UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2000
[ ] 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 333-92019
PLASTICS MFG. COMPANY
(Exact name of registrant as specified in charter)
W190 N11701 MOLDMAKERS WAY WISCONSIN
GERMANTOWN, WISCONSIN 53022-8214 (State of incorporation)
(Address of principal executive office) 39-1867101
(I.R.S. Employer
Identification Number)
Registrant's telephone number, including area code: 262-255-5790
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check 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 report), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. <checked-box>
There is no established trading market for the registrant's stock.
The number of common shares outstanding at December 15, 2000 was
3,791,912.
<PAGE>
TABLE OF CONTENTS
PAGE
PART I
Item 1. Business 1
Item 2. Properties 8
Item 3. Legal Proceedings 8
Item 4. Submission of Matters to a Vote of Security Holders 8
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters 9
Item 6. Selected Financial Data 10
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 7A. Quantitative and Qualitative Disclosure About Market
Risk 14
Item 8. Financial Statements and Supplementary Data 15
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures 37
PART III
Item 10. Directors and Executive Officers of the Registrant 38
Item 11. Executive Compensation 40
Item 12. Security Ownership of Certain Beneficial Owners and
Management 42
Item 13. Certain Relationships and Related Transactions 43
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 46
-i-
PART I
ITEM 1. BUSINESS.
In this Annual Report on Form 10-K, the terms "we," "us" and
"our" refer to Plastics Mfg. Company. Unless otherwise noted, these
terms also include our wholly owned subsidiary, TecStar Mfg. Company.
OUR BUSINESS
We manufacture high volume, precision injection molded plastic
parts for original equipment manufacturers in the medical, automotive,
appliance, telecommunications, cosmetic, and computer markets.
Services offered by the Company also include value-added and assembly
operations. Value-added operations include, but are not limited to,
pad printing, heat staking, and sonic welding. Our customers are other
manufacturers which produce end-use products or manufacture components
for sale to other manufacturers. Our manufacturing business is
conducted through our wholly-owned subsidiary, TecStar Mfg. Company.
<PAGE>
The manufacture of plastic parts and performance of value-added
operations for unrelated customers is done on a purchase order basis.
This portion of our business represented approximately 70% of our net
sales in fiscal 2000.
An important part of our business are our operations in
conjunction with affiliated companies in an industry niche as a
"turn-key" manufacturer. Engineering, design, mold making, and
sampling, polishing and testing services are provided by affiliated
companies which are referred to in this report as the "MGS Group."
During the last fiscal year approximately 6.3% of our net sales was
derived from business which involved services of the MGS Group.
Our business plan for 2000 provided for the acquisition of a Texas
production facility. Due to delays in acquiring a suitable facility
and raising sufficient capital, our expansion was delayed. We are
currently focusing on operations at our existing facilities and have
postponed expansion into Texas indefinitely. We still recognize Texas
as an important geographic location and future expansion plans may
include operations in Texas.
AFFILIATED COMPANIES - THE MGS GROUP.
Sixteen companies are affiliated with us through common ownership.
These affiliated companies are collectively referred to as the "MGS
Group." Mark G. Sellers is our Chairman, President, and Chief
Executive Officer and he controls directly or indirectly at least 51%
of the voting interests of each company in the MGS Group. Mr. Sellers
and the MGS Group collectively own approximately 60% of our outstanding
common stock.
We also rely on the MGS Group to provide management, accounting,
information system, and human resource services for us. Our principal
-1-
production facility and our injection molding equipment is leased from
MGS Group companies. See Item 13, Certain Relationships and Related
Transactions.
PROPOSED CONSOLIDATION WITH MGS GROUP
Our Board of Directors has determined that there are strategic and
operational advantages to be gained by consolidating our operations
with those of substantially all of the companies which now make up the
MGS Group. In connection with this consolidation:
<circle> We expect that a share exchange with Statistical
Plastics Corporation ("SPC") will be consummated December 31,
2000. SPC provides mold sampling of new and rebuilt tooling
and develops processing parameters for high volume plastic
part production primarily for us, other companies in the MGS
Group, and unrelated companies in the plastics industry.
Following consummation, SPC will become our wholly-owned
subsidiary.
<circle> During our 2001 second quarter, we expect that our
shareholders and the shareholders of MGS Mfg. Group, Inc.
<PAGE>
("MGS Mfg.") will consider a proposal in which MGS Mfg. will
become our wholly-owned subsidiary. MGS Mfg. is a holding
company whose subsidiaries provide the engineering, design,
mold making, and testing services used by us in our
"turn-key" niche operations. In connection with the
acquisition of MGS Mfg., we will change our name to "MGS Mfg.
Group, Inc." and the MGS Mfg. Group, Inc. will change its
name to "Moldmakers, Incorporated."
We also anticipate that during our 2001 second quarter that
we will acquire PCI Consulting and Leasing, Inc. ("PCI"). We
lease approximately 80% of our injection molding equipment
from PCI.
Following consummation of the planned restructuring, we
anticipate that our organizational structure will be as
follows:
MGS Mfg. Group, Inc
(now known as "Plastics
Mfg. Company)
TecStar Mfg. Company Moldmakers, Incorporated Statistical Plastics
(now known as "MGS Corp.
Mfg. Group, Inc.)
-2-
THE INDUSTRY
The plastics manufacturing business is a multi-billion dollar
industry. According to an annual survey published in the April 17,
2000 issue of PLASTIC NEWS, the 100 largest injection molders had
combined sales in excess of $18.7 billion in 1999. In 1999, the same
survey indicated that the 100 top molders had combined sales in excess
of $16.7 billion in 1998. We operate in a majority of the 25 market
segments in which the top 100 molders conducted operations in 1999.
There are an estimated 3,800 independent plastic molding
companies in the United States, most of which are privately held and
have sales volumes of under $10 million per year. However, within the
high technology, specialized plastics manufacturing segment of the
market, we compete with many companies which have more operating
experience, more capital or financing, and greater sales and income
levels. We believe our principal competitors and their approximate
1999 sales volumes are:
<PAGE>
<TABLE>
<CAPTION>
Approximate 1999
COMPETITOR SALES VOLUME{(1)}
<S> <C>
Nypro, Inc. $405 million
Clinton, MA
Phillips Plastics Corp. $217 million
Hudson, WI
InteSys Technologies, Inc. $150 million
Gilbert, AZ
Hoffer Plastics Corp. $79 million
South Elgin, IL
Advance Dial Co. $72 million
Elmhurst, IL
Evco Plastics $50 million
DeForest, WI
<FN>
{(1)} As reported in PLASTICS NEWS, April 17, 2000.
</TABLE>
Arrangements with most independent molding companies are in the
form of purchase orders that may be canceled by the customer.
Competition in the industry is based on piece price, quality, and
service.
-3-
CUSTOMERS
Our customer list currently includes approximately 8 Fortune 500
companies and approximately 50 other companies.
In 2000, we received approximately 35% of our manufacturing
revenue from our arrangement with Motorola, Inc. to produce plastic
parts for six of its divisions which produce consumer communications
products.
We have entered into an agreement with the Paslode Cordless Tool
Group of Illinois Tool Works, Inc., to provide injection molded parts
through September 30, 2004. Paslode designs and manufactures fasteners
and power tools for the residential construction industry. Under this
agreement, we have installed approximately $5.0 million of equipment
and improvements into the Paslode facility at Green Oaks, Illinois, to
produce the parts. We have the use of approximately 29,000 square feet
of space at the Paslode facility. Production under this agreement
began in October, 1999. Sales under this agreement were approximately
$3.15 million for fiscal year 2000. The agreement may be terminated
upon 180 days notice by either Paslode or us. If terminated by
Paslode, other than for cause, during the initial five-year term,
Paslode is required to reimburse us for our capital costs associated
with the equipment and other related costs.
Sales to MGS Group companies represented approximately 6.3% of
our revenue in 2000 and 22.6% in 1999. These sales consisted mainly of
machine time and related labor.
<PAGE>
During 2000, we derived approximately 18% of our revenues from
sales outside of the United States. Information concerning revenues
derived from different geographic areas is set forth under Note 12 in
the notes to our consolidated financial statements set forth in Item 8.
Our finished products are shipped to customers by common carrier
in most instances.
BACKLOG AND WORKING CAPITAL
At September 30, 2000, we had a backlog of orders in the amount
of approximately $8,200,000, compared to a backlog of approximately
$7,000,000 on September 30, 1999. This increase is attributable to the
growth of our business in 2000 as sales revenue increased approximately
348% in 2000 over the 1999 fiscal year.
Our open order backlog at September 30, 2000 required deliveries
at varying dates in fiscal 2001. Approximately 90% of our September
30, 2000 backlog had delivery dates in the first quarter of fiscal
2001. However, as we move closer to the calendar year-end we have seen
rapid increases in our backlog. Our backlog at October 31, 2000, and
November 30, 2000, was $13.3 and $18.7 million respectively. Because
of the length of time between entering an order, shipping the product
and recording the sale can vary significantly from order to order, we
believe that backlog levels should not be relied upon as an indicator
of future sales volume.
