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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, 1995 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 43-0985160
(State or other jurisdiction of incorporation)
(I.R.S. Employer Identification Number)
421 East 30th Avenue Hutchinson, Kansas 67502-2489
(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. ( )
The aggregate market value of voting stock held by non-affiliates
of the registrant was $7,361,825 as of December 8, 1995.
The number of shares of Common Stock outstanding on December 8,
1995 was 7,286,887.
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 2/23/96 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, wheelchair lifts and
accessories 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.
Collins manufactures products used in emergency medical
transportation and the transportation of school children,
business and leisure travelers and persons with disabilities, as
well as in the transfer of freight. In the U.S., Collins is the
largest manufacturer of ambulances, a leading manufacturer of
small school buses, a manufacturer of shuttle and mid-size
commercial buses and the second largest manufacturer of terminal
trucks. The Company also manufactures wheelchair lifts and
commercial bus chassis. The Company sells its products under
several well-known trade names, including Wheeled Coach
(ambulances), Collins Bus (small school buses), World Trans
(commercial buses), Mobile-Tech (vehicle wheelchair lifts),
Capacity (terminal trucks) and Transi-Corp (commercial bus
chassis).
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.
In fiscal 1992, the Company also developed the World Trans 3000,
an aluminum body bus built on a rear-engine, rail-type chassis
built by the Company. This bus has a lower floor height and
tighter turning radius than competitive models available in the
industry.
A new wheelchair lift called the under-vehicle lift (UVL) was
introduced in fiscal 1992. The UVL, suitable for installation on
both vans and minivans, is the first platform wheelchair lift to
be installed on the vehicle exterior so that it does not block
vehicle doorway entrances. The UVL is the first Company product
targeted to the consumer market, as well as to the commercial
market.
Financial Information About Industry Segments
Financial information about industry segments is contained in
Note 8 to the Company's Consolidated Financial Statements.
Description of Business
The Company's product lines currently are considered to be in the
Specialty Vehicle Manufacturing segment with the exception of the
transportation equipment for disabled persons.
Ambulances. The Company manufactures both modular and van-type
ambulances at its Hutchinson, Kansas and Orlando, Florida plants.
Van ("Type II") ambulances are cargo vans modified to include a
patient compartment and a raised fiberglass roof. 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. 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.
In 1995, the Company introduced a medical transfer van which
transports persons confined to wheelchairs and utilizes the
Company's UVL Lift as an option.
Buses. The Company manufactures small school buses at its South
Hutchinson, Kansas, facility and manufactures commercial and
shuttle buses at its Newton, Kansas facility. These
manufacturing operations are scheduled to be combined in fiscal
1996.
School Buses. The Company manufactures small Type A school buses
which carry from 16 to 24 passengers. Prior to 1992, the Company
built Type A school buses by extensively modifying vendor-
supplied cargo vans. The majority of Type A school buses built
by the Company are now 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.
They are equipped with luggage compartments and familiar
features.
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 1600/1900 models
are aluminum body buses built on vendor-supplied, cutaway chassis
that carry 17 to 25 passengers and target mid- to high-price
range markets. 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.
Transportation Equipment for Disabled Persons. The Company
manufactures wheelchair lifts and accessories used in the
transportation of disabled persons. These products are sold to
commercial and school bus manufacturers and to dealers who
install the lifts in existing buses. The Company's patented Step-
Lift product is installed in the stepwell of buses. The Step-
Lift can serve as a conventional two-step entryway into the bus
and fold out as a lift to make the bus accessible to disabled
persons. In 1992, the Company introduced the under-vehicle lift
("UVL") in North America. The UVL, suitable for installation on
both vans and minivans, was the first platform wheelchair lift to
be installed on the vehicle exterior so that it does not block
vehicle doorway entrances. The UVL was the first Company product
targeted to the consumer market as well as to the commercial
market.
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. The Dura-Ride suspension
system, an increasingly popular option on the Company's terminal
trucks, was installed on over half of the terminal trucks built
by the Company during fiscal 1994.
Bus Chassis. The Company produces both forward- and rear-engine
bus chassis for use by the Company and for sale to other
manufacturers. These chassis are 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. The principal raw
materials and components used by the Company in the production of
its wheelchair lifts and accessories are steel, aluminum, motors
and batteries. 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
certain of its wheelchair lift products and 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, sales of
Specialty Vehicles 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 specialty vehicle products are delivered on a
cash basis. Products sold on a direct basis (not through
dealers) and products for the disabled are sold on trade terms
common to each respective industry. Finished goods that are
reflected on the financial statements are generally sold units
that are ready for customer delivery. Since late in fiscal 1992,
many sales to dealers have 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 an industry segment or the Company as
a whole.
Sales Backlog
The sales backlog at October 31, 1995 was approximately $29.2
million. This compares to $38.8 million at October 31, 1994. In
the opinion of management, the majority of this sales backlog
will be shipped during the coming year.
Governmental Sales
The Company has, 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. In 1993, the Company was awarded a
new contract with the General Services Administration to provide
ambulances to all government sectors. The initial term of the
contract was for one year with three one-year extension options.
This contract does not contain specific quantities that will be
ordered. During fiscal 1995 such orders were less than 10
percent of the Company's consolidated sales.
Marketing and Distribution
The Company, through its wholly owned subsidiaries, markets its
products throughout the U.S. through independent dealers and
distributors, Company-owned stores and the direct sales efforts
of Company personnel and, to a limited extent, abroad. 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 brand name and (iii) in the commercial bus
market on the basis of its various product models, product
quality, price and distribution network.
The Company does not have numerous competitors in the market for
wheelchair lifts and accessories; however, its primary
competitors are well-established and may have greater relative
resources. The Company believes it can compete successfully in
the market on the basis of its innovative products, product
quality and price.
In the terminal truck market, the Company competes primarily with
one larger domestic competitor, Ottawa Truck Corporation and one
foreign competitor, Sisu USA, Inc. Both competitors have
international distribution channels and are owned by the
government of Finland 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
1995 1994 1993
Research and Development Expenses $261,747 $ 72,236 $70,294
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 850 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
The Company has no significant foreign or export sales.
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(1) Corporate headquarters 4,000
Hutchinson, Kansas(1),(2) Ambulance production; Wheelchair 300,000
lifts and accessories production;
Office space
Hutchinson, Kansas(1) Metal fabrication and available for
additional bus production 60,000
South Hutchinson, Kansas(1),(3) School bus production;
Office space 160,000
Newton, Kansas(1),(4) Commercial bus production 80,000
Orlando, Florida(1) Ambulance production; Office space 229,000
Longview, Texas(1) Terminal truck production; Chassis 120,000
production; Office space
Mansfield, Texas(1) Ambulance sales, service and 25,000
distribution center
___________________
(1) This property is pledged as collateral to secure payment of
the Company's debt obligations. See "Notes 2 and 3 to Consolidated
Financial Statements."
