<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, 2000
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 July 11, 2000 was 3,379,609.
1.
<PAGE> 2
PART I
FINANCIAL INFORMATION
INDEX
<TABLE>
<CAPTION>
Page
No.
<S> <C> <C>
Item 1. Financial Statements
Balance Sheets as of May 31, 2000 and August 31, 1999.......................................... 3
Statements of Operations for the Three Months and Nine Months Ended May 31, 2000 and May
31, 1999....................................................................................... 4
Statements of Cash Flows for the Nine Months Ended May 31, 2000 and May 31, 1999............... 5
Notes to Financial Statements.................................................................. 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......... 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk - None --
</TABLE>
PART II
OTHER INFORMATION
INDEX
<TABLE>
<CAPTION>
<S> <C>
Item 1. Legal Proceedings - None.
Item 2. Changes in Securities -
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
Exhibit 27 Financial Data Schedule.
</TABLE>
2.
<PAGE> 3
RIVIERA TOOL COMPANY
FINANCIAL STATEMENTS
BALANCE SHEETS
<TABLE>
<CAPTION>
MAY 31, AUGUST 31,
ASSETS 2000 1999
-------------------- --------------------
CURRENT ASSETS NOTE (UNAUDITED) (AUDITED)
-------------- -------------------- --------------------
<S> <C> <C> <C>
Cash............................................................... $ 16,324 $ 113,183
Accounts receivable................................................ 8,108,231 6,821,519
Costs and estimated gross profit in excess
of billings on contracts in process.............................. 2 6,648,587 7,829,744
Inventories........................................................ 416,167 451,167
Prepaid expenses and other current assets.......................... 164,001 84,189
----------------- -----------------
Total current assets........................................... 15,353,310 15,299,802
PROPERTY, PLANT AND EQUIPMENT, NET................................... 3 17,775,828 17,941,659
PERISHABLE TOOLING................................................... 612,044 550,634
OTHER ASSETS......................................................... 210,770 135,770
----------------- -----------------
Total assets................................................... $ 33,951,952 $ 33,927,865
================= =================
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt.................................. 4 $ 1,983,964 $ 1,889,415
Accounts payable................................................... 1,321,299 1,398,483
Accrued liabilities................................................ 363,258 1,030,984
----------------- -----------------
Total Current liabilities...................................... 3,668,521 4,318,882
LONG-TERM DEBT....................................................... 4 10,190,733 9,239,636
DEFERRED TAX LIABILITY............................................... 1,035,698 1,386,278
ACCRUED LEASE EXPENSE................................................ 685,087 671,073
----------------- -----------------
Total liabilities.............................................. 15,580,039 15,615,869
----------------- -----------------
PREFERRED STOCK - no par value, $100 mandatory redemption value:
Authorized - 5,000 shares
Issued and outstanding - None.................................... -- --
STOCKHOLDERS' EQUITY:
Preferred Stock - no par value,
Authorized - 200,000 shares
Issued and outstanding - None..................................... -- --
Common stock - No par value:
Authorized - 9,785,575 shares 1
Issued and outstanding - 3,379,609 shares at
May 31, 2000 and 3,218,744 shares at
August 31, 1999................................................... 15,115,466 14,512,185
Retained earnings.................................................. 1 3,256,447 3,799,811
----------------- -----------------
Total stockholders' equity..................................... 18,371,913 18,311,996
----------------- -----------------
Total liabilities and stockholders' equity..................... $ 33,951,952 $ 33,927,865
================= =================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
3.