-4-
Our purchase orders often call for the delivery of finished
products over an extended period of time. These delivery periods
commonly range from one to 12 months. As is customary in our industry,
we carry adequate amounts of raw materials inventory to facilitate the
manufacture of products for which we have purchase orders in hand. In
addition, in order to make the best use of manufacturing efficiencies,
we may produce an entire order in one production run and hold finished
goods in inventory until the purchase order requires delivery.
TRADEMARKS AND PATENTS
Our business is not dependent upon trademark or patent rights.
We have access to certain proprietary techniques such as "multi-shot"
injection process capability developed by the MGS Mfg. Multi-shot
injection molding is an injection process in which different types of
plastic resin, typically with different aesthetic and texture
qualities, are used to create a single plastic part. Demand for
multi-shot injection molding has increased dramatically throughout the
industry with applications in everything from toothbrushes to cellular
telephones. We are a leader in this emerging market. We believe that
this type of technology enhances our productivity and competitiveness.
RAW MATERIALS
The principal raw materials we use in the manufacture of plastic
parts are pelletized plastic resins. These resins are purchased at
open market prices from several manufacturers. The resins used in our
manufacturing process are petroleum or natural gas derivatives and
their availability and price could be affected by the supply or prices
<PAGE>
of petroleum. However, we have not experienced shortages in our
operating history and do not foresee any material increases in pricing.
We believe that should the cost of resins increase substantially, it
may have a short-term adverse impact on our operating results, but that
we will be able to recover most price increases from our customers in
the form of higher prices for our products.
ENVIRONMENTAL REGULATIONS
We are subject to various federal, state and local laws and
regulations including, without limitation, laws and regulations
concerning the containment and disposal of hazardous waste and other
waste materials which directly or indirectly affect our operations.
Environmental laws and regulations typically impose "strict liability"
for some environmental damages. Accordingly, in some situations, we
could be liable for clean up costs even if the situation resulted from
previous conduct that was lawful at the time or from improper conduct
of, or conditions caused by, previous property owners, lessees or other
persons not associated with us or events outside of our control. Such
clean up or costs associated with changes in environmental laws and
regulations could be substantial and could have a materially adverse
effect on our consolidated financial position, results of operations or
cash flows.
Our plastic products business routinely uses chemicals and
solvents, some of which are classified as hazardous substances. Use of
these materials is generally limited to the spray application of
solvents to clean molds. No special handling of used material is
currently required. Plastic resin and scraps may be recycled or sent
to landfills. We believe we are
-5-
currently in material compliance with existing environmental protection
laws and regulations. We are not involved in any significant
remediation activities or administrative or judicial proceedings
arising under federal, state or local environmental protection laws and
regulations.
EMPLOYEES
At September 30, 2000, we employed approximately 300 employees,
of which 180 are production workers and 120 are office, managerial,
engineering and technical employees. Our principal executive officers
are also officers and employees of other companies within the MGS
Group. None of our employees is represented under a collective
bargaining agreement. We consider our relations with our employees to
be satisfactory and have not experienced any job actions or labor
shortages since our inception. Management, accounting, information
systems, and human resource services are provided by MGS group
companies.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"). In addition, certain statements in future filings by us
with the Securities and Exchange Commission, reports to shareholders,
<PAGE>
press releases, and other oral and written statements made by or with
our approval which are not statements of historical fact will
constitute forward-looking statements within the meaning of the Act.
Our forward-looking statements may be identified by, among other
things, expressions of our beliefs or expectations that certain events
may occur or are anticipated, and projections or statements of
expectations with respect to (i) various aspects of our business
(including, but not limited to, net income, the availability or price
of raw materials, and customer demand for our products), (ii) our plans
or intentions, (iii) the industry within which we operate, (iv) the
economy, and (v) any other expressions of similar import or covering
other matters relating to us, our business, and our operations. In
making forward-looking statements within the meaning of the Reform Act,
we undertake no obligation to publicly update or revise any such
statement.
Forward-looking statements are not guarantees of performance.
Our forward-looking statements are based on information available to
us as of the date of such statements and reflect our expectations as of
such date, but are subject to risks and uncertainties that may cause
actual results to vary materially. Many of the factors that will
determine these results are beyond our ability to control or predict.
Shareholders and others are cautioned not to put undue reliance on any
forward-looking statements.
In addition to specific factors which may be described in
connection with any of our forward-looking statements, factors which
could cause actual results to differ materially include, but are not
limited to, the following:
<circle> The loss of the services of Mr. Sellers and disruption
in our relationship with MGS Mfg. Group, Inc., or other
affiliated companies.
-6-
<circle> The inability to obtain additional financing to
continue to implement our plans for expanded operations.
<circle> Termination of key customer relationships, including
those with Motorola, Inc. and ITW Paslode, Cordless Tool
Group, a division of Illinois Tool Works, Inc.
<circle> The inability to generate sufficient cash flow to
service our existing debt.
<circle> A material decrease in the business of MGS Mfg. Group,
Inc., or other affiliated companies.
<circle> The inability to hire or retain qualified personnel.
<circle> Increased competition from domestic or foreign
manufacturers, including increases in competitive production
capacity resulting in sales declines from reduced shipment
volume and/or lower net selling prices in order to maintain
shipment volume.
<PAGE>
<circle> Changes in customer demand for our products due to
overall economic activity affecting the rate of consumption
of our products, growth rates of the end markets for our
products, technological or consumer preference changes, or
acceptance of our products by the markets served by us.
<circle> Increases in the cost of raw materials or increases in
scrap and excess inventory or the inability to forecast such
increases in making bids for production agreements.
<circle> Unforseen or recurring operational problems at any of
our facilities causing significant lost production and/or
cost increases.
<circle> Significant changes to our strategic plans such as a
major acquisition or expansion, the disposition of assets or
product lines, or the failure to successfully execute major
capital projects or other strategic plans.
<circle> The inability to successfully integrate an acquisition,
particularly, the planned restructuring with our affiliated
companies described in this Form 10-K.
<circle> Changes in laws or regulations, including those
designed to protect the environment, which affect us. Any
changes required to comply with such laws or regulations may
increase our capital expenditures and operating costs.
-7-
ITEM 2. PROPERTIES.
We lease approximately 66,000 square feet in an 88,000 square
foot building owned by a member of the MGS Group. This leased space
houses our production facilities. The leased space also houses our
assembly, engineering, and design functions and provides general office
space. We also lease 12,800 square feet of warehouse space in
Germantown, Wisconsin. Other members of the MGS Group occupy the
remaining 22,000 square feet. The facility is located immediately
across the street from the MGS Technical Center, which houses the
offices of the MGS Group's companies and some of the design,
engineering and operating staff of those companies.
ITEM 3. LEGAL PROCEEDINGS.
We are the plaintiff in a lawsuit filed on February 7, 1999, in
the District Court of Tarrant County, Texas, which seeks to terminate a
lease entered into by us in November, 1999 with respect to a 142,000
square foot building in Fort Worth, Texas. We believe the premises did
not meet the requirements of the lease and are seeking a determination
by the court that the lease is of no legal effect or, alternatively,
has been breached by the landlord. The lease is for a term of seven
years ending December 31, 2006 and provides for annual payments of
$366,648, $431,880, $518,436 respectively, over the first three years
of the term and annual payments of $518,436 over each of the remaining
four years of the term. We believe that our legal position is correct
and that a court should find in our favor. In addition, the landlord
has a duty under Texas law to mitigate its damages and seek another
<PAGE>
tenant. For these reasons, we do not, as of the date of this report,
believe that this dispute will have a material adverse effect on our
financial condition or liquidity. Litigation is, by its nature,
uncertain and if the lease is held to be enforceable and no other
tenant is found for the building it would have a material adverse
effect on our financial condition.
We may, from time to time, become involved in various legal
proceedings in the ordinary course of our business. As of the date of
filing of this report, we are not engaged in any legal proceedings and
are not aware of any other claims which are likely to be asserted
against us.
ITEM 4.SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of stockholders during the
fourth quarter of 2000.
-8-
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS.
Our common stock is not listed on a securities exchange or
over-the-counter market. There is no established trading market for
our common stock. As of December 15, 2000, there were approximately
331 holders of record for our common stock.
We have not paid a dividend on our common stock since inception.
We anticipate that we will retain all of our earnings in the
foreseeable future to finance the continued growth and expansion of our
businesses. We have no current intention to pay cash dividends. Our
future dividend policy will depend on our earnings, capital
requirements, requirements of the financing agreements to which we may
be a party, financial condition, and other factors considered relevant
by our board of directors.