(2) Approximately 80 percent of this facility, together with
related machinery and equipment, is financed by industrial revenue
bonds in the original principal amount of $3,500,000 issued by the
city of Hutchinson under a lease purchase agreement providing for
rental payments sufficient to amortize the bonds in accordance with
their terms.
(3) This facility and certain related equipment are financed by
industrial revenue bonds in the original principal amount of
$1,750,000 issued by the city of South Hutchinson under a lease
purchase agreement similar to the one in effect for the Hutchinson
production facility.
(4) This facility and certain related equipment are financed by
industrial revenue bonds in the original principal amount of
$1,250,000 issued by the city of Newton under a lease purchase
agreement similar to those in effect for the Hutchinson and South
Hutchinson production facilities.
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
The Company has been named as a defendant in various law suits
arising out of its normal business operations. Based upon the
facts available to date, management believes that the Company has
meritorious defenses to these claims, as well as adequate
insurance coverage, and that their ultimate resolution should not
have a material adverse effect on the Company's financial
position.
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, 1995.
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. On October 31, 1995
there were approximately 3,500 shareholders of the Company's
common stock.
FISCAL 1995
Volume
Quarter High Low (000s)
First 2-3/8 1-5/8 846
Second 2-7/8 1-5/8 1,043
Third 2-5/8 2 574
Fourth 2-5/8 1-7/8 689
FISCAL 1994
Volume
Quarter High Low (000s)
First 3-1/8 1-13/16 1,131
Second 2-3/4 2-1/8 484
Third 2-7/8 1-5/8 571
Fourth 2-3/4 2 776
Item 6. SELECTED FINANCIAL DATA
Operating History
(In thousands except share and per-share data)
Fiscal years ended October 31, 1995 1994 1993
Sales $140,725 $143,763 $146,992
Cost of sales 123,911 126,664 137,436
Gross profit 16,814 17,099 9,556
Selling, general and
administrative (includes R&D) 13,925 13,661 14,992
Income (loss) from operations 2,889 3,438 (5,436)
Other income (expenses):
Interest (2,783) (3,410) (3,311)
Other, net (Note A) (27) (999) (3,220)
Income (loss) from
continuing operations
before provision
(benefit) for income
taxes and
extraordinary items 79 (971) (11,967)
Provision (benefit) for income taxes - - (749)
Income (loss) before
extraordinary items 79 (971) (11,218)
Discontinued operations
income (loss) - - -
Extraordinary items (420) - -
Net income (loss) $ (341) $ (971) $ (11,218)
Earnings (loss) per share:
Continuing operations $ .01 $ (.14) $ (1.59)
Discontinued operations - - -
Extraordinary items (.06) - -
Net income (loss) (.05) (.14) (1.59)
Dividends per share: $ - $ - $ .0625
Weighted average shares outstanding 7,240,926 7,106,082 7,071,097
Non-cash charges $ 3,040 $ 2,889 $ 3,117
Operating History (continued)
(In thousands except share and per-share data)
Fiscal years ended October 31, 1992 1991
Sales $143,502 $145,580
Cost of sales 125,939 125,879
Gross profit 17,563 19,701
Selling, general and administrative
(includes R&D) 13,806 12,826
Income (loss) from operations 3,757 6,875
Other income (expenses):
Interest (3,827) (4,623)
Other, net (Note A) 29 50
Income (loss) from continuing operations
before provision (benefit) for income
taxes and extraordinary items (41) 2,302
Provision (benefit) for income taxes - 687
Income (loss) before extraordinary items (41) 1,615
Discontinued operations income (loss) - -
Extraordinary items (1,059) -
Net income (loss) $ (1,100) $ 1,615
Earnings (loss) per share:
Continuing operations $ - $ .34
Discontinued operations - -
Extraordinary items (.20) -
Net income (loss) (.20) .34
Dividends per share: $ .10 $ -
Weighted average shares outstanding 5,395,895 4,779,920
Non-cash charges $ 4,415 $ 3,464
Note A: Includes special non-recurring expenses of $1,010,761 and
$3,115,531 in 1994 and 1993, respectively, associated with
the restatement of the October 31, 1992 - see Note 9 to
consolidated financial statements.
Financial Position
(In thousands except share and per-share data)
Fiscal years ended October 31, 1995 1994 1993
Current assets $32,086 $37,733 $40,651
Current liabilities 18,634 23,769 25,376
Working capital 13,452 13,964 15,275
Long-term debt (less
current maturities) 17,660 18,401 20,003
Capitalized leases (less
current maturities) 1,746 2,143 2,619
Shareholders' investment 8,805 8,994 9,811
Book value per share 1.21 1.26 1.38
Working capital per share 1.85 1.96 2.16
Financial Position (Continued)
(In thousands except share and per-share data)
Fiscal years ended October 31, 1992 1991
Current assets $53,766 $42.521
Current liabilities 47,526 33,530
Working capital 6,240 8,991
Long-term debt (less current maturities) 1,094 11,065
Capitalized leases (less current maturities) 3,080 3,661
Shareholders' investment 21,179 13,535
Book value per share 3.00 2.83
Working capital per share .88 1.88
Financial Comparisons
(Continuing Operations)
Fiscal years ended October 31, 1995 1994 1993
Gross profit margin 11.9% 11.9% 6.5%
Net profit margin NA NA NA
SG&A (includes R&D) as % of sales 9.9% 9.5% 10.2%
Current ratio 1.7:1 1.6:1 1.6:1
Long-term debt and capitalized leases
to shareholders' investment 2.2:1 2.3:1 2.3:1
Manufacturing space (000's square feet) 978 978 978
Financial Comparisons (Continued)
(Continuing Operations)
Fiscal years ended October 31, 1992 1991
Gross profit margin 12.2% 13.5%
Net profit margin NA NA
SG&A (includes R & D) as % of sales 9.6% 8.8%
Current ratio 1.1:1 1.3:1
Long-term debt and capitalized leases
to shareholders' investment 0.2:1 1.1:1
Manufacturing space (000's square feet) 1,035 1,035
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 1995 Compared to Fiscal 1994. Sales for fiscal 1995
decreased $3.0 million (2.1%) to $140.7 million. Sales within
the Specialty Vehicle product lines were mixed. Chassis sales
decreased $3.1 million, principally due to the impact of lower
unit sales in commercial and school bus products. Sales of
school bus products declined in fiscal 1995, principally due to
lower unit sales to major contractors operating large school bus
fleets. The unit sales of commercial bus products also declined,
primarily due to lower sales of single, rear-wheel buses. The
sales declines in the commercial and school bus products were
partially offset by an overall increase of 14% in the Company's
ambulance product lines. The overall increase in ambulance
sales principally resulted from a 10% increase in the volume of
ambulances sold in fiscal 1995 compared to fiscal 1994. The unit
sales volume of terminal trucks declined approximately 12% in
fiscal 1995 compared to fiscal 1994. The unit sales decline in
terminal truck products was partially offset by selling price
increases and increased sales of spare parts.
