-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V+LiFpkHHNreWb7MfGyEK07GWPf7bXGyZYUkckHLCO4uCRgKb0OsLEEf47Vca7kG KVI1wNpjuNRC0sRatJC4WQ== 0000950137-96-002270.txt : 19961115 0000950137-96-002270.hdr.sgml : 19961115 ACCESSION NUMBER: 0000950137-96-002270 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHICAGO RIVET & MACHINE CO CENTRAL INDEX KEY: 0000019871 STANDARD INDUSTRIAL CLASSIFICATION: METALWORKING MACHINERY & EQUIPMENT [3540] IRS NUMBER: 360904920 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-01227 FILM NUMBER: 96661486 BUSINESS ADDRESS: STREET 1: 901 FRONTENAC RD STREET 2: P O BOX 3061 CITY: NAPERVILLE STATE: IL ZIP: 60566 BUSINESS PHONE: 7083578500 MAIL ADDRESS: STREET 1: 901 FRONTENAC RD STREET 2: P O BOX 3061 CITY: NAPERVILLE STATE: IL ZIP: 60566 10-Q 1 10-Q 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, 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 (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, 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 September 30, 1996 are incorporated by reference in Part I of this Report. 2 CHICAGO RIVET & MACHINE CO. INDEX ----- PART I. FINANCIAL INFORMATION Page No. -------- Balance Sheets at September 30, 1996 2-3 and December 31, 1995. Statements of Operations for the Three and Nine Months Ended September 30, 1996 and 1995. 4 Statements of Retained Earnings for the Nine Months Ended September 30, 1996 and 1995. 5 Statements of Cash Flows for the Nine Months Ended September 30, 1996 and 1995. 6 Notes to the Financial Statements. 7-8 Management's Discussion and Analysis of Financial Condition and Results of Operations. 9-10 PART II. OTHER INFORMATION 11-15 3 CHICAGO RIVET & MACHINE CO. Balance Sheets September 30, 1996 and December 31, 1995 Assets
September 30, December 31, 1996 1995 --------------- --------------- (unaudited) Current Assets: Cash and cash equivalents $ 6,950,761 $ 1,349,093 Certificates of deposit 1,265,406 4,568,212 U. S. Government securities (Note 6) 396,913 2,703,533 Accounts receivable - net of allowances 2,681,328 2,379,497 Inventories: Raw materials 594,260 696,999 Work in process 768,095 900,888 Finished goods 2,135,346 2,504,519 ----------- ----------- Total inventories 3,497,701 4,102,406 ----------- ----------- Deferred income taxes (Note 4) 722,951 806,227 Other current assets 605,413 231,957 ----------- ----------- Total Current Assets 16,120,473 16,140,925 ----------- ----------- Goodwill, net of amortization 14,597 33,344 ----------- ----------- Property, Plant and Equipment At Cost: Land and improvements 347,676 347,676 Buildings and improvements 3,756,545 3,715,915 Production equipment, leased machines and other 14,330,316 14,233,135 ----------- ----------- 18,434,537 18,296,726 Less - Accumulated Depreciation 13,462,730 13,115,856 ----------- ----------- Net Property, Plant and Equipment 4,971,807 5,180,870 ----------- ----------- Total Assets $21,106,877 $21,355,139 =========== ===========
See Notes to the Financial Statements -2- 4 CHICAGO RIVET & MACHINE CO. Balance Sheets September 30, 1996 and December 31, 1995 Liabilities and Shareholders' Equity
September 30, December 31, 1996 1995 ------------- ------------- (unaudited) Current Liabilities: Accounts payable $ 792,170 $ 877,871 Contributions due profit - sharing and pension plans 396,025 572,864 Wages and salaries 616,619 623,790 Other accrued expenses (Note 5) 931,704 744,410 Unearned lease revenue 76,819 70,120 Federal and state income taxes 92,234 541,045 ----------- ----------- Total Current Liabilities 2,905,571 3,430,100 Deferred Income Taxes (Note 4) 1,031,190 1,041,930 Total Liabilities 3,936,761 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 15,538,368 15,251,361 ----------- ----------- Total Shareholders' Equity 17,170,116 16,883,109 ----------- ----------- Commitments and Contingencies (Note 3) ---- ---- ----------- ----------- Total Liabilities and Shareholders' Equity $21,106,877 $21,355,139 =========== ===========
See Notes to the Financial Statements -3- 5 CHICAGO RIVET & MACHINE CO. Statements of Operations For the Three and Nine Months Ended September 30, 1996 and 1995 (unaudited)
Three Months Ended Nine Months Ended September 30, September 30, 1996 1995 1996 1995 ----------- ----------- ----------- ----------- Net sales $ 4,700,714 $ 4,855,400 $15,974,223 $18,035,970 Lease revenue 106,314 135,960 319,149 396,794 ----------- ----------- ----------- ----------- $ 4,807,028 $ 4,991,360 $16,293,372 $18,432,764 Cost of goods sold and costs related to lease revenue 3,212,631 3,390,433 11,071,626 12,128,652 ----------- ----------- ----------- ---------- Gross profit 1,594,397 1,600,927 5,221,746 6,304,112 Shipping, selling and administrative expenses 1,092,249 1,097,267 3,523,185 3,575,170 Profit sharing and pension expenses 45,000 45,000 150,000 270,000 ----------- ----------- ----------- ----------- 457,148 458,660 1,548,561 2,458,942 Other income and expenses: Interest income from U.S. Government securities and certificates of deposit 95,614 85,500 282,937 228,455 Gain from sale of leased machines and other equipment 62,339 