** **

**Securities and Exchange Commission**

**Washington,DC  20549**

** **

**FORM 10-K**

** **

**[X ] ANNUAL REPORT PURSUANT TO SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF  1934**

**Forthe fiscal year ended October 31, 2003 or**

** **

**[    ] TRANSITION REPORT PURSUANT TO SECTION 13OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934**

**Forthe transition period from _________ to ___________**

** **

**Commission file number 0-12619**

 

**COLLINS INDUSTRIES, INC.**

 (Exact name of registrant as specified in its charter)

 

Missouri43-0985160

(State or other jurisdictionof incorporation)                                                                      (I.R.S. Employer IdentificationNumber)

 

15 CompoundDrive,  Hutchinson, Kansas67502-4349

(Addressof principal executive offices)                                                                                                    (Zip Code)

 

Registrant'stelephone number including area code:  620-663-5551

 

Securitiesregistered pursuant to Section 12(b) of the Act:

 

                                Title of eachclass                                                                 Name of each exchange on whichregistered

None                             .                N/A                                 .

 

Securitiesregistered pursuant to Section 12(g) of the Act:

 

##### Common Stock, ParValue $.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 theSecurities Exchange Act of 1934 during the preceding 12 months (or for suchshorter 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 delinquentfilers pursuant to Item 405 of Regulation S-K (Section 229.405 of thischapter), is not contained herein, and will not be contained, to the best ofthe registrant's knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or any amendment tothis Form 10-K. ( x )

 

Indicate by check mark wither the registrant is anaccelerated filer (as defined under rule 12-b of the Act). Yes ___   No x .

 

The aggregate market value of voting stock held bynon-affiliates of the registrant was $16,902,506  as of      April 30, 2003 

 

Thenumber of shares of Common Stock outstanding on    January 19, 2004   was   6,199,355.

 

Documents Incorporated byReference

 

The following are the documents incorporated byreference and the part of the Form 10-K into which the document isincorporated:

                Document:                                                                              Part of Form10-K

Proxy Statement for Annual Meeting

of Shareholders on February 27, 2004       Part III                                                         .

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

**PART I******

**Item 1.  BUSINESS**

 

General Development of Business

Collins Industries, Inc. wasfounded in 1971 as a manufacturer of small school buses and ambulances builtfrom modified cargo vans.  The Company'sinitial product was the first "Type A" school bus, designed to carry16 to 20 passengers.  Today the Companymanufactures specialty vehicles and accessories for various basic serviceniches of the transportation industry.The Company's products include ambulances, small school buses, shuttleand mid-size commercial buses, terminal trucks, commercial bus chassis, roadconstruction equipment and industrial rental sweepers.  From its inception, Collins' goal has beento become one of the largest manufacturers of specialty vehicles in theU.S.  The Company has grown primarilythrough the internal development of new products and the acquisition ofcomplementary product lines. 

In the U.S., Collinsbelieves that it is the largest single manufacturer of ambulances, the secondlargest manufacturer of terminal trucks, the leading manufacturer of smallschool buses and a leading manufacturer sweepers used in the road constructionindustry.  The Company sells itsproducts under several well-known trade names, including Wheeled Coach (ambulances), Collins Bus and Mid Bus  (small school buses), WorldTrans(commercial buses), Capacity (terminal trucks) and Waldon /Lay-Mor  (road construction and industrial rentalsweeper equipment).

Most Collins products are built to customerspecifications from a wide range of options offered by the Company.  Collins sells to niche markets which demandmanufacturing processes too sophisticated for small job shop assemblers, but donot require the highly automated assembly line operations of mass productionvehicle manufacturers.  The Companyemphasizes specialty engineering and product innovation, and it has introducednew products and product improvements, which include the Moduvan   ambulance, the first ambulance of its sizewith advanced life-support system capability; the Dura-Ride suspension system, the first frame-isolating suspension system forterminal trucks; and the innovation of a larger seating capacity, Type A SuperBantam school bus capable of carrying up to 24 passengers, one of the largestType A school buses in the industry.

 

Description of Business

 

The Company principally manufactures and marketsspecialty vehicles.

 

See "Note 8 to the Consolidated FinancialStatements" for quantitative segment information.

 

*Ambulances*.  The Company manufactures both modular and van-type ambulances atits 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 cutawaychassis 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 includea patient compartment and a raised fiberglass roof.  Type II ambulances are smaller and less expensive than modularambulances.

 

The Company also produces a limited number ofmedical support vans designed to transport medical and life-supportequipment.  Medical support vans aremodified commercial vehicles which do not have a patient compartment foradvanced life support systems.

 

*Buses.*The Company manufactures small school buses,commercial and shuttle buses at its Bluffton, Ohio and  South Hutchinson, Kansas facilities.

* *

*School Buses.*  The Company manufactures smallType A school buses which carry from 16 to 24 passengers.  The majority of Type A school buses currentlybuilt by the Company are produced by fabricating the body and mounting it on avendor-supplied, dual rear-wheel or single rear-wheel, cutaway chassis.  The Company was the first manufacturer toproduce a Type A school bus on this type of chassis, which permits greaterseating capacity than a van chassis.School buses are produced in compliance with federal, state and locallaws regarding school transportation vehicles.

 

*Commercial and Shuttle Buses*.  TheCompany produces shuttle and transit buses for car rental agencies, transitauthorities, hotels and resorts, retirement centers, nursing homes and similarusers.  These buses are built tocustomer specifications and are designed to transport 14 to 30 passengers overshort distances.  The Diplomat is a steel body bus built on a vendor-supplied, cutaway chassis thatcarries 17 to 25 passengers and targets a low- to mid-price range market.     

 

*TerminalTrucks / Road Construction Equipment.*  The Companyproduces two basic models of terminal trucks at its Longview, Texas facility,the Trailer Jockey  and the Yardmaster.  Terminal trucks are designedand built to withstand heavy-duty use by moving trailers and containers atwarehouses, rail yards, rail terminals and shipping ports.  Most terminal trucks manufactured by theCompany are built to customer specifications.The Company manufactures the entire truck except for major drivetraincomponents which are purchased from outside suppliers.  

 

The Company produces three and four wheel sweepers,a full line of articulated four-wheel drive loaders, rough terrain lift trucks,compact loaders and backhoes (road construction equipment).  These products are principally sold in bothcommercial and rental markets through direct sales and distributors throughoutthe United States. 

 

Manufacturing

 

Manufacturing consists of the assembly of componentparts either purchased from others or fabricated internally.  With the exception of chassis, chassiscomponents and certain terminal truck components which are purchased fromoutside suppliers, the Company fabricates the principal components of itsproducts.  Collins' internalcapabilities include CNC gas/plasma shape cutting, CNC punching and forming ofsheet metal, metal stamping, tooling, molding of fiberglass components,mechanical and electrical component assembly, upholstery, painting andfinishing and Computer-Aided-Design and Manufacturing (CAD/CAM) systems.

 

The Company has continued to improve itsmanufacturing facilities from time-to-time through the selective upgrading ofequipment and the mechanization or automation of appropriate portions of themanufacturing process.  In fiscal 2002,both the Florida and Kansas ambulance facilities initiated capital projects toautomate production.  Substantially allof the costs associated with  theseprojects were financed from the proceeds of Industrial Revenue Bonds totaling$4.0 million. These bonds were issued in the last half of fiscal 2002 and the projectscontinued into fiscal 2003. Approximately $2.0 million was invested into theseprojects in fiscal 2003 and $1.2 million in fiscal 2002. Management believesthe Company's manufacturing facilities are in good condition and are adequatefor the purposes for which they currently are used.  The capacity of the Company's current facilities, particularly ifoperated on a multiple shift basis, is adequate to meet current needs andanticipated sales volumes.

 

New Products

 

The Company is not presently and does not anticipateengaging in activities which would require a significant amount of expendituresor use of material amounts of assets for development of products in theplanning stage or otherwise for the foreseeable future.

 

Suppliers

 

In order to ensure that it has a readily availablesupply of chassis for ambulance and bus production, the Company has enteredinto consignment agreements with General Motors Corporation ("GMC") and FordMotor Company ("Ford").  Underthose agreements, chassis are kept at Company production facilities at no costto the Company other than chassis storage costs.  When an individual chassis is selected from the Company'sconsignment pool for use in vehicle production, title to the chassis passes tothe Company and the Company becomes liable to the consignor for the cost of thechassis.  Chassis currently in theconsignment pool are supplied by Ford and GMC.While an interruption in supply from one source may cause a temporaryslowdown in production, the Company believes that it could obtain adequatenumbers of chassis from alternate sources of supply.

 

The Company uses substantial amounts of steel in theproduction of its terminal truck products and road construction equipment andpurchases certain other major components (primarily engines, transmissions andaxles).  Collins also uses large amountsof aluminum, steel, fiberglass and glass in the production of ambulances andbuses.  There is substantial competitionamong suppliers of such raw materials and components, and the Company does notbelieve that a loss of a single source of supply would have a material adverseeffect on its business.

 

Patents, Trademarks and Licenses

 

The Company owns federal registrations for most ofthe trademarks which it uses on its products. The Company also owns patents onits 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 arehelpful, because they may force competitors to do more extensive design work toproduce a competitive product.  TheCompany believes that its production techniques and skills are as important asproduct design, and, therefore, in management's opinion, any lack of patent protectionwould not adversely affect the Company's business.

 

Seasonality of Business

** **

Historically, a major portion of the Company's netincome has been earned in the second half of the fiscal year ending October31.  The purchasing patterns of schooldistricts are typically strongest in the summer months which accounts fortypically stronger sales of small school buses.  Generally, the Company's sales tend to be lower in the wintermonths and first half of the Company's fiscal year due to the purchasing patternsof the Company's customers in general and because purchasing activities arenormally lower near the end of the calendar year.

 

Sales Terms

** **

The Company produces the majority of its products onan order-only basis.  Most products aredelivered on a cash basis.  Productssold on a direct basis (not through dealers) are sold on trade terms common tothe respective industry.  Finished goodsthat are reflected on the financial statements are generally completed unitsthat are ready for customer delivery.Sales to dealers have generally been financed through an unrelated thirdparty for the dealers, resulting in payment generally within days of the sale.

 

Customer Concentration

** **

The Company has no single customer whose loss wouldhave a material adverse effect on the Company as a whole.  During 2003, 2002 and 2001, sales to any onecustomer were not in excess of 10% of consolidated sales.

 

Sales Backlog

** **

The sales backlog at October 31, 2003, wasapproximately $46.7 million compared to $42.2 million at October 31, 2002.  In the opinion of management, the majorityof this sales backlog will be shipped in fiscal 2004.

 

Governmental Sales

** **

The Company has pursued, and will continue topursue, opportunities in government sales as they occur. No material portion ofthe Company's business, however, is subject to renegotiation of profits ortermination 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 and the direct sales efforts ofCompany personnel.  Each of theCompany's product groups is responsible for its own marketing activities andmaintains independent relationships with dealers and distributors.  Support is provided to dealers anddistributors in bidding, specification writing and customer service.

 

The Company regularly advertises in consumer andtrade magazines and other print media and actively participates in national,regional and local trade shows.  Inaddition, Company representatives attend a number of national conventions andregional meetings of important constituent groups such as school boards andemergency medical groups.

 

Competition

** **

The markets for most of the Company's product linesare very competitive, and the Company currently has several direct competitorsin most markets.  Some of thesecompetitors may have greater relative resources.  The Company believes it can compete successfully (i) in theambulance market on the basis of the quality and price of its products, itsdesign engineering and product innovation capabilities and the strength of theWheeled Coach brand name, and (ii) in the small school bus market on the basisof its product price and quality and favorable recognition of the Collins Busand Mid Bus brand names, and (iii) in the terminal truck and road constructionequipment market for sweepers on the strength of its Waldon and Lay-Mor brandnames, product quality, price and distribution networks.  The Company primarily competes in theterminal truck market with one larger domestic competitor, Ottawa Truck, whichis owned by Kalmar Industries. Kalmar has international distribution channelsand may have greater relative resources than the Company.  The Company believes it can competesuccessfully in this market on the basis of its Capacity brand name, price,product quality and customer demand for its exclusive Dura-Ride suspensionsystem.

 
| Research and Development Costs    |      |     |     |
|-----------------------------------|-----------|----------|----------|
|                              | 2003      | 2002     | 2001     |
| Research and Development Expenses | $  93,527 | $198,814 | $166,763 |

 

This table cites thelevel of research and development costs the Company incurred the past threefiscal years.  It should be noted theCompany does significant research and development work on the production lineand, therefore, the major costs of new programs are recorded as cost of salesand are expensed as prototypes.

 

Regulation

** **

The Company is subject to various laws andregulations, all of the Company's on-road vehicles must satisfy certainstandards applicable to such vehicles established by the United StatesDepartment of Transportation.  Certainof its products must also satisfy specifications established by other federal,state and local regulatory agencies, primarily dealing with safety andperformance standards.

 

Both federal and state authorities have various environmental controlstandards relating to air, water, and noise pollution which affect our businessand operations. For example, these standards, which are generally applicable toall companies, control our choice of paints, discharge of air compressor wastewater and noise emitted by factories.Our facilities are subject to air permitting by the U.S. EnvironmentalProtection Agency and/or authorized States' under federal and/or state regulationsimplementing the federal Clean Air Act. Each of our facilities is currentlyoperating under valid permits. Costs to renew these permits areimmaterial.  We rely upon certificationsobtained by chassis manufacturers with respect to compliance by our vehicleswith all applicable emission control standards.

 

With respect to employees' health and safety,  the Company is subject to various laws andregulations promulgated by the Occupational Safety and Health Administration orOSHA. Our plants are periodically inspected by federal agencies concerned withhealth and safety in the work place to ensure that our products comply withapplicable governmental and industry standards.

