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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, 1996 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)
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. (X )
The aggregate market value of voting stock held by non-affiliates
of the registrant was $27,665,021 as of January 20, 1997.
The number of shares of Common Stock outstanding on January 20,
1997 was 7,362,410.
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 2/28/97 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.
Description of Business
The Company principally manufactures and markets Specialty
Vehicles.
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.
Buses. The Company manufactures small school buses, commercial
and shuttle buses at its South Hutchinson, Kansas facility.
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.
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 1000 Series
vehicles are aluminum body buses built on vendor-supplied,
cutaway chassis that carry 17 to 23 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.
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 1996.
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
the vehicle doorway entrances. The UVL was the first Company
product targeted to the consumer market as well as to the
commercial market.
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, 1996 was approximately $40.4
million. This compares to $29.2 million at October 31, 1995. 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 1996 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 which is
owned by Sisu of Finland. Sisu has international distribution
channels and is 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
1996 1995 1994
Research and Development Expenses $215,313 $261,747 $72,236
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 900 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; 300,000
Wheelchair lifts and
accessories production;
Office space
Hutchinson, Kansas(1) Building presently leased and 60,000
available for future production
South Hutchinson, Kansas(1),(3) Small school bus and commercial 160,000
bus production; Office space
Orlando, Florida(1) Ambulance production; 229,000
Office space
Longview, Texas(1) Terminal truck production; 120,000
Chassis 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.
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, 1996.
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, 1996
there were approximately 3,500 shareholders of the Company's
common stock.
FISCAL 1996
Volume
Quarter High Low (000s)
First 2-1/4 1-7/16 1,049
Second 3-7/8 1-9/16 2,561
Third 6 3-7/16 2,954
Fourth 6-1/2 4-7/16 1,392
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
Item 6. SELECTED FINANCIAL DATA
Operating History
(In thousands except share and per-share data)
Fiscal years ended 1996 1995 1994 1993 1992
October 31,
Sales $151,879 $140,725 $143,763 $146,992 $143,502
Cost of sales 129,652 123,911 126,664 137,436 125,939
Gross profit 22,227 16,814 17,099 9,556 17,563
Selling, general and
administrative
(includes research &
development) 15,236 13,925 13,661 14,992 13,806
Income (loss) from
operations 6,991 2,889 3,438 (5,436) 3,757
Other income (expenses):
Interest, net (2,241) (2,783) (3,410) (3,311) (3,827)
Other, net (Note A) 262 (27) (999) (3,220) 29
Income (loss) from
continuing operations
before provision
(benefit) for income
taxes and
extraordinary items 5,012 79 (971) (11,967) (41)
Provision (benefit) for
income taxes 0 0 0 (749) 0
Income (loss) before
extraordinary items 5,012 79 (971) (11,218) (41)
Discontinued operations (loss) 0 0 0 0 0
Extraordinary items 0 (420) 0 0 (1,059)
Net income (loss) $ 5,012 $ (341) $ (971) $(11,218) $(1,100)
Earnings (loss) per share:
Continuing operations $ .66 $ .01 $ (.14) $ (1.59) $ 0
Discontinued operations 0 0 0 0 0
Extraordinary items 0 (.06) 0 0 (.20)
Net income (loss) .66 (.05) (.14) (1.59) (.20)
Dividends per share $ 0 $ 0 $ 0 $ .0625 $ .10
Weighted average shares
outstanding 7,621,403 7,240,926 7,106,082 7,071,097 5,395,895
Non-cash charges $ 2,128 $ 3,040 $ 2,889 $ 3,117 $ 4,415
Note A: Includes 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 consolidated financial statements.
Financial Position
(In thousands except share and per-share data)
Fiscal years ended
October 31, 1996 1995 1994 1993 1992
Current assets 32,640 32,086 37,733 40,651 53,766
Current liabilities 18,436 18,670 23,769 25,376 47,526
Working capital 14,204 13,416 13,964 15,275 6,240
Total assets 45,744 46,881 54,794 59,309 72,879
Long-term debt (less
current maturities) 12,827 17,660 18,401 20,003 1,094
Capitalized leases (less
current maturities) 591 1,746 2,143 2,619 3,080
Shareholders' investment 13,891 8,805 8,994 9,811 21,179
Book value per share 1.91 1.21 1.26 1.38 3.00
Working capital per share 1.95 1.84 1.96 2.16 .88
Financial Comparisons
Gross profit margin 14.6% 11.9% 11.9% 6.5% 12.2%
Net profit margin 3.3% NA NA NA NA
SG&A (includes R&D) as %
of sales 10.0% 9.9% 9.5% 10.2% 9.6%
Current ratio 1.8:1 1.7:1 1.6:1 1.6:1 1.1:1
Long-term debt and
capitalized leases
to shareholders'
investment 1.0:1 2.2:1 2.3:1 2.3:1 0.2:1
Manufacturing space
(000's square feet) 898 978 978 978 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 1996 Compared to Fiscal 1995. Sales for fiscal 1996
increased 8% to $151.9 million compared to $140.7 million in
fiscal 1995. The sales increase for fiscal 1996 was principally
due to improved sales of buses and ambulances. Sales related to
school bus products increased in fiscal 1996, principally due to
higher unit sales to major contractors operating large school bus
fleets. Sales of ambulance products increased in fiscal 1996
principally due to improved sales of units carrying higher sales
prices.
