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: April 30, 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 7,525,581
Class Outstanding at May 27, 1999
COLLINS INDUSTRIES, INC. AND SUBSIDIARIES
FORM 10-Q
April 30, 1999
INDEX
PART I. FINANCIAL INFORMATION PAGE NO
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets
April 30, 1999 and October 31, l998 3
Consolidated Condensed Statements of Income -
Three and Six Months Ended April 30, 1999
and 1998 4
Consolidated Condensed Statements of Cash Flow -
Six Months Ended April 30, 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)
April 30, October 31,
1999 1998
ASSETS
Current Assets:
Cash $ 290,454 $ 143,995
Receivables, trade & other 5,711,527 5,346,051
Inventories, lower of cost (FIFO)
or market 39,238,564 25,271,242
Prepaid expenses and other current
assets 664,807 985,420
Total current assets 45,905,352 31,746,708
Property and equipment, at cost 40,740,975 37,783,917
Less: accumulated depreciation 22,007,124 21,038,717
Net property and equipment 18,733,851 16,745,200
Other assets 5,111,742 584,141
Total assets $69,750,945 $49,076,049
LIABILITIES & SHAREHOLDERS' INVESTMENT
Current liabilities:
Current maturities of long-term
debt & capitalized leases $ 1,510,083 $ 1,108,750
Accounts payable 18,632,983 12,017,444
Accrued expenses 5,133,537 2,946,167
Total current liabilities 25,276,603 16,072,361
Long-term debt and capitalized leases 23,124,039 12,733,085
Shareholders' investment:
Common stock 727,818 743,088
Paid-in capital 17,331,081 18,051,859
Retained earnings 3,291,404 1,475,656
Total shareholders' investment 21,350,303 20,270,603
Total liabilities &
shareholders' investment $69,750,945 $49,076,049
(See accompanying notes)
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
April 30, April 30,
1999 1998 1999 1998
Sales $46,766,843 $38,332,942 $84,940,875 $76,813,564
Cost of sales 39,106,258 32,473,612 71,606,100 65,909,552
Gross profit 7,660,585 5,859,330 13,334,775 10,904,012
Selling, general and
administrative expenses 4,764,785 3,901,366 9,100,512 7,710,333
Income from operations 2,895,800 1,957,964 4,234,263 3,193,679
Other income (expense):
Interest expense (449,154) (341,551) (853,055) (728,180)
Other, net 15,062 107,547 145,348 176,285
(434,092) (234,004) (707,707) (551,895)
Income before provision
for income taxes 2,461,708 1,723,960 3,526,556 2,641,784
Provision for
income taxes 946,000 604,000 1,340,000 924,000
Net income 1,515,708 1,119,960 2,186,556 1,717,784
Earnings per share:
Basic $ .21 $ .15 $ .30 $ .23
Diluted $ .20 $ .14 $ .29 $ .22
Dividends per share $ .025 $ .025 $ .050 $ .180
Weighted average common
and common equivilent
shares outstanding:
Basic 7,345,677 7,560,060 7,383,950 7,505,898
Diluted 7,444,991 7,742,633 7,443,081 7,768,438
(See accompanying notes)
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(Unaudited)
Six Months Ended
April 30,
1999 1998
Cash flow from operations:
Cash received from customers $85,867,446 $76,744,088
Cash paid to suppliers and employees (83,302,134) (73,577,941)
Interest paid (839,560) (689,486)
Income taxes paid (683,898) -
Cash provided by operations 1,041,854 2,476,661
Cash flow from investing activities:
Capital expenditures and acquisition (6,475,095) (3,144,067)
Proceeds from sale of property and
equipment - 249,166
Other, net (166,382) (355,229)
Cash used in investing activities (6,641,477) (3,250,130)
Cash flow from financing activities:
Net increase in other borrowings 7,279,643 3,829,563
Principal payments of long-term debt
and capitalized leases (426,704) (1,347,023)
Proceeds from exercise of stock options 6,125 77,566
Acquisition and retirement of
treasury stock (742,174) (457,300)
Payment of dividends (370,808) (1,359,162)
Cash provided by financing activities 5,746,082 743,644
Net increase (decrease) in cash 146,459 (29,825)
Cash at beginning of period 143,995 189,152
Cash at end of period $ 290,454 $ 159,327
Reconciliation of net income to net cash
provided by operations:
Net income 2,186,556 1,717,784
Depreciation and amortization 1,138,937 851,905
Changes in assets net of Mid Bus
acquisition
Decrease (increase) in receivables 926,571 (69,476)
Decrease (increase) in inventories (8,944,534) (610,559)
Decrease in prepaid expenses and
other current assets 351,215 831,049
Increase (decrease) in accounts
payable and accrued expenses 5,382,780 (198,557)
Other 329 (45,485)
Cash provided by operations $ 1,041,854 $ 2,476,661
(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 and the
results of operations for the three and six months ended April
30, 1999 and 1998, and the cash flows for the six months ended
April 30, 1999 and 1998.
