Back to GetFilings.com
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, 1998 or
[ ] Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 (No Fee Required)
For the transition period from _________ to ___________
Commission file number 0-12619
Collins Industries, Inc.
(Exact name of registrant as specified in its charter)
Missouri
(State or other jurisdiction of incorporation)
43-0985160
(I.R.S. Employer Identification Number)
15 Compound Drive Hutchinson, Kansas 67502-4349
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code 316-663-5551
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None N/A
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.10 per share
(Title of class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the registrant's
knowledge, in definitive proxy of information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. (X)
The aggregate market value of voting stock held by non-affiliates
of the registrant was $ 20,377,531 as of January 18, 1999.
The number of shares of Common Stock outstanding on January 18, 1999 was
7,406,481.
Documents Incorporated by Reference
The following are the documents incorporated by reference and the
part of the Form 10-K into which the document is incorporated:
Document: Part of Form 10-K
Proxy Statement for Annual Meeting
of Shareholders on February 26, 1999 Part III
PART I
Item 1. BUSINESS
General Development of Business
Collins Industries, Inc. was founded in 1971 as a manufacturer of
small school buses and ambulances built from modified cargo vans.
The Company's initial product was the first "Type A" school bus,
designed to carry 16 to 20 passengers. Today the Company
manufactures specialty vehicles and accessories for various basic
service niches of the transportation industry. The Company's
products include ambulances, small school buses, shuttle and mid-
size commercial buses, terminal trucks, and commercial bus
chassis. From its inception, Collins' stated goal has been to
become the largest manufacturer of specialty vehicles in the U.S.
The Company has grown primarily through the internal development
of new products and the acquisition of complementary product
lines.
In the U.S., Collins is the largest manufacturer of ambulances,
the second largest manufacturer of terminal trucks and a leading
manufacturer of small school buses, shuttle and mid-size
commercial buses and commercial bus chassis. The Company sells
its products under several well-known trade names, including
Wheeled Coach (ambulances), Collins Bus (small school buses),
World Trans (commercial buses), and Capacity (terminal trucks).
On December 1, 1998, the Company completed the acquisition of all
of the common stock of Mid Bus, Inc., a manufacturer of Type A-I
and A-II school buses.
Most Collins products are built to customer specifications from a
wide range of options offered by the Company. Collins sells to
niche markets which demand manufacturing processes too
sophisticated for small job shop assemblers, but is not the
highly automated assembly line operations of mass production
vehicle manufacturers. The Company emphasizes specialty
engineering and product innovation. In the last few years, it
has introduced new products and product improvements, which
include the Moduvan ambulance, the first ambulance of its size
with advanced life-support system capability, the Dura-Ride
suspension system, the first frame-isolating suspension system
for terminal trucks, and the innovation of a larger seating
capacity, Type A Super Bantam school bus capable of carrying up
to 24 passengers, the largest Type A in the industry.
Description of Business
The Company principally manufactures and markets Specialty
Vehicles.
Ambulances. The Company manufactures both modular and van-type
ambulances at its Hutchinson, Kansas and Orlando, Florida plants.
Modular ambulances are produced by attaching an all-aluminum, box-
type, patient compartment to either a dual rear-wheel cab chassis
("Type I") ambulance or a dual rear-wheel, van-type, cutaway
chassis ("Type III") ambulance or to a single rear-wheel cutaway
chassis ("Moduvan") ambulance. A cutaway chassis consists of
only the front portion of the driver's compartment, engine, drive
train, frame, axle and wheels. Van ("Type II") ambulances are
cargo vans modified to include a patient compartment and a raised
fiberglass roof. Type II ambulances are smaller and less
expensive than modular ambulances.
The Company also produces a limited number of medical support
vans designed to transport medical and life-support equipment.
Medical support vans are modified commercial vehicles which do
not have a patient compartment for advanced life support systems.
Buses. The Company manufactures small school buses, commercial
and shuttle buses at its Hutchinson and South Hutchinson, Kansas
facilities.
School Buses. The Company manufactures small Type A school buses
which carry from 16 to 24 passengers. 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 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 approximately half of the terminal
trucks built by the Company during fiscal 1998.
Bus Chassis. The Company produces a rear-engine bus chassis for
use by the Company and for sale to other manufacturers. This
chassis is suitable for both commercial and large school buses.
To date, the Company has produced and sold limited quantities of
these chassis. The Company plans to continue manufacturing bus
chassis suitable for its own products and for sale to other
manufacturers.
Manufacturing
Manufacturing consists of the assembly of component parts either
purchased from others or fabricated internally. With the
exception of chassis, chassis components and certain terminal
truck components which are purchased from outside suppliers, the
Company fabricates the principal components of its products.
Collins' internal capabilities include CNC punching and forming
of sheet metal, metal stamping, tooling, molding of fiberglass
components, mechanical and electrical component assembly,
upholstery, painting and finishing and Computer-Aided-Design and
Manufacturing (CAD/CAM) systems.
Collins intends to continue to improve its manufacturing
facilities from time-to-time through the selective upgrading of
equipment and the mechanization or automation of appropriate
portions of the manufacturing process. Management believes the
Company's manufacturing facilities are in good condition and are
adequate for the purposes for which they currently are used. The
capacity of the Company's current facilities, particularly if
operated on a multiple shift basis, is considered adequate to
meet current needs and anticipated sales volumes.
New Products
The Company is not presently engaged in activities which would
require a significant amount of expenditures or use of material
amounts of assets for development of products in the planning
stage or otherwise for the foreseeable future.
Suppliers
In order to ensure that it has a readily available supply of
chassis for ambulance and bus production, the Company has entered
into consignment agreements with General Motors Corporation
("GMC") and Ford Motor Company ("Ford"). Under those agreements,
chassis are kept at Company production facilities at no cost to
the Company other than chassis storage costs. When an individual
chassis is selected from the Company's consignment pool for use
in vehicle production, title to the chassis passes to the Company
and the Company becomes liable to the consignor for the cost of
the chassis. Chassis currently in the consignment pool are
supplied by Ford and GMC. While an interruption in supply from
one source may cause a temporary slowdown in production, the
Company believes that it could obtain adequate numbers of chassis
from alternate sources of supply.
