<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 - Q
Quarterly Report Under Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For The Quarter Ended May 31, 1997
Commission File Number 001 - 12673
RIVIERA TOOL COMPANY
A Michigan Corporation
I.R.S. Employer Identification No. 38- 2828870
5460 Executive Parkway S.E., Grand Rapids, Michigan 49512
Telephone: (616) 698 - 2100
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, and (2) has been subject to such filing
requirements for the past 90 days.
Yes __X___ No _____
The number of Common Shares outstanding at June 19, 1997 was 2,485,000.
1.
<PAGE> 2
PART I
FINANCIAL INFORMATION
INDEX
<TABLE>
<S> <C> <C>
Page No.
Item 1. Financial Statements
Balance Sheets as of May 31, 1997 and August 31, 1996........ 3
Statements of Operations for the Nine and Three Months Ended
May 31, 1997 and 1996........................................ 4
Statements of Cash Flows for the Nine Months Ended May 31,
1997 and 1996................................................ 5
Notes to Financial Statements................................ 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................... 8
</TABLE>
PART II
OTHER INFORMATION
INDEX
<TABLE>
<S> <C>
Item 1. Legal Proceedings - Incorporated by reference to Prospectus -
"Business-Legal Proceedings" contained in Registrant's Registration
Statement number 333-14187, effective March 3, 1997.
Item 2. Changes in Securities - None
Item 3. Default Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8 - K .
6(a) Exhibits - None
6(b) Reports on Form 8-K - None
</TABLE>
2.
<PAGE> 3
RIVIERA TOOL COMPANY
FINANCIAL STATEMENTS
BALANCE SHEET
<TABLE>
<CAPTION>
MAY 31,
ASSETS 1997 AUGUST 31, 1996
------ ------------------ ---------------------
CURRENT ASSETS NOTE (UNAUDITED) (AUDITED)
---- ------------------ ---------------------
<S> <C> <C> <C>
Cash............................................... $ 162,432 $ -
Accounts Receivable:
Trade............................................. 4,615,779 4,924,305
Related Party..................................... 229,434 344,892
Costs and estimated gross profit in excess
of billings on contracts in process............. 2 6,423,727 5,549,823
Inventories....................................... 445,473 445,473
Prepaid expenses and other current assets......... 347,412 250,210
------------------ ---------------------
Total current assets.......................... 12,224,257 11,514,703
PROPERTY, PLANT AND EQUIPMENT, NET.................. 3 9,295,300 9,785,639
PERISHABLE TOOLING.................................. 632,050 759,258
OTHER ASSETS........................................ 447,946 868,832
------------------ ---------------------
Total assets.................................. $ 22,599,553 $22,928,432
================== =====================
LIABILITIES AND
STOCKHOLDERS' EQUITY
- ----------------------------------------------------
CURRENT LIABILITIES
Notes payable...................................... 4 $ - $ 10,241,503
Current portion of long-term debt.................. 4 968,373 926,861
Current portion of capitalized lease obligations... 4 - 409,225
Accounts payable................................... 1,131,140 2,913,878
Accrued liabilities................................ 530,205 692,271
------------------ ---------------------
Total Current liabilities..................... 2,629,718 15,183,738
CAPITALIZED LEASE OBLIGATIONS....................... - 118,805
LONG-TERM DEBT...................................... 4 7,302,718 882,989
DEFERRED GAINS...................................... 15,379 61,540
ACCRUED LEASE OBLIGATIONS........................... 593,981 558,935
DEFERRED TAX LIABILITY.............................. 694,957 395,700
PREFERRED STOCK - no par value,
$100 mandatory redemption value:
Authorized -- 5,000 shares
Issued and outstanding - 1,425 shares at
August 31, 1996 and 475 shares at May 31,
1997.............................................. 54,777 139,072
Preferred Stock - no par value,
Authorized - 200,000 shares
Issued and outstanding - none..................... - -
COMMON STOCKHOLDERS' EQUITY
Common stock - No par value:
Authorized - 9,785,575 shares
Issued and outstanding - 1,460,000 shares at
August 31, 1996 and 2,470,000 shares at May 31,
1997.............................................. 9,631,642 4,392,752
Retained earnings.................................. 1,676,381 1,194,901
------------------ ---------------------
Total common stockholders' equity............. 11,308,023 5,587,653
Total liabilities and stockholders' ------------------ ---------------------
equity...................................... $ 22,599,553 $ 22,928,432
================== =====================
</TABLE>
See notes to financial statements
3.