At October 31, 1996, the Company's consolidated sales backlog was
$40.4 million compared to $29.2 million at October 31, 1995. The
Company believes a majority of its consolidated sales backlog
will be shipped in fiscal 1997.
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 fourth year of the contract which was
originally estimated to be approximately $40 million with the
exercise of all extension options.
Cost of sales for fiscal 1996 were 85.4% of sales compared to
88.1% of sales in fiscal 1995. The principal reasons for this
improvement include: lower material costs associated with the
Company's consolidation of certain purchasing operations;
improved efficiencies in the operations of the bus product lines
and change in sales mix in ambulance products to higher margin
units.
Selling, general and administrative expenses for fiscal 1996 were
$15.0 million or 9.9% of sales compared to $13.7 million or 9.7%
of sales in fiscal 1995. The overall dollar increase was
principally due to higher selling expenses and incentive payments
and the impact of an unfavorable jury verdict of certain
litigation.
Interest expense for fiscal 1996 decreased $.5 million over
fiscal 1995. This decrease was principally due to reduced
average borrowings during fiscal 1996. The Company's base
interest rate with its lead Bank will decrease in fiscal 1997 by
1/4% (to prime + 1%) due to the Company meeting certain financial
thresholds at October 31, 1996.
There was no provision for income taxes in fiscal 1996 due to the
Company's utilization of its net operating loss carryforwards
from prior years. As described in Note 4 to the consolidated
financial statements, the Company has available net operating
loss carryforwards of approximately $1.9 million for tax purposes
to offset future taxable income. Additionally, the Company has
general tax and alternative minimum tax credit carryforwards of
approximately $.5 million available to offset future income
taxes.
The Company's income before extraordinary items in fiscal 1996
was $5.0 million ($.66 per share) compared to $.1 million ($.01
per share) in fiscal 1995. Income before extraordinary items
increased in fiscal 1996 principally as a result of improved
sales of ambulance and bus products, lower material costs gained
through the consolidation of certain purchasing operations and
lower interest costs associated with an overall reduction of
interest-bearing debt.
In fiscal 1995, the Company incurred extraordinary net charges of
$.4 million associated with the early retirement of certain debt.
No extraordinary expenses were incurred in fiscal 1996.
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 decline in terminal truck products was partially offset by
selling price increases and increased sales of spare parts. 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 related to charges incurred for restatement of
the 1992 financial statements.
Interest expense of $2.8 million decreased for fiscal 1995 by $.6
million from 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.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has principally relied 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 vehicle deliveries and
the payment terms offered to its customers.
Cash provided by operations was $5.8 million in fiscal 1996
compared to $5.3 million in fiscal 1995. Primary sources of the
1996 cash provided by operations related to the Company's
improved profit levels. The sources of cash from operations were
partially offset by increases in receivables and a reduction in
accounts payable.
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 was $5.2 million in fiscal 1994. The
primary sources of the 1994 cash provided by operations was the
profitable operations of the ambulance, terminal truck and small
school bus product lines; reductions in receivables and increases
in accounts payable to suppliers. In 1994 these sources were
used to reduce accrued expenses.
Cash used in investing activities was $.3 million in fiscal 1996
compared to $.2 million in fiscal 1995. In fiscal 1996, the
principal use of cash for investing activities was for the
acquisition of property and equipment ($.8 million) and certain
other assets ($.2 million). In fiscal 1996, these uses of cash
were partially offset by the proceeds from the sale of certain
property ($.7 million). 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, the cash used in investing activities
was for the acquisition of property and equipment.
