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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OF THE
SECURITIES EXCHANGE ACT of 1934
For Quarter ended July 31, 2000
Commission file number: 0-6056
Michigan Rivet Corporation
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(exact name of registrant as specified in its charter)
Michigan 38-1887153
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(State of Incorporation) (I.R.S. Employer Identification No.)
13201 Stephens Road; Warren, MI 48089
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (810) 754-5100
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes XX No
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There were 641,375 outstanding shares of the registrant's common stock, $1.00
par value, as of July 31, 2000, close of the period covered by this report.
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MICHIGAN RIVET CORPORATION
NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the interim periods are not necessarily
indicative of the results that may be expected for the year. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for the year ended
October 31, 1999.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MICHIGAN RIVET CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
July 31, October 31,
2000 1999
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<S> <C> <C>
Current Assets:
Cash ....................................................................... $ 269,831 $ 99,220
Accounts receivable, less allowance of $50,000 ............................. 5,431,438 6,004,636
Inventories ................................................................ 5,758,484 6,841,484
Deferred federal income taxes .............................................. 855,000 805,000
Prepaid expenses and other current assets .................................. 252,488 232,500
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TOTAL CURRENT ASSETS ..................... 12,567,241 13,982,840
Other Assets ................................................................. 1,012,210 1,012,210
Property, Plant and Equipment ................................................ 30,351,894 27,839,912
Less accumulated depreciation .............................................. 16,943,266 16,160,458
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13,408,628 11,679,454
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$26,988,079 $26,674,504
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable to bank ...................................................... $ 1,800,000 $ 216,000
Accounts payable ........................................................... 3,371,793 4,568,961
Payroll and employee benefits .............................................. 504,161 1,602,458
Other accrued expenses ..................................................... 667,645 750,998
Current maturities of long-term debt ....................................... 321,315 321,315
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TOTAL CURRENT LIABILITIES ................ 6,664,914 7,459,732
Long-Term Debt ............................................................... 1,534,415 1,720,167
Accrued Retiree Health Liability ............................................. 4,189,827 4,068,780
Shareholders' Equity
Common stock - $1 par value
Authorized - 1,000,000 shares
Outstanding - 641,375 shares ........................................ 641,375 638,525
Other capital .............................................................. 174,488 117,403
Retained earnings .......................................................... 13,783,060 12,669,897
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14,598,923 13,425,825
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$26,988,079 $26,674,504
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</TABLE>
See notes to condensed consolidated financial statements.
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MICHIGAN RIVET CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
July 31 July 31
------------------------------- --------------------------------
2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Net sales ...................................... $10,218,769 $11,195,010 $32,262,599 $34,343,856
Cost and expenses:
Cost of products sold ........................ 8,753,821 9,450,287 27,551,220 29,035,991
Selling, administrative
and general expenses .................. 872,701 1,014,389 2,333,952 2,786,659
Interest expense ............................. 93,398 50,877 225,430 183,730
----------- ----------- ----------- -----------
9,719,920 10,515,553 30,110,602 32,006,380
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Income before
income taxes ........................ 498,849 679,457 2,151,997 2,337,476
Income taxes ................................... 170,000 232,000 732,000 795,000
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Net Income ............................ $ 328,849 $ 447,457 $ 1,419,997 $ 1,542,476
=========== =========== =========== ===========
Net Income per share ........................... $ .51 $ .71 $ 2.22 $ 2.42
=========== =========== =========== ===========
Dividends per share ............................ $ .12 $ .12 $ .48 $ .44
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
----------------------------- Additional
Shares Paid in Retained
Outstanding Amount Capital Earnings Total
----------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, November 1, 1998 .............. 638,525 $ 638,525 $ 117,403 $10,634,994 $11,390,922
Net income, nine months ended
July 31, 1999 ....................... 1,542,476 1,542,476
Dividends, nine months ended
July 31, 1999 ....................... (280,951) (280,951)
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Balance, July 31, 1999 ................. 638,525 638,525 117,403 11,896,519 12,652,447
----------- ----------- ----------- ----------- -----------
Balance, November 1, 1999 .............. 638,525 638,525 117,403 12,669,897 13,425,825
Net income, nine months ended
July 31, 2000 ....................... 1,419,997 1,419,997
Dividends, nine months ended