9,809 62,589 10,918 Amortization expense (6,249) (6,249) (18,747) (18,747) Other income, net of other expense 2,921 111 10,289 414 ----------- ----------- ----------- ----------- Income before income taxes 611,773 547,831 1,885,629 2,679,982 Provision for income taxes 230,000 213,000 720,000 1,087,000 ----------- ----------- ----------- ----------- Net income $ 381,773 $ 334,831 $ 1,165,629 $ 1,592,982 =========== =========== =========== =========== Average common shares outstanding 585,748 586,548 585,748 586,613 =========== =========== =========== =========== Per share data: Net income per share $ .65 $ .58 $ 1.99 $ 2.72 =========== =========== =========== =========== Cash dividends declared per share $ .30 $ .30 $ 1.50 $ 1.45 =========== =========== =========== ===========
See Notes to the Financial Statements -4- 6 CHICAGO RIVET & MACHINE CO. Statements of Retained Earnings For the Nine Months Ended September 30, 1996 and 1995 (unaudited) September 30, --------------------------- 1996 1995 ----------- -----------
Retained earnings at beginning of period $15,251,361 $14,067,745 Net income for the nine months ended 1,165,629 1,592,982 Treasury stock retired at cost --- (2,641) Cash dividends declared in the period - $1.50 per share in 1996 and $1.45 per share in 1995. (878,622) (850,639) ----------- ----------- Retained earnings at end of period $15,538,368 $14,807,447 =========== ==========
See Notes to the Financial Statements -5- 7 CHICAGO RIVET & MACHINE CO. Statements of Cash Flows For the Nine Months Ended September 30, 1996 and 1995 (unaudited)
September 30, ------------------------------------- 1996 1995 ----------- ----------- Cash flows from operating activities: Net income $ 1,165,629 $ 1,592,982 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 491,607 500,101 Net gain on the sale of properties (62,589) (10,918) Deferred income taxes 72,536 19,834 Changes in current assets and current liabilities: Accounts receivable, net (301,831) (103,568) Inventories 604,706 592,781 Accounts payable (85,701) (427,757) Other, net (812,284) 107,351 ----------- ----------- Net cash provided by operating activities 1,072,073 2,270,806 ----------- ----------- Cash flows from investing activities: Capital expenditures (314,417) (226,419) Net proceeds from the sale of properties 113,208 41,130 Proceeds from the maturity of held-to-maturity securities 979,253 5,838,137 Purchases of held-to-maturity securities (687,120) (7,913,119) Proceeds from the maturity of available for sale securities 7,917,080 ---- Purchases of available for sale securities (2,599,787) ---- ----------- ----------- Net cash used by investing activities 5,408,217 (2,260,271) ----------- ----------- Cash flows from financing activities: Cash dividends (878,622) (850,639) Purchase of Treasury Stock ---- (2,920) ----------- ----------- Net cash used by financing activities (878,622) (853,559) ----------- ----------- Net increase (decrease) in cash and cash equivalents 5,601,668 (843,024) Cash and cash equivalents at beginning of period 1,349,093 2,225,445 ----------- ----------- Cash and cash equivalents at end of period $ 6,950,761 $ 1,382,421 =========== =========== Cash paid during the period for: Income taxes $ 1,096,293 $ 1,156,930
See Notes to the Financial Statements -6- 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, 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 nine month period ending September 30, 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 has been named by state and/or federal government agencies as a "potentially responsible party" with respect to certain waste disposal sites. As a potentially responsible party, the Company 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 $54 and $88 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 is unknown due to disagreement concerning 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 has recorded a liability of $504,345 related to these matters. The adequacy of his reserve will be reviewed periodically as more definitive cost information becomes available. 4. At September 30, 1996 significant deferred tax liabilities and assets were comprised of the following: Depreciation $(1,056,246) ----------- (1,056,246) Environmental accruals 201,738 Inventory valuations 209,391 Accrued vacation 149,198 Accrued Pension 74,954 Doubtful accounts 46,557 Unearned rental revenue 30,728 Other, net 35,441 ----------- 748,007 ----------- $ (308,239) -----------
-7- 9 CHICAGO RIVET & MACHINE CO. NOTES TO THE FINANCIAL STATEMENTS (CON'T.) ------------------------------------------ (Unaudited) 5. Other Accrued Expenses - accrued expenses consist of the following:
September 30, 1996 December 31, 1995 ------------------ ----------------- Payroll taxes $ 74,578 $ 45,819 Property taxes 55,101 60,137 Environmental costs 504,345 638,875 Accrued insurance 222,613 ---- All other items 75,067 (421) $ 931,704 $ 744,410 ========== =========
