FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Quarterly Report Under Section 13 or 15 (d) of The Securities Exchange Act of 1934 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 14 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2002 [ ] TRANSITION REPORT PURSUANT OR SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 0-7770 McCLAIN INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Michigan 38-1867649 State of Incorporation IRS Employer I.D. No. 6200 Elmridge Road Sterling Heights, Michigan 48310 (810) 264-3611 (Address of principal executive offices and telephone number) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _X_. No ___. Indicate the number of shares outstanding of each of the issuer's classes of common stock as of May 3, 2002. Common Stock, No Par Value 4,534,170 - -------------------------------------------------------------------------------- Class Number of Shares 1 of 16 PART 1. FINANCIAL INFORMATION Item 1. Financial Statements McCLAIN INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS MARCH 31 SEPTEMBER 30, 2002 2001 (UNAUDITED) ------------------------ ---------------------- CURRENT ASSETS Cash and cash equivalents $723,057 $763,635 Accounts receivable, (Net) 9,500,093 11,818,760 Inventories 30,489,373 36,729,464 Net investment in sales-type leases, current portion 8,100,000 10,600,000 Prepaid expenses 697,164 142,539 Refundable federal and state income taxes 2,716,299 2,733,572 ------------------------ ----------------------- TOTAL CURRENT ASSETS 52,225,986 62,787,970 ------------------------ ----------------------- PROPERTY, PLANT AND EQUIPMENT, NET 20,634,457 21,620,641 ------------------------ ----------------------- NET INVESTMENT IN SALES-TYPE LEASES, NET OF CURRENT PORTION 15,823,389 17,200,109 ------------------------ ----------------------- OTHER ASSETS 658,175 1,037,555 ------------------------ ----------------------- TOTAL OTHER ASSETS 89,342,007 102,646,275 ======================== ======================= LIABILITIES AND STOCKHOLDERS' INVESTMENT CURRENT LIABILITIES Accounts payable $7,900,368 $11,555,975 Current portion of long-term debt 51,741,644 59,415,504 Accrued expenses 4,095,453 4,225,970 ------------------------ ----------------------- TOTAL CURRENT LIABILITIES 63,737,465 75,197,449 Long-term debt, net of current portion 0 0 Product liability 502,531 897,163 Deferred income taxes 1,042,000 1,546,000 ------------------------ ----------------------- TOTAL LIABILITIES 65,281,996 77,640,612 ------------------------ ----------------------- STOCKHOLDERS' INVESTMENT 24,060,011 25,005,663 ------------------------ ----------------------- TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $89,342,007 $102,646,275 ======================== ======================= See notes to condensed consolidated financial statements 2 of 16 McCLAIN INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS UNAUDITED THREE MONTHS ENDED SIX MONTHS ENDED MARCH 31, MARCH 31, ------------------------------------------- --------------------------------------- 2002 2001 2002 2001 ----------------- ----------------- ----------------- ----------------- Net sales $ 16,776,715 $ 24,748,635 $ 36,864,314 $ 45,836,321 Cost of sales 14,756,339 20,773,019 31,787,371 38,701,317 Inventory writedown - 700,000 - 700,000 ----------------- ----------------- ----------------- ----------------- GROSS PROFIT 2,020,376 3,275,616 5,076,943 6,435,004 Selling, general and administrative expenses 3,105,432 4,387,360 6,228,125 8,473,630 Restructuring charge - 400,000 - 400,000 ----------------- ----------------- ----------------- ----------------- LOSS FROM OPERATIONS (1,085,056) (1,511,744) (1,151,182) (2,438,626) ----------------- ----------------- ----------------- ----------------- OTHER INCOME (EXPENSE) Interest expense (886,751) (1,278,383) (1,773,401) (2,850,747) Interest income 728,871 848,589 1,363,127 1,638,621 Other, net (8,034) (69,388) 79,308 (61,038) ----------------- ----------------- ----------------- ----------------- OTHER EXPENSE - NET (165,914) (499,182) (330,966) (1,273,164) ----------------- ----------------- ----------------- ----------------- LOSS BEFORE INCOME TAXES BENEFIT (1,250,970) (2,010,926) (1,482,148) (3,711,790) Income tax benefit (425,400) (684,000) (504,000) (1,262,000) ----------------- ----------------- ----------------- ----------------- NET LOSS (825,570) (1,326,926) (978,148) (2,449,790) ================= ================= ================= ================= Net loss per share: Basic and diluted $ (0.19) $ (0.29) $ (0.22) $ (0.54) ================= ================= ================= ================= See notes to condensed consolidated financial statements 3 of 16 McCLAIN INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED <Table> <Caption> SIX MONTHS ENDED MARCH 31, ------------------------------------------------- 2002 2001 ------------------------ ---------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (978,148) $ (2,449,790) Adjustments to reconcile net loss to net cash provided by operating activities Depreciation and amortization 1,432,641 