Cash used in financing activities was $6.0 million in fiscal 1996
compared to $8.0 million in fiscal 1995. In fiscal 1996, the
Company reduced its long-term borrowings $6.0 million compared to
a net reduction of $3.7 million in fiscal 1995. As described in
Note 2 to the consolidated financial statements, the Company
obtained a $33.05 million credit facility from NationsBank in
fiscal 1995. The proceeds of that 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. The Company
reduced its short-term borrowings by $4.3 million in fiscal 1995
and by $3.6 million in fiscal 1994. The Company reduced its long-
term borrowings by $1.6 million in fiscal 1994.
The Company believes that its cash flows from operations and its
credit facility with NationsBank will be sufficient to satisfy
its future working capital and capital expenditure requirements.
At October 31, 1996 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
interest and principal and are not affected by inflation.
Further, although the Company 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.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
For the years ended October 31,
1996 1995 1994
Sales $151,878,862 $140,725,065 $143,762,767
Cost of sales 129,651,654 123,910,694 126,664,018
Gross profit 22,227,208 16,814,371 17,098,749
Selling, general and
administrative expenses 15,020,673 13,663,037 13,588,494
Research and development
expenses 215,313 261,747 72,236
Income from operations 6,991,222 2,889,587 3,438,019
Other income (expense):
Special non-recurring
expenses 0 0 (1,010,761)
Interest, net (2,241,575) (2,783,198) (3,410,334)
Other, net 262,420 (26,704) 11,588
(1,979,155) (2,809,902) (4,409,507)
Income (loss) before
provision for income
taxes and
extraordinary items 5,012,067 79,685 (971,488)
Provision for income taxes
(Note 4) 0 0 0
Income (loss) before
extraordinary items 5,012,067 79,685 (971,488)
Extraordinary items -
Early retirement of debt
(Note 2) 0 (420,444) 0
Net income (loss) $ 5,012,067 $ (340,759) $ (971,488)
Earnings (loss) per share (Note 1):
Before extraordinary items $ .66 $ .01 $ (.14)
Extraordinary items 0 (.06) 0
Net income (loss) $ .66 $ (.05) $ (.14)
The accompanying notes are an integral part of these statements.
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
October 31,
ASSETS
1996 1995
Current assets:
Cash (Note 1) $ 255,405 $ 842,953
Receivables, less allowance for
doubtful accounts of $98,000 in
1996 and $82,000 in 1995 (Note 2) 8,310,009 7,375,492
Inventories, at the lower of cost
(first-in, first-out) or market
(Notes 1 & 2) 23,615,159 23,466,727
Prepaid expenses and other current
assets 459,275 400,753
Total current assets 32,639,848 32,085,925
Property and equipment, at cost (Notes 1, 2 & 3):
Land and improvements 2,332,717 2,313,339
Buildings and improvements 14,879,948 15,606,637
Machinery and equipment 14,661,124 15,103,215
Office furniture and fixtures 2,736,581 2,129,786
34,610,370 35,152,977
Less - accumulated depreciation 22,573,220 21,730,893
12,037,150 13,422,084
Other assets 1,067,454 1,373,042
$45,744,452 $46,881,051
LIABILITIES & SHAREHOLDERS' INVESTMENT
Current liabilities:
Current maturities of long-term debt
and capitalized leases (Notes 2 & 3) $ 1,125,842 $ 1,158,070
Accounts payable 13,729,044 14,154,891
Accrued expenses 3,580,731 3,357,210
Total current liabilities 18,435,617 18,670,171
Long-term debt (Note 2) 12,827,409 17,659,933
Long-term capitalized leases (Note 3) 590,601 1,745,797
Commitments and contingencies (Note 7)
Shareholders' investment (Notes 2, 5, & 6):
Preferred stock, $.10 par value
Authorized - 750,000 shares
Outstanding - No shares outstanding
Common stock, $.10 par value
Authorized - 17,000,000 shares
Issued - 7,274,110 shares in 1996;
7,286,887 in 1995 727,411 728,689
Capital stock, $.10 par value
Authorized - 3,000,000 shares
Outstanding - No shares outstanding
Paid-in capital 19,701,491 19,593,605
Retained deficit (6,505,077) (11,517,144)
13,923,825 8,805,150
Less - Treasury stock, 6,000 shares,
at cost (33,000) 0
Total shareholders' investment 13,890,825 8,805,150
$45,744,452 $46,881,051
The accompanying notes are an integral part of these balance sheets.
