<PAGE> 1
CONFORMED
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
X Annual Report Pursuant to Section 13 or 15(d)
--- of the Securities Exchange Act of 1934
For the fiscal year ended October 31, 1995
----------------
Commission file number 0-6056
------
Transition report pursuant to Section 13 or 15(d)
--- of the Securities Exchange Act of 1934
For the transition period from to
-------- ---------
MICHIGAN RIVET CORPORATION
------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Michigan 38-1887153
- ------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification No.)
13201 Stephens Road, Warren, Michigan 48089
- --------------------------------------- ---------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (810) 754-5100
--------------
Securities registered pursuant to Section 12(b) of the Act: None
----
Securities registered pursuant to Section 12(g) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Common Stock, $1.00 Par Value None
----------------------------- ----------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of 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. [ ]
The aggregate market value of the voting stock held by nonaffiliates (141,751)
of the registrant as of November 17, 1995 was $460,691.
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The number of shares outstanding of the registrant's common stock as of
November 17, 1995 was 638,525.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement for the 1995 Annual Meeting of Shareholders are
incorporated by reference into Items 10, 11, 12 and 13.
PART I
Item 1. BUSINESS
Michigan Rivet Corporation ("MRC") manufactures steel fasteners, principally
rivets and hinge pins, which are, in general, sold as original equipment to the
automotive industry. The fasteners range in size from a diameter of 1/8 of an
inch to 5/8 of an inch and are manufactured to customers' designs and
specifications through wire drawing, cold extrusion, cold heading and certain
secondary machining operations.
A wholly owned subsidiary of MRC, The McLaughlin Company ("McL"), manufactures
a wide variety of specialized steel nuts, nut and washer assemblies and special
fasteners which are sold as original equipment to the automotive industry and
as standard products to a wide variety of manufacturers. The nuts range in
size up to 1 inch across the flats and are manufactured through cold extrusion,
cold heading, stamping, tapping and certain other secondary operations.
Both MRC's and McL's (collectively referred to as "Company") business is
entirely within a single industry segment.
Manufacturing and Machining Operations
MRC purchases pickled and lubricated cold rolled steel rod ranging in diameter
from 7/32 of an inch to 45/64 of an inch. Charter Steel and American Steel and
Wire are the primary sources for raw material with a normal six week
availability. The steel rod is forced through a wire drawer consisting of one
or more dies, each of a smaller diameter than the preceding die. The rod is
thereby converted into cold rolled wire.
The cold rolled wire is then fed into a cold header, either directly or after
being forced through another wire drawer attached to the header. In the header
the wire is first cut into slugs, which may vary in length from 1/4 of an inch
to approximately five inches. These slugs are then forced or "hit" into one or
more dies to produce formed steel parts. The cold headers owned by MRC
generally cut and force or "hit" the slugs to size at rates of 60 to 300 "hits"
per minute. The drawing and heading operations are conducted with the steel
rod and wire at room temperature. Hence, the process is called "cold" heading.
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Some of MRC's fasteners require secondary machining operations, which include
drilling, broaching, annealing (to soften the part), tumbling (to remove burrs
and other irregularities), trimming, pointing, grooving, thread-rolling and
knurling. Other secondary operations, such as plating and heat-treating, are
performed on some of MRC's products by outside suppliers of such services.
McL's operations are very similar to those of MRC. Instead of purchasing cold
rolled steel rod and converting it into wire through the drawing process, McL
purchases the wire in a form ready to be fed into a cold header, principally
from Super Steel Treating Company. McL also purchases coiled flat stock which
is used in presses to manufacture floating cage nuts, clinch nuts, and washers
for the nut and washer assemblies.
While MRC's manufacturing process produces little waste, McL's process produces
slugs from the nut forming operation, offal from stampings and turnings from
tapping. Besides tapping, other secondary operations performed by McL are
washing, tumbling, locking and staking. All products manufactured by the
Company are subjected to quality control review through the various stages of
production.
Management believes that the Company is in substantial compliance with all
existing laws and regulations pertaining to protection of the environment and
does not anticipate that continued compliance will have any material effect on
the Company or its operations.
Customers and Marketing
The Industry Information, which includes the names of the Company's major
customers, set forth in Note 5 to the consolidated financial statements
included in Item 8 of this report is incorporated herein by reference. The
loss of any major domestic automobile producer as a customer would have a
materially adverse effect upon the Company's business.
The production of motor vehicles is generally reduced during July and August of
each year while retooling occurs to accommodate design changes for the
forthcoming model year. To this extent, the automotive industry, upon which
the Company is primarily dependent for its business, can be characterized as
seasonal in nature. However, the Company's production of automotive parts
reflects, in large part, periodic releases against customers' purchase orders
that are usually spaced throughout the automotive industry's model year (July
to July). A majority of the Company's orders are in the form of blanket
purchase orders (some covered under long-term contracts), which allows the
Company to manufacture in advance of releases knowing the product is salable
for the current model year. The nature of releases against open orders make it
impossible to determine the value of backlog orders.
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The Company sells its fasteners primarily through its own salaried personnel
sales staff and, to a lesser extent, through independent manufacturers'
representatives compensated on a commission basis. The Company also markets
through national distribution centers acting as distributors for standard
products and agents for specialized products.
Competition
The Company operates in a highly competitive industry. The Company has no
knowledge of its relative position in the general automotive parts industry.
There are a number of cold heading and cold extrusion companies in Michigan
which supply the automotive industry with parts similar to those produced by
the Company and which are larger and have greater resources than the Company.
The Company must also compete with domestic and foreign companies which
manufacture similar parts for the automobile industry by methods other than
cold heading and cold extrusion. There is no dominant supplier in the
Company's segment of the industry. Additionally, the three major domestic
automobile manufacturers have equipment in some of their plants with which they
manufacture similar parts for themselves by cold heading and other methods.
