<PAGE>   1


                                                                      EXHIBIT 13

FINANCIAL OVERVIEW

Selected Financial Data

The following selected financial data should be read in conjunction with
Management's Discussion and Analysis of Financial Condition and Results of
Operations and the Financial Statements and related Notes contained herein.
All amounts are in thousands, except per share data.


<TABLE>
<CAPTION>
                                                                        YEAR ENDED AUGUST 31,
                                                  -------------------------------------------------------------
STATEMENT OF OPERATION DATA:                        1995          1996         1997         1998        1999
----------------------------                      --------      --------     --------     --------     --------
<S>                                             <C>           <C>           <C>          <C>          <C>
Sales .......................................     $ 19,042      $ 18,334     $ 21,960     $ 22,581     $ 22,821
Gross Profit ................................          926         3,398        5,128        5,484        5,875
Income (loss) from Operations ...............         (976)        2,043        3,424        3,821        3,856
Interest Expense ............................        1,589         1,670        1,211          244          343
Other Income ................................          106           227           45         --            169
Other Expense ...............................          160          --            406          132         --
Income (loss) before income taxes ...........       (2,620)          600        1,851        3,445        3,682
Income Taxes (Benefits) .....................       (1,005)          204          667        1,040        1,252
                                                  --------      --------     --------     --------     --------
Net Income (loss) ...........................       (1,615)          396        1,185        2,405        2,430
                                                  --------      --------     --------     --------     --------
Dividends ...................................           35            29            7          202         --
                                                  --------      --------     --------     --------     --------
Net Income (loss) available for common shares     $ (1,650)     $    367     $  1,178     $  2,203     $  2,430
                                                  ========      ========     ========     ========     ========
Basic Earnings (loss)  per common share .....     $  (1.08)     $    .24     $    .57     $    .82     $    .76
                                                  ========      ========     ========     ========     ========
Basic common shares outstanding .............        1,533         1,533        2,067        2,686        3,219
                                                  ========      ========     ========     ========     ========
Diluted Earnings (loss)  per common share ...     $  (1.05)     $    .24     $    .57     $    .76     $    .76
                                                  ========      ========     ========     ========     ========
Diluted common shares outstanding ...........        1,533         1,533        2,065        3,138        3,219
                                                  ========      ========     ========     ========     ========

OTHER DATA:
-----------
Depreciation & amortization .................     $  1,438      $  1,272     $  1,298     $  1,292     $  1,579
                                                  ========      ========     ========     ========     ========
<CAPTION>

                                                                        AS OF AUGUST 31,
                                                ---------------------------------------------------------------
BALANCE SHEET DATA:                               1995          1996          1997         1998         1999
-------------------                             ---------     ---------     --------     ---------    ---------
<S>                                           <C>            <C>           <C>           <C>         <C>
Working Capital ...........................     $ (7,149)     $ (6,851)     $  6,982     $ 11,297     $ 10,981
Total Assets ..............................       19,414        20,432        20,056       27,696       33,928
Current Portion of Long-Term Debt & Capital
Leases ....................................        2,256         1,336           650          877        1,889
Revolving Line of Credit ..................        6,866        10,242         4,711        3,863        2,032
Long-term Capital Leases & Term Debt, less
current portion ...........................        1,830         1,002         3,142        4,334        7,207
Redeemable Preferred Stock ................          111           139          --           --           --
Common Stockholder's Equity ...............        3,120         3,487         9,722       15,882       18,312
</TABLE>




                                       50
<PAGE>   2

The following table is derived from the Company's Statement of Operations and
sets forth, for the periods indicated, selected operating data as a percentage
of sales.

<TABLE>
<CAPTION>
                                                                      FISCAL YEAR ENDED AUGUST 31,
                                                  ---------------------------------------------------------------
STATEMENT OF OPERATION DATA:                        1995            1996         1997         1998        1999
----------------------------                      ---------      ---------    ---------     ---------   ---------
<S>                                               <C>            <C>          <C>           <C>         <C>
Net Sales ...................................         100%          100%         100%         100%         100%
Gross Margin ................................           5            19           23           24           26
Income (Loss)  from Continuing Operations ...          (5)           11           16           17           17
Interest Expense ............................           8             9            6            1            1
Other Income ................................          --             1           --           --           --
Other Expense ...............................          --            --            2           --           --
Income (loss) before income taxes ...........         (14)            3            8           16           16
Federal Income Tax (Benefit) ................          (5)            1            3            5            5
                                                  ---------      ---------    ---------     ---------   ---------
Net Income (Loss) ...........................          (9)%           2%           5%          11%          11%
                                                  ---------      ---------    ---------     ---------   ---------
Dividends ...................................        --            --           --              1         --
                                                  ---------      ---------    ---------     ---------   ---------
Net Income (Loss) available for Common
  Shares.....................................          (9)%           2%           5%          10%          11%
                                                  =========      =========    =========     =========   =========
OTHER DATA:
-----------
Depreciation and Amortization ...............           8%            7%           6%           6%           7%
                                                  =========      =========    =========     =========   =========
</TABLE>

Quarterly Financial Data

The following is a condensed summary of quarterly results of operations for
1997, 1998 and 1999 (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                                                       BASIC                    DILUTED
                                                                 NET INCOME    ---------------------   -------------------------
                                                                AVAILABLE FOR   EARNINGS   COMMON        EARNINGS       COMMON
                                GROSS     OPERATING     NET        COMMON          PER     SHARES          PER          SHARES
                  REVENUES     PROFIT      INCOME      INCOME      SHARES         SHARE  OUTSTANDING      SHARE      OUTSTANDING
                  --------     -------    ---------   -------   -------------  --------- -----------   -----------   -----------
<S>               <C>         <C>         <C>        <C>        <C>           <C>         <C>         <C>             <C>
1997: First.....  $ 5,480     $ 1,085     $   654    $    176       $   172   $      .11      1,533   $        .11         1,533
-----
      Second....    5,405       1,105         666         159           157          .10      1,533            .10         1,533
      Third.....    5,001       1,085         730         247           244          .10      2,547            .10         2,593
      Fourth....    6,074       1,853       1,374         603           605          .23      2,609            .23         2,609
                  -------     -------     -------     -------       -------   ----------    -------   ------------       -------
        Total     $21,960     $ 5,128     $ 3,424     $ 1,185       $ 1,178   $      .57      2,067   $        .57         2,065
                  =======     =======     =======     =======       =======   ==========    =======   ============       =======

1998: First.....  $ 5,444     $ 1,260     $   756     $   415       $   331   $      .15      2,170   $        .14         2,893
-----
      Second....    6,096       1,662       1,103         526           408          .19      2,118            .16         3,219
      Third.....    6,878       1,846       1,297         714           714          .22      3,219            .22         3,219
      Fourth....    4,163         716         665         750           750          .22      3,219            .22         3,219
                  -------     -------     -------     -------       -------   ----------    -------   ------------       -------
        Total     $22,581     $ 5,484     $ 3,821     $ 2,405       $ 2,203   $      .82      2,686   $        .76         3,137
                  =======     =======     =======     =======       =======   ==========    =======   ============       =======

1999: First.....  $ 5,557     $ 1,341     $   906     $   518       $   518   $      .16      3,219   $        .16         3,219
-----
      Second....    5,071       1,632       1,081         695           695          .22      3,219            .22         3,219
      Third.....    6,445       1,939       1,389         805           805          .25      3,219            .25         3,219
      Fourth....    5,748         963         480         412           412          .13      3,219            .13         3,219
                  -------     -------     -------     -------       -------   ----------    -------   ------------       -------
        Total     $22,821     $ 5,875     $ 3,856     $ 2,430       $ 2,430   $      .76      3,219   $        .76         3,219
                  =======     =======     =======     =======       =======   ==========    =======   ============       =======
</TABLE>





                                       51
<PAGE>   3


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

GENERAL OVERVIEW

    The Company is a designer and manufacturer of large scale, complex stamping
die systems used to form sheet metal parts. Most of the stamping die systems
sold by the company are used in the high-speed production of automobile and
truck body parts such as doors, door frames, structural components and bumpers.
A majority of the Company's sales are to DaimlerChrysler AG, Ford Motor Company,
General Motors Corporation and their tier one suppliers.