At October 31, 1995, the Company's consolidated sales backlog was
approximately $29.2 million. This compares to a $38.8 million
consolidated sales backlog at October 31, 1994. The Company
believes the majority of its sales backlog will be shipped in the
1996 fiscal year.
In 1993, the Company was awarded a new contract with the General
Services Administration (GSA). The initial term of the contract
was one year with three (3) one-year extension options. The
Company is currently in the third year of the contract which was
originally estimated to be approximately $40 million with the
exercise of all extension options. There are no minimum
guarantees related to this contract and future sales under the
contract are therefore difficult to project.
Cost of sales and selling, general and administrative expenses
for both 1995 and 1994 were approximately the same. Cost of
sales were 88.1% of sales in both fiscal 1995 and 1994 and
selling general and administrative expenses in fiscal 1995 were
9.7% of sales compared to 9.5% of sales in fiscal 1994.
Research and development expenses increased to $.3 million in
fiscal 1995 compared to $.1 million in fiscal 1994. The
principal reason for this increase related to the development of
new ambulance products and the development costs associated with
a new commercial bus.
In fiscal 1994, the Company incurred $1.0 million in special, non-
recurring expenses as explained in Note 9 (f) to the Consolidated
Financial Statements. No expenses related to this matter were
incurred in fiscal 1995.
Interest expense of $2.8 million decreased for fiscal 1995 by $.6
million over fiscal 1994. This decrease was primarily due to
reduced average borrowings during fiscal 1995.
Income before extraordinary items in fiscal 1995 was $.1 million
($.01 per share) compared to a loss of $1.0 million ($.14 per
share) in fiscal 1994. The income before extraordinary items in
fiscal 1995 increased due to three principal factors: (1)
improved sales and income from ambulance product lines (2) lower
interest costs and (3) elimination of the special charges
incurred in 1994. These income improvements were principally
offset by losses sustained in the commercial and school bus
product lines in fiscal 1995.
In fiscal 1995, the Company incurred net extraordinary items of
$420,444 associated with its new credit facility with NationsBank
of Georgia, N.A. and the retirement of certain subordinated
debentures. (Refer to Note 2 to the Consolidated Financial
Statements).
Fiscal 1994 Compared to Fiscal 1993. Sales for fiscal 1994
decreased $3.2 million (2.2%) to $143.8 million. Sales within
the Specialty Vehicle product lines were mixed for two principal
reasons. First, sales in the Company's terminal truck product
line increased 32% over fiscal 1993 principally due to higher
sales volumes to intermodal markets. Secondly, this increase was
offset by an 18% decline in the Company's bus product lines which
primarily resulted from lower sales volumes of commercial buses.
Products for the transportation of the disabled decreased $1.8
million in 1994 principally due to a decline in the sales volume
of Step-Lift products. There were no other significant changes
in sales activity in 1994 except for the change in the method of
recognition of revenues as discussed in Note 1(f) of the
Consolidated Financial Statements.
Cost of sales for fiscal 1994 were 88.1% of sales compared to
93.5% in fiscal 1993. The primary reasons for this improvement
include: selling price increases in the ambulance division; a
reduction in direct labor and manufacturing overhead in the
ambulance division; improved margins on terminal truck products
associated with their higher sales volume and a reduction in the
direct manufacturing costs of products for the transportation of
the disabled.
Selling, general and administrative expenses of $13.6 million
(9.5% of sales) for fiscal 1994 decreased by $1.3 million or
8.9%. This decrease was principally attributable to improved
cost controls over both selling and administrative expenses in
the divisions that produce ambulances and products for the
transportation of the disabled. These decreases were partially
offset by increased selling expenses associated with the terminal
truck division's increase in sales.
In fiscal 1994, the Company incurred additional special, non-
recurring expenses of $1.0 million as explained in Note 9(f) to
the Consolidated Financial Statements. These expenses relate to
the legal, accounting and other costs associated with the
restatement of the 1992 financial statements.
Interest expense of $3.4 million for fiscal 1994 increased by $.1
million over fiscal 1993. The increase resulted from higher
average interest rates on both short- and long-term debt. This
increase was partially offset by an overall reduction in both
short- and long-term borrowings during 1994.
There was no income tax expense recorded in fiscal 1994 due to
the Company's net loss ($971,488). This loss could not be
carried back to prior years, and therefore there was no income
tax benefit to be derived. This compares to an income tax
benefit of $.7 million in fiscal 1993 which resulted from the
carryback of the Company's 1993 operating loss against
alternative minimum income tax paid in years prior to 1993.
The Company's net loss in fiscal 1994 was $1.0 million ($.14 per
share) compared to a net loss of $11.2 million ($1.59 per share)
in fiscal 1993. The net loss sustained in fiscal 1994 resulted
principally from the special non-recurring charges described
above and the operating losses associated with commercial buses,
commercial chassis and products for the transportation of the
disabled. These losses were partially offset by earnings from
ambulance, school bus and terminal truck products.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically relied primarily on internally
generated funds, supplier financing and bank borrowings 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 deliveries of
vehicles and the payment terms offered to its customers.
Cash provided by operations was $5.3 million in fiscal 1995
compared to $5.2 million in fiscal 1994. Primary sources of the
1995 cash provided by operations related to the profitable
operations of the ambulance and terminal truck product lines and
to reductions in receivables, inventories and prepaid expenses.
Cash provided by operations in 1994 was $5.2 million compared to
$5.4 million in fiscal 1993. Primary sources of the 1994 cash
provided by operations related to the profitable operations of
the ambulance, terminal truck and school bus product lines;
reductions in receivables ($1.9 million) and increases in
accounts payable to suppliers ($2.3 million). In fiscal 1994
these sources were used to reduce accrued expenses ($.9 million).
The primary sources of the fiscal 1993 cash provided by
operations of $5.3 million were from the profitable operations of
the terminal truck and school bus product lines; reductions in
receivables and prepaid expenses ($9.2 million) and reductions in
inventories ($8.0 million). The reductions in accounts
receivable and inventories resulted principally from the
completion and collection of two large ambulance contracts in
fiscal 1993. Further reductions in receivables and inventories
resulted from new controls, systems and procedures initiated in
1993 to reduce both inventories and receivables and to improve
inventory turns. A portion of the cash flow generated by the
reductions in receivables and inventories was used to reduce
accounts payable ($6.4 million).