<PAGE> 4
RIVIERA TOOL COMPANY
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
MAY 31, MAY 31
-------------------------- --------------------------------
1997 1996 1997 1996
------------ ------------ -------------- -------------
<S> <C> <C> <C> <C>
SALES................................... $ 5,000,864 $ 4,457,817 $ 15,886,163 $ 14,021,511
COST OF SALES........................... 3,915,605 3,501,096 12,610,934 11,233,646
------------ ------------ -------------- -------------
GROSS PROFIT 1,085,259 956,721 3,275,229 2,787,865
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES.............. 354,947 451,311 1,224,387 1,273,677
------------ ------------ -------------- -------------
INCOME FROM OPERATIONS 730,312 505,410 2,050,842 1,514,188
OTHER INCOME (EXPENSE)
Interest expense..................... (375,463) (418,325) (1,220,834) (1,187,813)
Gain on asset sales.................. 15,387 36,940 46,161 122,640
------------ ------------ -------------- -------------
TOTAL OTHER EXPENSE - NET 356,076 381,385 1,170,673 1,065,173
INCOME BEFORE TAXES ON INCOME........... 374,236 124,025 880,169 449,015
INCOME TAXES............................ 127,231 45,003 299,257 162,000
------------ ------------ -------------- -------------
NET INCOME.................... 247,005 79,022 580,912 287,015
DIVIDENDS AND ACCRETION ON
PREFERRED STOCK...................... 2,952 7,134 9,432 14,268
------------ ------------ -------------- -------------
NET INCOME AVAILABLE FOR COMMON
SHARES............................... $ 244,053 $ 71,888 $ 571,480 $ 272,747
============ ============ ============== =============
NET INCOME PER COMMON SHARE............. $ .14 $ .05 $ .33 $ .19
============ ============ ============== =============
COMMON SHARES OUTSTANDING............... 1,712,500 1,460,000 1,712,500 1,460,000
============ ============ ============== =============
PRE-OFFERING PREFERENTIAL DIVIDEND
(See note 5)............................ $ (80,000) $ - $ 90,000 -
============ ============ ============== =============
</TABLE>
See notes to financial statements
4.
<PAGE> 5
RIVIERA TOOL COMPANY
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
MAY 31,
1997 1996
----------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income....................................... $ 580,912 $ 287,015
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization................ 1,069,560 830,234
Amortization of deferred gain................ (46,161) (111,602)
Deferred taxes............................... 299,257 162,000
Bad debt expense............................. (137,378) -
Preferred Stock Accretion.................... 10,705 -
(Increase) decrease in assets: -
Accounts receivable....................... 561,362 2,010,125
Costs and estimated gross profit in
excess of billings on contracts in
process................................... (873,904) (3,955,318)
Perishable tooling........................ 127,208 -
Prepaid expenses and other current assets. (97,202) (45,409)
Increase (decrease) in liabilities:
Accounts payable.......................... (1,782,738) (903,578)
Accrued lease expense..................... 35,046 42,049
Accrued liabilities....................... (162,066) 97,748
----------- --------------
Net cash provided by (used in)
operating activities.................. (415,399) (1,586,736)
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in other assets......................... (10,753) 49,850
Additions to property, plant and equipment....... (490,339) 75,648
----------- --------------
Net cash provided by (used in) investing
activity................................ (501,092) 125,498
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from (repayments of) short-
term debt......................................... (10,241,503) 2,107,068
Net proceeds from issuance of common stock......... 5,238,890 -
Principal(payments)/proceeds from long-term debt... 5,933,211 (649,018)
Redemption of preferred stock...................... (95,000) -
Preferential dividend paid......................... (90,000) -
Capitalized refinancing costs...................... 333,325 -
----------- --------------
Net cash provided by (used in) financing
activities.............................. 1,078,923 1,458,050
----------- --------------
NET INCREASE IN CASH............................... $ 162,432 $ (3,188)
CASH - Beginning of Period......................... - 3,188
----------- --------------
CASH - End of Period............................... $ 162,432 $ -
=========== ==============
</TABLE>
See notes to financial statements
5.
<PAGE> 6
RIVIERA TOOL COMPANY
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1997
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements (the "Financial
Statements") of Riviera Tool Company (the "Company") have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, the Financial Statements do not include all the
information and footnotes normally included in the annual financial statements
prepared in accordance with generally accepted accounting principles.