RESULTS OF OPERATIONS

    The following discussion and analysis should be read in conjunction with the
Company's Financial Statements and the Notes thereto included elsewhere herein.

FISCAL 1999 COMPARED TO FISCAL 1998

     Revenue. Total revenue for 1999 increased from approximately $22.6 million
in 1998 to $22.8 million in 1999. The increase in 1999 sales was due to the
Company's increase in securing contracts during 1998 and 1999. Prior to the 1998
and 1999 capital expansion the Company was operating at near full capacity
resulting in minor revenue increases. With the expansion the Company has
increased its capacity to approximately $35.0 million and has begun marketing
such additional capacity. The Company expects the anticipated increase in
revenues and gross profit to more than offset the depreciation and interest
expense resulting from the 1998 and 1999 capital expansion.

     Cost of Goods Sold. Cost of goods sold decreased from $17.1 million for
1998 to $16.9 million for 1999. As a percent of sales, cost of goods sold
decreased from 75.7% for 1998 to 74.3% for 1999. Of the cost of goods sold,
direct costs were $9.2 million, 40.2% of sales, in 1999 as compared to $10.4
million, 45.9% of sales, in 1998. The largest direct cost decrease was in
outside machining expense, a decrease of $876,000 or 3.8% of sales, as a result
of the Company benefiting from the upgrades of the Company's machine tools
during 1998. These upgrades resulted in a more efficient and cost effective
manufacturing process while increasing the Company's machining capacity. Direct
labor expense decreased by $642,000 for 1999 as compared to 1998. This decrease
was a result of the Company experiencing reduced direct labor hours of 14,000
hours and 6,400 in overtime requirements in 1999, as compared to 1998. These
decreases were offset by increases in outside pattern expense of $380,000 and
prototype parts purchased of $70,000, as compared to 1998. The increase in
pattern expense was due to the Company's product mix in 1999 when compared to
1998. The increase in prototype purchased parts was due to limited press
capacity during the installation of new presses during 1999, which required
outsourcing of some prototype part production.

     Engineering expense was constant at approximately $1.6 million for 1998 and
1999. As a percent of sales, engineering expense was 7.1% in 1999 as compared to
7.3% in 1998.

     Manufacturing overhead was $6.1 million or 26.9% of sales in 1999 as
compared to $5.1 million or 22.5% of sales in 1998. This increase of $1.0
million was largely due to a $702,000 increase in depreciation expense in 1999
as compared to 1998 because of the Company's capital expansion. Other increases
include, $130,000 in manufacturing supplies expense, $64,000 in property taxes
as a result of the increase in machinery and equipment and the expiration of
certain tax abatements, $67,000 in perishable tooling expense as a result of
increased internal machining hours, and $43,000 in employee medical insurance
expense.

     Selling and Administrative Expense. Selling and administrative expense
increased to $2.0 million for 1999 as compared to $1.7 million for 1998. As a
percent of sales, selling and administrative expense increased from 7.4% in 1998
to 8.8% in 1999. The largest administrative expense increases in 1999 were
$155,000 in office salaries, $65,000 in supervision salaries, $73,000 in
deferred compensation/401(k) expense, $61,000 in the State of Michigan Single
Business Tax and $40,000 in insurance expense. During 1999 these increases were
offset by decreases in general expenses of $46,000 in legal and professional
fees, $41,000 in amortization expense, $53,000 in other state income taxes, and
$26,000 in leased equipment expense. Selling expenses increases included $60,000
in sales salaries and $25,000 in travel expenses offset by a $33,000 decrease in
sales commission expense.

         Interest Expense. Interest expense increased from $244,000 in 1998 to
$344,000 in 1999 and 1.1% in 1998 to 1.5% in 1999, as a percent of sales. This
increase was due to higher average debt levels during 1999 incurred as a result
of the Company's capital expansion.



                                       52
<PAGE>   4

During 1998 and 1999 the Company capitalized interest cost associated with its
construction in process of $394,664 and $601,330, respectively.

      Other Income/Expense. Other expense for 1998 represents a negotiated
settlement for penalties and interest for late payment of 1995 and 1996 state
income taxes. Other income for 1999 largely represents a $140,000 gain as a
result of a settlement of certain litigation.


FISCAL 1998 COMPARED TO FISCAL 1997

     Revenue. Total revenue for 1998 increased by 3% from approximately $21.9
million in 1997 to $22.6 million in 1998. The increase in 1998 sales was due to
the Company's increase in securing contracts awarded during 1998. Additionally,
the Company's August 31, 1998 contract backlog was 31% higher than as of August
31, 1997. These contracts will be completed and recognized as revenue during
fiscal years 1999 and 2000. The Company's contracts in process, as of August 31,
1998, were approximately $7.3 million higher than as of August 31, 1997. These
contracts will be completed and recognized as revenue during fiscal years 1999
and 2000.

     Cost of Goods Sold. Cost of goods sold increased from $16.8 million in 1997
to $17.1 million in 1998, an increase of 2%. As a percent of sales, cost of
goods sold decreased from 76.6% for 1997 to 75.7% for 1998. Of the cost of goods
sold, direct costs were $10.4 million, 46.1% of sales, in 1998 as compared to
$9.6 million, 43.6% of sales, in 1997. The largest direct cost increase was in
the outside machining services expense, $1.1 million or 4.9% of sales in 1998 as
compared to $321,000 or 1.5% of sales in 1997. This increase was largely due to
the Company rebuilding and upgrading its machining equipment during 1998, this
lowered the Company's internal machining capacity and resulted in increased
outsourced machining expense. Upon completion of the machining equipment rebuild
and upgrade, the Company's machining capacity and efficiency will improve. The
largest direct cost decreases in 1998 were in prototype parts purchased expense,
a decrease of $150,000 or .7% of sales, and direct labor expense, a decrease of
$131,600 or .6% of sales.

      Engineering expense was $1.7 million or 7.5% of sales in 1998 as compared
to $1.6 million or 7.1% of sales in 1997. The increase in engineering expense
was due to the Company increasing its engineering personnel to fulfill the
Company's increased engineering requirements.

      Manufacturing overhead was $5.1 million or 22.6% of sales in 1998 as
compared to $5.7 million or 26.0% of sales in 1997. This decrease of $.6 million
in 1998 as compared to 1997 was largely due to a $327,300 decrease in
depreciation expense in 1998 as compared to 1997. This was due to the Company
selling certain equipment during 1998 which was in service and depreciated for
all of 1997. Other decreases include a $224,100 in perishable tooling expense in
1998 as a result of the Company improving its usage and purchase of such
tooling, $84,400 in equipment rentals, $84,600 in machinery repairs and
maintenance, $28,900 in workers compensation expense and $29,300 in utilities
expense.

