U.S 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, 2002
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 15, 2002 was 3,379,609.
PART I
FINANCIAL INFORMATION
INDEX
Page No.
Item 1. Financial Statements
Balance Sheets as of February 28, 2002 and August 31, 2001........................................ 3
Statements of Operations for the Three and Six Months Ended February 28, 2002 and 2001............ 4
Statements of Cash Flows for the Three and Six Months Ended February 28, 2002 and 2001............ 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.
2.
RIVIERA TOOL COMPANY
FINANCIAL STATEMENTS
BALANCE SHEETS
FEBRUARY 28, AUGUST 31,
ASSETS 2002 2001
------ -------------------- --------------------
CURRENT ASSETS NOTE (UNAUDITED) (AUDITED)
-------------- ---- -------------------- --------------------
Cash.................................................................... $ 146,934 $ 282,721
Accounts receivable..................................................... 5,483,244 3,449,430
Costs net of estimated gross loss in excess
Of billings on contracts in process................................. 2 4,029,096 4,153,569
Inventories............................................................. 308,977 308,977
Prepaid expenses and other current assets............................... 132,715 97,289
---------------- ----------------
Total Current assets.......................................... 10,100,966 8,291,986
PROPERTY, PLANT AND EQUIPMENT, NET........................................ 3 15,229,094 16,146,059
PERISHABLE TOOLING........................................................ 534,620 572,822
OTHER ASSETS.............................................................. 178,060 135,770
---------------- ----------------
Total assets.................................................. $ 26,042,740 $ 25,146,637
================ ================
LIABILITIES AND
STOCKHOLDERS' EQUITY
--------------------
CURRENT LIABILITIES
-------------------
Current portion of long-term debt....................................... 4 $ 8,050,148 $ 1,875,631
Accounts payable........................................................ 664,473 898,212
Accrued liabilities..................................................... 555,059 342,007
---------------- ----------------
Total Current liabilities..................................... 9,269,680 3,115,850
LONG-TERM DEBT............................................................ 4 2,780,957 6,526,729
ACCRUED LEASE EXPENSE..................................................... 683,914 692,094
---------------- ----------------
Total liabilities............................................. 12,734,551 10,334,673
---------------- ----------------
PREFERRED STOCK - no par value,
$100 mandatory redemption value:
Authorized - 5,000 shares
Issued and outstanding - no shares................................. -- --
STOCKHOLDERS' EQUITY:
Preferred stock - no par value,
Authorized - 200,000 shares
Issued and outstanding - no shares................................... -- --
Common stock - No par value:
Authorized - 9,785,575 shares 1
Issued and outstanding - 3,379,609 shares at
February 28, 2002 and August 31, 2001................................ 15,115,466 15,115,466
Retained deficit........................................................ 1 (1,807,277) (303,502)
---------------- ----------------
Total stockholders' equity.................................... 13,308,189 14,811,964
---------------- ----------------
Total liabilities and stockholders'
equity...................................................... $ 26,042,740 $ 25,146,637
================ ================
See notes to financial statements
3.
RIVIERA TOOL COMPANY
STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED FEBRUARY 28, ENDED FEBRUARY 28,
----------------------------------- ------------------------------------
2002 2001 2002 2001
----------------- ---------------- ----------------- -----------------
SALES................................................ $ 3,452,082 $ 2,386,136 $ 6,815,756 $ 6,978,033
COST OF SALES........................................ 3,593,381 3,732,166 7,138,957 8,058,590
----------------- ---------------- ----------------- -----------------
GROSS LOSS..................................... (141,299) (1,346,030) (323,201) (1,080,557)
SELLING AND ADMINISTRATIVE EXPENSES.................. 377,939 321,445 843,806 849,748
----------------- ---------------- ----------------- -----------------
LOSS FROM OPERATIONS........................... (519,238) (1,667,475) (1,167,007) (1,930,305)
OTHER INCOME (EXPENSE)
INTEREST EXPENSE.................................. (169,200) (215,407) (336,979) (456,096)
OTHER INCOME/(EXPENSE)............................ 448 83 211 (98)
----------------- ---------------- ----------------- -----------------
TOTAL OTHER EXPENSE - NET...................... (168,752) (215,324) (336,768) (456,194)
LOSS BEFORE TAXES ON INCOME.......................... (687,990) (1,882,799) (1,503,775) (2,386,499)
----------------- ---------------- ----------------- -----------------
INCOME TAX CREDIT.................................... -- (640,152) -- (811,410)
----------------- ---------------- ----------------- -----------------
NET LOSS AVAILABLE FOR COMMON
SHARES........................................... $ (687,990) $ (1,242,647) $ (1,503,775) $ (1,575,089)
================= ================ ================= =================
BASIC AND DILUTED LOSS PER COMMON SHARE.............. $ (.20) $ (.37) $ (.44) $ (.47)
================= ================ ================= =================
BASIC AND DILUTED COMMON SHARES OUTSTANDING.......... 3,379,609 3,379,609 3,379,609 3,379,609
================= ================ ================= =================
See notes to financial statements
4.