The Company uses substantial amounts of steel in the production
of its terminal truck products and purchases certain other major
components (primarily engines, transmissions and axles). Collins
also uses large amounts of aluminum, steel, fiberglass and glass
in the production of ambulances and buses. There is substantial
competition among suppliers of such raw materials and components,
and the Company does not believe that a loss of a single source
of supply would have a material adverse effect on its business.
Patents, Trademarks and Licenses
The Company owns federal registrations for most of the trademarks
which it uses on its products. The Company also owns patents on
its bus body design, ambulance design, Dura-Ride air suspension
system, ambulance warning light system and air-activated bus
door. The Company believes that its patents are helpful, because
they may force competitors to do more extensive design work to
produce a competitive product. The Company believes that its
production techniques and skills are as important as product
design, and, therefore, in management's opinion, any lack of
patent protection would not adversely affect the Company's
business.
Seasonality of Business
Historically a major portion of the Company's net income has been
earned in the second and third fiscal quarters ending April 30
and July 31, respectively. The purchasing patterns of school
districts are typically strongest in the spring and summer months
which accounts for typically stronger sales of small school buses
in the quarters ending April 30 and July 31. Generally, the
Company's sales tend to be lower in the fall and winter months
due to the purchasing patterns of the Company's customers in
general and purchasing activities are normally lower near the end
of the calendar year.
Sales Terms
The Company produces the majority of its products on an order-
only basis. Most products are delivered on a cash basis.
Products sold on a direct basis (not through dealers) are sold on
trade terms common to the respective industry. Finished goods
that are reflected on the financial statements are generally sold
units that are ready for customer delivery. Sales to dealers
have generally been financed through an unrelated third party for
the dealers, resulting in payment generally within days of the
sale.
Customer Concentration
The Company has no single customer whose loss would have a
material adverse effect on the Company as a whole.
Sales Backlog
The sales backlog at October 31, 1998 was approximately $33.6
million. This compares to $45.5 million at October 31, 1997. 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.
Marketing and Distribution
The Company, through its wholly owned subsidiaries, markets its
products throughout the U.S. and, to a limited extent, abroad,
through independent dealers and distributors, Company-owned
stores and the direct sales efforts of Company personnel. Each
of the Company's product groups is responsible for its own
marketing activities and maintains independent relationships with
dealers and distributors. Support is provided to dealers and
distributors in bidding specification writing and customer
service.
The Company regularly advertises in consumer and trade magazines
and other print media and actively participates in national,
regional and local trade shows. In addition, Company
representatives attend a number of national conventions and
regional meetings of important constituent groups such as school
boards and emergency medical groups.
Competition
The markets for most of the Company's product lines are very
competitive, and the Company currently has several direct
competitors in most markets. Some of these competitors may have
greater relative resources. The Company believes it can compete
successfully (i) in the ambulance market on the basis of the
quality and price of its products, its design engineering and
product innovation capabilities and the strength of the Wheeled
Coach brand name, (ii) in the small school bus market on the
basis of its product price and quality and favorable recognition
of its Collins Bus brand name and (iii) in the commercial bus
market on the basis of its various product models, product
quality, price and distribution network.
In the terminal truck market, the Company competes primarily with
one larger domestic competitor, Ottawa Truck which is owned by
Kalmar Industries. Kalmar has international distribution
channels and may have greater relative resources than the
Company. The Company believes it can compete successfully in this
market on the basis of its Capacity brand name, price, product
quality and customer demand for its exclusive Dura-Ride suspension
system.
Research and Development Costs
1998 1997 1996
Research and Development Expenses $185,982 $162,002 $215,313
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 Corporate headquarters 5,000
Hutchinson, Kansas Ambulance production; Wheelchair 300,000
lifts and accessories production;
Office space
Hutchinson, Kansas (1) Building presently leased and 60,000
available for future production
So. Hutchinson, Kansas (1), (2) Small school bus and commercial 250,000
Office space
Orlando, Florida (1) Ambulance production; Office 229,000
space
Longview, Texas 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 "Note 2 to Consolidated
Financial Statements."
(2) This facility and certain related equipment are financed by
industrial revenue bonds in the original principal amounts
of $3,500,000 in 1998 and $1,750,000 in 1984 issued by the
city of South Hutchinson under lease purchase agreements
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
There are no material pending legal proceedings, other than
ordinary routine litigation incidental to the business, to which
the Company is a party or of which any of its property is
subject.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matter to a vote of security
holders during the fourth quarter of the fiscal year ended
October 31, 1998.
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, 1998
there were 650 shareholders of record of the Company's common
stock.
FISCAL 1998
Volume
Quarter High Low (000s)
First 7-3/4 6-1/4 382
Second 7 5-3/4 857
Third 6 4-1/4 710
Fourth 5-5/32 2-7/8 564
FISCAL 1997
Volume
Quarter High Low (000s)
First 6 4-1/2 1,261
Second 5-1/4 4 547
Third 8-1/4 4-1/4 1,660
Fourth 8-7/8 6-1/2 997
During the period covered by this Report, the Company did not
sell any equity securities that were not registered under the
Securities Act.