-9-
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
PLASTICS MFG. COMPANY AND SUBSIDIARY
<CAPTION>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
(In thousands, except per share data)
YEAR ENDED SEPTEMBER 30,
1997 1998 1999 2000
CONSOLIDATED STATEMENTS
OF OPERATIONS DATA:
<S> <C> <C> <C> <C>
Sales
Trade $ $ 203 $5,778 $31,305
Related parties 647 1,687 2,115
Total sales 850 7,465 33,420
Cost of goods sold
Trade 354 4,575 19,919
Related parties 1,155 3,037 9,954
Total cost of goods sold 1,509 7,612 29,873
Gross profit (659) (147) 3,547
Operating expenses
Trade 1 79 623 3,014
Related parties 2 203 172 642
Management fees - related party 43 373 784
Lease procurement fees - related party 1,818 0
Total operating expenses 3 325 2,986 4,440
Income (loss) from operations (3) (984) (3,133) (893)
Interest and other income (expense), net 6 - (17) (246)
Income (loss) before income tax expense 3 (984) (3,150) (1,139)
Income tax (1) 403 496 462
Income (loss) before cumulative effect
of accounting change 2 (581) (2,654) (677)
Cumulative effect of accounting
change, net of tax 0 (95) 0
Net income (loss) $ 2 $(581) $ (2,749) $ (677)
Per basic share:
Income (loss) before cumulative
effect of accounting change $ 0.00 $(0.24) $(1.01) $ (.18)
Cumulative effect of accounting change (0.04) 0
Net income (loss) $ 0.00 $(0.24) $(1.05) (.18)
Shares in computing basic net
income (loss) 1,551 2,432 2,614 3,764
per share
CONSOLIDATED BALANCE
SHEET DATA:
Cash $ 1,222 $ 10 $ 246 $ 48
Total current assets 1,222 147 4,428 10,883
Total current liabilities 1 823 4,054 17,288
Noncurrent liabilities 0 0 0 211
Stockholders' equity 52 1,066 2,841 5,196
</TABLE>
<PAGE>
NOTES TO SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
(1) As of September 30, 1997, we were still a development stage
company that had not commenced operations. The proceeds of our
first stock offering were held in escrow until September 14, 1997.
We then paid legal and accounting invoices related to organizing
the company and the first offering. No other transactions took
place during the fiscal year ended September 30, 1997.
(2) All shares outstanding and earnings per share have been
retroactively restated to reflect the 3-for-1 stock split on
September 30, 1999.
-10-
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
SALES. We experienced a sales increase in fiscal 2000 of 348% over
fiscal 1999 which was a 778% increase over fiscal 1998. No comparison
of 1999 to 1998 is presented because of the limited nature of our
operations in 1998. The continued rapid increases are primarily
attributable to improved plant efficiency, increased customer demand
and addition of new customers. The majority of our sales increases are
the results of increased volume rather than increases in per unit sales
prices. During the third quarter of fiscal 2000 our backlog of
unfilled orders, believed to be firm, decreased from $15.57 million at
June 30, 2000 to $8.2 million at September 30, 2000. The decrease is
due the reluctance of our customers to release new orders for the
coming calendar year. As a result over 90% of our backlog at September
30, 2000 had delivery dates prior to December 31, 2000. However, as we
move closer to the calendar year-end we have seen rapid increases in
backlog. Our backlog at October 31, 2000, and November 30, 2000, was
$13.3 and $18.7 million, respectively.
We continue to capitalize on our relationship with Moldmakers, Inc. and
Prototype Mold & Design, two of our related companies within the MGS
Group, to produce tooling as part of our total manufacturing solution.
COST OF GOODS SOLD. In keeping with our exponential increase in sales,
cost of sales increased 292% from fiscal 1999 to fiscal 2000. For the
twelve months ended September 30, 2000 cost of goods sold was
$29,873,000 as compared to $7,612,000 for the period ended September
30, 1999. However, when expressed as a percentage of sales, cost of
goods sold decreased from 102% in fiscal 1999 to 89% in fiscal 2000.
This decrease allowed us to recognize a gross profit of $3,547,000 for
the twelve months ended September 30, 2000 as compared to a loss of
$147,000 for the twelve months ended September 30, 1999. Materials as
a percentage of molding sales increased from 23% in fiscal 1999 to 32%
in fiscal 2000. The increase in material costs is due to product mix
and increased business in assembly and value-added services. Direct
labor costs continued to increase in order for us to meet current and
future sales growth. Comparing labor costs from fiscal 1999 to fiscal
2000 shows a significant decrease in labor as a percent of sales from
38% to 28%. During the same period fixed overhead decreased from 45%
to 24% of sales. These increased efficiencies are due to greater
<PAGE>
utilization of equipment, facilities, and labor. During fiscal 2000 we
received credits of approximately $1,506,000 with respect to various
purchase orders for tooling which had been completed by related
parties. The credits for the tooling purchase orders reflected
adjustments to the contract price to reflect the actual costs incurred
by the parties. Similar credits of approximately $244,500 relating to
purchase orders for tooling were received during fiscal 1999.
-11-
SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative
expenses for fiscal 2000 were $4,440,000 compared to $1,169,000 for
fiscal 1999. This increase is due to the addition of sales and
management personnel in an effort to increase our customer base and
meet the growing needs of current manufacturing operations. During the
third quarter we reached an agreement to terminate our existing
management agreements. The agreements called for us to record a
management fee equal to 5% of gross sales payable to various related
entities for sales and marketing, consulting and reference services.
Under those agreements we incurred a management fee of $784,000 and
$373,000 for the twelve months ended September 30, 2000 and 1999. Had
the management agreements been in place the entire year the management
fee would have been $1,671,000 in fiscal 2000.
INTEREST EXPENSE. For the twelve months ended September 30, 2000
interest expense totaled $265,000 compared with $22,000 for the twelve
months of fiscal 1999. Interest expense arises from borrowings on our
line of credit. Use of our line of credit has and will continue to
increase with increased sales levels and the directly related increases
in accounts receivable and inventory.
INCOME TAX EXPENSE. Income tax benefits of $462,000 for 2000 and
$497,000 for 1999 were recorded. These amounts are calculated as a
percentage of pre-tax income, and reflect, accordingly, the pre-tax
loss at the end of the above stated periods.
LIQUIDITY AND CAPITAL RESOURCES
We are continuing to finance our operations with a combination of
private capital, a bank line of credit facility and leases. During
2000, we received $297,000 in additional capital from the sale of
stock. In April, 2000 we obtained an increase in our line of credit
from $3 million to $5 million from M&I Northern Bank. In order to meet
our growing needs we received additional increases in our line of
credit during October and November to $6 and $7 million respectively.
Net cash used by operating activities totaled $2,051,000 for fiscal
2000 and $2,086,000 for fiscal 1999. Cash used in operating activities
for fiscal 2000 and 1999 resulted primarily from the necessity of
funding inventory and accounts receivable growth in excess of our
accounts payable growth.
Net cash used in investing activities totaled $2,343,000 in fiscal 1999
and $2,191,000 in fiscal 2000. Cash used in investing activities for
each period resulted from the acquisition of leasehold improvements and
manufacturing equipment.
Net cash provided by financing activities totaled $4,666,000 for fiscal
1999 and $4,043,000 for fiscal 2000. Cash provided by financing
<PAGE>
activities for each period resulted primarily from draws on our bank
line of credit and sale of company stock.
-12-
As of September 30, 2000, we had $800,000 available in additional
borrowings under our line of credit. Our fiscal 2001 business plan
requires $7 million of additional capital in fiscal 2001 for machinery
and equipment ($5 million) and working capital ($2 million). We
believe that current cash balances, cash flows from current operations,
and available term debt and lease financing will be sufficient to fund
our expected growth in current business operations and related working
capital and capital expenditure requirements for our current operations
for 2001 fiscal year. As noted in Item 1 of this report, our plans to
acquire a Texas facility have been postponed indefinitely.
Our forecast of the period of time through which our financial
resources will be adequate is a forward-looking statement that involves
risks and uncertainties. Our actual funding requirements may differ
materially from our forecasts as a result of a number of factors
including our plans to expand our operations and the expansion of our
value added and assembly operations as part of our total manufacturing
solution. We cannot be certain that additional funds will be available
on satisfactory terms when needed, if at all. If we are unable to
raise additional necessary capital in the future, we may be required to
scale down our expansion plans significantly.
-13-
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
We do not have a material market risk associated with interest
rate risk, foreign currency exchange risk, or commodity price risk.
We conduct U.S. dollar denominated export transactions or immediately
exchange all foreign currency attributable to export sales for U.S.
dollars. Foreign sales for fiscal year 2000 were approximately 17% of
total sales.
