<PAGE>   1
                                                                      CONFORMED
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-K

             X         Annual Report Pursuant to Section 13
            ---        or 15(d) of the Securities Exchange
                                   Act of 1934

                   For the fiscal year ended October 31, 1997
                          Commission file number 0-6056

            --- Transition report pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                        For the transition period from     to
                                                       ----   ----
                           MICHIGAN RIVET CORPORATION
             -----------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Michigan                                  38-1887153
---------------------------------------          -------------------
(State or other jurisdiction of                   (I.R.S. employer
 incorporation or organization)                  Identification No.)

13201 Stephens Road, Warren, Michigan                  48089
----------------------------------------         -------------------
(Address of principal executive offices)             (Zip Code)

Registrant's telephone number, including area code (810) 754-5100
                                                  ---------------- 

Securities registered pursuant to Section 12(b) of the Act: None
                                                           -------

Securities registered pursuant to Section 12(g) of the Act:

                                                           Name of each exchange
     Title of each class                                    on which registered
     -------------------                                   ---------------------
  Common Stock, $1.00 Par Value                                    None
 -------------------------------                           ---------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X  No   .
   ---   ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [x]

                                                                               1
<PAGE>   2



The aggregate market value of the voting stock held by nonaffiliates (131,967)
of the registrant as of January 7, 1998 was $1,055,736.

The number of shares outstanding of the registrant's common stock as of January
7, 1998 was 638,525.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the proxy statement for the 1998 Annual Meeting of Shareholders are
incorporated by reference into Items 10, 11, 12 and 13.


PART I

Item 1.  BUSINESS

Michigan Rivet Corporation ("MRC") manufactures steel fasteners, principally
rivets and hinge pins, which are, in general, sold as original equipment to the
automotive industry. The fasteners range in size from a diameter of 1/8 of an
inch to 5/8 of an inch and are manufactured to customers' designs and
specifications through wire drawing, cold extrusion, cold heading and certain
secondary machining operations.

A wholly owned subsidiary of MRC, The McLaughlin Company ("McL"), manufactures a
wide variety of specialized steel nuts, nut and washer assemblies and special
fasteners which are sold as original equipment to the automotive industry and as
standard products to a wide variety of manufacturers. The nuts range in size up
to 1 inch across the flats and are manufactured through cold extrusion, cold
heading, stamping, tapping and certain other secondary operations.

Both MRC's and McL's (collectively referred to as "Company") business is
entirely within a single industry segment.


Manufacturing and Machining Operations

MRC purchases pickled and lubricated cold rolled steel rod ranging in diameter
from 7/32 of an inch to 45/64 of an inch. Charter Steel and American Steel and
Wire are the primary sources for raw material with a normal six week
availability. The steel rod is forced through a wire drawer consisting of one or
more dies, each of a smaller diameter than the preceding die. The rod is thereby
converted into cold rolled wire.

The cold rolled wire is then fed into a cold header, either directly or after
being forced through another wire drawer attached to the header. In the header
the wire is first cut into slugs, which may vary in length from 1/4 of an inch
to approximately five inches. These slugs are then forced or "hit" into one or
more dies to produce formed steel parts. The cold headers owned by MRC generally
cut and force or "hit" the slugs to size at rates of 60 to 300 "hits" per
minute. The drawing and heading operations are conducted with the steel rod and
wire at room temperature. Hence, the process is called "cold" heading.


                                                                               2
<PAGE>   3





Some of MRC's fasteners require secondary machining operations, which include
drilling, broaching, annealing (to soften the part), tumbling (to remove burrs
and other irregularities), trimming, pointing, grooving, thread-rolling and
knurling. Other secondary operations, such as plating and heat-treating, are
performed on some of MRC's products by outside suppliers of such services.

McL's operations are very similar to those of MRC. Instead of purchasing cold
rolled steel rod and converting it into wire through the drawing process, McL
purchases the wire in a form ready to be fed into a cold header, principally
from Super Steel Treating Company. McL also purchases coiled flat stock which is
used in presses to manufacture floating cage nuts, clinch nuts, and washers for
the nut and washer assemblies.

While MRC's manufacturing process produces little waste, McL's process produces
slugs from the nut forming operation, offal from stampings and turnings from
tapping. Besides tapping, other secondary operations performed by McL are
washing, tumbling, locking and staking. All products manufactured by the Company
are subjected to quality control review through the various stages of
production.

Management believes that the Company is in substantial compliance with all
existing laws and regulations pertaining to protection of the environment and
does not anticipate that continued compliance will have any material effect on
the Company or its operations.

Customers and Marketing

The Industry Information, which includes the names of the Company's major
customers, set forth in Note 1 to the consolidated financial statements included
in Item 8 of this report is incorporated herein by reference. The loss of any
major domestic automobile producer as a customer would have a materially adverse
effect upon the Company's business.

The production of motor vehicles is generally reduced during July and August of
each year while retooling occurs to accommodate design changes for the
forthcoming model year. To this extent, the automotive industry, upon which the
Company is primarily dependent for its business, can be characterized as
seasonal in nature. However, the Company's production of automotive parts
reflects, in large part, periodic releases against customers' purchase orders
that are usually spaced throughout the automotive industry's model year (July to
July). A majority of the Company's orders are in the form of blanket purchase
orders (some covered under long-term contracts), which allows the Company to
manufacture in advance of releases knowing the product is salable for the
current model year. The nature of releases against open orders make it
impossible to determine the value of backlog orders.




                                                                               3
<PAGE>   4



The Company sells its fasteners primarily through its own salaried personnel
sales staff and, to a lesser extent, through independent manufacturers'
representatives compensated on a commission basis. The Company also markets
through national distribution centers acting as distributors for standard
products and agents for specialized products.

Competition

The Company operates in a highly competitive industry. The Company has no
knowledge of its relative position in the general automotive parts industry.
There are a number of cold heading and cold extrusion companies in Michigan
which supply the automotive industry with parts similar to those produced by the
Company and which are larger and have greater resources than the Company. The
Company must also compete with domestic and foreign companies which manufacture
similar parts for the automobile industry by methods other than cold heading and
cold extrusion. There is no dominant supplier in the Company's segment of the
industry. Additionally, the three major domestic automobile manufacturers have
equipment in some of their plants with which they manufacture similar parts for
themselves by cold heading and other methods.