Item 6. SELECTED FINANCIAL DATA
Operating History
(In thousands except share and per-share data)
Fiscal years ended
October 31, 1998 1997 1996 1995 1994
Sales $156,445 $157,522 $151,879 $140,725 $143,763
Cost of sales 134,544 131,920 129,652 123,911 126,664
Gross profit 21,901 25,602 22,227 16,814 17,099
Selling, general
& administrative
(includes research
& development) 16,124 15,379 15,236 13,925 13,661
Income from
operations 5,777 10,223 6,991 2,889 3,438
Other income (expenses):
Interest, net (1,400) (1,642) (2,241) (2,783) (3,410)
Other, net (Note A) 360 262 262 (27) (999)
Income (loss) from
continuing operations
before provision for
income taxes and
extraordinary
items 4,737 8,843 5,012 79 (971)
Provision for income
taxes 1,710 1,600 - - -
Income (loss) before
extraordinary
items 3,027 7,243 5,012 79 (971)
Extraordinary items - - - (420) -
Net income (loss) $3,027 $7,243 $5,012 $(341) $(971)
Earnings (loss) per
share-basic:
Income (loss) before
extraordinary items $ .40 $ .99 $ .69 $ .01 $(.14)
Extraordinary items - - - (.06) -
Net income (loss) .40 .99 .69 (.05) (.14)
Dividends per share $ .23 $.075 $ - $ - $ -
Weighted average shares
outstanding-basic 7,498,751 7,347,751 7,311,796 7,240,926 7,106,082
Non-cash charges $ 1,795 $ 1,782 $ 2,128 $ 3,040 $ 2,889
Note A: Includes non-recurring expenses of $1,010,761 in
1994 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, 1998 1997 1996 1995 1994
Current assets $31,747 $34,002 $32,640 $32,086 $37,733
Current liabilities 16,072 18,959 18,436 18,670 23,769
Working capital 15,675 15,043 14,204 13,416 13,964
Total assets 49,076 47,163 45,744 46,881 54,794
Long-term debt and
capitalized leases
(less current
maturities) 12,733 8,362 13,418 19,406 20,544
Shareholders'investment 20,271 19,842 13,891 8,805 8,994
Book value per share 2.73 2.69 1.91 1.21 1.26
Financial Comparisons
Fiscal years ended
October 31, 1998 1997 1996 1995 1994
Gross profit margin 14.0% 16.3% 14.6% 11.9% 11.9%
Net profit margin 1.9% 4.6% 3.3% NA NA
Selling, general and
administrative
(including R&D) as
percent of sales 10.3% 9.8% 10.0% 9.9% 9.5%
Current ratio 2.0:1 1.8:1 1.8:1 1.7:1 1.6:1
Long-term debt and
capitalized leases
to shareholders'
investment 0.6:1 0.4:1 1.0:1 2.2:1 2.3:1
Manufacturing space
(000's square feet) 988 898 898 978 978
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis provides information which
management believes is relevant to an assessment and
understanding of the Company's consolidated results of operations
and financial condition. The discussion should be read in
conjunction with the consolidated financial statements and notes
thereto.
RESULTS OF OPERATIONS
Fiscal 1998 Compared to Fiscal 1997. Sales for fiscal 1998
decreased slightly to $156.4 million compared to $157.5 million
in fiscal 1997. This decrease was principally due to lower sales
of ambulances and terminal trucks and was partially offset by
higher sales of bus products.
At October 31, 1998, the Company's consolidated sales backlog was
$33.6 million compared to $45.5 million at October 31, 1997. The
Company believes a majority of its consolidated sales backlog
will be shipped in fiscal 1999.
Cost of sales for fiscal 1998 was 86.0% of sales compared to
83.7% of sales in fiscal 1997. The percentage increase was
principally due to the impact of higher program discounts and
sales incentives in fiscal 1998 on closing out 1997 models, wage
increases in fiscal 1998 at rates higher than inflation due to
work force shortages in all geographic areas, and a one-time $1.2
million gain from the sale of the Company's UVL product line in
fiscal 1997 which was recorded as a reduction of cost of sales.
Selling, general and administrative expenses for fiscal 1998 were
$15.9 million or 10.2% of sales compared to $15.2 million or 9.6%
of sales in fiscal 1997. These increases principally resulted
from higher marketing expenses associated with direct sales
personnel and advertising.
Interest expense decreased principally due to negotiation of
lower interest rates with its lead Bank. This decrease was
partially offset by additional borrowings from its lead Bank and
from additional IRB ("Industrial Revenue Bond") debt which were
principally used to fund capital expenditures.
Income tax expense in fiscal 1998 was $1.7 million. Income tax
expense as a percentage of pretax income was 36% in fiscal 1998
compared to 18% in fiscal 1997. Income tax expense as a percent
of pretax income increased principally as a result of the
utilization of net operating loss carryforwards and general
business tax credits in fiscal 1997. All net operating loss
carryforwards and business tax credits were utilized in fiscal
1997.
The Company's net income in fiscal 1998 decreased to $3.0 million
($.40 per share-basic) compared to $7.2 million ($.99 per share-
basic) in fiscal 1997. This decrease principally resulted from
profit declines from ambulance and terminal truck products,
higher income taxes and the one-time gain from the sale of the
UVL product line recorded in fiscal 1997. These decreases were
partially offset by higher profit contributions from bus products
and lower interest costs.
Fiscal 1997 Compared to Fiscal 1996. Sales for fiscal 1997
increased to $157.5 million compared to $151.9 million. The
sales increase for fiscal 1997 was principally due to improved
sales of terminal truck products. The sales increase of terminal
trucks was principally due to a sales contract with U.S. Postal
Service.
Cost of sales for fiscal 1997 was 83.7% of sales compared to
84.5% of sales in fiscal 1996. The principal reasons for this
improvement include: The $1.2 million gain from the sale of the
Company's UVL product line which was recorded as a reduction of
cost of sales and lower material costs associated with an
improved sales mix in ambulance products.
Selling, general and administrative expenses for fiscal 1997 were
$15.2 million or 9.6% of sales compared to $15.0 million or 9.9%
of sales in fiscal 1996. The overall dollar increase was
principally due to higher marketing and selling expenses
associated with new sales personnel and the addition of a
corporate telemarketing center.
Interest expense for fiscal 1997 decreased $.6 million over
fiscal 1996. This decrease was principally due to reduced
average borrowings during fiscal 1997.
Income tax expense in fiscal 1997 was $1.6 million. Income tax
expense as a percentage of pretax income was 18% in fiscal 1997
and was less than the Federal statutory rate principally due to
the utilization of net operating loss carryforwards and general
business tax credits. 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.
The Company's income before extraordinary items in fiscal 1997
increased to $7.2 million ($.99 per share-basic) compared to $5.0
million ($.69 per share-basic) in fiscal 1996. This increase was
principally a result of profit improvements from ambulance and
terminal truck products, the gain from the sale of the UVL
product line and lower interest costs associated with an overall
reduction in interest-bearing debt. These increases were
partially offset by income taxes of $1.6 million in fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has principally relied on internally
generated funds, supplier financing, bank borrowings and
industrial revenue bonds to finance its operations and capital
expenditures. The Company's working capital requirements vary
from period to period depending on the production volume, the
timing of vehicle deliveries and the payment terms offered to its
customers.
