<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, 1999 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 (630) 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, 1999
- ----- ---------------------------------
COMMON STOCK, $1.00 PAR VALUE 1,150,896 SHARES
DOCUMENTS INCORPORATED BY REFERENCE
- -----------------------------------
(1) Portions of the Company's Interim Report to Shareholders for the Quarter
ended September 30, 1999 are incorporated by reference in Part I of this Report.
<PAGE> 2
CHICAGO RIVET & MACHINE CO.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
<S> <C>
Consolidated Balance Sheets at September 30, 1999
and December 31, 1998 2-3
Consolidated Statements of Operations for the Three
and Nine Months Ended September 30, 1999 and 1998 4
Consolidated Statements of Retained Earnings for the
Nine Months Ended September 30, 1999 and 1998 5
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 1999 and 1998 6
Notes to the Consolidated Financial Statements 7-9
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-12
PART II. OTHER INFORMATION 13-18
</TABLE>
<PAGE> 3
CHICAGO RIVET & MACHINE CO.
Consolidated Balance Sheets
September 30, 1999 and December 31, 1998
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
(Unaudited)
Assets
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,660,260 $ 3,181,471
Certificates of deposit 2,452,594 550,254
Accounts receivable - net of allowances 7,437,300 6,483,214
Inventories:
Raw materials 1,669,209 1,656,179
Work in process 1,802 868 1,777,584
Finished goods 3,048,583 3,095,984
----------- -----------
Total inventories 6,520,660 6,529,747
----------- -----------
Deferred income taxes 651,191 691,191
Other current assets 211,582 235,149
----------- -----------
Total current assets 18,933,587 17,671,026
----------- -----------
Property, Plant and Equipment:
Land and improvements 1,008,901 1,008,901
Buildings and improvements 5,644,704 5,634,144
Production equipment, leased
machines and other 24,400,886 23,737,405
----------- -----------
31,054,491 30,380,450
Less accumulated depreciation 17,439,645 16,235,695
----------- -----------
Net property, plant and equipment 13,614,846 14,144,755
----------- -----------
Total assets $32,548,433 $31,815,781
=========== ===========
See Notes to the Consolidated Financial Statements
</TABLE>
2
<PAGE> 4
CHICAGO RIVET & MACHINE CO.
Consolidated Balance Sheets
September 30, 1999 and December 31, 1998
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
(Unaudited)
<S> <C> <C>
Liabilities and Shareholders' Equity
Current Liabilities:
Current portion of note payable $ 1,800,000 $ 1,800,000
Accounts payable 1,553,192 1,272,462
Wages and salaries 1,112,503 745,158
Contributions due profit sharing plan 514,183 546,078
Other accrued expenses 627,020 546,068
Unearned lease revenue 34,456 43,267
Federal and state income taxes 403,706 354,814
----------- -----------
Total current liabilities 6,045,060 5,307,847
Note payable 1,800,000 3,150,000
Deferred income taxes 1,330,275 1,345,275
----------- -----------
Total liabilities 9,175,335 9,803,122
----------- -----------
Shareholders' Equity:
Preferred stock, no par value-authorized
500,000 shares-none outstanding -- --
Common stock, $1.00 par value;
authorized 4,000,000 shares;
issued and outstanding 1,150,896
and 1,153,496, respectively 1,150,896 1,153,496
Additional paid-in capital 452,163 453,184
Retained earnings 21,770,039 20,405,979
----------- -----------
Total shareholders' equity 23,373,098 22,012,659
----------- -----------
Commitments and contingencies (Note 4)
Total liabilities and shareholders' equity $32,548,433 $31,815,781
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 5
CHICAGO RIVET & MACHINE CO.
Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------- --------------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $11,654,430 $10,232,653 $36,953,321 $32,537,377
Lease revenue 67,028 98,714 219,307 289,470
----------- ----------- ----------- -----------
11,721,458 10,331,367 37,172,628 32,826,847
Cost of goods sold and costs
related to lease revenue 8,224,409 7,150,865 26,832,424 23,050,322
----------- ----------- ----------- -----------
Gross profit 3,497,049 3,180,502 10,340,204 9,776,525
Shipping, selling and
administrative expenses 2,071,812 1,822,202 6,057,800 5,385,139
Profit sharing expense 139,000 130,000 514,000 390,299
----------- ----------- ----------- -----------
1,286,237 1,228,300 3,768,404 4,001,087
Other income and expenses:
Interest income 49,600 55,107 144,567 196,441
Interest expense (60,091) (74,592) (199,357) (283,139)
Gain from sale/disposal of leased
machines and other equipment (5,302) (1,482) 9,240 12,858
Other income 4,330 2,173 12,492 10,003
----------- ----------- ----------- -----------
Income before income taxes 1,274,774 1,209,506 3,735,346 3,937,250
Provision for income taxes 458,000 491,000 1,285,000 1,520,000
----------- ----------- ----------- -----------
Net Income $ 816,774 $ 718,506 $ 2,450,346 $ 2,417,250
=========== =========== =========== ===========
Average common shares outstanding 1,152,139 1,155,535 1,152,792 1,161,426
=========== =========== =========== ===========
Per share data:
Net income per share $ 0.71 $ 0.62 $ 2.13 $ 2.08
=========== =========== =========== ===========
Cash dividends declared per share $ 0.18 $ 0.18 $ 0.89 $ 0.94
=========== =========== =========== ===========
</TABLE>
See Notes to the Consolidated Financial Statements
4
<PAGE> 6
CHICAGO RIVET & MACHINE CO.
Consolidated Statements of Retained Earnings
For the Nine Months Ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
September 30,
1999 1998
------------------------------
<S> <C> <C>
Retained earnings at beginning of period $20,405,979 $18,882,418
Net income for the nine months ended 2,450,346 2,417,250
Treasury stock retired at cost (60,510) (495,373)
Cash dividends declared in the period,
$.89 per share in 1999 and $.94 per
share in 1998 (1,025,776) (1,093,863)
----------- -----------
Retained earnings at end of period $21,770,039 $19,710,432
=========== ===========
</TABLE>
See Notes to the Consolidated Financial Statements
5
<PAGE> 7
CHICAGO RIVET & MACHINE CO.
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
September 30, September 30,
1999 1998
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $2,450,346 $2,417,250
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,320,268 1,107,138
Net gain on the sale of properties (9,240) (12,858)
Deferred income taxes 25,000 4,550
Changes in working capital components:
Accounts receivable (954,086) (317,189)
Inventories 9,087 (642,682)
Other current assets 23,567 (392,346)
Accounts payable 280,730 (174,627)
Accrued wages and salaries 367,345 368,715
Accrued profit sharing (31,895) (263,356)
Other accrued expenses 80,952 24,137
Unearned lease revenue (8,811) (5,721)
Income taxes payable 48,892 157,062
---------- ----------
Net cash provided by operating activities 3,602,155 2,270,073
---------- ----------
Cash flows from investing activities:
Capital expenditures (822,394) (2,523,616)
Proceeds from the sale of properties 41,275 20,541
Proceeds from held-to-maturity securities 4,051,774 5,231,753
Purchases of held-to-maturity securities (5,954,114) (3,114,292)
---------- ----------
Net cash provided by (used in) operating activities (2,683,459) (385,614)
---------- ----------
Cash flows from financing activities:
Payments under term loan agreement (1,350,000) (1,350,000)
Purchase of treasury stock (64,131) (515,013)
Cash dividends paid (1,025,776) (1,093,863)
---------- ----------
Net cash used by financing activities (2,439,907) (2,958,876)
---------- ----------
Net decrease in cash and cash equivalents (1,521,211) (1,074,417)
Cash and cash equivalents at beginning of period 3,181,471 3,983,471
---------- ----------
Cash and cash equivalents at end of period $1,660,260 $2,909,054
========== ==========
Cash paid during the period for:
Income taxes $1,211,108 $1,358,491
Interest $ 206,671 $ 304,895
</TABLE>
See Notes to the Consolidated Financial Statements
6
<PAGE> 8
CHICAGO RIVET & MACHINE CO.
