-----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, BL8XQ9+yqwD8R+U04NgBTuuvyuxZNkZjTQ6Hmird7efn0XzNZ9MS1NhX2QsSQWkk nwKgomkUtq3vgK0UWgwDHA== 0000950137-03-002620.txt : 20030505 0000950137-03-002620.hdr.sgml : 20030505 20030505080353 ACCESSION NUMBER: 0000950137-03-002620 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20030505 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: 03680979 BUSINESS ADDRESS: STREET 1: 901 FRONTENAC RD STREET 2: P O BOX 3061 CITY: NAPERVILLE STATE: IL ZIP: 60566 BUSINESS PHONE: 6303578500 MAIL ADDRESS: STREET 1: 901 FRONTENAC RD STREET 2: P O BOX 3061 CITY: NAPERVILLE STATE: IL ZIP: 60566 10-Q 1 c76694e10vq.txt QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ----------- FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2003 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ 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 (I.R.S. Employer of Incorporation or Organization) Identification No.) 901 Frontenac Road, Naperville, Illinois 60563 (Address of Principal Executive Offices) (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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes No X --- --- As of March 31, 2003, 966,132 shares of the registrant's common stock were outstanding. CHICAGO RIVET & MACHINE CO. INDEX
PART I. FINANCIAL INFORMATION Page ---- Consolidated Balance Sheets at March 31, 2003 and December 31, 2002 2-3 Consolidated Statements of Operations for the Three Months Ended March 31, 2003 and 2002 4 Consolidated Statements of Retained Earnings for the Three Months Ended March 31, 2003 and 2002 5 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2002 6 Notes to the Consolidated Financial Statements 7-8 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Quantitative and Qualitative Information About Market Risk 10 Controls and Procedures 10 PART II. OTHER INFORMATION 11-19
1 CHICAGO RIVET & MACHINE CO. Consolidated Balance Sheets March 31, 2003 and December 31, 2002
March 31, December 31, 2003 2002 ----------- ------------ (Unaudited) Assets Current Assets: Cash and cash equivalents $4,960,627 $2,204,430 Certificates of deposit 457,733 3,157,733 Accounts receivable - net of allowances 5,348,484 4,994,697 Inventories: Raw materials 1,624,639 1,636,216 Work in process 2,024,153 1,818,106 Finished goods 2,784,865 2,635,619 ----------- ----------- Total inventories 6,433,657 6,089,941 ----------- ----------- Deferred income taxes 581,191 581,191 Other current assets 274,589 277,893 ----------- ----------- Total current assets 18,056,281 17,305,975 ----------- ----------- Property, Plant and Equipment: Land and improvements 1,010,595 1,010,595 Buildings and improvements 5,748,125 5,743,325 Production equipment, leased machines and other 27,825,795 27,774,278 ----------- ----------- 34,584,515 34,528,198 Less accumulated depreciation 22,183,337 21,746,000 ----------- ----------- Net property, plant and equipment 12,401,178 12,782,198 ----------- ----------- Total assets $30,457,459 $30,088,173 =========== ===========
See Notes to the Consolidated Financial Statements 2 CHICAGO RIVET & MACHINE CO. Consolidated Balance Sheets March 31, 2003 and December 31, 2002
March 31, December 31, 2003 2002 ----------- ------------ (Unaudited) Liabilities and Shareholders' Equity Current Liabilities: Current portion of note payable $1,182,760 $1,632,760 Accounts payable 1,650,084 1,121,195 Accrued wages and salaries 1,023,164 795,920 Contributions due profit sharing plan 103,986 435,542 Other accrued expenses 510,539 397,634 Federal and state income taxes payable 280,742 48,742 ----------- ----------- Total current liabilities 4,751,275 4,431,793 Deferred income taxes 1,547,275 1,547,275 ----------- ----------- Total liabilities 6,298,550 5,979,068 ----------- ----------- Commitments and contingencies (Note 4) Shareholders' Equity: Preferred stock, no par value, 500,000 shares authorized: none outstanding -- -- Common stock, $1.00 par value, 4,000,000 shares authorized: 1,138,096 shares issued 1,138,096 1,138,096 Additional paid-in capital 447,134 447,134 Retained earnings 26,495,777 26,445,973 Treasury stock, 171,964 shares at cost (3,922,098) (3,922,098) ----------- ----------- Total shareholders' equity 24,158,909 24,109,105 ----------- ----------- Total liabilities and shareholders' equity $30,457,459 $30,088,173 =========== ===========
See Notes to the Consolidated Financial Statements 3 CHICAGO RIVET & MACHINE CO. Consolidated Statements of Operations For the Three Months Ended March 31, 2003 and 2002 (Unaudited)
2003 2002 ----------- ----------- Net sales $10,189,258 $10,398,136 Lease revenue 47,205 54,190 ----------- ----------- 10,236,463 10,452,326 Cost of goods sold and costs related to lease revenue 7,850,934 7,876,521 ----------- ----------- Gross profit 2,385,529 2,575,805 Selling and administrative expenses 1,694,677 1,654,723 ----------- ----------- 690,852 921,082 Other income and expenses: Interest income 19,799 21,956 Interest expense (9,585) (24,374) Gain from the disposal of equipment 4,300 24,577 Other income, net of other expense 3,875 3,875 ----------- ----------- Income before income taxes 709,241 947,116 Provision for income taxes 244,000 322,000 ----------- ----------- Net income $ 465,241 $ 625,116 =========== =========== Average common shares outstanding 966,132 967,132 =========== =========== Per share data: Net income per share $ 0.48 $ 0.65 =========== =========== Cash dividends declared per share $ 0.43 $ 0.33 =========== ===========
