<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended September 30, 1995 Commission File Number 0-1227
CHICAGO RIVET & MACHINE CO.
(Exact name of registrant as specified in its charter)
ILLINOIS 36-0904920
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
P. O. Box 3061
90l Frontenac Road
Naperville, Illinois 60566
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (708) 357-8500
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 the latest practicable date.
Class Outstanding at September 30, 1995
- - ------------------------- ---------------------------------
COMMON STOCK, $2.00 PAR VALUE 586,548 SHARES
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the Company's Interim Report to Shareholders for the Quarter
ended September 30, 1995 are incorporated by reference in Part I of
this Report.
<PAGE> 2
CHICAGO RIVET & MACHINE CO.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Balance Sheets at September 30, 1995 2-3
and December 31, 1994.
Statements of Operations for the Three and Nine
Months Ended September 30, 1995 and 1994. 4
Statements of Retained Earnings for the
Nine Months Ended September 30, 1995 and 1994. 5
Statements of Cash Flows for the Nine
Months Ended September 30, 1995 and 1994. 6
Notes to the Financial Statements 7-8
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION 10-13
</TABLE>
<PAGE> 3
CHICAGO RIVET & MACHINE CO.
Balance Sheets
September 30, 1995 and December 31, 1994
Assets
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------------ -------------
(unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,382,421 $ 2,225,445
Certificates of deposit 3,713,212 2,126,240
U. S. Government securities, at amortized cost,
which approximates market 2,119,985 1,631,975
Accounts receivable - net of allowances 2,976,130 2,872,562
Inventories:
Raw materials 715,460 828,616
Work in process 1,012,974 1,172,978
Finished goods 2,023,321 2,342,942
----------- -----------
Total inventories 3,751,755 4,344,536
----------- -----------
Deferred income taxes (Note 4) 714,012 683,064
Other current assets 541,483 310,103
----------- -----------
Total Current Assets 15,198,998 14,193,925
---------- -----------
Goodwill, net of amortization 39,593 58,340
Property, Plant and Equipment
At Cost:
Land and improvements 346,542 346,542
Buildings and improvements 3,720,915 3,704,730
Production equipment, leased
machines and other 14,333,333 14,179,089
----------- -----------
18,400,790 18,230,361
Less - Accumulated Depreciation 13,015,117 12,559,541
----------- -----------
Total Property, Plant and Equipment - Net 5,385,673 5,670,820
----------- -----------
Total Assets $20,624,264 $19,923,085
=========== ===========
</TABLE>
See Notes to the Financial Statements
-2-
<PAGE> 4
CHICAGO RIVET & MACHINE CO.
Balance Sheets
September 30, 1995 and December 31, 1994
Liabilities and Shareholders' Equity
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------------ --------------
(unaudited)
<S> <C> <C>
Current Liabilities:
Accounts payable $ 716,772 $ 1,144,529
Contributions due profit - sharing
and pension plans 304,970 322,309
Wages and salaries 665,736 638,565
Other accrued expenses (Note 5) 1,040,717 602,194
Unearned lease revenue 85,493 105,352
Federal and state income taxes 322,604 412,369
----------- -----------
Total Current Liabilities 3,136,292 3,225,318
Deferred Income Taxes (Note 4) 1,046,549 995,767
----------- -----------
Total Liabilities 4,182,841 4,221,085
Shareholders' Equity:
Preferred stock, no par value:
authorized 500,000 shares -
none outstanding -- --
Common stock, $2.00 par value:
authorized 2,000,000 shares -
issued and outstanding 586,548
and 586,648, respectively 1,173,096 1,173,296
Additional paid - in capital 460,880 460,959
Retained earnings 14,807,447 14,067,745
----------- -----------
Total Shareholders' Equity 16,441,423 15,702,000
----------- -----------
Commitments and Contingencies (Note 3) -- --
----------- -----------
Total Liabilities and Shareholders' Equity $20,624,264 $19,923,085
=========== ===========
</TABLE>
See Notes to the Financial Statements
-3-
<PAGE> 5
CHICAGO RIVET & MACHINE CO.