<PAGE> 4
RIVIERA TOOL COMPANY
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED ENDED
------------------------------------ -----------------------------------
MAY 31, MAY 31, MAY 31, MAY 31,
2000 1999 2000 1999
---------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
SALES............................................. $ 6,674,923 $ 6,444,605 $ 17,705,544 $ 17,072,689
COST OF SALES..................................... 5,364,041 4,505,297 15,170,645 12,160,458
---------------- ---------------- --------------- ---------------
GROSS PROFIT................................ 1,310,882 1,939,308 2,534,899 4,912,231
SELLING AND ADMINISTRATIVE EXPENSES............... 457,895 550,190 1,690,828 1,536,508
---------------- ---------------- --------------- ---------------
INCOME FROM OPERATIONS...................... 852,987 1,389,118 844,071 3,375,723
OTHER INCOME/(EXPENSE)
INTEREST EXPENSE............................... (248,591) (35,078) (656,677) (267,480)
OTHER EXPENSE.................................. 13,211 (433) 12,009 6,009
GAIN (LOSS) ON ASSET DISPOSALS................. (50,201) -- (100,892) --
---------------- ---------------- --------------- ---------------
TOTAL OTHER EXPENSE - NET................... (285,581) (35,511) (745,560) (261,471)
INCOME BEFORE TAXES ON INCOME..................... 567,406 1,353,607 98,511 3,114,252
---------------- ---------------- --------------- ---------------
INCOME TAX EXPENSE................................ 198,018 548,211 38,593 1,095,856
---------------- ---------------- --------------- ---------------
NET INCOME AVAILABLE FOR COMMON
SHARES........................................ $ 369,388 $ 805,396 $ 59,918 $ 2,018,396
================ ================ =============== ===============
BASIC AND DILUTED EARNINGS PER COMMON SHARE.......
$ .11 $ .24 $ .02 $ .61
================ ================ =============== ===============
BASIC AND DILUTED COMMON SHARES OUTSTANDING.......
3,289,454 3,289,454 3,289,454 3,289,454
================ ================ =============== ===============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4.
<PAGE> 5
RIVIERA TOOL COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
----------------------------------------
MAY 31, MAY 31,
2000 1999
------------------ -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income........................................................... $ 59,918 $ 2,018,396
Adjustments to reconcile net income to net cash
From operating activities:
Depreciation and amortization.................................... 1,418,927 856,916
Loss (Gain) on disposal of assets................................ 100,893
Deferred taxes................................................... (350,580) 948,553
(Increase) decrease in assets:
Accounts receivable........................................... (1,286,712) (5,031,199)
Costs and estimated gross profit in
excess of billings on contracts in
process....................................................... 1,181,157 1,048,463
Inventory..................................................... 35,000 112,500
Perishable tooling............................................ (61,410) 129,002
Prepaid expenses and other current assets..................... (79,812) 52,800
Increase (decrease) in liabilities:
Accounts payable.............................................. (77,182) 1,814,255
Accrued lease expense......................................... 14,013 21,025
Accrued liabilities........................................... (667,730) 544,762
------------------ -----------------
Net cash provided by operating activities.............................. $ 286,482 $ 2,515,473
------------------ -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment........................... (1,362,487) (5,565,768)
Decrease (increase) in other assets.................................. (75,000) --
Proceeds from sale of assets......................................... 8,500 --
------------------ -----------------
Net cash used in investing activity.................................... $ (1,428,987) $ (5,565,768)
------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolving credit line.................................. 2,439,070 1,183,467
Principal(payments)/proceeds from long-term
Debt............................................................... (1,393,424) 1,862,622
------------------ -----------------
Net cash used in financing activities.................................. $ 1,045,646 $ 3,046,089
------------------ -----------------
NET DECREASE IN CASH................................................... $ (96,859) $ (4,206)
------------------ -----------------
CASH - Beginning of Period............................................. 113,183 4,206
------------------ -----------------
CASH - End of Period................................................... $ 16,324 $ --
================== =================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5.
<PAGE> 6
RIVIERA TOOL COMPANY
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000
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 Form 10-K dated
November 18, 1999, for the fiscal year ended August 31, 1999.
The results of operations for the three and nine month periods ended May 31,
2000 are not indicative of the results to be expected for the full year.
On November 24, 1999, the Company's Board of Directors declared a five percent
common stock dividend, payable on February 1, 2000 to all shareholders of record
on December 29, 1999. On February 1, 2000, 160,865 common shares were issued as
a stock dividend. All share and per share data presented for the periods ending
May 31, 2000 and May 31, 1999 have been adjusted to give effect to the five
percent dividend. On November 24, 1999, the Company's Board of Directors granted
stock options for 75,000 shares under the 1996 Incentive Stock Option Plan, as
amended, and 53,000 shares under the 1998 Key Employee Stock Option Plan.