Quality and price are the major factors in supplying parts to the automotive
industry. Quality indexes must be maintained to be a viable source, and the
Company, to date, has been able to compete successfully with other sources of
the automotive parts which it makes. While the Company does not believe that it
is in danger of losing any significant portion of its business to these
automotive customers, no representation can be made that certain parts now made
by the Company may not in the future be made by an automobile manufacturer or by
a competitor of the Company, some by the methods employed by the Company.

Employees

As of December 21, 1997, the Company had approximately 305 employees, of
whom 82 were salaried.  Hourly employees are represented by the
International Union, United Automobile, Aerospace and Agricultural
Implement Workers of America.

Other

The success of the Company's business is not dependent upon any material
patents, trademarks, licenses, franchises or concessions held by it. The dollar
amount spent during each of the last two fiscal years on research activities
relating to the development of new products or services or the improvement of
existing products or services is deemed by management to be insignificant. The
Company's export sales were approximately 10.5% of net sales in Fiscal Year
1997.



                                                                               4
<PAGE>   5





Item 2.  PROPERTIES

MRC's manufacturing plant and executive offices are located at 13201 Stephens
Road, Warren, Michigan, a suburb of Detroit. There are approximately 140,000
square feet of floor space at the plant, of which 110,000 are devoted to
manufacturing. The warehouse and shipping operations encompass approximately
20,000 square feet with the remainder devoted to office and administration
purposes. The building, and the 7.5 acre parcel on which it is situated, are
owned by MRC subject to an outstanding mortgage in the amount of $2,580,972 at
October 31, 1997.

McL's manufacturing plant and executive offices are located at 1701 Standish
Avenue, Petoskey, Michigan, a city 260 miles north of Detroit. There are
approximately 79,000 square feet of floor space at the plant, of which 76,000
are devoted to manufacturing with the remainder being used for office and
administration purposes. The building and the 5.5 acre parcel on which it is
situated are owned by McL.

The Company owns all of its manufacturing plant and equipment and believes that
all such plant and equipment is well maintained and suited for the purposes
intended. The Company has adequate manufacturing capacity for current operations
and excess capacity for future growth.


Item 3.  LEGAL PROCEEDINGS

There are no material pending legal proceedings to which the Company is a party
or of which any of its property is the subject.


Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted during the fourth quarter of the fiscal year to a vote
of security holders.







                                                                               5
<PAGE>   6



PART II

Item 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS

The registrant's common stock is traded over-the-counter. The prices shown for
the fiscal years ended October 31, 1997 and 1996 were obtained from a
Detroit-area stock brokerage firm that effects transactions of Company stock
from time to time. Quotations reflect inter-dealer prices, without retail
mark-up, mark-down, or commission and may not necessarily represent actual
transactions. Trading in the registrant's stock is limited and sporadic and
should not be deemed to constitute an established public trading market.

                   Year Ended               Year Ended
                 Oct. 31, 1997             Oct. 31, 1996
                 -------------             ------------- 
                 Bid      Ask              Bid      Ask
                 -------------             -------------
First quarter     8        9                5        -
Second quarter    7        9                5-1/2    -
Third quarter     8       10                6       10
Fourth quarter    8       10                6        9

As of January 7, 1998, there were approximately 302 holders of record of the
common stock of MRC.

The Company paid dividends in Fiscal Year 1997 as follows:

Declared:   December 18, 1996    Paid: January 27, 1997     12(cent)per share
            February 19, 1997          March 31, 1997       12(cent)per share
            May 13, 1997               June 23, 1997        12(cent)per share
            August 20, 1997            September 30, 1997   12(cent)per share

Item 6.  SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
                                               Year Ended October 31
                                 ----------------------------------------------
                                    1997     1996      1995     1994     1993
                                 ----------------------------------------------
                                      (In thousands, except per share amounts)
<S>                              <C>       <C>       <C>      <C>       <C>    
Net sales                        $43,013   $41,597   $39,211  $38,375   $33,057

Net earnings (loss)                1,527     1,333     1,630       44      (768)

Total assets                      22,540    21,300    20,655   21,736    20,042

Long-term debt                     2,531     3,747     4,437    4,380       571 A

Per share of common stock:

Net earnings (loss)                 2.39      2.09      2.55      .07     (1.20)

Cash dividends                       .48       .37       .24        -         -
</TABLE>


A -   Due to Bank covenant violations, $4,331,659 of debt was classified as
      current.

                                                                         
                                                                               6
<PAGE>   7



Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

1997 vs. 1996
Results of Operations

Net sales increased to $43,013,000 in Fiscal Year 1997, a three percent (3%)
increase from net sales of $41,597,000 in Fiscal Year 1996. The net profit for
Fiscal Year 1997 was $1,527,000 vs. a $1,333,000 profit for Fiscal Year 1996.
The growth in sales resulted from a combination of new products, increased
volume, and change in product mix. Sales to Ford, General Motors, Chrysler and
their suppliers as a percent to total sales was 91% in Fiscal Year 1997 and 92%
for Fiscal Year 1996.

Cost of sales as a percentage of net sales remained the same for Fiscal Year
1997 and 1996.

Some major cost changes were as follows:

o        A ten percent (10%) increase in hourly labor due to contractual
         rate increases and lower efficiencies.

o        Higher tooling costs due to increased costs and new job set ups.

o        Outside secondary costs were lower due to bringing operations
         inside at an overall savings.

o        Cost to acquire QS-9000 certification was $75,000.

Selling, general and administrative expenditures as a percentage of net sales
decreased to 8.3% of sales in Fiscal Year 1997 from 8.6% in Fiscal Year 1996.
The dollar amount was an increase of $28,000 from the prior year. This was
primarily a result of increased commissions, salary wages and bonus provision.

Proceeds received from the sale of obsolete and excess equipment were $179,000
in Fiscal Year 1997 and $78,000 in Fiscal Year 1996.

Interest expense decreased $145,000 from the prior year due to lower short-term
notes and interest rates from the bank.

Liquidity and Capital Resources

The interest rate on $2,900,000 of the Company's Mortgage and Long Term
Equipment Loan Agreements was lowered by 50 basis points to equal the bank's
prime rate. The Revolving Credit available remains at $5,000,000 with the
interest rate reduced 25 basis points to a rate equal to 25 basis points below
the bank's prime rate. The Company is in compliance with all the covenants of
the lending agreement.