         Selling and Administrative Expense. Selling and administrative expense
remained consistent at $1.7 million per year for 1997 and 1998. As a percent of
sales, selling and administrative expense decreased from 7.8% in 1997 to 7.5% in
1998. The largest administrative expense decreases in 1998 were in office
salaries of $187,900, legal and professional expense of $47,000, insurance
expense of $35,500, computer maintenance expense of $22,600 and state tax
expense of $147,900. During 1998, increases in administrative expenses were in
public company expenses of $144,400, supervision salaries of $38,000, and
Directors and Officers insurance of $34,500. Selling expenses increases were in
sales salaries of $80,900, travel expenses of $38,000, and sales commissions
expense of $33,700.

        Interest Expense. Interest expense decreased from $1.2 million in 1997
to $.2 million in 1998 and as a percent of sales, interest expense decreased
from 5.5% in 1997 to 1.1% in 1998. This decrease was due to lower average debt
levels during 1998 as compared to 1997 and reduction in interest rates.


      Other Expense. Other expense during 1997 included $150,000 of bank fees
paid to the Company's former primary lender as well as $75,700 in debt
prepayment fees, $27,300 in tax agency penalties and $101,000 in late charges on
its facility lease. For 1998, other expense represents a negotiated settlement
for penalties and interest for late payment of 1995 and 1996 state income taxes.



                                       53
<PAGE>   5


FEDERAL INCOME TAX.

     The Company's effective income tax rates were 36%, 30% and 34% for the
years ended August 31, 1997, 1998 and 1999, respectively. As of August 31, 1999
the provision for federal income taxes was $1,251,824 of which $645,922 was
current expense and $605,902 was deferred expense. The Company had approximately
$187,000 of alternative minimum tax credits as of August 31, 1999, the use of
which does not expire.


LIQUIDITY AND CAPITAL RESOURCES.

     The Company's needs for capital over the periods presented have increased
primarily to acquire fixed assets and to finance the increase in trade accounts
receivable and contracts in process. The Company has financed these needs over
the period presented through internally generated funds and bank financing. The
Company anticipates less than $1.0 million in capital expenditures for fiscal
2000.

     The Company's total bank debt as of August 31, 1999, is $11,129,051, of
which $1,889,415 is short-term and the balance long-term. The Company has a
$10.0 million Revolving Line of Credit with a balance outstanding of $2,032,494,
a $1,841,667 Term Note, a $3,611,108 Term Note, a $3,271,000 Non-Revolving
Equipment Line of Credit with an outstanding balance of $2,643,782 and a
$1,000,000 Term Note. The interest rate on the financing is prime rate less .25
percent, except for the $3,611,108 Term Note Payable and the $1,000,000 Term
Note Payable which are at fixed rates of 7.26% and 8.04%, respectively. The
Company believes that the unused portion of this credit line and the funds
generated from operations, will be sufficient to cover anticipated cash needs
through fiscal 2000. 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.

YEAR 2000.

     The Company has completed its review and testing of its computer systems
and has concluded that all such systems are year 2000 compliant. The Company
primarily utilizes computer technology in its CAD design, Numerically Controlled
programming and its manufacturing information systems.

     The Company continues to review for any year 2000 compliance issues that
customers or suppliers may encounter with their own systems. Management believes
that any customer or supplier year 2000 issues will not have a material effect
on the Company's operations. However there can be no absolute assurances that
there will not be a materially adverse effect on the Company if third parties do
not resolve their year 2000 issues.

INFLATION.

     The Company has no long-term, fixed price supply contracts. Although the
average set of dies takes approximately ten months from inception to shipment,
any significant direct material costs are incurred at the beginning of the die
manufacturing process. Historically, the Company has been able to reflect
increases in the prices of labor and material in its selling prices. The Company
expects that this will continue to be the case.



                                       54
<PAGE>   6


                              Riviera Tool Company
                                 Balance Sheets

<TABLE>
<CAPTION>
                                                                         August 31
                                                                ----------------------------
                          ASSETS                      Note          1998           1999
                                                     ------      -------------  -------------
<S>                                                  <C>           <C>            <C>
     Current Assets
     Cash............................................           $       4,206  $     113,183
     Accounts receivable.............................  1            1,609,272      6,821,519
     Costs and estimated gross profit in excess
        of billings on contracts in process..........  4           11,299,961      7,829,744
     Inventories.....................................  5              405,566        451,167
     Prepaid expenses and other current assets.......                 172,054         84,189
                                                                -------------  -------------
              Total current assets...................              13,491,059     15,299,802

     Property, Plant and Equipment, net..............  6           13,237,501     17,941,659
     Perishable Tooling..............................  1              743,966        550,634
     Other Assets....................................                 223,869        135,770
                                                                -------------  -------------
              Total assets...........................           $  27,696,395  $  33,927,865
                                                                =============  =============

                      LIABILITIES AND
                   STOCKHOLDERS' EQUITY

     Current Liabilities
     Current portion of long-term debt...............  7        $     876,555  $   1,889,415
     Accounts payable................................               1,113,113      1,398,483
     Accrued liabilities.............................                 204,682      1,030,984
                                                                -------------  -------------
              Total current liabilities..............               2,194,350      4,318,882

     Long-Term Debt, net of current portion..........  7            8,196,641      9,239,636
     Accrued Lease Expense...........................  9              643,040        671,073
     Deferred Tax Liability..........................  8              780,376      1,386,278
                                                                -------------  -------------
              Total liabilities......................              11,814,407     15,615,869

     Preferred Stock -- no par value,
       $100 mandatory redemption value:
        Authorized--5,000 shares
        Issued and outstanding--no shares............                      --            --
     Preferred Stock-- no par value,
         Authorized -- 200,000 shares
         Issued and outstanding-- no shares..........                      --            --
     Common Stockholders' Equity
       Common stock -- no par value,
         Authorized -- 9,798,575 shares
         Issued and outstanding -- 3,065,499 at
         August 31, 1998 and 3,218,744 at
         August 31,1999 .............................  2           13,496,937     14,512,185
       Retained earnings.............................               2,385,051      3,799,811
                                                                -------------  -------------
              Total common stockholders' equity......              15,881,988     18,311,996
                                                                -------------  -------------
     Total liabilities and stockholders' equity......           $  27,696,395  $  33,927,865
                                                                =============  =============
</TABLE>




                        See Notes to Financial Statements



                                       55
<PAGE>   7


                              Riviera Tool Company
                              Statements of Income


<TABLE>
<CAPTION>
                                                                               Year Ended August 31
                                                                    ---------------------------------------------
                                                            Note        1997            1998            1999
                                                           -----   -------------   -------------   -------------
<S>                                                          <C>   <C>             <C>             <C>
   Sales
      Trade...............................................   3     $  21,108,195   $  22,203,755   $  22,820,998
      Related party.......................................               851,979         377,433              --
                                                                   -------------   -------------   -------------
   Total Sales............................................            21,960,174      22,581,188      22,820,998

   Cost of Sales..........................................            16,831,905      17,096,967      16,946,076
                                                                   -------------   -------------   -------------

   Gross Profit...........................................             5,128,269       5,484,221       5,874,922

   Selling and Administrative Expenses....................             1,703,884       1,663,340       2,019,195
                                                                   -------------   -------------   -------------
   Income From Operations.................................             3,424,385       3,820,881       3,855,727