 

TheComprehensive Environmental Response, Compensation and Liability Act of 1980("CERCLA"), as amended, and other similar state laws require thecleanup of hazardous waste disposal sites. Parties that may be liable underCERCLA for the cleanup of a hazardous waste disposal site include the currentproperty owner, the operator, owners and operators of the property at the timeof a release of hazardous substances, the arranger of the disposal, and thetransporter of hazardous substances. To date, we have not been notified by theU.S. Environmental Protection Agency, any state agency, or any other privateparty that we are considered responsible or potentially responsible for someaspect of the cleanup of any hazardous waste disposal site under CERCLA or anyother similar state laws.

 

In management's opinion, the Company and itsproducts are in compliance in all material respects with all applicablegovernmental regulations.  A substantialchange in any such regulation could have a significant impact on the businessof the Company.

 

Employees

The Company employs approximately 900 persons fulltime, including officers and administrative personnel.  No Company employees are represented byunions or are covered by collective bargaining agreements.  The Company has not experienced any strikesor work stoppages due to labor problems and considers its relations with itsemployees to be satisfactory.

 

 

Export Sales

See "Note 8 to the Consolidated FinancialStatements".

 

**Item 2.  PROPERTIES**

 

The following table sets forth certain information withrespect to the Company's manufacturing and office facilities.  The Company owns all properties listed belowin fee simple, except as otherwise noted.

 
|  

Location                 |  

Use                                                                               | Approximate

Size (sq ft) |
|----------------------------------|-------------------------------------------------------------------------------------------|---------------------------|
|                             |                                                                                      |                      |
| Hutchinson,  Kansas (1)          | Corporate  headquarters                                                                   | 5,000                     |
|                             |                                                                                      |                      |
| Hutchinson,  Kansas (1),(2)      | Ambulance  production; Office space                                                       | 216,000                   |
|                             |                                                                                      |                      |
| South  Hutchinson, Kansas(1),(3) | Small  school bus and commercial bus production;  Office space                            | 247,000                   |
|                             |                                                                                      |                      |
| Orlando,  Florida (1),(4)        | Ambulance  production; Office space                                                       | 311,000                   |
|                             |                                                                                      |                      |
| Longview,  Texas (5)             | Terminal  truck/road construction equipment production; chassis production; Office  space |  

180,000           |
|                             |                                                                                      |                      |
| Mansfield,  Texas (1)            | Ambulance  sales, service and distribution center                                         | 25,000                    |
|                             |                                                                                      |                      |
| Fairview,  Oklahoma (1)          | Road  construction equipment fabrication and assembly;

Office  space                     |  

74,000            |
|                             |                                                                                      |                      |
| Bluffton,  Ohio (6)              | Small  school bus and commercial bus production; Office space                             | 186,000                   |
|                                  |                                                                                      |                      |

(1)  This propertyis pledged as collateral to secure payment of the Company's debtobligations.    See "Note 2 toConsolidated 

       FinancialStatements."

(2)  This facility and certain related equipmentare financed by industrial revenue bonds in the original  principal amount of 

       $2,000,000in 2002 issued by  Reno County, Kansasunder lease purchase agreements.

(3)  This facilityand certain related equipment are financed by industrial revenue bonds in theoriginal  principal amounts of 

       $1,250,000 in 1999 and $3,500,000 in1997 issued by the City of SouthHutchinson under lease purchase agreements.

(4)  Certain related equipment is financed byindustrial revenue bonds in the originalprincipal amount of $2,000,000 in 

      2002 issuedby  Orange County, Florida IndustrialDevelopment Authority under lease purchase agreements.

(5)  This facility and certain related equipmentare financed by industrial revenue bonds in the original        principal amount of $4,200,000 in1999 issued by the Longview Industrial Corporation, Longview, Texas.

(6)  This property is leased until December 31,2004, with an option to renew for two additional five year terms or purchase

       after January 1, 2005. 

 

The Company also leases several other facilitiesthroughout the U.S. for the sale and distribution of ambulances.  Although the Company evaluates opportunitiesto acquire additional properties at favorable prices as they arise, it believesthat its existing facilities are well maintained and will be adequate to serveits needs in the foreseeable future.Certain Company facilities have room to expand in existing buildings andothers have land upon which additional buildings can be constructed.

** **

**Item3.  LEGAL PROCEEDINGS**

 

There are no material pending legal proceedings,other than ordinary routine litigation incidental to the business, to which theCompany is a party or of which any of its property is subject.

 

**Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS**

 

TheCompany did not submit any matter to a vote of security holders during thefourth quarter of the fiscal year ended October 31, 2003.

** **

** **

** **

** **

**PART II**

 

**Item 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND****RELATED****STOCKHOLDER MATTERS**

 

Collins Industries, Inc. common stock is quoted onthe Nasdaq Stock Market under the symbol COLL.The following table sets forth the high and low sales prices per shareof the common stock as reported by the Nasdaq Stock Market.  There were 518 shareholders of record of theCompany's common stock  at October 31,2003.

 

                                                                  FISCAL 2003

 

|    |        |        | Volume |
|---------|-------------|-------------|--------|
| Quarter | High        | Low         | (000s) |
| First   | $4.45  | $3.02  | 151    |
| Second  | 3.91        | 2.94        | 339    |
| Third   | 3.68        | 3.00        | 424    |
| Fourth  | 4.50        | 3.23        | 542    |

 

 

                                                                  FISCAL 2002

** **

|    |        |        | Volume |
|---------|-------------|-------------|--------|
| Quarter | High        | Low         | (000s) |
| First   | $4.00  | $2.85  | 265    |
| Second  | 5.60        | 3.50        | 398    |
| Third   | 5.25        | 4.04        | 454    |
| Fourth  | 4.10        | 2.50        | 229    |

 

During the period covered by this Report, theCompany did not sell any equity securities that were not registered under theSecurities Act.

** **

During each of the fiscal years ended October 31,2003 and 2002 the Company's annual cash dividend was $0.12 per share and waspaid on a quarterly basis. 

 

For information on our equity compensation plansrefer to Item 12, "Security Ownership of Certain Beneficial Owners andManagement."** 

 

 
Item 6.  SELECTED FINANCIAL DATA**

**Operating History**

(In thousands except share and per-share data)

 
| Fiscal years ended October 31,                      | 2003              | 2002              | 2001              | 2000 (a)          | 1999(b)           |
|-----------------------------------------------------|-------------------|-------------------|-------------------|-------------------|-------------------|
| Sales                                               | $204,647          | $  200,839        | $  207,653        | $  220,912        | $  196,398        |
| Cost of sales                                       | 181,606           | 178,114           | 182,317           | 192,621           | 165,978           |
| Gross profit                                        | 23,041            | 22,725            | 25,336            | 28,291            | 30,420            |
| Selling, general and administrative                 |              |              |              |              |              |
| (includes  research & development)              | 18,784            | 18,366            | 19,625            | 20,725            | 20,046            |
| Income from operations                              | 4,257             | 4,359             | 5,711             | 7,566             | 10,374            |
| Other income (expenses):                            |              |              |              |              |              |
| Interest, net                                       | (1,728)           | (1,527)           | (2,056)           | (1,743)           | (1,820)           |
| Other, net                                          | (6)               | 26                | 27                | 125               | 316               |
| Income before provision for income taxes            | 2,535             | 2,858             | 3,682             | 5,948             | 8,870             |
| Provision for income taxes                          | 960               | 1,110             | 1,300             | 1,790             | 3,460             |
| Net income                                          | $  1,575          | $     1,748       | $     2,382       | $     4,158       | $     5,410       |
| Earnings  per  share-diluted:                       |              |              |              |              |              |
| Net income                                          | $      .23        | $         .26     | $         .33     | $         .55     | $         .72     |
| Dividends per share                                 | $  .1200          | $     .1200       | $    .1425        | $     .1800       | $     .1000       |
| Weighted average shares outstanding -   

  Diluted |  

6,855,955 |  

6,854,222 |  

7,131,734 |  

7,574,915 |  

7,551,247 |
| Depreciation and amortization                       | $  3,320          | $     3,506       | $     3,525       | $    3,099        | $   2,568         |

** **

**Financial Position**

(In thousands, except share and per-share data)

 
| As of October 31,                                                    | 2003           | 2002           | 2001           | 2000 (a)       | 1999(b)        |
|----------------------------------------------------------------------|----------------|----------------|----------------|----------------|----------------|
|                                                                 |           |           |           |           |           |
| Current assets                                                       | $   46,550     | $   48,125     | $   44,792     | $   54,871     | $   43,359     |
| Current liabilities                                                  | 27,031         | 28,705         | 26,013         | 34,719         | 26,658         |
| Working capital                                                      | 19,519         | 19,420         | 18,779         | 20,152         | 16,702         |
| Total assets                                                         | 73,988         | 76,752         | 69,826         | 81,022         | 66,979         |
| Long-term debt and capitalized leases

   (less current  maturities) |  

16,730 |  

19,396 |  

15,124 |  

19,016 |  

15,803 |
| Shareholders' investment                                             | 28,894         | 27,536         | 27,730         | 26,673         | 23,960         |
| Book value per share                                                 | 3.99           | 3.87           | 3.80           | 3.59           | 3.21           |

** **

**Financial Comparisons**
| Fiscal years ended October 31,                                               | 2003         | 2002         | 2001         | 2000 (a)     | 1999(b)       |
|------------------------------------------------------------------------------|--------------|--------------|--------------|--------------|---------------|
|                                                                         |         |         |         |         |          |
| Gross profit margin                                                          | 11.3%        | 11.3%        | 12.2%        | 12.8%        | 15.5%         |
| Net profit margin                                                            | 0.8%         | 0.9%         | 1.1%         | 1.9%         | 2.8%          |
| Selling, general and administrative

(including R&D) as percent of sales |  

9.2% |  

9.1% |  

9.5% |  

9.4% |  

10.2% |
| Current ratio                                                                | 1.7:1        | 1.7:1        | 1.7:1        | 1.6:1        | 1.6:1         |
| Long-term debt and capitalized leases                                        |         |         |         |         |          |
| to shareholders'  investment                                                 | 0.7:1        | 0.7:1        | 0.5:1        | 0.7:1        | 0.7:1         |
| Manufacturing space (000's square feet)                                      | 1,108        | 1,108        | 1,108        | 1,108        | 1,014         |
| Common stock repurchased                                                     | $195         | $    1,749   | $       908  | $      539   | $    1,261    |
| Capital expenditures                                                         | $3,131       | $    3,004   | $    1,687   | $   1,763    | $    3,140    |

 

(a)     2000includes results from Mobile Products, Inc. acquisition of  certain assets of  Waldon, Inc.

(b)     1999includes results from Mid Bus acquisition.

** **

** **

** **

**Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL********CONDITION AND RESULTS OF OPERATIONS**

** **

The following discussion and analysis provides informationwhich management believes is relevant to an assessment and understanding of theCompany's consolidated results of operations and financial condition.  The discussion should be read in conjunctionwith the consolidated financial statements and notes thereto.

 
|                                         | 2003   | 2002   | 2001   |
|----------------------------------------------|--------|--------|--------|
|                                         |   |   |   |
| Sales                                        | 100.0% | 100.0% | 100.0% |
| Cost of sales                                | 88.7   | 88.7   | 87.8   |
| Gross  profit                                | 11.3   | 11.3   | 12.2   |
|                                         |   |   |   |
| Selling, general and administrative expenses | 9.1    | 9.0    | 9.4    |
| Research and development expenses            | 0.1    | 0.1    | 0.1    |
|                                         |   |   |   |
| Income  from operations                      | 2.1    | 2.2    | 2.7    |
|                                         |   |   |   |
| Other income (expense):                      |   |   |   |
| Interest, net                                | (0.8)  | (0.8)  | (1.0)  |
|                                         |   |   |   |
| Income  before provision for income taxes    | 1.3    | 1.4    | 1.7    |
|                                         |   |   |   |
| Provision for income taxes                   | 0.5    | 0.5    | 0.6    |
|                                         |   |   |   |
| Net  income                                  | 0.8%   | 0.9%   | 1.1%   |

####  

####  

#### OVERVIEW

 

CollinsIndustries, Inc. is a manufacturer of specialty vehicles and has threereportable segments: ambulances, buses and terminal trucks/road constructionequipment.    The bus segment producessmall school buses, commercial buses and shuttle buses for sale to schools,hotel shuttle services, airports, and other governmental agencies. The terminaltrucks/road construction equipment segment produces off-road trucks designed tomove trailers and containers for warehouses, truck terminals, rail yards, railterminals and shipping ports and produces a line of road constructionequipment.  Each of the Company'sproduct groups is responsible for its own marketing activities and maintainsindependent relationships with dealers and distributors.  

 

The accountingpolicies of the segments are the same as those described in the summary ofsignificant accounting policies of the "Notes to Consolidated FinancialStatements."  The Company evaluatesperformance based on profit or loss from operations before income taxes notincluding nonrecurring gains and losses.For the fiscal years ended October 31, 2003, 2002 and 2001 nonrecurringgains or losses were not incurred and as such have no impact on thisanalysis.  

 

The Companyaccounts for intersegment sales and transfers as if the sales or transfers wereto third parties, with all intercompany sales eliminated in consolidation.

 

TheCompany's reportable segments are strategic business units that offer differentproducts and services.  They are managedseparately because each business requires different technology and marketingstrategies.  

 

Thesales backlog at October 31, 2003, was approximately $46.7 million compared to$42.2 million at October 31, 2002.  Inthe opinion of management, the majority of this sales backlog will be shippedin fiscal 2004.