RIVIERA TOOL COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS ENDED
FEBRUARY 28,
---------------------------------------
2002 2001
------------------ ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss............................................................. $ (1,503,775) $ (1,575,089)
Adjustments to reconcile net income to net cash
From operating activities:
Depreciation and amortization.................................... 954,882 952,424
Deferred taxes................................................... -- (811,410)
(Increase) decrease in assets:
Accounts receivable........................................... (2,033,814) 5,095,346
Federal income tax receivable................................. -- 673,897
Costs and estimated gross profit/loss in
excess of billings on contracts in
process....................................................... 124,473 (352,108)
Perishable tooling............................................ 38,202 (29,590)
Prepaid expenses and other current assets..................... (35,426) 49,387
Increase (decrease) in liabilities:
Accounts payable.............................................. (233,739) (834,093)
Accrued lease expense......................................... (8,180) 1,168
Accrued liabilities........................................... 213,052 10,306
------------------ -----------------
Net cash provided by/(used in) operating activities.................... $ (2,484,325) $ 3,180,238
------------------ -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in other assets............................................. (42,290) --
Additions to property, plant and equipment........................... (37,917) (464,408)
------------------ -----------------
Net cash used in investing
Activities............................................................. $ (80,207) $ (464,408)
------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (repayments) on revolving
Credit line......................................................... 3,356,728 (1,854,722)
Principal payments on notes payable to bank and
non-revolving equipment line of credit.............................. (927,983) (953,041)
------------------ -----------------
Net cash provided by/(used in) financing
Activities............................................................. $ 2,428,745 $ (2,807,763)
------------------ -----------------
NET DECREASE IN CASH................................................... $ (135,787) $ (91,933)
------------------ -----------------
CASH - Beginning of Period............................................. 282,721 113,699
------------------ -----------------
CASH - End of Period................................................... $ 146,934 $ 21,766
================== =================
See notes to financial statements
5.
RIVIERA TOOL COMPANY
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2002
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 12, 2001, for the fiscal year ended August 31, 2001.
The results of operations for the three and six month periods ended February 28,
2002 is 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,
2002 2001
------------------ -----------------
Costs incurred on contracts in process under the
Percentage of completion method..................................... $ 8,210,002 $ 8,587,454
Estimated gross loss................................................... (600,000) (650,000)
------------------ -----------------
Total.......................................................... 7,610,002 7,937,454
Less progress payments received and progress
Billings to date.................................................... 3,588,463 3,783,885
Plus costs incurred on contracts in process under
the completed contract method....................................... 7,557 --
------------------ -----------------
Costs and estimated gross loss in excess
of billings on contracts in process.......................... $ 4,029,096 $ 4,153,569
================== =================
Included in estimated gross loss for February 28, 2002 and August 31, 2001 are
jobs with losses accrued of $1,107,635 and $763,980, respectively.
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net consist of the following:
FEBRUARY 28, AUGUST 31,
2002 2001
------------------ ----------------
Lease and leasehold improvements................................................ $ 1,501,015 $ 1,501,015
Office furniture and fixtures................................................... 195,310 194,993
Machinery and equipment......................................................... 22,865,732 22,865,732
Construction in Process......................................................... 49,535 23,913
Computer equipment and software................................................. 2,222,356 2,210,378
Transportation equipment........................................................ 133,365 133,365
------------------ ----------------
Total cost................................................................. 26,967,314 26,929,396
Accumulated depreciation and amortization....................................... 11,738,220 10,783,337
------------------ ----------------
Net carrying amount........................................................ $ 15,229,094 $ 16,146,059
================== ================
6.