   Other Income (Expense):
       Interest expense....................................
                                                                     (1,211,287)       (244,231)       (343,484)
       Other...............................................            (406,368)       (101,871)         166,316
       Gain/(loss) on asset sales..........................               44,651        (29,698)           3,273
                                                                   -------------   -------------   -------------
   Total Other Expense, net................................          (1,573,004)       (375,800)       (173,895)
                                                                   -------------   -------------   -------------
   Income-- Before Taxes on Income.........................            1,851,381       3,445,081       3,681,832
                                                                   -------------   -------------   -------------
   Income Tax Expense......................................              666,600       1,039,976       1,251,824
                                                                   -------------   -------------   -------------
   Net Income..............................................            1,184,781       2,405,105       2,430,008
                                                                   -------------   -------------   -------------
   Dividends and Accretion on Preferred Stock..............  2             7,228         202,108              --
                                                                   -------------   -------------   -------------
   Net Income Available for Common Shares..................        $   1,177,553   $   2,202,997   $   2,430,008
                                                                   =============   =============   =============


   Basic Earnings Per Common Share.........................            $ .57           $ .82           $ .76
                                                                   =============   =============   =============
   Basic Common Shares Outstanding.........................  1       2,067,188       2,686,176       3,218,744

   Diluted Earnings Per Common Share.......................            $ .57           $ .76           $ .76
                                                                   =============   =============   =============
   Diluted Common Shares Outstanding.......................  1       2,064,803       3,137,535       3,218,744
</TABLE>




                        See Notes to Financial Statements

                                       56
<PAGE>   8


                              Riviera Tool Company
                   Statements of Common Shareholders' Equity


<TABLE>
<CAPTION>

                                                                        Common Stock           Retained        Total
                                                                 -------------------------     Earnings/    Shareholders'
                                                          Note    Shares         Amount       (Deficit)       Equity
                                                          ----   ---------     -----------   -----------   ------------
<S>                                                       <C>    <C>           <C>           <C>           <C>
  Balance-- September 1, 1996.........................           1,460,000     $ 4,392,752   $  (905,499)  $  3,487,253
                                                                 ---------     -----------   -----------   ------------

  Increase to redeemable preferred stock..............              --              --            (7,228)        (7,228)

  Preferential Common Stock Dividend..................     2        --              --           (90,000)       (90,000)

  Sale of Common Stock................................     2     1,025,000       5,147,127            --      5,147,127

  Net Income..........................................              --              --         1,184,781      1,184,781
                                                                 ---------     -----------   -----------   ------------
  Balance-- August 31, 1997...........................           2,485,000     $ 9,539,879   $   182,054   $  9,721,933
                                                                 ---------     -----------   -----------   ------------

  Conversion of 8% Cumulative
    Convertible Preferred Stock.......................     2     1,310,499       6,957,058            --      6,957,058

  Purchase of Common Stock............................     2      (730,000)     (3,000,000)           --     (3,000,000)

  Preferred Stock Dividends...........................     2         --              --         (202,108)      (202,108)

  Net Income..........................................               --              --        2,405,105      2,405,105
                                                                 ---------     -----------   -----------   ------------
  Balance-- August 31, 1998...........................           3,065,499     $13,496,937   $ 2,385,051   $ 15,881,988
                                                                 ---------     -----------   -----------   ------------

  Net Income..........................................               --              --        2,430,008      2,430,008

  5% Common Stock Dividend............................     2       153,245       1,015,248    (1,015,248)            --
                                                                 ---------     -----------   -----------   ------------
  Balance-- August 31, 1999...........................           3,218,744     $14,512,185   $ 3,799,811   $ 18,311,996
                                                                 =========     ===========   ===========   ============
</TABLE>

























                        See Notes to Financial Statements

                                       57
<PAGE>   9


                              Riviera Tool Company
                            Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                          Year Ended August 31
                                                                            -----------------------------------------------
                                                                                1997             1998             1999
                                                                            ------------    -------------     ------------
<S>                                                                         <C>             <C>             <C>
     Cash Flows from Operating Activities
      Net income ........................................................   $  1,184,781    $   2,405,105     $  2,430,008
      Adjustments to reconcile net income to net cash from operating
           activities:
           Depreciation and amortization.................................      1,298,200        1,291,611        1,578,557
           (Gain) loss on sale of machinery and equipment................         16,889           26,717           (3,273)
           Amortization of deferred gain.................................        (61,540)              --               --
           Deferred taxes................................................        538,700          927,976          605,902
           Bad debt expense..............................................        (75,000)        (100,000)              --
           Decrease (increase) in assets:
              Accounts receivable........................................        528,654        3,306,271       (5,212,247)
              Costs and estimated gross profit in
              Excess of billings on contracts in  process................     (1,588,535)      (7,344,003)       3,470,217
              Inventories................................................        (23,267)          63,174          (45,601)
              Perishable tooling.........................................        186,673         (171,381)         193,332
              Prepaid expenses and other current assets..................        (17,344)          95,500           87,865
           Increase (decrease) in liabilities:
              Accounts payable...........................................     (1,672,635)        (128,130)         285,370
              Accrued lease expense......................................         46,725           37,380           28,033
              Accrued liabilities........................................        (57,347)        (430,242)         826,302

                                                                            ------------    -------------     ------------
               Net cash provided by (used in) operating activities.......        304,954          (20,022)       4,244,465
                                                                            ------------    -------------     ------------

     Cash Flows from Investing Activities
       Proceeds from sale of property, plant and equipment...............         25,200        1,084,356          102,650
       (Increase) decrease in other assets...............................        278,589          (76,919)         109,000
       Purchases of property, plant and equipment........................       (792,580)      (5,958,962)      (6,402,994)
                                                                            ------------    -------------     ------------
               Net cash used in investing activities.....................       (488,791)      (4,951,525)      (6,191,344)
                                                                            ------------    -------------     ------------

     Cash Flows from Financing Activities
       Net borrowings (repayments) on revolving credit line..............    (10,241,503)              --       (1,830,380)
       Proceeds from issuance of long-term debt..........................      9,904,848        2,718,655        4,925,128
       Principal payments on long-term debt..............................     (3,862,305)      (1,497,852)      (1,038,892)
       Principal payments under capital lease obligations................       (528,030)              --               --
       Redemption of preferred stock.....................................       (142,500)              --               --
       Sale of common stock..............................................      5,147,127               --               --
       Sale of convertible preferred stock...............................             --        6,957,058               --
       Redemption of common stock........................................             --       (3,000,000)              --
       Common stock cash dividends paid..................................        (90,000)              --               --
       Preferred stock cash dividends paid...............................         (3,800)        (202,108)              --

                                                                            ------------    -------------     ------------
              Net cash provided by financing activities..................        183,837        4,975,753        2,055,856
                                                                            ------------    -------------     ------------

     Net Increase in Cash................................................             --            4,206          108,977
                                                                            ------------    -------------     ------------

     Cash-- Beginning of Year............................................             --               --            4,206

     Cash-- End of Year..................................................   $         --    $       4,206     $    113,183
                                                                            ============    =============     ============


     Other Cash Flow Items:
     Interest paid.......................................................   $  1,253,563    $     557,334     $    924,331
     Income taxes paid...................................................          1,871          429,583          252,490
</TABLE>



                        See Notes to Financial Statements


                                       58
<PAGE>   10

                              Riviera Tool Company
                          Notes to Financial Statements


NOTE 1 -- NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

-    NATURE OF BUSINESS.
     Riviera Tool Company (the "Company") designs, develops and manufactures
     custom and complex large scale metal stamping die systems used in the
     high-speed production of sheet metal stamped parts and assemblies for the
     automotive industry. These systems are mainly sold to DaimlerChrysler AG,
     Ford Motor Company and General Motors Corporation and their tier one
     suppliers of sheet metal stamped parts and assemblies.