 

See "Note 8 to theConsolidated Financial Statements" for quantitative segment information. 

 

**RESULTS OF OPERATIONS**

** **

***Fiscal2003 Compared to Fiscal 2002***

 

#### AMBULANCE SEGMENT

The Company'sambulance segment is the most significant of the Company's three reportablesegments. The ambulance segment is dependent on a number of factors, includingreplacement cycles of ambulances, budgetary constraints of Federal,  municipaland other governmental agencies, the age and health demographics ofmedical patients, capital spending trends and interest rates for capital goods.Most ambulance sales are made on a competitive bid basis to public and privateambulance services, fire departments, hospitals and other governmentalagencies. Substantially all ambulance sales are based on and built to customerspecifications. The Company markets its products through a direct sales forceand to a lesser extent through a dealer network throughout the U.S. andabroad.   

 

In fiscal 2003,the ambulance segment sales were $96.5 million or 47.1% of the Company'sconsolidated sales compared to $95.5 million or 47.6% in fiscal 2002. Unitvolume sales of ambulance products decreased 14% in fiscal 2003 compared to2002. This decrease was principally due to a large non-recurring export sale ofambulances in fiscal 2002.  Ambulanceproducts selling prices increased 17% in fiscal 2003 compared to fiscal 2002.This increase principally resulted from the impact of a greater number ofcustomer furnished chassis in 2002 compared to 2003.  The impact of non-recurring, large export sale in fiscal 2002 anda change in product mix, were the principal reasons for lower profit marginsfrom the ambulance segment.   

 

TheCompany produces ambulances in Florida and Kansas and are generally completedin 60-90 days depending on the complexity of the particular ambulance.  Chassis, purchased components and rawmaterials are the most significant ambulance manufacturing costs. Ambulancesare produced on a variety of chassis purchased from other manufacturers such asFord and General Motors   As a result,the ambulance segment is dependent upon an adequate supply and flow of chassisfrom it principal chassis suppliers. The Company maintains chassis consignmentpool arrangements with both GM and Ford and generally maintains a 90-120 daysupply of chassis in its consignment pools. While an interruption in supplyfrom one source may cause a temporary slowdown in production, the Companybelieves that it could obtain adequate numbers of chassis from alternatesources of supply.  In certain cases,chassis may be supplied by a customer. Other key production components ofambulances include aluminum, steel, lights and lightbars, wood, laminates,paint and electrical wire and components. The Company generally does not enterinto long-term production contracts for ambulances that would requirecontractual provisions for cost adjustments.

 

The Company madecapital expenditures related to the ambulance segment in fiscal 2003 and 2002,of $2.7 million and $2.0 million, respectively.  The majority of these expenditures related to the automation ofcertain cabinet and metal fabrication operations in the Florida and Kansas  plants. The Company expects theseexpenditures to improve the quality of its products and to reduce its overallproduction costs.    

 

**BUS SEGMENT**

 

The Company's bussegment is its second most significant reportable segment. Key business driversof the bus segment include, among other things, the replacement cycle of buses,transportation budgets of school districts and other non-profit organizations,capital spending trends and interest rates for capital goods. Bus sales aregenerally made on a competitive bid basis either through the Company's dealernetwork or directly to an end user for national account customers. Substantiallyall bus sales are based on and built to customer specifications.  Additionally, school buses are manufacturedto meet state specifications which vary by state.  The majority of the bus segment sales are small Type-A buses soldto either school districts or large contract carriers for school districts. Inrecent years, many states have adopted new laws that will prohibit or severelylimit the public use of 14-passenger vans ("non-conforming vans").  Consequently, public and private schools,public agencies, churches and similar organizations have begun replacement ofnon-conforming vans with small school buses. As a result, the Company expectsthe replacement cycle in this new market segment to continue to increase overthe next several years.  In recentyears, the Company has sold an increasing number of small activity buses usedby day care, church and other non-profit organizations. 

 

In fiscal 2003,bus segment sales were $66.6 million or 32.6% of the Company's consolidatedsales compared to $66.3 million or 33.0% in fiscal 2002. Unit volume sales ofbus products decreased by 3% in fiscal 2003.This decrease was principally due to the overall weakness in the schoolbus transportation markets, school budgetary constraints and a general weaknessin the U.S. economy.  The average unitprice of bus products increased by 4% in fiscal 2003 principally as a result ofproduct mix changes.

 

TheCompany produces buses in Kansas and Ohio and are generally completed in 30-60days depending on the complexity of the particular bus. Chassis, purchasedcomponents and raw materials are the most significant bus manufacturing costs.Buses are principally produced on Ford, General Motors and Internationalchassis.  As a result, the bus segmentis dependent upon a adequate supply and flow of chassis from it principalchassis suppliers. The Company maintains chassis consignment pool arrangementswith both GM and Ford and generally maintains a 90-120 day supply of chassis inits consignment pools. While an interruption in supply from one source maycause a temporary slowdown in production, the Company believes that it couldobtain adequate numbers of chassis from alternate sources of supply.  In certain cases, chassis may be supplied bya customer. Other key production components of buses include steel, lights,wood, windows, paint and electrical wire and components.  The Company generally does not enter intolong-term production contracts for buses that would require contractual provisionsfor cost adjustments.  In fiscal 2003the Kansas bus plant completed mechanization projects and made major productand manufacturing process improvements.These projects and improvements were the principal reasons for theincreased bus margins achieved in fiscal 2003.

 

**TERMINAL TRUCK/ROAD CONSTRUCTION SEGMENT**

 

Productsales of terminal trucks and road construction units are principally driven byfreight volume trends in the intermodal, trucking, warehousing, stevedoringoperations and construction spending. Other key drivers of this segment includecapital spending and interest rate trends, highway construction budgets andinternational currency exchange rates.This segment's products are sold direct to end customers and throughdealer networks and distributors, depending on the particular product and unitvolumes. A majority of this segment's products are sold on a competitive bidbasis and terminal trucks are generally manufactured based on the particularspecifications and requirements of the end customer.  A significant majority of the trucks are built for off-highwayuse in railyards, ports and warehouses and distribution centers.   After-market sales of parts to the terminaltruck/road construction market customer base are also a key source of revenueto this segment.   

 

Infiscal 2003, the terminal truck/road construction segment sales were $41.5million or 20.3% of the Company's consolidated sales compared to $39.0 millionor 19.4% in fiscal 2002.  Unit volumesales of terminal truck/road construction products increased 7% in fiscal2003.  These unit volume increasesprincipally resulted from higher sales to intermodal, domestic stevedoring,trucking and warehousing customers.Additionally the Company experienced a rebound in the road sweepers soldto the domestic rental market. Average unit selling prices of terminaltruck/road construction products decreased less than 1% in fiscal 2003 comparedto fiscal 2002. 

 

TheCompany produces its terminal truck/road construction equipment in Texas andcertain other road construction equipment in Oklahoma. These products aregeneally manufactured within a 30-60 day timeframe depending on the complexityof the particular product. The most significant manufacturing costs are theengines, transmissions, axles and raw steel components. Other key manufacturingcomponents include windows, hydraulic components, paint and electrical wire andcomponents.  The Company generally doesnot enter into long-term production contracts for terminal truck/road constructionproducts that would require contractual provisions for cost adjustments.Segment pretax profits from terminal truck/road contruction products improvedby 42% in fiscal 2003 compared to 2002. These improvements were principally dueto the higher unit volumes and product mix.

 

**OTHER**

** **

Interestexpense increased to $1.7 million in fiscal 2003 compared to $1.5 million infiscal 2002.  This increase wasprincipally a result an overall increase of the Company's average borrowingsthroughout most of fiscal 2003 required to support higher levels of inventoryand capital expenditures financed by Industrial Revenue Bonds. 

 

TheCompany's net income in fiscal 2003 decreased to $1.6 million ($.23 pershare-diluted) compared to $1.7 million ($.26 per share-diluted) in fiscal2002.  The overall decrease wasprincipally due to lower profit contributions from ambulance products andincreased interest expense.   Thesedecreases were partially offset by the impact of higher profit contributionsfrom bus products,  lower corporateexpenses. 

 

 

 

***Fiscal 2002 Compared to Fiscal 2001***

*** ***

Sales for fiscal 2002 declined 3.3% to $200.8million compared to $207.7 million in fiscal 2001.  This decrease was principally due to a 13.3% decrease in unitvolume sales of terminal truck/road construction  products.  Sales of terminaltruck/road construction products declined primarily as a result of an overalldecline in the economy with slowing of orders for purchases of new equipment bytrucking, warehousing, domestic shipping and road construction industries.   Unit volume sales of ambulance productsincreased 12.8% in fiscal 2002 compared to 2001. This increase was principallydue to higher export sales of ambulances in fiscal 2002. Unit volume sales ofbus products in fiscal 2002 were approximately the same as in fiscal 2001.

 

Average unit selling prices of terminal truck/roadconstruction products decreased 1.5% in fiscal 2002 compared to fiscal 2001.This decrease principally resulted from higher competitive price discountsgranted in 2002.   Ambulance productsselling prices decreased 11.7% in fiscal 2002 compared to fiscal 2001. Thesedecreases principally resulted from the impact of a greater number of customerfurnished chassis in 2002 compared to 2001. The average unit price of busproducts increased by less than 1% in fiscal 2002. 

 

Cost of sales for fiscal 2002 was 88.7% of salescompared to 87.8% of sales in fiscal 2001.The overall percentage increase was principally due to sales discounts,higher raw material costs and higher manufacturing overhead costs related to employeehealth insurance expense, workers compensation and general liability insurance.

 

Selling, general and administrative expenses forfiscal 2002 were $18.2 million (9.0% of sales) compared to $19.5 million (9.3%of sales) in fiscal 2001. This decrease principally resulted from lowercorporate expenses, lower selling costs associated with terminal truck/roadconstruction product sales and the impact of changes in the distributionnetwork and sales mix of ambulance products.

 

Interest expense decreased in fiscal 2002principally as a result an overall decrease of the Company's effective interestrates.  

 

Income tax expense in fiscal 2002 was $1.1 millioncompared to $1.3 million in fiscal 2001.Income tax expense as a percentage of pretax income was 39% in fiscal2002 compared to 35% in fiscal 2001.Income tax expense as a percent of pretax income increased principallyas a result of higher state income taxes and non-deductible expenses. 

 

The Company's net income in fiscal 2002 decreased to$1.7 million ($.26 per share-diluted) compared to $2.4 million ($.33 pershare-diluted) in fiscal 2001.  Thisdecrease was principally due to declines in terminal truck/road constructionproducts sales and profits, lower profit contributions from bus products and  higher effective income tax rates in fiscal2002.  These decreases were partiallyoffset by the impact of higher profit contributions from ambulances and lowerinterest costs.

**LIQUIDITY ANDCAPITAL RESOURCES**

 

Historically, the Company has principally relied oninternally generated funds, supplier financing, bank borrowings and industrialrevenue bonds to finance its operations and capital expenditures.  The Company's working capital requirementsvary from period to period depending on the production volume, the timing ofvehicle deliveries and the payment terms offered to its customers. 

 

Cash provided by operations was $4.6 million infiscal 2003 compared to $4.7 million in fiscal 2002.  Principal sources of the cash provided by operations in fiscal2003 were from Company profits and decreases of accounts receivable.  These sources of cash from operations wereoffset by increases in inventories and decreases in accounts payable (net ofcontrolled disbursements). 

 

Cash provided by operations was $4.7 million infiscal 2002 compared to $8.7 million in fiscal 2001.  Principal sources of the cash provided by operations in fiscal2002 were from Company profits and increases of accounts payable.  These sources of cash from operations wereoffset by increases in receivables principally associated with exports sales ofterminal trucks in October of 2002. 

 

Cash used in investing activities was $3.2 millionin fiscal 2003 compared to $3.0 million in fiscal 2002.  In fiscal 2003, the principal use of cashfor investing purposes was for capital expenditures associated with theautomation of certain ambulance production. 

Cash used in investing activities was $3.0 millionin fiscal 2002 compared to $1.8 million in fiscal 2001.  In fiscal 2002, the principal use of cashfor investing purposes was for capital expenditures related to automationprojects in the ambulance and bus facilities. 

 

Cash used by financing activities was $1.7 million infiscal 2003 compared to $1.5 million in fiscal 2002. In fiscal 2003, the principalsources of cash from financing activities related to $2.0 million advanced fromIndustrial Revenue Bonds issued prior to fiscal 2002 and $.9 million inadditional debt related to equipment financed by the Company's term debt creditline. These sources of cash from financing activities were partially offset bythe Company's repayment of debt of $3.5 million, the repurchase and retirementof common stock of $.2 million and the payment of cash dividends of $.9million. 

 

Aggregate maturities of $11.3 million in capitalizedleases and long-term debt due in 2005 are principally a result of a loanagreement with the Company's  lead bankwhich expires May  17, 2005.  The Company currently anticipates arrangingan extension or refinancing of this debt at or prior to maturity.  See "Note 2 to the Consolidated FinancialStatements" for quantitative information.

 

At October 31, 2003, cash balances includedrestricted funds of $.8 million related to the unused proceeds from the newIndustrial Revenue Bonds issued in fiscal 2002.

 

Cash used by financing activities was $1.5 millionin fiscal 2002 compared to $6.9 million in fiscal 2001. In fiscal 2002, theprincipal sources of cash from financing activities related to two newIndustrial Revenue Bonds aggregating $4.0 million, $.6 million borrowed againstIndustrial Revenue Bonds issued prior to fiscal 2002 and $1.2 million inadditional debt related to refinancing revolving and term debt credit lines.These new sources of cash from financing activities were partially offset bythe Company's repayment of debt of $2.1 million, unexpended IRB bond proceedsof $2.7 million, the repurchase and retirement of common stock of $1.6 millionand the payment of cash dividends of $.9 million. At October 31, 2002, cashbalances included restricted funds of $2.7 million related to the unusedproceeds from the new Industrial Revenue Bonds issued in fiscal 2002.  

