<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 March 31, 1996 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 March 31, 1996
COMMON STOCK, $2.00 PAR VALUE 585,748 SHARES
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the Company's Interim Report to Shareholders for the Quarter
ended March 31, 1996 are incorporated by reference in Part I of this Report.
<PAGE> 2
CHICAGO RIVET & MACHINE CO.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page No.
--------
<S> <C> <C>
Balance Sheets at March 31, 1996 2-3
and December 31, 1995.
Statements of Operations for the Three
Months Ended March 31, 1996 and 1995. 4
Statements of Retained Earnings for the
Three Months Ended March 31, 1996 and 1995. 5
Statements of Cash Flows for the Three
Months Ended March 31, 1996 and 1995. 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 10-14
</TABLE>
<PAGE> 3
CHICAGO RIVET & MACHINE CO.
Balance Sheets
March 31, 1996 and December 31, 1995
Assets
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------------- -------------
(unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 2,381,824 $ 1,349,093
Certificates of deposit 3,754,355 4,568,212
U. S. Government securities (Note 6) 1,873,511 2,703,533
Accounts receivable - net of allowances 2,472,382 2,379,497
Inventories:
Raw materials 733,887 696,999
Work in process 948,567 900,888
Finished goods 2,637,067 2,504,519
----------- ------------
Total inventories 4,319,521 4,102,406
----------- ------------
Deferred income taxes (Note 4) 810,051 806,227
Other current assets 392,431 231,957
----------- -------------
Total Current Assets 16,004,075 16,140,925
---------- -----------
Goodwill, net of amortization 27,095 33,344
---------- ------------
Property, Plant and Equipment
At Cost:
Land and improvements 347,676 347,676
Buildings and improvements 3,719,640 3,715,915
Production equipment, leased
machines and other 14,181,044 14,233,135
----------- -----------
18,248,360 18,296,726
Less - Accumulated Depreciation 13,227,734 13,115,856
----------- -----------
Net Property, Plant and Equipment 5,020,626 5,180,870
----------- -----------
Total Assets $21,051,796 $21,355,139
=========== ===========
</TABLE>
See Notes to the Financial Statements
-2-
<PAGE> 4
CHICAGO RIVET & MACHINE CO.
Balance Sheets
March 31, 1996 and December 31, 1995
Liabilities and Shareholders' Equity
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
-------------------- --------------
(unaudited)
<S> <C> <C>
Current Liabilities:
Accounts payable $ 632,757 $ 877,871
Contributions due profit - sharing
and pension plans 265,541 572,864
Wages and salaries 651,033 623,790
Other accrued expenses (Note 5) 1,205,654 744,410
Unearned lease revenue 53,906 70,120
Federal and state income taxes 496,165 541,045
------------- -------------
Total Current Liabilities 3,305,056 3,430,100
Deferred Income Taxes (Note 4) 1,040,176 1,041,930
------------ ------------
Total Liabilities 4,345,232 4,472,030
------------ ------------
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 585,748 1,171,496 1,171,496
Additional paid - in capital 460,252 460,252
Retained earnings 15,074,816 15,251,361
----------- -----------
Total Shareholders' Equity 16,706,564 16,883,109
----------- -----------
Commitments and Contingencies (Note 3) ---- ----
----------- ------------
Total Liabilities and Shareholders' Equity $21,051,796 $21,355,139
=========== ============
</TABLE>
See Notes to the Financial Statements
-3-
<PAGE> 5
CHICAGO RIVET & MACHINE CO.