-    REPORTING ENTITY.
     In October 1996, the Company executed an agreement and  plan of merger.
     Under the provisions of the agreement, Riviera Die & Tool, Inc., merged
     with and into Riviera Tool Company, owner of 100% of its Common Stock, as
     the survivor corporation. Concurrently with such merger, the By-Laws and
     Articles of Incorporation were amended to provide updated language on
     officer and director indemnification and the authorized capital stock of
     the Company was amended to increase the availability of unissued shares of
     common and preferred stock. The following two classes of preferred stock
     existed immediately after the merger in October, 1996:

     -    Redeemable Preferred Stock -- no par value, authorized 1,425 shares,
          1,425 shares issued and outstanding.

     -    Non-Redeemable Preferred Stock -- no par value, authorized 200,000
          shares, no shares issued and outstanding.

     These two entities were reported on a consolidated basis for more than five
     years prior to the merger. Therefore, the merger had no effect on the
     balance sheet, statement of income, statement of common stockholders'
     equity or cash flows. The stockholders' equity section of this report
     reflects the impact of this merger on authorized, issued and outstanding
     shares of stock.

-    EARNINGS PER SHARE.
     The Company presents earnings per share in accordance with Statement of
     Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share",
     which requires presentation of basic and diluted earnings per share
     together with disclosure of how the per share amounts were computed.

     Basic earnings per share excludes dilution and is computed by dividing
     income available to common shareholders by the weighted-average common
     shares outstanding for the period. Diluted earnings per share reflects the
     potential dilution that could occur if securities or other contracts to
     issue common stock were exercised.

-    USE OF ESTIMATES.
     The preparation of financial statements in conformity
     with generally accepted accounting principles requires management to make
     estimates and assumptions that affect the reported amounts of assets and
     liabilities and disclosure of contingent assets and liabilities at the date
     of the financial statements and the reported amounts of revenue and
     expenses during the reporting period. Although management believes the
     estimates are reasonable, actual results could differ from those estimates.

-    SIGNIFICANT ESTIMATES.
     The most significant estimates made by the Company are in the determination
     and recognition of revenue on contracts in process at year end.
     Management's best estimate of costs to complete is based on costs incurred
     subsequent to year end, engineers' cost projections, experience with
     customers or particular die systems and other analyses. Although
     management's estimates are not expected to materially change in the near
     term, the costs the Company will ultimately incur could differ from the
     amounts estimated.

-    REVENUE RECOGNITION.
     The Company recognizes revenue on time and material contracts utilizing the
     completed-contract method. Revenue is recognized on all other contracts
     utilizing the percentage-of-completion method. Under the completed-contract
     method, the contract is considered complete when all costs except for
     insignificant items have been incurred and the project has been approved by
     the customer. Under the percentage-of-completion method estimated contract
     earnings are based on total estimated contract profits multiplied by the
     ratio of labor hours incurred to total estimated labor hours on the
     contract. Provisions for total estimated losses on contracts in process are
     recognized in the period such losses are determined. Changes in job
     performance, conditions and estimated profitability may result in revisions
     to costs and income and are recognized in the period such revisions are
     determined.

-    ACCOUNTS RECEIVABLE.
     As of August 31, 1998 and 1999, the Company had no reserve for
     uncollectible accounts receivable and had $0 and $650,000 of unbilled
     accounts receivable, respectively.

-    INVENTORIES.
     Inventories are recorded at the lower-of-cost (first-in, first-out method),
     or market.




                                       59
<PAGE>   11

                              Riviera Tool Company
                          Notes to Financial Statements


NOTE 1 -- NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

-    PROPERTY, PLANT AND EQUIPMENT.
     Property, plant and equipment are recorded at cost. Depreciation is
     computed using the straight-line method over the useful life of the asset
     for financial reporting purposes as follows:

<TABLE>
<CAPTION>
                                                              USEFUL
          ASSET                                               LIVES
          -----                                               -----
<S>                                                          <C>
            -  Leasehold Improvements......................    7-20
            -  Office Furniture and fixtures...............    3-10
            -  Machinery and Equipment.....................    5-20
            -  Computer Equipment and Software.............    5-20
            -  Transportation Equipment....................    5-10
</TABLE>

     Expenditures for maintenance and repairs are charged to expense as
     incurred. The Company capitalizes interest cost associated with
     construction in process.

-    PERISHABLE TOOLING.
     Certain perishable tools are used up over extended periods of time. These
     inventory items, which are reported as non-current assets in the balance
     sheet, are recorded at cost less a valuation allowance to reflect the loss
     in value resulting from gradual use.

-    INCOME TAXES.
     Deferred income tax assets and liabilities are computed for differences
     between the financial statement and tax bases of assets and liabilities
     that will result in taxable or deductible amounts in the future. Such
     deferred income tax asset and liability computations are based upon enacted
     tax laws and rates applicable to periods in which the differences are
     expected to affect taxable income. Valuation allowances are established
     when necessary to reduce deferred tax assets to the amounts expected to
     be realized. Income tax expense is the tax payable or refundable for the
     period plus or minus the change during the period in deferred tax assets
     and liabilities.

-    DERIVATIVE AND HEDGING ACTIVITIES.
     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133
     ("SFAS 133"), Accounting for Derivative Instruments and Hedging Activities,
     effective for the Company's fiscal year ending August 31, 2001. SFAS 133
     expands the definition of the types of contracts considered to be
     derivatives, requires all derivatives to be recognized in the balance sheet
     as either assets or liabilities measured at their fair market value and
     sets forth conditions in which a derivative instrument may be designated as
     a hedge. SFAS 133 further requires that changes in the fair value of
     derivatives be recognized currently in earnings unless specific hedge
     accounting criteria are met. Special accounting for qualifying hedges
     allows a derivative's gains and losses to be recorded at either
     comprehensive income or to offset related results on the hedged item in
     earnings. The Company`s use of derivatives is limited, but it has not
     quantified the effects of adopting SFAS 133 at this time.

-    STOCK-BASED COMPENSATION.
     The Company has adopted SFAS No. 123 ("SFAS 123"), Accounting for
     Stock-based Compensation, and as permitted by this standard, will continue
     to apply the recognition and measurement principles prescribed under
     Accounting Principles Board Opinion No, 25, Accounting for Stock Issued to
     Employees, to its stock-based compensation (see Note 11).

-    BUSINESS SEGMENT REPORTING.
     The Company has adopted SFAS No. 131 ("SFAS 131"), Disclosures about
     Segments of an Enterprise and Related Information, which requires companies
     to report certain information about their operating segments, products,
     geographic areas of operation and major customers. However, based on the
     nature of its operations and products, the Company considers its business
     to be a single operating segment.

NOTE 2  -- STOCKHOLDERS INVESTMENT

The Company, on October 31, 1996, declared a preferential dividend on the shares
of common stock of the Company owned by Riviera Holding Company to pay the
income tax payable by Riviera Holding Company as a result of the lapse of
options by Motor Wheel Corporation to purchase common stock owned by Riviera
Holding Company and as a result of the dividend itself. In May, 1997 the Company
paid this $90,000 dividend to Riviera Holding Company.


                                       60
<PAGE>   12

                              Riviera Tool Company
                          Notes to Financial Statements

NOTE 2  -- STOCKHOLDERS INVESTMENT - CONTINUED

In March, 1997, the Company sold 1,010,000 shares of Common Stock through an
initial public offering on the American Stock Exchange, at a price of $7.00 per
share (the "Offering"). The Company received net proceeds of approximately $5.1
million from the Offering. The net proceeds were used to reduce previously
incurred debt. In June, 1997, the Company sold 15,000 shares of common stock in
connection with a consulting agreement entered into with a financial consultant.