-14-
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholder
Plastics Mfg. Company and Subsidiary
Germantown, Wisconsin
We have audited the consolidated balance sheets of Plastic Mfg. Company
and Subsidiary as of September 30, 2000 and the related consolidated
statements of operations, stockholders' equity and cash flows for the
year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion
on these financial statements based on our audit. The financial
statements of Plastics Mfg. Company and Subsidiary as of September 30,
1999, and 1998, were audited by other auditors whose report dated
October 28, 1999, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
<PAGE>
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Plastics
Mfg. Company and Subsidiary as of September 30, 2000 and the result of
its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
WIPFLI ULLRICH BERTELSON LLP
Wipfli Ullrich Bertelson LLP
November 22, 2000
Milwaukee, Wisconsin
-15-
<PAGE>
<TABLE>
<CAPTION>
PLASTICS MFG. COMPANY
CONSOLIDATED BALANCE SHEETS
September 30
2000 1999
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $47,761 $245,813
Accounts receivable:
Trade - less allowance for doubtful
accounts of $40,000 in 2000 5,934,223 2,167,918
Related parties 1,611,935 739,603
Progress receivables 31,072 111,745
Inventories 3,199,728 1,073,435
Prepaid expenses 58,417 89,897
Total current assets 10,883,136 4,428,411
Plant and equipment:
Leasehold improvements 1,519,536 549,521
Machinery and equipment 1,899,517 697,406
Production molds 259,742 100,000
Vehicle 3,655 3,655
Furniture and office equipment 235,175 20,405
Totals 3,917,625 1,370,987
Less accumulated depreciation 379,772 134,756
Net depreciated value 3,537,853 1,236,231
Machinery in progress 4,430,286 0
Total plant and equipment 7,968,139 1,236,231
Other assets:
Deposits 2,413,562 2,189,039
Deferred income taxes 1,429,900 992,200
Total other assets 3,843,462 3,181,239
TOTAL ASSETS $22,694,737 $8,845,881
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
-16-
<PAGE>
<TABLE>
PLASTICS MFG. COMPANY
CONSOLIDATED BALANCE SHEETS (Continued)
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30
2000 1999
<S> <C> <C>
Current liabilities:
Current maturities:
Obligations under capital leases $60,528 $0
Notes payable - bank 4,200,000 425,000
Accounts payable:
Trade 8,283,928 1,359,174
Related parties 2,776,856 1,600,087
Accrued and other liabilities:
Payroll, bonuses, and vacation 331,380 203,711
Other 25 0
Customer deposits 1,635,138 441,439
Deferred income taxes 0 24,600
Total current liabilities 17,287,855 4,054,011
Long-term liabilities
Obligations under capital leases 210,554 0
Common stock subject to rescission 0 1,951,360
Stockholders' equity:
Common stock - no par value 15,000,000
shares authorized, 3,791,912 shares issued
and outstanding shares in 2000; and
3,027,510 shares issued and outstanding
in 1999. 9,200,789 6,952,040
Stock subscriptions receivable 0 (784,228)
Accumulated deficit (4,004,461) (3,327,302)
Total stockholders' equity 5,196,328 2,840,510
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $22,694,737 $8,845,881
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
-17-
<PAGE>
<TABLE>
<CAPTION>
PLASTICS MFG. COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended September 30, 2000, 1999 and 1998
2000 1999 1998
<S> <C> <C> <C>
Sales:
Molding $23,246,344 $4,561,615 $ 72,171
Tooling 8,058,721 1,217,037 131,200
Related parties 2,115,051 1,686,730 646,693
Total sales 33,420,116 7,465,382 850,064
Cost of sales:
Molding and tooling 19,919,459 4,575,334 354,126
Related parties 9,953,889 3,036,764 1,154,722
Total cost of sales 29,873,348 7,612,098 1,508,848
Gross profit (loss) on sales 3,546,768 (146,716) (658,784)
Operating expenses:
Administrative and general expenses 3,014,012 622,963 78,981
Related parties 641,847 172,441 203,392
Management fee - related party 784,228 373,269 42,503
Lease procurement fee - related party 0 1,817,600 0
Total operating expense 4,440,087 2,986,273 324,876
Loss from operations (893,319) (3,132,989) (983,660)
Other income (deductions):
Interest income 116 5,006 0
Interest expense (265,255) (21,872) 0
Gain on sale of assets 18,999 0 0
Loss before credit for income taxes
and cumulative effect of
accounting change (1,139,459) (3,149,855) (983,660)
Credit for income taxes (462,300) (496,710) (402,708)
Net loss before cumulative effect
of accounting change (677,159) (2,653,145) (580,952)
Cumulative effect of accounting
change, net of $68,000
deferred tax benefit 0 (95,614) 0
Net loss ($677,159) ($2,748,759) ($580,952)
</TABLE>
-18-
<PAGE>
<TABLE>
<CAPTION>
PLASTICS MFG. COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
Years Ended September 30, 2000, 1999 and 1998
2000 1999 1998
<S> <C> <C> <C>
Per basic share:
Loss before accounting change ($0.18) ($1.01) ($0.24)
Cumulative effect of accounting change 0.00 (0.04) 0.00
Net loss per share ($0.18) ($1.05) ($0.24)
Weighted average shares in computing
basic net loss per share (in thousands) 3,764 2,614 2,432
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
-19-
<PAGE>
<TABLE>
<CAPTION>
PLASTICS MFG. COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended September 30, 2000, 1999, and 1998
COMMON STOCK
Number of Stock Accumulated
SHARES AMOUNT SUBSCRIPTIONS DEFICIT
<S> <C> <C> <C> <C>
Balance, September 30, 1997 500,000 $1,250,000 $1,200,000 $ 2,409
Common stock sales 319,000 1,595,000
Net loss (580,952)
Balance, September 30, 1998 819,000 2,845,000 1,200,000 (578,543)
Common stock sales 431,000 6,058,400 0 0
Stock split 2,500,000 0 0 0
Common stock subject to rescission (722,490) (1,951,360) 0 0
Management fee applied 0 0 (415,772) 0
Net loss 0 0 0 (2,748,759)
Balance, September 30, 1999 3,027,510 6,952,040 784,228 (3,327,302)
Common stock sales, net of issue costs 41,912 297,389 0 0
Common stock released from rescission offer 722,490 1,951,360 0 0
Management fee applied 0 0 (784,228) 0
Net loss 0 0 0 (677,159)
Balance, September 30, 2000 3,791,912 $9,200,789 $ 0 ($4,004,461)
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
-20-
<PAGE>
<TABLE>
<CAPTION>
PLASTICS MFG. COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended September 30, 2000, 1999, and 1998
2000 1999 1998
<S> <C> <C> <C>
Increase (decrease) in cash and cash equivalents:
Cash flows from operating activities:
Net loss ($677,159) ($2,748,759) ($580,952)
Cumulative effect of accounting change 0 95,614 0
Adjustments to reconcile net loss to net cash used in
operating activities:
Provision for depreciation and amortization 245,015 94,080 46,676
Lease procurement fee 0 1,817,600 0
Management fees applied to stock subscription 784,228 415,772 0
Income taxes 0 0 (668)
Provision for deferred income tax credit (462,300) (496,760) (402,040)
Provision for bad debts 40,000 0 0
Changes in operating assets and liabilities:
Accounts receivable (4,678,637) (2,877,380) (30,141)
Progress receivable 80,673 (111,745) 0
Inventories (2,126,293) (1,001,233) (72,202)
Prepaid expenses and other assets 31,480 (55,319) (34,578)
Accounts payable 3,390,791 2,143,954 815,307
Accrued and other liabilities 127,694 196,314 7,397
Customer deposit 1,193,699 441,439 0
Total adjustments (1,373,650) 566,722 329,751
Net cash used in operating activities (2,050,809) (2,086,423) (251,201)
Cash flows from investing activities:
Deposits on leases (224,523) (1,899,189) (289,850)
Purchase of equipment (1,966,136) (443,996) (676,991)
Payment of organization expense-trade 0 0 (9,370)
Payment of organization expense-related party 0 0 (64,994)
Net cash used in investing activities (2,190,659) (2,343,185) (1,041,205)
</TABLE>
-21-
<PAGE>
<TABLE>
<CAPTION>
PLASTICS MFG. COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Years Ended September 30, 2000, 1999, and 1998
2000 1999 1998
<S> <C> <C> <C>
Cash flows from financing activities:
Payments on capital lease obligation (28,973) 0 0
Draws on note payable - bank 3,775,000 425,000 0
Proceeds from issuance of common stock 502,944 4,240,800 80,000
Cash paid for stock issuance costs (205,555) 0 0
Net cash provided by financing activities 4,043,416 4,665,800 80,000
Net increase (decrease) in cash and cash
equivalents (198,052) 236,192 (1,212,406)
Cash and cash equivalents at beginning 245,813 9,621 1,222,027
Cash and cash equivalents at end $ 47,761 $245,813 $ 9,621
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
-22-
<PAGE>
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPAL BUSINESS ACTIVITY
Plastics Mfg. Company (PMC) is a holding company, which owns 100% of
the stock of TecStar Mfg. Company (collectively referred to as the
Company). The Company was in the development stage through March 31,
1999. Manufacturing operations commenced in November, 1997 with sales
being made primarily to related companies.
The Company produces high quality injection molded plastic parts for
various original equipment manufacturers located throughout the world.