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,
2000 1999
------------------ -----------------
<S> <C> <C>
Costs incurred on contracts in process under the
percentage of completion method.............................. $ 17,186,606 $ 11,882,615
Estimated gross profit.......................................... 1,350,000 3,418,400
------------------ -----------------
Total................................................... 18,536,606 15,301,015
Less progress payments received and progress
billings to date............................................. 11,943,572 7,532,371
Plus costs incurred on contracts in process under
the completed contract method................................ 55,553 61,100
------------------ -----------------
Costs and estimated gross profit in excess
of billings on contracts in process................... $ 6,648,587 $ 7,829,744
================== =================
</TABLE>
Included in estimated gross profit for May 31, 2000 and August 31, 1999 are jobs
with losses accrued of $811,516 and $60,912, respectively.
6.
<PAGE> 7
RIVIERA TOOL COMPANY
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
MAY 31, AUGUST 31,
2000 1999
------------------ ----------------
<S> <C> <C>
Lease and leasehold improvements................................................ $ 1,293,844 $ 1,635,476
Office furniture and fixtures................................................... 194,256 203,514
Machinery and equipment......................................................... 21,752,492 21,781,835
Construction in Process......................................................... 707,799 434,269
Computer equipment and software................................................. 2,070,950 1,923,856
Transportation equipment........................................................ 126,365 126,365
------------------ ----------------
Total cost................................................................. 26,145,706 26,105,315
Accumulated depreciation and amortization....................................... 8,369,877 8,163,656
------------------ ----------------
Net carrying amount........................................................ $ 17,775,829 $ 17,941,659
================== ================
</TABLE>
NOTE 4 - LONG-TERM DEBT
The Company's long-term debt, which is subject to certain covenants discussed
below, consists of the following:
<TABLE>
<CAPTION>
MAY 31, AUGUST 31,
2000 1999
------------------- -----------------
<S> <C> <C>
REVOLVING WORKING CAPITAL CREDIT LINE
The Revolving Working Capital Credit Line is collateralized by
substantially all assets of the Company and provides for borrowing, subject
to certain collateral requirements of up to $10.0 million, is due September
1, 2001, and bears interest, payable monthly as follows:
London Interbank Offered Rate ("LIBOR") plus 2.25% (as of May 31,
2000, an effective rate of 8.6%). The LIBOR interest rate expires
August 24, 2000 at which time the interest rate will default to .25%
below the bank's prime rate or at LIBOR plus 2.25%..................... $ 1,500,000 $ --
The bank's prime rate less .25% (as of May 31, 2000, an effective rate
of 9.25%).............................................................. 2,971,564 2,032,494
NOTE PAYABLE TO BANK
The Note Payable to Bank is collateralized by substantially all assets of
the Company, is due July 19, 2002, and is payable in monthly principal
installments of $54,166.67 plus interest as follows:
LIBOR plus 2.25% (as of May 31, 2000, an effective rate of 8.6%). The
LIBOR interest rate expires August 24, 2000 at which time the interest
rate will default to .25% below the bank's prime rate or at LIBOR plus
2.25%.................................................................. 1,000,000 --
The bank's prime rate less .25% (as of May 31, 2000, an effective rate
of 9.25%).............................................................. 354,167 1,841,667
</TABLE>
7.