In October, 1997, the Company issued and sold 80,000 shares of 8% Cumulative
Convertible Preferred Stock (the "Preferred Shares") at $100.00 per share. The
Company received net proceeds of approximately $6.9 million, net of offering
costs, from this offering. With a portion of the proceeds from this sale, the
Company exercised its option to purchase and retired all 730,000 shares of
common stock held by Motor Wheel Corporation for $3.0 million or $4.11 per
share.

Dividends on the 8% Cumulative Convertible Preferred Stock were to be paid at an
annual rate of 8% payable quarterly, in arrears, at a rate of $2.00 per share
per quarter, commencing December 31, 1997. Of the 80,000 Preferred Shares
issued, 67,500 preferred shares were convertible into Common Stock for the
number of shares of Common Stock per share equal to $100 divided by $6.00. The
remaining 12,500 preferred shares were convertible into Common Stock for the
number of shares of Common Stock per share equal to $100 divided by $6.7375. All
the Preferred Shares outstanding were automatically converted into Common Stock
when the average closing price for the Common Stock on the American Stock
Exchange for 10 consecutive trading days was equal to or greater than $10 per
share (which occurred during the trading period of November 20 and December 4,
1997). The Company was not required to issue fractional shares in connection
with the conversion and a cash payment was made in lieu thereof. On January 9,
1998, the Company registered 1,461,529 shares of Common Stock under the
Securities Act of 1933. These common shares were issuable upon conversion of the
8% Cumulative Convertible Preferred Stock. On January 10, 1998, the Company sent
notice to all holders of the 8% Cumulative Convertible Preferred Stock that all
such preferred shares outstanding would be automatically converted into Common
Stock on or before February 11, 1998, under the mandatory conversion provision.

The Company, on February 11, 1998, converted all 80,000 shares of the 8%
Cumulative Convertible Preferred Stock into 1,310,499 of common stock. The
dividend expense for the year ended August 31, 1998 represents the dividends
paid on the 80,000 shares of 8% Cumulative Convertible Preferred Stock between
the issuance date and the conversion date.

On November 2, 1998, the Company's Board of Directors declared a five percent
common stock dividend, payable on December 18, 1998, to all shareholders of
record on November 17, 1998. All share and per share data presented for fiscal
1997 and 1998 have been adjusted to give effect to the five percent dividend.

NOTE 3 -- SALES TO MAJOR CUSTOMERS

The nature of the Company's business is such that a limited number of customers
comprise a majority of its business in any given year, even though the specific
customers will differ from year to year. The following table summarizes the
Company's sales to those customers, which represent more than 10% of the annual
sales, in the particular year presented, of the Company (in 000's):


<TABLE>
<CAPTION>
                                                                                   AUGUST 31
                                                        -------------------------------------------------------------------
                                                           1997         %            1998       %            1999       %
                                                        ----------   -------     ----------- -------     -----------    --
<S>                                                     <C>          <C>        <C>          <C>         <C>            <C>
General Motors.......................................   $      886       4%      $     5,285     23%     $     5,744    25%
DaimlerChrysler AG...................................        8,890      40             2,363     10            5,171    23
Navistar International...............................           --      --                --     --            3,959    17
Oxford Automotive....................................           --      --                --     --            2,968    13
Ford Motor Company...................................        3,411      16                62     --               94    --
Motor Wheel Corporation .............................          852       4               378      2               --    --
Flex-n-Gate..........................................        3,193      15             3,230     14               --    --
A.G. Simpson.........................................           --      --             2,605     12               --    --
Autodie International................................           --      --             4,191     19               10    --
Others...............................................        4,728      21             4,467     20            4,875    22
                                                        ----------   -------     ----------- -------     -----------   ---
     Total Sales.....................................   $   21,960     100%     $     22,581    100%     $    22,821   100%
                                                        ==========   =======     =========== =======     ===========   ===
</TABLE>

Outstanding accounts receivable from three of these customers represented
approximately 51 percent at August 31, 1998 and approximately 74 percent at
August 31, 1999 of the total accounts receivable.


                                       61
<PAGE>   13

                              Riviera Tool Company
                          Notes to Financial Statements

NOTE 4 -- COSTS AND BILLINGS ON CONTRACTS IN PROCESS

<TABLE>
<CAPTION>
                                                                                                     AUGUST 31
                                                                                            -----------------------------
                                                                                                1998           1999
                                                                                            -------------   -------------
<S>                                                                                        <C>              <C>
Costs and billings on contracts in process are as follows:                                  $ 14,949,213    $  11,882,615
Costs incurred on contracts in process under the percentage-of-completion method.....          1,450,000        3,418,400
Estimated gross profit...............................................................       ------------    -------------
                                                                                              16,399,213       15,301,015
     Total...........................................................................                           7,532,371
Less progress payments received and progress billings to date........................          5,099,252
                                                                                                      --           61,100
Plus costs incurred on contracts in process under the completed contract method......      -------------   --------------
                                                                                           $  11,299,961   $    7,829,744
Costs and estimated gross profit in excess of billings on contracts in process.......      =============   ==============

</TABLE>

Included in  estimated  gross  profit for 1998 and 1999 are jobs with  estimated
losses  accrued of  $309,565  and $60,912, respectively.

NOTE 5-- INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
                                                                                                      AUGUST 31
                                                                                            ------------------------------
                                                                                                1998             1999
                                                                                            -------------    -------------
<S>                                                                                         <C>              <C>
Raw material stock.....................................................................     $     234,424    $     322,838
Small tools and supplies...............................................................           171,142          128,329
                                                                                            -------------    -------------
         Total.........................................................................     $     405,566    $     451,167
                                                                                            =============    =============
</TABLE>

NOTE 6 -- PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
                                                                                                       AUGUST 31
                                                                                            -----------------------------
                                                                                                1998             1999
                                                                                            -------------    ------------
<S>                                                                                         <C>              <C>
Land and leasehold improvements........................................................     $  1,453,539     $  1,635,476
Office furniture and fixtures..........................................................          203,514          203,514
Machinery and equipment................................................................       11,594,436       21,781,835
Computer equipment and software........................................................        1,518,214        1,923,856
Transportation equipment...............................................................          126,365          126,365
Construction in process................................................................        5,283,903          434,269
                                                                                            ------------     ------------
     Total cost........................................................................       20,179,971       26,105,315
Accumulated depreciation and  amortization.............................................        6,942,470        8,163,656
                                                                                            ------------     ------------
     Property, plant and equipment, net................................................     $ 13,237,501     $ 17,941,659
                                                                                            ============     ============

Depreciation & amortization  expense...................................................     $  1,291,611     $  1,578,557
                                                                                            ============     ============
</TABLE>

As of August 31, 1998, the Company had $5,283,903 of construction in process.
These costs represent costs related to the purchase and installation of four
large stamping presses and other machinery, which were completed and placed in
service in July 1999 for a total cost of $10,709,823, including interest
capitalized interest of $394,664 and $601,330 in 1998 and 1999, respectively.


