10-Q 1 k63067e10-q.txt QUARTERLY REPORT 1 CONFORMED 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 April 30, 2001 Commission file number: 0-6056 Michigan Rivet Corporation ------------------------------------------------------ (exact name of registrant as specified in its charter) Michigan 38-1887153 ------------------------ ------------------------------------ (State of Incorporation) (I.R.S. Employer Identification No.) 13201 Stephens Road; Warren, MI 48089 ---------------------------------------- (Address of Principal Executive Offices) Registrant's telephone number, including area code: (810) 754-5100 -------------- 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 ------ ------ There were 641,375 outstanding shares of the registrant's common stock, $1.00 par value, as of April 30, 2001, close of the period covered by this report. 1 2 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, 2000. 2 3 PART I. FINANCIAL INFORMATION FORM 10-Q ITEM 1. FINANCIAL STATEMENTS MICHIGAN RIVET CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

ASSETS ~~January~~April 3130, October 31, 2001 2000 ----------- ------------- Current Assets: Cash ...................................................... $ 35287,~~336~~977 $ 18,950 Accounts receivable, less allowance of $50,000 ............ 45,~~424~~151,~~057~~789 6,523,119 Inventories: Finished products ......................................... 5956,~~460~~218 1,848,188 In process ................................................ 3,073,954 3,541,984 Raw materials ............................................. 399,337 340,337 ----------- ----------- Total inventories ........................................... 4,429,509 5,730,509 Deferred federal income taxes ............................. 760,000 760,000 Prepaid expenses and other current assets ................. ~~190~~158,~~978~~950 201,460 ----------- ----------- TOTAL CURRENT ASSETS ................. 10,~~870~~788,~~880~~225 13,234,038 Other Assets ................................................ 846,434 846,434 Property, Plant and Equipment ............................... 3031,~~806~~178,~~596~~319 30,573,715 Less accumulated depreciation ............................. 1718,~~626~~002,~~249~~749 17,249,749 ----------- ----------- 13,~~180~~175,~~347~~570 13,323,966 ----------- ----------- $24,~~897~~810,~~661~~229 $27,404,438 ============ =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Notes payable to bank ..................................... $ ~~615,000~~0 $ 585,000 Accounts payable .......................................... 3,~~508~~958,~~983~~987 4,569,482 Payroll and ~~employees~~employee benefits ............................. ~~550~~539,~~366~~954 1,061,905 Other accrued expenses .................................... 1295,~~385~~591 341,453 Current maturities of long-term debt ...................... 315,771 315,771 ----------- ----------- TOTAL CURRENT LIABILITIES 54,~~002~~910,~~505~~303 6,873,611 Long-Term Debt .............................................. 1,~~390~~308,~~733~~998 1,466,206 Accrued Retiree Health Liability ............................ 4,~~131~~182,294 4,071,957 Shareholders' Equity Common stock - $1 par value Authorized - 1,000,000 shares Outstanding - 641,375 shares ....................... 641,375 641,375 Other capital ............................................. 174,488 174,488 Retained earnings ......................................... 13,~~557~~592,~~266~~771 14,176,801 ----------- ----------- 14,~~373~~408,~~129~~634 14,992,664 ----------- ----------- $24,~~897~~810,~~661~~229 $27,404,438 =========== ===========