The Company suggests that the unaudited Consolidated Condensed
Financial Statements for the three and six months ended April 30,
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 April 30, 1999 and October 31,
1998, consisted of the following:
April 30, October 31,
1999 1998
Chassis $13,160,300 $ 7,916,058
Raw materials & components 11,033,681 8,871,980
Work in process 5,634,082 3,408,167
Finished goods 9,410,501 5,075,037
$39,238,564 $25,271,242
(3) Loan Agreement
On April 1, 1999, the Company amended the original Loan Agreement
dated July 31, 1998, with NationsBank (the "Bank"). This
amendment increased the Company's total credit facility to $37.3
million. The Agreement provides for a revolving credit facility
of $22.0 million, a long-term credit facility of $10.3 million,
and an acquisition credit facility of $5.0 million. The credit
facilities bear interest based on a combination of Eurodollar and
the Bank's prime rate.
The revolving credit facility is collateralized by inventories
and receivables and the long-term facility is collateralized by
equipment and certain real property. Under 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.
(4) Contingencies and Litigation
At April 30, 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) 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 was 99,314 and 182,573 for the
quarters ended April 30, 1999 and 1998, respectively. The effect
of dilutive stock options on weighted average shares outstanding
was 59,131 and 262,540 for the six months ended April 30, 1999
and 1998, respectively.
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS:
Sales
Sales for the quarter ended April 30, 1999, increased 22% from
the same period in fiscal 1998. This increase was principally due
to increased sales of bus and ambulance products partially offset
by a decrease in terminal truck sales.
Sales for the six months ended April 30, 1999, increased 11% over
the same period in fiscal 1998. This increase was principally due
to higher sales of bus products and was partially offset by lower
terminal truck sales.
The Company's consolidated sales backlog at April 30, 1999
increased 130% to $77.2 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 193%, ambulances by 89% and terminal trucks by
59%. The Company's consolidated sales backlog was $44.3 million
at April 30, 1998. The significant increase in backlog is
principally attributable to additional sales and marketing
expenditures and higher market demand related to the replacement
of non-conforming vans.
Cost of Sales
Cost of sales for the quarter ended April 30, 1999 was 83.6% of
sales compared to 84.7% for the same period in fiscal 1998. The
Company's cost of sales for the six months ended April 30, 1999
was 84.3% of sales compared to 85.8% of sales for the same period
in fiscal 1998. The decrease in cost of sales as a percent of
sales for the three and six months ended April 30, 1999 was
principally due to increased efficiencies in labor and material
usage achieved from mechanization, partially offset by an
increase in manufacturing overhead.