NOTE 7 -- LONG-TERM DEBT

The Company's long-term debt, which is subject to certain covenants discussed
below, consist of the following:

<TABLE>
<CAPTION>
                                                                                                    AUGUST 31
                                                                                            ---------------------------
LONG-TERM DEBT                                                                                 1998           1999
                                                                                            -----------     -----------
<S>                                                                                         <C>             <C>
-    Revolving bank working capital credit line, collateralized by substantially
     all assets of the Company, provides for borrowing, subject to certain
     collateral requirements of up to $10.0 million, and bears interest, payable
     monthly, at .25% below the bank's prime rate or Libor plus 2.25% (as of
     August 31, 1999 an effective rate of 8.0%), due January 1, 2001. The
     agreement requires a commitment fee of .25% per annum on the average daily
     unused portion of the revolving credit line........................................    $ 3,862,874     $ 2,032,494

-    Note payable to bank, collateralized by substantially all assets of the
     Company, payable in monthly installments of $54,166.67 plus interest .25%
     below the bank's prime rate or Libor plus 2.25% (as of August 31, 1999 an
     effective rate of 8.0%), due July 19, 2002... .....................................      2,491,667       1,841,667
</TABLE>





                                       62
<PAGE>   14

                              Riviera Tool Company
                          Notes to Financial Statements


NOTE 7 -- LONG-TERM DEBT - CONTINUED



<TABLE>
<S>  <C>                                                                                      <C>           <C>
-    Revolving equipment credit line, collaterlized by specific assets of the
     Company. The agreement provides for borrowing up to $4.0 million, in
     $500,000 increments, and bears interest at .25% below the bank's prime rate
     or Libor plus 2.25% (8.25% as of August 31, 1998), due in monthly
     installments over six years from date of borrowing increment.....................        2,718,655               --

-    Note payable to bank, collateralized by specific assets of the Company,
     payable in monthly installments of $55,566, plus simple interest of 7.26%,
     due December 31, 2003............................................................               --        3,611,108

-    Non-revolving, $3,271,000 equipment line of credit, collateralized by
     specific assets of the Company, payable in monthly installments of $38,941
     plus interest of .25% below the bank's prime rate (as of August 31, 1999 an
     effective rate of 8.0%), due November 1, 2004....................................                         2,643,782

-    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............................................................               --        1,000,000
                                                                                             ----------    -------------

         Total long-term debt.........................................................        9,073,196       11,129,051
         Less current portion.........................................................          876,555        1,889,415
                                                                                             ----------    -------------
         Long-term debt-- Net.........................................................       $8,196,641    $   9,239,636
                                                                                             ==========    =============
</TABLE>

Minimum scheduled principal payments on long-term debt to maturity as of August
31, 1999, are as follows:
<TABLE>
<S>                                                                                         <C>
           2000........................................................................    $ 1,889,415
           2001........................................................................      4,016,458
           2002........................................................................      1,875,631
           2003 .......................................................................      1,333,964
           2004 .......................................................................      1,333,964
           2005 and after..............................................................        679,619
                                                                                           ===========
                                        Total..........................................    $11,129,051
                                                                                           ===========
</TABLE>

The debt agreements require the Company to maintain certain ratios/levels of
tangible net worth, working capital, liabilities to tangible net worth, earnings
before interest, taxes, depreciation and amortization to debt service and
prohibit the payment of common stock cash dividends. The Company was in
compliance with its covenants.

The estimated fair value of the Company's notes payable and long-term debt
approximates its carrying amount.

NOTE 8 -- FEDERAL INCOME TAXES

The provision for federal income taxes is as follows:

<TABLE>
<CAPTION>
                                                                                  AUGUST 31
                                                                   --------------------------------------
                                                                      1997         1998           1999
                                                                   ----------   ----------    -----------
<S>                                                                <C>          <C>           <C>
          Current expense....................................      $  127,900   $  112,000    $   645,922
          Deferred expense...................................         538,700      927,976        605,902
                                                                   ----------   ----------    -----------
                        Total tax expense....................      $  666,600   $1,039,976    $ 1,251,824
                                                                   ==========   ==========    ===========
</TABLE>

The difference between the federal statutory tax rate and the Company's
effective rate was:

<TABLE>
<CAPTION>
                                                                                     AUGUST 31
                                                                         --------------------------------
                                                                           1997        1998        1999
                                                                         -------    ---------    ---------
<S>                                                                      <C>         <C>         <C>
Federal statutory tax rate...................................            34.0%         34.0%         34.0%
Increase (reduction) in income taxes relating to:
Effect of decreasing the valuation allowance.................              --          (6.0)           --
Other items..................................................             2.0           2.0            --
                                                                       -------      ---------    ---------
          Effective tax rate.................................            36.0%         30.0%         34.0%
                                                                       =======      =========    =========
</TABLE>


                                       63
<PAGE>   15


                              Riviera Tool Company
                          Notes to Financial Statements


NOTE 8 -- FEDERAL INCOME TAXES - CONTINUED

The details of the net deferred tax liability are as follows:

<TABLE>
<CAPTION>
                                                                                       AUGUST 31
                                                                              -----------------------------
                                                                                 1998              1999
                                                                              ------------     ------------
<S>                                                                           <C>             <C>
 Deferred tax liabilities:
   Depreciation.........................................................      $(1,798,676)    $  (1,847,122)
                                                                              -----------     -------------
 Deferred tax assets:
   Alternative minimum tax credit carryforward..........................          250,000           187,000
   Accrued lease expense................................................          218,600           228,100
   Deferred Compensation and other items................................           42,100            45,744
   Net operating loss carryforward......................................          335,800                --
   Investment tax credit carryforward...................................          171,800                --
                                                                              -----------     -------------
               Total deferred tax assets................................        1,018,300           460,844
                                                                              -----------     -------------
               Net deferred tax liability...............................      $  (780,376)    $  (1,386,278)
                                                                              ===========     =============
</TABLE>

The valuation allowance for net deferred tax assets decreased by $41,800 in 1997
and $204,900 in 1998. The Company has approximately $187,000 of alternative
minimum tax credits that do not expire.

NOTE 9 -- OPERATING LEASES

The Company has entered into a noncancellable operating lease agreement for
manufacturing and office facilities with a lease term that expires in October
2009. The agreement provides for annual lease payments plus an escalation of the
base rent of 1 percent in each of the first 10 years and 2 percent in each of
the second 10 years. The Company has an option to renew this lease for two
additional 10-year terms at a rate to be negotiated and has an option to acquire
the facility at fair market value. Generally accepted accounting principles
require that rent expense related to this type of lease be recognized ratably
over the term of the lease. The difference between the rent payments made and
the amount of expense recognized has been recorded as accrued lease expense (a
liability). For the years ended August 31, 1997, 1998 and 1999, lease expense
exceeded cash payments made by $46,725, $37,380 and $28,033, respectively.

On May 25, 1994, the Company entered into a sublease agreement with an unrelated
company. The agreement commenced August 1, 1994, and expired on July 31, 1998.
The agreement provided for annual lease payments ranging from $216,000 to
$224,724 plus a pro-rata share (33.7 percent) of the facility's operating costs.
The agreement also contains two options to renew the lease for up to five years,
with annual lease payments ranging from $231,468 to $268,332. During the year
ended August 31, 1998, the tenant exercised the first option to extend the
sublease until July 31, 2000. The Company exercised its option to terminate the
sublease agreement on July 31, 2000.

The Company has various operating leases, including the noncancellable operating
lease noted above, for facilities that expire during the next 15 years. Rent
expense under these leases for the years ended August 31, 1997, 1998 and 1999
amounted to $1,134,625, $960,636 and $879,898, respectively.