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended October 31,
1996 1995 1994
Cash flow from operations:
Cash received from customers $150,944,345 $141,425,892 $144,853,031
Cash paid to suppliers
and employees (142,919,078) (132,956,101) (137,273,728)
Interest paid, net (2,265,324) (3,209,818) (3,167,373)
Income taxes received 0 0 813,248
Cash provided by operations 5,759,943 5,259,973 5,225,178
Cash flow from investing activities:
Capital expenditures (862,889) (551,528) (657,114)
Sale of property and equipment 668,038 643,667 0
Expenditures for other assets (176,305) (237,519) 0
Other, net 43,613 (57,034) 0
Cash used in investing
activities (327,543) (202,414) (657,114)
Cash flow from financing activities:
Net (reduction) in short-term
borrowings 0 (4,301,111) (3,560,084)
Principal payments of
long-term debt and
capitalized leases (6,019,948) (19,783,293) (1,550,284)
Addition to long-term debt 0 16,055,400 0
Cash used in financing
activities (6,019,948) (8,029,004) (5,110,368)
Net decrease in cash (587,548) (2,971,445) (542,304)
Cash at beginning of year 842,953 3,814,398 4,356,702
Cash at end of year $ 255,405 $ 842,953 $ 3,814,398
Reconciliation of net income (loss)
to net cash provided by operations:
Net income (loss) $ 5,012,067 $ (340,759) $ (971,488)
Depreciation and amortization 2,019,938 2,513,541 2,756,470
Common stock issued for
benefit of employees 108,170 106,365 132,252
Decrease (increase) in
receivables, net (934,517) 700,827 1,903,512
Decrease (increase) in
inventories (148,432) 1,614,442 157,656
Decrease (increase)in
prepaid expenses (58,522) 329,517 97,757
Increase (decrease) in
accounts payable (425,847) 276,782 2,315,358
Increase (decrease) in
accrued expenses 223,521 (261,519) (889,330)
Decrease in reserve for
litigation settlement 0 0 (298,064)
Gain on sale of property
and equipment (36,435) (99,667) 0
Loss on early extinguishment
of debt 0 420,444 0
Other, net 0 0 21,055
Cash provided by operations $ 5,759,943 $ 5,259,973 $ 5,225,178
The accompanying notes are an integral part of these 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, 1993 7,084,680 $708,468 $19,307,300
Stock issued to Tax
Deferred Savings Plan
and Trust (Note 6) 52,668 5,267 126,985
Amortization of deferred
compensation 0 0 22,771
Net loss 0 0 0
Balance October 31, 1994 7,137,348 713,735 19,457,056
Stock issued under
various discretionary
arrangements (Note 5) 110,000 11,000 9,000
Stock issued to Tax
Deferred Savings Plan
and Trust (Note 6) 39,539 3,954 82,410
Amortization of deferred
compensation 0 0 45,139
Net loss 0 0 0
Balance October 31, 1995 7,286,887 $728,689 $19,593,605
Stock issued (rescinded)
under discretionary
arrangements (Note 5) (54,500) (5,450) 18,451
Stock issued to Tax
Deferred Savings Plan
and Trust (Note 6) 31,723 3,172 71,685
Stock issued under
Stock Option Plan (Note 5) 10,000 1,000 17,750
Net income 0 0 0
Purchase of treasury stock 0 0 0
Balance October 31, 1996 7,274,110 $727,411 $19,701,491
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT (CON'T.)
For the years ended October 31,
Retained
Earnings Treasury Stock
(Deficit) Shares Amount
Balance October 31, 1993 $(10,204,897) 0 $ 0
Stock issued to Tax
Deferred Savings Plan
and Trust (Note 6) 0 0 0
Amortization of deferred
compensation 0 0 0
Net loss (971,488) 0 0
Balance October 31, 1994 (11,176,385) 0 0
Stock issued under
various discretionary
arrangements (Note 5) 0 0 0
Stock issued to Tax
Deferred Savings Plan
and Trust (Note 6) 0 0 0
Amortization of deferred
compensation 0 0 0
Net loss (340,759) 0 0
Balance October 31, 1995 (11,517,144) 0 0
Stock issued (rescinded)
under discretionary
arrangements (Note 5) 0 0 0
Stock issued to Tax
Deferred Savings Plan
and Trust (Note 6) 0 0 0
Stock issued under
Stock Option Plan (Note 5) 0 0 0
Net income 5,012,067 0 0
Purchase of treasury stock 0 6,000 (33,000)
Balance October 31, 1996 $(6,505,077) 6,000 $(33,000)
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, 1996
(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 Specialty Vehicle
Manufacturing segment and related vehicle accessories.
