1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 - Q
-----------
Quarterly Report Under Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For The Quarter Ended February 28, 2001
Commission File Number 001 - 12673
RIVIERA TOOL COMPANY
A Michigan Corporation
I.R.S. Employer Identification No. 38- 2828870
5460 Executive Parkway S.E., Grand Rapids, Michigan 49512
Telephone: (616) 698 - 2100
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
The number of Common Shares outstanding at April 16, 2001 was 3,379,609.
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PART I
FINANCIAL INFORMATION
INDEX
Page
No.
Item 1. Financial Statements
Balance Sheets as of February 28, 2001 and August 31, 2000...................................... 3
Statements of Operations for the Three Months and Six Months Ended February 28,2001 and
February 29,2000................................................................................ 4
Statements of Cash Flows for the Six Months Ended February 28, 2001 and February 29, 2000....... 5
Notes to Financial Statements................................................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........... 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk -
None
PART II
OTHER INFORMATION
INDEX
Item 1. Legal Proceedings - The Company is involved in legal proceedings which are ordinary or routine to its operations. In
the opinion of management, no existing proceedings would have a significant effect on the financial condition,
results of operations and Cash Flows of the Company if determined against the Company.
Item 2. Changes in Securities - None.
Item 3. Default Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8 - K.
6(a) Exhibits - None
6(b) Reports on Form 8-K - None
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3
RIVIERA TOOL COMPANY
FINANCIAL STATEMENTS
BALANCE SHEETS
FEBRUARY 28, AUGUST 31,
ASSETS 2001 2000
------ -------------------- --------------------
CURRENT ASSETS NOTE (UNAUDITED) (AUDITED)
-------------- -------------------- --------------------
Cash............................................................... $ 21,766 $ 113,699
Accounts receivable................................................ 1,956,823 7,052,169
Costs and estimated gross profit in excess
of billings on contracts in process.............................. 2 8,916,759 8,564,651
Inventories........................................................ 306,675 306,675
Federal income tax refundable...................................... -- 673,897
Prepaid expenses and other current assets.......................... 120,783 170,170
----------------- -----------------
Total current assets........................................... 11,322,806 16,881,261
PROPERTY, PLANT AND EQUIPMENT, NET................................... 3 16,957,275 17,445,289
PERISHABLE TOOLING................................................... 568,333 538,743
OTHER ASSETS......................................................... 210,770 210,770
----------------- -----------------
Total assets................................................... $ 29,059,184 $ 35,076,063
================= =================
LIABILITIES AND
STOCKHOLDERS' EQUITY
--------------------
CURRENT LIABILITIES
-------------------
Current portion of long-term debt.................................. 4 $ 1,983,964 $ 1,983,964
Accounts payable................................................... 576,742 1,410,834
Accrued liabilities................................................ 444,995 434,689
----------------- -----------------
Total Current liabilities...................................... 3,005,701 3,829,487
LONG-TERM DEBT....................................................... 4 7,495,434 10,303,197
DEFERRED TAX LIABILITY............................................... 726,590 1,538,000
ACCRUED LEASE EXPENSE................................................ 690,926 689,758
----------------- -----------------
Total liabilities.............................................. 11,918,651 16,360,442
----------------- -----------------
PREFERRED STOCK - no par value, $100 mandatory redemption value:
Authorized - 5,000 shares
Issued and outstanding - None.................................... -- --
STOCKHOLDERS' EQUITY:
Preferred Stock - no par value,
Authorized - 200,000 shares
Issued and outstanding - None..................................... -- --
Common stock - No par value:
Authorized - 9,785,575 shares 1
Issued and outstanding - 3,379,609 shares at
February 28, 2001 and August 31, 2000............................. 15,115,466 15,115,466
Retained earnings.................................................. 1 2,025,067 3,600,155
----------------- -----------------
Total stockholders' equity..................................... 17,140,533 18,715,621
----------------- -----------------
Total liabilities and stockholders' equity..................... $ 29,059,184 $ 35,076,063
================= =================
SEE NOTES TO FINANCIAL STATEMENTS
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RIVIERA TOOL COMPANY
STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS
ENDED
------------------------------- -------------------------------
FEBRUARY 28, FEBRUARY 29, FEBRUARY 28, FEBRUARY 29,
2001 2000 2001 2000