Cash provided by operations was $4.1 million in fiscal 1998
compared to $8.1 million in fiscal 1997. Principal sources of
the 1998 cash provided by operations were from Company profits
and reductions of accounts receivable, inventories and prepaid
expenses. These sources of cash from operations were offset by
reductions in accounts payable and accrued expenses.
Cash provided by operations was $8.1 million in fiscal 1997
compared to $5.8 million in fiscal 1996. Primary sources of the
1997 cash provided by operations related to the Company's
improved profit levels and reductions in accounts receivable.
The sources of cash from operations were partially offset by
increased income taxes paid ($1.6 million) and increases in
inventories ($2.1 million) and a prepaid expense ($.9 million).
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 used in investing activities was $5.8 million in fiscal 1998
compared to $1.8 million in fiscal 1997. In fiscal 1998 the
principal use of cash for investing purposes was for the
acquisition of new property and equipment ($6.0 million).
Approximately $3.8 million of fiscal 1998 capital expenditures
related to the Company's expansion of its bus production
facilities. Cash used in investing activities was $1.8 million
in fiscal 1997 compared to $.3 million in fiscal 1996. In fiscal
1997 the principal use of cash for investing activities related
to the acquisition of property and equipment ($.8 million) and
certain other assets ($.2 million).
Cash provided by financing activities was $1.7 million in fiscal
1998 compared to cash used in financing activities of $6.4
million in fiscal 1997. In fiscal 1998, the Company made
additional long-term borrowings of $6.4 million and used cash of
$2.2 million to reduce other long-term debt, $.9 million to
purchase and retire common stock and $1.7 million to pay cash
dividends. Cash used in financing activities was $6.4 million in
fiscal 1997 compared to $6.0 million in fiscal 1996. In fiscal
1997 the Company used cash to reduce its long-term borrowings by
$5.1 million, to purchase and retire common stock of $.8 million
and to pay cash dividends totalling $.6 million. 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 net long-term borrowings by $6.0 million compared to a net
reduction of $3.7 million in fiscal 1995.
The Company believes that its cash flows from operations and its
credit facility with its lead Bank will be sufficient to satisfy
its future working capital, capital expenditure requirements and
anticipated dividends.
At October 31, 1998 there were no significant or unusual
contractual commitments or capital expenditure commitments.
On December 1, 1998, the Company completed the purchase of all of
the common stock, of Mid Bus, Inc., a manufacturer of Type A-I
and A-II school buses. The purchase was financed through
borrowings on the Company's revolving credit facility.
Recently Issued Accounting Standards
Statement of Financial Accounting Standards (SFAS) No. 130,
"Reporting Comprehensive Income" and Statement of Financial
Accounting Standards (SFAS) No.131, "Disclosure about Segments of
an Enterprise and Related Information" are effective for the
Company's 1999 fiscal year and are not expected to have a
material effect on the Company's financial position or results of
operations.
Year 2000 Issue
The Year 2000 ("Y2K") issue is the result of computer programs
being written using two digits rather than four to define the
applicable year. The Company's computer equipment and software
and devices with imbedded technology that are time-sensitive may
recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations
causing disruptions of operations, including, among other things,
a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
The Company has developed and begun implementing a plan intended
to ensure that its computer equipment and software will function
properly with respect to dates in the year 2000 and thereafter.
For this purpose, the term "computer equipment and software"
includes systems that are commonly thought of as information
technology ("IT") systems, including accounting, data processing
and telephone/PBX systems, hand-held terminals, scanning
equipment, and other miscellaneous systems, as well as systems
that are not commonly thought of as IT systems, such as alarm
systems, fax machines, or other miscellaneous systems. Both IT
and non-IT systems may contain imbedded technology, which
complicates the Company's Y2K identification, assessment,
remediation, and testing efforts. Based upon its identification
and assessment efforts to date, the Company believes that certain
of the computer equipment and software that it currently uses
will require replacement or modification. A substantial portion
of the Company's software relates to prepackaged, copyrighted
software written by Mapics, Actionware and American Viking.
The Company has obtained Y2K compliant versions of these software
packages and has or intends to convert to the Y2K versions of
such software in 1999. Additionally, in the ordinary course of
replacing computer equipment and software, the Company attempts
to obtain replacements that are Y2K compliant. The Company
expects that its overall Y2K plan, which began in fiscal 1998,
will be completed by October 31, 1999. However, the Company is
in the process of developing a contingency plan for certain
internal systems.
The Company has also contacted significant suppliers such as
Ford, General Motors and Cummins concerning the Company's use of
embedded technology from such vendors.
The cost of the Y2K issue is not expected to have a materially
adverse impact on the Company's results of operation or adversely
affect the Company's relationships with customers, vendors or
others. Additionally, there can be no assurance that the Y2K
issues of other entities will not have a material adverse impact
on the Company's systems or results of operations.
Cautionary Statement Regarding Risks and Uncertainties That May
Affect Future Results
This annual report and other written reports and oral statements
made from time to time by the Company may contain so-called
"forward-looking statements" about the business, financial
conditions, prospects of the Company and year 2000 issues, all of
which are subject to risks and uncertainties. One can identify
these forward-looking statements by their use of words such as
"expects", "plans", "will", "estimates", "forecasts", "projects",
and other words of similar meaning. One can also identify them
by the fact that they do not relate strictly to historical or
current facts. One should understand that it is not possible to
predict or identify all factors which involve risks and
uncertainties. Consequently, the reader should not consider any
such list or listing to be a complete statement of all potential
risks or uncertainties.
No forward-looking statement can be guaranteed and actual future
results may vary materially. The actual results of the Company
could differ materially from those indicated by the forward-
looking statements because of various risks and uncertainties
including without limitation, changes in product demand, the
availability of vehicle chassis, adequate direct labor pools,
changes in competition, interest rate fluctuations, development
of new products, various inventory risks due to changes in market
conditions, changes in tax and other governmental rules and
regulations applicable to the Company, substantial dependence on
third parties for product quality, reliability and timely
fulfillment of orders and other risks indicated in the Company's
filings with the Securities and Exchange Commission.