 

OnMay 17, 2002 the Company entered into a Loan and Security Agreement, (the"Agreement"), with Fleet Capital Corporation, a Rhode Island Corporation (the"Bank"). The Agreement , as amended, provides a total credit facility of $39.6million consisting of a revolving credit facility of $30.0 million andlong-term credit facilities of $9.6 million.This Agreement expires May 17, 2005.The credit facilities bear interest based on a combination of Eurodollar(LIBOR plus 1.75%) and the Bank's prime lending rate (4.00% at October 31,2003).  The revolving credit facilityalso provides for a maximum of $2.5 million in letters of credit, of which $1.5million were outstanding at October 31, 2003.The total amount of unused revolving credit available to the Company was$17.2 million at October 31, 2003. 

 

OnDecember 1, 2003 the Company completed a modified Dutch auction tender offer,which commenced on October 10, 2003 and expired on November 21, 2003.  As a result, the Company purchased andretired 14.4% of its outstanding common stock (1,050,879 shares) at $4.50 pershare or $4.7 million. The purchase of the shares was financed by the Company'srevolving credit facility. The effect of this transaction increased theCompany's interest-bearing debt and reduced its stockholders' equity by $4.7million.

 

On January 7, 2004 the Company initiated purchasesof normal inventory from a key supplier which carried a special, one-timepurchase discount. The discount is expected to be approximately $500,000. Thetransaction also resulted in the Company amending its bank credit agreement tofund the purchase. The impact of this purchase will temporarily increase theCompany's inventories and revolving bank debt by approximately $13.5 million.The Company expects to fully utilize this inventory in normal production overits next three fiscal quarters. 

 

The Company believes that its cash flows fromoperations, its credit facility with its lead bank and unused funds restrictedfor future capital expenditures will be sufficient to satisfy its futureworking capital, capital expenditure requirements and anticipated dividends.See "Note 2 to the Consolidated Financial Statements" for quantitativeinformation.

 

It is customary practice for companies in thespecialty vehicle industry to enter into repurchase agreements with financinginstitutions to provide floor plan financing for dealers.  In the event of a dealer default, theseagreements generally require therepurchase of products at the original invoice price net of certainadjustments.  The risk of loss under theagreements is limited to the risk that market prices for these products maydecline between the time of delivery to the dealer and time of repurchase bythe Company.  The risk is spread overnumerous dealers and the Company has not incurred significant losses underthese agreements.  In the opinion ofmanagement, any future losses under these agreements will not have a materialadverse effect on the Company's financial position or results ofoperations.  The Company's repurchaseobligation under these agreements is limited to vehicles which are in new conditionand as to which the dealer still holds title.The Company's contingent obligationunder such agreements was approximately $4,052,000 at October 31, 2003.

 

** **

** **

**CRITICALACCOUNTING PRINCIPLES AND ESTIMATES**

 

The Company's consolidated financial statements areprepared in conformity with accounting principles generally accepted in theUnited States. The preparation of these financial statements requires the useof estimates, judgments, and assumptions that affect the reported amounts ofassets and liabilities at the date of the financial statements and the reportedamounts of revenues and expenses during the periods presented. We believe thatof our critical accounting policies, the following may involve a higher degreeof judgments, estimates, and complexity: 

 

***Inventories***

The Company values its inventories at the lower ofcost or market. The Company has chosen the first-in, first-out (FIFO) costmethod for valuing its inventories. The effect of the FIFO method is to valueending inventories on the balance sheet at their approximate current or mostrecent cost.  The market values forfinished goods inventories are determined based on recent selling prices. 

 

***Impairment of Long-Lived Assets***

In June 2001, the Financial Accounting Standards Board(FASB) issued Statement of Financial Accounting Standards No. 142,"Goodwill and Other Intangible Assets" (SFAS No. 142). SFAS No. 142was effective for fiscal years beginning after December 15, 2001. Consequently,goodwill is no longer amortized over future periods, but is assessed for impairmentat least annually using a fair value test. The Company adopted this newstandard on November 1, 2002.

 

As of November 1, 2002 and October 31, 2003, theCompany tested for impairment the bus and terminal truck/road constructionbusiness segments using the discounted cash flow approach and determined thatthe fair values for each of these segments exceeded the related carryingvalues. On an on-going basis, and absent any impairment indicators, the Companywill conduct similar tests and record any impairment loss. Management believesthat the estimates of future cash flows and fair values are reasonable;however, changes in estimates of such cash flows and fair value could affectthe valuations. 

 

***Insurance Reserves***

Generally, the Company is self-insured for workers'compensation for certain subsidiaries and for all group medical insurance.Under these plans, liabilities are recognized for claims incurred (includingclaims incurred but not reported) and changes in the case reserves. At the timea workers' compensation claim is filed, a liability is estimated to settle theclaim. The liability for workers' compensation claims is determined based onmanagement's estimates of the nature and severity of the claims and based onanalysis provided by third party administrators and by various state statutesand reserve requirements. Since the liability is an estimate, the ultimateliability may be more or less than reported.If previously established accruals are required to be adjusted, suchamounts are included in cost of sales. Group medical reserves are fundedthrough a Trust and are estimated using historical claims' experience. 

 

Due to the nature of the Company's products, the Companyis subject to product liability claims in the normal course of business. To theextent permitted under applicable law, the Company maintains insurance toreduce or eliminate risk to the Company. This insurance coverage includesself-insured retentions that vary each year. 

 

The Company maintains excess liability insurance withoutside insurance carriers to minimize its risks related to catastrophic claimsin excess of all self-insured positions. Any material change in theaforementioned factors could have an adverse impact on our operating results.

* *

***Warranties***

The Company's products generally carry explicit product warranties thatextend from several months to more than a year, based on terms that aregenerally accepted in the marketplace. Certain components included in theCompany's end products (such as chassis, engines, axles, transmissions, tires,etc.) may include manufacturers' warranties. These manufacturers' warrantiesare generally passed on to the end customer of the Company's products and thecustomer generally deals directly with the applicable component manufacturer.The Company records provisions for estimated warranty and other related costsat the time of sale based on historical warranty loss experience andperiodically adjusts these provisions to reflect actual experience. Certainwarranty and other related claims involve matters of dispute that ultimatelyare resolved by negotiation, arbitration or litigation. Infrequently, amaterial warranty issue may arise which is beyond the scope of the Company'shistorical experience. The Company provides for any such warranty issues asthey become known and estimable. It is reasonably possible that from time totime additional warranty and other related claims could arise from disputes orother matters beyond the scope of the Company's historical experience.

 

***Revenue Recognition***

The Company records vehicle sales, and passes titleto the customer, at the earlier of completion of the vehicle and receipt offull payment or shipment or delivery to the customer as specified by thecustomer purchase order.  Customerdeposits for partial payment of vehicles are deferred and treated as currentliabilities until the vehicle is completed and recognized as revenue.  Ininstances where revenue has been recognized and the vehicle is on the Company'sproperty, the customer has instructed in writing the Company to hold the unitfor specific business reasons, a delivery date normally within the next 30 dayshas been established, the vehicles are complete, ready for shipment, andsegregated from other vehicles, and the risk of ownership has passed to the customer.

 

**PRINCIPAL CONTRACTUALOBLIGATIONS AND COMMERCIAL COMMITMENTS**

 

TheCompany's contractual obligations and other commercial commitments aresummarized below and fully disclosed in Notes 2 and 7 in Notes to ConsolidatedFinancial Statements:

 

|   | **Payments due by  period (in millions)**
 

 

 

**Less than**

 

 

 

 

 

**After 5**

 

**Total**

 

**1 year**

 

**1-3 years**

 

**4-5 years**

 

**years**

 

 

 

 

 

 

 

 

 

 

**Contractual Cash Obligations**

 

 

 

 

 

 

 

 

 

Long-term debt

$  11.267

 

$   1.180

 

$  10.087

 

$           -

 

   $           -

Capital lease obligations

7.868

 

1.226

 

2.501

 

2.113

 

2.028

Operating leases

1.007

 

0.618

 

0.380

 

0.009

 

-

Purchase obligations

.773

 

.773

 

-

 

-

 

-

Chassis contingent obligations

25.110

 

25.110

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

**Total contractual cash  obligations**

$  46.025

 

$  28.907

 

$  12.968

 

$   2.122

 

$   2.028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

**Other Commercial Commitments**

 

 

 

 

 

 

 

 

 

Lines of credit

$           -

 

$           -

 

$           -

 

$           -

 

$           -

Standby letters of credit

3.475

 

3.475

 

-

 

-

 

-

Standby repurchase commitments

4.052

 

4.052

 

-

 

-

 

-

Other commercial commitments 

-

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

**Total commercial commitments**

$   7.527

 

 

$  7.527

 

$           -

 

$           -

 

$           -

 

 

 

 

 

 

 

 

 

 

** **

**RecentlyIssued Accounting Standards**

** **

In December 2002, FASB issued SFAS 148, Accountingfor Stock-Based Compensation-Transition and Disclosure which providestransition guidance for a voluntary change to the fair value method ofaccounting (from the intrinsic value method) for stock option awards. TheStatement also amends the disclosure requirements of SFAS 123, "Accountingfor Stock-Based Compensation" ("SFAS123"). The disclosure requirements apply to annual as well asinterim disclosures, and are applicable whether Accounting Principles Board("APB") Opinion 25, Accounting for Stock Issued to Employees("APB Opinion 25"), or SFAS 123 is used to account for stock-basedawards. The Company will continue to apply the provisions of APB Opinion 25(intrinsic value) in accounting for stock-based awards. 

 

In January 2003, the FASB issued FASB Interpretation46, Consolidation of Variable Interest Entities. FIN 46 is an interpretation ofAccounting Research Bulletin No. 51, Consolidated Financial Statements, andaddresses consolidation by business enterprises of variable interest entities-anew term. Under current practice, two enterprises generally have been includedin consolidated financial statements because one entity controls the other. FIN46 defines "variable interests" and requires existing unconsolidatedvariable interest entities to be consolidated by their primary beneficiaries ifthe entities do not effectively disperse risks among the parties involved. FIN46 applies immediately to variable entities created after January 31, 2003. Itapplies in the first fiscal year or interim periods beginning after June 15,2003 to variable interest entities in which an enterprise holds a variableinterest that it acquired before February 1, 2003. If it is reasonably possiblethat an enterprise will consolidate or disclose information about a variableinterest entity when FIN 46 becomes effective, the entity must discloseinformation about those entities in all financial statements issued afterJanuary 31, 2003. FIN 46 may be applied prospectively with a cumulative-effectadjustment as of the date on which it is first applied or by restatingpreviously issued financial statements for one or more years with acumulative-effect adjustment as of the beginning of the first year restated.FIN 46 will not have a financial statement impact on the Company. 

 

On May 15, 2003, the FASB issued SFAS No. 150,Accounting for "Certain Financial Instruments with Characteristics of bothLiabilities and Equity". SFAS 150 establishes standards for classifyingand measuring as liabilities certain financial instruments that embodyobligations of the issuer and have characteristics of both liabilities andequity. SFAS 150 represents a significant change in practice in the accountingfor a number of financial instruments, including mandatory redeemable equityinstruments and certain equity derivatives that frequently are used in connectionwith share repurchase programs. SFAS 150 is effective for all financialinstruments created or modified after May 31, 2003. The Company has not enteredinto or modified any financial instruments subsequent to May 31, 2003. Therewas no impact from the adoption of this statement.

 

**CautionaryStatement Regarding Risks and Uncertainties That May Affect Future Results**

 

This annual report on Form 10-K and other written reportsand oral statements made from time to time by the Company may contain so-called"forward-looking statements" about the business, financial condition, andprospects of the Company which are subject to risks and uncertainties.  One can identify these forward-lookingstatements 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 thatthey do not relate strictly to historical or current facts.  One should understand that it is notpossible to predict or identify all factors which involve risks anduncertainties.  Consequently, the readershould not consider any such list or listing to be a complete statement of allpotential risks or uncertainties.  

 

No forward-looking statement can be guaranteed and actualfuture results may vary materially.  Theactual results of the Company could differ materially from those indicated bythe forward-looking statements because of various risks and uncertaintiesincluding without limitation, changes in funds budgeted by Federal, state andlocal governments, changes in competition, various inventory risks due tochanges in market conditions, changes in product demand, substantial dependenceon third parties for product quality, the availability of key raw materials,components and chassis, interest rate fluctuations, adequate direct laborpools, development of new products, changes in tax and other governmental rulesand regulations applicable to the Company, reliability and timely fulfillmentof orders and  other risks indicated inthe Company's filings with the Securities and Exchange Commission. 

 

The Company does not assume the obligation to updateany forward-looking statement.  Oneshould carefully evaluate such statements in light of factors described in theCompany's filings with the Securities and Exchange Commission, especially onForms 10-K, 10-Q and 8-K (if any).
****
**Item7A.  Quantitative and QualitativeDisclosures About Market Risk**

 

TheCompany is exposed to market risk relating to interest rates on its fixed ratedebt. Interest rate risk is not material to the Company's consolidatedfinancial position or results of operations. 