The Company also recognizes revenues from the sale of high quality
molds, the manufacture of which is currently subcontracted, primarily
to affiliates. The majority of these molds are intended for parts
produced at its facility in Germantown, Wisconsin.
PRINCIPLES OF CONSOLIDATION
The accompanying financial statements include the accounts of the
Company after elimination of significant intercompany accounts and
transactions.
USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS
The preparation of the accompanying financial statements in conformity
with generally accepted accounting principles requires management to
make certain estimates and assumptions that directly affect the results
of reported assets, liabilities, revenue, and expenses. Actual results
may differ from these estimates.
CASH EQUIVALENTS
The Company considers all highly liquid debt instruments with an
original maturity of three months or less to be cash equivalents.
As of September 30, 2000, the Company had deposits at one bank totaling
approximately $290,000. These deposits are insured by the Federal
Deposit Insurance Corporation (FDIC) up to $100,000.
INVENTORIES
Inventories are valued at the lower of cost, determined on the
first-in, first-out (FIFO) method or market.
-23-
<TABLE>
<CAPTION>
Inventories consist of the following:
2000 1999
<S> <C> <C>
At current cost:
Perishable tools $ 47,551 $ 14,772
Raw materials 1,717,544 459,825
Work in process 272,059 176,630
Finished products 1,162,574 422,208
Total $3,199,728 $1,073,435
</TABLE>
<PAGE>
PLANT, EQUIPMENT, AND DEPRECIATION
Plant and equipment are valued at cost and includes equipment under
leases which have been capitalized. Maintenance and repair costs are
charged to expense as incurred. Gains or losses on disposition of
plant and equipment are reflected in income. Depreciation and
amortization is computed on the straight-line and accelerated methods
for financial reporting purposes, based on the estimated useful lives
of the assets or the terms of the lease, whichever is required.
INCOME TAXES
Deferred income taxes have been provided under the liability method.
Deferred tax assets and liabilities are determined based upon the
difference between the financial statement and tax basis of assets and
liabilities, as measured by the enacted tax rates expected to be in
effect when these differences are expected to reverse. Deferred tax
expense is the result of changes in the deferred tax asset and
liability.
REVENUE RECOGNITION
The Company recognizes revenue from molding upon shipment of the parts.
Progress billings for tooling sales are recognized on the specific job
orders based upon hours incurred using the applicable billing rate for
shop or design work, which approximates the percentage of completion
method of income recognition.
NOTE 2 NOTE PAYABLE - BANK
As of September 30, 2000, the Company had a bank line of credit of
$5,000,000 (increased to $6,000,000 in October 2000 and to $7,000,000
in November 2000) which is available through February 2001. The loan
agreement is secured by basically all assets. Borrowings are based on
accounts receivable and inventory levels. The loan contains covenants
pertaining to maintaining minimum working capital and tangible net
worth levels.
-24-
At September 30, 2000 and 1999, $4,200,000 and $425,000, respectively,
were borrowed against the line of credit. The interest rate is 8.92%
(adjusted interbank rate plus 2.25%) at September 30, 2000.
NOTE 3 CAPITAL LEASES
During 2000, the Company leased various items of equipment which
qualify as capital leases. The leases require monthly payments ranging
from $352 to $5,127 and expire during the next five years.
Machinery and equipment includes the following amounts for leases that
have been capitalized:
<PAGE>
<TABLE>
<CAPTION>
2000
<S> <C>
Equipment $300,055
Accumulated amortization (18,740)
Net amortized value $281,315
Lease amortization is included in depreciation expense.
</TABLE>
-25-
<TABLE>
<CAPTION>
Future minimum payments, by year and in the aggregate, under the
capital leases consist of the following:
CAPITAL LEASES
<S> <C>
2001 $87,374
2002 87,374
2003 87,374
2004 66,729
2005 8,414
Total minimum lease payments 337,265
Amount representing interest 66,183
Present value of net minimum lease payments 271,082
Less - current maturities 60,528
Long-term obligations under capital lease $210,554
</TABLE>
NOTE 4 OPERATING LEASES
OPERATING LEASE COMMITMENTS
The Company leases equipment from Moldmakers Leasing & Investments
Limited Partnership, LLP (Moldmakers Leasing) and from PCI Consulting
and Leasing, Inc. (PCI), both of whom are related parties through
common control. The lease payments are based on 105% of PCI's and/or
Moldmakers Leasing's lease cost. The month-to-month leases are
automatically renewable. Rent expenses totaled $2,181,065, $1,566,230,
and $603,476 in 2000, 1999, and 1998, respectively. In addition, the
Company leases facilities from Moldmakers Leasing on a month-to-month
basis under a triple net operating lease. Rent expense totaled
$360,000, $305,500, and $174,663 in 2000, 1999, and 1998, respectively.
PCI and Moldmakers Leasing generally lease the molding equipment from
third parties under long-term leases with sixty-month terms. The
Company's principal stockholder has personally guaranteed PCI and
Moldmakers Leasing's lease obligations.
During 2000, the Company began leasing equipment from a third party.
The equipment lease, which is for five years expiring May 2005,
requires monthly payments of $18,636. Rent expense totaled $74,544
during 2000.
-26-
<PAGE>
<TABLE>
<CAPTION>
Future minimum payments, by year and in the aggregate, consistent of
the following:
<S> <C>
2001 $ 583,627
2002 583,627
2003 583,627
2004 583,627
2005 509,085
Thereafter 300,000
Total minimum lease payments $3,143,593
</TABLE>
<TABLE>
<CAPTION>
Lease deposits outstanding at year-end consist of the following:
2000 1999
<S> <C> <C>
Facility $ 60,000 $ 60,000
Equipment 374,860 229,039
Equipment orders 1,900,000 1,900,000
Other 78,702 0
Total $2,413,562 $2,189,039
</TABLE>
NOTE 5 DEFINED CONTRIBUTION PENSION PLAN
The Company maintains a retirement savings plan for substantially all
of their employees, which allows participants to make contributions by
salary reduction pursuant to Section 401(k) of the Internal Revenue
Code. Company contributions are discretionary and amounted to $71,066,
$13,196 and $50 in 2000, 1999 and 1998, respectively. Employees vest
immediately in their contributions and vest in the Company
contributions over a seven-year period of service.
-27-
<PAGE>
<TABLE>
<CAPTION>
NOTE 6 INCOME TAXES
The credit for income taxes consists of the following:
2000 1999 1998
<S> <C> <C> <C>
Current credit (expense):
Federal $ 0 $ 0 $ 0
State 0 (50) 0
Benefit of NOL carryback 0 0 668
Total current 0 (50) 668
Deferred tax credit:
Federal 375,500 377,100 333,398
State 86,800 119,660 68,642
Total deferred 462,300 496,760 402,040
Total credit for income taxes $462,300 $496,710 $402,708
</TABLE>
Deferred income taxes are provided for the temporary differences
between the financial reporting basis and the tax basis of the
Company's assets and liabilities. The major temporary differences
that give rise to the deferred tax liabilities and assets are as
follows:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Deferred tax assets:
Operating loss carryforwards $1,495,400 $ 989,500
Organization costs 36,200 50,200
Vacation accrual 13,500 5,100
Total deferred tax assets 1,545,100 1,044,800
Deferred tax liabilities:
Depreciation (103,000) (34,200)
Progress receivables (12,200) (43,000)
Total deferred tax liabilities (115,200) (77,200)
Net deferred tax assets $1,429,900 $ 967,600
</TABLE>
-28-
<PAGE>
The provision for income taxes varies from the amount of income tax
determined by applying the applicable federal statutory income tax rate
to pretax income before extraordinary item as a result of the following
differences:
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
Statutory federal income tax rates (34.0)% (34.0)% (34.0)%
Increase (decrease) in rates resulting
from:
Nondeductible items 1.2 19.6 0.0
State income taxes - less federal
benefit (5.2) (2.3) (7.0)
Other (2.5) 0.9 0.1
Effective tax rates (40.5)% (15.8)% (40.9)%
</TABLE>
For income tax purposes, federal and Wisconsin net operating loss
carryforwards of $3,813,172 exist as of September 30, 2000 which begin
to expire on September 30, 2018.
NOTE 7 STOCK OPTIONS
During 2000, the Company granted stock options totaling 5 million
shares to its President Mark G. Sellers or entities that he controls.
The option price is set at $10 per share with an expiration date of
September 30, 2001. The fair value of the options granted is estimated
on the grant date using an option-pricing model which considers the
expected dividends, risk free interest rate, and lives of the options.
The option price approximates the fair value of the options on the
grant date.
-29-
A summary of the status of the Company's outstanding stock options as
of September 30, 2000 and the changes during the year ended September
30, 2000 is as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE
FIXED OPTIONS: SHARES PRICE
<S> <C> <C>
Options outstanding at September 30, 1999 0 $ 0
Granted during 2000 5,000,000 10
Options outstanding at September 30, 2000 5,000,000 $10
Options exercisable at September 30, 2000 5,000,000
Weighted average fair-value of options
granted during the year $ 0
</TABLE>
The fair value of the options granted during the year had a grant date
<PAGE>
fair value of $0. This amount was determined pursuant to a modified
Black-Scholes option pricing model using assumptions of a) an option
term of two years, b) a risk-free interest rate of 5.62%, c) no
dividends per share, and d) no volatility.