NOTES TO THE CONSOLIDATED 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, 1999 and December 31, 1998 and the
results of operations and changes in cash flows for the indicated periods.
The Company uses estimated gross profit rates to determine the cost of goods
sold during interim periods. Actual results could differ from those estimates
and will be adjusted, as necessary, following the Company's annual physical
inventory in the fourth quarter.
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 revenues and expenses during the reporting period.
Actual results could differ from those estimates.
2. The results of operations for the three-month period ending September 30,
1999 are not necessarily indicative of the results to be expected for the year.
3. The Company extends credit primarily on the basis of 30-day terms to various
companies doing business primarily in the automotive and appliance industries.
The Company has a concentration of credit risk primarily within the automotive
industry and in the Midwestern United States.
4. The Company is, from time to time involved in litigation, including
environmental claims, in the normal course of business. While it is not possible
at this time to establish the ultimate amount of liability with respect to
contingent liabilities, including those related to legal proceedings, management
is of the opinion that the aggregate amount of any such liabilities, for which
provision has not been made, will not have a material adverse effect on the
Company's financial position.
7
<PAGE> 9
CHICAGO RIVET & MACHINE CO.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5. Segment Information--The Company operates in two business segments as
determined by its products. The fastener segment includes rivets, cold-formed
fasteners and screw-machine products. The assembly equipment segment includes
automatic rivet setting machines, parts and tools for such machines and the
leasing of automatic rivet setting machines.
Information by segment is as follows:
<TABLE>
<CAPTION>
Three months ended Assembly
September 30, 1999: Fastener Equipment Other Consolidated
-------- --------- ----- ------------
<S> <C> <C> <C> <C>
Net sales and lease revenue $ 9,023,786 $ 2,697,672 $ -- $11,721,458
Depreciation 317,817 66,588 51,068 435,473
Segment profit 1,942,948 1,155,430 -- 3,098,378
Selling and administrative
expenses 1,813,113 1,813,113
Interest expense 60,091 60,091
Interest income (49,600) (49,600)
-----------
Income before income taxes 1,274,774
-----------
Capital expenditures 106,053 15,653 16,391 138,097
Segment assets:
Inventory 3,508,194 3,012,466 -- 6,520,660
Property, plant and equipment 10,214,229 1,712,975 1,687,642 13,614,846
Other assets -- -- 12,412,927 12,412,927
-----------
32,548,433
-----------
Three Months Ended
September 30, 1998:
Net sales and lease revenue $ 7,747,205 $ 2,584,162 $ -- $10,331,367
Depreciation 271,577 50,628 27,330 349,535
Segment profit 1,658,415 1,202,330 -- 2,860,745
Selling and administrative
expenses 1,631,754 1,631,754
Interest expense 74,592 74,592
Interest income (55,107) (55,107)
-----------
Income before income taxes 1,209,506
-----------
Capital expenditures 956,546 19,755 128,836 1,105,137
Segment assets:
Inventory 4,083,507 2,913,782 -- 6,997,289
Property, plant and equipment 11,046,483 1,568,103 1,748,303 14,362,889
Other assets -- -- 11,243,174 11,243,174
-----------
32,603,352
-----------
</TABLE>
8
<PAGE> 10
CHICAGO RIVET & MACHINE CO.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended Assembly
September 30, 1999: Fastener Equipment Other Consolidated
-------- --------- ----- ------------
<S> <C> <C> <C> <C>
Net sales and lease revenue $28,661,346 $ 8,511,282 $ -- $37,172,628
Depreciation 953,019 197,621 169,628 1,320,268
Segment profit 5,507,310 3,578,582 -- 9,085,892
Selling and administrative
expenses 5,295,756 5,295,756
Interest expense 199,357 199,357
Interest income (144,567) (144,567)
-----------
Income before income taxes 3,735,346
-----------
Capital expenditures 581,639 149,566 91,189 822,394
Nine Months Ended
September 30, 1998:
Net sales and lease revenue $24,651,453 $ 8,175,394 $ -- $32,826,847
Depreciation 822,049 177,388 107,701 1,107,138
Segment profit 5,168,146 3,613,849 -- 8,781,995
Selling and administrative
expenses 4,758,047 4,758,047
Interest expense 283,139 283,139
Interest income (196,441) (196,441)
-----------
Income before income taxes 3,937,250
-----------
Capital expenditures 1,942,849 128,531 452,236 2,523,616
</TABLE>
9
<PAGE> 11
CHICAGO RIVET & MACHINE CO.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
Net sales and lease revenues during the third quarter of 1999 totaled
$11,721,458, which represents an increase of approximately 13.5% compared with
the third quarter of 1998. On a year to date basis, sales and lease revenues for
the first nine months of 1999 total $37,172,628 which is an increase of
approximately 13.2% over the first nine months of 1998. During 1999, revenues
from the sale of fasteners have increased approximately 16% when compared with
both the third quarter and the first nine months of 1998. Revenues within the
assembly equipment segment have also increased when compared to both the third
quarter and the first nine months of 1998, although the increase has been a more
modest 4%.