Statements of Operations
For the Three and Nine Months Ended September 30, 1995 and 1994
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------------- ------------------------------
September 30, September 30,
1995 1994 1995 1994
--------------------------------- ------------------------------
<S> <C> <C> <C> <C>
Net sales $ 4,855,400 $ 5,105,573 $18,035,970 $16,578,771
Lease revenue 135,960 137,538 396,794 432,251
------------ ------------ ------------- -----------
$ 4,991,360 $ 5,243,111 $18,432,764 $17,011,022
Cost of goods sold and costs
related to lease revenue 3,390,433 3,656,869 12,128,652 11,339,091
------------ ------------ ------------- -----------
Gross profit 1,600,927 1,586,242 6,304,112 5,671,931
Shipping, selling and
administrative expenses 1,097,267 1,051,334 3,575,170 3,505,914
Profit sharing and pension
expenses 45,000 63,000 270,000 174,000
------------ ------------ ------------- -----------
458,660 471,908 2,458,942 1,992,017
Other income and expenses:
Interest income from
U.S. Government securities
and certificates of deposit 85,500 52,701 228,455 131,079
Gain from sale of leased
machines and other equipment 9,809 (10,175) 10,918 19,813
Amortization expense (6,249) (6,249) (18,747) (18,747)
Other income, net of other expense 111 36,936 414 37,062
------------ ------------ ------------- -----------
Income before income taxes 547,831 545,121 2,679,982 2,161,224
Provision for income taxes 213,000 223,000 1,087,000 883,000
------------ ------------ ------------- -----------
Net income $ 334,831 $ 322,121 $1,592,982 $1,278,224
============ ============ ============= ===========
Average common shares outstanding 586,548 587,048 586,613 587,101
============ ============ ============= ===========
Per share data:
Net income per share $ .58 $ .55 $ 2.72 $ 2.18
============ ============ ============= ===========
Cash dividends declared per share $ .30 $ .30 $ 1.45 $ 1.25
============ ============ ============= ===========
</TABLE>
See Notes to the Financial Statements
-4-
<PAGE> 6
CHICAGO RIVET & MACHINE CO.
Statements of Retained Earnings
For the Nine Months Ended September 30, 1995 and 1994
(unaudited)
<TABLE>
<CAPTION>
September 30,
----------------------------
1995 1994
----------- -----------
<S> <C> <C>
Retained earnings at beginning
of period $14,067,745 $13,081,301
Net income for the nine months ended 1,592,982 1,278,224
Treasury stock retired at cost (2,641) (2,633)
Cash dividends declared in the period -
$1.45 per share in 1995 and $1.25 per
share in 1994 (850,639) (733,936)
--------- ---------
Retained earnings at end of period $14,807,447 $13,622,956
=========== ===========
</TABLE>
See Notes to the Financial Statements
-5-
<PAGE> 7
CHICAGO RIVET & MACHINE CO.
Statements of Cash Flows
For the Nine Months Ended September 30, 1995 and 1994
(unaudited)
<TABLE>
<CAPTION>
September 30,
------------------------------------
1995 1994
---------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,592,982 $ 1,278,224
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 500,101 494,669
Net gain on the sale of properties (10,918) (19,813)
Deferred income taxes 19,834 (9,642)
Changes in current assets and current liabilities:
Accounts receivable, net (103,568) 340,266
Inventories 592,781 (473,003)
Accounts payable (427,757) (372,367)
Other, net 107,351 (156,798)
--------------- --------------
Net cash provided by operating activities 2,270,806 1,081,536
--------------- --------------
Cash flows from investing activities:
Capital expenditures (226,419) (280,896)
Net proceeds from the sale of properties 41,130 153,712
Proceeds from the maturity of
held-to-maturity securities 5,838,137 5,302,603
Purchases of held-to-maturity securities (7,913,119) (6,148,583)
--------------- --------------
Net cash used by investing activities (2,260,271) (973,164)
-------------- ---------------
Cash flows from financing activities
Cash dividends (850,639) (733,936)
Purchase of Treasury Stock (2,920) (2,912)
-------------- ---------------
Net cash used by financing activities (853,559) (736,848)
-------------- -------------
Net decrease in cash and
cash equivalents (843,024) (628,476)
Cash and cash equivalents at beginning
of period 2,225,445 1,896,696
-------------- -------------
Cash and cash equivalents at end of period $ 1,382,421 $ 1,268,220
============== =============
Cash paid during the period for:
Income taxes $ 1,156,930 $ 932,790
</TABLE>
See Notes to the Financial Statements
-6-
<PAGE> 8
CHICAGO RIVET & MACHINE CO.
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
1. In the opinion of the Company, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly the
financial position of the Company as of September 30, 1995 and December
31, 1994 and the results of operations and changes in cash flow for the
indicated periods. The unaudited financial statements reflect certain
estimated inventories as of the end of the interim periods.