Cash used in investing activities was $.2 million in 1995
compared to $.7 million in fiscal 1994. In fiscal 1995, the
principal use of cash for investing activities was for the
acquisition of property and equipment ($.6 million) and certain
other assets ($.3 million). In fiscal 1995, these uses of cash
were partially offset by the proceeds from the sale of vacant
land ($.6 million). In fiscal 1994 and 1993, the cash used in
investing activities was for the acquisition of property and
equipment.
Cash used in financing activities was $8.0 million in fiscal 1995
compared to $5.1 million in fiscal 1994. In fiscal 1995, the
Company reduced its short-term borrowings $4.3 million compared
to a reduction of $3.7 million in fiscal 1994. Additionally, the
Company reduced net long-term borrowings in fiscal 1995 by $3.7
million compared to $1.6 million in fiscal 1994. As discussed in
Notes 2 and 3 to the Consolidated financial statements, the
Company obtained a new $33.05 million credit facility from
NationsBank of Georgia, N.A. in fiscal 1995. The proceeds of
this financing were used to repay the Company's chassis floor
plan notes (short-term) and to pay off Guaranteed Senior Notes of
$17.5 million. In fiscal 1993, the Company used the proceeds of
the Guaranteed Senior Notes to repay short-term, interest-bearing
debt.
The Company believes that its cash flows from operations and new
credit facility with NationsBank will be sufficient to satisfy
its future working capital and capital expenditure requirements.
At October 31, 1995 there were no significant or unusual
contractual commitments or capital expenditure commitments.
IMPACT OF INFLATION AND FOREIGN CURRENCY EXCHANGE FLUCTUATIONS
The results of the Company's operations for the periods discussed
have not been significantly affected by inflation or foreign
currency fluctuations. Facility costs result primarily from
fixed amortization of interest and principal and are not affected
by inflation. Further, although Collins often sells products on a
fixed quote basis, the average time between the receipt of an
order and delivery is generally a few months. Therefore, the
Company generally is not adversely affected by increases in the
cost of raw materials and components. This could change in
situations in which the Company is producing against a
substantial backlog and may not be able to pass on higher costs
to customers. In addition, interest on the Company's debt is
tied to the prime rate and therefore may increase with inflation.
Collins makes substantially all sales to foreign customers in
U.S. dollars. Thus, notwithstanding fluctuation of foreign
currency exchange rates, the Company's profit margin for any
purchase order is not subject to change due to exchange rate
fluctuations after the time the order is placed.
OTHER MATTERS
The Financial Accounting Standards Board has issued
pronouncements SFAS 106 on accounting for post-retirement
benefits, SFAS 112 on accounting for post-employment benefits,
and SFAS 109 on accounting for income taxes. These
pronouncements and their effect on the Company are more fully
explained in "Notes 1(h) and 5 to Consolidated Financial
Statements."
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
For each of the three years in the period ended October 31, 1995
1995 1994 1993
Sales $140,725,065 $143,762,767 $146,992,058
Cost of sales 123,910,694 126,664,018 137,436,166
Gross profit 16,814,371 17,098,749 9,555,892
Selling, general and
administrative expenses 13,663,037 13,588,494 14,922,331
Research and development
expenses 261,747 72,236 70,294
Income (loss) from operations 2,889,587 3,438,019 (5,436,733)
Other income (expense):
Special non-recurring - (1,010,761) (3,115,531)
Interest, net (2,783,198) (3,410,334) (3,311,015)
Other, net (26,704) 11,588 (104,865)
(2,809,902) (4,409,507) (6,531,411)
Income (loss) before provision
for income taxes and
extraordinary items 79,685 (971,488) (11,968,144)
Provision (benefit) for
income taxes (Note 5):
Current - - (749,000)
Deferred - - -
- - (749,000)
Income (loss) before
extraordinary items 79,685 (971,488) (11,219,144)
Extraordinary items - early
retirement of debt (Note 2) (420,444) - -
Net loss $(340,759) $(971,488) $(11,219,144)
Earnings (loss) per share (Note 1):
Before extraordinary items $ .01 $ (.14) $(1.59)
Extraordinary items (.06) - -
Net loss $ (.05) $ (.14) $(1.59)
The accompanying notes are an integral part of these statements.
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
October 31, 1995 and 1994
ASSETS 1995 1994
Current assets:
Cash (Note 1) $ 842,953 $ 3,814,398
Receivables, less allowance for
doubtful accounts of $82,000 in
1995 and $95,000 in 1994 (Notes 2 & 3) 7,375,492 8,076,319
Inventories, at the lower of cost
(first-in, first-out) or market
(Notes 1, 2 & 3) 23,466,727 25,081,169
Prepaid expenses and other current assets 400,753 761,270
Total current assets 32,085,925 37,733,156
Property and equipment, at cost (Notes 1, 2 & 3):
Land and land improvements 2,313,339 2,326,013
Buildings and improvements 15,606,637 15,430,715
Machinery and equipment 15,103,215 15,101,723
Office furniture and fixtures 2,129,786 2,362,128
35,152,977 35,220,579
Less - accumulated depreciation 21,730,893 20,304,288
13,422,084 14,916,291
Other assets 1,373,042 1,927,252
$46,881,051 $54,576,699
LIABILITIES & SHAREHOLDERS' INVESTMENT
Current liabilities:
Current maturities of long-term debt
and capitalized leases (Notes 2 & 3) 1,158,070 2,006,694
Note payable (Note 2) - 625,000
Chassis floor plan notes payable (Note 4) - 3,676,111
Accounts payable 14,154,891 13,878,109
Accrued expenses 3,321,210 3,582,729
Total current liabilities 18,634,171 23,768,643
Long-term capitalized leases, less current
maturities (Note 3) 1,745,797 2,143,403
Long-term debt, less current
maturities (Note 3) 17,659,933 18,401,311
Reserve for litigation settlement (Note 9) - 1,201,936
Deferred income taxes (Notes 1 and 5) 36,000 67,000
Commitments and contingencies (Note 9)
Shareholders' investment (Notes 1, 2, 3, 6 & 7):
Common stock, $.10 par value
Authorized - 17,000,000 shares
Outstanding - 7,286,887 shares
in 1995; 7,137,348 in 1994 728,689 713,735
Capital stock, $.10 par value
Authorized - 3,000,000 shares
Outstanding - No shares outstanding
Paid-in capital 19,593,605 19,457,056
Retained deficit (11,517,144) (11,176,385)
Total shareholders' investment 8,805,150 8,994,406
$46,881,051 $54,576,699
The accompanying notes are an integral part of these balance sheets.