Net income improved to $816,774, or $.71 per share on 1,152,139 average
shares outstanding during the third quarter of 1999, compared with $718,506, or
$.62 per share on 1,155,535 average shares outstanding during the third quarter
of 1998. The increase in net income, compared with the third quarter of 1998, is
primarily attributable to increased sales volume, offset, in part, by increases
in depreciation and certain administrative costs. During the third quarter of
1999, gross margins increased compared with the third quarter of 1998. Most of
this increase is attributable to the increased level of sales recorded during
the third quarter of 1999. Excluding the effect of an adjustment to certain
estimates recorded in the third quarter of 1998, the gross margin percentage in
1999 is approximately equal to that of the prior year. Selling and
administrative expenses for the quarter were approximately $250,000 higher in
1999 than during the third quarter of 1998. The major factors contributing to
the increase include higher consulting expenses related to data processing of
$110,000, higher freight and shipping expenses of $74,000, higher state tax
expense of $44,000, and a $31,000 increase in depreciation expense. These
increases were partially offset by reductions in travel and non-data processing
consulting.
The Company's financial condition remains sound. Working capital
increased by approximately $0.4 million during the quarter and totaled $12.9
million at the end of the quarter. Capital expenditures during the quarter
amounted to $138,000, which was expended primarily for new equipment used in the
manufacture of fasteners.
The Company continues to make scheduled quarterly principal payments of
$450,000 plus interest, at a variable rate, on its term note. At September 30,
1999, the principal balance of this note was $3.6 million and the interest rate
was approximately 6.4%. The Company also has a $1.0 million line of credit from
Bank of America. This line is currently unused and is scheduled to expire on May
30, 2000. The Company believes that its current cash, cash equivalents and
existing borrowings will be sufficient to meet the Company's needs through the
next twelve months.
During the third quarter of 1999, the Company purchased 1,600 shares of
its stock under the terms of its existing stock repurchase program. The program
provides for the repurchase of an aggregate of 200,000 shares, with such
purchases to be made, from time to time, in the open market, or in private
transactions. The most recent purchases were made in the open market, at an
aggregate purchase price of $64,131, bringing the total purchases made under the
current program to 137,796 shares at an average price of $14.63 per share. It is
management's intention to continue this program, provided conditions are
favorable and funding for repurchases is available.
YEAR 2000 COMPLIANCE
The Company continues to make ongoing assessments of its state of
readiness with respect to Year 2000 ("Y2K") issues. This process can logically
be segregated into two major categories -- information technology and
non-information technology. The first category encompasses issues related to
computer equipment and software used in the operation of the business, while the
second category deals with all other aspects of Y2K
10
<PAGE> 12
issues, including, but not limited to, manufacturing equipment and systems,
supplier and customer preparedness and facility related issues such as
telecommunications equipment, HVAC systems and facility security.