1,665,972 Deferred Income Tax Benefit (504,000) - Common stock issued to directors for services 32,496 17,987 Net changes in operating assets and liabilities which provided (used) cash: Current assets excluding cash & cash equivalents 8,004,133 8,471,810 Other assets 4,178,052 1,192,251 Accounts payable (3,655,563) (2,455,783) Accrued expenses (130,517) 781,054 Federal and state income taxes 17,273 (1,331,250) ------------------------ ---------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 8,396,367 5,892,251 ------------------------ ---------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of plant and equipment (368,453) (37,838) Payments (made on) liabilities assumed upon the Galion acquisition (394,632) (242,100) ------------------------ ---------------------- NET CASH USED IN INVESTING ACTIVITIES (763,085) (279,938) ------------------------ ---------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal reduction of long term debt (7,673,860) (5,037,087) Repurchase of common stock - (241,238) ------------------------ ---------------------- NET CASH USED IN FINANCING ACTIVITIES (7,673,860) (5,278,325) ------------------------ ---------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (40,578) 333,988 ------------------------ ---------------------- Cash and cash equivalents, beginning of period 763,635 1,401,810 ------------------------ ---------------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 723,057 $ 1,735,798 ======================== ====================== See notes to condensed consolidated financial statements 4 of 16 McCLAIN INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SIX MONTHS ENDED MARCH 31, 2002 1. Basis of Presentation The accompanying unaudited Consolidated Financial Statements of McClain Industries, Inc. and subsidiaries (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, such Statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring items considered necessary for a fair presentation have been included. Operating results for the six-month period ended March 31, 2002 are not necessarily indicative of the results that may be expected for the year ending September 30, 2002. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended September 30, 2001. 2. Inventories Inventories at March 31, 2002 and September 30, 2001 are summarized as follows: (Unaudited) March 31, 2002 September 30, 2001 -------------- ------------------ Materials and Supplies $ 15,689,373 $ 16,136,116 Work in Process 4,300,000 4,306,681 Finished Goods 5,800,000 8,583,582 Chassis 4,700,000 7,703,085 ------------- ------------- $ 30,489,373 $ 36,729,464 ------------- ------------- 3. Earnings per Common Share and Common Equivalent Share: Earnings per share are computed using the weighted average number of common shares outstanding during the periods, including a dual presentation and reconciliation of "basic" and "diluted" per share amounts. Diluted reflects the potential dilution of all common stock equivalents for the periods ended March 31, 2002 and 2001 options to purchase 177,000 and 146,983 shares, respectively, were excluded from the computation of earnings per share because the options' exercise prices were greater than the average market price of the common shares. 5 of 16 McCLAIN INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SIX MONTHS ENDED MARCH 31, 2002 4. Depreciation For the six months ended March 31, 2002 and 2001, depreciation charges were $1,354,637 and $1,398,552, respectively. Accumulated depreciation totaled $26,780,336 and $25,353,719 at March 31, 2002 and September 30, 2001, respectively. 5. Contingencies Product Liability As a manufacturer of industrial products, the Company is occasionally subjected to various product liability claims. Such claims typically involve personal injury or wrongful death associated with the use or misuse of the Company's products. The Company is currently defending certain legal proceedings involving allegations of product liability relating to products manufactured and sold by the Company. Historically, such claims have not resulted in material losses to the Company in any one year, and the Company maintains product liability insurance in amounts believed by management to be adequate. McClain E-Z Pack, Inc., as successor to Galion Holding Company (GHC), pursuant to an indemnification it provided to the seller in connection with GHC's July 1992 acquisition of the Galion operations, is currently defending a number of legal proceedings involving product liability claims arising out of products manufactured and sold prior to the acquisition. These claims are covered by insurance and many of these cases have been settled. In addition, the acquisition agreement called for the seller to share in the payment of certain costs related to the defense of these cases. On December 29, 1998 the Company reached a settlement agreement with the seller, the terms of which called for the Company to release the seller from its obligations related to product liability claims under the Galion acquisition agreement in exchange for a cash payment of $1,050,000. A reserve to provide for these product claims was established at the acquisition date. Since many of the cases have been settled and insurance coverage exists, management believes that the ongoing costs to defend these claims will not exceed the amount accrued on the accompanying consolidated balance sheet at March 31, 2002. Nevertheless, it is not possible to predict the ultimate outcome of any product liability claim, and any such claim not fully covered by insurance, as well as adverse publicity from a product claim, could have a material adverse effect on the Company. 