<PAGE> 8
RIVIERA TOOL COMPANY
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000
NOTE 4 - LONG-TERM DEBT -- CONTINUED
<TABLE>
<CAPTION>
FEBRUARY 29, AUGUST 31,
2000 1999
------------------- -----------------
<S> <C> <C>
NON-REVOLVING EQUIPMENT LINE OF CREDIT
$3,271,000 equipment line of credit collateralized by specific assets of the
Company, is due November 1, 2004, and is payable in monthly principal
installments of $38,941 plus interest as follows:
LIBOR plus 2.25% (as of May 31, 2000, an effective rate of 8.6%). The
LIBOR interest rate expires August 24, 2000 at which time the interest
rate will default to .25% below the bank's prime rate or at LIBOR plus
2.25%.................................................................. 2,000,000 --
The bank's prime rate less .25% (as of May 31, 2000, an effective rate
of 9.25%), due December 1, 2000........................................ 371,196 2,643,782
NOTE PAYABLE TO BANK
The Note Payable to Bank is collateralized by specific assets of the Company,
payable in monthly installments of $55,566, plus simple interest of 7.26%, due
December 31, 2003.................................................................. 3,111,104 3,611,108
NOTE PAYABLE TO BANK
The Note Payable to Bank is collateralized by specific assets of the Company,
payable in monthly installments of $16,666, plus simple interest of 8.04%, due
September 1, 2004.................................................................. 866,666 1,000,000
NON-REVOLVING EQUIPMENT LINE OF CREDIT NOTE
$1.0 million Non-Revolving Equipment Line of Credit. The Note Payable to Bank
is collateralized by specific assets of the Company, payable in monthly
installments of $16,666 (principal payments commencing February 1, 2001), plus
interest at the bank's prime rate less .25% (interest payments commencing June -- --
1, 2000), due February 1, 2006..................................................... ---------------- ----------------
Total long-term debt....................................................... 12,174,697 11,129,051
Total current portion...................................................... 1,983,964 1,889,415
---------------- ----------------
Long-term debt - Net....................................................... $ 10,190,733 $ 9,239,636
================ ================
</TABLE>
The debt agreements require the Company to maintain certain ratios/levels of
tangible net worth, working capital, liabilities to tangible net worth, earnings
before interest, taxes, depreciation and amortization to debt service and
prohibit the payment of common stock cash dividends. The Company was in
compliance with all of these covenants.
8.
<PAGE> 9
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
ENDED MONTHS ENDED
-------------------------- --------------------------
MAY 31, MAY 31, MAY 31, MAY 31,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
SALES.................................................... 100.0% 100.0% 100.0% 100.0%
COST OF SALES............................................ 80.4% 69.9% 85.7% 71.2%
----------- ----------- ----------- -----------
GROSS PROFIT....................................... 19.6% 30.1% 14.3% 28.8%
SELLING AND ADMINISTRATIVE EXPENSE....................... 6.8% 8.5% 9.5% 9.0%
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS...................... 12.8% 21.6% 4.8% 19.8%
OTHER INCOME (EXPENSE)
INTEREST EXPENSE....................................... (3.7%) (0.6%) (3.7%) (1.5%)
OTHER.................................................. (0.6%) -- (0.5%) --
GAIN (LOSS) ON ASSET DISPOSALS......................... -- -- -- --
----------- ----------- ----------- -----------
TOTAL OTHER EXPENSE - NET.......................... (4.3%) (0.6%) (4.2%) (1.5%)
INCOME (LOSS) BEFORE TAXES ON INCOME..................... 8.5% 21.0% 0.6% 18.3%
INCOME TAX EXPENSE (CREDIT).............................. 3.0% 8.5% 0.2% 6.4%
----------- ----------- ----------- -----------
NET INCOME (LOSS)............................ 5.5% 12.5% 0.4% 11.9%
=========== =========== =========== ===========
</TABLE>
THE MATTERS DISCUSSED IN THIS QUARTERLY REPORT ON FORM 10-Q CONTAIN CERTAIN
FORWARD-LOOKING STATEMENTS. FOR THIS PURPOSE, ANY STATEMENTS CONTAINED IN THIS
REPORT THAT ARE NOT STATEMENTS OF HISTORICAL FACT MAY BE DEEMED TO BE
FORWARD-LOOKING STATEMENTS. WITHOUT LIMITING THE FOREGOING, WORDS SUCH AS "MAY,"
"WILL," "EXPECT," BELIEVE," "ANTICIPATE," OR "CONTINUE," THE NEGATIVE OR OTHER
VARIATION THEREOF, OR COMPARABLE TERMINOLOGY, ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. THESE STATEMENTS BY THEIR NATURE INVOLVE SUBSTANTIAL
RISKS AND UNCERTAINTIES, AND ACTUAL RESULTS MAY DIFFER MATERIALLY DEPENDING UPON
A VARIETY OF FACTORS, INCLUDING CONTINUED MARKET DEMAND FOR THE TYPES OF
PRODUCTS AND SERVICES PRODUCED AND SOLD BY THE COMPANY.
