10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: July 31, 2004

OR

[  ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to __________
Commission file number 0-12619
Collins Industries, Inc.
(Exact name of registrant as specified in its charter)
Missouri	43-0985160
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification Number)

15 Compound Drive	Hutchinson, Kansas	67502-4349
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number including area code 620-663-5551

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
	Yes	X	No	__
Indicate by check mark wither the registrant is an accelerated Filer (as defined under rule 12b-2 of the Act).						Yes___	No  X
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as
of the latest practicable date.
Common Stock, $.10 par value					6,369,327

                 Class             Outstanding at September 7, 2004

COLLINS INDUSTRIES, INC. AND SUBSIDIARIES

FORM 10-Q

July 31, 2004

INDEX

PART I.	FINANCIAL INFORMATION	PAGE NO.
Item 1.	Financial Statements:
	Consolidated Condensed Balance Sheets
	July 31, 2004 and October 31, 2003	2
	Consolidated Condensed Statements of Income and
	Comprehensive Income
	Three and Nine Months Ended July 31, 2004 and 2003	3
	Consolidated Condensed Statements of Cash Flow
	Nine Months Ended July 31, 2004 and 2003	4
	Notes to Consolidated Condensed Financial Statements	5
Item 2.
	Management’s Discussion and Analysis of Financial
	Condition and Results of Operations	10
Item 3.
	Quantitative and Qualitative Disclosures
	About Market Risk	21
Items 4.
	Controls and Procedures	21
PART II.	OTHER INFORMATION
Item 2.	Changes in Securities, Use of Proceeds and Issuer
	Purchases of Equity Securities	22
Items 4.	Submission of Matters to a Vote of Security-Holders	22
Item 6.	Exhibits and Reports on Form 8-K	22
SIGNATURES		23

(1)

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

Collins Industries, Inc. and Subsidiaries
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
	July 31,	October 31,
	2004	2003
ASSETS
Current Assets:
Cash	$      107,592	$       77,012
Receivables, trade & other	11,304,224	6,679,907
Inventories, lower of cost (FIFO) or market	38,894,644	36,364,906
Prepaid expenses and other current assets	2,209,611	3,428,027
Total current assets	52,516,071	46,549,852
Restricted cash	657,068	772,803
Property and equipment, at cost	50,443,208	50,538,388
Less: accumulated depreciation	31,117,010	30,494,964
Net property and equipment	19,326,198	20,043,424
Other assets	6,378,773	6,622,131
Total assets	$ 78,878,110	$73,988,210
LIABILITIES & SHAREHOLDER’S INVESTMENT
Current liabilities:
Current maturities of long-term debt & capitalized leases	$   2,483,140	$  2,406,250
Accounts payable	24,374,724	17,528,283
Accrued expenses	7,072,044	7,096,802
Total current liabilities	33,929,908	27,031,335
Long-term debt and capitalized leases	18,583,591	16,729,561
Deferred income tax	1,333,571	1,333,571
Shareholders’ investment:
Common stock	636,920	724,787
Paid-in capital	13,341,803	17,570,310
Deferred compensation	(1,636,814)	(1,238,947)
Accumulated other comprehensive income (loss), net	(45,020)	(101,216)
Retained earnings	12,734,151	11,938,809
Total shareholders’ investment	25,031,040	28,893,743
Total liabilities & shareholders’ investment	$ 78,878,110	$73,988,210

(See accompanying notes)

(2)

Collins Industries, Inc. and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
	Three Months Ended July 31,		Nine Months Ended July 31,
	2004	2003	2004	2003
Sales	$59,069,576	$57,581,114	$150,174,904	$146,997,072
Cost of sales	52,325,095	51,476,505	132,934,959	130,842,536
Gross profit	6,744,481	6,104,609	17,239,945	16,154,536
Selling, general and administrative expenses	5,020,542	4,622,304	14,168,913	13,831,224
Income from operations	1,723,939	1,482,305	3,071,032	2,323,312
Other income (expense):
Interest expense	(351,900)	(462,319)	(1,111,049)	(1,418,331)
Other, net	17,770	(6,301)	333,490	126
	(334,130)	(468,620)	(777,559)	(1,418,205)
Income before income taxes	1,389,809	1,013,685	2,293,473	905,107
Income tax expense	530,000	390,000	870,000	350,000
Net income	$    859,809	$    623,685	$  1,423,473	$    555,107
Other comprehensive income, net of tax:
Unrealized gain on interest rate swap	20,307	61,188	56,196	128,784
Comprehensive income	$   880,116	$  684,873	$ 1,479,669	$  683,891
Earnings per share:
Basic	$          .15	$          .09	$          .24	$          .08
Diluted	$          .14	$          .09	$          .23	$          .08
Dividends per share	$        .035	$        .030	$        .100	$        .090
Weighted average common and common
equivalent shares outstanding:
Basic	5,758,562	6,647,919	5,842,652	6,645,948
Diluted	6,178,537	6,890,274	6,200,556	6,903,291

(See accompanying notes)

(3)

Collins Industries, Inc. and Subsidiaries
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(Unaudited)
	Nine Months Ended July 31,
	2004	2003
Cash flow from operations:
Cash received from customers	$145,550,587	$148,031,882
Cash paid to suppliers and employees	(138,609,194)	(148,668,899)
Interest paid	(1,135,575)	(1,472,480)
Income taxes paid	(1,175,281)	(648,540)
Cash provided by (used in) operations	4,630,537	(2,758,037)
Cash flow from investing activities:
Capital expenditures	(1,187,145)	(2,851,807)
Net proceeds from sale of building and land	399,810	-
Other, net	(64,833)	(34,875)
Cash used in investing activities	(852,168)	(2,886,682)
Cash flow from financing activities:
Borrowings of long-term debt	4,288,444	6,285,513
Principal payments of long-term debt and
capitalized leases	(2,247,964)	(1,519,423)
Expenditures of restricted cash	115,735	1,678,920
Purchase of common stock	(5,275,874)	(182,646)
Payment of dividends	(628,130)	(645,611)
Cash provided by (used in) financing activities	(3,747,789)	5,616,753
Net increase (decrease) in cash	30,580	(27,966)
Cash at beginning of period	77,012	384,514
Cash at end of period	$   107,592	$356,548
Reconciliation of net income to net cash provided by
(used in) operations:
Net income	$  1,423,473	$    555,107
Depreciation and amortization	2,560,723	2,554,327
Decrease (increase) in receivables	(4,624,317)	1,034,810
Increase in inventories	(2,529,738)	(11,467,219)
Decrease in prepaid expenses and other current assets	1,274,612	1,537,955
Increase in accounts payable and accrued expenses	6,821,683	3,026,983
Gain on sale of building and land	(295,899)	-
Cash provided by (used in) operations	$ 4,630,537	$(2,758,037)

(See accompanying notes)

(4)

COLLINS INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Condensed Financial Statements

(Unaudited)

(1) General

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring items) necessary to present fairly the Company’s financial position at July 31, 2004 and the results of operations and the cash flows for the three and nine months ended July 31, 2004 and 2003.

The Company suggests that the unaudited Consolidated Condensed Financial Statements for the three and nine months ended July 31, 2004 be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended October 31, 2003.

(2) Inventories

Inventories, which include material, labor, and manufacturing overhead, are stated at the lower of cost (FIFO) or market. See Note 3 regarding a one-time special purchase of inventory.