Statements of Operations
For the Three Months Ended March 31, 1996 and 1995
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------
March 31,
1996 1995
------------- --------------
<S> <C> <C>
Net sales $ 5,218,322 $ 6,327,461
Lease revenue 105,310 131,196
----------- -----------
5,323,632 6,458,657
Cost of goods sold and costs
related to lease revenue 3,604,976 4,216,223
----------- -----------
Gross profit 1,718,656 2,242,434
Shipping, selling and
administrative expenses 1,176,359 1,217,026
Profit sharing and pension
expenses 57,500 75,000
----------- -----------
484,797 950,408
Other income and expenses:
Interest income from
U.S. Government securities
and certificates of deposit 98,274 71,344
Gain (loss) from sale of leased
machines and other equipment (10,110) 579
Amortization expense (6,249) (6,249)
Other income, net of other expense 4,899 161
---------- ----------
Income before income taxes 571,611 1,016,243
Provision for income taxes 220,982 427,000
---------- ----------
Net income $ 350,629 $ 589,243
========== ==========
Average common shares outstanding 585,748 586,648
========== ==========
Per share data:
Net income per share $ .60 $ 1.00
========== ==========
Cash dividends declared per share $ .90 $ .85
========== ==========
</TABLE>
See Notes to the Financial Statements
-4-
<PAGE> 6
CHICAGO RIVET & MACHINE CO.
Statements of Retained Earnings
For the Three Months Ended March 31, 1996 and 1995
(unaudited)
<TABLE>
<CAPTION>
March 31,
-----------------------------------------
1996 1995
----------- ------------
<S> <C> <C>
Retained earnings at beginning
of period $15,251,361 $14,067,745
Net income for the three months ended 350,629 589,243
Cash dividends declared in the period -
$.90 per share in 1996 and $.85 per
share in 1995. (527,174) (498,650)
----------- -----------
Retained earnings at end of period $15,074,816 $14,158,338
=========== ===========
</TABLE>
See Notes to the Financial Statements
-5-
<PAGE> 7
CHICAGO RIVET & MACHINE CO.
Statements of Cash Flows
For the Three Months Ended March 31, 1996 and 1995
(unaudited)
<TABLE>
<CAPTION>
March 31,
-----------------------------------
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 350,629 $ 589,243
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 162,901 166,333
Net (gain) loss on the sale of properties 10,110 (579)
Deferred income taxes (5,578) 14,043
Changes in current assets and current liabilities:
Accounts receivable, net (92,885) (418,741)
Inventories (217,115) (121,336)
Accounts payable (245,114) (186,542)
Other, net (391,853) 162,719
Net cash provided (used) by operating activities (428,905) 205,140
----------- -----------
Cash flows from investing activities:
Capital expenditures (10,308) (75,464)
Net proceeds from the sale of properties 3,790 4,175
Proceeds from the maturity of
held-to-maturity securities -- 2,451,494
Purchases of held-to-maturity securities (195,344) (2,705,626)
Proceeds from maturities of
available-for-sale securities 3,203,603 --
Purchases of available-for-sale securities (1,364,381) --
----------- ------------
Net cash provided (used) by investing activities 1,637,360 (325,421)
----------- ------------
Cash flows from financing activities
Cash dividends declared (175,724) (175,994)
----------- ------------
Net cash used by financing activities (175,724) (175,994)
------------ ------------
Net increase (decrease) in cash and
cash equivalents 1,032,731 (296,275)
Cash and cash equivalents at beginning
of period 1,349,093 2,225,445
----------- ------------
Cash and cash equivalents at end of period $ 2,381,824 $ 1,929,170
=========== ============
Cash paid during the period for:
Income taxes $ 271,458 $ 288,500
</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 March 31, 1996 and December
31, 1995 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 three month period ending March 31,
1996 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 $100 and $133 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 $598,075 related to these
matters. The adequacy of this reserve will be reviewed periodically
as more definitive cost information becomes available.
4. At March 31, 1996 significant deferred tax liabilities and assets were
comprised of the following:
<TABLE>
<S> <C>
Depreciation $(1,061,560)
-----------
(1,061,560)
Environmental accruals 239,230
Inventory valuations 223,840
Accrued vacation 150,254
Doubtful accounts 67,829
Accrued pension 76,819
Unearned rental revenue 21,562
Other, net 51,901
831,435
-----------
$ (230,125)
===========
</TABLE>
-7-
<PAGE> 9
5. Other Accrued Expenses - accrued expenses consist of the following:
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
-------------- ------------------
<S> <C> <C>
Payroll taxes $ 130,667 $ 45,819
Property taxes 92,145 60,137
Environmental costs 598,075 638,875
Dividends payable 351,450 ---
All other items 33,317 (421)
---------- ---------
$1,205,654 $ 744,410
========== =========
</TABLE>
6. At March 31, 1996 the Company has recorded $889,471 of U. S.
Government securities as held-to-maturity, and $984,040 of U. S.
