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: July 31, 1998
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 7,478,381
Class Outstanding at September 14, 1998
COLLINS INDUSTRIES, INC. AND SUBSIDIARIES
FORM 10-Q
July 31, 1998
INDEX
PART I. FINANCIAL INFORMATION PAGE NO
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets
July 31, 1998 and October 31, l997 3
Consolidated Condensed Statements of Income -
Three and Nine Months Ended July 31, 1998 and 1997 4
Consolidated Condensed Statements of Cash Flow
Nine Months Ended July 31, 1998 and 1997 5
Notes to Consolidated Condensed Financial Statements 6
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED CONDENSED BALANCE SHEETS
July 31, October 31,
1998 1997
(Unaudited)
ASSETS
Current Assets:
Cash $ 151,273 $ 189,152
Receivables, trade & other, net 4,171,539 6,745,973
Inventories, lower of cost (FIFO)
or market (Note 2) 27,137,502 25,686,022
Prepaid expenses and other current
assets 533,453 1,380,998
Total current assets 31,993,767 34,002,145
Property and equipment, at cost 36,431,664 32,232,490
Less: accumulated depreciation 20,608,250 19,800,671
Net property and equipment 15,823,414 12,431,819
Other assets 699,325 729,166
Total assets $48,516,506 $47,163,130
LIABILITIES & SHAREHOLDERS' INVESTMENT
Current liabilities:
Current maturities of long-term
debt & capitalized leases $ 1,120,000 $ 1,094,948
Accounts payable 11,145,212 14,200,975
Accrued expenses 3,377,697 3,663,382
Total current liabilities 15,642,909 18,959,305
Long-term debt and capitalized leases 12,554,669 8,361,887
Shareholders' investment:
Common stock 754,218 738,568
Paid-in capital 18,543,832 18,918,903
Retained earnings 1,235,268 184,467
Treasury stock (214,390) --
Total shareholders' investment 20,318,928 19,841,938
Total liabilities & shareholders'
investment $48,516,506 $47,163,130
(See accompanying notes)
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
July 31, July 31,
1998 1997 1998 1997
Sales $39,289,431 $42,202,842 $116,102,995 $118,895,578
Cost of sales 33,549,606 34,226,943 99,459,158 98,842,817
Gross profit 5,739,825 7,975,899 16,643,837 20,052,761
Selling, general and
administrative
expenses 4,116,855 3,842,542 11,852,080 11,327,941
Income from
operations 1,622,970 4,133,357 4,791,757 8,724,820
Other income
(expense):
Interest expense (362,471) (378,616) (1,090,651) (1,290,950)
Other, net 96,236 18,101 297,413 187,533
(266,235) (360,515) (793,238) (1,103,417)
Income before provision
for income taxes 1,356,735 3,772,842 3,998,519 7,621,403
Provision for income
taxes 476,000 700,000 1,400,000 1,500,000
Net income $ 880,735 $3,072,842 $2,598,519 $6,121,403
Earnings per share
(Note 6):
Basic $ .12 $ .42 $ .35 $ .83
Diluted $ .12 $ .40 $ .34 $ .80
Dividends per share $ .025 $ .025 $ .205 $ .050
Weighted average and
common equivilent shares
outstanding:
Basic 7,518,533 7,342,334 7,510,156 7,342,495
Diluted 7,624,141 7,745,839 7,729,063 7,693,568
(See accompanying notes)
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(Unaudited)
Nine Months Ended
July 31,
1998 1997
Cash flow from operations:
Cash received from customers $118,677,429 $120,108,657
Cash paid to suppliers and employees (114,246,674) (110,286,303)
Interest paid (1,051,957) (1,406,836)
Income taxes paid (901,457) (1,645,000)
Cash provided by operations 2,477,341 6,770,518
Cash flow from investing activities:
Capital expenditures (4,657,208) (1,055,140)
Proceeds from sale of property and
equipment 481,341 16,500
Other, net (435,658) (82,141)
Cash used in investing activities (4,611,525) (1,120,781)
Cash flow from financing activities:
Net increase (decrease) in other
borrowings 6,196,375 (1,032,801)
Principal payments of long-term debt
and capitalized leases (1,978,541) (3,216,153)
Proceeds from exercise of stock
options 97,878 118,450
Acquisition and retirement of
treasury stock (671,690) (1,179,013)
Payment of dividends (1,547,717) (369,251)
Cash provided by (used in)
financing activities 2,096,305 (5,678,768)
Net decrease in cash (37,879) (29,031)
Cash at beginning of period 189,152 255,405
Cash at end of period $ 151,273 $ 226,374
Reconciliation of net income to net cash
provided by operations:
Net income $2,598,519 $6,121,403
Depreciation and amortization 1,322,051 1,358,014
Decrease in receivables 2,574,434 1,213,079
Increase in inventories (1,451,480) (2,240,268)
Decrease (increase) in prepaid expenses
and other current assets 847,545 (25,252)
Increase (decrease) in accounts payables
and accrued expenses (3,341,448) 352,826
Gain on sale of property and equipment (72,280) (9,284)
Cash provided by operations $2,477,341 6,770,518
(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 results of operations for the three and nine months ended
July 31, 1998 and 1997, and the cash flows for the nine
months ended July 31, 1998 and 1997.
