UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: January 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ___________
Commission file number
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
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
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $.10 par value 7,386,781
Class Outstanding at March 11, 1999
COLLINS INDUSTRIES, INC. AND SUBSIDIARIES
FORM 10-Q
January 31, 1999
INDEX
PART I. FINANCIAL INFORMATION PAGE NO
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets
January 31, 1999 and October 31, l998 3
Consolidated Condensed Statements of Income -
Three Months Ended January 31, 1999 and 1998 4
Consolidated Condensed Statements of Cash Flow -
Three Months Ended January 31, 1999 and 1998 5
Notes to Consolidated Condensed Financial Statements 6
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
January October
31, 31,
1999 1998
ASSETS
Current Assets:
Cash $ 1,009,400 $ 143,995
Receivbles, trade & other 3,988,234 5,346,051
Inventories, lower of cost (FIFO)
or market 33,606,254 25,271,242
Prepaid expenses and other current
assets 1,063,589 985,420
Total current assets 39,667,477 31,746,708
Property and equipment, at cost 39,807,920 37,783,917
Less: accumulated depreciation 21,500,626 21,038,717
Net property and equipment 18,307,294 16,745,200
Other assets 5,104,598 584,141
Total assets $63,079,369 $49,076,049
LIABILITIES & SHAREHOLDERS' INVESTMENT
Current liabilities:
Current maturities of long-term
debt & capitalized leases $ 2,010,032 1,108,750
Accounts payable 16,399,276 12,017,444
Accrued expenses 4,867,146 2,946,167
Total current liabilities 23,276,454 16,072,361
Long-term debt and capitalized leases 19,152,711 12,733,085
Shareholders' investment:
Common stock 742,398 743,088
Paid-in capital 18,017,074 18,051,859
Retained earnings 1,960,732 1,475,656
Treasury stock (70,000) --
Total shareholders' investment 20,650,204 20,270,603
Total liabilities &
shareholders' investment $63,079,369 $49,076,049
(See accompanying notes)
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
January 31,
1999 1998
Sales $38,174,032 $38,480,622
Cost of sales 32,499,842 33,435,940
Gross profit 5,674,190 5,044,682
Selling, general and administrative expenses 4,346,537 3,820,458
Income from operations 1,327,653 1,224,224
Other income (expense):
Interest expense (427,681) (386,629)
Other, net 164,876 80,229
(262,805) (306,400)
Income before provision
for income taxes 1,064,848 917,824
Provision for income taxes 394,000 320,000
Net income $ 670,848 $ 597,824
Earnings per share
Basic $ .09 $ .08
Diluted $ .09 $ .08
Dividends per share $ .025 $ .155
Weighted average common
and common equivilent shares
outstanding:
Basic 7,420,974 7,452,847
Diluted 7,468,975 7,903,702
(See accompanying notes)
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(Unaudited)
Three Months Ended
January 31,
1999 1998
Cash flow from operations:
Cash received from customers $40,823,896 $36,978,808
Cash paid to suppliers and employees (37,056,833) (38,164,207)
Interest paid (391,301) (347,935)
Cash provided by (used in) operations 3,375,762 (1,533,334)
Cash flow from investing activities:
Capital expenditures and acquisition (5,599,938) (1,588,096)
Other, net (63,961) (316,616)
Cash used in investing activities (5,663,899) (1,904,712)
Cash flow from financing activities:
Net increase in other borrowings 3,599,561 5,261,678
Principal payments of long-term debt
and capitalized leases (218,001) (289,049)
Proceeds from exercise of stock options 6,126 65,629
Acquisition and retirement of treasury
stock (111,600) (108,000)
Payment of dividends (185,772) (1,169,525)
Cash provided by financing activities 3,090,314 3,760,733
Net increase in cash 802,177 322,687
Cash at beginning of period 207,223 189,152
Cash at end of period $ 1,009,400 $ 511,839
Reconciliation of net income to net cash
provided by (used in) operations:
Net income $ 670,848 $ 597,824
Depreciation and amortization 532,159 411,946
Decrease (increase) in receivables 2,649,864 (1,501,814)
Decrease (increase) in inventories (3,312,224) 1,382,792
Decrease (increase) in prepaid expenses
and other current assets (47,567) 607,733
Increase (decrease) in accounts payable
and accrued expenses 2,882,682 (3,031,815)
Cash provided by (used in) operations $ 3,375,762 $(1,533,334)
(See accompanying notes)
COLLINS INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
(Unaudited)
(1) 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.
In the opinion of management, the accompanying unaudited
consolidated condensed financial statements contain all
adjustments (consisting of only normal recurring items) necessary
to summarize fairly the Company's financial position at January
31, 1999 and the results of operations and the cash flows for the
three months ended January 31, 1999 and 1998.
The Company suggests that the unaudited Consolidated Condensed
Financial Statements for the three months ended January 31, 1999
be read in conjunction with the Company's Annual Report for the
year ended October 31, 1998.
(2) Inventories
Inventories, which include material, labor, and manufacturing
overhead, are stated at the lower of cost (FIFO) or market.