The Company's cash increased $119,000 from the beginning of the Fiscal Year
1997. Cash flow from operating activities increased to $3,633,000 in Fiscal Year
1997, due primarily to earnings, non-cash expenses for


                                                                               7
<PAGE>   8



depreciation and accrued postretirement benefits and other current liabilities.
Cash of $2,959,000 was used to acquire equipment and pay short and long term
debt. Cash of $311,000 was used to pay dividends to shareholders. As of October
31, 1997, the Company had $4,800,000 available under its revolving line of
credit. Expenditures for additional equipment during Fiscal year 1998 are
presently expected to approximate $2,300,000 which are projected to be financed
from cash generated from operations and cash from the revolving credit line.

The Company is continuing to review the costs of all parts and when necessary
request price adjustments from our customers. The Company has had some success,
about ten percent, in attaining a few price adjustments. The Company will
continue its long range capital improvements plan to upgrade major production
equipment on an orderly, as needed basis and, to evaluate all current outside
operations. There can be no assurance that the Company's projections will be
realized.

Impact of the Year 2000 Issue

The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any computer programs
that have date sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities.

Based on a complete assessment conducted by Company personnel, the Company
determined that its computer systems will properly utilize dates beyond December
31, 1999. The Company has initiated formal communications with all of its
significant suppliers and large customers to determine the extent to which the
Company is vulnerable to those third parties' failure to remediate their own
Year 2000 Issue. Based on the responses to these inquiries, the Company believes
that it has no exposure to contingencies related to the Year 2000 Issue for the
products it has sold.

Dividends

Dividends totaling forty-eight cents ($.48) per share were paid in Fiscal Year
1997 for an increase of 30% over amounts paid in Fiscal Year 1996.

1996 vs. 1995
Results of Operations

Net sales increased to $41,597,000 in Fiscal Year 1996, a six percent
(6%) increase from net sales of $39,211,000 in Fiscal Year 1995.  The
net profit for Fiscal Year 1996 was $1,333,000 vs. a $1,630,000 profit
for Fiscal Year 1995.  Fiscal Year 1995 profits included life insurance
proceeds.  The growth in sales resulted from a combination of new
products, increased volume, and change in product mix.  Sales to Ford,


                                                                               8
<PAGE>   9



General Motors, Chrysler and their suppliers as a percent to total sales was 92%
in Fiscal Year 1996 and 1995.

Cost of sales as a percentage of net sales decreased to 85.4% in Fiscal Year
1996 from 88.0% in Fiscal Year 1995.

Some major cost changes were as follows:

o        A small reduction in hourly direct and indirect labor due to
         automation and better utilization of resources.

o        Lower manufacturing costs due to improved tooling and maintenance
         procedures.

o        The largest cost reduction came in the fringe benefit area. Workers
         Compensation and retiree medical accrual (FAS 106) were the areas that
         had significant lower costs. The lower FAS 106 accrual will continue in
         future years as a result of the May 1995 agreement with the Union.

Selling, general and administrative expenditures as a percentage of net sales
decreased to 8.6% of sales in Fiscal Year 1996 from 8.7% in Fiscal Year 1995.
The dollar amount was an increase of $145,000 from the prior year. This was
primarily a result of increased sales commissions, salary wage and bonus, and
Michigan Single Business Tax.

Proceeds received from the sale of excess production equipment were $78,000 in
Fiscal Year 1996.

Interest expense decreased $177,000 from the prior year due to lower short-term
notes and interest rate from the bank.

Liquidity and Capital Resources

The interest rate on $3,000,000 of the Company's Mortgage and Long Term
Equipment Loan Agreements was lowered by .25% to prime +.5%. The Revolving
Credit remains at $5,000,000 with the interest rate reduced .75% to prime. The
Company is in compliance with all the Covenants of the lending agreement.

The Company's cash increased $9,000 from the beginning of the Fiscal Year 1996.
Cash flow from operating activities increased to $2,320,000 in Fiscal Year 1996,
due primarily to earnings and to non-cash expenses for depreciation and the
accrued postretirement benefits. Cash of $2,154,000 was used to acquire
equipment and pay short and long term debt. The Company paid down $309,000 on
its revolving line of credit and at October 31, 1996 had $4,800,000 available
under the agreement. Expenditures for additional equipment during Fiscal Year
1997 are presently expected to approximate $2,300,000, which are projected to be
financed from cash generated from operations and cash from the revolving credit
line.



                                                                               9
<PAGE>   10



The Company is continuing to review the costs of all parts and when necessary
request price adjustments from our customers. The Company has had some success
in attaining a few price adjustments in the past year. The Company will continue
its long range capital improvements plan to upgrade major production equipment
on an orderly, as needed basis. There can be no assurance that the Company's
projections will be realized.

Dividends

Dividends totaling thirty-seven cents ($.37) per share were paid in Fiscal Year
1996 for an increase of 54% over amounts paid in Fiscal Year 1995.

Impact of Inflation

The Company maintains data on its costs which allows it to monitor the impact of
changes due in part to inflation and also to other factors such as technological
change. Periodically, usually on a part-by-part basis, increases in costs are
reviewed and are, to the extent allowed by the Company's customers and permitted
by competition, passed along as price increases.

The Company is party to an agreement with one of its major customers which
requires automatic price decreases in future contract years. Although this
provision will prevent the Company from passing along increases in costs related
to the project, the Company believes that it will be able to absorb any such
increases due to increased production efficiencies currently planned.

The Company continues to monitor controllable costs in the areas of labor, raw
material, work-in-process and finished goods inventory, as well as other
suppliers of goods or services so that assets are used more productively and
margins are improved.

Other

The volatility of the domestic automotive industry and the Company's reliance on
this important customer base for sales causes the reported information not to be
necessarily indicative of future operating results or future financial
conditions for the Company.


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The response to this item is submitted as a separate section of this
         report.


Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE

     None



                                                                              10
<PAGE>   11



PART III

The information called for by the items within this part is included in the
Company's 1998 Proxy Statement, and is incorporated herein by reference, as
follows

                             Caption(s) in 1998 Proxy Statement

Item 10.  DIRECTORS AND EXECUTIVE
                   OFFICERS OF THE REGISTRANT........"Election of Directors"
Item 11.  EXECUTIVE COMPENSATION...................."Executive Compensation"
Item 12.  SECURITY OWNERSHIP OF CERTAIN
                   BENEFICIAL OWNERS AND MANAGEMENT..."Security Ownership of
                                                        Management"
Item 13.  CERTAIN RELATIONSHIPS AND
                   RELATED TRANSACTIONS..........."Certain Relationships and
                                                       Related Transactions"

PART IV

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8K

  (a) Financial Statements, Schedules and Exhibits

      (1) and (2)--The response to this portion of Item 14 is submitted as a
      separate section of this report.