See notes to condensed consolidated financial statements. 3 4 FORM 10-Q MICHIGAN RIVET CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Three Months Ended ~~January~~Six 31Months Ended April 30 April 30 -------------------------- ----------------------------- 2001 2000 2001 2000 ------------- ---------- ------------- ------------- Net sales ...................~~....~~ $ 79,~~658~~079,~~295~~161 $10 11,~~327~~716,~~184~~646 $ 16,737,456 $ 22,043,830 Cost and expenses: Cost of products sold .....~~....~~ 78,~~530~~257,~~058~~146 89,~~872~~924,~~872~~527 15,787,204 18,797,399 Selling, administrative and general expenses... ~~781~~723,~~876~~325 ~~773~~687,~~806~~445 1,505,201 1.461,251 Interest expense ..........~~....~~ 5145,~~966~~185 5378,~~341~~691 97,151 132,032 ----------- ------------ 8------------ ------------ 9,~~363~~025,~~900~~656 910,~~700~~690,~~019~~663 17,389,556 20,390,682 ----------- ------------ ~~Income~~------------ ~~(Loss)~~------------ Income before income taxes ........ 53,505 1,025,983 (~~705~~652,~~605~~100) ~~627~~1,~~165~~653,148 Income taxes ~~(credit)~~................ 18,000 349,000 (~~240~~222,000) ~~213~~562,000 ----------- ------------ ------------ ------------ Net Income ~~(Loss)~~............ $ 35,505 $ 676,983 $ (~~465~~430,~~605~~100) $ ~~414~~1,~~165~~091,148 =========== ============ ~~Net~~============ ~~income~~============ ~~(loss)~~Net Income per share ........ $ .06 $ 1.06 $ (.7367) $ 1.6571 ======== ======== ======== ======== Dividends per share ......... $ 0 $ .~~...~~12 $ .24 $ .2436 ======== ======== ======== ========

See notes to condensed consolidated financial statements. 4 5 FORM 10-Q MICHIGAN RIVET CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

~~Three~~Six Months Ended ~~January~~April 3130 ------------------------------- 2001 2000 ------------- ------------ OPERATING ACTIVITIES Net income (loss) ....................................~~....~~ $ (~~465~~430,~~605~~100) $ ~~414~~1,~~165~~091,148 Adjustments to reconcile net income ~~(loss)~~ to net cash used in operating activities: Depreciation ..................................~~....~~ ~~376~~753,~~500~~000 ~~339~~695,000 Accrued retiree health liability ..............~~....~~ 59110,337 4479,~~760~~349 Cash provided from (used in) changes in operating assets and liabilities: Accounts receivable .......................~~....~~ 21,~~099~~371,~~062~~330 ~~870~~(843,~~189~~495) Inventories ...............................~~....~~ ~~270~~1,301,000 11504,000 Prepaid expenses and other current assets..~~...~~ 1042,~~482~~510 7(41,~~637~~777) Accounts payable & other accrued expenses..~~...~~ (1,~~901~~378,~~106~~308) (1618,~~837,190~~966) ------------ ------------ NET CASH PROVIDED BY ~~(USED IN)~~ OPERATING ACTIVITIES ~~448~~................ 1,~~670~~769,769 ~~(150~~865,~~439)~~259 INVESTING ACTIVITIES Acquisition of property, plant and equipment .........~~....~~ (~~232~~604,~~881~~604) (~~910~~2,~~620~~181,623) FINANCING ACTIVITIES Net ~~proceeds~~increase ~~from~~(decrease) in short-term debt ...........~~.............~~ 30(585,000) 1,~~262~~914,~~711~~289 Payments on long-term debt ...........................~~....~~ (75157,~~473~~208) (75111,~~323~~975) Dividends paid .......................................~~.........~~ (153,930) (~~153~~229,~~245~~868) ------------ ------------ NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES ................~~..............~~ (~~199~~896,~~403~~138) 1,~~028~~572,~~721~~446 ------------ ------------ INCREASE ~~(DECREASE)~~ IN CASH ..................... 16269,~~386~~027 ~~(32~~256,~~338)~~082 Cash at beginning of period ............................ 18,950 99,220 ------------ ------------ CASH AT END OF PERIOD ................~~....~~ $ 35287,~~336~~977 $ 66355,~~882~~302 ============ ============