No compensation cost has been recognized for the stock option plan.
The effect of the stock options on earnings per share is antidilutive
because of the Company's loss from operations in 2000. Therefore
diluted earnings per share has not been presented.
-30-
<TABLE>
<CAPTION>
NOTE 8 SUPPLEMENTAL CASH FLOW DISCLOSURE INFORMATION
2000 1999 1998
<S> <C> <C> <C>
Cash paid during the year for:
Interest $265,255 $21,875 $ 0
Income taxes $ 0 $ 25 $ 0
Non-cash investing and financing activities:
Acquisition of machinery and equipment
through capital lease $300,055 $0 $0
Acquisition of machinery and equipment
through increase in accounts payable $4,710,732 $0 $0
Transfer of stock subject to recision to
(from) Stockholder's deficit $1,951,360 ($1,951,360) $0
Management fee applied to
stock subscriptions $784,228 $415,772 $0
</TABLE>
NOTE 9 RELATED PARTY TRANSACTIONS
During the periods presented, the Company transacted business with
certain other companies, which are related by common control. These
companies are collectively referred to as the MGS Group. The activity
consisted primarily of buying and selling services between the parties,
whose services complement one another. Also included is the purchase
of services from one company that performs human resources, marketing,
finance, and other administrative duties for all of the related
companies. Mark G. Sellers, who beneficially owns approximately 60% of
the Company's issued and outstanding common stock, also controls a
majority of the equity interests of each of the MGS Group. Scott W.
Scampini, Executive Vice President of the Company, owns between 10.5%
and 25% of the equity interests of these related companies. These
transactions are summarized as follows:
-31-
<PAGE>
<TABLE>
<CAPTION>
NOTE 9 RELATED PARTY TRANSACTIONS (Continued)
ADMINISTRATIVE, DESIGN, AND COMPUTER
SERVICES 2000 1999 1998
<S> <C> <C> <C>
MGS Enterprises $529,898 $156,961 $41,618
Cadd Plus 56,055 6,800 445
O & S Design, Inc. 218,323 84,985 15,769
Total $804,276 $248,746 $57,832
MACHINE TIME SALES 2000 1999 1998
Statistical Plastics Corporation $2,271,882 $1,304,030 $646,693
LEASING ACTIVITY 2000 1999 1998
Moldmakers Leasing:
Equipment lease $103,040 $116,430 $122,857
Facility lease 193,520 305,500 174,663
Lease procurement 0 1,817,600 0
PCI Consulting:
Equipment lease 2,078,025 1,449,800 480,618
Total $2,374,585 $3,689,330 $778,138
QUALITY OPERATIONS AND CONSULTING 2000 1999 1998
Statistical Plastic Corporation $170,584 $139,050 $397,272
MGS Enterprises 96,495 20,300 455
Total $267,079 $159,350 $397,727
TOOLING PURCHASE 2000 1999 1998
Moldmakers, Inc. $3,817,966 $590,133 $69,091
Moldmakers Die Cast Tooling Div. 23,150 0 0
Prototype Mold and Design (54,875) 74,000 33,950
O & S Design, Inc. 22,850 0 0
Statistic Plastics Corporation 19,290 0 0
Total $3,828,381 $664,133 $103,041
</TABLE>
-32-
<PAGE>
<TABLE>
<CAPTION>
NOTE 9 RELATED PARTY TRANSACTIONS (Continued)
PROJECT MANAGEMENT 2000 1999 1998
<S> <C> <C> <C>
O & S Design $ 9,116 $ 188 $ 0
Moldmakers, Inc. 366,794 198,672 0
Moldmakers Die Casting Division 25,841 19,418 0
Prototype Mold and Design 129,248 163,167 0
Total $530,999 $381,445 $ 0
MAINTENANCE, SHIPPING, QUALITY 2000 1999 1998
MGS Enterprises $ 0 $ (1,144) $ 0
ProFab 0 (113) 0
Moldmakers, Inc. 582,142 128,963 10,514
Moldmakers Die Casting Tooling Div. 70,995 23,725 278
Prototype Mold and Design 523,088 57,732 3,950
Redline, Inc. 10,423 3,218 0
Total $1,186,648 $ 212,381 $14,742
MOLD SAMPLING 2000 1999 1998
Statistical Plastics Corporation $ 272,427 $ 50,958 $10,270
</TABLE>
The Company also reimburses MGS Enterprises for certain shared expenses
such as insurance costs, utilities, shop supplies, and other shared
costs. In 2000, these costs totaled approximately $2,181,000.
The Company had entered into management agreements with its three
initial stock subscribers under which it would pay them an aggregate
management fee equal to 5% of gross sales through December 31, 2001.
The Company agreed with those related companies to offset payment of
the management fees due them against the stock subscriptions. The
amount offset totaled $415,772 in 1999 and $784,228 in 2000. In
addition to providing management services, each of the three companies
solicits sales on behalf of the Company. On October 1, 1999, the
Company agreed to extend the termination of the agreements to December
31, 2006. On May 1, 2000 the Company terminated the management
agreements and all modifications to them.
-33-
Some of the Company's other stockholders also have ownership interests
and management functions in the above related entities. The existence
of that common control could result in operating results or financial
position of the Company significantly different from those that would
have been obtained had such control not existed, although management is
of the opinion that such control has not had an adverse affect on the
Company.
NOTE 10 CONTINGENCIES
In the ordinary course of conducting business, the Company occasionally
<PAGE>
becomes involved in legal proceedings relating to contracts,
environmental issues, or other matters. While any proceeding or
litigation has an element of uncertainty, management of the Company
believes that the outcome of any pending or threatened actions will not
have a material adverse effect on the business or financial condition
of the Company.
NOTE 11 LEASE PROCUREMENT FEE
During fiscal 1999, the Company recorded a charge of $1,817,600 for
expenses related to leases procured by a related company on the
Company's behalf. This related company purchased common stock from
the Company during fiscal 1999. The charge represents the difference
between the approximate fair market value of the stock and the price
paid by the related company. No similar expense was incurred during
fiscal 2000.
NOTE 12 MAJOR CUSTOMERS
The Company's customers operate in a number of different industries.
As of September 30, 2000, 1999, and 1998, sales to six separate
divisions of Motorola, Inc. in each year were approximately
$11,595,000, $2,018,000, and $140,000, respectively, sales to the
Company's group of related parties were approximately $2,115,000,
$1,687,000, and $647,000, respectively.
Sales by geographical location of customers were approximately as
follows:
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
United States $27,545,000 $4,495,000 $850,000
Brazil 1,325,000 0 0
China 925,000 1,370,000 0
United Kingdom 3,075,000 1,190,000 0
Other countries 550,000 410,000 0
Total $33,420,000 $7,465,000 $850,000
</TABLE>
-34-
The Company's presently does not require collateral from their
customers. To reduce credit risk, the Company performs on going
evaluations of its customers' financial condition. As of September
30, 1999, two customers owed approximately 18% and 10% respectively,
and a related party owed approximately 13%, of the Company's accounts
receivable.
NOTE 13 CUMULATIVE EFFECT OF ACCOUNTING CHANGE
In accordance with Statement of Position 98-5 issued by the Accounting
Standards Executive Committee, the Company has chosen to charge all
start-up costs to operations as of October 1, 1998. As a result,
organization costs amounting to $95,614 (after taxes of $68,000)
remaining unamortized as of that date were written off. Prior to this
change, organization costs were amortized over 5 years.
<PAGE>
NOTE 14 STOCK SUBJECT TO RESCISSION
The Company sold 722,490 shares of common stock from August 1999 to
September 1999 that may not have qualified for exemption from
registration under federal and state securities law. A rescission
offer was made to repurchase these shares for a 30-day period in fiscal
year 2000. The Company had a written agreement with its president and
affiliated organizations to purchase shares tendered in the rescission
offer. The amounts received for shares subject to the rescission offer
totaling $1,951,360 were classified outside of permanent equity in the
balance sheet as of September 30, 1999.
The rescission period ended on April 14, 2000. None of the shares
subject to rescission were tendered during the rescission offer.
Consequently, the Company reclassified the amounts received for those
shares into permanent equity.
NOTE 15 CAPITAL STOCK ACTIVITY
Three related parties subscribed to the initial 500,000 shares of stock
issued. The subscription agreements provide for the payment of $.10
per share upon issuance of the stock with the remaining $2.40 per share
payable on December 31, 2001. The subscriptions were paid in full as
of September 30, 2000 by applying management fees earned (Note 9)
during 2000 and 1999.
On September 30, 1999, the Companies declared a three-for-one stock
split effected in the form of a dividend. The record date was
September 30, 1999.