Previously, the Company determined that its information technology
systems were not Y2K compliant and further determined that its existing software
would not meet the needs of the organization in the future. Accordingly,
significant resources have been allocated to the process of implementing a new
data processing solution that would better meet the needs of the organization
while also addressing the Y2K issues. At this time, one facility has completed
its conversion to new data processing systems. At all other facilities, hardware
and software are installed, and we are currently processing data on both our new
software and our older software in order to be certain that the new software is
functioning properly. This testing has been successfully underway for some time,
and we expect the changeover to the new software will be completed in early
November. The completion of this phase of our data processing initiative will
eliminate all critical Y2K deficiencies in our current information systems and
we believe that it will also provide significant benefits to the organization in
terms of more efficient operations, improved access to information related to
production control and inventory management as well as improvements in customer
service. The final phase of this project encompasses enhancements to information
management with respect to manufacturing systems. The final phase, which was
originally scheduled for completion during 1999 has been delayed and is not
expected to be completed until mid-2000. While this final phase is expected to
yield improvements over the manufacturing systems currently in place, it should
be recognized that these current systems are not expected to be significantly
affected by any Y2K issues.
It is not possible to segregate the costs of this project into segments
that are solely related to resolution of Y2K issues and costs associated with
the other aspects of the project. This project has recently exceeded budget due
to unexpected costs related to data conversion and other issues associated with
implementation. As a result, the overall project budget has been revised to
reflect these additional costs, and now totals approximately $1.6 million.
Actual expenditures related to this project, through the first nine months of
1999, totaled approximately $1.1 million. This project encompasses the Company's
solution to Y2K issues as well as significant improvements in information
systems. As such, nearly all the information technology budget is committed to
this project. No other information technology projects have been deferred
because of resources committed to this project. Funding for this project is
expected to be available from internal sources.
While we are currently in the final stages of testing for this project,
and believe that the timetable for implementation is realistic and attainable,
it is not possible to be absolutely certain of completion within the scheduled
time frame. The failure to correct a material Y2K issue could result in an
interruption in, or failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. However, manual
systems currently exist for the essential functions covered by this project, and
such manual systems could be utilized on a temporary basis if the project falls
substantially behind schedule, thus the potential disruption resulting from a
delay in implementation is expected to be manageable.
With respect to non-information technology issues, the Company has
completed an inventory of the production and support equipment and systems
currently in use and determined that most such equipment does not contain
microprocessors or embedded microchips and therefore will not be affected by Y2K
issues. Certain, more modern, production equipment contains microprocessors. For
the majority of that equipment, we have received the manufacturer's confirmation
that the equipment is Y2K compliant. In a limited number of cases, we are
awaiting responses from the equipment manufacturer and plan to continue efforts
to ascertain the status of that equipment with respect to Y2K issues. We believe
that we have alternative equipment available that could be utilized on an
interim basis should some of the modern equipment fail unexpectedly. This
eventuality would cause disruptions in our production schedules as the older
equipment is less efficient than the newer equipment, and our manufacturing
costs would be adversely affected as well. At this time, we are unable to
quantify the monetary impact of this potential disruption.
The Company has also requested that each of its major customers and
critical suppliers advise the Company of their current state of readiness, as
well as their plans
11
<PAGE> 13
to resolve any open Y2K issues. The response to these requests has been varied.
In general, most firms contacted have indicated that their systems are Y2K
compliant, or that Y2K issues will be resolved during 1999. Typically, larger
firms are better prepared than smaller concerns. A number of smaller customers
have not, as yet, responded to our inquiries with respect to Y2K compliance.