2. The results of operations for the nine month period ending September 30,
1995 are not necessarily indicative of the results to be expected for the
year.
3. The Company is, from time to time, involved in litigation, including
environmental claims, in the normal course of business. With regard to
environmental claims, the Company, and a former subsidiary, W.S. & W.C.,
Inc., have been named by state and/or federal government agencies as
"potentially responsible parties" with respect to certain waste disposal
sites. As a potentially responsible party, the Company, or its former
subsidiary, may be considered jointly and severally liable, along with
other potentially responsible parties, for the cost of remediation of
these waste sites. The actual cost of remediation is presently unknown;
however, estimates currently available suggest that the cost of
remediation at these sites will be between $77 and $100 million. Despite
the joint and several nature of the liability, these proceedings are
frequently resolved on the basis of the quantity and type of waste
disposed by the parties. The actual amount of liability for the Company,
and its former subsidiary, is unknown due to disagreement concerning the
allocation of responsibility, uncertainties regarding the amount of
contribution that will be available from other parties and uncertainties
related to insurance coverage. After investigation of the quantities
and type of waste disposed at these sites, it is management's opinion that
any liability will not be material to the Company's financial condition.
Nevertheless, it is unlikely that the Company will not incur significant
costs associated with these proceedings and accordingly the Company has
recorded a liability of $614,000 related to these matters. The adequacy
of this reserve will be reviewed periodically as more definitive cost
information becomes available.
4. At September 30, 1995 significant deferred tax liabilities and assets were
comprised of the following:
<TABLE>
<S> <C>
Depreciation $ (1,071,262)
------------
(1,071,262)
Environmental accruals 245,699
Inventory valuations 209,461
Accrued vacation 146,307
Doubtful accounts 52,431
Unearned rental revenue 34,197
Other 50,630
------------
738,725
------------
$ (332,537)
------------
</TABLE>
-7-
<PAGE> 9
CHICAGO RIVET & MACHINE CO.
NOTES TO THE FINANCIAL STATEMENTS (CON'T.)
(Unaudited)
5. Other Accrued Expenses - accrued expenses consist of the following:
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
------------------- ------------------
<S> <C> <C>
Property taxes $ 29,525 $ 64,366
Environmental costs 614,246 513,583
Accrued insurance 289,059 0
All other items 107,887 24,245
------------ -----------
$1,040,717 $ 602,194
</TABLE> ========== ===========
-8-
<PAGE> 10
CHICAGO RIVET & MACHINE CO.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Demand for Company products began to show some weakness during the second
quarter of this year and similar weakness was evident during the third quarter.
Accordingly, it was not surprising that third quarter sale and lease revenue
declined approximately 4.8% compared to the year earlier period. For the three
months ended September 30, 1995, net sales and lease revenue amounted to
$4,991,360 compared to $5,243,111 recorded during the same period in 1994.
Despite the decrease in revenues, earnings for the third quarter of 1995
improved slightly over the same period in 1994. Net income totaled $334,831,
or $.58 per share on 586,548 average shares outstanding during the third
quarter of 1995, compared with $322,121, or $.55 per share on 587,048 average
shares outstanding during the third quarter of 1994. The improvement in
operating margins is primarily attributable to a more favorable product mix
during the 1995 period compared to the year earlier period.
Working capital totaled slightly over $12 million at the end of the third
quarter, an increase of approximately $1.1 million since the beginning of the
year. The ratio of current assets to current liabilities has also improved
when compared to year end 1994. Investment in inventories has declined since
year end 1994. The Company's financial condition continues to be excellent,
with adequate liquidity and no long term debt.
See the Company's Interim Report to Shareholders for the quarter ended
September 30, 1995 for a discussion and analysis of financial condition and
results of operations. This section is incorporated herein by reference. The
Interim Report is filed as an exhibit to this report on pages 12 and 13.
-9-
<PAGE> 11
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K -- No reports on Form 8-K were filed during the
three months ended September 30, 1995.
-10-
<PAGE> 12
SIGNATURES
Pursuant to the requirements 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.
CHICAGO RIVET & MACHINE CO.