NOTE 16 ADVERTISING COSTS
The Company expenses advertising costs as incurred or the first time
the advertising takes place. Total advertising costs charged to
expense for 2000, 1999, and 1998 were $83,913, $6,037, and $1,043,
respectively.
-35-
NOTE 17 COMMITMENTS
Subsequent to year end, the Company agreed to acquire the stock of PCI
Consulting and Leasing, Inc. for 10,000 shares of Company stock.
-36-
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES.
A report of the change in our independent accountants and the
appointment of new independent accountants was previously reported in
Form 8-K dated September 29, 2000. Item 304(b) of Regulation S-K is
not applicable.
-37-
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
DIRECTORS
<PAGE>
Our directors are elected annually. The following information is
provided with respect to directors:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
AND OTHER
NAME AND AGE DIRECTORSHIPS DIRECTOR SINCE
<S> <C> <C>
Mark G. Sellers, 46 Chairman of the Board, CEO 1996
and Treasurer of the Company and TecStar
and president, director and/or partner in
each other entity in MGS Group; Mr. Sellers
founded the MGS Group of companies in 1982
Scott W. Scampini, 48 Executive Vice President and Secretary of the 1996
Company and TecStar; also an officer, director
and/or partner of each other entity in the MGS
Group; Mr. Scampini was in public accounting
prior to joining the MGS Group in 1993 at
BDO Siedman, LLP (1984-1993) and Price
Waterhouse (1977-1982)
Jeffrey A. Kolbow, 32 Vice President - Finance of MGS Enterprises, 1999
Inc., and an officer and/or director of each
other entity in the MGS Group; Mr. Kolbow
has served the MGS Group of companies in
various capacities since 1995; previously, BDO
Siedman, LLP (1990-1995)
Bruce L. Schneider, 48 Vice President - Finance of the Company and 1999
TecStar since July, 1999, and also an officer
and/or director of each other entity in the MGS
Group; previously, controller, Sterling Tool
Mfg. Co. (1994-1996)
-38-
Rade (Rudi) Petrovic, 52 Vice President - Sales of the Company and 1996
TecStar; previously employed by Regina
U.S.A., a division of Regina Industria, an
Italian manufacturer of conveyor chains
(1989-1995); Mr. Petrovic has been employed
by the MGS Group since 1995
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EMPLOYEES
NAME AND AGE OFFICE
<S> <C>
Mark G. Sellers, 46<dagger>
Scott W. Scampini, 48<dagger>
Bruce L. Schneider, 49<dagger>
Rade R. Petrovic, 50<dagger>
Craig R. Hall, 52 President since August, 2000; Chief Operating
Officer of TecStar since November, 1999;
previously, Vice President of Technology,
Tulip Corporation (January, 1998 - November,
1999); Manager of Molding, Mattel Power
Wheels (February, 1995 - January, 1998).
John R. Burt, 40 Director of Engineering and Sales since
October, 1999; previously, Sales and Marketing
Director, Oberg Industries (1998-1999);
Business Unit Manager, Intesys Technologies
(1990-1998).
<FN>
<dagger> See "Directors."
</TABLE>
-39-
ITEM 11. EXECUTIVE COMPENSATION.
COMPENSATION OF DIRECTORS
Our directors are not compensated for their services as directors.
EXECUTIVE COMPENSATION
The table below sets forth the compensation earned by, or awarded
or paid by us, to our CEO and to each of our three other most highly
compensated executive officers whose salary and bonus exceeded $100,000
for the last fiscal year.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Awards
Securities
Restricted Underlying
Name and Principal Other Annual Stock Options/ All Other
Position Year Salary Bonus Compensation($) Awards(1) SARs(#) Compensation
<S> <C> <C> <C> <C> <C> <C> <C>
Mark G. Sellers; CEO of 2000 (2) (2) (2) 0 5,000,000 (2)
the Company 1999 (2) (2) (2) 0 0 (2)
Craig R. Hall; President 2000 $106,900 $0 $0 0 0 $1,800(3)
John R. Burt; 2000 $127,465 $0 $0 0 0 $1,615(3)
Director - Engineering
and Sales
Rade R. Petrovic; Vice 2000 $104,000 $0 $0 0 0 $1,800(3)
President - Sales 1999 $105,800 $0 $0 0 0 $1,560(3)
<FN>
{(1)} We adopted the Restricted Stock Plan during fiscal year 2000.
No grants had been made under the plan at fiscal year-end.
{(2)} Mr. Sellers did not receive any salary, bonus, or other
compensation from us in 2000 or in 1999. See Item 13, Certain
Relationships and Related Transactions.
{(3)} Amounts contributed to 401(k) plan.
</TABLE>
-40-
OPTION EXERCISES AND HOLDINGS
The following options were granted in 2000 to executive officers
named in the summary compensation table. No options were exercised by
any executive officer named in the summary compensation table during
our last fiscal year.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR {(1)}
Potential Realizable
Number of % of total Value at Assumed Annual
Securities Options/SARs Rates of Stock Price
Underlying Granted to Exercise or Appreciation for
Options/SARs Employees In Base Price Expiration Option Term
Name Granted(#) Fiscal Year ($/Sh) Date 5%(2) 10%($)
<S> <C> <C> <C> <C> <C> <C>
Mark G. Sellers 5,000,000{(1)} 100% $10.00 9/30/01 $0{(2)} $0{(2)}
<FN>
{(1)} The options indicated in the table were granted on October 1,
1999 to Mr. Sellers (1,750,000 shares), two trusts for which he
serves as trustee (1,250,000 shares), and two of the MGS Group
companies, Moldmakers Investments (1,000,000 shares) and
Moldmakers, Inc. (1,000,000 shares). Each of the options is
immediately exercisable, in whole or in part, at an exercise
price of $10.00 per share.
{(2)} There is no established market for the stock. Assumes fair
market value per share of $6.00 on date of grant.
</TABLE>
-41-
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth information with respect to
beneficial ownership of our common stock as of December 15, 2000, by
<circle>each director;
<circle>each holder of more than 5% of our common stock;
<circle>each of the officers listed in the Summary Compensation
Table; and
<circle>all current directors and executive officers as a group.
Except as indicated in the footnotes to this table, the individuals
named in this table have sole voting and investment power with respect
to all shares of common stock shown as beneficially owned by them.
<TABLE>
<CAPTION>
Number of Shares Percentage
NAME BENEFICIALLY OWNED OF CLASS
<S> <C> <C>
Statistical Plastics Corporation<dagger> 705,000 18.59%
MGS Mfg. Group, Inc. 2,015,950 {(1)} 42.07%
Moldmakers Leasing & Investments<dagger> 1,517,560 {(1)} 31.67%
Mark G. Sellers 7,301,510 {(2)} 83.05%
Scott W. Scampini 70,800 1.87%
Jeffrey A. Kolbow 9,000 *
Rade R. Petrovic 39,000 1.02%
Bruce L. Schneider 30,600 *
Craig R. Hall 0 -
John R. Burt 9,130 *
All directors and officers as a group (7) 7,460,040 {(3)} 84.85%
<FN>
<dagger> Member of MGS Group of companies; the mailing address is W188
N11707 Maple Road, Germantown, WI 53022-8214
* Less than 1%
{(1)} Includes 1,000,000 shares subject to options exercisable
within 60 days
{(2)} Includes (a) 4,238,510 shares beneficially owned by the MGS
Group companies (including options exercisable within 60
days) listed in the table and in which Mr. Sellers directly
or indirectly holds a majority of the equity interests and
over which Mr. Sellers exercises management and voting
control as principal executive officer, (b) 1,750,000 shares
subject to options which are exercisable within 60 days, and
(c) 1,250,000 shares which are exercisable within 60 days
held by trusts of which Mr. Sellers is trustee.
{(3)} Includes shares subject to options which are exercisable
within 60 days
</TABLE>
-42-
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
RELATED PARTY TRANSACTIONS
We have entered into various transactions with members of the MGS
<PAGE>
Group to provide management and administrative services, equipment, and
facilities. We expect that additional transactions of a similar nature
will be entered into in the future. None of these agreements is the
result of independent, arms-length negotiations and no independent
third party has reviewed or approved any of these arrangements. We
believe that the services, equipment and/or real estate transactions
which have been or which will be entered into with the MGS Group are,
or will be, on terms no less favorable than comparable transactions
entered into with independent parties. The types of transactions we
have entered into with MGS Group companies, and the aggregate dollar
amounts attributable to transactions with each company which:
<circle>aggregated more than $60,000; or
<circle>aggregated more than 5% of our consolidated gross revenues or
5% of the MGS Group company's consolidated gross revenues; or
<circle>represented an indebtedness at the end of our 2000 fiscal year
in excess of 5% of our total consolidated assets;
are set forth below.
RELATED PARTY PURCHASES
<circle>Management agreements in effect until May 1, 2000, under which
MGS group companies and officers provide essential management,
sales, and marketing services to us in exchange for an amount
equal to 5% of our revenue.