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
1996, 1995 and 1994.
(b) Cash and cash management - Cash includes in checking
accounts and funds invested in overnight and other short-term,
interest-bearing accounts.
The Company maintains controlled disbursement account 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,
1996 accounts payable included $1,698,208 in outstanding checks
drawn on controlled disbursement accounts. No controlled
disbursement accounts existed at October 31, 1995.
(c) Inventories - Major classes of inventories which include
material, labor, and manufacturing overhead required in
production of Company products as of October 31, 1996 and 1995:
1996 1995
Chassis $ 6,466,570 $ 6,545,808
Raw materials & components 8,867,477 8,294,483
Work in process 3,061,276 3,400,583
Finished goods 5,219,836 5,225,853
$23,615,159 $23,466,727
(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) 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.
(f) 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 7,621,403 in 1996, 7,240,926 in 1995, and
7,106,082 in 1994.
(g) Reclassification - Certain amounts in the prior year
financial statements have been reclassified to conform with the
1996 presentation.
(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 (the "Bank"), 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. At October 31, 1996 and 1995 the Company was
in compliance with all loan covenants.
The revolving credit facility requires payment of interest (only)
at 1.25% over the Bank's prime rate which was 8.25% at October 31,
1996. The revolving credit facility also provides for a
maximum of $3.0 million in letters of credit, of which, $1.0
million were outstanding at October 31, 1996. The total amount
of unused revolving credit available to the Company at October 31,
1996 was $9.4 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 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, 1996 no borrowings were outstanding
under Term Loan B which expires May 9, 1997.
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, 1996,
the facilities had a net book value of $1,245,000.
In December, 1994 the Company issued $1,201,936 in 8.75%
subordinated debentures maturing January 11, 2000 in settlement
of a class action lawsuit. Interest on the debentures is payable
annually.
Long-term debt at October 31, 1996 and 1995 consists of the
following:
1996 1995
Bank credit facility:
Revolving credit borrowings $ 6,360,948 $10,447,630
Term Loan A, less current
maturities of $620,000 4,701,667 5,321,667
10.75%, Term loan from insurance
company less maturities of
$125,842 in 1996 and
$113,070 in 1995 662,500 788,342
8.75% subordinated debentures
due 2000 1,102,294 1,102,294
$12,827,409 $17,659,933
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.
In June, 1995 the Company retired at less than par value certain
subordinated debentures which would have matured in 2000. 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) 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.
The capitalized leases subject to these agreements follow:
1996 1995
City of Hutchinson, Kansas, 8.25% to
8.5%. Annual principal and sinking
fund payments are approximately
$200,000 from 1997 to 1999. 430,441 651,120
City of South Hutchinson, Kansas,
11.0%. Annual principal and sinking
fund payments range from 180,000
in 1997 to $225,000 in 1999. 540,160 725,000
City of Newton, Kansas, 7.0% to 8.25%. 0 794,677
Total capitalized leases 970,601 2,170,797
Less - current maturities 380,000 425,000
$ 590,601 $1,745,797
During the third quarter of fiscal 1996, the Company deposited
approximately $1,023,000 in cash and U.S. Government securities
into an irrevocable trust to complete an in-substance defeasance
of the Company's 1989 Industrial Revenue Bonds with the City of
Newton, Kansas. The transaction did not result in any material
gain or loss. At October 31, 1996 the principal balance of the
defeased debt was approximately $875,000.
At October 31, 1996, the net book value of manufacturing
facilities subject to these lease purchase agreements was
approximately $2,512,000.
The aggregate maturities of capitalized leases and long-term debt
for the five years subsequent to October 31, 1996 are as follows:
1997 $ 1,125,842
1998 11,602,672
1999 346,478
2000 1,275,779
2001 193,081
(4) Income Taxes
There is no current or deferred tax expense for the years ended
October 31, 1996, 1995 and 1994. The Company in 1996 and 1995
utilized net operating loss carryforwards and in 1994 was in a
loss position. The benefits of timing differences have not
previously been recorded.
The deferred tax consequences of temporary differences in
reporting items for financial statement and income tax purposes
are recognized, if appropriate. Realization of the future tax
benefits related to the deferred tax assets is dependent on many
factors, including the Company's ability to generate taxable
income within the net operating loss carryforward period.