COMPARISON OF THE THREE MONTHS ENDED MAY 31, 2000 TO THE THREE MONTHS ENDED MAY
31, 1999.
REVENUES - Revenues for the three months ended May 31, 2000 totaled $6.7 million
as compared to $6.4 million for the three months ended May 31, 1999, an increase
of $0.3 million or 3.6%.
Prior to fiscal 2000, the Company was constrained in revenue growth due to
limited manufacturing capacity. This constraint was alleviated by the Company's
$10.6 million engineering and manufacturing capital expansion, which was
completed in August 1999. The Company has since been marketing this additional
capacity to its customers. Due to the fact that the contracts the Company
receives are long-term in nature, the marketing efforts have not yet
9.
<PAGE> 10
generated additional revenues. Management continues to believe additional growth
opportunities exist and the Company will continue to be successful in securing
additional volume utilizing the increased manufacturing capacity. Additionally,
certain labor and interest costs incurred in fiscal 1999 were required to be
capitalized as part of the capital expansion, which in the first and second
quarters and throughout the remainder of fiscal 2000 will negatively impact the
comparative results of operations. The Company continues to expect the increase
in revenue and gross profit to more than offset the depreciation and interest
expense resulting from the engineering and manufacturing capital expansion.
COST OF SALES - Cost of sales were $5.4 million or 80.4% of sales for the three
months ended May 31, 2000 as compared to $4.5 million or 69.9% of sales for the
three months ended May 31, 1999.
The gross margin decrease was largely due to increases in the Company's direct
costs expense of $624,000 or 8.0%, as a percent of sales, and $227,000 or 2.6%,
as a percent of sales, in manufacturing overhead expense.
The increase in direct cost expense was primarily due to an increase of $619,000
in labor expense for the three months ended May 31, 2000 over the same period
last year. The increase in labor was due to the Company incurring more labor
hours during the quarter ended May 31, 2000 over the same period last year,
necessary to process the Company's contract backlog. Additionally, during the
quarter ended May 31, 1999 the Company had direct labor personnel involved in
completing the manufacturing expansion and accordingly such labor was
capitalized as a part of the expansion. During the quarter ended May 31, 2000,
the amount of such capitalized labor was lower in comparison to the previous
comparable quarter and resulted in the labor expense increase this quarter.
Manufacturing overhead expense increased from $1,512,000 or 23.5% of sales for
the three months ended May 31, 1999 to $1,739,000 or 26.1% of sales for the
three months ended May 31, 2000. This change was due to increases in
depreciation expense, perishable tooling costs, payroll taxes, and medical
insurance premiums.
SELLING & ADMINISTRATIVE EXPENSES - Selling and administrative expenses
decreased from approximately $550,000 or 8.5% of sales for the three months
ended May 31, 1999 to approximately $458,000 or 6.8% of sales for the three
months ended May 31, 2000. This change was due to decreases in legal and
professional expenses, State of Michigan Single Business Tax obligations, and
liability insurance premium expenses.
INTEREST EXPENSE - Interest expense for the three months ended May 31, 2000 was
approximately $249,000 as compared to approximately $35,000 for the same period
last year. As a percentage of sales, interest expense increased from 0.5% in the
quarter ended May 31, 1999 as compared to 3.7% for the quarter ended May 31,
2000.
The increase in interest expense was a result of the Company capitalizing
$190,000 of interest on its construction in process during the quarter ended May
31, 1999.
COMPARISON OF THE NINE MONTHS ENDED MAY 31, 2000 TO THE NINE MONTHS ENDED MAY
31, 1999
10.
<PAGE> 11
REVENUES - Revenues for the nine months ended May 31, 2000 totaled $17.7 million
as compared to $17.1 million for the nine months ended May 31, 1999, an increase
of $0.6 million or 3.7%.
COST OF SALES - Cost of sales were $15.2 million or 85.7% of sales for the nine
months ended May 31, 2000 as compared to $12.2 million or 71.2% of sales for the
nine months ended May 31, 1999.