RIVIERA TOOL COMPANY
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2002
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,
2002 2001
------------------ -----------------
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 $6.5 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, 2002, and bears interest, payable monthly,
at 1.0% above the bank's prime rate(as of February 28, 2002, an effective rate
of 5.75%)......................................................................... $ 6,499,518 $ 3,142,790
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 (as of February 28, 2002, an effective rate of 4.5%), at the
election of the Company........................................................... 216,666 541,667
Note payable to bank, collateralized by specific assets of the Company, payable
in monthly installments of $55,556, plus simple interest of 7.26%, due December
31, 2003.......................................................................... 1,944,428 2,277,764
Note payable to bank, collateralized by specific assets of the Company, payable
in monthly installments of $16,666 plus simple interest of 8.04%, due September
1, 2004........................................................................... 516,671 616,667
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, payable monthly, at either LIBOR plus 2.25% or at .25%
below the bank's prime rate (as of February 28, 2002, an effective rate of
4.5%), at the election of the Company............................................. 1,653,822 1,823,472
------------------ -----------------
Total long-term debt................................................... $ 10,831,105 $ 8,402,360
Less current portion................................................... 8,050,148 1,875,631
------------------ -----------------
Long-term debt-- Net................................................... $ 2,780,957 $ 6,526,729
================== =================
The Company is required to maintain certain levels of tangible net worth, ratio
of total liabilities to tangible net worth, and earnings before interest, taxes,
depreciation and amortization and prohibit the payment of common stock cash
dividends. At February 28, 2002, the Company was in compliance with the earnings
before interest, taxes, depreciation and amortization and the tangible net worth
covenants. The Company was not in compliance with the ratio of total liabilities
to tangible net worth covenant as of February 28, 2002, however in March, 2002
the Company was in compliance with such covenant and believes it will maintain
such covenant compliance.
7.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following table presents, for the periods therein, the components of the
Company's Statements of Operations as a percentage of sales.
FOR THE THREE MONTHS FOR THE SIX
ENDED FEBRUARY 28, MONTHS ENDED FEBRUARY 28,
-------------------------- --------------------------
2002 2001 2002 2001
----------- ----------- ----------- -----------
SALES.................................................... 100.0% 100.0% 100.0% 100.0%
COST OF SALES............................................ 104.1% 156.4% 104.7% 115.5%
----------- ----------- ----------- -----------
GROSS (LOSS) ...................................... (4.1%) (56.4%) (4.7%) (15.5%)
SELLING AND ADMINISTRATIVE EXPENSE....................... 10.9% 13.5% 12.4% 12.2%
----------- ----------- ----------- -----------
LOSS FROM OPERATIONS............................... (15.0%) (69.9%) (17.1%) (27.7%)
OTHER INCOME (EXPENSE)
INTEREST EXPENSE....................................... (4.9%) (9.0%) (4.9%) (6.5%)
OTHER.................................................. -- -- -- --
----------- ----------- ----------- -----------
TOTAL OTHER EXPENSE - NET.......................... (4.9%) (9.0%) (4.9%) (6.5%)
LOSS BEFORE TAXES ON INCOME.............................. (19.9%) (78.9%) (22.0%) (34.2%)
INCOME TAX CREDIT........................................ -- (26.8%) -- (11.6%)
----------- ----------- ----------- -----------
NET LOSS..................................... (19.9%) (52.1%) (22.0%) (22.6%)
=========== =========== =========== ===========
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," "UNDERSTANDING," 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, 2002 TO THE THREE MONTHS ENDED
FEBRUARY 28, 2001.