In the opinion of management, the Financial Statements reflect all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
such information in accordance with generally accepted accounting principles.
These Financial Statements should be read in conjunction with the financial
statements and footnotes thereto included in the Company's Prospectus dated
March 4, 1997, for the fiscal year ended August 31, 1996.
The results of operations for the three and nine month periods ended May 31,
1997 are not indicative of the results to be expected for the full year.
NOTE 2 - COSTS AND BILLINGS ON CONTRACTS IN PROCESS
Costs and billings on contracts in process are as follows:
<TABLE>
<CAPTION>
MAY 31, AUGUST 31,
1997 1996
--------------- ----------------
<S> <C> <C>
Costs incurred on contracts in process under the $
percentage of completion method................... 15,611,119 $ 10,844,647
Estimated gross profit............................... 650,601 900,375
--------------- ----------------
Total........................................ 16,261,720 11,745,022
Less progress payments received and progress
billings to date.................................. 9,840,887 6,353,779
Plus costs incurred on contracts in process under
the completed contract method..................... 2,894 158,580
--------------- ----------------
Costs and estimated gross profit in excess
of billings on contracts in process........ $ 6,423,727 $ 5,549,823
=============== ================
</TABLE>
Included in estimated gross profit for August 31, 1996 and May 31, 1997 are
jobs with losses accrued of $264,890 and $99,351, respectively.
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
MAY 31, AUGUST 31,
1997 1996
----------- -----------
<S> <C> <C>
Lease and leasehold improvements.................... $ 1,553,206 $ 1,553,206
Office furniture and fixtures....................... 186,909 186,909
Machinery and equipment............................. 15,080,310 14,704,396
Transportation equipment............................ 99,935 99,935
----------- -----------
Total cost..................................... 16,920,360 16,544,446
Accumulated depreciation and amortization........... 7,625,060 6,758,807
----------- -----------
Net carrying amount............................ $ 9,295,300 $ 9,785,639
=========== ===========
Depreciation expense for the period................. 911,980 1,081,680
Amortization expense for the period................. 52,746 93,548
----------- -----------
Depreciation and amortization expense for the
period.............................................. $ 964,726 $ 1,175,228
=========== ===========
</TABLE>
6.
<PAGE> 7
RIVIERA TOOL COMPANY
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1997
NOTE 4 - NOTES PAYABLE AND LONG-TERM DEBT
<TABLE>
<CAPTION>
May 31, August 31,
NOTES PAYABLE 1997 1996
---------- ------------
<S> <C> <C>
Revolving bank credit line collaterlized by
substantially all assets of the Company. The agreement
provides for borrowing, subject to certain collateral
requirements of up to $10,500,000, and bears interest
at 4% above the bank's prime rate....................... $ -- $ 10,241,503
========== ============
LONG-TERM DEBT
Note payable to bank, payable in monthly installments
of $40,000 plus interest of 4% above the bank's prime
rate.................................................... -- 376,962
Note payable to financial institution, payable in
monthly installments of $39,945, including interest at
9.9%.................................................... 800,635 1,088,532
Note payable to financial institution, payable in
monthly installments of $15,000, including interest at
7%...................................................... 224,625 344,356
Note payable to bank, payable in monthly installments
of $31,667 plus interest of 1% above the bank's prime
rate (an effective rate of 9.5%),....................... 1,836,667 --
Revolving bank credit line, collaterlized by
substantially all assets of the Company. The agreement
provides for borrowing, subject to certain collateral
requirements of up to $8,000,000, and bears interest at
1% above the bank's prime rate (an effective rate of
9.5%), due December 1, 1998. The agreement is subject
to certain loan covenants and requires a quarterly
commitment fee of .05% per annum on the average daily
unused portion of the revolving credit line............. 5,409,164 --
---------- ------------
Total long-term debt.................................. 8,271,091 1,809,850
Total current portion................................. 968,373 926,861
---------- ------------
Long-term debt - Net.................................. $7,302,718 $ 882,989
========== ============
</TABLE>
In connection with the line of credit and notes payable to certain banks as of
August 31, 1996, the Company had agreed to certain covenants. As of August 31,
1996, the Company was in violation of such covenants and therefore, had
reclassified those debt obligations as current liabilities. During the quarter
ended May 31, 1997 the Company refinanced such debt with LaSalle National Bank
and was in compliance with all covenants under such refinancing. Subsequent to
the quarter ended May 31, 1997 (June 12, 1997), the Company refinanced all of
its existing debt with Old Kent Bank. Under such financing, the Company
increased its Revolving Line of Credit to $10.0 million, refinanced all
existing term debt into a $3.25 million five year debt and received a $4.0
million Non-Revolving Equipment Line of Credit. The interest rate on the
refinancing is the bank's prime rate plus .25% (an effective rate of 8.75%).