Major classes of inventories as of July 31, 2004 and October 31, 2003 consisted of the following:

	July 31, 2004	October 31, 2003
Chassis	$   8,908,650	$   5,727,490
Raw materials & components	13,433,138	15,980,298
Work-in-process	7,834,372	6,705,560
Finished goods	8,718,484	7,951,558
	$38,894,644	$36,364,906

(5)

(3) Long Term Debt and Shareholders Equity

On January 7, 2004 the Company initiated purchases of normal inventory from a key supplier which carried a special, one-time purchase discount. The discount amounted to approximately $500,000. The transaction also resulted in the Company amending its bank credit agreement to fund the purchase. The impact of this purchase increased the Company’s inventories and revolving bank debt by approximately $13.5 million at January 31, 2004. At July 31, 2004 the Company’s inventories related to this special purchase amounted to $2.1 million and the related revolving debt was $2.0 million.  The Company expects to fully utilize this inventory in normal production over the next fiscal quarter.  

On December 1, 2003 the Company completed a modified Dutch auction tender offer for the purchase of a portion of its common stock. As a result, the Company purchased and retired 14.4% of its outstanding common stock (1,050,879 shares) at $4.50 per share exclusive of transaction expenses. The purchase was financed by the Company’s revolving credit facility. The effect of this transaction increased the Company’s interest-bearing debt and reduced its stockholders’ equity by $5.1 million.

(4) Earnings per Share

Dilutive securities, consisting of options to purchase the Company’s common stock and restricted stock awards, included in the calculation of diluted weighted average common shares were 419,975 and 242,355 for the three months ended July 31, 2004 and 2003, respectively.  Dilutive securities were 357,904 and 257,343 for the nine months ended July 31, 2004 and 2003, respectively.

(5) Contingencies and Litigation

At July 31, 2004 the Company had contingencies and pending litigation which arose in the ordinary course of business. Litigation is subject to many uncertainties and the outcome of the individual matters is not presently determinable. It is management’s opinion that this litigation would not result in liabilities that would have a material adverse effect on the Company’s consolidated financial position or results of operations or cash flows.

(6)

(6) Segment Information

The Company has three reportable segments: ambulances, buses and terminal trucks/road construction equipment. The ambulance segment produces modular and van type ambulances for sale to hospitals, ambulance services, fire departments and other governmental agencies. The bus segment produces small school buses, commercial buses and shuttle buses for sale to schools, hotel shuttle services, airports, and other governmental agencies. The terminal truck/road construction equipment segment produces off road trucks designed to move trailers and containers for warehouses, truck terminals, rail yards, rail terminals and shipping ports and produces a line of road construction equipment.

       (In Thousands) Three Months Ended July 31, Nine Months Ended July 31,

	2004	2003	2004	2003
Revenues from external customers:
Ambulance	$20,376	$23,573	$59,407	$68,322
Buses	19,817	22,122	42,211	48,982
Terminal Trucks/Road Construction      Equipment	18,877	11,886	48,557	29,693
Consolidated Total	$59,070	$57,581	$150,175	$146,997
Pretax segment profit (loss):
Ambulance	$601	$     513	$  1,965	$  2,432
Buses	969	1,120	794	975
Terminal Trucks/Road Construction       Equipment	910	280	2,227	154
Other	(1,090)	(899)	(2,693)	(2,656)
Consolidated Total	$   1,390	$   1,014	$   2,293	$     905

	As of
	July 31,	October 31,
	2004	2003
Segment assets:
Ambulance	$36,434	$31,224
Buses	18,083	18,265
Terminal Trucks/Road Construction       Equipment	21,023	19,628
Other	3,338	4,871
Consolidated Total	$78,878	$73,988

(7)

(7) Guarantees and Warranties

Letters of Credit

The Company has issued various standby letters of credit in the ordinary course of business. No liability has been reflected in the accompanying balance sheet and no draws on the Company’s standby letters of credit have ever been made. The current outstanding standby letters of credit are limited to (i) a letter of credit originally issued approximately 15 years ago (renewable annually) as required under Kansas law to backup self-insured reserves for workers compensation insurance, (ii) a declining standby letter of credit required under Texas law to backup certain industrial revenue bonds issued for a plant expansion in Longview, Texas in 1999 that is renewable annually and (iii) other standby letters of credit related to periodic bids and issued for other similar purposes. A default in meeting an obligation or condition under the above-referenced standby letters of credit could require the Company to rec ord a liability. The letters of credit outstanding at July 31, 2004 are summarized as follows:

		Date of
Purpose	Amount	Expiration
Workers compensation – Kansas self-insurance reserves	$1,373,000	April 1, 2005
Industrial revenue bond-Longview, Texas [a]	1,618,411	September 16, 2005
Bids and other	221,285	Various

[a] All assets (originally $3.0 million) acquired with the proceeds of the Longview, Texas industrial revenue bonds would also be available to offset any defaults under these obligations. The liquidation amount of such assets is not reasonably estimable.

Warranties

The Company’s products generally carry explicit product warranties that extend from several months to more than a year, based on terms that are generally accepted in the marketplace. Certain components included in the Company’s end products (such as chassis, engines, axles, transmissions, tires, etc.) may include warranties from original equipment manufacturers (OEM). These OEM warranties are generally passed on to the end customer of the Company’s products and the customer generally deals directly with the applicable component manufacturer. The Company records provisions for estimated warranty and other related costs at the time of sale based on historical warranty loss experience and periodically adjusts these provisions to reflect actual experience. Certain warranty and other related claims involve matters of dispute that ultimately are resolved by negotiation, arbitration or litigation. Infre quently, a material warranty issue may arise which is beyond the scope of the Company’s historical experience. The Company provides for any such warranty issues as they become known and estimable. It is reasonably possible that from time to time additional warranty and other related claims could arise from disputes or other matters beyond the scope of the Company’s historical experience. The following tables provide the changes in the Company’s product warranties (in thousands):

(8)

Reconciliation of Accrued Warranties	Three Months Ended July 31, 2004	Nine Months Ended July 31, 2004
Accrued warranties at beginning of period	$1,146	$1,133
Provisions for warranties charged against income	373	1,021
Payments and adjustments of warranties	(348)	(983)
Accrued warranties at end of period	$1,171	$1,171

(8) Stock Based Compensation

On November 1, 2002 the Company adopted FASB Statement No. 148 (SFAS 148), “Accounting for Stock-Based Compensation – Transition and Disclosure.” At July 31, 2004 the Company had two stock-based employee compensation plans, which are more fully described in Note 5 of the “Notes to Consolidated Financial Statements” in the Company’s 2003 Form 10-K. The Company accounts for these plans under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations. No stock based compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. There are no unvested outstanding stock options during fiscal 2003 or 2004 and no stock options have been granted since 1999. Therefore, no pro-forma net income disclosures are required.

(9) Subsequent Event

On August 31, 2004 the Company amended and extended its Agreement with its lead bank through May 17, 2008. Under the amended Agreement, the Bank will provide a total credit line of $39.0 million, consisting of a $30.0 million revolving line of credit and a $9.0 long-term line of credit. The interest rates, repayment terms, financial covenants and other significant features of the credit facility were not changed by the new amendment.   

(9)

Item 2 – Management’s Discussion and Analysis of Financial Condition and Result of Operations

GENERAL

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of the Company’s consolidated results of operations and financial condition. The discussion should be read in conjunction with the consolidated financial statements and notes thereto.