The Company suggests that the unaudited Consolidated
Condensed Financial Statements for the three and nine months
ended July 31, 1998 be read in conjunction with the Company's
Annual Report for the year ended October 31, 1997.
(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 July 31, 1998 and October
31, 1997, consisted of the following:
July 31, October 31,
1998 1997
Chassis $ 8,524,001 $ 7,675,115
Raw materials & components 9,935,533 8,673,308
Work in process 2,898,556 4,173,173
Finished goods 5,779,412 5,164,426
$27,137,502 $25,686,022
(3) Loan Agreement
On July 31, 1998, the Company entered into a new Loan
Agreement with NationsBank (the "Bank") for a $22.1
million credit facility. The Agreement provides for a
revolving credit facility of $17.0 million and a long-term
credit facility of $5.1 million. The credit facilities bear
interest based on a combination of Eurodollar and the Bank's
prime rate. The proceeds of the new credit facility were
used to repay bank loans incurred under its May 9, 1995, Loan
Agreement.
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 July 31, 1998, 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 and nine months
ended July 31, 1998 is calculated at statutory rates. The
Company's income tax expense for the three and nine months
ended July 31, 1997, was less than statutory rates due to
the impact of the utilization of net operating loss
carryforwards and general business tax credits.
(6) Earnings per Share
In 1997, the Financial Accounting Standards Board (FASB)
issued Statement No. 128, Earnings per Share (EPS), which
requires the reporting of basic and diluted earnings per
share. The Company adopted Statement 128 in the first
quarter of 1998 as required. Earnings per share and weighted
average shares outstanding for all periods presented have
been restated to conform to Statement 128. Basic earnings per
share excludes any dilutive effects of stock options and is
computed by dividing net income by the weighted average
shares of common stock outstanding for the period.
Diluted earnings per share is computed by dividing net income
by the weighted average shares of common stock outstanding for
the period plus the shares that would be outstanding assuming
the exercise of dilutive stock options. The effect of
dilutive stock options on weighted average shares outstanding
was 105,608 and 403,505 for the quarters ended July 31,
1998 and 1997, respectively. The effect of dilutive stock
options on weighted average shares outstanding was 218,907
and 351,073 for the nine months ended July 31, 1998 and 1997,
respectively.
Options to purchase 279,000 shares of common stock at
exercise prices ranging from $5.13 to $7.56 and 2,500 shares
of common stock at an exercise price of $6.00 were
outstanding during the quarter ended July 31 of 1998
and 1997, respectively. Accordingly, these were not
included in the computation of diluted EPS because the
options exercise price was greater than the average market
price of common shares.
Options to purchase 180,000 shares of common stock at
exercise prices ranging from $6.13 to $7.56 and 17,500 shares
of common stock at exercise prices ranging from $5.64 to
$6.00 were outstanding during the nine months ended July 31
of 1998 and 1997, respectively. Accordingly, these were not
included in the computation of diluted EPS because the options
exercise price was greater than the average market price of
common shares.
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS:
Net Sales
Sales for the quarter ended July 31, 1998, decreased 6.9%
from the same period in fiscal 1997. This decrease was
principally due to lower sales of ambulances and terminal trucks,
partially offset by higher sales of bus products.
The Company's consolidated sales backlog at July 31, 1998
was $39.0 million compared to $45.5 million at October 31,
1997 and $44.3 million at July 31, 1997.
Cost of Sales
Cost of sales for the quarter ended July 31, 1998 was 85.4%
of sales compared to 81.1% for the same period in fiscal 1997.
The percentage increase was principally due to program discounts
and higher sales incentives on closing out 1997 models over
that of the same period last year, and a one-time gain on the
sale of the UVL product line in the third quarter ended July
31, 1997. The Company's cost of sales for the nine months ended
July 31, 1998 was 85.7% of sales compared to 83.1% of sales
for the same period in fiscal 1997. Increases were principally
due to the same reasons discussed above.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the
quarter ended July 31, 1998, was 10.5% of sales compared to
9.1% for the same period in fiscal 1997. The percentage
increase was principally due to increased marketing expense. The
Company's selling, general and administrative expenses for the
nine months ended July 31, 1998, was 10.2% of sales compared
to 9.5% of sales for the same period in fiscal 1997. Increases
were principally due to the same reasons discussed above.
Other Income (Expense)
Interest expense decreased principally as a result of
the Company's overall reduction of its effective interest
rate. The reduction of the Company's effective interest
rate was principally due to additional IRB ("Industrial Revenue
Bond") debt of $3.2 million which bears interest at annual
rates ranging from 4.75% to 5.80%. The additional IRB debt was
incurred to construct and equip an addition to the Company's
bus manufacturing facilities. Additionally, the Company negotiated
a lower interest rate with the Bank prior to entering into the
July 31, 1998, Loan Agreement.