See Notes to the Consolidated Financial Statements 4 CHICAGO RIVET & MACHINE CO. Consolidated Statements of Retained Earnings For the Three Months Ended March 31, 2003 and 2002 (Unaudited)
2003 2002 ----------- ----------- Retained earnings at beginning of period $26,445,973 $24,682,816 Net income for the three months ended 465,241 625,116 Cash dividends declared in the period: $.43 per share in 2003 and $.33 in 2002 (415,437) (319,154) ----------- ----------- Retained earnings at end of period $26,495,777 $24,988,778 =========== ===========
See Notes to the Consolidated Financial Statements 5 CHICAGO RIVET & MACHINE CO. Consolidated Statements of Cash Flows For the Three Months Ended March 31, 2003 and 2002 (Unaudited)
2003 2002 ----------- ----------- Cash flows from operating activities: Net income $ 465,241 $ 625,116 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 463,318 484,012 Net gain on the sale of equipment (4,300) (24,577) Changes in operating assets and liabilities: Accounts receivable, net (353,787) (1,307,000) Inventories (343,716) (432,422) Other current assets 3,394 (38,519) Accounts payable 287,356 426,106 Accrued wages and salaries 227,244 264,310 Accrued profit sharing (331,556) (179,000) Other accrued expenses 112,905 215,698 Income taxes payable 232,000 317,000 ----------- ----------- Net cash provided by operating activities 758,099 350,724 ----------- ----------- Cash flows from investing activities: Capital expenditures (82,298) (104,327) Proceeds from the sale of properties 4,300 26,170 Proceeds from held-to-maturity securities 2,900,000 21,281 Purchases of held-to-maturity securities (200,000) (400,000) ----------- ----------- Net cash provided by (used in) investing activities 2,622,002 (456,876) ----------- ----------- Cash flows from financing activities: Payments under term loan agreement (450,000) (450,000) Cash dividends paid (173,904) (174,084) ----------- ----------- Net cash used in financing activities (623,904) (624,084) ----------- ----------- Net increase (decrease) in cash and cash equivalents 2,756,197 (730,236) Cash and cash equivalents at beginning of period 2,204,430 4,692,999 ----------- ----------- Cash and cash equivalents at end of period $ 4,960,627 $ 3,962,763 =========== ===========
See Notes to the Consolidated Financial Statements 6 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 March 31, 2003 and December 31, 2002 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 on a portion of its operations. 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 ended March 31, 2003 are not necessarily indicative of the results to be expected for the year. 3. The Company extends credit on the basis of terms that are customary within our markets to various companies doing business primarily in the automotive industry. 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 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:
Fastener Equipment Other Consolidated ----------- ----------- ---------- -------------- Three Months Ended March 31, 2003: Net sales and lease revenue $ 8,360,151 $ 1,876,312 $ -- $ 10,236,463 Depreciation 370,696 40,101 52,521 463,318 Segment profit 1,003,112 443,455 -- 1,446,567 Selling and administrative expenses 747,540 747,540 Interest expense 9,585 9,585 Interest income (19,799) (19,799) ------------ Income before income taxes 709,241 ------------ Capital expenditures 71,881 10,417 -- 82,298 Segment assets: Accounts receivable, net 4,468,032 880,452 -- 5,348,484 Inventory 4,123,346 2,310,311 -- 6,433,657 Property, plant and equipment, net 9,755,512 1,501,276 1,144,390 12,401,178 Other assets -- -- 6,274,140 6,274,140 ------------ 30,457,459 ------------ Three Months Ended March 31, 2002: Net sales and lease revenue $ 8,639,317 $ 1,813,009 $ -- $ 10,452,326 Depreciation 369,359 58,769 55,884 484,012 Segment profit 1,198,107 472,574 -- 1,670,681 Selling and administrative expenses 721,147 721,147 Interest expense 24,374 24,374 Interest income (21,956) (21,956) ------------ Income before income taxes 947,116 ------------ Capital expenditures 104,327 -- -- 104,327 Segment assets: Accounts receivable, net 4,386,103 916,045 -- 5,302,148 Inventory 4,020,607 2,462,483 -- 6,483,090 Property, plant and equipment, net 10,476,762 1,677,240 1,283,255 13,437,257 Other assets -- -- 5,500,664 5,500,664 ------------ 30,723,159 ------------
8 CHICAGO RIVET & MACHINE CO. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The recent quarter was more difficult than anticipated. The quarter began with an increase in revenues compared with the prior year, building expectations for a good start to 2003. Unfortunately, conditions changed abruptly as our major customers reduced, or delayed, orders as the quarter progressed. Revenues for the quarter amounted to $10,236,463, which is a decrease of approximately 2% compared to the first quarter of 2002. Revenues within the assembly equipment segment increased slightly, but that gain was more than offset by the decline in revenues within the fastener segment. The increase in volumes within the assembly equipment segment helped to offset higher costs incurred for labor, raw material, health insurance and utilities. As a result, gross margins within this segment were essentially unchanged from one year ago. However, within the fastener segment, gross margins declined, compared to the first