	Three Months Ended July 31,		Nine Months Ended July 31,
	2004	2003	2004	2003
Sales	100.0%	100.0%	100.0%	100.0%
Cost of sales	88.6	89.4	88.5	89.0
Gross profit	11.4	10.6	11.5	11.0
Selling, general and administrative expenses	8.5	8.0	9.5	9.4
Income from operations	2.9	2.6	2.0	1.6
Other income (expense):
Interest, net	(0.6)	(0.8)	(0.7)	(1.0)
Other, net	0.0	0.0	0.2	0.0
Income before provision for              income taxes	2.3	1.8	1.5	0.6
Income tax provision	(0.9)	(0.7)	(0.6)	(0.2)
Net income	1.4%	1.1%	0.9%	0.4%

OVERVIEW

Collins Industries, Inc. is a manufacturer of specialty vehicles and has three reportable segments: ambulances, buses and terminal trucks/road construction equipment. The ambulance segment produces modular and van type ambulances for sale to hospitals, ambulance services, fire departments and other governmental agencies. The bus segment produces small school buses, commercial buses and shuttle buses for sale to schools, hotel shuttle services, airports, and other governmental agencies. The terminal trucks/road construction equipment segment produces off-road trucks designed to move trailers and containers for warehouses, truck terminals, rail yards, rail terminals and shipping ports and produces a line of road construction equipment. Each of the Company’s product groups is responsible for its own marketing activities and maintains independent relationships with dealers and distributors.

(10)

The accounting policies of the segments are the same as those described in the summary of significant accounting policies of the “Notes to Consolidated Financial Statements” in the Company’s 2003 Form 10-K and in “Critical Accounting Principles and Estimates” below. The Company evaluates performance based on profit or loss from operations before income taxes not including nonrecurring gains and losses.

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

The Company’s reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies.

The Company posted a 41% increase in its sales backlog at July 31, 2004 to $74.3 million compared to $52.7 million at July 31, 2003. The backlog at October 31, 2003 was $46.7 million. The increased backlog at July 31, 2004 principally resulted from new orders of the Company’s terminal truck/road construction equipment and ambulance product lines.  

See “Segment Information” (Note 6 to the Consolidated Financial Statements) for quantitative segment information.

Three months ended July 31

Consolidated sales for the three months ended July 31, 2004 increased 3% to $59.1 million compared to $57.6 million for the same period last year. This increase was principally led by a 59% improvement in sales from terminal truck/road construction products and was partially offset by 14% and 10% decreases in ambulance and bus product sales, respectively. Additionally, sales of bus products were reduced by approximately $8.3 million for the three months ended July 31, 2004 due to customer-supplied bus chassis compared to a reduction of approximately $4.1 million for the same period last year.  

Consolidated gross profit for the three months ended July 31, 2004 increased $.64 million or 10% over the same period last year. This increase was principally due to the impact of higher sales from terminal truck/road construction products and the impact of cost reductions realized from a special, one-time purchase discount offered by a major supplier.  This increase was partially offset by the impact of lower sales and gross profit from bus products.

Consolidated selling, general and administrative expenses for the three months ended July 31, 2004 increased $.4 million or 9% over the same period last year. This increase was principally due to accrued incentives associated with higher earnings and additional insurance and corporate costs. These increases were partially offset by lower telemarketing and promotion expenses.

Interest expense for the three months ended July 31, 2004 decreased to $.35 million compared to $.46 million in the same period last year. This decrease was principally a

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result of an overall decrease of the Company’s average borrowings throughout most of the third quarter of fiscal 2004.

The Company posted a consolidated net income of $.88 million ($.14 per share – diluted) for the three months ended July 31, 2004 compared to a $.62 million ($.09 per share – diluted) for the same period last year.  The net income for the three months ended July 31, 2004 increased principally due to higher profit from terminal truck/road construction equipment, higher profit from ambulance products and lower interest costs. These increases were partially offset by lower profit contributions from bus products and by higher corporate expenses.  

Nine  months ended July 31

Consolidated sales for the nine months ended July 31, 2004 increased 2% to $150.2 million compared to $147.0 million the same period last year. This sales increase principally resulted from higher sales of terminal truck/ road construction products.  Additionally, sales of bus products were impacted (reduced) by approximately $18.6 million for the nine months ended July 31, 2004 due to customer-supplied bus chassis compared to an impact (reduction) of approximately $7.0 million for the same period last year.  

Consolidated gross profit for the nine months ended July 31, 2004 increased $1.1 million or 7% over the same period last year.  This increase was principally due to the impact of higher gross profit from terminal truck/road construction products and the impact of cost reductions realized from a special, one-time purchase discount offered by a major supplier.  This increase was partially offset by the impact of lower sales and gross profit from the ambulance and bus product segments.

Consolidated selling, general and administrative expenses for the nine months ended July 31, 2004 increased $.34 million or 2% over same period last year.  This increase was principally due to accrued incentives associated with higher earnings and additional insurance and corporate costs. These increases were partially offset by lower telemarketing and promotion expenses.  

Interest expense for the nine months ended July 31, 2004 decreased to $1.1 million compared to $1.4 million in the same period last year. This decrease was principally a result of an overall decrease of the Company’s average borrowings throughout most of fiscal 2004.  

Other income for the nine months ended July 31, 2004 was $.33 million. Of this amount, $.30 million resulted from a non-recurring gain from the sale of a building and land.      

The Company posted consolidated net income of $1.4 million ($.23 per share – diluted) for the nine months ended July 31, 2004 compared to $.56 million ($.08 per share – diluted) for the same period last year.  The net income for the nine months ended July 31, 2004 increased principally due to higher profit contributions from terminal truck/road

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construction products, lower interest costs and a non-recurring gain from the sale of a building and land. These improvements were partially offset by lower profit contributions from ambulance and bus products.

RESULTS OF OPERATIONS

AMBULANCE SEGMENT

Three months ended July 31

For the three months ended July 31, 2004, the ambulance segment sales were $20.4 million or 34% of the Company’s consolidated sales compared to $23.6 million or 41% for the same period in fiscal 2003. Unit volume sales of ambulance products decreased 14% for the three months ended July 31, 2004 compared to the same period in fiscal 2003. This decrease was principally due to budgetary curtailments by certain municipalities and national not-for-profit organizations. Ambulance products selling prices in the three months ended July 31, 2004 increased 1% compared to the same period in fiscal 2003.  

For the three months ended July 31, 2004, ambulance segment gross profit increased 4% and selling, general and administrative expenses increased 4% compared to the same period last year.  The gross profit increase was principally due to product mix, production efficiencies achieved from automation of certain manufacturing operations and the impact of higher purchase discounts and incentives from chassis manufacturers. The increase in selling, general and administrative expenses was principally as a result of higher legal costs.

Pretax profit of the ambulance segment increased by 17% to $.6 million for the three months ended July 31, 2004 compared to $.5 million for the same period last year. The improvement in pretax profits principally resulted from improved manufacturing margins discussed above and from a reduction of interest expense.  These improvements were partially offset by an increase in selling, general and administrative expenses discussed above.

Nine months ended July 31

For the nine months ended July 31, 2004, the ambulance segment sales were $59.4 million or 40% of the Company’s consolidated sales compared to $68.3 million or 46% for the same period in fiscal 2003. Unit volume sales of ambulance products decreased 14% for the nine months ended July 31, 2004 compared to the same period in fiscal 2003. This decrease was principally due to budgetary curtailments by certain municipalities and national not-for-profit organizations. Ambulance products selling prices in the nine months ended July 31, 2004 were flat compared to the same period in fiscal 2003.