As described in Note 3 to the July 31, 1998,
Consolidated Condensed Financial Statements (unaudited), the
Company entered into a new Loan Agreement with NationsBank.
Under the Agreement, the annual rates of interest will be
based on a combination of the Eurodollar and the Bank's prime
rate. The Company's previous borrowing rates with the Bank
were at prime plus one-half of one percent.
Income Taxes
The Company's income tax expense for the quarter ended July
31, 1998 and 1997 was 35% and 19% of income before
provisions for income taxes. For the quarter ended July
31, 1998, the provision for income taxes was calculated based
on statutory income tax rates. For the quarter ended July 31,
1997, due to the utilization of net operating loss
carryforwards and general business tax credits, the provision
was less than the statutory income tax rate. All
carryforwards of net operating losses and tax credits were
utilized in the fiscal year ended October 31, 1997. Accordingly,
the Company expects future income tax provisions to be based
on statutory income tax rates.
The Company's income tax expense for the nine months ended
July 31, 1998 and 1997 were 35% and 20% of income before
provisions for income taxes. Differences between 1998 and
1997 provisions were principally due to the same reasons
discussed in the immediately preceding paragraph.
Net Income
The Company's net income for the quarter ended July 31, 1998
was $.9 million ($.12 per share-basic) compared to $3.1 million
($.42 per share-basic) for the same period in fiscal
1997. The decrease in the Company's net earnings was
principally attributable to a decrease in ambulance and terminal truck
sales, and an increase in the effective income tax rate, and offset
by a one-time gain on the sale of the UVL product line in
the third quarter ended July 31, 1997.
The Company's net earnings were $2.6 million ($.35 per share
basic) for the nine months ended July 31, 1998, compared to
$6.1 million ($.83 per share-basic) for the nine months ended
July 31, 1997. The net income change is 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 and financing from
issuance of Industrial Revenue Bonds to fund its operations
and capital expenditures for the three and nine months ended
July 31, 1998.
Cash provided by operations was $2.5 million for the nine
months ended July 31, 1998 compared to $6.8 million for the
nine months ended July 31, 1997. Cash provided by operations
principally resulted from the Company's net income ($2.6
million), depreciation ($1.3 million) and a decrease in prepaid
expense ($.8 million) and was partially offset by
increases in inventories ($1.5 million), during the nine
months ended July 31, 1998.
Cash used in investing activities was $4.6 million for the
nine months ended July 31, 1998 compared to $1.1 million for the
nine months ended July 31, 1997. The increase was principally
due to higher capital expenditures for the expansion of the
Company's bus manufacturing facilities.
Cash flow provided by financing activities was $2.1 million
for the nine months ended July 31, 1998 compared to cash
used in financing activities of $5.7 million for the nine
months ended July 31, 1997. This change principally resulted
from increases in borrowings for the nine months ended July
31, 1998. This increase was partially offset by the payment
of four cash dividends totaling $1.5 million. The Company paid a
regular quarterly cash dividend of $.025 per share in
December 1997, March 1998 and June 1998, and a special cash
dividend of $.13 per share 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.
At July 31, 1998, the Company had entered into
contractual commitments for the purchase of certain
manufacturing equipment of approximately $1.0 million. Except
as previously noted, at July 31, 1998, there were no
other significant or unusual contractual commitments or
capital expenditure commitments.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
Except for the historical information contained herein,
certain matters discussed in this Form 10-Q are
forward-looking statements which involve risks and
uncertainties, including but not limited to economic,
competitive, governmental and technological factors
affecting the Company's operations,
markets, products, services, prices and other factors.
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 - No reports on Form 8-K were
filed during the quarter ended July 31, 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 September 14, 1998 /s/ Larry W. Sayre
LARRY W. SAYRE
VICE PRESIDENT - FINANCE AND
CHIEF FINANCIAL OFFICER
(Principal Accounting Officer)
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<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> JUL-31-1998
<CASH> 151,273
<SECURITIES> 0
<RECEIVABLES> 4,171,539
<ALLOWANCES> 0
<INVENTORY> 27,137,502
<CURRENT-ASSETS> 31,993,767
<PP&E> 36,431,664
<DEPRECIATION> 20,608,250
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0
0
<COMMON> 754,218
<OTHER-SE> 19,564,710
<TOTAL-LIABILITY-AND-EQUITY> 48,516,506
<SALES> 116,102,995
<TOTAL-REVENUES> 116,102,995
<CGS> 99,459,158
<TOTAL-COSTS> 111,311,238
<OTHER-EXPENSES> (297,413)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,090,651
<INCOME-PRETAX> 3,998,519
<INCOME-TAX> 1,400,000
<INCOME-CONTINUING> 2,598,519
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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