Major classes of inventories as of January 31, 1999 and October
31, 1998, consisted of the following:
January 31, October 31,
1999 1998
Chassis $ 9,787,561 $ 7,916,058
Raw materials & components 11,687,591 8,871,980
Work in process 4,534,056 3,408,167
Finished goods 7,597,046 5,075,037
$33,606,254 $25,271,242
(3) Earnings per Share
Dilutive securities, consisting of options to purchase the
Company's common stock, included in the calculation of diluted
weighted average common shares were 48,001 shares for the three
month period ended January 31, 1999, and 450,855 shares for the
three month period ended January 31, 1998.
(4) Contingencies and Litigation
At January 31, 1999, the Company had contingencies and 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 would not result in
liabilities that would have a material adverse effect on the
Company's consolidated financial position.
(5) Income Taxes
The provision for income taxes for three months ended January 31,
1999 is calculated at statutory rates.
(6) Acquisitions
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,
and was accounted for as a purchase.
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS:
Sales
Sales for the quarter ended January 31, 1999, decreased slightly
compared to the same period in fiscal 1998. Sales were flat
principally as a result of lower terminal truck sales, partially
offset by an increase in bus sales including the impact of Mid
Bus, Inc., an Ohio based manufacturer of small school buses.
However, the first quarter of fiscal 1998 included a sizable
terminal truck order from the United States Postal Service.
The Company's consolidated sales backlog at January 31, 1999
increased 71% to $57.4 million compared to $33.6 million at
October 31, 1998. This increase was across all product lines.
Including the Mid Bus acquisition, the backlog of bus product
lines increased by 96%, ambulances by 53% and terminal trucks by
45%. The Company's consolidated sales backlog was $44.4 million
at January 31, 1998.
Cost of Sales
Cost of sales for the quarter ended January 31, 1999 was 85.1% of
sales compared to 86.9% for the same period in fiscal 1998. The
percentage decrease was principally due to an increase in sales
of higher margin bus products, partially offset by an unfavorable
sales mix, and lower sales volumes in ambulances and terminal
trucks.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the quarter
ended January 31, 1999, was 11.4% of sales compared to 9.9% for
the same period in fiscal 1998. The percentage increase was
principally due to increased marketing expenses associated with
direct sales personnel and advertising.
Other Income (Expense)
Interest expense increased principally as a result of the
Company's increase in borrowings to fund capital asset additions,
a plant expansion and the acquisition of Mid Bus, Inc.. This
increase was partially offset by an overall reduction of the
Company's effective interest rates. The reduction of the
Company's effective interest rate was principally due to the
Company negotiating a lower interest rate with the Bank prior to
entering into the July 31, 1998, Loan Agreement and new
Industrial Revenue Bond financing.
Net Income
The Company's net income for the quarter ended January 31, 1999
was $.7 million ($.09 per share-diluted) compared to $.6 million
($.08 per share-diluted) for the same period in fiscal 1998. The
increase in the Company's net earnings was principally
attributable to stronger operating results from bus products
including those of the newly acquired Mid Bus, Inc. This increase
was partially offset by lower profits from ambulance and terminal
truck products.
LIQUIDITY AND CAPITAL RESOURCES:
The Company used existing credit lines, internally generated
funds and supplier financing to fund its operations and capital
expenditures for the quarter ended January 31, 1999.
Cash provided by operations was $3.4 million for the three months
ended January 31, 1999 compared to ($1.5) million for the three
months ended January 31, 1998. Cash provided by operations
principally resulted from the Company's net income ($.7 million),
depreciation ($.5 million) an increase in accounts payable ($2.8
million), a decrease in accounts receivable ($2.6 million), and
was partially offset by an increase in inventory ($3.3 million),
during the three months ended January 31, 1999.
Cash used in investing activities was $5.7 million for the three
months ended January 31, 1999 compared to $1.9 million for the
three months ended January 31, 1998. The increase was
principally due to higher capital expenditures including the
acquisition of Mid Bus Inc.
Cash flow provided by financing activities was $3.1 million for
the three months ended January 31, 1999 compared to $3.8 million
for the three months ended January 31, 1998. This change
principally resulted from lower new borrowings for the three
months ended January 31, 1999 compared to the same period in
1998. This decrease was partially offset by the payment of
special cash dividend of $.13 per share ($1.0 million) in
January, 1998.
The Company believes that its cash flows from operations and bank
credit lines will be sufficient to satisfy its future working
capital and capital expenditure requirements.
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 fully converted to the Y2K version of
Actionware. The Company has installed the Y2K versions of
Mapics and American Viking in a test environment and intends to
fully convert to these versions 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. Significant suppliers have
implemented plans to help ensure the uninterrupted supply of
goods to their customers, and have initiated efforts to evaluate
the status of products using embedded technology.
The cost of the Y2K issue is not expected to have a materially
adverse impact on the Company's results of operation or adversely
affect the Company's relationships with customers, vendors or
others. 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 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).
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
Not applicable
Item 2 - Changes in Securities
Not applicable
Item 3 - Defaults on Senior Securities
Not applicable
Item 4 - Submission of Matters to a Vote of Security-Holders
Not applicable
Item 5 - Other Information
Not applicable
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits:
27.0 - EDGAR Financial Data Schedule
(b) Reports on Form 8-K -
The Company filed Form 8-K, all of which reported
information under Item 5 of Form 8-K, on the following
date:
December 1, 1998
SIGNATURE
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.
(REGISTRANT)
DATE March 11, 1999 /s/ Larry W. Sayre
LARRY W. SAYRE
VICE PRESIDENT - FINANCE AND
CHIEF FINANCIAL OFFICER
(Principal Accounting Officer)