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For each of the three years in the period ended October 31, 1995
1995 1994 1993
Cash flow from operations:
Cash received from customers $141,425,892 $144,853,031 $155,818,764
Cash paid to suppliers
and employees (132,956,101) (137,273,728) (147,645,022)
Interest paid, net (3,209,818) (3,167,373) (2,748,495)
Income taxes received - 813,248 -
Cash provided by operations 5,259,973 5,225,178 5,425,247
Cash flow from investing activities:
Capital expenditures (551,528) (657,114) (1,820,676)
Proceeds from sale of vacant land 643,667 - -
Expenditures for other assets (237,519) - -
Other, net (57,034) - -
Cash used in investing
activities (202,414) (657,114) (1,820,676)
Cash flow from financing activities:
Net (reduction) in short-term
borrowings (4,301,111) (3,560,084) (15,284,191)
Principal payments of long-term
debt and capitalized leases (19,783,293) (1,550,284) (3,564,950)
Addition to long-term debt 16,055,400 - 19,387,964
Additional expenses from
public offering of common
stock - - (11,884)
Cash dividends paid - - (441,858)
Cash provided by (used in)
financing activities (8,029,004) (5,110,368) 85,081
Net increase (decrease) in cash (2,971,445) (542,304) 3,689,652
Cash at beginning of year 3,814,398 4,356,702 667,050
Cash at end of year $ 842,953 $ 3,814,398 $ 4,356,702
Reconciliation of net loss to
net cash provided by operations:
Net loss $ (340,759) $ (971,488) $(11,219,144)
Depreciation and amortization 2,513,541 2,756,470 2,945,551
Common stock issued for
benefit of employees 106,365 132,252 171,364
Loss from sale of fixed assets - - 75,781
Decrease in receivables, net 700,827 1,903,512 8,027,712
Decrease in inventories 1,614,442 157,656 7,616,194
Decrease in prepaid expenses 329,517 97,757 1,160,796
Increase (decrease) in
accounts payable 276,782 2,315,358 (6,388,679)
Increase (decrease) in
accrued expenses (261,519) (889,330) 1,535,672
Increase (decrease) in
reserve for litigation settlement - (298,064) 1,500,000
Gain on sale of vacant land (99,667) - -
Loss on early extinguishment
of debt 420,444 - -
Other, net - 21,055 -
Cash provided by operations $ 5,259,973 $ 5,225,178 $ 5,425,247
The accompanying notes are an integral part of these statements.
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
For each of the three years in the period ended October 31, 1995
Common Stock
Shares Amount
Balance October 31, 1992 7,049,552 $704,955
Stock issued under
various discretionary
arrangements (Note 1) 5,600 560
Stock issued to Tax
Deferred Savings Plan
and Trust (Note 7) 29,528 2,953
Additional expenses of
public stock offering - -
Cash dividends declared
($.0625 per share) - -
Net loss 1993 - -
Balance October 31, 1993 7,084,680 708,468
Stock issued to Tax
Deferred Savings Plan
and Trust (Note 7) 52,668 5,267
Amortization of deferred
compensation - -
Balance October 31, 1994 7,137,348 713,735
Stock issued under
various discretionary
arrangements (Note 1) 110,000 11,000
Stock issued to Tax
Deferred Savings Plan
and Trust (Note 7) 39,539 3,954
Amortization of deferred
compensation - -
Net loss 1995 - -
Balance October 31, 1995 7,286,887 $728,689
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT (CONTINUED)
Retained
Paid-In Earnings
Capital (Deficit)
Balance at October 31, 1992 $19,374,423 $ 1,099,315
Stock issued under
various discretionary
arrangements (Note 1) 163,240 -
Stock issued to Tax
Deferred Savings Plan
and Trust (Note 7) 138,311 -
Additional expenses of
public stock offering (11,884) -
Cash dividends declared
($.0625 per share) (356,790) (85,068)
Net loss 1993 - (11,219,144)
Balance October 31, 1993 19,307,300 (10,204,897)
Stock issued to Tax
Deferred Savings Plan
and Trust (Note 7) 126,985 -
Amortization of deferred
compensaton 22,771 -
Net loss 1994 - (971,488)
Balance October 31, 1994 19,457,056 (11,176,385)
Stock issued under
various discretionary
arrangements (Note 1) 9,000 -
Stock issued to Tax
Deferred Savings Plan
and Trust (Note 7) 82,410 -
Amortization of deferred
compensation 45,139 -
Net loss 1995 - (340,759)
Balance October 31, 1995 $19,593,605 $(11,517,144)
The accompanying notes are an integral part of these statements.
Collins Industries, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three years ended October 31, 1995
(1) Summary of Significant Accounting Policies
(a) Consolidation - 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.
(b) Cash - Includes cash in checking accounts and funds invested
in overnight and other short-term, interest-bearing accounts.
(c) Inventories - Major classes of inventories which include
material, labor, and manufacturing overhead required in
production of Company products as of October 31, 1995 and 1994
consisted of the following:
1995 1994
Chassis $ 6,545,808 $ 7,272,003
Raw materials & components 8,294,483 9,291,001
Work in process 3,400,583 5,425,766
Finished goods 5,225,853 3,092,399
$23,466,727 $25,081,169
(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
Building and improvements 10 to 30 years
Machinery and equipment 3 to 15 years
Office furniture and fixtures 3 to 10 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) Capital Stock - The Company completed a public stock
offering during fiscal 1992 in which 2,205,000 shares of common
stock were sold at a price of $4.50 per share. The proceeds to
the Company, after deducting commissions and offering expenses,
were $8,791,488 (exclusive of additional offering expenses of
$11,884 incurred in fiscal 1993).
During fiscal 1995 and 1993, the Company awarded 110,000 shares
and 5,600 shares respectively, of unregistered common stock to
senior management which was treated as compensation.
Compensation in the amount of the fair market value of the shares
at the issuance date is recognized currently or over the three
year period of restriction.
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 reserved 750,000 shears
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.
(f) Revenue Recognition and Accounting Change - Effective
November 1, 1993 the Company changes its method of revenue
recognition from recording sales when the Company's obligations
under the terms of the sales contract or purchase order are
fulfilled to recording sales at the earlier of completion of the
vehicle and receipt of full payment for the vehicles 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 fully recognized as revenue. The new method more
closely related to the manner in which the Company markets and
distributes its products. There was no cumulative effect on the
Company's results of operations as a result of adopting this new
method of revenue recognition.