For the nine months ended July 31, 2004, ambulance segment gross profit decreased 7% and selling, general and administrative expenses decreased by 1% compared to the same period in fiscal 2003. Substantially all of the gross profit decrease was a result of lower sales volumes. However, the gross profit decrease was partially offset by higher purchase

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discounts and incentives from chassis manufacturers and by production efficiencies achieved from automation of certain manufacturing operations. Selling, general and administrative expenses decreased principally as a result of lower telemarketing expenses and were partially offset by higher legal costs.

Pretax profit of the ambulance segment decreased by 19% to $1.97 million for the nine months ended July 31, 2004 compared to $2.43 million for the same period last year principally as a result of the sales volume declines discussed above.

BUS SEGMENT

Three months ended July 31

For the three months ended July 31, 2004, bus segment sales were $19.8 million or 34% of the Company’s consolidated sales compared to $22.1 million or 38% for the same period last year. The sales dollar volume declined due to the impact of higher customer-supplied chassis in the three months ended July 31, 2004.  The impact of customer-supplied chassis reduced the overall sales dollar volume by approximately $8.3 million for the three months ended July 31, 2004 compared to a reduction of approximately $4.1 million in the same period last year.  Units with customer-supplied chassis in the three months ended July 31, 2004 amounted to 55% of the total bus units sold compared to 30% for the same period last year. The overall unit volume sales of bus products, including units built on customer-supplied chassis, increased by 2% for the three months ended July 31, 2004 compared to the same period last year. This increase was principally due to increased sales to day-care providers and to church-related organizations. The average unit selling price of bus products decreased by 12% in the three months ended July 31, 2004 compared to the same period in fiscal 2003. Substantially all of this unit price decrease resulted from the impact of customer-supplied chassis discussed above.

For the three months ended July 31, 2004, gross profit decreased 3% and selling, general and administrative expenses increased by 15% compared to the same period last year. The decrease in gross profit was principally attributable to certain abnormal production expenses.  The increase in selling, general and administrative expense was principally a result of abnormal selling and legal expenses associated with two customers.   

Pretax profit of the bus segment decreased by 14% to $.97 million for the three months ended July 31, 2004 compared to $1.12 million for the same period last year. This decrease principally resulted from lower margins and increased selling, general and administrative expenses as discussed above.

Nine months ended July 31

For the nine months ended July 31, 2004, bus segment sales were $42.2 million or 28% of the Company’s consolidated sales compared to $49.0 million or 33% for the same period last year. The decrease was principally the result of customer supplied chassis for bus products.  Sales of bus products were reduced by approximately $18.6 million for the nine months ended July 31, 2004 due to customer-supplied bus chassis compared to a reduction of approximately $7.0 million for the same period last year.  Units with customer-supplied

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chassis in the nine months ended July 31, 2004 amounted to 58% of bus units produced compared to 24% for the same period last year.  Unit volume sales of bus products increased by 5% for the nine months ended July 31, 2004 compared to the same period in fiscal 2003.  This increase was principally due to increased sales to day-care providers and to church-related organizations. The average unit price of bus products decreased by 18% in the nine months ended July 31, 2004 compared to the same period in fiscal 2003. Substantially all of this unit price decrease resulted from customer supplied chassis as discussed above.

For the nine months ended July 31, 2004, bus segment gross profit decreased 10% compared to the same period last year. The decrease in gross profit was principally attributable to temporary production inefficiencies during the first six months of fiscal 2004 and certain abnormal production expenses incurred in the third fiscal quarter of 2004.  For the nine months ended July 31, 2004, selling, general and administrative expenses decreased by 3% compared to the same period last year. This decrease was principally a result of lower promotional, telemarketing and bad debt expenses and was partially offset in the third quarter of fiscal 2004 by abnormal selling and legal expenses associated with two customers.

The pretax income of the bus segment was $.79 million for the nine months ended July 31, 2004 compared to $.98 million in the same period last year. The decrease in pretax income was principally attributable to gross profit declines discussed above and was partially offset by reductions in selling, general and administrative expenses discussed in the immediately preceding paragraph.

TERMINAL TRUCK/ROAD CONSTRUCTION SEGMENT

Three months ended July 31

For the three months ended July 31, 2004, terminal truck/road construction segment sales were $18.9 million and comprised 32% of the Company’s consolidated sales compared to $11.9 million or 21% for the same period last year. Unit volume sales of terminal truck/road construction products increased by 43% for the three months ended July 31, 2004 compared to the same period in fiscal 2003. This increase was principally due to the impact of additional export sales associated with foreign stevedoring operations, changes in currency exchange rates and higher domestic sales to intermodal and warehousing customers. Additionally, this segment experienced a rebound in the number of road sweepers sold to the domestic rental market. The average unit price of terminal truck/road construction products increased by 11% in the three months ended July 31, 2004 compared to the same period in fiscal 2003. Substantially all of this increase related to the product mix of terminal truck products and unit price increases required to offset higher steel and major component prices of suppliers.

For the three months ended July 31, 2004, terminal truck/road construction segment gross profit increased 56% and selling, general and administrative expenses increased by 8% compared to the same period last year. The increase in gross profit was principally a result

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of the higher sales volumes described above and was partially offset by higher steel prices. The increase in selling, general and administrative expenses was principally due to higher incentives associated with improved sales and profitability and higher insurance costs.

The pretax income of the terminal truck/road construction segment increased 225% to $.91 million for the three months ended July 31, 2004 compared to $.28 million in the same period last year. The pretax income of the terminal truck/road construction segment increased principally as a result of the sales volume gains discussed above.

Nine months ended July 31

For the nine months ended July 31, 2004, terminal truck/road construction segment sales were $48.6 million or 32% of the Company’s consolidated sales compared to $29.7 million or 20% for the same period last year. Unit volume sales of terminal truck/road construction products increased by 52% for the nine months ended July 31, 2004 compared to the same period in fiscal 2003. This increase was principally due to the impact of additional export sales associated with foreign stevedoring operations, the changes in currency exchange rates and higher domestic sales to intermodal and warehousing customers. Additionally, this segment experienced a rebound in the number of road sweepers sold to the domestic rental market. The average unit price of terminal truck/road construction products increased by 8% in the nine months ended July 31, 2004 compared to the same period in fiscal 2003. Substantially all of this inc rease related to the product mix of terminal truck products and unit price increases required to offset higher steel and major component prices of suppliers.

For the nine months ended July 31, 2004, terminal truck/road construction segment gross profit increased 79% and selling, general and administrative expenses increased by 7% compared to the same period last year. The increase in gross profit was principally a result of higher sales volumes described above. The increase in selling, general and administrative expenses was principally a result of higher incentives associated with improved sales and profitability and higher promotion and insurance costs. This increase was partially offset by lower trade show and telemarketing costs.

The pretax income of the terminal truck/road construction segment increased to $2.23 million for the nine months ended July 31, 2004 compared to $.15 million in the same period last year. The pretax income of the terminal truck/road construction segment increased principally as a result of the sales volume gains discussed above.

LIQUIDITY AND CAPITAL RESOURCES

The Company used existing credit lines, proceeds from Industrial Revenue Bonds, internally generated funds and supplier financing to fund its operations and capital expenditures for the nine months ended July 31, 2004.