------------ ------------ ------------ ------------
SALES ................................................. $ 2,386,136 $ 5,175,600 $ 6,978,033 $ 11,030,621
COST OF SALES ......................................... 3,732,166 5,148,571 8,058,590 9,806,604
----------- ----------- ----------- ------------
GROSS (LOSS)/INCOME.............................. (1,346,030) 27,029 (1,080,557) 1,224,017
SELLING AND ADMINISTRATIVE EXPENSES ................... 321,445 778,445 849,748 1,232,934
----------- ----------- ----------- ------------
LOSS FROM OPERATIONS ............................ (1,667,475) (751,416) (1,930,305) (8,917)
OTHER INCOME (EXPENSE)
INTEREST EXPENSE ................................... (215,407) (203,479) (456,096) (408,086)
OTHER EXPENSE ...................................... 83 -- (98) --
GAIN (LOSS) ON ASSET DISPOSALS ..................... -- (50,691) -- (51,893)
----------- ----------- ----------- ------------
TOTAL OTHER EXPENSE - NET ....................... (215,324) (254,170) (456,194) (457,979)
LOSS BEFORE TAXES ON INCOME ........................... (1,882,799) (1,005,586) (2,386,499) (468,896)
----------- ----------- ----------- ------------
INCOME TAX CREDIT ..................................... (640,152) (341,899) (811,410) (159,425)
----------- ----------- ----------- ------------
NET LOSS AVAILABLE FOR COMMON
SHARES ............................................ $ (1,242,647) $ (663,687) $ (1,575,089) $ (309,471)
=========== =========== =========== ============
BASIC AND DILUTED LOSS PER COMMON SHARE ............... $ (.37) $ (.20) $ (.47) $ (.09)
=========== =========== =========== ============
BASIC AND DILUTED COMMON SHARES OUTSTANDING ........... 3,379,609 3,379,609 3,379,609 3,379,609
=========== =========== =========== ============
SEE NOTES TO FINANCIAL STATEMENTS
4.
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RIVIERA TOOL COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS ENDED
----------------------------------------
FEBRUARY 28, FEBRUARY 29,
2001 2000
------------------ -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss............................................................. $ (1,575,089) $ (309,471)
Adjustments to reconcile net income(loss)to net cash
from operating activities:
Depreciation and amortization.................................... 952,424 945,854
Loss on disposal of assets....................................... -- 50,940
Deferred taxes................................................... (811,410) (548,597)
(Increase) decrease in assets:
Accounts receivable........................................... 5,095,346 (435,468)
Federal income tax receivable................................. 673,897
Costs and estimated gross profit in
excess of billings on contracts in
process....................................................... (352,108) 596,162
Inventory..................................................... -- 20,000
Perishable tooling............................................ (29,590) (30,392)
Prepaid expenses and other current assets..................... 49,387 (162,378)
Increase (decrease) in liabilities:
Accounts payable.............................................. (834,093) (217,058)
Accrued lease expense......................................... 1,168 9,343
Accrued liabilities........................................... (10,306) (411,821)
------------------ -----------------
Net Cash provided by(used in)operating activities...................... $ 3,180,238 $ (492,886)
------------------ -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in other assets............................................. -- (75,000)
Additions to property, plant and equipment........................... (464,408) (869,083)
------------------ -----------------
Net cash used in investing activity.................................... $ (464,408) $ (944,083)
------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds/(payments) from revolving credit line....................... (1,854,722) 2,229,300
Principal payments on long-term debt................................. (953,041) (897,432)
------------------ -----------------
Net cash (used in) provided by
financing activities.................................................. $ (2,807,763) $ 1,331,868
------------------ -----------------
NET DECREASE IN CASH................................................... $ (91,933) $ (105,001)
------------------ -----------------
CASH - Beginning of Period............................................. 113,699 113,183
------------------ -----------------
CASH - End of Period................................................... $ 21,766 $ 8,082
================== =================
SEE NOTES TO FINANCIAL STATEMENTS
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RIVIERA TOOL COMPANY
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2001
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements (the "Financial
Statements") of Riviera Tool Company (the "Company") have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission.
Accordingly, the Financial Statements do not include all the information and
footnotes normally included in the annual financial statements prepared in
accordance with generally accepted accounting principles.