6 of 16 McCLAIN INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SIX MONTHS ENDED MARCH 31, 2002 Environmental Matters The Company's operations are subject to extensive federal, state and local regulation under environmental laws and regulations concerning, among other things, emissions into the air, discharges into the waters and the generation, handling, storage, transportation, treatment and disposal of waste and other materials. Inherent in manufacturing operations and in owning real estate is the risk of environmental liabilities as a result of both current and past operations, which cannot be predicted with certainty. The Company has incurred and will continue to incur costs, on an ongoing basis, associated with environmental regulatory compliance in its business. Labor Union Matters Certain of the Company's hourly employees are represented by various labor unions pursuant to collective bargaining agreements which expire between September 2002 and June 2003. In 1995, a local union filed unfair labor practices against the Company's Macon, Georgia plant, which were subsequently upheld by the National Labor Relations Board (NLRB) and the U.S. Court of Appeals. The local union filed additional unfair labor practices in 1996. The NLRB seeks back pay, reinstatement and an order requiring transfer of work. The Company reached an agreement with the NLRB regarding the back pay and reinstatement issues in February 2002. The agreement calls for the Company to make payments of approximately $600,000 in quarterly installments over three years, beginning in March of 2002. A reserve was set up at September 30, 2001 to cover the costs of this agreement. The Company is currently negotiating with the NLRB in an effort to reach a settlement of the remaining matter. There can be no assurance that that claim will be settled or that any amounts awarded to the union will not have a material adverse impact on the Company. Other Legal Matters The Company is also involved in routine litigation incidental to its business. Management believes that the resolution of these matters will not materially affect the consolidated financial statements. 7 of 16 McCLAIN INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SIX MONTHS ENDED MARCH 31, 2002 6. Other Matters The Company recorded a $1,100,000 charge against operations in March 2001 primarily related to the reduction of certain truck chassis to their estimated realizable value and for various severance packages for terminated employees. 7. Segment Information The Company operates in three principal operating segments 1) Manufactured Equipment, 2) Truck Chassis Sales, and 3) Leasing Operations. Management evaluates the performance of its operating segments separately to individually monitor the different factors affecting performance. The Company measures the performance of its operating segments based on net revenue and operating income. Income taxes are managed on a Company-wide basis. Segment performance is also evaluated based on profit or loss before income taxes. 8 of 16 McCLAIN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) THREE MONTHS ENDED MARCH 31, 2002 Information regarding the Company's operating segments follows for the three months ended March 31, 2002 and 2001 follows: Manufacturing Truck Leasing Operations Group Operations Totals ------------------- ------------------- ----------------- ------------------- 2002 ---- Net sales $14,440,788 $2,335,927 $0 $16,776,715 Lease revenues 0 0 1,782,557 1,782,557 Operating income (loss) -1,370,482 41,958 243,468 -1,085,056 Interest expense, net 438,691 101,670 346,390 886,751 Income (loss) before income taxes -1,427,102 -60,454 236,586 -1,250,970 Identifiable assets 60,284,624 5,133,994 23,923,389 89,342,007 Capital expenditures 118,398 0 0 118,398 Depreciation and amortization 702,052 0 0 702,052 2001 ---- Net sales $18,851,958 $5,896,677 $0 $24,748,635 Lease revenues 0 0 1,925,387 1,925,387 Operating income (loss) -1,744,594 -58,958 291,808 -1,511,744 Interest expense, net 662,219 195,315 420,849 1,278,383 Income (loss) before income taxes -2,039,460 -263,274 291,808 -2,010,926 Identifiable assets 79,167,360 11,930,990 22,959,606 114,057,956 Capital expenditures 14,672 0 0 14,672 Depreciation and amortization 833,456 0 0 833,456 9 of 16 McCLAIN INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SIX MONTHS ENDED MARCH 31, 2002 Information regarding the Company's operating segments follows for the six months ended March 31, 2002 and 2001 follows: Manufacturing Truck Leasing Operations Group Operations Totals ------------------- ------------------- ----------------- ------------------- 2002 ---- Net sales $31,800,517 $5,063,797 $0 $36,864,314 Lease revenues 0 0 3,647,109 3,647,109 Operating income (loss) -1,829,543 29,676 648,685 -1,151,182 Interest expense, net 867,847 229,118 676,436 1,773,401 Income (loss) before income taxes -1,829,028 -200,875 547,755 -1,482,148 Identifiable assets 60,284,624 5,133,994 23,923,389 89,342,007 Capital expenditures 368,453 0 0 368,453 Depreciation and amortization 1,432,641 0 0 1,432,641 ------------------- ------------------- ----------------- ------------------- 2001 ---- Net sales $34,298,629 $11,537,692 $0 $45,836,321 Lease revenues 0 0 3,714,996 3,714,996 Operating income (loss) -2,835,457 -251,854 648,685 -2,438,626 Interest expense, net 1,595,605 446,185 808,957 2,850,747 Income (loss) before income taxes -3,659,841 -700,634 648,685 -3,711,790 Identifiable assets 79,167,360 11,930,990 22,959,606 114,057,956 Capital expenditures 37,838 0 0 37,838 Depreciation and amortization 1,665,972 0 0 1,665,972 10 of 16 McCLAIN INDUSTRIES, INC. ITEM TWO. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Overview The following discussion should be read in conjunction with the condensed consolidated financial statements, including the notes thereto, appearing elsewhere in this report. Selected financial data for the Company for the periods indicated: (Unaudited) (Unaudited) Three Months Ended Six Months Ended March 30, March 31, 2002 2001 2002 2001 ---- ---- ---- ---- Net Sales $16,776,715 $24,748,635 $36,864,314 $45,836,321 Net Loss (825,570) (1,326,926) (978,148) (2,449,790) Net Loss Per Common Share (Basic and Diluted) $ (.19) (.29) $ (.22) $ (.54) (Unaudited) As of As of March 31, September 30, 2002 2001 -------------- ----------------- Working Capital (Deficit) $ (11,511,479) $ (12,409,479) Total Assets 89,342,007 102,646,275 Long-Term Debt 0 0 Stockholders' Investment 24,060,011 25,005,661 Common shares outstanding (Basic and Diluted) 4,534,170 4,565,661 Current Ratio 0.82:1 0:83:1 Funded Debt to Equity Stockholders' Investment 2.15:1 2.28:1 11 of 16 McCLAIN INDUSTRIES, INC. The following table presents, as a percentage of net sales, certain selected financial data for the Company for the periods indicated: (Unaudited) (Unaudited) Three Months Ended Six Months Ended March 31, March 31, 2002 2001 2002 2001 ------------------------ ------------------------ Net Sales 100.00% 100.00% 100.00% 100.00% Cost of Sales 87.96 83.94 86.23 84.43 Inventory Writedown 0 2.83 0 1.53 ------- ------- ------- ------- Gross Profit 12.04 13.23 13.77 14.04 Selling, General & Administrative Expenses 18.51 17.72 16.89 18.49 Restructuring charge 0 1.61 0 0.87 ------- ------- ------- ------- Operating Loss ( 6.47) (6.10) ( 3.12 (5.32) Other Expenses ( 0.99) ( 2.02) ( 0.90) ( 2.78) ------- ------- ------ ------- Loss before Income Taxes ( 7.46) (8.12) ( 4.02) (8.10) Income Tax Benefit 2.54 2.76 1.37 2.75 ------- ------- ------- ------- Net Loss ( 4.92)% ( 5.36)% ( 2.65)% (5.35)% ------- ------- ------- ------- 12 of 16 McCLAIN INDUSTRIES, INC. DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION Net sales decreased 32.2% to $16.8 million for the quarter ended March 31, 2002 (Quarter 2002) from $24.8 million for the quarter ended March 31, 2001 (Quarter 2001). The decrease was due primarily to reduced truck sales and the continuing slump in the capital equipment markets. McClain E-Z Pack's sales decreased 39.8% or $6.0 million during the Quarter 2002 compared to the Quarter 2001 while McClain Truck sales decreased 61.8% or $2.6 million during the Quarter 2002 compared to the Quarter 2001. Sales of the Company's dump body products increased by 6.2% or $.2 million for the Quarter 2002 compared to the Quarter 2001. The sales of the McClain Truck division accounted for 10.8% of the Company's sales for the Quarter 2002 compared to 20.6% of the Company's sales for the Quarter 2001. Cost of goods sold increased to 87.9% for the Quarter 2002 from 83.9% for the Quarter 2001 due to the lower sales volume. The gross profit margin on manufactured products decreased to 14.7% for the Quarter 2002 compared to 19.8% for the Quarter 2001. The McClain Truck division had a gross loss of 4.0% for the Quarter 2002 compared to a gross loss of 11.9% for the Quarter 2001. Selling, General & Administrative Expenses increased to 18.5% of net sales for the Quarter 2002 from 17.2% of net sales for the Quarter 2001 due primarily the lower sales volume. The Company had a Net Loss of 4.92% of sales for the Quarter 2002 compared to a Net Loss 5.36% of sales for the Quarter 2001. The loss was due primarily to reduced sales volumes particularly in the Company's E-Z Pack product lines. Net sales decreased 19.6% to $36.8 million for the six months ended March 31, 2002 (six months 2002) from $45.8 million for the six months quarter March 31, 2001 (six months 2001). The decrease was due primarily to reduced truck sales and the continuing slump in the capital equipment markets. McClain E-Z Pack's sales decreased 19.0% or $5.3 million during the six months 2002 compared to the six months 2001 while McClain Truck sales decreased 56.3% or $4.7 million during the six months 2002 compared to the six months 2001. Sales of the Company's dump body products increased by 1.5% or $.1 million for the six months 2002 compared to the six months 2001. The sales of the McClain Truck division accounted for 10.9% of the Company's sales for the six months 2002 compared to 27.0% of the Company's sales for the six months 2001. 