July 31, 2000 ....................... (306,834) (306,834)
Common Stock issued .................... 2,850 2,850 57,085 59,935
----------- ----------- ----------- ----------- -----------
Balance, July 31, 2000 ................. 641,375 $ 641,375 $ 174,488 $13,783,060 $14,598,923
=========== =========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
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MICHIGAN RIVET CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
July 31
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2000 1999
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<S> <C> <C>
OPERATING ACTIVITIES
Net income ....................................................................... $ 1,419,997 $ 1,542,476
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation .............................................................. 1,059,500 958,000
Accrued retiree health liability .......................................... 121,047 129,365
Cash provided from (used in) changes in
operating assets and liabilities:
Accounts receivable ................................................... 573,198 1,931,616
Inventories ........................................................... 1,083,000 (447,000)
Prepaid expenses and other current assets ............................. (69,988) (19,585)
Accounts payable & other accrued expenses ............................. (2,376,108) (1,507,250)
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NET CASH PROVIDED BY
OPERATING ACTIVITIES ............................................ 1,810,646 2,587,622
INVESTING ACTIVITIES
Acquisition of property, plant and equipment ..................................... 2,788,674 1,162,867
FINANCING ACTIVITIES
Net increase (decrease) in short-term debt ....................................... 1,584,000 (848,000)
Payments on long-term debt ....................................................... (188,463) (234,324)
Dividends paid ................................................................... (306,833) (280,951)
New stock issued ................................................................. 59,935
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NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES ...................................................... 1,148,639 (1,363,275)
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INCREASE (DECREASE) IN CASH ...................................... 170,611 61,480
Cash at beginning of period ........................................................ 99,220 92,125
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CASH AT END OF PERIOD ............................................ $ 269,831 $ 153,605
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</TABLE>
See notes to condensed consolidated financial statements.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
MICHIGAN RIVET CORPORATION
Results of Operations
Net sales in the quarter ended July 31, 2000 of $10,219,000 decreased $976,000,
or 8.7% from the sales reported in the comparable period a year ago. The
decrease in sales is a result of lower orders and delay of start up of a few new
jobs by our customers. The net profit for the quarter ended July 31, 2000 was
$329,000 vs. a net profit of $447,000 in the comparable period a year ago.
The cost of sales percentage was 85.7% for the current fiscal year quarter vs.
84.4% in the comparable period a year ago. This increase was due to a
combination of lower volume and some increases in manufacturing costs.
The selling, general and administrative expense decrease was primarily due to
lower bonus accruals and Single Business Tax refund. The percent to sales also
decreased from 9.01% to 8.54% for year 2000.
Interest expense increased $42,521 due primarily to greater short-term borrowing
during the period and an increase in rates. The interest rate paid by the
Company to Comerica Bank is tied to the prevailing prime rate.
For the first nine months of 2000, net sales of $32,263,000 were 6.1% lower than
the same period in 1999, due primarily to lower release schedules from our
customers. The decrease in gross profit resulted primarily from higher
maintenance, tooling, and BCBS premiums offset in part by lower workers'
compensation and freight costs. The net profit for the first nine months of 2000
was $1,420,000 vs. a net profit of $1,542,000 in the comparable period a year
ago.
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Liquidity and Capital Resources
The Company has short-term credit lines aggregating $5,000,000. At July 31,
2000, $1,800,000 were borrowed on this facility for new plant equipment.
Additionally, cash generated from operations was used to purchase machinery and
equipment and reduce long-term debt. The Company anticipates that funds provided
by operations together with funds available under its credit lines will be
sufficient to meet the Company's liquidity needs for the remainder of fiscal
year 2000.
Recent Developments
On June 28, 2000, the Company announced that it had retained TM Capital Corp., a
private New York investment banking firm, as its financial advisor in connection
with the evaluation of the Company's strategic alternatives. The Board of
Directors of the Company have asked TM Capital Corp. to provide advice on how
best to maximize the value of the Company for its shareholders.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK SENSITIVE
INSTRUMENTS
At the end of the quarter covered by this report, the Company had no material
exposure to market risks from instruments related to currency, interest rates or
otherwise.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended July 31, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto, duly authorized.
Michigan Rivet Corporation
By /s/ William P. Lianos
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William P. Lianos
President and Treasurer
(Principal Financial & Accounting Officer)
Date 8-24-00
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Exhibit Index
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Exhibit No. Description
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27 Financial Data Schedule