Government securities as available-for-sale.
-8-
<PAGE> 10
CHICAGO RIVET & MACHINE CO.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net sales and lease revenues amounted to $5,323,632 in the first
quarter of 1996, well below the robust level recorded in the same period in
1995. Demand for the company's products was uncharacteristically weak
throughout the first quarter of 1996. The decline was not limited to one
product line, but rather was evident in both the fastener and automatic rivet
setting equipment and accessory segments of our product offerings. Similarly,
the decline in order activity has been encountered in all of the Company's our
major markets.
Net income totaled $350,629 or $.60 per share on 585,748 average
shares outstanding during the first quarter of 1996. This compares to $589,243
or $1.00 per share on 586,648 average shares outstanding during the first
quarter of 1995. In addition to the effects of lower sales volumes, profits
were adversely affected by a change in composition of sales in 1996 compared
with 1995 when we enjoyed a relatively larger percentage of business with
higher operating margins.
Working capital increased to approximately $13 million compared with
$12.7 million at year end 1995. Inventories increased approximately 5% during
the quarter. The Company's financial condition remains strong and liquidity is
considered to be excellent.
The Company recently announced that it has entered into a conditional
agreement to purchase substantially all of the assets and assume certain
liabilities of H & L Tool Company, Inc. of Madison Heights, Michigan. The
transaction is subject to various conditions, including completion by the
Company of its due diligence investigation and the negotiation of a
satisfactory purchase and sale agreement. While the exact purchase price will
be determined by the definitive contract, it is expected to be approximately
$19,000,000 in a combination of cash and the assumption of certain liabilities.
The transaction is expected to be financed by a combination of available cash
and borrowings of approximately $8,000,000. After completion of the
transaction, Chicago Rivet intends to continue operations at H & L Tool
Company, Inc.'s Michigan location. H & L Tool Company, Inc. was established in
1946 and is a privately held manufacturer of specialty cold-formed fasteners
and screw machine products predominately for the automotive market. The
proposed acquisition is expected to significantly enhance our capabilities
for the manufacture of cold-headed parts.
See the Company's Interim Report to Shareholders for the Quarter ended
March 31, 1996 for additional information. This section is incorporated herein
by reference. The Interim Report is filed as an exhibit to this report on
pages 11 and 12.
-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 March 31, 1996.
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.
<TABLE>
<S> <C> <C>
CHICAGO RIVET & MACHINE CO.
(Registrant)
Date: May 13, 1996
John A. Morrissey
-------------------------------------------
Chairman of the Board of Directors
and Chief Executive Officer
Date: May 13, 1996
John C. Osterman
-------------------------------------------
President, Chief Operating
Officer and Treasurer (Principal
Financial Officer)
Date: May 13, 1996
Stephen D. Voss
-------------------------------------------
Assistant Treasurer and Controller
</TABLE>
-10-
<PAGE> 12
CHICAGO RIVET & MACHINE CO.
EXHIBITS
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Page
- - ------ ----
<S> <C> <C>
19.1 Interim Report to Shareholders for the
quarter ended March 31, 1996. 12 - 13
27.1 Financial Data Schedule 14
</TABLE>
-11-
<PAGE> 1
E X H I B I T 1 9 . 1
To Our Shareholders:
The comparative results of operations of Chicago Rivet & Machine
Co. for the first quarter of 1996 and 1995 are summarized below.
Net sales and lease revenues amounted to $5,323,632 in the first
quarter of 1996, well below the robust level recorded in the same period in
1995. Demand for the company's products was uncharacteristically weak
throughout the first quarter of 1996. This weakness was evident in both the
fastener and automatic rivet setting equipment and accessory segments of our
product offerings. Similarly, the decline in order activity has been
encountered in all of our major markets.