Additionally, the Company's recent acquisition of Mid Bus, Inc.
involves certain risks and uncertainties including without
limitation, the Company's ability to operate Mid Bus profitably
and to retain Mid Bus' customers, suppliers and labor force.
The Company does not assume the obligation to update any forward-
looking statement. One should carefully evaluate such statements
in light of factors described in the Company's filings with the
Securities and Exchange Commission, especially on Forms 10-K, 10-
Q and 8-K (if any).
Quantative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk relating to interest rates
on its fixed rate debt. Interest rate risk is not material to
the Company's consolidated financial position or results of
operations.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
For the years ended October 31,
1998 1997 1996
Sales $156,445,451 $157,522,016 $151,878,862
Cost of sales 134,544,521 131,919,939 129,651,654
Gross profit 21,900,930 25,602,077 22,227,208
Selling, general and
administrative expenses 15,937,649 15,216,609 15,020,673
Research and development
expenses 185,982 162,002 215,313
Income from operations 5,777,299 10,223,466 6,991,222
Other income (expense):
Interest, net (1,399,984) (1,642,573) (2,241,575)
Other, net 359,785 262,323 262,420
(1,040,199) (1,380,250) (1,979,155)
Income before provision
for income taxes 4,737,100 8,843,216 5,012,067
Provision for income taxes 1,710,000 1,600,000 -
Net income $3,027,100 $7,243,216 $5,012,067
Earnings per share
Basic $ .40 $ .99 $ .69
Diluted $ .39 $ .94 $ .66
Dividends per share $ .23 $ .075 $ -
The accompanying notes are an integral part of these statements.
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
October 31,
ASSETS 1998 1997
Current assets:
Cash $ 143,995 $ 189,152
Receivables 5,346,051 6,745,973
Inventories 25,271,242 25,686,022
Prepaid expenses and other current 985,420 1,380,998
Total current assets 31,746,708 34,002,145
Property and equipment, at cost:
Land and improvements 2,538,457 2,341,943
Buildings and improvements 17,466,615 15,072,087
Machinery and equipment 14,498,992 11,817,691
Office furniture and fixtures 3,279,853 3,000,769
37,783,917 32,232,490
Less - accumulated depreciation 21,038,717 19,800,671
16,745,200 12,431,819
Other assets 584,141 729,166
$49,076,049 $47,163,130
LIABILITIES & SHAREHOLDERS'INVESTMENT
Current liabilities:
Current maturities of long-term debt
and capitalized leases $ 1,108,750 $ 1,094,948
Accounts payable 12,017,444 14,200,975
Accrued expenses 2,946,167 3,663,382
Total current liabilities 16,072,361 18,959,305
Long-term debt and capitalized leases 12,733,085 8,361,887
Commitments and contingencies
Shareholders' investment:
Preferred stock, $.10 par value
Authorized - 750,000 shares
Outstanding - No shares outstanding
Capital stock, $.10 par value
Authorized - 3,000,000 shares
Outstanding - No share oustanding
Common stock, $.10 par value
Authorized - 17,000,000 shares
Issued - 7,430,881 shares in 1998;
7,385,681 in 1997 743,088 738,568
Paid-in capital 18,051,859 18,918,903
Retained earnings 1,475,656 184,467
Total shareholders' investment 20,270,603 19,841,938
$49,076,049 $47,163,130
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,
1998 1997 1996
Cash flow from operations:
Cash received from
customers $157,845,373 $159,086,052 $150,944,345
Cash paid to suppliers
and employees (150,697,953) (147,534,561) (142,919,078)
Interest paid, net (1,456,095) (1,759,087) (2,265,324)
Income taxes paid (1,628,444) (1,650,700) -
Cash provided by
operations 4,062,881 8,141,704 5,759,943
Cash flow from investing activities:
Capital expenditures (5,958,283) (1,731,543) (862,889)
Sale of property and
equipment 478,150 16,500 668,038
Expenditures for other
assets (284,849) (97,995) (176,305)
Other, net - - 57,863
Cash used in
investing activities (5,764,982) (1,813,038) (313,293)
Cash flow from financing activities:
Principal payments of
long-term debt and
capitalized leases (2,168,041) (5,087,017) (6,019,948)
Addition to long-term
debt and capitalized leases 6,423,421 - -
Purchase of common stock
and other capital
transactions (862,525) (754,230) (14,250)
Payment of dividend (1,735,911) (553,672) -
Cash provided by (used
in) financing
activities 1,656,944 (6,394,919) (6,034,198)
Net decrease in cash (45,157) (66,253) (587,548)
Cash at beginning of year 189,152 255,405 842,953
Cash at end of year $143,995 $189,152 $255,405
Reconciliation of net income
to net cash provided by operations:
Net income $3,027,100 $7,243,216 $5,012,067
Depreciation and
amortization 1,795,336 1,781,740 2,019,938
Common stock issued for
benefit of employees - - 108,170
Decrease (increase) in
receivables 1,399,922 1,564,036 (934,517)
Decrease (increase) in
inventories 414,780 (2,070,863) (148,432)
Decrease (increase) in
prepaid expenses 395,578 (921,723) (58,522)
Increase (decrease) in
accounts payables (2,183,531) 471,931 (425,847)
Increase (decrease) in
accrued expenses (717,215) 82,651 223,521
Gain on sale of property
and equipment (69,089) (9,284) (36,435)
Cash provided by
operations $4,062,881 $8,141,704 $5,759,943
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, 1995 7,286,887 $ 728,689 $ 19,593,605
Stock issued (rescinded)
under various discretionary
arrangements (54,500) (5,450) 18,451
Stock issued to Tax Deferred
Savings Plan and Trust 31,723 3,172 71,685
Stock issued under Stock
Option Plans 10,000 1,000 17,750
Net income - - -
Purchase of treasury stock - - -
Balance October 31, 1996 7,274,110 727,411 19,701,491
Stock issued under Stock
Option Plans 275,196 27,520 (86,097)
Amortization of deferred
compensation - - 15,799
Net income - - -
Cash dividends paid - - -
Purchase of treasury stock - - -
Retirement of treasury stock (163,625) (16,363) (934,825)
Tax benefit from exercise of
stock options - - 222,535
Balance October 31, 1997 7,385,681 738,568 18,918,903
Stock issued under Stock
Option Plans 228,500 22,850 75,028
Net income - - -
Cash dividends paid - - -
Purchase of treasury stock - - -
Retirement of treasury stock (183,300) (18,330) (955,729)
Tax benefit from exercise of
stock options - - 13,657
Balance October 31, 1998 7,430,881 $743,088 $18,051,859
The accompanying notes are an integral part of these statements.