 

TheCompany uses derivative financial instruments to reduce exposure to itsvariable-rate debt.  On July 5, 2002,the Company entered into an interest rate declining balance swap agreement onterm debt of $6.8 million to limit the effect of potential increases in theinterest rates on its floating-rate term debt through May 2005. The effect ofthis agreement is to convert the underlying variable-rate debt based on LIBORto a fixed-rate debt with an interest rate between 4.42% and 4.65% plus amargin of 175 basis points.  Fair valueof this swap at October 31, 2003 was $6.6 million.  If interest rates for long-term debt under the current creditfacility had averaged 10% more on the average variable-rate debt for the entireyear, interest expense would have increased, and income before taxes would havedecreased by less than $0.05 million for the year ended October 31, 2003.

 

 

**Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**

** **

CollinsIndustries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Forthe years ended October 31,

 

 

2003

2002

2001

 

 

 

 

Sales

$204,647,364

$200,839,393

$207,653,284

Cost of sales

181,606,051

 178,114,150

 182,317,488

          Gross  profit

23,041,313

22,725,243

25,335,796

 

 

 

 

Selling, general and administrative expenses

18,690,542

18,167,038

19,457,978

Research and development expenses                                 

        93,527

        198,814

        166,763

 

 

 

 

          Income  from operations

4,257,244

4,359,391

5,711,055

 

 

 

 

Other income (expense):

 

 

 

     Interest, net

(1,728,369)

(1,527,592)

(2,055,886)

     Other, net

           6,078

          26,034

          26,858

 

    (1,722,291)

    (1,501,558)

    (2,029,028)

 

 

 

 

          Income  before provision for income taxes

2,534,953

2,857,833

3,682,027

 

 

 

 

Provision for income taxes

960,000

    1,110,000

    1,300,000

 

 

 

 

          Net  income

$  1,574,953

$   1,747,833

$   2,382,027

 

 

 

 

Other comprehensive income, net of tax:

 

 

 

     Unrealized  gain (loss) on interest rate swap 

 

 

 

     agreement

          143,702

     (244,918)

                  -

 

 

 

 

  Comprehensive income

$   1,718,655

$   1,502,915

$   2,382,027

 

 

 

 

Earnings per share:

 

 

 

     Basic

$.24

$.26

$.35

 

 

 

     Diluted

$.23

$.26

$.33

 

 

 

 

Dividends per share

$0.1200

$0.1200

$0.1425

 

 

The accompanyingnotes are an integral part of these consolidated statements.

** **
****
CollinsIndustries, Inc. and Subsidiaries

CONSOLIDATEDBALANCE SHEETS

October31, 

ASSETS

2003

2002

Current assets:

 

 

    Cash

$       77,012     

$     384,514

    Receivables

6,679,907

8,982,854

    Inventories

36,364,906

35,724,808

    Prepaid  expenses and other current assets

   3,428,027

   3,033,130

          Total  current assets

46,549,852

48,125,306

 

 

 

Restricted cash 

772,803

2,748,970

 

 

 

Property and equipment, at cost:

 

 

    Land and  improvements

2,925,178

2,902,933

    Buildings and  improvements

19,987,222

19,432,685

    Machinery and  equipment

23,270,297

22,065,315

    Office  furniture and fixtures

4,355,691

   4,479,740

 

50,538,388

48,880,673

    Less -  accumulated depreciation

30,494,964

 29,653,262

 

20,043,424

19,227,411

Other assets

  6,622,131

   6,650,054

 

$73,988,210

$76,751,741

 

 

 

  LIABILITIES & SHAREHOLDERS' INVESTMENT

 

 

Current liabilities:

 

 

    Current  maturities of long-term debt and capitalized leases 

$  2,406,250

$  2,137,915

    Controlled  disbursements 

3,632,287

5,287,090

    Accounts  payable

13,895,996

14,385,933

    Accrued  expenses and other current liabilities

  7,096,802  

   6,893,702

          Total  current liabilities

27,031,335

28,704,640

 

 

 

Long-term debt and capitalized leases

16,729,561

19,395,723

 

 

 

Deferred income taxes

1,333,571

1,115,336

 

 

 

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 shares outstanding

 

 

    Common stock,  $.10 par value

 

 

        Authorized - 17,000,000 shares

 

 

        Issued and  outstanding - 7,247,865 shares in 2003 

          and  7,115,629 shares in 2002

 

724,787

 

711,563

    Paid-in capital

17,570,310

17,110,446

    Deferred  compensation

(1,238,947)

(1,267,992)

    Accumulated  other comprehensive income (loss), net

(101,216)

(244,918)

    Retained  earnings 

11,938,809

   11,226,943

 

 

 

          Total shareholders' investment

  28,893,743

  27,536,042

 

$73,988,210

$76,751,741

 

The accompanyingnotes are an integral part of these consolidated balance sheets.

** **

** **
****
CollinsIndustries, Inc. and Subsidiaries

CONSOLIDATEDSTATEMENTS OF CASH FLOWS

Forthe years ended October 31,

 

 

2003

2002

2001

Cash flow from operations:

 

 

 

    Cash received  from customers

$206,950,311

$197,942,040

$211,773,952

    Cash paid to  suppliers and employees

(199,957,978)

(191,276,791)

(200,474,336)

    Interest paid,  net

(1,760,118)

(1,563,990)

(2,098,523)

    Income taxes  paid

       (648,540)

       (406,650)

       (542,250)

        Cash provided by operations

     4,583,675

     4,694,609

     8,658,843

 

 

 

 

Cash flow from investing activities:

 

 

 

    Capital  expenditures and acquisitions

(3,131,071)

(3,003,579)

(1,667,382)

    Expenditures  for other assets 

        (38,096)

        (43,560)

      (137,420)

        Cash used in investing activities

   (3,169,167)

   (3,047,139)

   (1,804,802)

 

 

 

 

Cash flow from financing activities:

 

 

 

    Principal  payments of long-term debt and

 

 

 

  capitalized leases

(3,546,861)

(2,062,485)

(6,370,175)

    Addition to  long-term debt and capitalized leases

900,000

5,817,348

1,434,847

    Changes in  restricted unexpended IRB cash

1,976,167

(2,748,970)

                  -  

    Purchase of  common stock and other

 

 

 

         capital  transactions

(188,229)

(1,605,906)

(908,231)

     Payment of  dividends

     (863,087)

      (855,558)

    (1,021,968)

          Cash used  in financing activities

  (1,722,010)

   (1,455,571)

    (6,865,527)

 

 

 

 

Net  increase  (decrease) in cash

(307,502)

191,899

(11,486)

Cash at beginning of year

       384,514

       192,615

       204,101

 

 

 

 

Cash at end of year

$      77,012

$      384,514

$      192,615

 

 

 

 

 

 

 

 

Reconciliation of net income to net

 

 

 

cash provided by operations:

 

 

 

    Net income 

$  1,574,953

$   1,747,833

$   2,382,027

    Depreciation  and amortization

3,320,474

3,505,504

3,525,087

    Deferred income taxes (credits)

   (152,000)

205,000

344,766

Changes in assets and liabilities, net of acquisitions:

 

 

 

    Decrease  (increase) in receivables

          2,302,947

(2,897,353)

4,120,668

    Decrease  (increase) in inventories

(640,098)

(355,508)

6,041,490

    Increase  (decrease) in prepaid expenses

(251,196)

361,648

(94,350)

    Increase in  controlled disbursements

  1,654,803

373,394

83,718

    Increase  (decrease) in accounts payable

(3,799,543)

1,768,676

(8,164,148)

    Increase (decrease)  in accrued expenses

573,335

(14,585)

417,616

  Other, net    

                  -

                  -

           1,969

           Cash provided by operations

$  4,583,675

$  4,694,609

$  8,658,843

 

 

 

 

 

 

The accompanyingnotes are an integral part of these consolidated statements.

** **

** **
****
CollinsIndustries, Inc. and Subsidiaries

CONSOLIDATEDSTATEMENTS OF SHAREHOLDERS' INVESTMENT

Forthe years ended October 31, 

 

 

 

Common Stock

 

  Paid-In

 

Retained

 

 

 

Shares

Amount

Capital

Earnings

Other

Balance November 1, 2000

7,424,455

$  742,446

$  18,026,830

$  8,974,609

$ (1,071,169)

 

 

 

 

 

 

Issuance of restricted stock awards, net

132,000

13,200

467,438

-

(480,638)

Amortization of restricted

 

 

 

 

 

    stock awards

-

-

-

-

605,826

Net income

-

-

-

2,382,027

-

Cash dividends paid

-

-

-

(1,021,968)

-

Purchase and retirement of treasury stock

  (264,700)

   (26,471)

     (881,760)

                -

                 -

 

 

 

 

 

 

Balance October 31, 2001

7,291,755

729,175

17,612,508

10,334,668

   (945,981)

 

 

 

 

 

 

Stock issued under stock

 

 

 

 

 

   option plans

76,000

7,600

135,236

-

-

Issuance of restricted stock awards, net

202,500

20,250

992,250

-

(1,012,500)

Amortization of restricted

 

 

 

 

 

    stock awards

-

-

-

-

690,489

Net income

-

-

-

1,747,833

-

Other comprehensive loss (net of taxes)

-

-

-

-

(244,918)

Cash dividends paid

-

-

-

(855,558)

-

Tax benefit from NQSO options exercised

-

-

73,731

-

-

Purchase and retirement of treasury stock

  (454,626)

   (45,462)

   (1,703,279)

                -

                 -

 

 

 

 

 

 

Balance October 31, 2002

7,115,629

711,563

17,110,446

11,226,943

(1,512,910)

 

 

 

 

 

 

 

 

 

 

 

 

Stock issued under stock

 

 

 

 

 

   option plans

3,700

370

6,818

-

-

Issuance of restricted stock awards, net

185,500

18,550

642,768

-

  (661,318)

Amortization of restricted

 

 

 

 

 

    stock awards

-

-

-

-

       690,363

Net income

-

-

-

     1,574,953

-

Other comprehensive income (net of  taxes)                                                                                                                          

 

-

 

-

 

-

 

-

 

143,702

Cash dividends paid 

-

-

-

   (863,087) 

-

Purchase and retirement of treasury       stock

 

(56,964)

 

(5,696)

 

(189,722)

 

                -

 

                -

Balance October 31, 2003

7,247,865

$  724,787

$  17,570,310

$  11,938,809

$ (1,340,163)

 

 

The accompanyingnotes are an integral part of these consolidated statements.

** **

** **

** **

** **

** **

** **

** **

**Collins Industries, Inc. andSubsidiaries**

**NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS**

Forthe three years ended October 31, 2003

 

**(1)  Summary of Significant Accounting Policies**

 

(a)  *General* - The preparation of financialstatements in conformity with generally accepted accounting principles requiresmanagement to make estimates and assumptions that affect the reported amountsof assets and liabilities and disclosure of contingent assets and liabilitiesat the date of the financial statements and the reported amounts of revenues andexpenses during the reporting period.Actual results could differ from those estimates.

 

(b)  *Consolidation and Operations* - Theconsolidated financial statements include the accounts of Collins Industries,Inc. (the Company) and its wholly owned subsidiaries.  All significant intercompany accounts and transactions have beeneliminated in consolidation.

 

The Company primarily operates in the bus,ambulance, and terminal truck/road construction equipment segments.  Manufacturing activities are carried onsolely in the United States.  However,the Company does market its products in other countries.  Revenues derived from export sales were lessthan 10% of consolidated sales in fiscal 2003, 2002 and 2001.

 

(c)  *Cash and Cash Management* -  Cash includes checking accounts, fundsinvested in overnight and other short-term, interest-bearing accounts of threemonths or less.  

 

The Company maintains controlled disbursementaccounts with its lead bank under an arrangement whereby all cash receipts andchecks are centralized and presented to the bank daily.  All deposits are applied directly againstthe Company's revolving credit line and all checks presented for payment in thecontrolled disbursement accounts are funded through daily borrowings under theCompany's revolving credit facility.Accordingly controlled disbursements represent the Company's liabilityfor outstanding checks drawn but not yet presented for payment to the bank.

(d)Inventories -  Inventories arestated at the lower of cost (first-in, first-out) or market.  Major classes of inventories which includematerial, labor, and manufacturing overhead required in production of Companyproducts consisted of the following:

 

 

           2003

2002

Chassis

$     5,727,490

$  7,434,486

Raw materials & components

15,980,298

  14,122,413

Work-in-process

6,705,560

    6,156,230

Finished goods

7,951,558

   8,011,679

 

$36,364,906

$35,724,808

 

(e)  *Depreciation and Maintenance* -  Depreciation is provided using thestraight-line method for financial reporting purposes and accelerated methodsfor income tax purposes.  The estimateduseful 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 asincurred.  The cost of additions andbetterments are capitalized.  The costand related depreciation of property retired or sold are removed from theapplicable accounts and any gain or loss is taken into income.

 

(f) *Impairment**of Long‐Lived Assets*- Long‐livedassets, such as property, plant, and equipment, are reviewed for impairmentwhenever events or changes in circumstances indicate that the carrying amountof an asset may not be recoverable. Recoverability of assets to be held andused is measured by a comparison of the carrying amount of an asset toestimated undiscounted future cash flows expected to be generated by the asset.If the carrying amount of an asset exceeds its estimated future cash flows, animpairment charge is recognized by the amount by which the carrying amount ofthe asset exceeds the fair value of the asset. 

 

(g) *Goodwill*-In June 2001, the Financial Accounting Standards Board (FASB) issued Statementof Financial Accounting Standards No. 142, "Goodwill and Other IntangibleAssets" (SFAS No. 142). SFAS No. 142 was effective for fiscal yearsbeginning after December 15, 2001. Accordingly, after October 31, 2002,goodwill is no longer be amortized over future periods, but is assessed forimpairment at least annually using a fair value test. The Company adopted thisnew standard on November 1, 2002.