REVENUES - Revenues for the three months ended February 28, 2002 totaled $3.5
million as compared to $2.4 million for the three months ended February 28,
2001, an increase of $1.1 million or 45%. This is a result of increased
shipments or completed contracts during the second quarter of 2002 as compared
to the prior years second quarter. During the past twenty-four months, market
demand for automotive tooling systems has declined. During this period limited
contracts have been released and of those contracts that were released, most
8.
were competitively bid and resulted in erosion of contract pricing. These
factors resulted in the Company having lower contract revenue as well as
contract margins during fiscal 2001 and 2002.
As a direct result of these market conditions, the Company instituted specific
cost containment measures in fiscal 2001 which have continued through 2002 such
as direct labor layoffs, 45% of the normal workforce, and suspension of the
Company's matching contribution to the Company 401(K) Plan for all employees.
During and subsequent to the second quarter of 2002, the Company received $21
million in purchase orders and letters of intent for upcoming models of
Mercedes-Benz, BMW and Nissan Motors. The Company anticipates that revenue from
the new contracts should contribute to revenue and earnings over the next 18-24
months.
COST OF SALES - Cost of sales was $3.6 million or 104% of sales for the three
months ended February 28, 2002 as compared to $3.7 million or 156% of sales for
the same period last year. The increase in gross margin was largely due to the
Company's cost containment measures and the effect upon the Company's fixed
manufacturing overhead. The Company continues to review and lower all fixed
expenses where applicable in order to maintain the lowest possible cost rate.
Direct costs expense decreased from $1.8 million in 2001 to $1.7 million in
2002, as a percent of sales it decreased from 76.9% to 51.1%. Direct labor
expense was $0.8 million in 2002 as compared to $1.1 million in 2001, as a
percent of sales, direct labor expense decreased from 44.6% in 2001 to 24.5% in
2002. The Company incurred 40,400 shop floor hours during the second quarter of
2002 as compared to 52,700 during the same period of 2001, a decrease of 12,300
hours or 23%. This decrease was a direct result of lower direct labor
requirements during the second quarter of 2002. Additionally, the Company
continued to review all labor levels and reduced labor expense during the second
quarter of 2002. Other direct costs increased from $770,000 in 2001 to $917,000
in 2002, however as a percent of sales, other direct costs decreased from 32.3%
to 26.5%.
Engineering expense increased from $268,000 for the second quarter of 2001 to
$322,500 for the second quarter of 2002, however as a percent of sales
engineering expense decreased from 11.25% to 9.3%. The increase in engineering
expense was largely in salaries as a result of increasing staffing levels for
the Company's increased backlog.
Manufacturing overhead expense decreased from $1,629,000 or 68.3% of sales for
the second quarter of 2001 to $1,508,000 or 43.7% of sales for the second
quarter of 2002. The largest decreases in the second quarter of 2002 as compared
to 2001 included $44,300 in indirect labor, vacation, holiday pay and related
payroll taxes, $36,000 in machinery repair and maintenance expense and $35,000
in building rent, utilities, maintenance and supplies expenses. This decrease
was offset by an increase of $22,000 in perishable tooling expense.
SELLING & ADMINISTRATIVE EXPENSES - Selling and administrative expenses
increased from $321,000 or 13.5% of sales for the second quarter of 2001 to
$378,000 or 10.9% of sales for the second quarter of 2002. This increase was
largely due to increases of $62,000 in State of Michigan Single Business Tax,
$22,000 in supervision salaries, $16,000 in legal and professional fees, $15,000
in public company expenses and $13,000 in employee training expense. These
increases were offset by decreases of $43,000 in insurance expense, $14,000 in
travel expenses and $10,000 deferred compensation/401(k) expense.
9.
INTEREST EXPENSE - Interest expense for the second quarter of 2002 decreased to
$169,000 or 4.9% of sales from $215,400 or 9.0% of sales for the second quarter
of 2001. This was a result of lower debt levels as well as lower interest rates
during the second quarter of 2002 as compared to the second quarter of 2001.
COMPARISON OF THE SIX MONTHS ENDED FEBRUARY 28, 2002 TO THE SIX MONTHS ENDED
FEBRUARY 28, 2001.
REVENUES - Revenues for the six months ended February 28, 2002 totaled $6.8
million as compared to $7.0 million for the six months ended February 28, 2001,
a decrease of $162,000 or 2.3%.