The following is a schedule of future minimum rent payments and noncancellable
sublease income required under operating leases that have initial or remaining
noncancellable lease terms in excess of one year as of August 31, 1999:

<TABLE>
<CAPTION>
                                                              LEASE         SUB-LEASE        NET LEASE
                                                             PAYMENTS      RECEIVABLE         PAYMENT
                                                           -------------   ------------    -------------
<S>                                                        <C>             <C>             <C>
 2000................................................      $  1,034,180    $    238,412    $     795,768
 2001................................................         1,052,870              --        1,052,870
 2002................................................         1,071,560              --        1,071,560
 2003................................................         1,090,250              --        1,090,250
 2004................................................         1,108,940              --        1,108,940
 2005 and after......................................         6,025,968              --        6,025,968
                                                           ------------    ------------    -------------
               Total minimum payments required.......      $ 11,383,768    $    238,412    $  11,145,356
                                                           ============    ============    =============
</TABLE>


                                       64
<PAGE>   16
                              Riviera Tool Company
                         Notes to Financial Statements


NOTE 10 -- RETIREMENT PLANS

The Company has a profit-sharing plan that covers substantially all employees.
The plan includes a 401(k) deferred-compensation option. The Company's policy is
to fund profit-sharing costs accrued on an annual basis. The plan, as
established, allows for discretionary contributions as determined annually by
the Company's Board of Directors. No discretionary contribution was made for the
years ended August 31, 1997, 1998, and 1999. The Company also matches and
contributes up to 15 percent of an employees' contributions, up to 2% of the
employee's annual wage. The Company's matching contributions to the plan for the
years ended August 31, 1997, 1998 and 1999, amounted to $90,879, $78,984 and
$101,689, respectively.


NOTE 11 -- STOCK OPTION PLANS

The Company's 1996 Stock Option Plan (the "Option Plan") was adopted by the
Board of Directors and approved by the shareholders on October 31, 1996. Under
the Option Plan, 250,000 shares of Common Stock were reserved for issuance and
were intended to qualify as incentive stock options under the Internal Revenue
Code of 1986, as amended. During the year August 31, 1999, the Company granted
stock options for 45,000 shares to certain Company personnel under the option
plan at exercise prices equal to the market value of the stock on the date of
grant. The options vest in one year from the date of option grant and recipients
must be employed by the Company at the time of exercise.

The Company's 1998 Key Employee Stock Option Plan (the "Key Option Plan") was
adopted by the Board of Directors and approved by the shareholders on December
16, 1998. Under the Key Option Plan, 200,000 shares of Common Stock were
reserved for issuance and do not qualify as incentive stock options under the
Internal Revenue Code of 1986, as amended. During the year August 31, 1999, the
Company granted stock options for 54,000 shares to certain Company personnel and
Directors under the option plan at exercise prices equal to the market value of
the stock on the date of grant. The options vest in one year from the date of
option grant and recipients must be employed by the Company at the time of
exercise.

As permitted by SFAS No. 123, "Accounting for Stock-based Compensation", the
Company continues to apply the provisions of Accounting Principles Board Opinion
No. 25 which recognizes compensation expense under the intrinsic value method.
The compensation cost estimated under the fair value based method defined in
SFAS 123 is not significant.

A summary of the status of the Option Plan and Key Option Plan during the years'
presented is as follows (no stock options were granted previous to fiscal 1999
under the 1996 Stock Option Plan and the 1998 Key Employee Stock Option Plan):

<TABLE>
<CAPTION>                                                                                      Weighted
                                                                                               Average
                   1996 Stock Option Plan, as amended                     Shares            Exercise Price
                   ----------------------------------                 ---------------      ---------------
<S>                                                                   <C>                  <C>

     Outstanding at end of year,  August 31, 1998....................      --                   --
                                                                      ===============      ===============
     Fiscal Year Ended August 31, 1999
     Stock options granted...........................................     45,000               $6.625
     Stock options exercised.........................................      --                   --
     Stock options forfeited.........................................      --                   --
                                                                      ---------------      ---------------
     Outstanding at end of year,  August 31, 1999....................     45,000               $6.625
                                                                      ===============      ===============
<CAPTION>

                                                                                              Weighted
                   1998 Key Employee Stock Option Plan                                        Average
                   -----------------------------------                    Shares           Exercise Price
                                                                      ---------------      ---------------
<S>                                                                   <C>                  <C>
     Outstanding at beginning of year, August 31, 1998...............      --                   --
                                                                      ===============      ===============

     Fiscal Year Ended August 31, 1999
     Stock options granted...........................................     54,000               $6.625
     Stock options exercised.........................................      --                   --
     Stock options forfeited.........................................      --                   --
                                                                      ---------------      ---------------

     Outstanding at end of year,  August 31, 1999....................     54,000               $6.625
                                                                      ===============      ===============
</TABLE>


                                       65

<PAGE>   17


Report of Management


The management of Riviera Tool Company is responsible for the preparation of the
accompanying financial statements in conformity with generally accepted
accounting principles appropriate in the circumstances. Management is also
responsible for the determination of estimates and judgments used in the
financial statements, and the preparation of other financial information
included in this annual report to shareholders. The August 31, 1999 financial
statements have been audited by Deloitte & Touche LLP, independent auditors.

The management of the Company is responsible for and maintains an accounting
system and related internal controls that it believes are sufficient to provide
reasonable assurance that assets are safeguarded against unauthorized
acquisition, use or disposition, that transactions are executed and recorded in
accordance with management's authorization and that the financial records are
reliable for preparing financial statements. The concept of reasonable assurance
is based on the recognition that the cost of a system of internal control must
be related to the benefits derived and that the balancing of those factors
requires estimates and judgments. The system is evaluated by the independent
auditors in connection with their annual audit. Management responds to all
significant recommendations of the independent auditors and makes changes to the
systems where appropriate.

The Board of Directors has an Audit Committee of Directors who are not members
of management. The committee meets with management and the independent auditors
in connection with its review of matters relating to the company's annual
financial statements; the Company's system of internal controls, and the
services of the independent auditors. The Committee also periodically meets with
independent auditors, without management present, to discuss appropriate
matters. In addition, the independent auditors have full and free access to meet
with the Committee, with or without management representatives present, to
discuss the results of their audit, the adequacy of internal controls and the
quality of financial reporting.



/s/ Kenneth K. Rieth
--------------------
Kenneth K. Rieth
President and Chief Executive Officer


/s/ Peter C. Canepa
-------------------
Peter C. Canepa
Treasurer and Chief Financial Officer







                                       66
<PAGE>   18


Independent Auditors' Report


Board of Directors and Stockholders
Riviera Tool Company
Grand Rapids, Michigan

We have audited the accompanying balance sheet of Riviera Tool Company as of
August 31, 1999, and the related statement of income, common stockholders'
equity and cash flows for the year 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 audit. The financial
statements of the Company for the years ended August 31, 1998 and 1997 were
audited by other auditors whose report, dated October 19, 1998, expressed an
unqualified opinion on those statements.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit 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 audit provide a reasonable basis for our opinion.

In our opinion, such 1999 financial statements present fairly, in all material
respects, the financial position of the Company at August 31, 1999, and the
results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.



DELOITTE & TOUCHE LLP


Grand Rapids, Michigan
November 3, 1999


                                       67
<PAGE>   19
Independent Auditor's Report



Board of Directors and Stockholders
Riviera Tool Company

We have audited the accompanying balance sheet of Riviera Tool Company, as of
August 31, 1998, and the related statements of income, common stockholders'
equity and cash flows for the years ended August 31, 1997 and 1998. 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 financial statements referred to above present fairly, in
all material respects, the financial position of Riviera Tool Company at August
31, 1998, and the results of its operations and cash flows for the years ended
August 31, 1997 and 1998, in conformity with generally accepted accounting
principles.

PLANTE & MORAN, LLP



Grand Rapids, Michigan
October 19, 1998








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