Cash provided by operations was $4.6 million for the nine months ended July 31, 2004, compared to cash used in operations of $2.8 million for the same period last year. Cash

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provided by operations was principally due to net income of $1.4 million, depreciation and amortization of $2.6 million, an increase in accounts payable of $6.8 million and a decrease in prepaid and other current assets of $1.3 million.  These increases were partially offset by an increase in accounts receivable and inventories of $4.6 million and $2.5 million, respectively.

Cash used in investing activities was $.9 million for the nine months ended July 31, 2004 compared to $2.9 million for the same period last year. The decrease in cash used by investing activities was principally due to the proceeds from the sale of a building and land in the first fiscal quarter of 2004 and higher capital expenditures for the nine months ended July 31, 2003 associated with certain equipment acquired for the automation of certain ambulance operations.

Cash flow used in financing activities was $3.7 million for the nine months ended July 31, 2004 compared to cash flow provided by financing activities of $5.6 million for the same period last year.  This change principally resulted from a reduction in borrowings, the repurchase of the 1,050,879 shares of the Company’s common stock in a modified Dutch auction tender offer ($5.3 million) and a decrease in restricted cash ($1.7 million) associated with the capital expenditures financed by Industrial Revenue Bonds in 2003.

The Company uses derivative financial instruments to reduce exposure to its variable-rate debt. On July 5, 2002, the Company entered into a $6.8 million declining balance interest rate swap agreement to limit the effect of increases in the interest rates on its floating rate term debt through May 2005.  The effect of this agreement is to convert underlying variable-rate debt based on LIBOR to fixed rate debt with an interest rate between 4.42% and 4.65% plus a margin of 175 basis points. This agreement reduces the Company’s risk with respect to variable-rate debt. At July 31, 2004, the fair value of this debt was $4.8 million, net of the fair value of the swap of $.1 million (loss). This debt is reflected as a liability within long-term debt and capitalized leases.

The Company believes that its cash flows from operations, its credit facility with its lead bank and unused funds restricted for future capital expenditures will be sufficient to satisfy its future working capital needs, capital expenditure requirements and anticipated dividends. The total amount of unused revolving credit available to the Company at July 31, 2004 was $12.1 million.  On August 31, 2004, the Company extended its credit facility with its lead bank to May 17, 2008. Also refer to Note 9 of the Company’s July 31, 2004, Consolidated Condensed Financial Statements.

It is customary practice for companies in the specialty vehicle industry to enter into repurchase agreements with financing institutions to provide floor plan financing for dealers. In the event of a dealer default, these agreements generally require the repurchase of products at the original invoice price net of certain adjustments. The risk of loss under the agreements is limited to the risk that market prices for these products may decline between the time of delivery to the dealer and time of repurchase and resale by the Company. The risk is spread over numerous dealers and the Company has not incurred significant losses under these agreements. In the opinion of management, any future losses

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under these agreements will not have a material adverse effect on the Company’s financial position or results of operations. The Company’s repurchase obligation under these agreements is limited to vehicles which are in new condition and as to which the dealer still holds title. The Company’s contingent obligation under such agreements was approximately $3.5 million at July 31, 2004.

CRITICAL ACCOUNTING PRINCIPLES AND ESTIMATES

The Company’s consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States. The preparation of these financial statements requires the use of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. We believe that of our critical accounting policies, the following may involve a higher degree of judgments, estimates, and complexity:

Inventories

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

Goodwill and Other Assets

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

As of October 31, 2003, the Company tested for impairment of the bus and terminal truck/road construction business segments using the discounted cash flow approach and determined that the fair values for each of these segments exceeded the related carrying values. On an on-going basis, and absent any impairment indicators, the Company will annually conduct similar tests and record any impairment loss. Management believes that the estimates of future cash flows and fair values are reasonable; however, changes in estimates of such cash flows and fair value could affect the evaluations.

Insurance Reserves

Generally, the Company is self-insured for worker’s compensation for certain subsidiaries and for all group medical insurance. Under these plans, liabilities are recognized for claims incurred (including claims incurred but not reported) and changes in the reserves. At the

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time a workers’ compensation claim is filed, a liability is estimated to settle the claim. The liability for workers’ compensation claims is determined based on management’s estimates of the nature and severity of the claims and based on analyses by third party administrators and by various state statutes and reserve requirements. Since the liability is an estimate, the ultimate liability may be more or less than reported. If previously established accruals are required to be adjusted, such amounts are included in cost of sales. Group medical reserves are funded through a trust and are estimated using historical claims’ experience.

Due to the nature of the Company’s products, the Company is subject to product liability claims in the normal course of business. To the extent permitted under applicable law, the Company maintains insurance to reduce or eliminate risk to the Company. This insurance coverage includes self-insured retentions that vary each year.

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

Warranties

The Company’s products generally carry explicit product warranties that extend from several months to more than a year, based on terms that are generally accepted in the marketplace. Certain components included in the Company’s end products (such as chassis, engines, axles, transmissions, tires, etc.) may include warranties from original equipment manufacturers (OEM). These OEM warranties are generally passed on to the end customer of the Company’s products and the customer generally deals directly with the applicable component manufacturer. The Company records provisions for estimated warranty and other related costs at the time of sale based on historical warranty loss experience and periodically adjusts these provisions to reflect actual experience. Certain warranty and other related claims involve matters of dispute that ultimately are resolved by negotiation, arbitration or litigation. Infre quently, a material warranty issue may arise which is beyond the scope of the Company’s historical experience. The Company provides for any such warranty issues as they become known and estimable. It is reasonably possible that from time to time additional warranty and other related claims could arise from disputes or other matters beyond the scope of the Company’s historical experience.

Revenue Recognition

The Company records vehicle sales and passes title to the customer, at the earlier of completion of the vehicle and receipt of full payment or shipment or delivery to the customer as specified by the customer purchase order. Customer deposits for partial payment of vehicles are deferred and treated as current liabilities until the vehicle is completed and recognized as revenue.

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NEW ACCOUNTING PRONOUNCEMENTS

In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46) which requires the consolidation of variable interest entities, as defined. FIN 46 is applicable to variable interest entities created after April 30, 2003. Variable interest entities created prior to February 1, 2003, must be consolidated effective July 1, 2003. Disclosures are required currently if the Company expects to consolidate any variable interest entities. The Company does not have any variable interest entities; therefore, FIN 46 will not have a material effect on its consolidated results of operations or financial position.

CAUTIONARY STATEMENTS REGARDING RISKS AND UNCERTAINTIES THAT MAY AFFECT FUTURE RESULTS

This report and other written reports and oral statements made from time to time by the Company may contain so-called “forward-looking statements” about the business, financial condition and prospects of the Company, all of which are subject to risks and uncertainties. One can identify these forward-looking statements by their use of words such as “expect”, “plans”, “will”, “estimates”, “forecasts”, “projects”, and other words of similar meaning. One can also identify them by the fact that they do not relate strictly to historical or current facts. One should understand that it is not possible to predict or identify all factors, which involve risks and uncertainties. Consequently, the reader should not consider any such list or listing to be a complete statement or all potential risks or uncertainties.