<TABLE>
<CAPTION>
COMPANY AMOUNT EXPENSED{(1)}
<S> <C>
Statistical Plastics Corporation $470,536
Moldmakers Management, Inc. $156,846
MGS Enterprises, Inc. $156,846
<FN>
{(1)}Amounts due were applied to reduce the outstanding stock
subscription receivable.
</TABLE>
-43-
<circle>We subcontract with several of the MGS Group companies for
moldmaking, engineering, maintenance, sampling, and other
services related to our production orders from customers. Our
contracts represent less than 5% of each of such companies'
revenues. These contracts and services can be summarized as
follows:
<PAGE>
<TABLE>
<CAPTION>
MGS Group Fiscal 2000
COMPANY PRODUCTS OR SERVICES AMOUNT
<S> <C> <C>
Moldmakers, Tooling $3,817,966
Incorporated Maint./Shipping/Quality 582,142
O&S Design Design 241,173
Moldmakers Die Cast Maint./Shipping/Quality 70,995
Tooling Division
Prototype Mold
& Design Maint./Shipping/Quality 523,088
Statistical Plastics Mold Sampling
Corporation Quality/Operators/Consulting 272,427
</TABLE>
<circle>Leases between us and Moldmakers Leasing under which we lease
our Germantown, Wisconsin facility. Rent payments to
Moldmakers Leasing in fiscal 2000 under these leases were
$360,000;
Subleases for a majority of our production equipment with
Moldmakers Leasing and PCI Consulting and Leasing, Inc. Rent
payments in fiscal 2000 under these leases were $103,040, paid
to Moldmakers Leasing, and $2,078,025, paid to PCI Consulting
and Leasing, Inc.;
We provided 10% of Moldmakers Leasing's revenue and 58% of the
revenue of PCI Consulting in fiscal 2000.
<circle>Agreements between us and MGS Enterprises, Inc. for accounting,
sales and marketing services, and human resources services.
During fiscal 2000, we paid MGS Enterprises, Inc. $526,898 for
accounting, human resource, and other administrative services,
and $96,495 for sales and marketing services.
<circle>Agreements between us and Cadd Plus, Inc. for management
information systems and related computer support services.
During fiscal 2000, we paid Cadd Plus, Inc. $56,055 for these
services;
-44-
RELATED PARTY SALES
<circle>Agreements under which Statistical Plastics Corporation
purchases machine time and labor to meet their customer
orders. Sales to Statistical Plastics represented $2,271,882
or approximately 5% of our revenue in fiscal 2000;
<circle>Agreements with other MGS Group companies under which we were
compensated based upon hourly rates. These contracts resulted
in payments to us as follows:
<PAGE>
<TABLE>
<CAPTION>
Fiscal 2000
MGS GROUP COMPANY SERVICES AMOUNT
<S> <C> <C>
Moldmakers, Incorporated Project Management $366,794
Moldmakers Die Casting Division Project Management 25,841
Prototype Mold & Design Project Management/Maint. 129,248
</TABLE>
-45-
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K.
(a) Documents filed as part of this report.
(1) The following financial statements are filed as part of this
report:
(i) Consolidated Balance Sheets as of September 30, 2000 and 1999
(ii) Consolidated Statements of Income for the years ended September
30, 2000, 1999, and 1998
(iii) Consolidated Statements of Cash Flows for the years ended
September 30, 2000, 1999, and 1998
(iv) Consolidated Statements of Stockholders' Equity for the years
ended September 30, 2000, 1999, and 1998
(v) Notes to Consolidated Financial Statements
(2) Financial Statement Schedules
Schedules prescribed by Regulation S-X are not submitted because they
are not applicable or not required, or because the required information
is included in the Consolidated Financial Statements and Notes thereto.
-46-
(3) Exhibits
Exhibits required by Item 601 of Regulation S-K:
EXHIBIT NUMBER EXHIBIT DESCRIPTION
3.1 Registrant's Restated Articles of Incorporation,
incorporated by reference to Exhibit 3.1 to Form
S-1 (Registration No. 333-92019)
3.2 Registrant's By-laws, as amended November 29,
1999, incorporated by reference to Exhibit 3.2
to Form S-1 (Registration No. 333-92019)
4.1 Form of specimen certificate for Registrant's
common stock, incorporated by reference to
Exhibit 4.1 to Form S-1 (Registration No.
333-92019)
<PAGE>
4.2 Loan Agreement between M&I Northern Bank and
PMC, as last amended November 7, 2000
10.01 Mark G. Sellers Stock Option Agreement,
incorporated by reference to Exhibit 10.01 to
Form S-1 (Registration No. 333-92019)
10.02 MGS Childrens' Trust Stock Option Agreement,
incorporated by reference to Exhibit 10.02 to
Form S-1 (Registration No. 333-92019)
10.03 Moose Lake Trust Stock Option Agreement,
incorporated by reference to Exhibit 10.03 to
Form S-1 (Registration No. 333-92019)
10.04 Moldmakers Leasing & Investments Limited
Partnership, LLP Stock Option Agreement,
incorporated by reference to Exhibit 10.04 to
Form S-1 (Registration No. 333-92019)
10.05 Moldmakers, Inc. Stock Option Agreement,
incorporated by reference to Exhibit 10.05 to
Form S-1 (Registration No. 333-92019)
10.06 Management Agreement Between Registrant and MGS
Enterprises, Inc. dated December 31, 1996, as
amended and terminated May 1, 2000
10.07 Management Agreement Between Registrant and
Moldmakers Management, Inc. dated December 31,
1996, as amended and terminated May 1, 2000
10.08 Management Agreement Between Registrant and
Statistical Plastics Corporation dated December
31, 1996, as amended and terminated May 1, 2000
10.09 Master Equipment Lease between Registrant and
Moldmakers Leasing & Investments Limited
Partnership, LLP, incorporated by reference to
Exhibit 10.09 to Form S-1 (Registration No.
333-92019)
10.10 Master Equipment Lease between Registrant and
PCI Consulting and Leasing, Inc., incorporated
by reference to Exhibit 10.10 to Form S-1
(Registration No. 333-92019)
10.11 ITW Paslode, Cordless Tool Group Supply
Agreement, incorporated by reference to Exhibit
10.11 to Form S-1 (Registration No. 333-92019)
10.12 Agreement to Assume Obligations With Respect to
Rescission Shares entered into between
Registrant, Mark G. Sellers, and certain MGS
Group companies, incorporated by reference to
Exhibit 10.12 to Amendment No. 1 to Form S-1
(Registration No. 333-92019)
-47-
10.13 Lease on Germantown, Wisconsin, Facility,
incorporated by reference to Exhibit 10.13 to
Form S-1 (Registration No. 333-92019)
10.14 Plastics Mfg. Company Restricted Stock Plan,
incorporated by reference to Form S-8
(Regulation No. 333-45830)
21.1 Subsidiaries of the Registrant, incorporated by
reference to Exhibit 21.1 to Form S-1
(Registration No. 333-92019)
23.1 Consent of Wipfli Ullrich Bertelson LLP
27.1 Financial Data Schedule (electronic filing only)
<PAGE>
(B) REPORTS ON FORM 8-K:
We filed a Current Report on Form 8-K dated September 29, 2000
to report a change in our independent public accountants. See Item 9.
-48-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
PLASTICS MFG. COMPANY
December 28, 2000 By: SCOTT W. SCAMPINI
Scott W. Scampini
Executive Vice President
Pursuant to the requirement of the Securities Exchange Act of 1934,
this report has been signed below on December 27, 2000 by the following
persons on behalf of the registrant and in the capacities indicated.
SIGNATURE TITLE
MARK G. SELLERS President and Chief Executive Officer
Mark G. Sellers and a director (Principal Executive Officer)
SCOTT W. SCAMPINI Executive Vice President and Director
Scott W. Scampini
BRUCE L. SCHNEIDER Vice President - Finance and Director
Bruce L. Schneider (Principal Financial and Accounting Officer)
JEFFREY A. KOLBOW Director
Jeffrey A. Kolbow
RADE PETROVIC Director
Rade Petrovic
-49-
<PAGE>
EXHIBIT INDEX<dagger>
TO
FORM 10-K
OF
PLASTICS MFG. COMPANY
FOR THE YEAR ENDED SEPTEMBER 30, 2000
Pursuant to Section 102(d) of Regulation S-T
(17 C.F.R. <section> 232.102(d))
EXHIBIT 4.2 LOAN AGREEMENT BETWEEN M&I NORTHERN BANK AND PMC, AS LAST
AMENDED NOVEMBER 7, 2000
EXHIBIT 23.1 CONSENT OF WIPFLI ULLRICH BERTELSON LLP
EXHIBIT 27.1 FINANCIAL DATA SCHEDULE (ELECTRONIC FILING ONLY,)
<dagger>Exhibits required by Item 601 of Regulation S-K which have
previously been filed and are incorporated herein by reference are set
forth in Part IV, Item 14(a) of Form 10-K to which this Exhibit Index
relates.
-50-