 

As of November 1, 2002 and October 31, 2003, the Companytested for impairment the bus and terminal truck/road construction businesssegments using the discounted cash flow approach and determined that the fairvalues for each of these segments exceeded the related carrying values. On anon-going basis, and absent any impairment indicators, the Company will continueto conduct similar tests and record any impairment losses.  

 

At October 31, 2003 the Company's goodwill related to thebus and terminal truck/road construction segments was $3.0 million and $2.0million, respectively.  Prior to November1, 2002 goodwill was amortized on a straight-line basis over 15-20 years.Goodwill amortization charged against fiscal 2002 earnings was $283,000, net oftax ($.04 per share).  

 

(h)  *Revenue Recognition* - The Companyrecords vehicle sales, and passes title to the customer, at the earlier ofcompletion of the vehicle and receipt of full payment or shipment or deliveryto the customer as specified by the customer purchase order.  Customer deposits for partial payment ofvehicles are deferred and treated as current liabilities until the vehicle iscompleted and recognized as revenue.    In instances where revenue has beenrecognized and the vehicle is on the Company's property, the customer hasinstructed in writing the Company to hold the unit for specific businessreasons, a delivery date normally within the next 30 days has been established,the vehicles are complete, ready for shipment, and segregated from othervehicles, and the risk of ownership has passed to the customer.

 

(i)  *Earnings Per Share* - Basic earnings pershare are computed based on the weighted average number of common sharesoutstanding.  Potentially dilutiveshares, calculated using the treasury stock method, consist of stock optionsand restricted stock.

 

The following is a reconciliation of shares used tocalculate basic and diluted earnings per share:

 

 

2003

2002

2001

Average  shares outstanding - basic

6,663,471

6,681,140

6,890,965

Effect  of potentially dilutive stock

  options and restricted stock

 

   192,484

 

   173,082

 

   240,769

Average  shares outstanding - diluted

6,855,955

6,854,222

7,131,734

 

(j)  *StockOption Plan* - The Company applies the intrinsic‐value‐basedmethod of accounting prescribed by Accounting Principles Board (APB) OpinionNo. 25, Accounting for Stock Issued to Employees, and relatedinterpretations including FASB Interpretation No. 44, Accounting forCertain Transactions involving Stock Compensation, an interpretation of APBOpinion No. 25, issued in March 2000, to account for its fixed‐planstock options. Under this method, compensation expense is recorded on the dateof grant only if the current market price of the underlying stock exceeded theexercise price. SFAS No. 123, Accounting for Stock‐BasedCompensation, established accounting and disclosure requirements using a fair‐value‐basedmethod of accounting for stock‐based employee compensation plans. Asallowed by SFAS No. 123, the Company has elected to continue to apply theintrinsic‐value‐based method of accounting described above, and hasadopted only the disclosure requirements of SFAS No. 123.  No stock options have been granted since1999 and therefore, no proforma net income disclosures are required. 

 

(k)  *Reclassificationof Financial Statements* - Certain amounts reported for prior years have beenreclassified to conform to the 2003 presentation.

 
****
**(2)  Long-term Debt and Capitalized Leases**

 

Long-term debt and capitalizedleases at October 31, 2003 and 2002 consist of the following:

 

2003

2002

Bank credit facility:

 

 

  Revolving  credit borrowings

$ 4,867,474

$  6,052,343

  Term Loan  A, quarterly principal payment of $250,000

5,500,000

6,500,000

  Term Loan  B, quarterly principal payments of $45,000 

900,000

-

Capitalized leases:

 

 

  City of  South Hutchinson, Kansas, 4.75%-5.80%

 

 

    Annual  principal and sinking fund payments range

 

 

    From  $370,000 in 2004 to $323,000 in 2007

1,498,750

1,833,612

  City of  South Hutchinson, Kansas, 4.80%-5.90%

 

 

    Annual  principal and sinking fund payments range

 

 

    From  $122,000 in 2004 to $150,000 in 2009

770,000

925,138

  Longview  Industrial Corporation, Longview, Texas 

 

 

  Variable Rate Demand Revenue Bonds, 0.85%-1.95% in 2003 

 

 

    Annual  principal and sinking fund payments range 

 

 

    From  $400,000 in 2004 to $188,000 in 2009

1,988,337

2,289,212

  Orange  County Industrial Development Authority 

 

 

  Orlando, Florida, 5.50%

 

 

    Annual  principal and sinking fund payments range 

 

 

    From  $165,000 in 2004 to $250,000 in 2012 

1,840,000

2,000,000

  Reno  County, Kansas, 4.60%-5.50%

 

 

    Annual  principal and sinking fund payments range

 

 

    From  $169,000 in 2004 to $250,000 in 2012

   1,771,250

   1,933,333

 

19,135,811

21,533,638

Less - current maturities

   2,406,250

   2,137,915

 

$16,729,561

$19,395,723

 

On May 17, 2002 the Company entered into a Loan andSecurity Agreement, (the "Agreement"), with Fleet Capital Corporation, a RhodeIsland Corporation (the "Bank"). The Agreement , as amended, provides a totalcredit facility of $39.6 million consisting of a revolving credit facility of$30.0 million and long-term credit facilities of $9.6 million.  This Agreement expires May 17, 2005.  The credit facilities bear interest based ona combination of Eurodollar (LIBOR plus 1.75%) and the Bank's prime lendingrate (4.00% at October 31, 2003).  Therevolving credit facility also provides for a maximum of $2.5 million inletters of credit, of which $1.5 million were outstanding at October 31, 2003.  The total amount of unused revolving creditavailable to the Company was $17.2 million at October 31, 2003. Also see Note10 to the Consolidated Financial Statements - Subsequent Events regardingadditional borrowings in January, 2004. 

 

The Company uses derivative financial instruments toreduce exposure to its variable-rate debt.On July 5, 2002, the Company entered into an interest rate decliningbalance swap agreement on term debt of $6.8 million to limit the effect ofpotential increases in the interest rates on its floating-rate term debtthrough May 2005. The effect of this agreement is to convert the underlyingvariable-rate debt based on LIBOR to a fixed-rate debt with an interest ratebetween 4.42% and 4.65% plus a margin of 175 basis points.  The fair value of this swap at October 31,2003 was $6.6 million. 

 

The credit facility is collateralized byreceivables, inventories, equipment and certain real property.  Under the terms of the Agreement, theCompany is required to maintain certain financial ratios and other financialconditions.  The Agreement also prohibitsthe Company from incurring certain additional indebtedness, limits certaininvestments, advances or loans and restricts substantial asset sales andcapital expenditures.  At October 31,2003 and 2002, the Company was in compliance with all loan covenants.

 

Certain of the Company's manufacturing facilitieswere financed from the proceeds of industrial revenue bonds.  Lease purchase agreements with therespective cities provide that the Company may purchase the manufacturingfacilities at any time during the lease terms by paying the outstandingprincipal amount of the bonds plus a nominal amount.  At October 31, 2003, the net book value of manufacturingfacilities subject to these lease purchase agreements was approximately $8.2million.  At October 31, 2003 theCompany's assets included $.8 million in unexpended cash proceeds fromIndustrial Revenue Bonds issued in 2002. 

The carrying amount of the Company's long-termobligations does not differ materially from fair value based on current marketrates available to the Company.

 

The aggregate maturities of capitalized leases andlong-term debt for the years subsequent to October 31, 2003 are as follows:

 

2004

$  2,406,250

2005

11,262,057

2006

1,326,250

2007

1,158,750

2008

954,167

2009 and thereafter

2,028,337

 

The Company has aggregate maturities of $11.3million in capitalized leases and long-term debt due in 2005, principally as aresult of a loan agreement with the Company's lead bank that expires May 17,2005.  The Company currently anticipatesarranging an extension or refinancing of this debt at or prior to maturity. 

 

**(3)**Other ComprehensiveIncome****

Othercomprehensive income consists of net income and other gains and lossesaffecting shareholders' investments that, under generally accepted accountingprinciples, are excluded from net income.Accumulated other comprehensive loss as of October 31, 2003, includesunrealized losses on interest rate swaps of $161,216, reduced by $60,000 ofdeferred tax benefit.  Accumulated othercomprehensive loss as of October 31, 2002, includes unrealized losses oninterest rate swaps of $394,918, reduced by $150,000 of deferred taxbenefit.  Other comprehensive income forthe years ended October 31, 2003 and 2002 was $1,718,655 and $1,502,915,respectively.   There was no othercomprehensive income or loss for the year ended October 31, 2001.

** **

**(4)  Income Taxes**

 

The provision for income taxes consists of thefollowing: 

 

 

2003

2002

2001

 

 

 

 

Current

 $ 1,112,000

$    905,000

$ 1,120,000

Deferred

    (152,000)

     205,000

     180,000

 

$    960,000   

$ 1,110,000

$ 1,300,000

 

The Company accounts for income taxes in accordance withthe liability method.  Deferred incometaxes are determined based upon the difference between the book and tax basisof the Company's assets and liabilities.Deferred taxes are provided at the enacted tax rates expected to be ineffect when the differences reverse.The income tax effect of temporary differences comprising the deferredtax assets are included in other current assets and liabilities on theaccompanying consolidated balance sheet and result from:

 

2003

2002

Deferred tax assets:

 

 

  Self-insurance reserves

$ 517,000

         $   424,000

   Vacation

194,000

206,000

   Warranty

469,000

343,000

   Doubtful  accounts

75,000

    25,000

   Inventories

370,000

  429,000

  Amortization

217,000

  178,000

   Interest  rate swaps

60,000

   150,000

  Restricted stock awards

270,000

   151,000

   Deferred  compensation

84,000

   40,000

   Other

              -  

     25,000

 

2,256,000

1,971,000

Deferred tax liabilities:

 

 

  Accelerated depreciation

(1,553,000)

  (1,296,000)

   Prepaid  health insurance

(462,000)

(590,000)

   Other

      (4,000)

              -  

 

(2,019,000)

(1,886,000)

 

 

 

Net deferred tax assets 

$   237,000

$    85,000

 

Novaluation allowance against deferred tax assets was provided at October 31,2003 and 2002, as management considers it more likely than not that therecorded tax assets will be realized. 

 

A reconciliation between the statutory federalincome tax rate (34%) and the effective rate of income tax expense for each ofthe three years during the period ended October 31, 2003 follows:

 

 

  2003

2002

2001

Statutory federal income tax  rate

    34%

    34%

 34%

Increase (decrease) in  taxes

 

 

 

  Resulting from:

 

 

 

    State tax, net of federal benefit

     4

  4

3

    Other

     -

    1

 (2)

 

 

 

 

Effective tax rate

   38%

   39%

  35%

** **

**(5) CapitalStock**

 

*Preferred Stock* - On March 28, 1995, theCompany's Board of Directors adopted a stockholders rights plan (Plan) anddeclared a dividend distribution of one right (Right) for each outstandingshare of common stock to stockholders of record on April 20, 1995.  Under the terms of the Plan each Rightentitles the holder to purchase one one-hundredth of p share of Series AParticipating Preferred Stock (Unit) at an exercise price of $7.44 perUnit.  The Rights are exercisable aspecified number of days following (i) the acquisition by a person or group ofpersons of 20% or more of the Company's common stock or (ii) the commencementof a tender offer or an exchange offer for 20% or more of the Company's commonstock or (iii) when a majority of the Company's unaffiliated directors (asdefined) declares that a person is deemed to be an adverse person (as defined)upon determination that such adverse person has become the beneficial owner ofat least 10% of the Company's common stock.The Company has authorized and reserved 750,000 shares of preferredstock, $.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 provisionsof the Plan.  Rights expire on April 1,2005 unless redeemed by the Company.

 

*Stock-BasedCompensation Plans* - The Company has two shareholder-approved stock plans, the 1997Omnibus Incentive Plan (the "1997 Plan") and 1995 Stock Option Plan (the "1995Plan").  Under the 1997 Plan, directors,officers and key employees may be granted stock options, restricted stock andother stock-based awards.  A total of2,000,000 shares may be granted under the 1997 Plan.  At October 31, 2003 a total of 196,000 share were available forfuture issuance under the 1997 Plan.

 

In fiscal 2003, the Company issued 205,000 shares ofcommon stock under the 1997 Plan in the form of restricted stock awards whichwill vest in fiscal 2007. In fiscal 2002, the Company issued 202,500 shares ofcommon stock under the 1997 Plan in the form of restricted stock awards whichwill vest in fiscal 2005.    In fiscal2001, the Company issued 142,000 shares of common stock in the form ofrestricted stock awards which will vest in fiscal 2004. Restricted sharesissued under the 1997 Plan were awarded as an incentive to retain keyemployees, officers and directors.Upon issuance of restricted stock, unearned compensation, equivalent tothe excess of the market price of the shares awarded over the price paid by therecipient at the date of grant, is charged to equity and amortized againstincome over the related vesting period.

 

At October 31, 2003, options for 732,500 shares wereoutstanding under the 1997 Plan. Under the 1995 Plan, a total of 1,000,000shares of the Company's common stock were available for grant to officers,directors and key employees.  As ofOctober 31, 2003, all of these shares had been granted and options for 105,700shares were outstanding under the 1995 Plan. 

 

Under both plans, the exercise price of all optionsgranted through October 31, 2003 equaled the stock's market price on the dateof grant and fully vested six months after the date of grant.  The original expiration dates of the optionsranged from 5 to 10 years.  Optionsoutstanding at October 31, 2003 had a weighted average contractual life of fouryears and exercise prices ranged from $1.75 to $5.13 per share.