(g) Earnings Per Share - The computation of earnings per share
is based on the weighted average number of outstanding common
shares during the period plus, when their effect is dilutive,
common stock equivalents consisting of certain shares subject to
stock options.
The weighted average number of shares used to calculate earnings
(loss) per share was 7,240,926 in 1995, 7,106,082 in 1994 and
7,071,097 in 1993.
(h) Post-Retirement and Post-Employment Benefits - The Company
provides neither post-retirement nor post-employment benefits.
(i) Supplemental Cash Flow Information - During the year ended
October 31, 1993 the Company exchanged land, land improvements,
buildings and building improvements associated with an idle plant
for a $225,000 note receivable. The Company also acquired land
and a building in exchange for a note receivable of approximately
$625,000 and the payment of the remaining mortgage obligation.
(j) Income Taxes - Effective November 1, 1993 the Company
implemented the provision of Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes." Under
SFAS No. 109, deferred taxes are determined based on the
difference between the financial statement and tax basis of
assets and liabilities using the enacted marginal rate.
(2) Loan Agreements and Retirement of Debt
On May 9, 1995 the Company entered into a Loan Agreement with
NationsBank of Georgia, N.A., Atlanta, Georgia, for a $33.05
million credit facility. The Agreement provides for a revolving
credit facility of $25.0 million and a long-term credit facility
of $8.05 million. The proceeds of the new credit facility were
used to repay the Company's Senior Notes and chassis floor plan
notes.
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, capital expenditures
and cash dividends.
The revolving credit facility requires payment of interest (only)
at 1.25% over the Bank's prime rate which was 8.75% at October 31,
1995. The revolving credit facility also provides for a
maximum of $3.0 million in letters of credit, of which, $1.3
million were outstanding at October 31, 1995. The total amount
of unused revolving credit available to the Company at October 31,
1995 was $4.4 million.
The long-term facility includes a $6.2 million term loan (Term
Loan A) which is payable in monthly installments of $51,667 plus
interest at 1.25% over the Bank's prime rate. Term Loan A
matures upon the expiration of the Loan Agreement in April, 1998.
The long-term facility provides for an additional $1.85 million
long-term credit line (Term Loan B) at 2.50% over the Bank's
prime rate. At October 31, 1995 no borrowings were outstanding
under Term Loan B which expires May 9, 1996.
On February 8, 1994 the Company's and its former Bank amended and
restated its loan agreement to a term loan which was payable in
twelve (12) equal monthly principal payments until December 30,
1994 plus interest at the Bank's prime rate plus two percent
(9.75% at October 31, 1994). The loan was collateralized jointly
with the Senior Notes (Note 3) by accounts receivable, certain
inventories, equipment and general intangibles and was guaranteed
by the Company's subsidiaries.
Maximum and average borrowings and the weighted average interest
rates of the former Bank's short-term borrowings during the two
months ended December 30, 1994 (date of maturity) and the year
ended October 31, 1994 follows:
1995 1994
Maximum borrowings outstanding at
month-end $416,667 $2,500,000
Average borrowing outstanding $310,000 $1,718,751
Weighted average interest rate 9.75% 8.10%
In June, 1995 the Company retired at less than par value certain
subordinated debentures which would have matured in 2001. A gain
of $53,881 from the early retirement of these debentures and a
charge of $474,325 for the unamortized debt issuance costs
associated with the early retirement of the Senior Notes resulted
in net extraordinary items of $420,444 ($.06 per share) for the
year ended October 31, 1995.
(3) Long-Term Debt and Capitalized Leases
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 $100).
The capitalized leases subject to these agreements follow:
1995 1994
City of Hutchinson, Kansas, 8.25% to
8.5%. Annual principal and sinking fund
payments are approximately $200,000
from 1996 to 1999 $ 651,120 $ 846,703
City of South Hutchinson, Kansas, 11.0%.
Annual principal and sinking fund
payments range from $160,000 in 1996
to $225,000 in 1999. 725,000 847,576
City of Newton, Kansas, 7.5% to 8.25%.
Annual principal payments range from
$65,000 in 1996 to $245,000 in 2004. 794,677 854,124
Total capitalized leases 2,170,797 2,548,403
Less - current maturities 425,000 405,000
$1,745,797 $2,143,403
At October 31, 1995, the net book value of manufacturing
facilities subject to these lease purchase agreements was
approximately $3,315,000.
Long-term debt at October 31, 1995 and 1994 consists of the
following:
1995 1994
NationsBank credit facility (Note 2):
Revolving credit borrowings $10,447,630 $ -
Term Loan A, less current
maturities of $620,000 5,321,667 -
10.75%, Term loan from insurance
company less maturities of $113,070
in 1995 and $101,694 in 1994 788,342 901,311
8.75% subordinated debentures, due 2001 1,102,294 -
Variable-rate, Guaranteed Senior Notes
less current maturities of $1,500,000
at October 31, 1994 - 17,500,000
$17,659,933 $18,401,311
On February 8, 1994 the loan agreements in force at October 31,
1993 with the Senior Note holders were modified. Under the terms
of the February, 1994 modified loan agreements, the Senior Notes
were collateralized by accounts receivable, certain inventories,
equipment and general intangibles and were guaranteed by the
Company's subsidiaries. At October 31, 1994 equipment with a net
book value of approximately $3,600,000 was pledged as collateral
to secure the bank note payable to the Company's former bank
(Note 2) and the Senior Notes. The Senior Notes were payable in
semi-annual installments on February 1 and August 1 of each year
as follows: $750,000 each in 1995; $1,000,000 each in 1996;
$1,500,000 in 1997 and each year thereafter through August 1,
1999. On December 1, 1999, all unpaid principal balances were
due. The rates of interest on these notes increased periodically
over the terms of the notes, to the greater of 12%, or the prime
rate plus 5%.
On September 30, 1991, a $1,250,000 10-year loan with a fixed
interest rate of 10.75% was obtained from an insurance company to
refinance existing manufacturing facilities. The note matures in
2001 and is secured by the facilities which it finances.
Interest and principal are paid monthly. At October 31, 1995 the
facilities had a net book value of $1,299,000.
In December, 1994 the Company issued $1,201,936 in 8.75%
subordinated debentures maturing January 11, 2001 in settlement
of a class action lawsuit. Interest on the debentures is payable
annually.
Warrants which were issued in connection with the 10.5%
subordinated debentures (retired in fiscal 1992) are exercisable
until February 29, 1996. There are 479,999 warrants outstanding
and each warrant may be used to purchase 1.25 shares of common
stock. The exercise price of $9.75 per warrant will be payable
in cash. The warrants are redeemable by the Company at $3.00 per
warrant at any time if the closing price for the Company's common
stock has been at least 150% of the then prevailing exercise
price of the warrants for 20 of 30 consecutive trading days.