COST OF SALES - Cost of sales was $7.1 million or 105% of sales for the six
months ended February 28, 2002 as compared to $8.1 million or 116% of sales for
the same period last year. The increase in gross margin was largely due to the
Company's cost containment measures and the effect upon the Company's fixed
manufacturing overhead. The Company continues to review and lower all fixed
expenses where applicable in order to maintain the lowest possible cost rate.
Direct costs expense decreased from $4.0 million in 2001 to $3.4 million in
2002, as a percent of sales it decreased from 57.6% to 49.7%. Direct labor
expense was $1.8 million in 2002 as compared to $2.3 million in 2001, as a
percent of sales, direct labor expense decreased from 33.6% in 2001 to 26.1% in
2002. The Company incurred 88,900 shop floor hours during the first and second
quarters of 2002 as compared to 125,900 during the same period of 2001, a
decrease of 37,000 hours or 29%. This decrease was a direct result of lower
contract level requirements during the first and second quarter of 2002. Other
direct costs decreased from $1.7 million in 2001 to $1.6 million in 2002,
however as a percent of sales, other direct costs remained consistent at 24%.
Engineering expense increased from $612,000 for first and the second quarter of
2001 to $644,400 for same period of 2002, as a percent of sales engineering
expense increased from 8.8% to 9.5%. The increase in engineering expense was
largely in salaries as a result of increasing staffing levels for the Company's
increased backlog. Such resulted in the Company increasing design and project
management staffing.
Manufacturing overhead expense decreased from $3.4 million or 49.1% of sales for
the first and second quarter of 2001 to $3.1 million or 45.6% of sales for the
first and second quarter of 2002. The largest decreases during this period in
2002 as compared to 2001 included $182,000 in indirect labor, vacation, holiday
pay and related payroll taxes, $40,000 in medical, workers compensation and
general insurance, $35,000 in machinery repair and maintenance expense, $22,000
in building rent, utilities, maintenance and supplies expenses and $15,000 in
manufacturing supplies expense.
SELLING & ADMINISTRATIVE EXPENSES - Selling and administrative expenses
decreased slightly from $849,700 or 12.1% of sales for the first and second
quarter of 2001 to $843,800 or 12.4% of sales in 2002. Increases in the first
and second quarters of 2002 as compared to 2001 included increases of $61,000 in
legal and professional fees, $37,000 in supervision and office salaries, $22,000
in employee training expense and $10,000 in dues and subscriptions expense.
These increases were offset by decreases of $43,000 in insurance expense,
$30,000 in contributions expense, $20,000 in director fees, $19,000 in public
company expenses, $16,000 in deferred compensation/401(k) expense, $10,000 in
advertising expense and $8,000 in meals and entertainment expense.
10.
INTEREST EXPENSE - Interest expense for the first and second quarter of 2002
decreased to $337,000 or 4.9% of sales from $456,000 or 6.5% of sales for the
2001. This was a result of lower debt levels as well as lower interest rates
during 2002 as compared to 2001.
FEDERAL INCOME TAXES
For the six months ended February 28, 2002, the Company recorded a valuation
allowance of approximately $511,000 to offset the income tax benefit. As of
February 28, 2002, the Company had approximately $3,602,000 of net operating
loss carryforwards which will expire in fiscal 2020 through 2022, 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, 2002, the Company's cash used in
operating activities was $2,484,000. This largely resulted from an increase of
$2,034,000 in accounts receivable and a decrease of $234,000 in accounts
payable. From investing activities, the Company acquired additional machinery
and equipment of $38,000. From financing activities, the Company used $928,000
to reduce long-term debt and borrowed an additional $3,357,000 on the revolving
working capital credit line. Subsequent to February 28, 2002, the revolving
working capital credit line balance was reduced by approximately $3.4 million
representing proceeds from the collection of accounts receivable. 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 2002. However, depending on the level of
future sales and terms of such 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.
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 15, 2002
Riviera Tool Company
/s/ Kenneth K. Rieth
----------------------
Kenneth K. Rieth
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Peter C. Canepa
----------------------
Peter C. Canepa
Chief Financial Officer, Treasurer
and Secretary (Principal Financial
and Accounting Officer)
11.