 

A summary of the Company's two stock option plans atOctober 31, 2003, 2002 and 2001 and changes during the years then ended arepresented in the table following:

 

2003

2002

2001

 

 

Per

 

Per

 

Per

 

Shares

Share(a)

Shares

Share(a)

Shares

Share(a)

Outstanding  at

beginning  of year                        

 

 

849,800

 

 

$4.26

 

925,800

 

 

$4.07

 

985,800

 

 

$4.08

 

 

 

 

 

 

 

Exercised

(3,700)

1.94

   (76,000)

  1.88

   -

            -

 

 

 

 

 

 

 

Forfeited

(7,900)

4.44

              -

             -

   (60,000)

  4.33

 

 

 

 

 

 

 

Outstanding  at end of year

 

838,200

 

$4.27

 

849,800

 

$4.26

 

925,800

 

$4.07

 

 

 

 

 

 

 

Exercisable  at end of year

 

838,200

 

$4.27

 

849,800

 

$4.26

 

925,800

 

$4.07

 

 

 

 

 

 

 

(a)  Weighted average exercise price per share.

 

The Company applies the intrinsic‐value‐basedmethod of accounting prescribed by Accounting Principles Board (APB) OpinionNo. 25, Accounting for Stock Issued to Employees, and relatedinterpretations including FASB Interpretation No. 44, Accounting forCertain Transactions involving Stock Compensation, an interpretation of APBOpinion No. 25, issued in March 2000, to account for its fixed‐planstock options. Under this method, compensation expense is recorded on the dateof grant only if the current market price of the underlying stock exceeded theexercise price. SFAS No. 123, Accounting for Stock‐BasedCompensation, established accounting and disclosure requirements using a fair‐value‐basedmethod of accounting for stock‐based employee compensation plans. Asallowed by SFAS No. 123, the Company has elected to continue to apply theintrinsic‐value‐based method of accounting described above, and hasadopted only the disclosure requirements of SFAS No. 123.  No stock options have been granted since1999 and therefore, no proforma net income disclosures are required. 

 

**(6)  Tax Deferred Savings Plan and Trust**

 

In 1985, the Company made available to all eligibleemployees the opportunity to participate in the Company's Tax Deferred SavingsPlan and Trust.  The Company provides a50% matching contribution in the form of cash or unregistered common stock ofthe Company on the eligible amount invested by participants in the plan to purchasecommon stock of the Company.  TheCompany's contribution to this plan was $159,160 in 2003, $81,488 in 2002, and$131,165 in 2001. This plan held 535,552 shares of the Company's common stockat October 31, 2003 and 515,427 shares at October 31, 2002.

 

**(7)  Commitments and Contingencies**

 

(a)  *Letters of Credit* - The Company hasoutstanding letters of credit as more fully described in Note 2.

 

(b)*Repurchase Agreements* - It is customarypractice for companies in the specialty vehicle industry to enter intorepurchase agreements with financing institutions to provide floor planfinancing for dealers.  In the event ofa dealer default, these agreements generally require the  repurchase of products at the originalinvoice price net of certain adjustments.The risk of loss under the agreements is limited to the risk that marketprices for these products may decline between the time of delivery to thedealer and time of repurchase by the Company.The risk is spread over numerous dealers and the Company has notincurred significant losses under these agreements.  In the opinion of management, any future losses under theseagreements will not have a material adverse effect on the Company's financialposition or results of operations.  TheCompany's repurchase obligation under these agreements is limited to vehicleswhich are in new condition and as to which the dealer still holds title.  The Company's contingent obligation  under such agreements was approximately$4,052,000 at October 31, 2003.

** **

(c)  *Operating Leases* - The Company hasoperating leases principally for certain manufacturing facilities vehicles andequipment.  Operating lease expense was$651,998 in 2003, $586,297 in 2002, and $612,352 in 2001. It is expected thatin the ordinary course of business these leases will be renewed or replaced asthey expire.

The following schedule details operating leasecommitments for the years subsequent to October 31, 2003:

2004

$618,037

2005

294,866

2006

84,783

2007

9,285

2008

-

2009  and thereafter

-

 

(d)  *Litigation* - At October 31, 2003 theCompany has litigation pending which arose in the ordinary course ofbusiness.  Litigation is subject to manyuncertainties and the outcome of the individual matters is not presently determinable.  It is management's opinion that thislitigation will not result in liabilities that would have a material adverseeffect on the Company's financial position or results of operations.                                                                                                                

(e)  *Self-insurance Reserves* - The Company isself-insured for workers compensation, health insurance, general liability andproduct liability claims, subject to specific retention and reinsurance levels.

 

(f)  *Chassis Contingent Liabilities* - TheCompany obtains certain vehicle chassis from two automotive manufacturers underagreements that do not transfer the vehicle's certificate of origin to theCompany and, accordingly, the Company accounts for the chassis as consignedinventory.  Chassis are typicallyconverted and delivered to customers within 90 days.  The Company's contingent liability under such agreements amountedto $25.1 Million at October 31, 2003.

 

(g)  *Warranties*- The Company's products generally carry explicit product warranties thatextend from several months to more than a year, based on terms that aregenerally accepted in the marketplace. Certain components included in theCompany's end products (such as chassis, engines, axles, transmissions, tires,etc.) may include warranties from original equipment manufacturers (OEM). TheseOEM warranties are generally passed on to the end customer of the Company'sproducts and the customer generally deals directly with the applicablecomponent manufacturer. The Company records provisions for estimated warrantyand other related costs at the time of sale based on historical warranty lossexperience and periodically adjusts these provisions to reflect actualexperience. Certain warranty and other related claims involve matters ofdispute that ultimately are resolved by negotiation, arbitration or litigation.Infrequently, a material warranty issue may arise which is beyond the scope ofthe Company's historical experience. The Company provides for any such warrantyissues as they become known and estimable. It is reasonably possible that fromtime to time additional warranty and other related claims could arise fromdisputes or other matters beyond the scope of the Company's historicalexperience.  The following table providethe changes in the Company's product warranties (in thousands):

 

 

 

Accrued  warranties at November 1, 2002 

$  1,076

 

 

Provisions for warranty charged  against income

1,442

 

 

Payments and adjustments of warranties

 (1,385)

 

 

Accrued warranties at October 31, 2003

$  1,133

 

 

 

**(8)  Segment Information**

The Company has threereportable segments: ambulances, buses and terminal trucks/road constructionequipment.  The ambulance segmentproduces modular and van type ambulances for sale to hospitals, ambulanceservices, fire departments and other governmental agencies.   The bus segment produces small schoolbuses, commercial buses and shuttle buses for sale to schools, hotel shuttleservices, airports, and other governmental agencies. The terminal trucks/roadconstruction equipment segment produces off road trucks designed to movetrailers and containers for warehouses, truck terminals, rail yards, railterminals and shipping ports and produces a line of road constructionequipment. 

 

The accounting policies of the segments are the same asthose described in the summary of significant accounting policies in Note 1 ofthe Notes to the Consolidated Financial Statements.  The Company evaluates performance based on profit or loss fromoperations before income taxes not including nonrecurring gains and losses.  For the fiscal years ended October 31, 2003,2002 and 2001 nonrecurring gains or losses were not incurred and as such haveno impact on this analysis.  

 

The Company accounts for intersegment sales and transfersas if the sales or transfers were to third parties, with all intercompany saleseliminated in consolidation.

 

The Company's reportable segments are strategicbusiness units that offer different products and services.  They are managed separately because eachbusiness requires different technology and marketing strategies.  

 

The following tablecontains segment information for the years ended October 31, 2003, 2002 and2001. All amounts are in thousands of dollars.

 

 

 

 

 

 

 

Ambulance

 

 

 

 

Buses

Terminal

Trucks /

Road

Construction

Equipment

 

 

 

 

 

Other

 

 

 

Consolidated 

Total

 

 

 

 

 

 

 

Revenues from external customers

2003

$96,487

$66,631

$41,529

-

$204,647

 

2002

95,547

66,266

39,026

-

200,839

 

2001

95,932

66,022

45,699

-

207,653

 

 

 

 

 

 

 

Intersegment revenues:

2003

142

411

48

-

601

 

2002

787

      2,315

251

-

3,353

 

2001

-

      1,370

257

-

1,627

 

 

 

 

 

 

 

Interest income/(expense) net:

2003

(499)

(520)

(697)

(12)

(1,728)

 

2002

    (283)

    (497)

     (691)

     (57)

   (1,528)

 

2001

    (624)

    (769)

     (944)

  281

   (2,056)

 

 

 

 

 

 

 

Depreciation and amortization:

2003

(722)

(1,060)

(559)

(979)

(3,320)

 

2002

    (700)

  (1,195)

    (707)

 (904)

   (3,506)

 

2001

    (778)

  (1,220)

    (715)

 (812)

   (3,525)

 

 

 

 

 

 

 

Segment profit (loss)  pre tax:

2003

3,390

1,773

1,078

(3,706)

2,535

 

2002

   6,333

    (167)

  761

(4,069)

     2,858

 

2001

   4,089

    689

  2,385

(3,481)

     3,682

 

 

 

 

 

 

 

Segment assets:

2003

31,224

18,265

19,628

4,871

73,988

 

2002

32,844

21,428

  17,956

4,524

  76,752

 

2001

26,411

22,125

  16,767

4,523

  69,826

 

 

 

 

 

 

 

Segment expenditures for capital 

assets:

 

2003

 

2,706

 

211

 

138

 

76

 

3,131

 

2002

   1,953

     902

     122

   27

    3,004

 

2001

   856

     386

  229

   216

    1,687

 

Other includes the elimination of intersegmenttransactions and expenses generated to support corporate activities notdirectly attributable to any specific organization within the enterprise.                                                                              

Non-domestic sales were $10.9 million, $19.8 million, and$12.0 million for fiscal years 2003, 2002 and 2001, respectively.            

All assets are held by companies operating in the UnitedStates. 

 

During 2003, 2002 and 2001, sales to any onecustomer were not in excess of 10% of consolidated sales.

** **

**(9)  Quarterly Financial Information (Unaudited)**

(Dollars in thousands except per share information)

** **

Financial Results

 

 

              Net Sales

 

Gross Profit

 

Net Earnings  (Loss)

 

2003

2002

 

2003

2002

 

2003

2002

 

 

 

 

 

 

 

 

 

First Quarter

$43,836

$  39,774

 

4,701

$  3,918

 

$(149)

$    (660)

Second Quarter

45,580

47,375

 

5,349

5,072

 

80

166

Third Quarter

57,581

55,520

 

6,105

6,335

 

624

1,009

Fourth Quarter

57,650

    58,170

 

6,886

    7,400

 

1,020

   1,233

 

 

 

 

 

 

 

 

 
Fiscal Year
$204,647

$200,839

 

$23,041

$22,725

 

$1,575

$  1,748

 

 

 

 

Basic Earnings  (Loss)

Per Common Share

Diluted Earnings  (Loss)

Per Common Share

 

 

 

2003

2002

2003

2002

 

 

 

 

 

 

 

First Quarter

 

 

$   (.02)

$       (.10)

$   (.02)

$       (.10)

Second Quarter

 

 

.01

.03

.01

.02

Third Quarter

 

 

.09

.15

.09

.15

Fourth Quarter

 

 

       .16

       .18

       .15

       .18
 
 

 

 

 

 

 
Fiscal Year
 

 

$      .24

$      .26

$     .23

$      .26
 
 

 

 

 

 

 

 

Fiscal year 2002 diluted earnings per share isgreater than the sum of quarters due to rounding and reduction of sharesoutstanding from purchase and retirement of treasury stock.

 

 

 

 

**(10) Subsequent Events**

 

OnDecember 1, 2003 the Company completed a modified Dutch auction tender offer,which commenced on October 10, 2003 and expired on November 21, 2003.  As a result, the Company purchased andretired 14.4% of its outstanding common stock (1,050,879 shares) at $4.50 pershare or $4,728, 942. The purchase of the shares was financed by the Company'srevolving credit facility. The effect of this transaction increased theCompany's interest-bearing debt and reduced its stockholders' equity by$4,728,942.  Following the purchase ofshares tendered in the tender offer, the Company had 6,196,989 outstandingcommon shares.

 

On January 7, 2004 the Company initiated purchasesof normal inventory from a key supplier which carried a special, one-timepurchase discount. The discount is expected to be approximately $500,000. Thetransaction also resulted in the Company amending its bank credit agreement tofund the purchase. The impact of this purchase will temporarily increase the Company'sinventories and revolving bank debt by approximately $13.5 million. The Companyexpects to fully utilize this inventory in normal production over its nextthree fiscal quarters. 

 

 

**REPORT OFINDEPENDENT PUBLIC ACCOUNTANTS**

 

The Board of Directors andShareholders of Collins Industries, Inc.,

 

We have audited the accompanying consolidated balancesheets of Collins Industries, Inc. (a Missouri corporation) and Subsidiaries asof October 31, 2003 and 2002, and the related consolidated statements of incomeand comprehensive income, shareholders' investment and cash flows for the yearsthen ended.  These consolidatedfinancial statements are the responsibility of the Company's management.  Our responsibility is to express an opinionon these consolidated financial statements based on our audits.  The accompanying consolidated financialstatements of the Company for the year ended October 31, 2001 was audited byother auditors who have ceased operations.Those auditors expressed an unqualified opinion on those financialstatements in their report dated November 19, 2001.

 

We conducted our auditsin accordance withauditing standards generally accepted in the United States of America.  Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement.An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles usedand significant estimates made by management, as well as evaluating the overallfinancial statement presentation.  Webelieve that our audits provide a reasonable basis for our opinion.

 

In our opinion, the 2003 and 2002 consolidated financialstatements referred to above present fairly, in all material respects, thefinancial position of Collins Industries, Inc. and Subsidiaries as of October31, 2003 and 2002, and the results of their operations and their cash flows forthe yearsthenended, in conformity with accounting principles generally accepted in theUnited States of America.