The aggregate maturities of capitalized leases and long-term debt
for the five years subsequent to October 31, 1995 are as follows:
1996 $ 1,158,070
1997 1,195,842
1998 15,764,354
1999 476,997
2000 263,485
2001 and thereafter 1,705,052
(4) Chassis Floor Plan Notes Payable
In May, 1995, a portion of the proceeds from the new NationsBank
credit facility (Note 2) was used to pay the chassis floor plan
notes in full.
Chassis floor plan notes were payable to financing subsidiaries
of chassis manufacturers. These notes were secured by the
related chassis and payable upon the earlier of the date the
Company sells the chassis or 180 days from the date of the note.
Interest was payable monthly at 2.0% over the prime rate
(effective rate of 7.75% at October 31, 1994). Maximum and
average borrowing and weighted average interest rates during the
period from November 1, 1994 to May 9, 1995 (date of new
financing - Note 2) and the year ended October 31, 1995 are as
follows:
1995 1994
Maximum borrowings outstanding $3,486,780 $6,084,844
Average borrowings outstanding $3,180,122 $3,953,150
Weighted average interest rate 9.41% 7.99%
(5) Income Taxes
As of October 31, 1995 and 1994, the Company recorded the
following net deferred taxes:
Current deferred taxes:
1995 1994
Gross assets $ 36,000 $ 67,000
Gross liabilities - -
$ 36,000 $ 67,000
Noncurrent deferred taxes
Gross assets $ 102,000 $ 248,000
Gross liabilities (138,000) (316,000)
(36,000) (67,000)
The income tax effect of significant temporary differences
representing deferred tax assets and liabilities at October 31,
1995 and 1994 are summarized as follows:
1995 1994
Federal tax operating loss, investment
tax credit and alternative minimum
tax carryforwards $2,994,000 $3,163,000
Depreciation (138,000) (316,000)
Allowance for doubtful accounts 31,000 36,000
Inventories 264,000 206,000
Accrued vacation pay 115,000 139,000
Accrued warranty reserves 122,000 86,000
Accrued self-insurance reserves 314,000 283,000
Revenue recognition 161,000 201,000
Accrued compensation 94,000 -
Accrued litigation liabilities 420,000 461,000
Other 61,000 31,000
4,438,000 4,290,000
Valuation allowance (4,438,000) (4,290,000)
Net $ - $ -
The prior year amounts above have been revised to reflect actual
amounts reported in the tax returns.
The components of the provision (benefit) for income taxes are as
follows:
1995 1994 1993
Current:
Federal $ - $ - $(749,000)
State - - -
Subtotal - - (749,000)
Deferred:
Federal - - -
State - - -
Subtotal - - -
Total Provision $ - $ - $(749,000)
The effective income tax rate follows:
1995 1994 1993
U.S. federal statutory
rate (benefit) 34.0% 34.0% (34.0%)
State income taxes (benefit) 2.0 2.0 (2.0)
Non-deductible travel and
entertainment, officer life
insurance, other items .1 .1 .1
Tax credits - - -
Loss producing no current
tax benefit (35.9) (35.9) (29.2)
Effective tax rate 0.0% 0.0% 6.7%
The Company has available net operating loss carryforwards of
approximately $10,300,000 for financial reporting purposes and
approximately $6,365,000 for tax purposes to offset future
taxable income. The net operating loss carryforward expires
from 2007 to 2009. General tax credit carryforwards of
approximately $403,000 expire 1996 to 2006.
(6) Stock Option Plans
During 1995 the Company's shareholders approved new stock option
plans limited to key employees, officers and directors of the
Company. Options to purchase Company shares are granted at no
less than the fair market value at the date of the grant.
A summary of options authorized, granted, outstanding and
available for future grants is as follows:
October 31, October 31, October 31,
1995 1994 1993
Authorized for grants 1,000,000 750,000 750,000
Granted & outstanding 745,000 600,000 560,000
Exercised - - -
Exercise price - - -
Option issue price $1.75-$2.13 $2.00-$5.00 $2.75-$5.00
Available for future grants 255,000 141,875 181,875
(7) Tax Deferred Savings Plan and Trust
In 1985 the Company made available to all eligible employees the
opportunity to participate in Collins Industries, Inc. Tax
Deferred Savings Plan and Trust. The Company provides a 50%
matching contribution in the form of 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 $86,365 in 1995, $132,252 in 1994
and $150,143 in 1993. This plan held 423,529 shares of the
Company's common stock at October 31, 1995 and 380,910 shares at
October 31, 1994.
(8) Segment Information
(a) Business Segments - The Company primarily operates in the
Specialty Vehicle Manufacturing segment. The Corporate and Other
segment represents the corporate function and the wheelchair
lifts and accessories product lines whose products are installed
in specialty vehicles.
Intersegment sales are not material. Income (loss) from
operations excludes interest expense and other income and expense
items. Identifiable assets by segment are those assets used in
and related to the Company's operation of each segment.
The following is certain financial information regarding the
identifiable business segments of the Company:
Specialty
Corporate Vehicle
and Other Manufacturing
(Amounts in
Thousands) Consolidated
Sales 1995 $4,730 $135,995 $140,725
1994 4,290 139,473 143,763
1993 6,106 140,886 146,992
Income (loss) 1995 (1,626) 4,516 2,890
from operations 1994 (2,865) 6,303 3,438
1993 (4,746) (691) (5,437)
Other income (expense):
Interest, net 1995 (493) (2,290) (2,783)
1994 (792) (2,618) (3,410)
1993 (578) (2,733) (3,311)
Other, net 1995 (49) 22 (27)
1994 6 6 12
1993 (36) (69) (105)
Income (loss) before 1995 (2,168) 2,248 80
income taxes and 1994 (4,663) 3,692 (971)
extraordinary items 1993 (8,475) (3,493) (11,968)
Identifiable assets 1995 4,887 41,994 46,881
1994 6,183 48,394 54,577
1993 9,508 49,801 59,309
Capital additions 1995 66 486 552
1994 68 589 657
1993 1,189 632 1,821
Depreciation and
amortization expense 1995 684 1,829 2,513
1994 716 2,040 2,756
1993 716 2,230 2,946
(b) Geographic 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 1995, 1994 and 1993.
(9) 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) Repurchase Agreements - It is customary practice for
companies in the specialty vehicle industry to enter into
repurchase agreements with financing institutions to provide
floor plan financing for dealers. Generally, these agreements
provide for repurchase of products from the financing institution
at the original invoice price in the event of dealer default.