      (3) Listing of exhibits

          3.1--Articles of Incorporation - Previously filed as Exhibit 3
               to the registrant's Annual Report on Form 10K for the year ended
               October 31, 1982 and incorporated herein by reference.

          3.2--Bylaws - Previously filed as Exhibit 3 to the
               registrant's Annual Report on Form 10K for the year ended October
               31, 1976 and incorporated herein by reference.

          21--Subsidiaries of Registrant

          27--Financial Data Schedule

  (b)  No reports on Form 8-K were filed during the last quarter of the 
       Company's fiscal year ended October 31, 1997.

  (c)  Exhibits:

       See Item 14(a)(3) above.

  (d)  Financial Statement Schedules:

       The response to this portion of Item 14 is submitted as a separate 
       section of this report.



                                                                              11
<PAGE>   12
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.



                                                 MICHIGAN RIVET CORPORATION

                                                 /s/ WILLIAM B. STADE
                                                 -------------------------------
                                                 William B. Stade
                                                 President


                                                 Date      01-22-98
                                                 -------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of this registrant and
in the capacities indicated on the 22nd day of January 1998.


/s/ WILLIAM B. STADE                                  /s/ KERMIT L. KNUPPENBURG
-------------------------------                       --------------------------
William B. Stade                                      Kermit L. Knuppenburg
Chairman of the Board,                                Director
President and Director


/s/ ANTHONY W. LIVORINE                               /s/ CLARK V. STEVENS
-------------------------------                       --------------------------
Anthony W. Livorine                                   Clark V. Stevens
Director                                              Director


/s/ WILLIAM P. LIANOS                                 /s/ CHARLES E. BLANK
-------------------------------                       --------------------------
William P. Lianos                                     Charles E. Blank
Exec. V. P. & Treasurer and Director                  Director
(Principal Financial & Accounting
  Officer)


/s/ ANTHONY J. CAPUTO
-------------------------------
Anthony J. Caputo
Director




                                                                              12
<PAGE>   13






                           ANNUAL REPORT ON FORM 10-K

                       ITEM 8, ITEM 14(a)(1), (2), and (d)

                   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

                                CERTAIN EXHIBITS

                          FINANCIAL STATEMENT SCHEDULES

                           YEAR ENDED OCTOBER 31, 1997

                           MICHIGAN RIVET CORPORATION

                                WARREN, MICHIGAN



                                                                              13
<PAGE>   14






FORM 10-K--ITEM 14(a)(1) and (2)

LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

MICHIGAN RIVET CORPORATION AND SUBSIDIARIES


The following consolidated financial statements of Michigan Rivet Corporation
and subsidiaries are included in Item 8:

  Consolidated balance sheets--Years ended October 31, 1997, 1996 and
  1995

  Consolidated statements of operations and retained earnings--Years
  ended October 31, 1997, 1996 and 1995

  Consolidated statements of cash flows--Years ended October 31, 1997,
  1996 and 1995

  Notes to consolidated financial statements--Years ended October 31,
  1997, 1996, and 1995


The following consolidated financial statement schedule of Michigan Rivet
Corporation and subsidiaries are included in Item 14(d):


  Schedule VIII--Valuation and qualifying accounts


All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.






                                                                              14
<PAGE>   15
                        [PLANTE & MORAN, LLP LETTERHEAD]


                          Independent Auditor's Report


To the Board of Directors and Stockholders
Michigan Rivet Corporation and Subsidiaries


We have audited the accompanying consolidated balance sheet of Michigan Rivet
Corporation and subsidiaries as of October 31, 1997, 1996 and 1995, and the
related consolidated statements of income and retained earnings and cash flows
for the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated 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 consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Michigan Rivet Corporation and subsidiaries at October 31, 1997, 1996 and 1995,
and the consolidated results of their operations and their cash flows for the
years then ended in conformity with generally accepted accounting principles.


                                                 /s/ Plante & Moran, LLP



Bloomfield Hills, Michigan
December 16, 1997


                                                                             15

<PAGE>   16
                           MICHIGAN RIVET CORPORATION
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET




<TABLE>
<CAPTION>
                                                                                     OCTOBER 31
                                                             ----------------------------------------------------------
                                                                    1997                1996                1995
                                                             ------------------   -----------------   -----------------
                           ASSETS
<S>                                                          <C>                  <C>                 <C>              
CURRENT ASSETS
    Cash                                                        $       660,398      $      119,372      $      110,682
    Accounts receivable, less allowance of $50,000 in
        1997, 1996 and 1995                                           5,687,051           6,151,075           5,368,533
    Inventories:
        Finished products                                             1,722,457           1,311,279           1,328,108
        In process                                                    2,708,403           2,664,998           2,967,555
        Raw materials                                                   722,270             728,025             673,281
                                                                ---------------      --------------      --------------

                  Total inventories                                   5,153,130           4,704,302           4,968,944

    Deferred federal income taxes (Note 3)                              597,639             520,211             697,639

    Prepaid expenses and other current assets                           252,792             189,990             182,590
                                                                ---------------      --------------      --------------

                  Total current assets                               12,351,010          11,684,950          11,328,388

OTHER ASSETS (Note 3)                                                 1,004,594             704,191             505,324

PROPERTY, PLANT AND EQUIPMENT
    Land                                                                125,000             125,000             125,000
    Buildings and improvements                                        5,435,779           5,347,560           5,295,320
    Machinery and equipment                                          19,455,410          18,505,226          17,578,978
                                                                ---------------      --------------      --------------

                  Total property and equipment                       25,016,189          23,977,786          22,999,298

    Less accumulated depreciation                                    15,831,463          15,067,088          14,178,218
                                                                ---------------      --------------      --------------

                  Net carrying amount                                 9,184,726           8,910,698           8,821,080
                                                                ---------------      --------------      --------------

                  Total assets                                  $    22,540,330      $   21,299,839      $   20,654,792
                                                                ===============      ==============      ==============
</TABLE>


See Notes to Consolidated
  Financial Statements.   
                                                                             16

<PAGE>   17

                           MICHIGAN RIVET CORPORATION
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                   (Continued)



<TABLE>
<CAPTION>
                                                                                     OCTOBER 31
                                                             ----------------------------------------------------------