6. At September 30, 1996 the Company has recorded $396,913 of U. S. Government Securities as held-to-maturity. -8- 10 CHICAGO RIVET & MACHINE CO. --------------------------- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ------------------------------------------------- CONDITION AND RESULTS OF OPERATIONS ----------------------------------- Sales and lease revenues totaled $4,807,028 during the recently ended quarter, compared to $4,991,360 recorded during the third quarter of 1995, a decline of approximately 3.7%. For the first nine months, sales and lease revenues amounted to $16,293,372 in 1996, a decline of approximately 11.6% from the year earlier total of $18,432,764. As previously reported, demand for all of our products has consistently trailed the robust levels enjoyed during 1995. While revenue comparisons between the third quarter of 1996 and 1995 are more favorable than similar comparisons between the first two quarters of 1996 and 1995, our outlook for the balance of the year remains cautious. Revenue from the sales of automatic rivet setting machines and related tools and parts has shown a larger percentage decrease between the current period of 1996 and the corresponding period of 1995. Earnings for the third quarter of 1996 improved approximately 14% from $334,831, or $.58 per share on 586,548 average shares outstanding during the third quarter of 1995 to $381,771, or $.65 per share on 585,748 average shares outstanding during the third quarter of this year. Earnings for the quarter include a one-time gain of approximately $.06 per share from the sale of certain leased rivet setting machinery to the current leaseholder. Earnings for the first nine months of 1996 amounted to $1,165,629 or $1.99 per share on 585,748 average shares outstanding, down from the strong earnings of $1,592,982 or $2.72 per share on 586,613 average shares outstanding during the first nine months of 1995. The change in year to date earnings reflects the effect of reduced sales volumes recorded in 1996. Working capital increased slightly during the third quarter to approximately $13.2 million. As more fully discussed below, the Company plans to borrow between approximately $8 and $9 million in connection with its acquisition of H & L Tool Company, Inc. ("H & L Tool"). The Company believes that its existing cash, cash equivalents, short-term investments and future borrowings (including the borrowings related to the acquisition of H & L Tool.) will be sufficient to fund necessary purchases of equipment and to provide adequate working capital through at least the next twelve months. On September 18, 1996, the Company executed a purchase and sale agreement related to its previously announced intention to acquire substantially all the assets of H & L Tool, of Madison Heights, Michigan. The agreement, which is subject to various conditions typical in transactions of this type, is expected to close before year-end 1996. H & L Tool, produces screw machine products, as well as specialty cold-formed parts, primarily for the automotive industry. The acquisition represents a significant enhancement to the Company's fastener line. Although the exact purchase price will be adjusted by any changes in the values of certain assets acquired as of the closing date, the purchase price is expected to be approximately $19.1 million in the combination of cash and the assumption of certain liabilities. Financing will be consist of a combination of available cash, a $4.8 million credit against the purchase price, in consideration of H & L Tool's retention of all cash and cash equivalents, and borrowing of $8 to $9 million. The assets to be purchased include all of H & L Tool's production equipment and facilities located in Madison Heights, Michigan. Upon completion of the transaction, the Company intends to continue operations at that location under the H & L Tool name. -9- 11 CHICAGO RIVET & MACHINE CO. --------------------------- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ------------------------------------------------- CONDITION AND RESULTS OF OPERATIONS (CON'T.) --------------------------------------------- The following important factors, among others, in some cases have affected, and in the future could affect, the Company's actual results and could cause the Company's actual results for the fourth quarter of 1996, and thereafter, to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company. The Company's operating results are subject to quarterly and other fluctuations due to a variety of factors including availability and cost of raw materials and other products purchased from the Company's suppliers, changes in the mix of products sold, the gain or loss of significant customers, the timing of significant orders, increased competitive pressure or changes in general economic conditions. Many of these factors are beyond the control of the Company. While these factors are difficult to forecast, these or other factors could materially affect the Company's quarterly or annual operating results. Furthermore, while the Company fully expects that its acquisition of substantially all of the assets of H & L Tool will close before year-end 1996, there can be no assurance that the transaction will be consummated. While