Quality and price are the major factors in supplying parts to the automotive
industry. Quality indexes must be maintained to be a viable source, and the
Company, to date, has been able to compete successfully with other sources of
the automotive parts which it makes. While the Company does not believe that
it is in danger of losing any significant portion of its business to these
automotive customers, no representation can be made that certain parts now made
by the Company may not in the future be made by an automobile manufacturer or
by a competitor of the Company, some by the methods employed by the Company.
Employees
As of December 22, 1995, the Company had approximately 283 employees, of whom
73 were salaried. Hourly employees are represented by the International Union,
United Automobile, Aerospace and Agricultural Implement Workers of America.
Other
The success of the Company's business is not dependent upon any material
patents, trademarks, licenses, franchises or concessions held by it. The
dollar amount spent during each of the last two fiscal years on research
activities relating to the development of new products or services or the
improvement of existing products or services is deemed by management to be
insignificant. The Company's export sales were 11% of net sales in Fiscal Year
1995.
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Item 2. PROPERTIES
MRC's manufacturing plant and executive offices are located at 13201 Stephens
Road, Warren, Michigan, a suburb of Detroit. An 80,000 square foot,
$4,000,000, addition was erected on the available land at the Stephens Road
plant and was completed in September 1989. There are approximately 131,500
square feet of floor space at the plant, of which 108,000 are devoted to
manufacturing. The warehouse and shipping operations encompass approximately
20,000 square feet with the remainder devoted to office and administration
purposes. The building, and the 7.5 acre parcel on which it is situated, are
owned by MRC subject to an outstanding mortgage in the amount of $3,061,300 at
October 31, 1995.
McL's manufacturing plant and executive offices are located at 1701 Standish
Avenue, Petoskey, Michigan, a city 260 miles north of Detroit. There are
approximately 79,000 square feet of floor space at the plant, of which 76,000
are devoted to manufacturing with the remainder being used for office and
administration purposes. The building and the 5.5 acre parcel on which it is
situated are owned by McL.
The Company owns all of its manufacturing plant and equipment and believes that
all such plant and equipment is well maintained and suited for the purposes
intended. The Company has adequate manufacturing capacity for current
operations and excess capacity for future growth.
Item 3. LEGAL PROCEEDINGS
Two former salaried employees and one current salaried employee filed claims
of age discrimination with the Michigan Department of Civil Rights based upon
the Company's management reorganization in 1994. The Company settled the
claims of the two former employees prior to the end of Fiscal 1995 in amounts
which were not material. The Company previously filed with the Department a
position statement to the effect that the claim of the current salaried
employee is without merit, a view the Company continues to hold. Management
believes that the resolution of this claim will not have a material adverse
effect on the Company's financial condition or results of operation.
There are no other material pending legal proceedings to which the Company is a
party or of which any of its property is the subject.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of the fiscal year to a vote
of security holders.
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PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The registrant's common stock is traded over-the-counter. The prices shown for
the fiscal years ended October 31, 1995 and 1994 were obtained from a
Detroit-area stock brokerage firm that makes a market in the registrant's
stock. Quotations reflect inter-dealer prices, without retail mark-up,
mark-down, or commission and may not necessarily represent actual transactions.
Trading in the registrant's stock is limited and sporadic and should not be
deemed to constitute an established public trading market.
<TABLE>
<CAPTION>
Year Ended Year Ended
Oct. 31, 1995 Oct. 31, 1994
--------------- ---------------
Bid Ask Bid Ask
--------------- ---------------
<S> <C> <C> <C> <C>
First quarter 3 - 2-1/2 3-1/2
Second quarter 3 - 1 3
Third quarter 3 - 1 3
Fourth quarter 3-1/4 - 1 3
</TABLE>
As of November 17, 1995, there were approximately 315 holders of record of the
common stock of MRC. The Company paid no dividends in Fiscal 1994. Due to the
current profitable operating results and positive cash flow, the Company began
dividend payments of $.08 per share as follows:
Declared: February 22, 1995 Paid: March 23, 1995
May 16, 1995 June 19, 1995
August 23, 1995 September 29, 1995
December 20, 1995 January 26, 1996
Item 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended October 31
---------------------------------------------------
1995 1994 1993 1992 1991
---------------------------------------------------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Net sales $39,211 $38,375 $33,057 $31,364 $28,756
Earnings (loss) before
cumulative effect of
accounting change 1,630 44 ( 768) ( 543) ( 980)
Cumulative effect of
accounting change 190
Net earnings (loss) 1,630 44 ( 768) ( 353) ( 980)
Total assets 20,655 21,736 20,042 20,102 21,724
Long-term debt 4,437 4,380 571 4,780 5,316
Per share of common stock:
Earnings (loss) before
cumulative effect of
accounting change 2.55 .07 (1.20) ( .85) (1.53)
Cumulative effect of
accounting change .30
Net earnings (loss) 2.55 .07 (1.20) ( .55) (1.53)
Cash dividends .24 - - - -
</TABLE>
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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
1995 vs. 1994
Results of Operations
Net sales increased to $39,211,000 in Fiscal 1995, a two percent (2%) increase
from net sales of $38,375,000 in Fiscal 1994. The net profit for Fiscal 1995
was $1,630,000 vs. a $44,000 profit for Fiscal 1994. The growth in sales
resulted from product mix as the volume of products shipped was 4% lower than
the prior year. Sales to Ford, General Motors, Chrysler and their suppliers as
a percent to total sales was 92% in Fiscal 1995 vs. 93% in Fiscal 1994. Fiscal
1995 had an increase in the highly specialized fasteners that receive higher
prices per thousand pieces.
Cost of sales as a percentage of net sales decreased to 88% in Fiscal 1995 from
90.4% in Fiscal 1994. Effective November 1, 1993, the Company adopted FAS 106,
which requires that postretirement benefits for health care and life insurance
for certain of the Company's retirees be recognized as an expense when the
benefits are incurred rather than when paid as the Company historically had
done. This expense increased cost of sales before FAS 106 adoption by
$1,115,000 or 2.8% in Fiscal 1995 and 3.8% in Fiscal 1994.
Some major cost changes were as follows:
A small material price increase was experienced at one plant but was
almost entirely offset by a greater decrease at the other plant.