------------------------------
(Registrant)
Date: November 10, 1995
John A. Morrissey
-------------------------------------
Chairman of the Board of Directors
and Chief Executive Officer
Date: November 10, 1995
John C. Osterman
-------------------------------------
President, Chief Operating
Officer and Treasurer (Principal
Financial Officer)
Date: November 10, 1995
Stephen D. Voss
-------------------------------------
Assistant Treasurer and Controller
-11-
<PAGE> 13
E X H I B I T S
To Our Shareholders:
The comparative results of operations of Chicago Rivet & Machine Co. for
the third quarter and first nine months of 1995 and 1994 are summarized
below.
As reported in our second quarter report, demand for our products began to
show some weakness during the second quarter of this year. Accordingly, it was
not surprising that third quarter sales and lease revenue declined
approximately 4.8% compared to the year earlier period. For the three months
ended September 30, 1995, net sales and lease revenue amounted to $4,991,360
compared to $5,243,111 recorded during the same period in 1994. On a year to
date basis, revenues totaled $18,432,764 during the first nine months of 1995,
which represents an increase of $1,421,742, or approximately 8.4%, over the
same period in 1994.
Despite the decrease in revenues, earnings for the third quarter of 1995
improved slightly over the same period in 1994. Net income totaled $334,831,
or $.58 per share on 586,548 average shares outstanding during the third
quarter of 1995, compared with $322,121, or $.55 per share on 587,048 average
shares outstanding during the third quarter of 1994. For the first nine
months, 1995 earnings totaled $1,592,982 or $2.72 per share on 586,613 average
shares outstanding, compared with earnings of $1,278,224, or $2.18 per share on
587,101 average shares outstanding during the first nine months of 1994.
Traditionally, the Company's third quarter revenues have been affected by
reduced work schedules related to vacation shutdowns at our facilities as well
as those of our major customers. The effects of those reduced schedules were
not as noticeable during the third quarter of 1994 as our vacation schedules
were modified to accommodate high demand that existed in our markets. Our
third quarter work schedules returned to the traditional level in 1995, with
each of our facilities scheduling a two week vacation shutdown during the
quarter. Third quarter results were also affected as the softening of product
demand that began during the second quarter continued to characterize our
markets throughout the third quarter.
The outlook for the balance of 1995 is clouded by uncertainty with regard
to the general economy. Many forecasts suggest that the economy will grow
modestly in the months ahead. As has been the case for several months, our
major customers are less optimistic concerning the immediate future. The level
of incoming orders continues to trail year earlier levels across all product
lines. Our backlog of unfilled orders, while still adequate, is lower than at
this time last year and unless the level of incoming orders improves
dramatically in the next few weeks, we would expect fourth quarter sales to lag
behind those recorded during the fourth quarter of 1994. We are poised to take
full advantage of any opportunities that lie ahead and despite the current
weakness in our markets, we are confident that 1995 will be another good year
for the company.
Respectfully submitted,
John A. Morrissey John C. Osterman
Chairman President
October 26, 1995
-12-
<PAGE> 14
CHICAGO RIVET & MACHINE CO.
Summary of Results of Operations
For the Three and Nine months September June 30
<TABLE>
<CAPTION>
Third Quarter First Nine Months
---------------------------- -------------------------------
1995 1994 1995 1994
------------ --------------- --------------- --------------
<S> <C> <C> <C> <C>
Net sales and lease revenue $4,991,360 $5,243,111 $18,432,764 $17,011,022
Income before taxes 547,831 545,121 2,679,982 2,161,224
Income after taxes 334,831 322,121 1,592,982 1,278,224
Net income per share .58 .55 2.72 2.18
Average shares outstanding 586,548 587,048 586,613 587,101
</TABLE>
(All figures subject to year end audit)
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,382,421
<SECURITIES> 5,833,197
<RECEIVABLES> 3,107,208
<ALLOWANCES> 131,078
<INVENTORY> 3,751,755
<CURRENT-ASSETS> 15,198,998
<PP&E> 18,400,790
<DEPRECIATION> 13,015,117
<TOTAL-ASSETS> 20,624,264
<CURRENT-LIABILITIES> 3,136,292
<BONDS> 0
<COMMON> 1,173,096
0
0
<OTHER-SE> 15,268,327
<TOTAL-LIABILITY-AND-EQUITY> 20,624,264
<SALES> 18,035,970
<TOTAL-REVENUES> 18,432,764
<CGS> 12,128,652
<TOTAL-COSTS> 15,973,822
<OTHER-EXPENSES> (221,040)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,679,982
<INCOME-TAX> 1,087,000
<INCOME-CONTINUING> 1,592,982
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,592,982
<EPS-PRIMARY> 2.72
<EPS-DILUTED> 2.72
</TABLE>