 

As discussed in Note 1 to the consolidated financialstatements, in 2003 the Company changed its method of accounting for goodwilland other intangible assets to comply with the accounting provisions ofStatement of Financial Accounting Standard No. 142.

 

 

KPMG LLP

 

 

Kansas City, MissouriNovember 21, 2003, except for Note 10, 

as to which the date isJanuary 7, 2004

 

**REPORTOF INDEPENDENT PUBLIC ACCOUNTANTS**

 

 

To theBoard of Directors and

Shareholdersof Collins Industries, Inc.,

 

Wehave audited the accompanying consolidated balance sheets of CollinsIndustries, Inc.  (a Missouricorporation) and Subsidiaries as of October 31, 2001 and 2000, and the relatedconsolidated statements of income, shareholders' investment and cash flows foreach of the three years in the period ended October 31, 2001.  These financial statements are theresponsibility of the Company's management.Our responsibility is to express an opinion on these financialstatements based on our audits.

 

Weconducted our audits in accordance with auditing standards generally acceptedin the United States.  Those standardsrequire that we plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement.  An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financialstatements.  An audit also includesassessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statementpresentation.  We believe that ouraudits provide a reasonable basis for our opinion.

 

In ouropinion, the financial statements referred to above present fairly, in allmaterial respects, the consolidated financial position of Collins Industries,Inc. and Subsidiaries as of October 31, 2001 and 2000, and the results of theiroperations and their cash flows for each of the three years in the period endedOctober 31, 2001, in conformity with accounting principles generally acceptedin the United States.

 

 

 

 

ARTHURANDERSEN LLP

 

KansasCity, Missouri

November19, 2001

 

 

 

***This audit report ofArthur Andersen LLP, our former independent public accountants, is a copy ofthe original report dated November 19, 2001 rendered by Arthur Andersen LLP onour consolidated financial statements included in our form 10-K filed onDecember 26, 2001, and has not been reissued by Arthur Andersen LLP since thatdate.  This report refers to financialstatements not physically included in this filing****.*

 

 

 

 

 

**Item9.  DISAGREEMENTS ON ACCOUNTING ANDFINANCIAL DISCLOSURE**

** **

None.

 

**Item9A.  CONTROLS AND PROCEDURES**

** **

**a)     ***Evaluation of disclosure controls andprocedures.*Ourchief executive officer and our chief financial officer, after evaluating theeffectiveness of our "disclosure controls and procedures" (as defined in theSecurities Exchange Act of 1934 Rules 13(a)-14(c) and 15-d-14(c)) as of the endof the period covered by this annual report (the "Evaluation Date"), haveconcluded that, as of the Evaluation Date, our disclosure controls andprocedures were adequate and designed to ensure that the information requiredto be disclosed in the reports filed or submitted by us under the SecuritiesExchange Act of 1934 is recorded, processed, summarized and reported within therequired time periods.

 

**b)     ***Changes in internal controls.*    There have been no changes in our internalcontrol over financial reporting that has materially affected or is reasonablylikely to materially affect our internal control over financial reporting.

** **

** **

** **
****
**PART III**

** **

**Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THEREGISTRANT**

 

Information with respect to Directors and ExecutiveOfficers is contained in the section entitled "Management" and"Committees of the Board and Other Corporate Governance Matters" in the ProxyStatement for the Annual Meeting of Shareholders to be held February 27, 2004,and is incorporated herein by reference.

 

*Code of Ethics -*We are in the process of finalizing our Code of Ethics(the "Code"). The Code will be adopted by the date of our 2004 AnnualMeeting of Stockholders and will be applicable to all directors and employees.The Code will be posted on our website at http://www.collinsind.com. We will satisfyany disclosure requirements under Item 10 of Form 8-K regarding an amendment to, orwaiver from, any provision of the Code with respect to our principal executive officer,principal financial officer, principal accounting officer and persons performing similarfunctions by disclosing the nature of such amendment or waiver on our website.

 

**Item 11.  EXECUTIVE COMPENSATION**

 

Information with respect to executive compensationis contained in the section entitled "Executive Compensation" in theCompany's Proxy Statement for the Annual Meeting of Shareholders to be held onFebruary 27, 2004, and is incorporated herein by reference.

 
****
**Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIALOWNERS AND****MANAGEMENT**

 

Information with respect to security ownership ofcertain beneficial owners and management is contained in the section entitled"Security Ownership of Certain Beneficial Owners and Management" inthe Company's Proxy Statement for the Annual Meeting of Shareholders to be heldon February 27, 2004, and is incorporated herein by reference.

 

*EquityCompensation Plan -*The followingtable sets forth information as of the end of theCompany's 2003 fiscal year with respect to compensation plans under which equitysecurities of the Company are authorized for issuance. 

 

 

 

 

 

 

Plan  Category

 

Number of  Securities To Be Issued Upon Exercise of Outstanding Options, Warrants and  Rights

(A)

 

 

Weighted Average  Exercise Price of Outstanding Options, Warrants and Rights

(B)

Number of  Securities Remaining Available For Future Issuance Under Equity Compensation  Plans (Excluding Securities Reflected in Column (A)

(C)

 

 

 

 

 

Equity compensation plans approved  by security holders 

 

 

 

838,200

 

 

 

(1)

 

 

 

$4.27

 

 

 

196,000

 

 

 

 

 

Equity compensation plans not approved by security holders

 

 

 

           -

 

 

 

 

 

$      -

 

 

 

            -

 

 

 

 

 

Total

   838,200

 

 $4.27

   196,000

 

(1)  These plans include the 1995 Stock OptionPlan and the 1997 Omnibus Incentive Plan.

 

**Item 13.  CERTAIN RELATIONSHIPS AND RELATEDTRANSACTIONS**

 

None

 

**Item 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES**

 

The information required by this Item 14 withrespect to principal accountant fees and services is contained in the sectionentitled "Fees and Services of KPMG LLP" in the Company's Proxy Statement forthe Annual Meeting of Stockholders to be held on February 27, 2004, and isincorporated herein by reference.

** **

** **

** **

** **

**PART IV**

 

 

**Item 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES,REPORTS****ONFORM 8-K**

 

     (a)The following documents are filed as a part of this Report:

 

          (1) Financial Statements:

 

               All financial statements andnotes thereto as set               forth under Item 8 ofthis Report on Form 10-K:

 

               Reports of Independent PublicAccountants

 

               Consolidated Statements ofIncome and Comprehensive Income for                the Three Years EndedOctober 31, 2003

 

Consolidated Balance Sheets--October 31, 2003   and 2002

               Consolidated Statements of CashFlows for               the Three Years EndedOctober 31, 2003

 

Consolidated Statements of Shareholders' Investment               for  the Three Years Ended October 31, 2003

 

 

          (2) Financial Statement Schedules:

 

All schedules have been omitted as not applicable 

               or not required under theinstructions contained in

               Regulation S-X or theinformation is included in the

               financial statements or notesthereto.

(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 2-1, 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 and incorporated herein by reference).

 
 

 

 

 
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 and incorporated  herein by reference).

 
 

 

 

 
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 Lease dated November 15, 1997, between the  Registrant and the City of South Hutchinson, Kansas. (Incorporated herein by  reference to Exhibit 10.4 to the Registrant's Report on Form 10-K for the  fiscal year ended October 31, 1998.)

 
 

 

 

 
10.4

-

1999 Supplemental Lease  dated June 1, 1999, by and between the City of South Hutchinson, Kansas and  Collins Bus Corporation. Original Lease dated August 1, 1984 and a November  15, 1997, Amended and Restated Lease between the same parties. (Incorporated  herein by reference to Exhibit 10.1 to the Registrant's Report on Form 10-Q  for the quarterly period ended July 31, 1999.)

 
 

 

 

 
10.5

-

Loan Agreement dated April  1, 1999, between Longview Industrial Corporation and Collins Industries, Inc.  (Incorporated herein by reference to Exhibit 10.2 to the Registrant's Report  on Form 

10-Q for the quarterly period  ended July 31, 1999.)

 
 

 

 

 
10.6

-

Loan and Security Agreement  dated as of May 17, 2002, by and between Collins Industries, Inc., and Fleet  Capital Corporation. (Incorporated herein by reference to Exhibit 10.1 to the  Registrant's Report on Form 10-Q for the quarterly period ended July 31,  2002.)  

-

Florida IRB Lease dated November 15, 1997, between the  Registrant and the City of South Hutchinson, Kansas.

 

 

 

 
10.7

-

Deferred Compensation Plan  dated as of November 27, 2001, between Collins Industries, Inc and Intrust  Bank N.A.  (Incorporated herein by  reference to Exhibit 10.2 to the Registrant's Report on Form 10-Q for the  quarterly period ended July 31, 2002.)

 
 

 

 

 
 

Exhibit Number

 

Document

 

 

 

10.8

-

Lease dated June 20, 2002,  by and between Reno County, Kansas and Wheeled Coach Industries, Inc.  (Incorporated herein by reference to Exhibit 10.8 to the Registrant's Report  on Form 10-K for the fiscal year ended October 31, 2002.)

 

 

 

10.9

-

Amendment No. 1 dated as of  October 15, 2002, to the Loan and Security Agreement dated as of May 17,  2002, by and between Collins Industries, Inc., and Fleet Capital Corporation.  (Incorporated herein by reference to Exhibit 10.9 to the Registrant's Report  on Form 10-K for the fiscal year ended October 31, 2002.)

 

 

 

10.10

-

Financing Agreement dated  October 16, 2002, between the Orange County Industrial  Development  Authority, Orange County Florida,  and Wheeled Coach Industries, Inc.. (Incorporated herein by  reference to Exhibit 10.10 to the Registrant's Report on Form 10-K for the  fiscal year ended October 31, 2002.)

 

 

 

10.11

-

Amendment No. 2 dated as of  December 31, 2002, to the Loan and Security Agreement dated as of May 17,  2002, by and between Collins Industries, Inc., and Fleet Capital Corporation.  (Incorporated herein by reference to Exhibit 99(b)(3)  to the Registrant's Report on Form SC TO-I  filed October 10, 2003.)

 

 

 

10.12

-

Amendment No. 3 dated as of  October 9, 2003, to the Loan and Security Agreement dated as of May 17, 2002,  by and between Collins Industries, Inc., and Fleet Capital Corporation.  (Incorporated herein by reference to Exhibit 99(b)(4)  to the Registrant's Report on Form SC TO-I  filed October 10, 2003.)

 

 

 

10.13

-

Amendment No. 4 dated as of  December 5, 2003, to the Loan and Security Agreement dated as of May 17,  2002, by and between Collins Industries, Inc., and Fleet Capital Corporation.  

 

Exhibit Number

 

Document

 

 

 

10.14

-

Amendment No. 5 dated as of  January 7, 2004, to the Loan and Security Agreement dated as of May 17, 2002,  by and between Collins Industries, Inc., and Fleet Capital Corporation. 

 

 

 

21.1

-

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

 

 

Mid Bus, Inc.

Ohio

 

 

Wheeled Coach  Industries, 

   Inc.

 

Florida

 

 

Collins Ambulance Corp.

Kansas

 

 

Collins Financial Services,  Inc.

Kansas

 

 

Mobile Products, Inc.

Kansas

 

 

Mobile-Tech Corporation

Kansas

 

 

World Trans, Inc.

Kansas

 

 

 

 

23.1

-

Accountants Consent

 

 

 

 

 

31.1

-

Section 302 Certification  of Periodic Report-CEO

 

 

 

 

 

31.1

-

Section 302 Certification  of Periodic Report-CFO

 

 

 

 

 

32.1

-

Section 906 Certification  of Periodic Report-CEO

 

 

 

 

 

32.2

-

Section 906 Certification  of Periodic Report-CFO

 

 

(b)  Reports on Form 8-K

 

On August 18, 2003, the  Company filed a Form 8-K furnishing its press 

release dated August 18,  2003, which announced its financial results 

for its third fiscal  quarter ended July 31, 2003.    

 
 

 

 

 

 

The Company filed a Form  8-K, all of which reported information under Item 5 on the following date:  October 10, 2003

 
 

 

 

 

 

On November 28, 2003, the  Company filed a Form 8-K furnishing its press 

release dated November 25,  2003, which announced its financial results 

for its fiscal year ended  October 31, 2003.    

 
 

 

 

 

 

The Company filed a Form  8-K, all of which reported information under Item 5 on the following date:  January 9, 2004

 
 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the Registrant has duly caused this report to be signedon 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 19, 2004

 

 

 

Pursuant to the requirements of the SecuritiesExchange Act of 1934, this report has been signed by the following persons onbehalf of the Registrant, in their respective capacities and on the datesindicated.

 

 

Dated:

January 19, 2004

/s/ Don L. Collins

 

 

Don L. Collins, Director

 

 

 

Dated:

January 19, 2004

/s/ Donald Lynn Collins

 

 

Donald Lynn Collins, Director, 

 

 

President and Chief Executive

 

 

Officer

 

 

(Principal Executive Officer)

 

 

 

Dated:

January 19, 2004

/s/ Don S. Peters

 

 

Don S. Peters, Director

 

 

 

Dated:

January 19, 2004

/s/ Arch G. Gothard, III

 

 

Arch G. Gothard III, Director

 

 

 

Dated:

January 19, 2004

/s/ William R. Patterson

 

 

William R. Patterson, Director

 

 

 

Dated:

January 19, 2004

/s/ Larry W. Sayre

 

 

Larry W. Sayre, Vice President of Finance

 

 

and Chief Financial Officer

 

 

(Principal Financial and 

Accounting Officer)
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