Gross Margin
Gross margins for the three and six months ended April 30, 1999,
improved as a result of cost controls implemented over the past
several quarters and higher bus product sales. However, the
Company experienced increased direct labor rates without any
significant increase in selling prices. The labor increases were
partially offset by other cost reduction measures and improved
operating efficiencies including those resulting from continuing
mechanization of manufacturing processes.
Other Income (Expense)
Interest expense for the three and six months ended April 30,
1999, 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 its lead bank and new Industrial Revenue Bond
financing.
Net Income
The Company's net income for the quarter ended April 30, 1999 was
$1.5 million ($.20 per share-diluted) compared to $1.1 million
($.14 per share-diluted) for the same period in fiscal 1998. The
increase in the Company's net income was principally attributable
to stronger operating results from bus products including those
of the newly acquired Mid Bus, Inc.
The Company's net income was $2.2 million ($.29 per share-
diluted) for the six months ended April 30, 1999 compared to $1.7
million ($.22 per share-diluted) for the six months ended April
30, 1998. The net income change was principally due to the same
reasons discussed in the immediately preceding paragraph.
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 three and six months ended April 30, 1999.
Cash provided by operations was $1.0 million for the six months
ended April 30, 1999 compared to $2.5 million for the six months
ended April 30, 1998. Cash provided by operations principally
resulted from the Company's net income ($2.2 million), an
increase in accounts payable ($5.4 million), depreciation and
amortization ($1.1 million), a decrease in receivables ($.9
million), and a decrease in prepaid expenses ($.4 million), and
was partially offset by an increase in inventory ($8.9 million),
during the six months ended April 30, 1999. Inventories increased
principally to support higher sales volumes, to better balance
production capacities with related sales demand and to
accommodate higher production levels anticipated in the upcoming
summer months for bus products.
Cash used in investing activities was $6.6 million for the six
months ended April 30, 1999 compared to $3.3 million for the six
months ended April 30, 1998. The increase was principally due to
higher capital expenditures including the acquisition of Mid Bus
Inc.
Cash flow provided by financing activities was $5.7 million for
the six months ended April 30, 1999 compared to $.7 million for
the six months ended April 30, 1998. This change principally
resulted from increases in borrowing for the six months ended
April 30, 1999. Interest-bearing debt for the three and six
months ended April 30, 1999, increased to accommodate higher
inventory levels, to finance certain equipment with Industrial
Revenue Bonds and to complete the acquisition of Mid Bus, Inc.
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
Mapicsr and American Viking in a test environment and has fully
converted three of the five locations currently using Mapics,
and/or American Viking, to the Y2K versions. The Company intends
to convert the two remaining locations 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. However, 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
The Company's 1999 Annual Meeting of Shareholders was held
February 26, 1999. Mr. Don L. Collins and Mr. Don S.
Peters were each elected as a director for a three year
term. Mr. Collins received 6,670,301 votes for, 206,114
against and no abstentions. Mr. Peters received 6,659,921
votes for, 216,494 against and no abstentions. The other
directors whose term of office continued after the meeting
were: Donald Lynn Collins, Lewis W. Ediger, Robert E.
Lind, Arch G. Gothard III, and William R. Patterson.
For the fiscal year ending October 31, 1998, the Company
also ratified the appointment of its independent public
accountants, Arthur Andersen LLP at is 1999 Annual Meeting
of Shareholders. Arthur Andersen LLP received 6,800,728
votes for, 47,497 votes against and 28,190 abstentions.
Item 5 - Other Information
Not applicable
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits:
27.0 - EDGAR Financial Data Schedule
10.1 - Amendment No. 1. dated as of April 1, 1999,
to the Amended and Restated Loan and Security
Agreement dated as of July 31, 1998, by and
between Collins Industries, Inc., and NationsBank,
N.A.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed durring the
quarter ended April 30, 1999.
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: June 2, 1999 /s/ Larry W. Sayre
LARRY W. SAYRE
VICE PRESIDENT - FINANCE AND
CHIEF FINANCIAL OFFICER
(Principal Accounting Officer)