In the opinion of management, the Financial Statements reflect all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
such information in accordance with generally accepted accounting principles.
These Financial Statements should be read in conjunction with the financial
statements and footnotes thereto included in the Company's Form 10-K dated
November 20, 2000, for the fiscal year ended August 31, 2000.
The results of operations for the three and six month periods ended February 28,
2001 are not indicative of the results to be expected for the full year.
NOTE 2 - COSTS AND BILLINGS ON CONTRACTS IN PROCESS
Costs and billings on contracts in process are as follows:
FEBRUARY 28, AUGUST 31,
2001 2000
------------------ -----------------
Costs incurred on contracts in process under the
percentage of completion method..................................... $ 15,174,935 $ 19,549,230
Estimated gross profit/(loss).......................................... (107,437) 1,150,000
------------------ -----------------
Total.......................................................... 15,067,498 20,699,230
Less progress payments received and progress
billings to date.................................................... (6,150,739) 12,173,130
Plus costs incurred on contracts in process under
the completed contract method....................................... -- 38,550
------------------ -----------------
Costs and estimated gross profit in excess
of billings on contracts in process.......................... $ 8,916,759 $ 8,564,650
================== =================
Included in estimated gross profit for February 28, 2001 and August 31, 2000 are
jobs with losses accrued of $1,278,425 and $1,407,405, respectively.
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
FEBRUARY 28, AUGUST 31,
2001 2000
------------------ ----------------
Lease and leasehold improvements................................................ $ 1,415,785 $ 1,293,845
Office furniture and fixtures................................................... 194,256 194,256
Machinery and equipment......................................................... 22,537,592 22,468,979
Construction in Process......................................................... 325,681 110,349
Computer equipment and software................................................. 2,141,034 2,082,512
Transportation equipment........................................................ 126,365 126,365
------------------ ----------------
Total cost................................................................. 26,740,713 26,276,306
Accumulated depreciation and amortization....................................... (9,783,438) (8,831,017)
------------------ ----------------
Net carrying amount........................................................ $ 16,957,275 $ 17,445,289
================== ================
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RIVIERA TOOL COMPANY
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2001
NOTE 4 - LONG-TERM DEBT
The Company's long-term debt, which is subject to certain covenants discussed
below, consists of the following:
FEBRUARY 28, AUGUST 31,
2001 2000
------------------ -----------------
REVOLVING WORKING CAPITAL CREDIT LINE
-------------------------------------
The revolving working capital credit line is collateralized by substantially all
assets of the Company and provides for borrowing, subject to certain collateral
requirements of up to $10.0 million. The agreement requires a commitment fee of
.25% per annum on the average daily unused portion of the revolving credit line.
The credit line is due September 1, 2001, and bears interest, payable monthly,
at either London Interbank Offered Rate ("LIBOR") plus 2.25% or at .25% below
the bank's prime rate, at the election of the Company, as follows:
- LIBOR plus 2.25%....................................................... $ -- $ 1,500,000
- The bank's prime rate less .25% (as of February 28, 2001,
an effective rate of 8.25%)............................................ 3,225,297 3,580,019
NOTES PAYABLE TO BANK
---------------------
Note payable to bank, collateralized by substantially all assets of the Company,
is due July 19, 2002, and is payable in monthly installments of $54,167 plus
interest, payable monthly, at either LIBOR plus 2.25% or at .25% below the
bank's prime rate, at the election of the Company, as follows:
- LIBOR plus 2.25%....................................................... -- 1,025,000
- The bank's prime rate less .25% (as of February 28, 2001,
an effective rate of 8.25%)............................................ 866,667 166,667
Note payable to bank, collateralized by specific assets of the Company, payable 2,611,100
in monthly installments of $55,556, plus simple interest of 7.26%, due December
31, 2003........................................................................ 2,944,436
Note payable to bank, collateralized by specific assets of the Company, payable 716,667
in monthly installments of $16,666 plus simple interest of 8.04%, due September
1, 2004......................................................................... 816,666
NON-REVOLVING EQUIPMENT LINE OF CREDIT
--------------------------------------
$3,271,000 equipment line of credit is collateralized by specific assets of the
Company, is due November 1, 2004, and is payable in monthly installments of
$38,941 plus interest as follows:
- LIBOR plus 2.25%....................................................... -- 2,135,000
- The bank's prime rate less .25% (as of February 28, 2001, an effective
rate of 8.25%)......................................................... 2,059,667 119,373
------------------ -----------------
Total long-term debt................................................. 9,479,398 12,287,161
Less current portion................................................. 1,983,964 1,983,964
------------------ -----------------
Long-term debt-- Net................................................. $ 7,495,434 $ 10,303,197
================== =================
The debt agreements require the Company to maintain certain ratios/levels of
tangible net worth, working capital, liabilities to tangible net worth,
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earnings before interest, taxes, depreciation and amortization to debt service
and prohibit the payment of common stock cash dividends. The Company was not in
compliance with the earnings before interest, taxes, depreciation and
amortization to debt service ratio and the working capital as of February 28,
2001. On April 9, 2001, the Company's lender agreed to waive the earnings before
interest, taxes, depreciation and amortization to debt service ratio covenant
violation for a period of not less than twelve months. The Company anticipates
that their lender will waive the working capital covenant violation until March
1, 2002.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table presents, for the periods indicated, the components of the
Company's Statement of Operations as a percentage of sales.
FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
-------------------------- --------------------------
FEB. 28, FEB. 29, FEB. 28, FEB. 29,
2001 2000 2001 2000
----------- ----------- ----------- -----------
SALES.................................................... 100.0% 100.0% 100.0% 100.0%
COST OF SALES............................................ 156.4% 99.5% 115.5% 88.9%
----------- ----------- ----------- -----------
GROSS LOSS......................................... (56.4%) 0.5% (15.5%) 11.1%
SELLING AND ADMINISTRATIVE EXPENSE....................... 13.5% 15.0% 12.2% 11.2%
----------- ----------- ----------- -----------
LOSS FROM OPERATIONS............................... (69.9%) (14.5%) (27.7%) (0.1%)
OTHER INCOME (EXPENSE)
INTEREST EXPENSE....................................... (9.0%) (3.9%) (6.5%) (3.7%)
OTHER.................................................. -- -- -- --
LOSS ON ASSET DISPOSALS................................ -- (1.0%) -- (0.5%)
----------- ----------- ----------- -----------
TOTAL OTHER EXPENSE - NET.......................... (9.0%) (4.9%) (6.5%) (4.2%)
LOSS BEFORE TAXES ON INCOME.............................. (78.9%) (19.4%) (34.2%) (4.3%)
INCOME TAX CREDIT........................................ (26.8%) (6.6%) (11.6%) (2.8%)
----------- ----------- ----------- -----------
NET LOSS..................................... (52.1%) (12.8%) (22.6%) (2.8%)
=========== =========== =========== ===========
THE MATTERS DISCUSSED IN THIS QUARTERLY REPORT ON FORM 10-Q CONTAIN CERTAIN
FORWARD-LOOKING STATEMENTS. FOR THIS PURPOSE, ANY STATEMENTS CONTAINED IN THIS
REPORT THAT ARE NOT STATEMENTS OF HISTORICAL FACT MAY BE DEEMED TO BE
FORWARD-LOOKING STATEMENTS. WITHOUT LIMITING THE FOREGOING, WORDS SUCH AS "MAY,"
"WILL," "EXPECT," BELIEVE," "ANTICIPATE," OR "CONTINUE," THE NEGATIVE OR OTHER
VARIATION THEREOF, OR COMPARABLE TERMINOLOGY, ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. THESE STATEMENTS BY THEIR NATURE INVOLVE SUBSTANTIAL
RISKS AND UNCERTAINTIES, AND ACTUAL RESULTS MAY DIFFER MATERIALLY DEPENDING UPON
A VARIETY OF FACTORS, INCLUDING CONTINUED MARKET DEMAND FOR THE TYPES OF
PRODUCTS AND SERVICES PRODUCED AND SOLD BY THE COMPANY.
COMPARISON OF THE THREE MONTHS ENDED FEBRUARY 28, 2001 TO THE THREE MONTHS ENDED
FEBRUARY 29, 2000.
REVENUES - Revenues for the three months ended February 28, 2001 totaled $2.4
million as compared to $5.2 million for the three months ended February 29,
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2000, a decrease of $2.8 million or 54%. This decrease has been a result of the
Company not securing additional contracts during the recent six-month period.