The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company believes the assumptions underlying these forward-looking statements are reasonable; however, any of the assumptions could be inaccurate, and therefore, actual results may differ materially from those projected in the forward-looking statements due to certain risks and uncertainties, including, but not limited to, changes in funds budgeted by Federal, state and local governments, the availability of chassis, substantial dependence on third parties for product quality and timely delivery, various inventory risks due to changes in market conditions, disruptions to production due to a natural disaster, interest rate fluctuations, changes in product demand, exchange rate fluctuations, changes in competition, development of new products, adequate direct labor pools, chan ges in tax and other governmental rules and regulations applicable to the Company, reliability and timely fulfillment of orders and other risks as  indicated in the Company’s filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly release any revisions to any forward-looking statements contained herein to reflect events or circumstances occurring after the date released or to reflect the occurrence of unanticipated events.

The Company does not assume the obligation to update any forward-looking statement. One should carefully evaluate such statements in light of factors described in the Company’s filings with the Securities and Exchange Commission, especially on Forms 10-K, 10-Q and 8-K (if any).

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Item 3 – Quantitative and Qualitative Disclosures About Market Risk

There has been no material change in this disclosure.

Item 4. Controls and Procedures

a)

Evaluation of disclosure controls and procedures.  Our chief executive officer and our chief financial officer, after evaluating the effectiveness of our “disclosure controls and procedures” (as defined in Rules 13a-15(c) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this Form 10-Q have concluded that, our disclosure controls and procedures were adequate and designed to ensure that the information required to be disclosed in the reports filed or submitted by us under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods.

b)

Changes in internal controls over financial reporting.  There were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that occurred during the Company’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1 - Legal Proceedings

Not applicable

Item 2 - Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

Information regarding the repurchase of common stock during the three months ended July 31, 2004 is as follows:

			Total Number	Maximum Number of
	Total		Of Shares Purchased	Shares That May
	Number of	Average	As Part of Publicly	Yet Be Purchased
	Shares	Price Paid	Announced Plans	Under the Plan
Period	Purchased	Per Share	or Programs	or Programs
05/01/04 –05/30/04	3,703 (a)	5.70	--	--
06/01/04 –06/30/04	2,521 (a)	5.70	--	--
07/01/04 –07/31/04	--	--	--	--

(a)  Shares purchased as cashless exercise of employee stock options.

Item 3 - Defaults on Senior Securities

Not applicable

Item 4 - Submission of Matters to a Vote of Security-Holders

Not applicable

Item 5 - Other Information

Not applicable

Item 6 - Exhibits and Reports on Form 8-K

(a)	Exhibits
	(10.1) Amendment No. 7 dated as of August 31, 2004, to the Loan and Security
	Agreement dated as of May 17, 2002, by and between Collins Industries, Inc., and Fleet
	Capital Corporation.
	(31.1) Certifications-CEO
	(31.2) Certifications-CFO
	(32.1) Certification of Periodic Report-CEO
	(32.2) Certification of Periodic Report-CFO
(b)	Reports on Form 8-K
	On May 19, 2004, the Company filed a Form 8-K furnishing its press release dated August 18, 2004, which announced its financial results for its second fiscal quarter ended April 30, 2004.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		COLLINS INDUSTRIES, INC.
Dated:	September 7,  2004
	By:	/s/ Larry W. Sayre
		Larry W. Sayre, Vice President of Finance and Chief Financial Officer
		(Signing on behalf of the registrant and as principal accounting officer)

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EX-10

AMENDMENT NO. 7 TO

LOAN AND SECURITY AGREEMENT

THIS AMENDMENT NO. 7 TO LOAN AND SECURITY AGREEMENT (this "Amendment") is dated as of August 31, 2004 and is made by and among (i) COLLINS INDUSTRIES, INC., a Missouri corporation ("Collins"), COLLINS BUS CORPORATION, a Kansas corporation ("Bus"), WHEELED COACH INDUSTRIES, INC., a Florida corporation ("WCI"), CAPACITY OF TEXAS, INC., a Texas corporation ("Capacity"), MOBILE-TECH CORPORATION, a Kansas corporation ("Mobile"), BRUTZER CORPORATION, an Ohio corporation ("Brutzer"), MID BUS, INC., an Ohio corporation ("Mid Bus"), MOBILE PRODUCTS, INC., a Kansas corporation ("Mobile Products"), and WORLD TRANS, INC., a Kansas corporation ("World Trans," and, together with Collins, Bus, WCI, Capacity, Mobile, B rutzer, Mid Bus, and Mobile Products, the "Borrowers" and each, a "Borrower"), (ii) the financial institutions party to the "Loan Agreement" (as hereinafter defined) from time to time as the Lenders (individually, a "Lender" and collectively, the "Lenders"), and (iii) FLEET CAPITAL CORPORATION, a Rhode Island corporation ("FCC"), as administrative agent for the Lenders (the "Agent").

Preliminary Statements

The Borrowers, the Lenders, and the Agent are parties to a Loan and Security Agreement dated as of May 17, 2002 (as heretofore amended, the "Loan Agreement"; terms defined in the Loan Agreement (and not otherwise defined herein) are used in this Amendment as defined in the Loan Agreement).  FCC is the sole Lender under the Loan Agreement.

The Borrowers have requested that the Loan Agreement be amended to extend the Termination Date of the Revolving Credit Facility and to amortize the outstanding principal balance of Term Loan B, while preserving Borrowers' capacity to borrow under the Term Loan B Facility in accordance with the Loan Agreement.

The Agent and the Lender have agreed to the aforementioned modifications subject to the provisions of this Amendment.

Statement of Agreement

Accordingly, in consideration of the Loan Agreement, the Loans made by the Lender and outstanding thereunder, the mutual promises hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.

Amendments to Loan Agreement.  Effective as provided in Section 2 of this Amendment, the Loan Agreement is hereby amended as follows:

(a)

By amending Section 1.1 Definitions by inserting therein in appropriate alphabetical order, the following new definitions:

(1)

"Amendment No. 7 Effective Date" means August 31, 2004.

"Stock Option Repurchase Program" means a program approved by the board of directors of Collins pursuant to which Collins may in its discretion from time to time from September 1, 2004, through August 31, 2006, repurchase shares of its outstanding common stock from its employees or directors who hold such shares as a result of their exercise of stock options issued prior to the Amendment No. 7 Effective Date, up to a maximum aggregate purchase price for all such repurchases of $1,800,000.

"Term Loan" means any of Term Loan A, Term Loan B or Term Loan C, and refers to both LIBOR Term Loans and Base Rate Term Loans, and “Term Loans” means all such Loans.

"Term Loan C" means the aggregate Loans made to the Borrowers that are evidenced by Term Note C as described in Section 3.1(c).

"Term Note" means any of the Term Notes A, the Term Notes B or the Term Notes C, and "Term Notes" means more than one such Note.

"Term Note C" means any of the promissory notes made by the Borrowers, jointly and severally, payable to the order of a Lender evidencing the obligations of such Borrowers to pay the aggregate unpaid amount of Term Loan C made by such Lender to the Borrowers (and any promissory note or notes that may be issued from time to time in substitution, renewal, extension, replacement or exchange therefor whether payable to the same or different Lender, whether issued in connection with a Person becoming a Lender after the Effective Date or otherwise), substantially in the form of Exhibit B-3 hereto, with all blanks properly completed, either as originally executed or as the same may be from time to time supplemented, modified, amended, renewed, extended or refinanced, and "Term Notes C" means more t han one such Term Note C.