                                                             
                                                                    1997                1996                1995
                                                             ------------------   -----------------   -----------------
<S>                                                          <C>                  <C>                 <C>        
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Notes payable to bank (Note 2)                           $                -   $               -   $         309,000
    Accounts payable                                                  4,441,194           3,813,348           3,569,626
    Payroll and employees' benefits                                   1,121,649             997,522             945,252
    Other accrued expenses                                              602,709             333,535             599,601
    Current maturities of long-term debt (Note 2)                       369,163             684,815             691,039
                                                             ------------------   -----------------   -----------------

               Total current liabilities                              6,534,715           5,829,220           6,114,518

LONG-TERM DEBT (Note 2)                                               2,531,337           3,746,600           4,436,829

ACCRUED POSTRETIREMENT BENEFITS
    (Note 4)                                                          3,813,570           3,279,140           2,732,084

DEFERRED FEDERAL INCOME TAXES (Note 3)                                        -                   -              25,000

STOCKHOLDERS' EQUITY Common stock - $1 par value:
        Authorized - 1,000,000 shares
        Issued and outstanding - 638,525 shares                         638,525             638,525             638,525
    Paid-in capital                                                     117,403             117,403             117,403
    Retained earnings                                                 8,904,780           7,688,951           6,590,433
                                                             ------------------   -----------------   -----------------


               Total stockholders' equity                             9,660,708           8,444,879           7,346,361
                                                             ------------------   -----------------   -----------------

               Total liabilities and stockholders' equity    $       22,540,330   $      21,299,839   $      20,654,792
                                                             ==================   =================   =================
</TABLE>


See Notes to Consolidated
  Financial Statements.
                                                                             17

<PAGE>   18



                           MICHIGAN RIVET CORPORATION
                                AND SUBSIDIARIES
                        CONSOLIDATED STATEMENT OF INCOME
                              AND RETAINED EARNINGS




<TABLE>
<CAPTION>
                                                                            YEAR ENDED OCTOBER 31
                                                       ----------------------------------------------------------------

                                                              1997                   1996                  1995
                                                       -------------------   --------------------   -------------------

<S>                                                    <C>                   <C>                    <C>                
NET SALES                                              $        43,013,303   $         41,596,542   $        39,210,844

COSTS AND EXPENSES
    Cost of products sold                                       36,790,532             35,526,431            34,487,789
    Selling, administrative and general                          3,585,020              3,557,246             3,412,508
    Interest                                                       323,853                469,451               646,227
                                                       -------------------   --------------------   -------------------

                  Total costs and expenses                      40,699,405             39,553,128            38,546,524
                                                       -------------------   --------------------   -------------------

INCOME - Before other income
    and federal income taxes                                     2,313,898              2,043,414               664,320

OTHER INCOME - Net gain from life
    insurance proceeds (Note 5)                                          -                      -             1,141,394

FEDERAL INCOME TAXES (Note 3)                                      787,000                710,000               175,793
                                                       -------------------   --------------------   -------------------

NET INCOME                                                       1,526,898              1,333,414             1,629,921

RETAINED EARNINGS - Beginning of
    year                                                         7,688,951              6,590,433             5,110,146

DIVIDENDS ($.48, $.37 and $.24 per share,
    respectively)                                                (311,069)              (234,896)             (149,634)
                                                       -------------------   --------------------   -------------------

RETAINED EARNINGS - End of year                        $         8,904,780   $          7,688,951   $         6,590,433
                                                       ===================   ====================   ===================

NET INCOME PER SHARE                                   $              2.39   $               2.09   $              2.55
                                                       ===================   ====================   ===================

</TABLE>

See Notes to Consolidated
  Financial Statements.
                                                                             18

<PAGE>   19




                           MICHIGAN RIVET CORPORATION
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS



<TABLE>
<CAPTION>
                                                                              YEAR ENDED OCTOBER 31
                                                           ------------------------------------------------------------
                                                                  1997                1996                 1995
                                                           ------------------   -----------------   -------------------
<S>                                                        <C>                  <C>                 <C>                
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                             $        1,526,898   $       1,333,414   $         1,629,921
    Adjustments to reconcile net income to net cash
        from operating activities:
           Depreciation                                             1,044,186           1,059,216             1,048,743
           Gain on sale of equipment                                  (68,354)            (78,326)                    -
           Provision for deferred income taxes                       (355,000)                  -              (369,187)
           Provision for postretirement benefits                      534,430             547,056             1,274,482
           Changes in operating assets and liabilities:
               (Increase) decrease in accounts
                  receivable                                          464,024            (782,542)              394,712
               (Increase) decrease in inventories                    (448,828)            264,642                50,402
               (Increase) decrease in prepaid expenses
                  and other assets                                    (85,633)            (53,839)               24,456
               Increase (decrease) in accounts payable
                  and other accrued expenses                        1,021,147              29,926              (192,180)
                                                           ------------------   -----------------   -------------------

                      Net cash provided by operating
                         activities                                 3,632,870           2,319,547             3,861,349

CASH FLOWS FROM INVESTING ACTIVITIES
    Acquisition of property, plant and equipment                   (1,428,360)         (1,148,834)           (1,054,716)
    Proceeds from sale of equipment                                   178,500              78,326                     -
                                                           ------------------   -----------------   -------------------

                      Net cash used in investing
                         activities                                (1,249,860)         (1,070,508)           (1,054,716)

CASH FLOWS FROM FINANCING ACTIVITIES
    Net payments under short-term credit line                               -           (309,000)            (3,434,000)
    Proceeds from long-term debt                                            -                   -               813,298
    Payments on long-term debt                                     (1,530,915)           (696,453)             (563,881)
    Payment of dividends                                             (311,069)           (234,896)             (149,634)
                                                           ------------------   -----------------   -------------------

                      Net cash used in financing
                         activities                                (1,841,984)         (1,240,349)           (3,334,217)
                                                           ------------------   -----------------   -------------------

NET INCREASE (DECREASE) IN CASH                                       541,026               8,690              (527,584)

CASH - Beginning of year                                              119,372             110,682               638,266
                                                           ------------------   -----------------   -------------------

CASH - End of year                                         $          660,398   $         119,372   $           110,682
                                                           ==================   =================   ===================

</TABLE>

See Notes to Consolidated Financial Statements.


                                                                             19

<PAGE>   20

NOTE 1 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          Principles of Consolidation - The consolidated financial
          statements include the accounts of Michigan Rivet Corporation and
          its subsidiaries (the "Company"). Upon consolidation, significant
          intercompany accounts and transactions are eliminated.