Although the Company has been involved in significant contract quoting activity
during this period, its customers have been tentative in releasing contracts to
tooling manufacturers. This lack of contract releases has created very
competitive pricing on those tooling contracts that have been released during
this period. Although the Company has been successful in securing contracts
during this period, the Company has been very selective in the bidding process
to ensure that those contracts have contribution margin. This market has
negatively impacted both the Company and the tooling industry as a whole. It is
the Company's belief that based upon quoting activity, the release of orders is
imminent. However, such delays could continue as the OEM's focus on the recent
decline in unit sales as well as the effects of global mergers during the past
year. The Company believes that the OEM's are reviewing their various product
platforms and plans, on a global basis, in order to maximize and streamline
model offerings within their global platforms. As a result of these market
conditions, the Company has instituted specific cost containment measures. These
containments include direct labor layoffs of approximately 62 employees or 38%
of the workforce, a 20% pay-cut for all salaried employees and a 10% pay-cut for
all hourly employees. The Company anticipates the decline in contract releases
will also negatively effect the Company's financial results at least through
2001.
The Company incurred 52,741 shop floor hours during the second quarter of 2001
as compared to 85,428 during the same period of 2000. The decrease was 32,687
hours or 38.3%. This decrease was a direct result of lower contract levels
during the second quarter of 2001.
COST OF SALES - Cost of sales were $3.7 million or 156.4% of sales for the three
months ended February 28, 2001 as compared to $5.1 million or 99.5% of sales for
the three months ended February 29, 2000.
The gross margin decrease was largely due to the decrease in shop floor hours
and resulting revenue, despite cost containment measures taken by the Company
during this period. Cost of sales for the quarter ended February 28, 2001, as
compared to the same period last year, included decreases in the Company's
direct cost expense of $1,089,000, engineering expenses of $164,000 and $163,000
in manufacturing overhead. However, due to the decrease in revenue during the
second quarter of 2001, these expenses increased as a percent of sales by 20.4%,
3.0% and 33.7%, respectively, as compared to the same period last year.
The decrease in direct cost expense was primarily due to decreases of $564,000
in labor expense and $488,000 in outside services expense for the three months
ended February 28, 2001 over the same period last year. The decrease in labor
expense was due to the Company incurring less labor hours during the quarter
ended February 28, 2001 over the same period last year, as a result of the
Company's decreased contract levels. The decrease in contract levels also
lowered the Company's outside services expense requirements.
The decrease in engineering expense was primarily due to decreases in wages and
salaries. As a part of the Company's cost containment measures, including
lay-offs and pay-cuts, the Company experienced a decrease in wages and salaries
of $161,000 or 39.1% during the second quarter of 2001 as compared to the same
period last year.
Manufacturing overhead expense decreased from $1,792,000 for the three months
ended February 29, 2000 to $1,629,000 for the three months ended February 28,
2001. This change was due to decreases in wages and salaries of $100,000,
perishable tooling expense of $90,700, manufacturing supplies of $44,400.
Increases included rent expense of $58,400 and property tax expense of $50,900.
9.
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SELLING & ADMINISTRATIVE EXPENSES - Selling and administrative expenses
decreased from approximately $778,000 or 15.0% of sales for the three months
ended February 29, 2000 to approximately $321,000 or 13.5% of sales for the
three months ended February 28, 2001. This change was due to decreases in wages
and salaries of $146,700, State of Michigan Single Business Tax obligation of
$130,000, public company expense of $85,500, and legal/professional fee expenses
of $76,900.
INTEREST EXPENSE - Interest expense for the three months ended February 28, 2001
was approximately $215,400 as compared to approximately $203,500 for the same
period last year. The Company's total average interest-bearing debt for the
second quarter of 2001 was comparable with the same period last year.
COMPARISON OF THE SIX MONTHS ENDED FEBRUARY 28, 2001 TO THE SIX MONTHS ENDED
FEBRUARY 29, 2000
REVENUES - Revenues for the six months ended February 28, 2001 totaled
approximately $7.0 million as compared to $11.0 million for the same period last
year, a decrease of $4.0 million or 36%. The Company incurred 125,915 shop floor
hours during the first two quarters of 2001 as compared to 165,880 during the
same period of 2000. The decrease was 39,965 hours or 24.1%. This decrease was a
direct result of lower contract levels during the first and second quarter of
2001 as compared to the same period of 2000.