NOTE 5 - DIVIDENDS
Pursuant to a Shareholder Agreement dated October 31, 1996 between Motor Wheel
Corporation and Riviera Holding Company, the Company had declared a
preferential dividend of approximately $170,000 on the shares of Common Stock
owned by Riviera Holding Company to pay the income tax payable by Riviera
Holding Company as a result of the lapse of options by Motor Wheel Corporation
to purchase common stock owned by Riviera Holding Company and as a result of
the dividend itself. During the quarter ended February 28, 1997 this dividend
was declared, but unpaid. During the quarter ended May 31, 1997, the actual
dividend paid was $90,000. As a result the difference between the dividend
declared and the dividend paid ($80,000) was reversed during the three months
ended May 31, 1997.
7.
<PAGE> 8
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table presents, for the periods indicated, the components of the
Company's Statement of Operations as a percentage of sales.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED MAY 31, ENDED MAY 31
-------------------- ---------------------
1997 1996 1997 1996
-------- ------- ---------- -------
<S> <C> <C> <C> <C>
SALES............................... 100.0% 100.0% 100.0% 100.0%
COST OF SALES....................... 78.3% 78.5% 79.4% 80.1%
-------- ------- ---------- -------
GROSS PROFIT 21.7% 21.5% 20.6% 19.9%
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSE............................. 7.1% 10.1% 7.7% 9.1%
-------- ------- ---------- -------
INCOME FROM OPERATIONS.. 14.6% 11.4% 12.9% 10.8%
OTHER INCOME (EXPENSE)
INTEREST EXPENSE.................. .7.4% 9.4% 7.7% 8.5%
GAIN ON ASSET SALES............... .3% .8% .3% .9%
-------- ------- ---------- -------
TOTAL OTHER EXPENSE - NET.... 7.1% 8.6% 7.4% 7.6%
INCOME BEFORE TAXES ON INCOME...... 7.5% 2.8% 5.5% 3.2%
INCOME TAXES........................ 2.5% 1.1% 1.9% 1.2%
-------- ------- ---------- -------
NET INCOME................ 5.0% 1.7% 3.6% 2.0%
======== ======= ========== =======
</TABLE>
COMPARISON OF THE THREE MONTHS ENDED MAY 31, 1997 TO THE THREE MONTHS ENDED MAY
31, 1996.
REVENUES -- Revenues for the three months ended May 31, 1997 totaled $5.0
million as compared to $4.5 million for the three months ended May 31, 1996, an
increase of $0.5 million or 12%. This revenue increase was due to the Company's
increase in orders and contract backlog.
COST OF SALES -- Cost of sales increased from $3.5 million for the three months
ended May 31, 1996 to $3.9 million for the three months ended May 31, 1997. The
increase in cost of sales was largely due to an increase in the Company's
revenue during the three month period. As a percent of revenue, cost of sales
for the three months ended May 31, 1997 was 78.3% compared to 78.5% for the
three months ended May 31, 1996.
S,G & A EXPENSES -- Selling, general and administrative expenses decreased from
approximately $451,000 for the three months ended May 31, 1996 to approximately
$325,000 for the three months ended May 31, 1997. This decrease was largely due
to an decrease in legal and professional expenses ($40,000), decrease in
selling expenses ($53,000) and decrease in deferred compensation expense
($37,000). As a percentage of revenue, selling, general and administrative
expenses were 7.1% for the three months ended May 31, 1997 compared to 10.1%
for the three months ended May 31,1996.
INTEREST EXPENSE -- Interest expense for the three months ended May 31, 1997
was approximately $375,000 (including $27,000 in tax agencies interest, $86,000
of bank fees paid to its former primary lender and $21,000 in capital lease
prepayment fees) as compared to approximately $418,000 for the three months
ended May 31, 1996. As a percentage of revenue, interest expense decreased from
9.4% for the three months ended May 31, 1996 as compared to 7.4% for the three
months ended May 31, 1997.
8.