          Description of Business - The Company is a domestic manufacturer
          of cold headed steel fasteners, nuts and components, principally
          for the automotive industry. Sales to General Motors Corporation,
          Ford Motor Company and Chrysler Corporation, including their
          suppliers, are summarized as follows:


                                                 1997         1996        1995
                                               -------      --------    --------

          General Motors Corporation             33%           33%         33%
          Ford Motor Company                     39            40          38
          Chrysler Corporation                   19            19          21

          The Company generally does not require collateral from its
          customers. Credit losses from automobile and related
          manufacturers have been minimal and within management's
          expectations.

          Inventories - Inventories are stated at the lower of cost or
          market. Cost is determined by the last-in, first out (LIFO)
          method for certain inventories (approximately 26 percent, 26
          percent and 25 percent of consolidated inventories at October 31,
          1997, 1996 and 1995, respectively) and the first-in, first-out
          (FIFO) method for all other inventories.

          Current cost exceeded the balance sheet carrying amount of LIFO
          inventories by $403,000, $407,000 and $456,000 in 1997, 1996 and
          1995, respectively.

          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. Actual results could differ from
          those estimates.

          Property, Plant and Equipment - Properties are stated at cost and
          include expenditures that materially increase the useful lives of
          existing buildings and equipment. Expenditures for normal repairs,
          maintenance and production tooling are charged to operations as
          incurred. Depreciation is computed principally by the straight-line
          method over the estimated useful lives of the related assets.



                                                                             20

<PAGE>   21


                           MICHIGAN RIVET CORPORATION
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         OCTOBER 31, 1997, 1996 AND 1995


NOTE 1 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

          Income Taxes - Under Statement of Financial Accounting Standards
          No. 109, Accounting for Income Taxes, the liability method is
          used in accounting for income taxes. Under this method, deferred
          tax assets and liabilities are determined based on differences
          between financial reporting and tax bases of assets and
          liabilities and are measured using the enacted tax rates and laws
          in effect. Current taxes payable or refundable are based on
          amounts on tax returns for the year.

          Employee Postretirement Benefits - The Company provides health
          care and life insurance benefits for certain retired employees.
          This plan is unfunded and benefits are paid when they are
          incurred by the retiree. These benefits are recognized as an
          expense as employees render service.


NOTE 2 -  DEBT

          Notes payable to bank represent borrowings for working capital
          purposes under a $5,000,000 short-term revolving line of credit,
          which is renewed quarterly and bears interest at the lending
          institution's prime rate less .25 percent (prime was 8.5 percent
          at October 31, 1997). The weighted average interest rate for
          1997, 1996 and 1995 was 8.59 percent, 8.99 percent and 9.64
          percent, respectively. Available borrowings under this agreement
          are based on a percentage of eligible accounts receivable.

          Long-term debt consists of the following obligations:


<TABLE>
<CAPTION>
                                                              1997              1996                  1995
                                                         ----------------   -----------------    -----------------

<S>                                                      <C>                <C>                  <C>              
          Mortgage note                                  $      2,580,972   $       2,821,489    $       3,040,359
          Term note                                                     -             633,306              833,310
          Mortgage note, due February 1996,
             9.75%, $5,346 paid monthly                                 -                   -               20,941
          Equipment notes payable                                 288,682             933,830            1,171,835
          Other                                                    30,846              42,790               61,423
                                                         ----------------   -----------------    -----------------

                     Total                                      2,900,500           4,431,415            5,127,868

          Less current maturities                                 369,163             684,815              691,039
                                                         ----------------   -----------------    -----------------

                     Total long-term debt                $      2,531,337   $       3,746,600    $       4,436,829
                                                         ================   =================    =================
</TABLE>


                                                                           21

<PAGE>   22
                           MICHIGAN RIVET CORPORATION
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         OCTOBER 31, 1997, 1996 AND 1995


NOTE 2 -  DEBT (Continued)

          The mortgage note is payable in monthly installments of $39,757
          including interest, and matures February 1, 2000. The mortgage
          note bears interest at the lending institution's prime rate
          (prime was 8.5 percent at October 31, 1997). The Company's
          financing agreements include covenants that require minimum
          levels of working capital, tangible net worth and debt to equity
          ratios. The agreements also require the lender's approval before
          cash dividends may be declared or paid.

          During 1995, the Company financed certain production equipment
          totaling $750,000 under terms of a note payable to a bank. The
          note requires monthly payments of $10,174 plus interest at 9
          percent and matures July 1, 2000.

          Maturities of long-term debt during the five fiscal years
          following 1997 are:


                      1998                           $  369,163
                      1999                              431,894
                      2000                              390,048
                      2001                              343,334
                      2002                              373,682
                   Thereafter                           992,379

          As of October 31, 1997, substantially all of the Company's assets
          were mortgaged or otherwise collateralized by the various debt
          agreements.

          Cash payments for interest were $326,493, $473,295 and $687,589
          in 1997, 1996 and 1995, respectively.


NOTE 3 -  FEDERAL INCOME TAXES

          The provision for income tax expense is as follows:


<TABLE>
<CAPTION>
                                                                       1997               1996               1995
                                                                 -----------------   ---------------   ---------------
<S>                                                              <C>                 <C>               <C>           
               Current expense                                   $       1,142,000   $       710,000   $       544,980
               Deferred reduction                                         (355,000)                -          (369,187)
                                                                 -----------------   ---------------   ---------------

                              Total income tax expense           $         787,000   $       710,000   $      175,793
                                                                 =================   ===============   ===============

               Income tax payments                               $         905,000   $       785,000   $      605,000
                                                                 =================   ===============   ===============
</TABLE>


                                                                            22

<PAGE>   23


                           MICHIGAN RIVET CORPORATION
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         OCTOBER 31, 1997, 1996 AND 1995


NOTE 3 -       FEDERAL INCOME TAXES (Continued)

               The total tax expense for 1995 differs from the amount computed
               utilizing the statutory rate of 34 percent primarily due to
               nontaxable income from insurance proceeds as described in Note 5.