The gross margin decrease was largely due to increases in the Company's direct
costs expense of $2,353,000 or 36.4%, as a percent of sales, and $598,000 or
13.3%, as a percent of sales, in manufacturing overhead expense offset by the
minor increase in revenue growth during the nine months ended May 31, 2000.
The increase in direct cost expense was primarily due to an increase of
$1,795,000 in labor expense for the nine months ended May 31, 2000 over the same
period last year. The increase in labor was due to the Company incurring more
labor hours during the nine months ended May 31, 2000 over the same period last
year. Additionally, during the nine months ended May 31, 1999 the Company had
direct labor personnel involved in completing the manufacturing expansion and
accordingly, such labor was capitalized as a part of the expansion. During the
nine months ended May 31, 2000, the amount of such capitalized labor was lower
in comparison to the previous comparable quarters and resulted in the labor
expense increase this year.
Direct materials and outside services increased by $557,000 for the nine months
ended May 31, 2000 over the same period last year. These increases include
outside machining expense, an increase of $750,000, resulting from the Company's
product mix during the nine months ended May 31, 2000. This product mix created
machining requirements beyond the Company's capacity and resulted in outsourcing
some machining requirements. Services purchased increased by $870,000 for the
nine months ended May 31, 2000 over the same period last year. These increases
were largely due to the increased shipping requirements to and from certain
customers (an increase of approximately $355,000) and outside laser services
required as a result of the increased prototype dies produced during the nine
months of 2000 (an increase of approximately $328,000). Decreases in direct
materials of $727,000 for the nine months ended May 31, 2000 as compared to the
same period last year was a result of the Company purchasing less castings,
steel, hydraulics etc.
Manufacturing overhead expense increased from $4,483,000 or 26.3% of sales for
the nine months ended May 31, 1999 to $5,079,000 or 28.7% of sales for the nine
months ended May 31, 2000. The largest increase was $246,000 in depreciation
expense, as a result of the Company's recent capital expansion program. Other
increases included additional perishable tooling expense, machinery repairs and
maintenance expenses, medical insurance premiums expenses and payroll tax
expenses.
SELLING & ADMINISTRATIVE EXPENSES - Selling and administrative expenses
increased from approximately $1,536,508 or 9.0% of sales for the nine months
ended May 31, 1999 to approximately $1,691,000 or 9.5% of sales for the nine
months ended May 31, 2000. This increase was due to additional State of Michigan
Single Business Tax obligations, salaries and wages expenses and legal and
professional expenses.
INTEREST EXPENSE - Interest expense for the nine months ended May 31, 2000 was
approximately $657,000 as compared to approximately $267,000 for the same period
last year. As a percentage of sales, interest expense increased from 1.6% for
the nine months ended May 31, 1999 as compared to 3.7% for the nine months ended
May 31, 2000.
11.
<PAGE> 12
The increase in interest expense was a result of the Company capitalizing
$464,000 of interest on its construction in process during the nine months ended
May 31, 1999.
FEDERAL INCOME TAXES
The effective federal income tax rate was 39% for the nine months ended May 31,
2000 as compared to 35% for the same period last year. As of August 31, 1999,
the Company had approximately $187,000 of alternative minimum tax credits that
do not expire.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended May 31, 2000, the Company's cash provided by
operating activities was $286,482. The Company invested in additional machinery
and equipment of $1,362,487 and increased its long-term debt obligations by
$951,097. The Company financed these activities by borrowing $2,439,070 on its
revolving bank working capital credit line. The Company believes that the unused
portion of the revolving bank working capital credit line and the funds
generated from operations will be sufficient to cover anticipated cash needs
through fiscal 2000. However, depending on the level of future sales, an
expanded credit line may be necessary to finance increases in trade accounts
receivable and contracts in process. The Company believes it will be able to
obtain such expanded credit line, if required, on generally the same terms as
the existing credit line.
12.
<PAGE> 13
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: July 11, 2000
Riviera Tool Company
/s/ Kenneth K. Rieth /s/ Peter C. Canepa
-------------------- -------------------
Kenneth K. Rieth Peter C. Canepa
President and Chief Executive Officer Chief Financial Officer,
(Principal Executive Officer) Treasurer and Secretary
(Principal Financial and
Accounting Officer)
13.
<PAGE> 14
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