(b)

By further amending Section 1.1 Definitions by deleting the definitions of "Fixed Charge Coverage Ratio" and "Termination Date" in their entireties and by substituting the following in lieu thereof:

"Fixed Charge Coverage Ratio" means, for any period, the ratio of (i) the sum of consolidated Net Income of Collins and its Consolidated Subsidiaries for such period plus (without duplication) consolidated depreciation expense plus consolidated amortization expense plus consolidated interest expense plus consolidated Non-Cash Charges of Collins and its Consolidated Subsidiaries for such period, to the extent the same were deducted in computing such consolidated Net Income, less the sum of Net Capital Expenditures, Restricted Payments and Restricted Purchases of Collins and its Consolidated Subsidiaries, other than those made pursuant to the Stock Repurchase Program or the Stock Option Repurchase Program, in each case made during such period, to (ii) the sum of consolidated Current Maturities of Long-Term Liabilities and Capitalized Lease Obligations of Collins and its Consolidated Subsidiaries as of the last day of such period plus

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consolidated interest expense of Collins and its Consolidated Subsidiaries for such period; provided, that for any accounting period of less than twelve consecutive months, consolidated Current Maturities of Long-Term Liabilities and Capitalized Lease Obligations of Collins and its Consolidated Subsidiaries as of the date of determination shall be multiplied by a fraction, the numerator of which is the number of months included in such accounting period and the denominator of which is twelve.

"Termination Date" means May 17, 2008, such earlier date as all Secured Obligations shall have been irrevocably paid in full and the Revolving Credit Facility shall have been terminated, or such later date as to which the same may be extended pursuant to the provisions of Section 2.5.

(c)

By amending Section 3.1 Term Loan Facilities by adding a new subsection (c), to read in its entirety as follows:

(c)

Term Loan C. Upon the terms and subject to the conditions of, and in reliance upon the representations and warranties made under, this Agreement, FCC agrees, at Borrowers' request, to accept from Borrowers a Term Note C payable to FCC, dated the Amendment No. 7 Effective Date, in the original principal amount of $1,035,750, to evidence the aggregate principal amount of Term Loan B Advances outstanding immediately prior to the Amendment No. 7 Effective Date, and to re-designate such principal amount as "Term Loan C" on Borrower's Loan Account at FCC.  Upon and after the execution and delivery of Term Note C, any determination of Term Loan B Availability shall be made as if the $1,035,750 principal amount of Term Loan B Advances evidenced by Term Note C were not outstanding on the date of such determination of Te rm Loan B Availability. Borrowers may not reborrow any amount of Term Loan C that is repaid.  

(d)

By amending Section 3.3 Repayment of Term Loans by adding a new subsection (c), to read in its entirety as follows:

(c)

Term Loan C. The principal amount of Term Loan C is due and payable, and shall be repaid in full by the Borrowers, in consecutive installments on successive Installment Payment Dates, commencing on October 1, 2004, as follows: fifteen (15) installments each in an amount equal to $51,787.50, and a final installment on the Termination Date in the amount of the then-unpaid balance of such Term Loan C.

(e)

By amending Section 3.5 Term Notes by adding new sentences at the end thereof to read in their entirety as follows:

Each Term Loan C made by each Lender and the obligation of Borrowers to repay such Loan shall be evidenced by this Agreement and by a Term Note C made by the Borrowers, jointly and severally, payable to the order of such Lender.  Each Term Note C shall be dated the Amendment No. 7 Effective Date or the later

(3)

effective date of any Assignment and Acceptance and be duly and validly executed and delivered by the Borrowers.

(f)

By adding Exhibit B-3 to the Loan Agreement in the form of Annex A attached to this Amendment.

2.

Effectiveness of Amendment.  This Amendment shall be effective as of the first date on which the Agent has received each of the following (notice of the acceptance of which is hereby waived), each in form and substance satisfactory to the Agent (the "Amendment No. 7 Effective Date"):

(a)

four (4) copies of this Amendment duly executed and delivered by each Borrower and the Lender;

(b)

the fee described in paragraph 3, below;

(c)

for FCC a Term Note C in the amount of $1,035,750 in the form of Annex A attached hereto with appropriate insertions and completions; and

(d)

such other agreements, certificates, instruments and other documents as any Lender through the Agent may reasonably request in connection with the transactions contemplated hereby.

3.

Amendment Fee.  As consideration for the Agent and the Lender entering into this Amendment, Borrowers jointly and severally agree to pay to the Agent an amendment fee in the amount of $85,000 on the date on which Borrowers execute and deliver to Lender one or more counterparts of this Amendment and, to facilitate such payment, hereby authorize the Agent to charge such amount as a Revolving Credit Loan.

4.

Interest Rate Disclosure.  The Base Rate on the date hereof is 4.50% per annum and, therefore, the rate of interest in effect hereunder on the date hereof, expressed in simple interest terms, is 4.50% per annum with respect to any portion of the Revolving Credit Loans bearing interest as a Base Rate Loan and is 4.50% per annum with respect to any portion of the Term Loan Advances bearing interest as a Base Rate Loan.

5.

Representations and Warranties.  Each Borrower hereby represents and warrants to the Agent and the Lender that it has the corporate or other power and has taken all actions necessary to authorize it to execute and deliver this Amendment and the other documents contemplated to be delivered by it pursuant to this Amendment and to perform its obligations under the Loan Agreement as amended by this Amendment and under such other documents; that this Amendment has been and each such other document when executed and delivered by such Borrower will have been, duly executed and delivered by such Borrower; and that the Loan Agreement as amended hereby and each such other document, constitute legal, valid and binding obligations of each Borrower, enforceable against each Borrower in accordance with their respective terms.

6.

Effect of Amendment.  From and after the effectiveness of this Amendment, all references in the Loan Agreement and in any other Loan Document to "this Agreement," "the

(4)

Loan Agreement," "hereunder," "hereof" and words of like import referring to the Loan Agreement, shall mean and be references to the Loan Agreement as amended by this Amendment.  Except as expressly amended hereby, the Loan Agreement and all terms, conditions and provisions thereof remain in full force and effect and are hereby ratified and confirmed.  The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.

7.

Counterpart Execution; Governing Law; Costs and Expenses.

(a)

Execution in Counterparts.  This Amendment may be executed in any number of counterparts and by different  parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement.  Delivery of an executed signature page of any party hereto by facsimile transmission shall be as effective as delivery of a manually executed counterpart thereof.

(b)

Governing Law.  This Amendment shall be governed by and construed in accordance with the internal laws of the State of Georgia.

(c)

Expenses.  In furtherance and not in limitation of the provisions of the Loan Agreement, the Borrowers will pay or reimburse the Agent and the Lenders for their costs and expenses, including reasonable fees and disbursements of counsel actually incurred, in connection with the preparation and delivery of this Amendment.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their respective officers thereunto duly authorized, as of the date first above written.