Indirect hourly and salary labor decreased at one plant due to better
utilization of resources.
Fringe benefits other than FAS 106 were down at one plant and slightly
up at the other plant, with an overall reduction.
Selling, general and administrative expenditures as a percentage of net sales
increased to 8.7% of sales in Fiscal 1995 from 8.0% in Fiscal 1994. The dollar
amount was an increase of $330,000 from the prior year. This was primarily a
result of increased sales commissions, salary bonus, and the settlement of
former employees age discrimination claims (See Item 3).
Proceeds received from the sale of excess production equipment were $110,000.
Interest expense decreased $55,000 from the prior year due to lower short-term
notes at the bank.
Total tax expense deferred from that amount expected by applying the statutory
rate of 34% due primarily to nontaxable life insurance proceeds.
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Liquidity and Capital Resources
The Company's Mortgage and Long Term Equipment Loan Agreements were renewed in
January 1995 for five years at the same amortization schedule. The Revolving
Credit remains at $5,000,000. In most instances, the interest rate was reduced
by .5% on all Comerica Bank loans. The Company is in compliance with all the
Covenants of the lending agreement.
The Company used the life insurance proceeds as a result of the death of the
former President of the Company to pay down the short-term bank debt.
The Company's cash decreased $528,000 from the beginning of the Fiscal Year
1995. Cash flow from operating activities increased to $3,861,000 in Fiscal
1995, due primarily to earnings and to non-cash expenses for depreciation and
the accrued postretirement benefits. Cash of $1,619,000 was used to acquire
equipment and pay long term debt. The Company paid down $3,434,000 on its
revolving line of credit and at October 31, 1995 had an additional $3,362,000
available under the agreement. Expenditures for additional equipment during
Fiscal 1996 are presently expected to approximate $1,850,000, which are
projected to be financed from cash generated from operations.
In May 1995, the Company and the Union agreed to a revision to the retiree
health and life insurance along with a new wage schedule for newly hired
employees. This change equates to approximately $900,000 lower annual accrual
for retiree health benefits.
As described in note 4 to the consolidated financial statements, this change
reduced the accumulative postretirement benefit obligation by approximately
$5,200,000 thus reducing the future annual cost by approximately $900,000.
In April 1995, the Company sold its interest in the assets of Renair. This
transaction eliminated all of the assets of Rivmac and resulted in a pretax
loss of $53,000.
The Company is currently projecting a 5% increase in sales with continued
profitability. The Company will review its sales forecast at the end of the
first quarter in view of the lower production estimates from the automotive
industry. The Company is continuing to review the costs of all parts and when
necessary request price adjustments from our customers. The Company has had
some success in attaining price adjustments in the past year. The Company will
continue its long range capital improvements plan to upgrade major production
equipment on an orderly, as needed basis. There can be no assurance that the
Company's projections will be realized.
Dividends
Dividends totaling twenty-four cents ($.24) per share were paid in Fiscal 1995.
The Company's lender consented to the payment of dividends
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but only from cash generated from operations. As a result, the Board of
Directors began quarterly dividend payments.
1994 vs. 1993
Results of Operations
Net sales increased to $38,375,000 in Fiscal 1994, a sixteen percent (16%)
increase from net sales of $33,057,000 in Fiscal 1993. The net profit for
Fiscal 1994 was $44,000 vs. a loss of ($768,000) for Fiscal 1993. The growth
in sales resulted from a sixteen percent (16%) increase in the volume of
products shipped due to the growth of the automotive market. Sales to Ford,
General Motors, Chrysler and their suppliers as a percent to total sales
remained at 93% of net sales. The success that the Company has had in
increasing its sales in the automotive markets can be attributed to its
continued strength in producing highly specialized fasteners along with quality
and price.
Cost of sales as a percentage of net sales decreased to 90.4% of net sales in
Fiscal 1994 from 92.5% in Fiscal 1993. Effective November 1, 1993, the Company
adopted FAS 106, which requires that postretirement benefits for health care
and life insurance for certain of the Company's retirees be recognized as an
expense when the benefits are incurred rather than when paid as the Company
historically has done. This expense increased cost of sales by $1,440,000 or
3.8%. The primary reason for the lower cost of sales in the other areas was
the greater utilization of the manufacturing capacity along with improved
production efficiencies.
Some major cost changes were as follows:
A small material price increase was experienced at one plant.
Improved plant efficiencies were attained at one plant.
Reduced salary labor costs were realized at one plant due to
reorganization.
Increased tooling costs were realized at one plant.
Selling, general and administrative expenditures as a percentage of net sales
decreased to 8.0% of sales in Fiscal 1994 from 8.8% in Fiscal 1993. The dollar
amount was an increase of $163,000 from the prior year. This was primarily as
a result of increased sales commissions and the Michigan Single Business Tax.
During 1994, the previously imposed salary reductions were in some cases
discontinued.
Proceeds received from the sale of excess production equipment were $162,000.
Interest expense increased $69,000 from the prior year due to the higher prime
interest rate. The rate paid by the Company to Comerica Bank is tied to the
prevailing prime rate.
The Company adjusted cumulative tax accruals during the year to increase the
income tax benefit over that which would be expected based on the tax benefit
calculated at the statutory rate of 34%.
9
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Liquidity and Capital Resources
The Company's Mortgage and Long Term Equipment Loan Agreements matured in
January/February 1995. The Company's lending institution, Comerica Bank,
agreed to renew these agreements for five years at the same amortization
schedule. The Revolving Credit of $5,000,000 remained at the same amount.
Comerica Bank amended the Affirmative Covenants of the Company's lending
agreement as follows:
Net Worth from $8,000,000 to $5,900,000
Debt Ratio from 2.25 to 1 to 2.7 to 1
Working Capital from $3,500,000 to $3,000,000
Using the Company's 1995 conservative forecast, it was projected that the
Affirmative Covenants will remain in compliance.