COST OF SALES - Cost of sales were $8.1 million or 115.5% of sales for the six
months ended February 28, 2001 as compared to $9.8 million or 88.9% of sales for
the six months ended February 29, 2000.
The gross margin decrease was largely due to the decrease in shop floor hours
and resulting revenue, despite cost containment measures taken by the Company
during this period. Cost of sales for the six months ended February 28, 2001, as
compared to the same period last year, included decreases in the Company's
direct cost expense of $1,594,700, engineering expenses of $235,500 and an
increase of $82,000 in manufacturing overhead. However, due to the decrease in
revenue during the second quarter of 2001, these expenses increased as a percent
of sales by 6.7%, 1.1% and 18.8%, respectively, as compared to the same period
last year.
The decrease in direct cost expense was primarily due to a decrease of $731,000
in labor expense and $941,600 in outside services expense for the six months
ended February 28, 2000 over the same period last year. The decrease in labor
was due to the Company incurring less labor hours during the six months ended
February 28, 2001 over the same period last year, as a result of the Company's
decreased contract levels. The decrease in contract levels also lowered the
Company's outside services expense requirements.
The decrease in engineering expense was due to wages and salaries expense. As a
result of the Company's cost containment measures, the Company experienced a
28.9% decrease in wages and salaries during the first and second quarter of 2001
as compared to the same period last year.
Manufacturing overhead expense increased from $3,342,000 for the six months
ended February 29, 2000 to $3,424,000 for the six months ended February 28,
2001. The largest increases were $95,000 in facility rent expense, $70,000 in
property tax expense, $28,000 in utilities expenses, and $26,000 in machinery
repairs and maintenance expense. Decreases included $67,000 in manufacturing
supplies expense, $37,000 in perishable tooling expense and $18,000 in employee
welfare expense.
10.
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SELLING & ADMINISTRATIVE EXPENSES - Selling and administrative expenses
decreased from approximately $1,233,000 or 11.2% of sales for the six months
ended February 29, 2000 to approximately $850,000 or 12.2% of sales for the six
months ended February 28, 2001. This change was due to decreases in wages and
salaries of $164,000, State of Michigan Single Business Tax obligation of
$129,000, public company expense of $30,500, legal/professional fee expenses of
$43,300, travel and entertainment expenses of $16,000.
INTEREST EXPENSE - Interest expense for the six months ended February 28, 2001
was approximately $456,000 as compared to approximately $408,000 for the same
period last year. As a percentage of sales, interest expense increased from 3.7%
for the six months ended February 29, 2000 to 6.5% for the six months ended
February 28, 2001 as a result of the decrease in revenue during the first and
second quarters of 2001.
FEDERAL INCOME TAXES
The effective federal income tax rate was 34% for the six months ended February
28, 2001 and February 29, 2000. As of August 31, 2000, the Company had
approximately $542,000 of a net operating loss carryforward which will expire in
fiscal 2020, if unused, as well as $155,000 of alternative minimum tax credits
that do not expire.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended February 28, 2001, the Company's cash from operating
activities was $3,180,236, primarily from the decrease in account receivables of
$5.1 million, a $0.4 million increase in contracts in process, a $0.8 million
decrease in deferred tax liabilities, and a $0.8 million decrease in accounts
payable and accrued liabilities. The Company invested in additional machinery
and equipment of $464,408 and reduced its long-term debt obligations by
$953,041. The Company utilized the remainder of the cash flows to reduce its
revolving bank working capital credit line by $1,854,722. The Company believes
that the unused portion of the revolving bank working capital credit line and
the funds generated from operations will be sufficient to cover anticipated cash
needs through fiscal 2001. However, depending on the level of future sales, an
expanded credit line may be necessary to finance increases in trade accounts
receivable and contracts in process. The Company believes it will be able to
obtain such expanded credit line, if required, on generally the same terms as
the existing credit line.
11.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: April 16, 2001
Riviera Tool Company
/s/ Kenneth K. Rieth /s/ Peter C. Canepa
-------------------- -------------------
Kenneth K. Rieth Peter C. Canepa
President and Chief Executive Officer Chief Financial Officer,
(Principal Executive Officer) Treasurer and Secretary
(Principal Financial and
Accounting Officer)
12.