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

<TABLE>
<CAPTION>

                                                                     1997                1996                  1995
                                                               -----------------   -----------------   -----------------
<S>                                                            <C>                 <C>                 <C>              
               Deferred tax liabilities:
                   Depreciation                                $         935,465   $         962,480   $         952,612
                   Other                                                       -                   -               2,896
                                                               -----------------   -----------------   -----------------

                          Total deferred tax liabilities                 935,465             962,480             955,508

               Deferred tax assets:
                   Employee benefits                                   1,549,855           1,256,396           1,145,594
                   Tax credit carryover                                        -                   -             100,000
                   Inventory valuation                                   398,524             328,849             335,387
                   Other                                                  14,725              49,874              47,166

                                                               -----------------   -----------------   -----------------

                          Total deferred tax assets                    1,963,104           1,635,119           1,628,147

               Valuation allowance                                             -                   -                   -
                                                               -----------------   -----------------   -----------------

                          Net deferred tax asset               $       1,027,639   $         672,639   $         672,639
                                                               =================   =================   =================
</TABLE>

The principal components of deferred federal income tax credits are as follows:


<TABLE>
<CAPTION>
                                                                    1997                1996                1995
                                                             ------------------   -----------------   -----------------

<S>                                                          <C>                  <C>                 <C>               
               Employee benefits                             $         (293,459)  $        (110,802)  $        (437,443)
               Accelerated tax depreciation                             (27,015)              9,868              54,696
               Inventory valuation                                      (69,675)              6,538              51,597
               Tax credit carryover and other                            35,149              94,396             (38,037)
                                                             ------------------   -----------------   -----------------

                          Total                              $         (355,000)  $               -   $        (369,187)
                                                             ==================   =================   =================

</TABLE>

                                                                             23

<PAGE>   24


                           MICHIGAN RIVET CORPORATION
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         OCTOBER 31, 1997, 1996 AND 1995


NOTE 4 -       RETIREMENT BENEFITS

               Pension Plans - Certain employees of the Company who are members
               of collective bargaining units are covered by a noncontributory
               defined benefit pension plan. The plan provides benefits that are
               based on a stated amount for each year of service plus a frozen
               vested accrued severance benefit calculated as of August 26, 1977
               for eligible employees on that date. The Company's funding policy
               is to make at least the minimum annual contribution required by
               applicable regulations.

               A summary of the components of pension income for the union plan
follows:


<TABLE>
<CAPTION>
                                                                       1997               1996               1995
                                                                 ----------------   ----------------   ----------------
<S>                                                               <C>                <C>                <C>           
               Service cost for benefits earned during
                  the period                                      $       82,164     $       73,369     $       60,377
               Interest cost of projected benefit
                  obligation                                             291,878            266,634            255,487
               Actual return on plan assets                             (906,341)          (718,773)          (662,138)
               Net amortization and deferral                             508,743            332,331            295,544
                                                                 ----------------   ----------------   ----------------

                                 Net pension income                $     (23,556)     $     (46,439)     $     (50,730)
                                                                 ================   ================   ================

                                                                 
               Assumptions used in accounting for the plan were:
                                                                 

                                                                       1997               1996               1995
                                                                 ----------------   ----------------   ----------------

               Weighted average discount rate                           7.5%               7.5%               7.0%
               Expected long-term rate of return on                     7.0%               7.0%               7.0%
                   assets
</TABLE>


                                                                             24

<PAGE>   25
                           MICHIGAN RIVET CORPORATION
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         OCTOBER 31, 1997, 1996 AND 1995


NOTE 4 -       RETIREMENT BENEFITS (Continued)

               The following table sets forth the funded status and amounts
               recognized in the consolidated balance sheets for the union plan:


<TABLE>
<CAPTION>
                                                                   1997                 1996                1995
                                                             -----------------   ------------------   -----------------
<S>                                                          <C>                 <C>                  <C>             
               Actuarial present value of benefit
                  obligation:
                       Vested benefit                        $       4,139,816   $        3,699,434   $       3,636,038
                                                             =================   ==================   =================

                       Accumulated benefit
                          obligation                         $       4,272,033   $        3,818,023   $       3,781,650
                                                             =================   ==================   =================

               Projected benefit obligation                  $       4,272,033   $        3,818,023   $       3,781,650
               Plan assets at fair value                             6,306,504            5,617,523           5,116,114
                                                             -----------------   ------------------   -----------------

               Excess of plan assets over
                  projected benefit obligation                       2,034,471            1,799,500           1,334,464
               Unrecognized net gain                                (1,101,670)            (682,137)           (207,948)
               Unrecognized prior service cost                         157,781                5,827               6,399
               Unrecognized net asset
                  at transition                                       (524,288)            (580,452)           (636,616)
                                                             -----------------   ------------------   -----------------
               Net pension asset recognized                  
                   in the balance sheet                      $         566,294   $          542,738   $         496,299
                                                             =================   ==================   =================
</TABLE>

               Plan assets are invested primarily in pooled equity investment
               funds, obligations of the U.S. government and its agencies and
               certain other investments.

               During 1997, the plan was amended to increase the benefit levels
               resulting in an increase in the unrecognized prior service cost.

               Certain employees participate in a Company-sponsored savings
               plan. Under the plan, the Company contributes a defined amount to
               individual employee accounts based on the respective employee's
               contribution. The Company contributed approximately $60,000,
               $50,000 and $56,000 to this plan in 1997, 1996 and 1995,
               respectively.


                                                                            25

<PAGE>   26
                           MICHIGAN RIVET CORPORATION
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         OCTOBER 31, 1997, 1996 AND 1995


NOTE 4 -       RETIREMENT BENEFITS (Continued)

               Postretirement Benefits - As discussed in Note 1, the Company
               provides health care and life insurance benefits for certain
               retired employees. The Company adopted the provisions of SFAS 106
               effective November 1, 1993. The accumulated postretirement
               benefit obligation (APBO) at the date of adoption was
               $11,263,445. The Company elected to recognize the transition
               obligation over 20 years.

               During 1995, the Company and its collective bargaining unit
               agreed to modifications to the postretirement benefit plan. These
               modifications primarily related to a cap on future retiree
               medical insurance benefits, and resulted in a reduction of the
               accumulated postretirement benefit obligation of approximately
               $5,200,000. This reduction has been used to reduce the transition
               obligation, which will be recognized prospectively over the
               remaining amortization period allowed by SFAS 106.

               During 1997, the plan provisions were revised to change the limit
               on the Company's subsidy from 2.00 to 1.50 times the 1997
               premium. This change reduced the unrecognized transition
               obligation by $636,000.