The Company's cash increased $437,000 from the beginning of the Fiscal Year
1994. Cash flow from operating activities was $1,330,000 in Fiscal 1994, due
primarily to non-cash expenses for depreciation and the accrued postretirement
benefits. This was partially offset by increases in accounts receivable and
inventories. Cash of $1,109,000 was used to acquire plant and equipment and
pay long term debt. The Company borrowed an additional $216,000 on its
revolving line of credit and at October 31, 1994 had an additional $377,000
available under the agreement. Expenditures for additional equipment during
Fiscal 1995 were expected to approximate $1,400,000, of which $750,000 would be
financed over 7 years by Comerica Bank. The balance of the expenditures were
expected to be financed from cash generated from operations and additional
borrowing allowed via the bank credit agreement referenced in the previous
paragraph.
In November 1994, the Company made a proposal and requested a re-opening of the
contract at the Warren plant to address FAS 106 and other matters. The Union
initially refused to consider any revision to the retiree health and life
insurance (subsequent agreement was reached in Fiscal 1995). The Company
determined to continue to review its costs and, if necessary, to curtail some
operations and subsequently reduce the work force at the Warren plant. A new
three year contract was negotiated at the Petoskey plant.
The Company projected a 9% increase in sales with continued profitability. The
Company continued to review the costs of all parts and when necessary request
price adjustments from customers. The Company had some success in attaining
price adjustments in the past year. The Company continued its long range
capital improvement plan to upgrade major production equipment on an orderly,
as needed basis. There can be no assurances that the Company's projections
will be realized.
Subsequent to year end, the Company received $1,200,000 in life insurance
proceeds as a result of the death of the former President of the Company.
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Impact of Inflation
The Company maintains data on its costs which allows it to monitor the impact
of changes due in part to inflation and also to other factors such as
technological change. Periodically, usually on a part-by-part basis, increases
in costs are reviewed and are, to the extent allowed by the Company's customers
and permitted by competition, passed along as price increases.
The Company is party to an agreement with one of its major customers which
requires automatic price decreases in future contract years. Although this
provision will prevent the Company from passing along increases in costs
related to the project, the Company believes that it will be able to absorb any
such increases due to increased production efficiencies currently planned.
The Company continues to monitor controllable costs in the areas of labor, raw
material, work-in-process and finished goods inventory, as well as other
suppliers of goods or services so that assets are used more productively and
margins are improved.
Other
The volatility of the domestic automotive industry and the Company's reliance
on this important customer base for sales causes the reported information not
to be necessarily indicative of future operating results or future financial
conditions for the Company.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is submitted as a separate section of this
report.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
The information called for by the items within this part is included in the
Company's 1996 Proxy Statement, and is incorporated herein by reference, as
follows
Caption(s) in 1996 Proxy Statement
Item 10. DIRECTORS AND EXECUTIVE
OFFICERS OF THE REGISTRANT........"Election of Directors"
Item 11. EXECUTIVE COMPENSATION................"Executive Compensation"
Item 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT..."Security Ownership of
Management"
Item 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS..........."Certain Relationships and
Related Transactions"
11
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PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8K
(a) Financial Statements, Schedules and Exhibits
(1) and (2)--The response to this portion of Item 14 is
submitted as a separate section of this report.
(3) Listing of exhibits
3.1--Articles of Incorporation - Previously filed as
Exhibit 3 to the registrant's Annual Report on Form
10K for the year ended October 31, 1982 and
incorporated herein by reference.
3.2--Bylaws - Previously filed as
Exhibit 3 to the registrant's Annual Report on Form
10K for the year ended October 31, 1976 and
incorporated herein by reference.
21--Subsidiaries of Registrant
(b) No reports on Form 8-K were filed during the last quarter of the
Company's fiscal year ended October 31, 1995.
(c) Exhibits:
See Item 14(a)(3) above.
(d) Financial Statement Schedules:
The response to this portion of Item 14 is submitted as a
separate section of this report.
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<PAGE> 13
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.
MICHIGAN RIVET CORPORATION
/s/ William B. Stade
------------------------------
William B. Stade
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of this
registrant and in the capacities indicated on the 20th day of January 1996.
/s/ William B. Stade /s/ Anthony L. Caputo
- -------------------------------- -------------------------------
William B. Stade Anthony L. Caputo
President and Director Director
/s/ Anthony W. Livorine /s/ Clark V. Stevens
- -------------------------------- -------------------------------
Anthony W. Livorine Clark V. Stevens
Director Director
/s/ William P. Lianos /s/ Charles E. Blank
- -------------------------------- -------------------------------
William P. Lianos Charles E. Blank
Exec. V. P. & Treasurer and Director Director
(Principal Financial & Accounting
Officer)
/s/ Kermit L. Knuppenburg
- -------------------------------- -------------------------------
Dorothy E. Knuppenburg Kermit L. Knuppenburg
Chairman of the Board Director
13
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EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
13 Annual Report
21 Subsidiaries of Registration
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 13
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14(a)(1), (2), and (d)
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
CERTAIN EXHIBITS
FINANCIAL STATEMENT SCHEDULES
YEAR ENDED OCTOBER 31, 1995
MICHIGAN RIVET CORPORATION
WARREN, MICHIGAN
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FORM 10-K--ITEM 14(a)(1) and (2)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
MICHIGAN RIVET CORPORATION AND SUBSIDIARIES
The following consolidated financial statements of Michigan Rivet Corporation
and subsidiaries are included in Item 8:
Consolidated balance sheets--Years ended October 31, 1995, 1994 and
1993
Consolidated statements of operations and retained earnings--Years
ended October 31, 1995, 1994 and 1993
Consolidated statements of cash flows--Years ended October 31, 1995,
1994 and 1993
Notes to consolidated financial statements--Years ended October 31,
1995, 1994, and 1993
The following consolidated financial statement schedule of Michigan Rivet
Corporation and subsidiaries are included in Item 14(d):
Schedule VIII--Valuation and qualifying accounts
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
15
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MICHIGAN RIVET CORPORATION
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL REPORT
OCTOBER 31, 1995
16
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MICHIGAN RIVET CORPORATION
AND SUBSIDIARIES
CONTENTS
<TABLE>
<S> <C>
REPORT LETTER 1
CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheet 2-3
Statement of Operations and Retained Earnings 4
Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6-13
</TABLE>
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Independent Auditor's Report
To the Board of Directors and Stockholders
Michigan Rivet Corporation and Subsidiaries
We have audited the accompanying consolidated balance sheet of Michigan Rivet
Corporation and subsidiaries as of October 31, 1995, 1994 and 1993, and the
related consolidated statements of operations and retained earnings and cash
flows for the years 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements 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 audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Michigan Rivet Corporation and subsidiaries at October 31, 1995, 1994 and 1993,
and the consolidated results of their operations and their cash flows for the
years then ended in conformity with generally accepted accounting principles.