See notes to condensed consolidated financial statements. 5 6 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 April 30, 2001 of $9,079,000 decreased $2,637,000, or 22.5% from the sales reported in the comparable period a year ago. The decrease in sales resulted from lower orders and price concessions to our customers. The net profit for the quarter ended April 30, 2001 was $36,000 vs. a net profit of $677,000 in the comparable period a year ago. The cost of sales percentage was 90.9% for the current fiscal year quarter vs. 84.7% in the comparable period a year ago. This increase was due to volume related lower absorption of fixed costs, higher hourly rates/benefits, medical expenses and utilities. Selling, general and administrative expenses were 8.0% of sales for this period and 5.9% for the previous year comparable period. This was due to lower provision for employee bonus plans and normal Single Business Tax provision. The prior period had a Single Business Tax refund. Interest expense decreased $34,000 due primarily to lower borrowing base and interest rates. The interest rate paid by the Company to Comerica Bank is tied to the prevailing prime rate. For the first six months of 2001, net sales of $16,737,000 were 24.1% lower than the same period in 2000, due primarily to lower release schedules from our customers and price reductions. The net loss for the first six months of 2001 was $(430,000) vs. a net profit of $1,091,000 in the comparable period a year ago. The cost of sales was 94.3% as compared to 85.3% for the prior year. This was primarily due to higher cost of medical insurance, utilities and lower absorption of fixed costs because of the lower volume. Ford Motor Company notified Michigan Rivet Corporation in May, 2001 that due to continued supplier consolidation and the Plant Provider program the Petoskey Plant business with Ford direct would be resourced within twelve months. The current Ford sales of $6.5 million annually represents 35 to 40% of the volume at the Petoskey Plant. Plans have been made to reduce the Petoskey operation while we continue attempts to replace all or a portion of the lost work to Ford. The down side of the projection is a planned break-even level near term. 6 7 Financial Condition Liquidity and Capital Resources The Company has short-term credit lines aggregating $5,000,000. At April 30, 2001, $0 was outstanding. Our cash increased $269,000 from the beginning of the Fiscal Year 2001. Our cash flow from operating activities was $1,770,000 in Fiscal Year 2001, due primarily to reductions in inventories and non-cash expenses for depreciation and accrued health liability offset by the net operating loss. We used cash of $605,000 to acquire equipment. We used cash of $742,000 to pay down short and long-term bank debt. We used cash of $154,000 to pay dividends to shareholders. 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 2001. 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. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On April 27, 2001, the Company held its annual meeting of stockholders. Stockholders of the Company voted in favor of the election of Clark V. Stevens, William B. Stade, Charles E. Blank, William P. Lianos, Anthony W. Livorine, Kermit L. Knuppenburg, Anthony J. Caputo, Gen. Earl T. O'Loughlin and Howard W. Burdett to the Company's Board of Directors. In the election of Mr. Lianos, 616,430 total votes were cast in favor and 153 votes were cast against or withheld. In addition, there were 24,792 abstentions and 0 broker non-voters. In the election of Mr. Stade and Mr. Knuppenburg, 616,443 total votes were cast in favor and 140 votes were cast against or withheld for each nominee. In addition, there were 24,792 abstentions and 0 broker non-voters for each nominee. In the election of Mr. Caputo, 616,220 total votes were cast in favor and 363 votes were cast against or withheld. In addition, there were 24.792 abstentions and 0 broker non-voters. In the election of Mr. Stevens and Mr. Livorine, 616,333 total votes were cast in favor and 250 votes were cast against or withheld for each nominee. In addition, there were 24,792 abstentions and 0 broker non- voters for each nominee. In the election of Gen. O'Loughlin and Mr. Blank, 616,330 total votes were cast in favor and 253 votes were cast against or withheld. In addition, there were 24,792 abstentions and 0 broker non-voters. In the election of Mr. Burdett, 616,330 total votes were cast in favor and 263 votes were cast against or withheld. In addition, there were 24,792 abstentions and 0 broker non-votes. 7 8 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 April 30, 2001. 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 -------------------------------- William P. Lianos President and Treasurer (Principal Financial & Accounting Officer) Date 5-30-01 --------- 8

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