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, 1995 (11,517,144) - $ -
Stock issued (rescinded) under
various discretionary
arrangements - - -
Stock issued to Tax Deffered
Savings Plan and Trust - - -
Stock issued under Stock
Option Plans - - -
Net income 5,012,067 - -
Purchase of treasury stock - 6,000 (33,000)
Balance October 31, 1996 (6,505,077) 6,000 (33,000)
Stock issued under Stock
Option Plans - - -
Amortization of deferred
compensation - - -
Net income 7,243,216 - -
Cash dividends paid (553,672) - -
Purchase of treasury stock - 157,625 (918,188)
Retirement of treasury stock - (163,625) 951,188
Tax benefit from exercise of
stock options - - -
Balance October 31, 1997 184,467 - -
Stock issued under Stock
Option Plans - - -
Net income 3,027,100 - -
Cash dividends paid (1,735,911) - -
Purchase of treasury stock - 183,300 (974,059)
Retirement of treasury stock - (183,300) 974,059
Tax benefit from exercise of
stock options - - -
Balance October 31, 1998 $1,475,656 - $ -
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, 1998
(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
1998, 1997 and 1996.
(b) Cash and Cash Management - Cash includes checking accounts
and funds invested in overnight and other short-term, interest-
bearing accounts of three months or less.
The Company maintains controlled disbursement accounts with its
lead bank under an arrangement whereby all cash receipts and
checks are centralized and presented to the bank daily. All
deposits are applied directly against the Company's revolving
credit line and all checks presented for payment in the
controlled disbursement accounts are funded through borrowings
under the Company's revolving credit facility. At October 31,
1998 and 1997 accounts payable included outstanding checks drawn
on controlled disbursement accounts of $3,122,255 and $2,082,355,
respectively.
(c) Inventories - Inventories are stated at the lower of cost
(first-in, first-out) or market. Major classes of inventories
which include material, labor, and manufacturing overhead
required in production of Company products consisted of the
following as of October 31, 1998 and 1997:
1998 1997
Chassis $ 7,916,058 $ 7,675,115
Raw materials & components 8,871,980 8,673,308
Work-in-process 3,408,167 4,173,173
Finished goods 5,075,037 5,164,426
$25,271,242 $25,686,022
(d) Depreciation and Maintenance - Depreciation is provided
using the straight-line method for financial reporting purposes
and accelerated methods for income tax purposes. The estimated
useful lives of property are as follows:
Land improvements 10 to 20 years
Buildings and improvements 10 to 30 years
Machinery and equipment 3 to 15 years
Office furniture and fixtures 3 to 10 years
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 - During the first quarter of fiscal
1998, the Company adopted Statement of Financial Accounting No.
128, "Earnings Per Share". Prior period earnings per share has
been restated to reflect current presentation. Basic earnings
per share is computed based on the weighted average number of
common shares outstanding. Potentially dilutive shares,
calculated using the treasury stock method, consist of shares
issued under the Company's stock option plans.
The following is a reconciliation of shares used to calculate
basic and diluted earnings per share:
1998 1997 1996
Average share outstanding for basic 7,498,751 7,347,751 7,311,796
Effect of potentially dilutive shares 186,516 363,470 309,607
Average shares outstanding for diluted 7,685,267 7,711,221 7,621,403
(g) Cost of Sales - Cost of sales for the year ended October 31,
1997 has been reduced by the $1.2 million gain from the sale of
the Company's UVL product line which was completed in May, 1997.
(2) Long-term Debt and Capitalized Leases
Long-term debt and capitalized leases at October 31, 1998 and
1997 consist of the following:
1998 1997
Bank credit facility:
Revolving credit borrowings $ 7,873,921 $4,780,277
Term Loan A 2,655,517 3,474,167
Capitalized leases:
City of South Hutchinson, Kansas, 4.75%-11%.
Annual principal and sinking fund payments
range from $519,000 in 1999 to $323,000 in
2007 3,312,397 375,000
City of Hutchinson, Kansas, 8.25% to
8.5% due in 1998 - 164,891
10.75%, Term Loan from insurance company - 662,500
13,841,835 9,456,835
Less - current maturities 1,108,750 1,094,948
$12,733,085 $8,361,887
At October 31, 1997, the Company had a Loan Agreement with
NationsBank of Georgia, N.A., Atlanta, Georgia (the "Bank") for
a revolving credit facility of $25.0 million and a long-term
credit facility of $8.05 million. The revolving credit facility
required payment of interest (only) at 1% over the Bank's prime
rate which was 8.50% at October 31, 1997. The long-term facility
included a $6.2 million term loan which was payable in monthly
installments of $49,167 plus interest at 1% over the Bank's prime
rate.
On July 31, 1998, the Company entered into a new Loan Agreement
for a revolving credit facility of $17.0 million and a long-term
credit facility (Term Loans A and B) of $5.1 million. Both
credit facilities bear interest based on a combination of
Eurodollar (LIBOR plus 1.75%) and the Bank's prime lending rate
(8% at October 31, 1998) and mature May 31, 2001. The revolving
credit facility also provides for a maximum of $3.0 million in
letters of credit, of which $1.2 million were outstanding at
October 31, 1998. The long-term credit facility also provides
for an additional $2.0 million credit line (Term Loan B) for
future capital expenditures. The total amount of unused
revolving credit available to the Company was $3.7 million at
October 31, 1998. At October 31, 1998 no borrowings were
outstanding under Term Loan B.
The credit facility is collateralized by receivables,
inventories, equipment and certain real property. Under the
terms of the Agreement, the Company is required to maintain
certain financial ratios and other financial conditions. The
Agreement also prohibits the Company from incurring certain
additional indebtedness, limits certain investments, advances or
loans and restricts substantial asset sales and capital
expenditures. At October 31, 1998 and 1997 the Company was in
compliance with all loan covenants.