As disclosed in Notes 1 and 4 to the financial statements, the Company adopted
the provisions of Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions" in
1994.
PLANTE & MORAN, LLP
December 18, 1995
18
<PAGE> 6
MICHIGAN RIVET CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
OCTOBER 31
---------------------------------------------
1995 1994 1993
------- -------- -------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 110,682 $ 638,266 $ 201,614
Accounts receivable, less allowance of $50,000 in 1995,
1994 and 1993 5,368,533 5,763,245 4,894,398
Inventories:
Finished products 1,328,108 1,331,453 1,542,226
In process 2,967,555 3,058,305 2,163,298
Raw materials 673,281 629,588 635,568
------------- ------------ -------------
Total inventories 4,968,944 5,019,346 4,341,092
DEFERRED FEDERAL INCOME TAXES (Note 3) 697,639 788,000 443,000
PREPAID EXPENSES AND OTHER CURRENT ASSETS 182,590 645,464 719,343
------------- ------------ -------------
Total current assets 11,328,388 12,854,321 10,599,447
OTHER ASSETS 505,324 66,906 62,272
PROPERTY, PLANT AND EQUIPMENT
Land 125,000 125,000 125,000
Buildings and improvements 5,295,320 5,208,957 5,208,957
Machinery and equipment 17,578,978 16,966,933 16,735,001
------------- ------------ -------------
Total property and equipment 22,999,298 22,300,890 22,068,958
Less accumulated depreciation 14,178,218 13,485,783 12,688,795
------------- ------------ -------------
Net carrying amount 8,821,080 8,815,107 9,380,163
------------- ------------ -------------
Total assets $ 20,654,792 $ 21,736,334 $ 20,041,882
============= ============ =============
</TABLE>
See Notes to Financial Statements.
19
<PAGE> 7
MICHIGAN RIVET CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Continued)
<TABLE>
<CAPTION>
OCTOBER 31
--------------------------------------------------
1995 1994 1993
---------- --------- -------
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable to bank (Note 2) $ 309,000 $ 3,743,000 $ 3,527,000
Accounts payable 3,569,626 3,997,626 3,980,376
Payroll and employees' benefits 945,252 558,717 494,453
Other accrued expenses 599,601 750,316 178,168
Current maturities of long-term debt (Note 2) 691,039 498,831 4,894,459
------------- ------------ -------------
Total current liabilities 6,114,518 9,548,490 13,074,456
LONG-TERM DEBT (Note 2) 4,436,829 4,379,620 570,994
ACCRUED POSTRETIREMENT BENEFITS (Note 4) 2,732,084 1,457,602 -
DEFERRED FEDERAL INCOME TAXES (Note 3) 25,000 484,548 574,604
STOCKHOLDERS' EQUITY
Common stock - $1 par value:
Authorized - 1,000,000 shares
Issued and outstanding - 638,525 shares 638,525 638,525 638,525
Paid-in capital 117,403 117,403 117,403
Retained earnings 6,590,433 5,110,146 5,065,900
------------- ------------ -------------
Total stockholders' equity 7,346,361 5,866,074 5,821,828
------------- ------------ -------------
Total liabilities and stockholders' equity $ 20,654,792 $ 21,736,334 $ 20,041,882
============= ============ =============
</TABLE>
See Notes to Financial Statements. 20
<PAGE> 8
MICHIGAN RIVET CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
AND RETAINED EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31
----------------------------------------------------------
1995 1994 1993
------------ ----------- -----------
<S> <C> <C> <C>
NET SALES $ 39,210,844 $ 38,375,208 $ 33,057,415
COSTS AND EXPENSES
Cost of products sold 34,487,789 34,702,554 30,573,055
Selling, administrative and general 3,412,508 3,082,643 2,919,682
Interest 646,227 700,765 632,203
--------------- --------------- ---------------
Total costs and expenses 38,546,524 38,485,962 34,124,940
--------------- --------------- ---------------
INCOME (LOSS) - Before other income and federal
income taxes 664,320 (110,754) (1,067,525)
OTHER INCOME (Note 6) 1,141,394 - -
--------------- --------------- ---------------
INCOME (LOSS) - Before federal income taxes 1,805,714 (110,754) (1,067,525)
FEDERAL INCOME TAXES (BENEFIT) (Note 3) 175,793 (155,000) (300,000)
--------------- --------------- ---------------
NET INCOME (LOSS) 1,629,921 44,246 (767,525)
RETAINED EARNINGS - Beginning of
year 5,110,146 5,065,900 5,833,425
DIVIDENDS ($.24 per share) (149,634) - -
--------------- --------------- ---------------
RETAINED EARNINGS - End of year $ 6,590,433 $ 5,110,146 $ 5,065,900
=============== =============== ===============
NET INCOME (LOSS) PER SHARE $ 2.55 $ .07 $ (1.20)
=============== =============== ===============
</TABLE>
See Notes to Financial Statements.