13 of 16 Cost of goods sold increased to 86.2% for the six months 2002 from 84.4% for the six months 2001 due primarily to the lower sales volume. The gross profit margin on manufactured products decreased to 15.8% for the six months 2002 compared to 20.0% for the six months 2001. The McClain Truck division had a gross loss of 2.42% for the six months 2002 compared to a gross loss of 7.57% for the Quarter 2001 Selling, General & Administrative Expenses decreased to 16.89% of net sales for the six months 2002 from 18.49% of net sales for the six months 2001. The Company had a Net Loss of 2.65% of sales for the six months 2002 compared to a Net Loss of 5.35% of sales for the six months 2001. The loss was due primarily to reduced sales volumes particularly in the Company's E-Z Pack product lines. The Company had negative working capital of $11.5 million at March 31, 2002 compared to negative working capital of $12.4 million at September 30, 2001 (see subsequent discussion regarding the Company's debt agreements). The ratio of current assets to current liabilities was 0.82:1 at March 31, 2002 and 0.83:1 at September 30, 2001. The Company's cash and cash equivalents totaled $0.7 million at March 31, 2002. Cash flows provided by operations were $8.4 million for the six months ended March 31, 2002. The Company's debt agreements contain certain restrictive covenants that require the Company to, among other things, meet certain net worth and working capital requirements along with maintaining various financial ratios. As the result of non compliance with certain of the financial covenants, the Company entered into a forbearance agreement with its principal lending institution in June of 2001 and expiring August 31, 2001. This agreement was extended to October 31, 2001 and further extended through January 31, 2002. Under the most recent amended and extended forbearance agreement, the line of credit is capped at $22 million, effective December 4, 2001, interest will accrue at the default rate of prime plus 2 1/2%, the leasing credit limit is reduced to the lesser of $19 million or the borrowing base, as defined, and the Company has been placed under a dominion of funds arrangement. The Company is currently operating without an agreement with it principal lender. Accordingly, the debt related to these agreements has been shown as a current liability. Management's plans to resolve this matter include, exploring other financing options while continuing to negotiate with its principal lender to extend the forbearance period or amend its current agreements to among other things reset those covenants that are currently out of compliance and extend the maturity dates on certain of its revolving credit agreements, continuing to evaluate the need for additional personnel reductions, analyzing all plant operations and product lines to determine the viability of each facility, and continuing inventory reductions to match forecasted operating levels. While management believes it will be successful in its negotiations with it principal lender or in obtaining an alternative financing source, that outcome is not certain. If either of these options are ultimately unavailable to the Company and the principal lender exercises it right to accelerate the repayment of the outstanding debt, the Company would be unable to pay the amount outstanding. The revolving credit agreements expire in May 2002. 14 of 16 Management believes, that if its principal lender does not chose to accelerate its right to payment, the negotiations discussed above are successful or the Company secures an alternative financing source, that the Company's cash flow, together with the credit available to it under existing debt facilities, will provide it with adequate cash for its working capital needs for the next 12 months (For further information on the Company's debt agreements, refer to the Consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended September 30, 2001). If these options are ultimately unavailable to the Company and the principal lender exercises it right to accelerate the repayment of the outstanding debt, the Company would be unable to pay the amount outstanding. 15 of 16 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. McCLAIN INDUSTRIES, INC. Date: May 3, 2002 By: /s/ Kenneth D. McClain ----------------------------------- ----------------------------------- Kenneth D. McClain, President Date: May 3, 2002 By: /s/ Mark S. Mikelait ----------------------------------- ----------------------------------- Mark S. Mikelait, Treasurer 16 of 16