Certain of the Company's manufacturing facilities were financed
from the proceeds of industrial revenue bonds. Lease purchase
agreements with the respective cities provide that the Company
may purchase the manufacturing facilities at any time during the
lease terms by paying the outstanding principal amount of the
bonds plus a nominal amount.
In 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, 1998 the principal balance of the defeased debt was
approximately $740,000.
At October 31, 1998, the net book value of manufacturing
facilities subject to these lease purchase agreements was
approximately $3,334,000.
In March, 1998, the Company retired at par value a 10.75% term
loan from an insurance company.
During the fourth quarter of fiscal year 1998, the Company
defeased the 1979 Industrial Revenue Bonds with the City of
Hutchinson, Kansas. The transaction did not result in any gain
or loss. At October 31, 1998, the principal balance of the
defeased debt was approximately $400,000.
The carrying amount of the Company's long-term obligations does
not differ materially from fair value based on current market
rates available to the Company.
The aggregate maturities of capitalized leases and long-term debt
for the year subsequent to October 31, 1998 are as follows:
1999 $1,108,750
2000 893,750
2001 9,668,188
2002 335,000
2003 353,750
2004 and thereafter 1,482,397
(3) Income Taxes
The provision for income taxes for the year ended October 31,
1998 includes current income tax expense of $1,424,000 and
deferred income tax expense of $286,000.
The provision for income taxes for the year ended October 31,
1997 includes current income tax expense of $1,954,000 and
deferred income tax benefits of $354,000.
There was no current or deferred tax expense for the years ended
October 31, 1996. The Company utilized net operating loss
carryforwards in 1997 and 1996. The benefits of temporary
differences were not recorded prior to 1997.
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. 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:
1998 1997
Deferred tax assets:
Self-insurance reserves $ 88,000 $ 106,000
Vacation 172,000 153,000
Warranty 82,000 88,000
Doubtful accounts 10,000 15,000
Inventories 265,000 349,000
Amortization 198,000 189,000
Revenue recognition 40,000 80,000
Other - 58,000
855,000 1,038,000
Deferred tax liabilities:
Depreciation (765,000) (684,000)
Other (22,000) -
(787,000) (684,000)
Net deferred tax assets $ 68,000 $ 354,000
A reconciliation between the statutory federal income tax rate
(34%) and the effective rate of income tax expense for each of
the three years during the period ended October 31, 1998 follows:
1998 1997 1996
Statutory federal income tax rate 34% 34% 34%
Increase (decrease) in taxes
resulting from:
State tax, net of federal benefit 3 4 4
Utilization of net operating loss
carryforwards - (14) (38)
Decrease in tax asset valuation
allowance - (9) -
Other (1) 3 -
Effective tax rate 36% 18% -
(4) Capital Stock
Preferred Stock - On March 28, 1995 the Company's Board of
Directors adopted a stockholders rights plan (Plan) and declared
a dividend distribution of one right (Right) for each outstanding
share of common stock to stockholders of record on April 20,
1995. Under the terms of the Plan each Right entitles the holder
to purchase one one-hundredth of a share of Series A
Participating Preferred Stock (Unit) at an exercise price of
$7.44 per Unit. The Rights are exercisable a specified number of
days following (i) the acquisition by a person or group of
persons of 20% or more of the Company's common stock or (ii) the
commencement of a tender offer or an exchange offer for 20% or
more of the Company's common stock or (iii) when a majority of
the Company's unaffiliated directors (as defined) declares that a
person is deemed to be an adverse person (as defined) upon
determination that such adverse person has become the beneficial
owner of at least 10% of the Company's common stock. The Company
has authorized and reserved 750,000 shares of preferred stock,
$.10 par value, for issuance upon the exercise of the Rights.
The Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right in accordance with the provisions of the
plan. Rights expire on April 1, 2005 unless redeemed by the
Company.
Stock-Based Compensation Plans - The Company has two shareholder-
approved stock plans, the 1997 Omnibus Incentive Plan (the "1997
Plan") and 1995 Stock Option Plan (the "1995 Plan"). Under the
1997 Plan, directors, officers and key employees may be granted
stock options and other stock-based awards. A total of 2,000,000
shares may be granted under the 1997 Plan. At October 31, 1998,
options for 675,000 shares were outstanding under the 1997 Plan.
Under the 1995 Plan, a total of 1,000,000 shares of the Company's
common stock were available for grant to officers, directors and
key employees. As of October 31, 1998, all of these shares had
been granted and options for 248,200 shares were outstanding
under the 1995 Plan.
Under both plans, the exercise price of all options granted
through October 31, 1998 equaled the stock's market price on the
date of grant and fully vested six months after the date of
grant. The expiration dates of the options range from 5 to 10
years. Options outstanding at October 31, 1998 had a weighted
average contractual life of eight years, five months and exercise
prices ranged from $1.75 to $5.13.
A summary of the Company's two stock option plans at October 31,
1998, 1997 and 1996 and changes during the years then ended are
presented in the table following:
1998 1997 1996
Per Per Per
Shares Share(a) Shares Share(a) Shares Share(a)
Outstanding at
beginning
of year 1,072,400 $3.57 814,500 $1.89 745,000 $1.80
Granted 182,500 4.33 677,300 4.55 147,000 2.27
Exercised (318,000) 1.82 (411,400) 1.84 (10,000) 1.88
Forfeited (13,700) 6.26 (8,000) 4.81 (67,500) 1.86
Outstanding at
end of year 923,200 $4.11 1,072,400 $3.57 814,500 $1.89
Exercisable at
end of year 748,200 $4.08 1,069,900 $3.56 797,000 $1.82
Weighted average
fair value
of options $2.08 $1.50 $ .81
(a) Weighted average exercise price per share.
The fair value of each option grant is estimated using the Black-
Scholes option pricing model with the following assumptions used
for grants in 1998, 1997 and 1996 respectively: Risk free
interest rate ranging from 5.33% to 6.76% for the 1997 Plan
options and ranging from 5.36% to 7.37% for the 1995 Plan
options; expected dividend yield of 1.5%; expected life of four
years; and expected volatility of 50.5% for options granted prior
to fiscal 1998 and 47.5% for options granted in fiscal 1998.