21
<PAGE> 9
MICHIGAN RIVET CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31
-----------------------------------------------
1995 1994 1993
------------ --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 1,629,921 $ 44,246 $ (767,525)
Adjustments to reconcile net income (loss) to net
cash from operating activities:
Depreciation 1,048,743 1,087,267 983,835
Provision for deferred income taxes (369,187) (435,056) (300,000)
Provision for postretirement benefits 1,274,482 1,657,602 -
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 394,712 (851,285) (524,671)
(Increase) decrease in inventories 50,402 (678,254) 443,861
Decrease in prepaid expenses and other assets 24,456 51,683 59,725
Increase (decrease) in accounts payable and
other accrued expenses (192,180) 453,662 631,673
------------- ------------ ------------
Net cash provided by operating activities 3,861,349 1,329,865 526,898
CASH FLOWS FROM INVESTING ACTIVITIES -
Acquisition of property, plant and equipment (1,054,716) (522,211) (1,113,441)
CASH FLOWS FROM FINANCING ACTIVITIES
Net (payments) borrowings under short-term credit line (3,434,000) 216,000 227,000
Proceeds from long-term debt 813,298 - 817,266
Payments on long-term debt (563,881) (587,002) (623,791)
Payment of dividends (149,634) - -
------------- ------------ ------------
Net cash provided by (used in) financing
activities (3,334,217) (371,002) 420,475
------------- ------------ ------------
NET INCREASE (DECREASE) IN CASH (527,584) 436,652 (166,068)
CASH - Beginning of year 638,266 201,614 367,682
------------- ------------ ------------
CASH - End of year $ 110,682 $ 638,266 $ 201,614
============= ============ ============
</TABLE>
See Notes to Financial Statements.
22
<PAGE> 10
MICHIGAN RIVET CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1995, 1994 AND 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The consolidated financial
statements include the accounts of Michigan Rivet Corporation and
its subsidiaries. Upon consolidation, significant intercompany
accounts and transactions are eliminated.
Inventories - Inventories are stated at the lower of cost or
market. Cost is determined by the last-in, first out (LIFO)
method for certain inventories (approximately 25 percent, 26
percent and 24 percent of consolidated inventories at October 31,
1995, 1994 and 1993, respectively) and the first-in, first-out
(FIFO) method for all other inventories.
Current cost exceeded the balance sheet carrying amount of LIFO
inventories by $456,000, $512,000 and $516,000 in 1995, 1994 and
1993, respectively.
Property, Plant and Equipment - Properties are stated at cost and
include expenditures which materially increase the useful lives
of existing buildings and equipment. Expenditures for normal
repairs, maintenance and production tooling are charged to
operations as incurred. Depreciation is computed principally by
the straight-line method over the estimated useful lives of the
related assets.
Income Taxes - Under Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes", the liability method is
used in accounting for income taxes. Under this method, deferred
tax assets and liabilities are determined based on differences
between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws
in effect. Current taxes payable or refundable are based on
amounts on tax returns for the year.
Accounting for Employee Postretirement Benefits - The Company
provides health care and life insurance benefits for certain
retired employees. This plan is unfunded and benefits are paid
when they are incurred by the retiree. Effective November 1,
1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions (SFAS No. 106).
This Statement requires that these benefits be recognized as an
expense as employees render service instead of when benefits are
paid as the Company historically has done. As permitted under
the Statement, the Company elected to amortize the cumulative
effect of this accounting change on a prospective basis over 20
years (see Note 4).
23
<PAGE> 11
MICHIGAN RIVET CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1995, 1994 AND 1993
NOTE 2 - DEBT
Notes payable to bank represent borrowings for working capital
purposes under a $5,000,000 short-term revolving line of credit,
which is renewed quarterly and bears interest at the lending
institution's prime rate plus .75 percent (prime was 8.00 percent
at October 31, 1995). The weighted average interest rate for
1995, 1994 and 1993 was 9.64 percent, 7.78 percent and 6.94
percent, respectively. Available borrowings under this agreement
are based on a percentage of eligible accounts receivable plus
$150,000. At October 31, 1995, $3,362,456 in additional
borrowings were available under the agreement.
Long-term debt consists of the following obligations:
<TABLE>
<CAPTION>
1995 1994 1993
------------- -------------- --------------
<S> <C> <C> <C>
Mortgage note $ 3,040,359 $ 3,212,001 $ 3,385,114
Term note 833,310 1,033,314 1,233,318
Mortgage note, due February 1996,
9.75%, $5,346 paid monthly 20,941 79,901 133,406
Equipment notes payable 1,171,835 553,235 673,615
Other 61,423 - 40,000
------------- -------------- --------------
Total 5,127,868 4,878,451 5,465,453
Less current maturities 691,039 498,831 4,894,459
------------- -------------- --------------
Total long-term debt $ 4,436,829 $ 4,379,620 $ 570,994
============= ============== ==============
</TABLE>
24
<PAGE> 12
MICHIGAN RIVET CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1995, 1994 AND 1993
NOTE 2 - DEBT (Continued)
The mortgage note is payable in monthly installments of $37,314
including interest, and matures November 1, 1996. The term note
is payable in monthly installments of $16,667 plus interest and
matures November 1, 2000. The mortgage note bears interest at 9
percent. The term note bears interest at the lending
institutions prime rate plus 1 percent. The Company's financing
agreements include covenants that require minimum levels of
working capital, tangible net worth, and debt to equity ratios.
The agreements also require the lender's approval before cash
dividends may be declared or paid.
During 1995, the Company financed certain production equipment
totaling $750,000 under terms of a note payable to a bank. The
new note requires monthly payments of $12,500 plus interest at 9
percent and matures July 1, 2000. An additional note payable
required monthly payments of $16,452 through May 1995. Another
equipment note payable has an interest rate of approximately 8
percent and requires 60 monthly payments of $9,058 through May
1998 plus a balloon payment of $201,603 in June 1998.
Maturities of long-term debt during the five fiscal years
following 1995 are: $691,039 in 1996; $698,776 in 1997; $727,611
in 1998 and $752,479 in 1999.
As of October 31, 1995, substantially all of the Company's assets
were mortgaged or otherwise collateralized by the various debt
agreements.
Cash payments for interest were $687,589, $763,288 and $582,169
in 1995, 1994 and 1993, respectively.