Ongoing follow up contacts with those vendors and customers that have not yet
indicated Y2K compliance are being made in an effort to determine that their
compliance efforts are progressing. The Company will continue to monitor the
status of its key vendors and customers and will develop appropriate contingency
plans as more information becomes available. The Company's contingency plans
related to these issues are not complete at this time. Preliminary work in this
area has focused upon information technology issues and in-house manufacturing
issues. Based upon our current state of readiness, we do not anticipate any
significant disruptions due to internal Y2K issues. Further, while we continue
to evaluate the situation, based upon information currently available, we
anticipate that we will be able to maintain core operations with existing manual
systems supplemented by scheduling overtime to offset the reduced efficiency of
manual systems in the event of an unexpected failure of data processing systems
or microprocessor controlled manufacturing equipment. Contingency planning with
respect to third parties is limited by incomplete information concerning their
state of readiness, and we are unable, at this time, to make a reasonable
estimate of the impact Y2K issues will have on our customers or suppliers. We
have ordered additional supplies of raw material and critical operating supplies
and anticipate delivery of this material late in December. However, if our
customers' plans include a similar contingency, it is possible that we will use
such safety stock to satisfy our customers' requests that we, in turn, supply
them with safety stock. The Company is dependent upon its utility suppliers for
both heat and electricity and has concluded that adequate alternate sources are
not available. Accordingly, a disruption in the supply of natural gas or
electric power would significantly disrupt our operations. Although we have
received notification of Y2K compliance from our utility suppliers, we have also
developed plans to protect the Company's facilities from the effects of cold
weather in the event that utility service is disrupted for a short period of
time.
Overall, the first nine months of 1999 have been successful for the
Company. Revenues have increased substantially. Earnings have improved
measurably despite significant costs incurred in connection with data processing
initiatives and a product recall. The Company's financial condition continues to
be sound and we expect the fourth quarter will be another successful quarter.
This discussion contains certain "forward-looking statements" which are
inherently subject to risks and uncertainties that may cause actual events to
differ materially from those discussed herein. Factors which may cause such
differences in events include, among other things, fluctuations in general
economic conditions, consumer demand, the gain or loss of a key customer, the
price and availability of the Company's primary raw materials, or Y2K issues
that may affect the Company, or its key suppliers or customers. Therefore,
readers are cautioned not to place undue reliance upon such forward-looking
statements.
12
<PAGE> 14
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
19.1 Interim Report to Shareholders for the quarter ended
September 30, 1999
27.1 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the current period.
13
<PAGE> 15
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 8, 1999
/s/ John A. Morrissey
---------------------------
John A. Morrissey
Chairman of the Board of Directors
and Chief Executive Officer
Date: November 8, 1999
/s/ John C. Osterman
---------------------------
John C. Osterman
President, Chief Operating
Officer and Treasurer (Principal
Financial Officer)
Date: November 8, 1999
/s/ Michael J. Bourg
--------------------------
Michael J. Bourg
Controller (Principal Accounting
Officer)
14
<PAGE> 16
CHICAGO RIVET & MACHINE CO.
EXHIBITS
INDEX TO EXHIBITS
Exhibit
Number Page
19.1 Interim Report to Shareholders for the
quarter ended September 30, 1999 16 - 17
27.1 Financial Data Schedule 18
15
<PAGE> 1
To Our Shareholders:
The comparative results of operations of Chicago Rivet & Machine Co. for the
third quarter and first nine months of 1999 and 1998 are summarized below.
Sales and lease revenues during the third quarter of 1999 totaled $11,721,458,
which represents an increase of approximately 13.5% compared with the third
quarter of 1998. On a year to date basis, sales and lease revenues for the first
nine months of 1999 total $37,172,628 which is an increase of approximately
13.2% over the first nine months of 1998. During 1999, revenues from the sale of
fasteners have increased approximately 16% when compared with both the third
quarter and the first nine months of 1998. Revenues within the assembly
equipment segment have also increased when compared to both the third quarter
and the first nine months of 1998, although the increase has been more modest,
averaging approximately 4%.
Net income improved to $816,774, or $.71 per share on 1,152,139 average shares
outstanding during the third quarter of 1999, compared with $718,506, or $.62
per share on 1,155,535 average shares outstanding during the third quarter of
1998. The increase in net income, compared with the third quarter of 1998, is
primarily attributable to increased sales volumes, offset, in part, by increases
in depreciation and certain administrative costs, including higher consulting
costs associated with implementation of new data processing systems. Year to
date earnings for 1999 total $2,450,346, or $2.13 per share on 1,152,792 average
shares outstanding. Year to date earnings reflect a second quarter after tax
charge, related to a product recall, of $623,000, or $.54 per share as well as
increases in administrative expenses related to data processing and increases in
depreciation expense resulting from the relatively high level of investments in
data processing equipment and software, as well as new manufacturing equipment.