Net income totaled $350,629 or $.60 per share on 585,748 average
shares outstanding during the first quarter of 1996. This compares to $589,243
or $1.00 per share on 586,648 average shares outstanding during the first
quarter of 1995. In addition to the effects of lower sales volume, profits
were adversely affected by a change in composition of sales in 1996 compared
with 1995 when we enjoyed a relatively larger percentage of business with
higher operating margins. We plan to continue our successful efforts to
increase our market share in the coming months. Naturally, renewed emphasis
had been, and will continue to be, placed on cost reduction programs in order
to maintain an acceptable level of profitability despite the softer market
conditions that exist today.
The Company recently announced that it has entered into a conditional
agreement to purchase substantially all of the assets and assume certain
liabilities of H & L Tool Company, Inc. of Madison Heights, Michigan. The
transaction is subject to various conditions, including completion by the
Company of its due diligence investigation and the negotiation of a
satisfactory purchase and sale agreement. While the exact purchase price will
be determined by the definitive contract, it is expected to be approximately
$19,000,000 in a combination of cash and the assumption of certain liabilities.
The transaction is expected to be financed by a combination of available cash
and borrowings of approximately $8,000,000. After completion of the
transaction, Chicago Rivet intends to continue operations at H & L Tool
Company, Inc.'s Michigan location. H & L Tool Company, Inc. was established in
1945 and is a privately held manufacturer of specialty cold-formed fasteners
and screw machine products predominately for the automotive market. The
proposed acquisition is expected to significantly enhance our capabilities
for the manufacture of cold-headed parts.
<PAGE> 2
The 1996 annual meeting of shareholders will be held at the Company's
headquarters in Naperville, Illinois at 10:00 AM on Tuesday, May 14, 1996. All
shareholders are cordially invited to attend. Formal notice of the meeting,
proxy materials and the Company's 1995 Annual Report to Shareholders were
distributed early in April. If you have not already completed and returned
your proxy, we ask that you do so at your earliest convenience. Thank you.
Respectfully yours,
John A. Morrissey John C. Osterman
Chairman President
April 25, 1996
- - --------------------------------------------------------------------------------
CHICAGO RIVET & MACHINE CO.
Summary of Results of Operations
<TABLE>
<CAPTION>
For the Three Months
Ended:
March 31, March 31,
1996 1995
---------- -----------
<S> <C> <C>
Net sales and lease revenue . . . . . . . . . . . . . . $ 5,323,632 $ 6,458,657
Income before taxes . . . . . . . . . . . . . . . . . . . 571,611 1,016,243
Income after taxes . . . . . . . . . . . . . . . . . . . 350,629 589,243
Net income per share . . . . . . . . . . . . . . . . . . .60 1.00
Average shares outstanding . . . . . . . . . . . . . . . 585,748 586,648
- - ----------------------------------------------------------------------------------------------
</TABLE>
(All figures subject to year end audit)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1996
<CASH> 2,381,824
<SECURITIES> 5,627,866
<RECEIVABLES> 2,641,954
<ALLOWANCES> 169,572
<INVENTORY> 4,319,521
<CURRENT-ASSETS> 16,004,075
<PP&E> 18,248,360
<DEPRECIATION> 13,227,734
<TOTAL-ASSETS> 21,051,796
<CURRENT-LIABILITIES> 3,305,056
<BONDS> 0
0
0
<COMMON> 1,171,496
<OTHER-SE> 15,535,068
<TOTAL-LIABILITY-AND-EQUITY> 21,051,796
<SALES> 5,218,322
<TOTAL-REVENUES> 5,323,632
<CGS> 3,604,976
<TOTAL-COSTS> 4,838,835
<OTHER-EXPENSES> (86,814)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 571,611
<INCOME-TAX> 220,982
<INCOME-CONTINUING> 350,629
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 350,629
<EPS-PRIMARY> 0.60
<EPS-DILUTED> 0.60
</TABLE>