Management has considered these factors in reaching its
conclusion as to the valuation allowance for financial reporting
purposes. The income tax effect of temporary differences
comprising the deferred tax assets and deferred tax liabilities
on the accompanying consolidated balance sheets is a result of
the following:
1996 1995
Deferred tax assets:
Self-insurance reserves $ 292,000 $ 314,000
Vacation 158,000 115,000
Warranty 130,000 122,000
Doubtful accounts 38,000 31,000
Inventories 212,000 264,000
Subordinated debentures 420,000 420,000
Compensation 0 94,000
Revenue recognition 121,000 161,000
Federal tax operating loss and
general tax credit carryforwards 1,233,000 2,994,000
Other 122,000 61,000
$2,726,000 $4,576,000
Deferred tax liabilities:
Depreciation (708,000) (138,000)
Valuation allowance (2,018,000) (4,438,000)
Net deferred tax assets $ 0 $ 0
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, 1996 follows:
1996 1995 1994
Statutory federal income
tax rate 34% (34%) (34%)
Increase (decrease) in
taxes resulting from:
State tax, net of federal benefit 4 0 0
Increase in (utilization of) net
operating loss carryforwards (38) 34 34
Effective tax rate 0 % 0 % 0 %
The Company has available net operating loss carryforwards of
approximately $1,872,000 for tax purposes to offset future
taxable income. The net operating loss carryforwards expire
principally in 2009. General tax and alternative minimum tax
credit carryforwards of approximately $521,000 expire principally
in 1997 to 2006.
(5) Capital Stock
Common Stock - During fiscal 1996 and 1995, the Company awarded
20,500 and 110,000 shares, respectively, of unregistered common
stock to senior management which was treated as compensation.
During fiscal 1996, 75,000 shares awarded in fiscal 1995 were
rescinded.
Warrants which were issued in connection with the 10.5%
subordinated debentures (retired in fiscal 1992) are exercisable
until February 28, 1997. 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.
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 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.
As of October 31, stock options authorized, granted, outstanding
and available for future grants are as follows:
1996 1995 1994
Authorized for grants 1,000,000 1,000,000 750,000
Granted & outstanding 814,500 745,000 600,000
Exercised 10,000 0 0
Exercise price $1.75-$2.13 0 0
Option issue price $1.88-$6.00 $1.75-$2.13 $2.00-$5.00
Available for future grants 175,500 255,000 141,875
In October 1995, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123). This
statement defines a fair value based method of accounting for
employee stock options or similar equity instruments and requires
disclosures. The Company will adopt this standard on November 1,
1996 by making a pro-forma disclosure in the notes to its
consolidated financial statements.
(6) 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 $74,858 in 1996, $86,365 in 1995
and $132,252 in 1994. This plan held 458,588 shares of the
Company's common stock at October 31, 1996 and 423,529 shares at
October 31, 1995.
(7) 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, 1996, the Company
had repurchase agreements covering units with an aggregate
invoice cost of approximately $1,261,000.
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.
The 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:
1997 $159,641
1998 99,723
1999 2,819
$262,183
Operating lease expense was $222,542 in 1996, $167,178 in 1995,
and $146,018 in 1994.
(e) Litigation - At October 31, 1996 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) 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.
(g) 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.
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, 1996 and 1995, and the related
consolidated statements of income, shareholders' investment and
cash flows for each of the three years in the period ended
October 31, 1996. 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,
1996 and 1995, and the results of their operations and their cash
flows for each of the three years in the period ended October 31,
1996, 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 10, 1996
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 28, 1997, 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 28, 1997, 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 28, 1997, 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, 1996
Consolidated Statements of Shareholders' Investment
for the Three Years Ended October 31, 1996
Consolidated Statements of Cash Flows for
the Three Years Ended October 31, 1996
Consolidated Balance Sheets--October 31, 1996 and 1995
(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).
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).
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.)
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).
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, 1996.
COLLINS INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
Balance Charged Deductions Balance at
Beginning to From End of
Classification of Period Income Reserve Period
(In 000s)
ALLOWANCE FOR DOUBTFUL
ACCOUNTS:
For the year ended
October 31, 1996 $ 82 $ 54 $ 38 $ 98
For the year ended
October 31, 1995 $ 95 $ 51 $ 64 $ 82
For the year ended
October 31, 1994 $ 60 $156 $121 $ 95
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 27, 1997
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 27, 1997 /s/ Don L. Collins
Don L. Collins
Dated: January 27, 1997 /s/ Donald Lynn Collins
Donald Lynn Collins
Dated: January 27, 1997 /s/ Lewis W. Ediger
Lewis W. Ediger
Dated: January 27, 1997 /s/ Robert E. Lind
Robert E. Lind