As previously reported, the Company is in the process of installing new data
processing systems that are Y2K compliant. This project is ongoing and as of
this date, one facility has successfully upgraded and the new software is fully
operational. At our other facilities, new software has been installed, and we
are currently processing data on both our new software and our older software,
in order to be certain that the new software is functioning properly. This
testing has been successfully underway for some time, and we expect a
change-over to the new software at the beginning of November. The completion of
this phase of our new management information system initiative will eliminate
all critical Y2K deficiencies in our current information systems. The second
phase of this project, which relates to manufacturing, is planned to be fully
implemented after the year-end. While this second phase is expected to yield
improvements over the manufacturing systems currently in place, it should be
recognized that these current systems are not expected to be significantly
affected by any Y2K issues. Further, our customers and suppliers report that
they are, or will be, positioned to minimize any disruptions related to the
change of the century.
Overall, the first nine months of 1999 have been successful for the Company.
Revenues have increased substantially. Earnings have improved measurably despite
significant costs incurred in connection with data processing initiatives and a
product recall. The Company's financial condition continues to be sound and we
expect the fourth quarter will be another successful quarter.
Respectfully yours,
<TABLE>
<S> <C>
John A. Morrissey John C. Osterman
John A. Morrissey John C. Osterman
Chairman President
</TABLE>
October 29, 1999
The foregoing discussion is only intended to provide highlights of operations
for the periods covered. Additional information is contained in our Form 10-Q
which will be filed with the SEC and is available to shareholders upon request
from the Company, or via the internet through the SEC's EDGAR database. This
discussion contains certain "forward-looking statements" which are inherently
subject to risks and uncertainties that may cause actual events to differ
materially from those discussed herein. Factors which may cause such differences
in events include, among other things, fluctuations in general economic
conditions, consumer demand, the gain or loss of a key customer, the price and
availability of the Company's primary raw materials, or Y2K issues that may
affect the Company or its key suppliers or customers. Therefore, readers are
cautioned not to place undue reliance upon such forward-looking statements.
- --------------------------------------------------------------------------------
CHICAGO RIVET & MACHINE CO.
SUMMARY OF CONSOLIDATED RESULTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30
<TABLE>
<CAPTION>
THIRD QUARTER FIRST NINE MONTHS
------------------------- -------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales and lease revenue.................... $11,721,458 $10,331,367 $37,172,628 $32,826,847
Income before taxes............................ 1,274,774 1,209,506 3,735,346 3,937,250
Income after taxes............................. 816,774 718,506 2,450,346 2,417,250
Net income per share........................... .71 .62 2.13 2.08
Average shares outstanding..................... 1,152,139 1,155,535 1,152,792 1,161,426
</TABLE>
- --------------------------------------------------------------------------------
(All figures subject to year end audit)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,660,260
<SECURITIES> 2,452,594
<RECEIVABLES> 7,526,741
<ALLOWANCES> 89,441
<INVENTORY> 6,520,660
<CURRENT-ASSETS> 18,933,587
<PP&E> 31,054,491
<DEPRECIATION> 17,439,645
<TOTAL-ASSETS> 32,548,433
<CURRENT-LIABILITIES> 6,045,060
<BONDS> 1,800,000
0
0
<COMMON> 1,150,896
<OTHER-SE> 22,222,202
<TOTAL-LIABILITY-AND-EQUITY> 32,548,433
<SALES> 36,953,321
<TOTAL-REVENUES> 37,172,628
<CGS> 26,832,424
<TOTAL-COSTS> 26,832,424
<OTHER-EXPENSES> 6,571,800
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 199,357
<INCOME-PRETAX> 3,735,346
<INCOME-TAX> 1,285,000
<INCOME-CONTINUING> 2,450,346
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,450,346
<EPS-BASIC> 2.13
<EPS-DILUTED> 2.13
</TABLE>