The Company applies Accounting Principles Board Opinion No. 25,
accounting for Stock Issued to Employees, in accounting for its
Plans. Accordingly, no compensation expense has been recognized
for its stock-based compensation plans other than for restricted
stock awards, which was not significant.
Had compensation cost for the Company's stock options been
determined consistent with the methodology prescribed under FASB
Statement No. 123, "Accounting for Stock-Based Compensation", the
Company's net income and income per share would have been reduced
to the following pro forma amounts:
1998 1997 1996
Net income:
As reported $3,027,100 $7,243,216 $5,012,067
Pro forma 2,675,035 6,993,318 4,940,057
Diluted earnings per share
As reported $ .39 $ .94 $ .66
Pro forma .35 .91 .65
(5) Tax Deferred Savings Plan and Trust
In 1985 the Company made available to all eligible employees the
opportunity to participate in the Company's Tax Deferred Savings
Plan and Trust. The Company provides a 50% matching contribution
in the form of cash or unregistered common stock of the Company
on the eligible amount invested by participants in the plan to
purchase common stock of the Company. The Company's contribution
to this plan was $75,269 in 1998, $71,130 in 1997 and $74,858 in
1996. This plan held 425,279 shares of the Company's common
stock at October 31, 1998 and 405,325 shares at October 31, 1997.
(6) Commitments and Contingencies
(a) General - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
(b) Letters of Credit - The Company has outstanding letters of
credit as more fully described in Note 2.
(c) Operating Leases - The Company has operating leases
principally for certain vehicles and equipment. Future lease
payments required under these operating leases are not material.
Operating lease expense was $351,435 in 1998, $184,813 in 1997
and $222,542 in 1996.
(d) Litigation - At October 31, 1998 the Company has litigation
pending which arose in the ordinary course of business.
Litigation is subject to many uncertainties and the outcome of
the individual matters is not presently determinable. It is
management's opinion that this litigation will not result in
liabilities that would have a material adverse effect on the
Company's financial position or results of operations.
(e) Self-insurance Reserves - The Company is self-insured for
workers compensation, health insurance, general liability and
product liability claims, subject to specific retention and
reinsurance levels.
(f) Chassis Contingent Liabilities - The Company obtains certain
vehicle chassis from two automotive manufacturers under
agreements that do not transfer the vehicle's certificate of
origin to the Company and, accordingly, the Company accounts for
the chassis as consigned inventory. Chassis are typically
converted and delivered to customers within 90 days.
(7) Subsequent Event
On December 1, 1998, the Company completed the acquisition of all
of the common stock of Mid Bus, Inc., a manufacturer of Type A-I
and A-II school buses. The acquisition, which was financed
through borrowings on the Company's revolving credit facility,
will be accounted for as a purchase.
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, 1998 and 1997, and the related
consolidated statements of income, shareholders' investment and
cash flows for each of the three years in the period ended
October 31, 1998. 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,
1998 and 1997, and the results of their operations and their cash
flows for each of the three years in the period ended October 31,
1998, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Kansas City, Missouri
December 1, 1998
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 26, 1999, 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 26, 1999, 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 26, 1999, 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, 1998
Consolidated Statements of Shareholders' Investment
for the Three Years Ended October 31, 1998
Consolidated Statements of Cash Flows for
the Three Years Ended October 31, 1998
Consolidated Balance Sheets--October 31, 1998
and 1997
(2) Financial Statement Schedules:
All schedules have been omitted as not applicable
or not required under the instructions contained in
Regulation S-X or the information is included in
the financial statements or notes thereto.
(3) Exhibits:
Exhibit Number Document
3.1 - Certificate of Incorporation of
Registrant, as amended (included as
Exhibit 3.1 of the Company's Amendment
No. 2 to Form S-1, No. 2-93247 and
incorporated herein by reference).
3.2 - Amendment to Certificate of
Incorporation of Registrant (included
as Exhibit 3.3 of the Company's
Amendment No. 1 to Form S-1,
No. 2-93247 and incorporated herein
by reference).
3.3 - Amendment to Certificate of
Incorporation of Registrant (included
as Exhibit 3.3(c) of the Company's
Amendment No. 1 to Form S-1,
No. 33-48323 and incorporated herein
by reference).
3.4 - By-Laws of the Registrant, as
amended (included as Exhibit 3.4 of
the Company's S-1, No. 33-48323 and
incorporated herein by reference).
4.1 - Rights Agreement dated as of March 28,
1995 between the Registrant and Mellon
Bank, N.A. (included as Exhibit 1 to
Form 8-A filed with the SEC as of
March 28, 1995).
4.2 - First Amendment to the Rights Agreement
dated as of April 25, 1995 (included as
Exhibit 4 to Form 8-A/A filed with the SEC
as of May 8, 1995).
10.1 - Various bailment and consignment
agreements between the Registrant and
Automotive manufacturers (included
as Exhibit 10.2 to the Company's
Registration Statement on Form S-1,
No. 33-48323 and incorporated herein
by reference).
Exhibit Number Document
10.2 - Form of Indemnification Agreement
between Registrant and its directors.
(Incorporated herein by reference to
Exhibit 10.21 to the Registrant's
Report on Form 10-K for the fiscal
year ended October 31, 1991.)
10.3 - Amended and Restated Loan and
Security Agreement for credit
facility dated July 31, 1998, between
Registrant and NationsBank, N.A.
10.4 - Amended and restated Lease dated
November 15, 1997 between Registrant
and the City of South Hutchinson,
Kansas.
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
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, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
COLLINS INDUSTRIES, INC.
By /s/ Donald Lynn Collins
Donald Lynn Collins, President
and Chief Executive Officer
Dated: January 28, 1999
By /s/ Larry W. Sayre
Larry W. Sayre, Vice President
Finance and Chief Financial Officer
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on
behalf of the Registrant, in their capacities as Directors of the
Registrant, and on the dates indicated.
Dated: January 28, 1999 /s/ Don L. Collins
Don L. Collins
Dated: January 28, 1999 /s/ Donald Lynn Collins
Donald Lynn Collins
Dated: January 28, 1999 /s/ Lewis W. Ediger
Lewis W. Ediger
Dated: January 28, 1999 /s/ Donald S. Peters
Donald S. Peters