BORROWERS

COLLINS INDUSTRIES, INC., a Missouri

corporation

By:	/s/ Larry W. Sayre
	Larry W. Sayre, Vice President of
	Finance and Chief Financial Officer

COLLINS BUS CORPORATION, a Kansas

corporation

By:	/s/ Larry W. Sayre
	Larry W. Sayre, Vice President of
	Finance and Chief Financial Officer

[Signatures continued on next page]

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WHEELED COACH INDUSTRIES, INC., a

Florida corporation

By:	/s/ Larry W. Sayre
	Larry W. Sayre, Vice President of
	Finance and Chief Financial Officer

CAPACITY OF TEXAS, INC., a Texas

corporation

By:	/s/ Larry W. Sayre
	Larry W. Sayre, Vice President of
	Finance and Chief Financial Officer

MOBILE-TECH CORPORATION, a Kansas

corporation

By:	/s/ Larry W. Sayre
	Larry W. Sayre, Vice President of
	Finance and Chief Financial Officer

BRUTZER CORPORATION, an Ohio

corporation

By:	/s/ Larry W. Sayre
	Larry W. Sayre, Vice President of
	Finance and Chief Financial Officer

MID BUS, INC., an Ohio corporation

By:	/s/ Larry W. Sayre
	Larry W. Sayre, Vice President of
	Finance and Chief Financial Officer

 [Signatures continued on next page]

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MOBILE PRODUCTS, INC., a Kansas corporation

By:	/s/ Larry W. Sayre
	Larry W. Sayre, Vice President of
	Finance and Chief Financial Officer

WORLD TRANS, INC., a Kansas corporation

By:	/s/ Larry W. Sayre
	Larry W. Sayre, Vice President of
	Finance and Chief Financial Officer

AGENT:

FLEET CAPITAL CORPORATION, a Rhode

Island corporation, as Agent

By:	/s/ Robert B. H. Moore
	Robert B. H. Moore
	Senior Vice President

LENDER:

FLEET CAPITAL CORPORATION, a Rhode

Island corporation, as Agent

By:	/s/ Robert B. H. Moore
	Robert B. H. Moore
	Senior Vice President

(7)

ANNEX A

FORM OF TERM NOTE C

$1,035,750.00 August 31, 2004

FOR VALUE RECEIVED, the undersigned, COLLINS INDUSTRIES, INC., a Missouri corporation, COLLINS BUS CORPORATION, a Kansas corporation, WHEELED COACH INDUSTRIES, INC., a Florida corporation, CAPACITY OF TEXAS, INC., a Texas corporation, MOBILE-TECH CORPORATION, a Kansas corporation, WORLD TRANS, INC., a Kansas corporation, BRUTZER CORPORATION, an Ohio corporation, MID BUS, INC., an Ohio corporation, and MOBILE PRODUCTS, INC., a Kansas corporation (the “Borrowers”), hereby jointly and severally unconditionally promise to pay to the order of FLEET CAPITAL CORPORATION, a Rhode Island corporation (the “Lender”), at the offices of the Agent located at 300 Galleria Parkway, Suite 800, Atlanta, Georgia 30339, or at such other place within the United States as shall be designated from time to time by the Agent, the principal amount of ONE MILLION THIRTY-FIVE THOUSAND SEVEN HUNDRED FI FTY AND NO/100 DOLLARS ($1,035,750.00) in lawful money of the United State of America in federal or other immediately available funds, payable at the times and in the manner provided in the Loan Agreement (as hereinafter defined).

The Borrowers also jointly and severally unconditionally promise to pay interest on the unpaid principal amount of this Note outstanding from time to time for each day from the date hereof until such principal amount is paid in full at the rates per annum and on the dates specified in the Loan Agreement applicable from time to time in accordance with the provisions thereof.  Nothing contained in this Note or in the Loan Agreement shall be deemed to establish or require the payment of a rate of interest in excess of the maximum rate permitted by any Applicable Law.  In the event that any rate of interest required to be paid hereunder exceeds the maximum rate permitted by Applicable Law, the provisions of the Loan Agreement relating to the payment of interest under such circumstances shall control.

This Term Note C is one of the Term Notes C referred  to in that certain Loan and Security Agreement dated as of May 17, 2002 (as further amended, modified, supplemented or restated from time to time, the “Loan Agreement”; terms defined in the Loan Agreement being used herein as therein defined) among the Borrowers, the Lender, the other financial institutions party thereto from time to time as “Lender,” and the Agent, is subject to, and entitled to, all provisions and benefits of the Loan Documents, is secured by the Collateral and other property as provided in the Loan Documents, is subject to optional and mandatory prepayment in whole or in part and is subject to acceleration prior to maturity upon the occurrence of one or more Events of Default, all as provided in the Loan Documents.

Presentment for payment, demand, protest and notice of demand, notice of dishonor, notice of non-payment and all other notices are hereby waived by the Borrowers, except to the extent expressly provided in the Loan Agreement.  No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights.

(1)

The Borrowers hereby jointly and severally agree to pay on demand all costs and expenses incurred in collecting the Secured Obligations hereunder or in enforcing or attempting to enforce any of the Lender’s rights hereunder, including, but not limited to, reasonable attorneys’ fees and expenses actually incurred if collected by or through an attorney, whether or not suit is filed.

The provisions of Section 15.5 of the Loan Agreement are hereby expressly incorporated herein.

This Term Note C shall be governed by, and construed in accordance with, the laws of the State of Georgia without giving effect to the conflict of laws principles thereof.

IN WITNESS WHEREOF, the undersigned have executed this Term Note C as of the day and year first above written.

BORROWERS

COLLINS INDUSTRIES, INC.

By:	/s/ Larry W. Sayre
	Larry W. Sayre,
	Chief Financial Officer

COLLINS BUS CORPORATION

By:	/s/ Larry W. Sayre
	Larry W. Sayre,
	Chief Financial Officer

WHEELED COACH INDUSTRIES, INC.

By:	/s/ Larry W. Sayre
	Larry W. Sayre,
	Chief Financial Officer

[Signatures continued on next page]

(2)

CAPACITY OF TEXAS, INC.

By:	/s/ Larry W. Sayre
	Larry W. Sayre,
	Chief Financial Officer

MOBILE-TECH CORPORATION

By:	/s/ Larry W. Sayre
	Larry W. Sayre,
	Chief Financial Officer

WORLD TRANS, INC.

By:	/s/ Larry W. Sayre
	Larry W. Sayre,
	Chief Financial Officer

BRUTZER CORPORATION

By:	/s/ Larry W. Sayre
	Larry W. Sayre,
	Chief Financial Officer

MID BUS, INC.

By:	/s/ Larry W. Sayre
	Larry W. Sayre,
	Chief Financial Officer

MOBILE PRODUCTS, INC.

By:	/s/ Larry W. Sayre
	Larry W. Sayre,
	Chief Financial Officer

(3)

EX-31

EXHIBIT 31.1

CERTIFICATIONS

I, Donald Lynn Collins certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Collins Industries, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	September 7, 2004	/s/ Donald Lynn Collins
		Donald Lynn Collins, President
		and Chief Executive Officer

EX-31

EXHIBIT 31.2

CERTIFICATIONS

I, Larry W. Sayre, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Collins Industries, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	September 7, 2004	/s/ Larry W. Sayre
		Larry W. Sayre , Vice President of
		Finance and Chief Financial Officer

EX-32

 EXHIBIT 32.1

CERTIFICATION OF PERIODIC REPORT

I, Donald Lynn Collins, Chairman and Chief Executive Officer of Collins Industries, Inc., certify pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1) The Quarterly Report on Form 10-Q of the Company for the quarterly period ended July 31, 2004 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	September 7, 2004
	By
		/s/ Donald Lynn Collins
		Donald Lynn Collins, President
		and Chief Executive Officer

EX-32

EXHIBIT 32.2

CERTIFICATION OF PERIODIC REPORT

I, Larry W. Sayre, Vice President-Finance and Chief Financial Officer of Collins Industries, Inc., certify pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1) The Quarterly Report on Form 10-Q of the Company for the quarterly period ended July 31, 2004 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	September 7, 2004
	By
		/s/ Larry  W. Sayre
		Larry W. Sayre, Vice President of Finance
		and Chief Financial Officer