               The Company recognized an expense related to postretirement
               benefits consisting of service cost, interest cost and transition
               amortization in 1997, 1996 and 1995, as follows:


<TABLE>
<CAPTION>
                                                                     1997                1996               1995
                                                               -----------------   ----------------   -----------------

<S>                                                            <C>                 <C>                <C>            
               Service cost of benefits earned                 $         176,150   $        196,412   $         359,215
               Interest cost on liability                                347,471            351,592             677,106
               Net amortization and deferral                             213,248            189,473             426,530
                                                               -----------------   ----------------   -----------------
                          Total net periodic post-             
                            retirement benefit cost            $         736,869   $        737,477   $       1,462,851
                                                               =================   ================   =================
</TABLE>


                                                                           26

<PAGE>   27
                           MICHIGAN RIVET CORPORATION
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         OCTOBER 31, 1997, 1996 AND 1995


NOTE 4 -       RETIREMENT BENEFITS (Continued)

               The amounts reported on the balance sheet at October 31, 1997,
               1996 and 1995 were as follows:



<TABLE>
<CAPTION>
                                                                  1997                 1996                 1995
                                                          --------------------   -----------------   ------------------
<S>                                                       <C>                    <C>                 <C>               
               Accumulated postretirement benefit
                  obligation:
                     Fully eligible active participants   $            900,253   $       1,051,138   $        1,379,359
                     Other active participants                         896,131             957,331            1,529,610
                         Retired participants                        2,920,002           3,207,589            3,875,644
                                                          --------------------   -----------------   ------------------
                          Total APBO                                 4,716,386           5,216,058            6,784,613

                      Unrecognized net obligation at
                        transition                                  (2,696,908)         (3,556,706)          (3,779,000)
                      Unrecognized net gain (loss)                   1,994,092           1,819,788              (73,529)
                                                          --------------------   -----------------   ------------------
                            Accrued postretirement        
                              benefit cost                $          4,013,570   $       3,479,140   $        2,932,084
                                                          ====================   =================   ==================
</TABLE>

               The Company has not funded any portion of its APBO except for
               benefits being paid as incurred by participants. Cash paid for
               these benefits totaled $202,000 $190,000 and $188,000 in 1997,
               1996 and 1995, respectively. The Company estimated the current
               portion of this accrued benefit cost to be $200,000 for 1997,
               1996 and 1995, and those amounts have been shown as current
               liabilities.

               The significant actuarial assumptions used to determine the cost
               to the Company at October 31, 1997 are as follows:


               Discount rate                                7.25%

               Health care trend rates - Medical            Approximately 9.9% 
                                                            per annum grading
                                                            down to 5.25% in 
                                                            2005/2006 and all 
                                                            years thereafter

               Health care trend rates - Prescription       Approximately 12.60%
                                                            per annum grading
                                                            down to 5.25% in 
                                                            2005/2006 and all 
                                                            years thereafter

               A one percent increase in the health care trend rate assumptions
               would increase the October 31, 1997 APBO by 1.87 percent and
               would increase the aggregate of the 1997 service and interest
               cost components of the net periodic postretirement benefit cost
               by 2.01 percent.


                                                                        27

<PAGE>   28


                           MICHIGAN RIVET CORPORATION
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         OCTOBER 31, 1997, 1996 AND 1995

NOTE 5 -       OTHER INCOME

               In November 1994, the Company's former president passed away. The
               Company received life insurance proceeds totaling $1,200,000 from
               policies on his life. The cash surrender value of these policies
               at the time of death totaled $58,606, resulting in a net gain of
               $1,141,394.


NOTE 6 -       CONTINGENCIES

               The Company is self-insured for purposes of workers' compensation
               insurance. Under the plan, the Company has specific stop-loss
               insurance for occurrences exceeding $300,000 per individual
               claim. The Company's authority for self insurance is renewed by
               the State of Michigan on January 1 yearly. The Company currently
               has a standby letter of credit of $200,000 pledged for potential
               future claims. Workers' compensation claims totaled approximately
               $301,000, $195,000 and $268,000 for the years ended October 31,
               1997, 1996 and 1995, respectively.


NOTE 7 -       FAIR VALUE OF FINANCIAL INSTRUMENTS

               A summary of the fair value of financial instruments, as well as
               the methods and significant assumptions used to estimate fair
               value, is as follows:

               Short-term Financial Instruments - The fair value of short-term
               financial instruments, including cash, accounts receivable,
               accounts payable and accrued liabilities, approximates the
               carrying amount in the accompanying financial statements due to
               the short maturity of such instruments.

               Long-term Debt - The fair value of long-term debt approximates
               the carrying amount based on the current borrowing rates offered
               for such instruments and since the current rates reflect market
               rates.




                                                                            28




<PAGE>   29
              SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
        COL. A                          COL. B                      COL. C                COL. D          COL. E
--------------------------------------------------------------------------------------------------------------------
      DESCRIPTION                     Balance at        (1) Charged       (2) Charged   Deductions-     Balance at
                                     Beginning of       to Costs and        to Other     Describe      End of Period
                                        Period            Expenses          Accounts-
                                                                            Describe
--------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                 <C>                              <C>          <C>        
Year Ended October 31, 1997:
     Valuation allowance for         $ 50,000           $ 51,874                       A $ 51,874      $    50,000
       accounts receivable
     Reserve for inventory
       obsolescence                   663,000            127,000                                           790,000
                                     --------           --------                         --------      -----------
       
          TOTALS                     $713,000           $178,874                         $ 51,874      $   840,000
                                     ========           ========                         ========      ===========

Year Ended October 31, 1996:
     Valuation allowance for         $ 50,000           $ 31,231                       A $ 31,231      $    50,000
       accounts receivable
     Reserve for inventory            
       obsolescence                   604,000             59,000                                           663,000
                                     --------           --------                         --------      -----------
       
          TOTALS                     $654,000           $ 90,231                         $ 31,231      $   713,000
                                     ========           ========                         ========      ===========

Year Ended October 31, 1995:
     Valuation allowance for         $ 50,000           $  9,505                       A $  9,505      $    50,000
       accounts receivable
     Reserve for inventory            
       obsolescence                   612,800             (8,800)                                          604,000
                                     --------           --------                         --------      -----------
       
          TOTALS                     $662,800           $    705                         $  9,505      $   654,000
                                     ========           ========                         ========      ===========
</TABLE>


A - Represents uncollectible accounts charged off, net of recoveries.

                                                                             29
<PAGE>   30

                               INDEX TO EXHIBITS




  EXHIBIT NO.                  DESCRIPTION
  ------- ---                  -----------

  EXHIBIT 21              Subsidiaries of Registrant

  EXHIBIT 27              Financial Data Schedule