<PAGE> 9
COMPARISON OF THE NINE MONTHS ENDED MAY 31,1997 TO THE NINE MONTHS ENDED MAY
31,1996
REVENUES -- Revenues for the nine months ended May 31, 1997 totaled $15.9
million as compared to $14.0 million for the nine months ended May 31, 1996, an
increase of $1.9 million or 13%. This revenue increase was due to the Company's
increase in orders and contract backlog.
COST OF SALES -- Cost of sales increased from $11.2 million for the nine months
ended May 31, 1996 to $12.6 million for the nine months ended May 31, 1997. The
increase in cost of sales was largely due to an increase in the Company's
revenue during this period. As a percent of revenue, cost of sales for the nine
months ended May 31, 1997 was 79.4% compared to 80.1% for the nine months ended
May 31, 1996.
S,G & A EXPENSES -- Selling, general and administrative expenses were
approximately $1.2 million for the nine months ended May 31, 1996 as compared
to the same for the nine months ended May 31, 1997. Fluctuations of expenses
included an increase in legal and professional expenses ($30,000), an increase
on office salaries ($72,000), an increase in public company costs ($33,000), a
decrease in selling expenses ($74,000), and a decrease in deferred compensation
expense ($63,000). As a percentage of revenue, selling, general and
administrative expenses were 7.7% for the nine months ended May 31, 1997
compared to 9.1% for the nine months ended May 31,1996 as a result of the
increase in revenue for the nine months ended May 31, 1997.
INTEREST EXPENSE -- Interest expense for the nine months ended May 31, 1997 was
approximately $1.2 million, the same amount for the nine months ended May 31,
1996. As a percentage of revenue, interest expense decreased from 8.5% for the
nine months ended May 31, 1996 as compared to 7.7% for the nine months ended
May 31, 1997 as a result of the increase in revenue for the nine months ended
May 31, 1997.
FEDERAL INCOME TAXES
The effective federal income tax rate was 34% for the three and nine months
ended May 31, 1997 and 1996. As of August 31, 1996, the Company had
approximately $4.2 million of net operating loss carryforwards that expire 2006
through 2009, investment tax credit carryforwards of approximately $246,700
that expire 1998 through 2003 and alternative minimum tax credits of
approximately $40,000, the use of which do not expire.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended May 31, 1997, the Company's cash used in operating
activities was $415,399. The capital provided from operating activities was
primarily due to the decrease in the Company's Accounts Receivable ($561,362)
and increase in Work-in-Process ($873,904) and Accounts Payable ($1,782,739).
From Investing Activities, the Company increased it's other assets by $10,753
and acquired additional machinery and equipment of $490,339 for a total of
$501,092 during the nine months ended May 31, 1997.
From Financing Activities, the Company was provided from financing activities a
total of $1,078,923 during the nine months ended May 31, 1997. During the nine
months ended May 31, 1997, the Company reduced financial institution debt and
capital lease obligations (net of $4,308,292), received proceeds from issuance
of 1,010,000 shares of common stock net of $5,238,890), redeemed 950 shares of
8% mandatory redeemable preferred stock ($95,000) and paid a preferential
dividend ($90,000).
9.
<PAGE> 10
6/19/97
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: June 20, 1997
Riviera Tool Company
/s/ Kenneth K. Rieth
-------------------------------------
Kenneth K. Rieth
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Peter C. Canepa
-------------------------------------
Peter C. Canepa
Chief Financial Officer, Treasurer and Secretary
(Principal Financial and Accounting Officer)
10.
<PAGE> 11
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PART I
FINANCIAL INFORMATION, ITEM 1, FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH SEL FORM 10Q FOR THE THIRD QUARTER ENDED MAY 31,
1997
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> SEP-01-1996
<PERIOD-END> MAY-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 4,845
<ALLOWANCES> 37
<INVENTORY> 6,869
<CURRENT-ASSETS> 12,224
<PP&E> 16,920
<DEPRECIATION> 7,625
<TOTAL-ASSETS> 22,600
<CURRENT-LIABILITIES> 2,630
<BONDS> 7,303
55
0
<COMMON> 9,632
<OTHER-SE> 1,677
<TOTAL-LIABILITY-AND-EQUITY> 22,600
<SALES> 15,886
<TOTAL-REVENUES> 15,886
<CGS> 12,611
<TOTAL-COSTS> 1,170
<OTHER-EXPENSES> (46)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,221
<INCOME-PRETAX> 880
<INCOME-TAX> 299
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 572
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
</TABLE>