NOTE 3 - FEDERAL INCOME TAXES
The provision for income tax expense (benefit) is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- -------
<S> <C> <C> <C>
Current expense $ 544,980 $ 280,056 $ -
Deferred (reduction) (369,187) (435,056) (300,000)
------------ ------------ -------------
Total tax expense
(benefit) $ 175,793 $ (155,000) $ (300,000)
============ ============ =============
Income tax payments $ 605,000 $ - $ -
============ ============ =============
</TABLE>
The total tax expense differs from the amount computed utilizing
the statutory rate of 34 percent primarily due to nontaxable
income from insurance proceeds as described in Note 6.
25
<PAGE> 13
MICHIGAN RIVET CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1995, 1994 AND 1993
NOTE 3 - FEDERAL INCOME TAXES (Continued)
The details of the net deferred tax asset (liability) are as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------ -------------- -------------
<S> <C> <C> <C>
Deferred tax liabilities:
Depreciation $ 952,612 $ 944,735 $ 1,020,214
Other 2,896 35,813 67,914
------------ -------------- -------------
Total deferred tax
liabilities 955,508 980,548 1,088,128
Deferred tax assets:
Employee benefits 1,145,594 708,149 142,666
Net operating loss carryover - - 513,524
Tax credit carryover 100,000 172,000 -
Inventory valuation 335,387 386,984 294,935
Other 47,166 16,867 5,399
------------ -------------- -------------
Total deferred tax assets 1,628,147 1,284,000 956,524
Valuation allowance - - -
------------ -------------- -------------
Net deferred tax asset
(liability) $ 672,639 $ 303,452 $ (131,604)
============ ============== =============
</TABLE>
The principal components of deferred federal income tax expense
(credits) are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
Net operating loss carryforward $ - $ 341,500 $ (378,500)
Employee benefits (437,443) (565,500) 35,600
Accelerated tax depreciation 54,696 (75,500) 2,200
Inventory valuation 51,597 (92,000) (28,300)
Other (38,037) (43,556) 69,000
------------- ------------- -------------
Total $ (369,187) $ (435,056) $ (300,000)
============= ============= =============
</TABLE>
26
<PAGE> 14
MICHIGAN RIVET CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1995, 1994 AND 1993
NOTE 4 - RETIREMENT BENEFITS
Pension Plans - Certain union employees of the Company are
covered by a noncontributory defined benefit pension plan. The
plan provides benefits that are based on a stated amount for each
year of service plus a frozen vested accrued severance benefit
calculated as of August 26, 1977 for eligible employees on that
date. The Company's funding policy is to make at least the
minimum annual contribution required by applicable regulations.
A summary of the components of pension expense (income) for the
union plan follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------------- ------------ -------------
<S> <C> <C> <C>
Service cost for benefits earned during
the period $ 60,377 $ 76,729 $ 71,880
Interest cost of projected benefit
obligation 255,487 240,899 232,924
Actual return on plan assets (662,138) (17,575) (651,072)
Net amortization and deferral 295,544 (336,461) 318,314
--------------- ------------ -------------
Net pension income $ (50,730) $ (36,408) $ (27,954)
=============== ============ =============
</TABLE>
Assumptions used in accounting for the plan were:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Weighted average discount rate 7.0% 8.0% 7.0%
Expected long-term rate of return on
assets 7.0% 7.0% 7.0%
</TABLE>
The following table sets forth the funded status and amounts
recognized in the consolidated balance sheets for the union plan:
<TABLE>
<CAPTION>
1995 1994 1993
--------------- ------------- -------------
<S> <C> <C> <C>
Actuarial present value of benefit
obligation:
Vested benefit $ 3,636,038 $ 3,135,696 $ 3,491,200
=============== ============= =============
Accumulated benefit obligation $ 3,781,650 $ 3,243,054 $ 3,521,542
=============== ============= =============
</TABLE>
27
<PAGE> 15
MICHIGAN RIVET CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1995, 1994 AND 1993
NOTE 4 - RETIREMENT BENEFITS (Continued)
<TABLE>
<CAPTION>
1995 1994 1993
----------- ---------- --------
<S> <C> <C> <C>
Projected benefit obligation $ 3,781,650 $ 3,243,054 $ 3,521,542
Plan assets at fair value 5,116,114 4,680,338 4,866,739
------------- ------------- -------------
Excess of plan assets over projected
benefit obligation 1,334,464 1,437,284 1,345,197
Unrecognized net gain (207,948) (305,906) (194,635)
Unrecognized prior service cost 6,399 6,971 7,543
Unrecognized net asset at transition (636,616) (692,780) (748,944)
------------- ------------- -------------
Net pension asset recognized in the
balance sheet $ 496,299 $ 445,569 $ 409,161
============= ============= =============
</TABLE>
Plan assets are invested primarily in pooled equity investment
funds, obligations of the U.S. Government and its agencies, and
certain other investments.
Certain employees participate in a Company sponsored savings
plan. Under the plan, the Company contributes a defined amount
to individual employee accounts based on the respective
employee's contribution. The Company contributed approximately
$56,000, $49,000 and $52,000 to this plan in 1995, 1994 and 1993,
respectively.
Postretirement Benefits - As discussed in Note 1, the Company
provides health care and life insurance benefits for certain
retired employees. The Company adopted the provisions of SFAS
106 effective November 1, 1993. The accumulated postretirement
benefit obligation (APBO) at the date of adoption was
$11,263,445. The Company elected to recognize the transition
obligation over 20 years.
During 1995, the Company and its collective bargaining unit
agreed to modifications to the postretirement benefit plan.
These modifications primarily relating to a cap on future retiree
medical insurance benefits resulted in a reduction of the
accumulated postretirement benefit obligation of approximately
$5,200,000. This reduction has been used to reduce the
transition obligation, which will be recognized prospectively
over the remaining amortization period allowed by SFAS 106.