the acquisition of H & L Tool is expected to have a positive impact on the operating results, the Company recognizes that there are risks associated with any acquisition which may adversely effect the Company's operating results. . See the Company's Interim Report to Shareholders for the Quarter ended September 30, 1996 for additional information. This section is incorporated herein by reference. The Interim Report is filed as an exhibit to this report on pages 12 and 13. -10- 12 PART II -- OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (b) Reports on Form 8-K -- A Form 8-K was filed on September 24, 1996. -11- 13 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 13, 1996 John A. Morrissey ---------------------------------- Chairman of the Board of Directors and Chief Executive Officer Date: November 13, 1996 John C. Osterman ---------------------------------- President, Chief Operating Officer and Treasurer (Principal Financial Officer) Date: November 13, 1996 Stephen D. Voss ---------------------------------- Assistant Treasurer and Controller -12- 14 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 1996 and 1995 are summarized below. Sales and lease revenues totaled $4,807,028 during the recently ended quarter, compared to $4,991,360 recorded during the third quarter of 1995, a decline of approximately 3.7%. For the first nine months, sales and lease revenues amounted to $16,293,372 in 1996, a decline of approximately 11.6% from the year earlier total of $18,432,764. As previously reported, demand for all of our products has consistently trailed the robust levels enjoyed during 1995. While revenue comparisons between the third quarter of 1996 and 1995 are more favorable than similar comparisons between the first two quarters of 1996 and 1995, our outlook for the balance of the year remains cautious. Earnings for the third quarter of 1996 improved approximately 14% compared to the year earlier period, totaling $381,773, or $.65 per share on 585,748 average shares outstanding during the third quarter this year. Earnings for the quarter include a one time gain of approximately $.06 per share from the sale of certain leased rivet setting machinery to the current leaseholder. Earnings for the first nine months of 1996 amounted to $1,165,629 or $1.99 per share on 585,748 average shares outstanding, down from the strong earnings of $1,592,982 or $2.72 per share on 586,613 average shares outstanding during the first nine months of 1995. The change in year to date earnings reflects the effect of reduced sales volumes recorded in 1996. On September 18, 1996, the Company executed a purchase and sale agreement related to its previously announced intention to acquire substantially all the assets of H & L Tool Company, Inc., of Madison Heights, Michigan. The agreement, which is subject to various conditions typical in transactions of this type, is expected to close before year end 1996. H & L Tool Company, produces screw machine products, as well as specialty cold-formed parts, primarily for the automotive industry. The acquisition represents a significant enhancement to the Company's fastener line. Although the exact purchase price will be adjusted by any changes in the values of certain assets acquired as of the closing date, the purchase price is expected to be approximately $19.1 million in the combination of cash and the assumption of certain liabilities. Financing will consist of a combination of available cash, a $4.8 million credit against the purchase price, in consideration of H & L Tool's retention of all cash and cash equivalents, and borrowing of $8 to $9 million. The assets to be purchased include all of H & L Tool's production equipment and facilities located in Madison Heights, Michigan. Upon completion of the transaction, the Company intends to continue operations at that location under the H & L Tool name. Respectfully submitted, John A. Morrissey John C. Osterman Chairman President October 29, 1996 -13- EX-11 2 STATEMENT OF CALCULATION 1 EXHIBIT 11 CHICAGO RIVET & MACHINE CO. Summary of Results of Operations For the Three and Nine Months Ended September 30
Third Quarter First Nine Months ------------- ----------------- 1996 1995 1996 1995 ----------- ----------- ------------ ------------ Net sales and lease revenue ...... $ 4,807,028 $ 4,991,360 $ 16,293,372 $ 18,432,764 Income before taxes .............. 611,773 547,831 1,885,629 2,679,982 Income after taxes ............... 381,773 334,831 1,165,629 1,592,982 Net income per share.............. .65 .58 1.99 2.72 Average shares outstanding........ 585,748 586,548 585,748 586,613 - ------------------------- ------------------------------------------------------------------
(All figures subject to year end audit) -14- EX-27 3 FDS
5 9-MOS DEC-31-1995 SEP-30-1996 6,950,761 1,662,319 2,797,721 116,393 3,497,701 16,120,473 18,434,537 13,462,730 21,106,877 2,905,571 0 1,171,496 0 0 15,998,620 21,106,877 4,700,714 4,807,028 3,212,631 4,349,880 (154,625) 0 0 611,773 230,000 381,773 0 0 0 381,773 0.65 0.65
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