Under these agreements, the Company's repurchase obligation is
limited to vehicles which are in new condition and as to which
the dealer still holds title. At October 31, 1995, the Company
had repurchase agreements covering units with an aggregate
invoice cost of approximately $1,314,000.
The risk of loss under the agreements is limited to the risk that
market prices for these products may decline between the time of
delivery to the dealer and time of repurchase by the Company.
This risk is spread over numerous dealers and the Company has not
incurred significant losses under these agreements. In the
opinion of management, any future losses under these agreements
will not have a material adverse effect on the Company's
financial position or results of operations.
(c) Letters of Credit - The Company has outstanding letters of
credit as more fully described in Note 2.
(d) Operating Leases - The Company has operating leases
principally for certain vehicles and equipment. Lease payments
required under these operating leases are as follows:
1996 $126,651
1997 58,636
1998 22,768
1999 -
2000 -
Thereafter -
$208,055
Operating lease expense was $167,178 in 1995, $146,018 in 1994,
and $114,739 in 1993.
(e) Litigation - At October 31, 1995 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.
(f) Settlement of SEC Investigation - Misstatements of the
Company's October 31, 1992 financial statements were discovered
subsequent to the original release of those financial statements.
The 1992 financial statements were restated to reflect the
corrections of the misstatements and were re-released.
The costs associated with the SEC investigation and a class
action lawsuit, settled in 1994, are included in special non-
recurring expenses in the consolidated statements of operations.
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, 1995 and 1994, and the related
consolidated statements of operations, shareholders' investment
and cash flows for each of the three years in the period ended
October 31, 1995. 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,
1995 and 1994, and the results of their operations and their cash
flows for each of the three years in the period ended October 31,
1995, in conformity with generally accepted accounting
principles.
Our audit was made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedule listed
in Part IV, Item 14(a)(2) is the responsibility of the Company's
management and is presented for purposes of complying with
Securities and Exchange Commission's rules and is not part of the
basic financial statements. This schedule has been subjected to
the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Kansas City, Missouri,
December 8, 1995
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 23, 1996, 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 23, 1996, 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 23, 1996, 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 Operations for each
of the Three Years Ended October 31, 1995
Consolidated Statements of Shareholders' Investment
for each of the Three Years Ended October 31, 1995
Consolidated Statements of Cash Flows for each
of the Three Years Ended October 31, 1995
Consolidated Balance Sheets--October 31, 1995
and 1994
(2) Financial Statement Schedules:
Schedule II--Valuation and Qualifying Accounts
Schedules other than those referred to above 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 - Indenture, dated as of November 1,
1984, between the Company and Allied
Bank of Texas, as Trustee (included
as Exhibit 4.3 of the Company's
Registration Statement on Form S-1,
No. 2-93247 and incorporated herein
by reference).
4.2 - Form of Representatives Warrants
(included as Exhibit 4.8 on the
Company's Registration Statement on
Form S-1, No. 2-93247 and
incorporated herein by reference).
Exhibit Number Document
4.3 - Warrant Agreement dated as of
November 1, 1984, between the Company
and Allied Bank of Texas, as Warrant
Agent (included as Exhibit 4.5 on the
Company's Registration Statement on
Form S-1, No. 2-93247 and
incorporated herein by reference).
4.4 - Extension Agreement as to Warrant
Agreement between Registrant and First
Interstate Bank of Texas, N.A., dated
February 11, 1991 (included as Exhibit
4(d) to Registrant's Registration
Statement on Form S-1, No. 33-40035
and incorporated herein by reference).
4.5 - Extension Agreement as to Warrant
Agreement between Registrant and First
Interstate Bank of Texas, N.A., dated
February 12, 1992 (included as Exhibit
4.5 of the Company's Registration
Statement on Form S-1, No. 33-48303
and incorporated herein by reference).
4.6 - Specimen Common Stock Certificate
(included as Exhibit 4.1 to Company's
Amendment to its Registration
Statement on Form S-1, No. 2-81977
and incorporated herein by reference).
4.7 - 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).
4.8 - 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).
Exhibit Number Document
10.1 - Lease dated November 1, 1981, between
the Registrant and Hutchinson Air Base
Investors (included as Exhibit 10.1 to
the Company's Registration Statement
on Form S-1, No. 2-81977 and
incorporated herein by reference).
10.2 - Lease dated August 14, 1979, by and
between the Registrant and city of
Hutchinson, Kansas (included as
Exhibit 10.2 to the Company's
Registration Statement on Form S-1,
No. 2-81977 and incorporated herein
by reference).
10.3 - 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).
10.4 - Lease dated August 1, 1984 between
the city of South Hutchinson, Kansas
(included as Exhibit 10.11 of the
Company's Registration Statement on
Form S-1, No. 2-93247 and incorporated
herein by reference).
10.5 - Lease Agreement dated October 1,
1989 between Registrant and the city
of Newton, Kansas. (Incorporated
herein by reference to Exhibit 10.17
to Registrant's Report on Form 10-K
for the fiscal year ended October 31,
1989.)
Exhibit Number Document
10.6 - Promissory Note and Security Agreement
between Capacity of Texas, Inc. and
Metlife Capital Corporation dated
September 30, 1991. (Incorporated
herein by reference to Exhibit 10.20
to Registrant's Report on Form 10-K
for the fiscal year ended October 31,
1991.)
10.7 - 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.)
10.8 - Loan and Security Agreement for
33.05 million credit facility dated
May 9, 1995 between Registrant
and NationsBank of Georgia, N.A.
(Incorporated herein by reference to
Exhibit 10.14 to Registrant's Report
on Form 10-Q for the fiscal period
ended July 31, 1995).
Exhibit Number Document
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
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
Transi-Corp Alabama
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, 1995.
COLLINS INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
Balance at Charged Deductions Balance
Beginning to From At End of
Classiciation of Period Income Reserve Period
(In 000s)
ALLOWANCE FOR DOUBTFUL
ACCOUNTS:
For the year ended
October 31, 1995 $ 95 $ 51 $ 64 $ 82
For the year ended
October 31, 1994 $ 60 $ 156 $ 121 $ 95
For the year ended
October 31, 1993 $ 81 $ 24 $ 45 $ 60
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/ Don L. Collins
Don L. Collins, Chairman
and Chief Executive Officer
Dated: January 26, 1996
BY /s/ Larry W. Sayre
Larry W. Sayre, Vice President
Finance and Chief Financial 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 26, 1996 /s/ Don L. Collins
Don L. Collins
Dated: January 26, 1996 /s/ Donald Lynn Collins
Donald Lynn Collins
Dated: January 26, 1996 /s/ Lewis W. Ediger
Lewis W. Ediger
Dated: January 26, 1996 /s/ Robert E. Lind
Robert E. Lind