28
<PAGE> 16
MICHIGAN RIVET CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1995, 1994 AND 1993
NOTE 4 - RETIREMENT BENEFITS (Continued)
The Company recognized an expense related to postretirement
benefits consisting of service cost, interest cost and transition
amortization in 1995 and 1994, as follows:
<TABLE>
<CAPTION>
1995 1994
-------------- -----------
<S> <C> <C>
Service cost of benefits earned $ 359,215 $ 437,451
Interest cost on liability 677,106 835, 440
Net amortization and deferral 426,530 561,822
--------------- -----------------
Total net periodic postretirement
benefit cost $ 1,462,851 $ 1,834,713
=============== =================
The amount reported on the balance sheet at
October 31, 1995 and 1994 was:
Accumulated postretirement benefit obligation:
Fully eligible active participants $ 1,379,359 $ 2,117,080
Other active participants 1,529,610 6,168,314
Retired participants 3,875,644 3,731,548
--------------- -----------------
Total APBO 6,784,613 12,016,942
Unrecognized net obligation at transition (3,779,000) (10,674,623)
Unrecognized net gain (loss) (73,529) 315,283
--------------- -----------------
Accrued postretirement benefit cost $ 2,932,084 $ 1,657,602
=============== =================
</TABLE>
The company has not funded any portion of its APBO
except for benefits being paid as incurred by participants.
Cash paid for these benefits totaled $188,000, $177,000 and
$149,000 in 1995, 1994 and 1993, respectively. The Company
estimated the current portion of this accrued benefit cost to
be $200,000 for 1995 and 1994, and those amounts have been
shown as current liabilities.
The significant actuarial assumptions used to determine the
cost at October 31, 1995 to the Company are as follows:
Discount rate 8.00%
Health care trend rates - Medical Approximately 11.50%
per annum grading
down to 6.50% in
2005/2006 and all
years thereafter
29
<PAGE> 17
MICHIGAN RIVET CORPORATION
AND SUDSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1995, 1994 AND 1993
NOTE 4 - RETIREMENT BENEFITS (Continued)
Health care trend rates - Prescription Approximately 15.20% per
annum grading down to
6.50% in 2005/2006 and
all years thereafter
A one percent increase in the health care trend rate assumptions
would increase the October 31, 1995 APBO by 4.75 percent and
would increase the aggregate of the 1995 service and interest
cost components of the net periodic postretirement benefit cost
by 5.87 percent.
NOTE 5 - INDUSTRY INFORMATION AND CONCENTRATION OF CREDIT RISK
The Company is a domestic manufacturer of cold headed steel
fasteners, nuts and components, principally for the automotive
industry. Sales to General Motors Corporation, Ford Motor
Company and Chrysler Corporation, including their suppliers, are
summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
General Motors Corporation 33% 27% 28%
Ford Motor Company 38 40 41
Chrysler Corporation 21 26 24
</TABLE>
The Company generally does not require collateral from its
customers. Credit losses from automobile and related
manufacturers have been minimal and within management's
expectations.
NOTE 6 - OTHER INCOME
In November 1994, the Company's former president passed away.
The Company received life insurance proceeds totaling $1,200,000
from policies on his life. The cash surrender value of these
policies at the time of death totaled $58,606, resulting in a net
gain of $1,141,394.
30
<PAGE> 18
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- ---------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION Balance at (1) Charged (2) Charged Deductions- Balance at
Beginning of to Costs and to Other Describe End of Period
Period Expenses Accounts-
Describe
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year Ended October 31, 1995:
Valuation allowance for
accounts receivable $ 50,000 $ 9,505 A $ 9,505 $ 50,000
Reserve for inventory
obsolescence 612,800 (8,800) 604,000
-------- --------- --------- --------
TOTALS $662,800 $ 705 $ 9,505 $654,000
======== ========= ========= ========
Year Ended October 31, 1994:
Valuation allowance for
accounts receivable $ 50,000 $ (5,146) A $ (5,146) $ 50,000
Reserve for inventory
obsolescence 538,600 74,200 612,800
-------- --------- --------- --------
TOTALS $588,600 $ 69,054 $ (5,146) $662,800
======== ========= ========= ========
Year Ended October 31, 1993:
Valuation allowance for
accounts receivable $ 50,000 $ 20,040 A $ 20,040 $ 50,000
Reserve for inventory
obsolescence 489,700 48,900 538,600
-------- --------- --------- --------
TOTALS $539,700 $ 68,940 $ 20,040 $588,600
======== ========= ========= ========
</TABLE>
A - Represents uncollectible accounts charged off, net of recoveries.
31
<PAGE> 1
EXHIBIT 21
EXHIBIT 21--SUBSIDIARIES OF REGISTRANT
MICHIGAN RIVET CORPORATION AND SUBSIDIARIES
Information with respect to registrant's subsidiaries is set forth
below:
Name: The McLaughlin Company
State of incorporation: Michigan
Percentage owned by registrant: 100%
Name: Rivmac Distribution, Inc.
State of incorporation: Michigan
Percentage owned by registrant: 100%
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONDENSED CONSOLIDATED BALANCE SHEETS AND STATEMENT OF OPERATIONS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10K.
</LEGEND>
<CIK> 0000065666
<NAME> MICHIGAN RIVET CORP.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<CASH> 110,682
<SECURITIES> 0
<RECEIVABLES> 5,418,533
<ALLOWANCES> 50,000
<INVENTORY> 4,968,944
<CURRENT-ASSETS> 11,328,388
<PP&E> 22,999,298
<DEPRECIATION> 14,178,218
<TOTAL-ASSETS> 20,654,792
<CURRENT-LIABILITIES> 6,114,518
<BONDS> 4,436,829
0
0
<COMMON> 638,525
<OTHER-SE> 6,707,836
<TOTAL-LIABILITY-AND-EQUITY> 20,654,792
<SALES> 39,210,844
<TOTAL-REVENUES> 39,210,844
<CGS> 34,487,789
<TOTAL-COSTS> 34,487,789
<OTHER-EXPENSES> 3,412,508
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 646,227
<INCOME-PRETAX> 664,320
<INCOME-TAX> 175,793
<INCOME-CONTINUING> 488,527
<DISCONTINUED> 0
<EXTRAORDINARY> 1,141,394
<CHANGES> 0
<NET-INCOME> 1,629,921
<EPS-PRIMARY> 2.55
<EPS-DILUTED> 2.55
</TABLE>