quarter of last year, not only due to the decrease in volume, but also due to significant increases in labor expense and increases in the cost of employee health insurance, the cost of utilities, and higher repair expense. The higher labor costs were due to the combination of higher wage rates compared to the prior year and reduced labor efficiencies as a result of our inability to reduce labor hours as quickly as demand declined, particularly in the latter part of the quarter. First quarter selling and administrative expenses increased modestly during 2003 compared to the first quarter of 2002, due to increased payroll and fringe benefit costs. As a result, net income for the first quarter of 2003 fell to $465,241, or $.48 per share on 966,132 shares outstanding, compared to $625,116, or $.65 per share on 967,132 shares outstanding during the first quarter of 2002. During the quarter, the accounts receivable balance increased due to comparatively higher volume of sales recorded during the first quarter, compared with the fourth quarter. The accounts receivable balance as of March 31 was comparable to the balance at the end of the first quarter of 2002. Inventory levels, as of March 31, 2003, are somewhat higher than anticipated, due in part to the reduction in customer shipping schedules that occurred in the latter portion of the first quarter. Our production schedules have been adjusted to compensate and we expect that inventory levels will decline during the second quarter. At March 31, the balance due on the term note was $1.18 million, and the average interest rate was 2.1%. The Company also has a $1.0 million line of credit available through Bank of America. There is no charge for this facility until it is utilized. We believe that current cash, cash equivalents and the available credit facility will be sufficient to provide adequate working capital to meet the Company's needs for the foreseeable future. Our markets continue to be extremely competitive and demand continues to be constrained by the lingering weakness that has characterized the manufacturing sector of the domestic economy for quite some time. We have taken action to reduce labor costs, and we continue to pursue every opportunity to secure new business. However, until there is sustained improvement within the overall manufacturing sector, our margins will continue to be constrained by lower than ideal levels of operation and by continued downward pressure on the price of our products. In the interim, we will continue to focus our efforts on controlling costs, improving profitability and obtaining new business. 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 has been 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, our ability to maintain our relationships with our significant customers; increased global competition; increases in the prices of, or limitations on the availability of, our primary raw materials; or a downturn in the automotive industry, upon which we rely for sales revenue, and which is cyclical and dependent on, among other things, consumer spending, international economic conditions and regulations and policies regarding international trade. Many of these factors are beyond our ability to control or predict. Readers are cautioned not to place undue reliance on these forward-looking statements. We undertake no obligation to publish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. 9 CHICAGO RIVET & MACHINE CO. QUANTITATIVE AND QUALITATIVE INFORMATION ABOUT MARKET RISK Over time, the Company is exposed to market risks arising from changes in interest rates. The Company has not historically used derivative financial instruments. As of March 31, 2003, $1.18 million of floating-rate debt was exposed to changes in interest rates compared to $1.63 million as of December 31, 2002. This exposure was primarily linked to the London Inter-Bank Offering Rate and the lender's prime rate under the Company's term loan. A hypothetical 10% change in these rates would not have had a material effect on the Company's quarterly earnings. CONTROLS AND PROCEDURES (a) Evaluation of Disclosure Controls and Procedures. The Company's Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company (including its consolidated subsidiary) required to be included in the Company's periodic filings under the Exchange Act. (b) Changes in Internal Controls. Since the Evaluation Date, there have not been any significant changes in the Company's internal controls or in other factors that could significantly affect such controls. 10 PART II -- OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 99.1 Interim Report to Shareholders for the quarter ended March 31, 2003. 99.2 Certification of CEO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 99.3 Certification of CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K No reports on Form 8-K were filed during the current period. 11 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: May 5, 2003 /s/ John A. Morrissey --------------------------------------- John A. Morrissey Chairman of the Board of Directors and Chief Executive Officer Date: May 5, 2003 /s/ John C. Osterman --------------------------------------- John C. Osterman President, Chief Operating Officer and Treasurer (Principal Financial Officer) Date: May 5, 2003 /s/ Michael J. Bourg --------------------------------------- Michael J. Bourg Controller (Principal Accounting Officer) 12 CERTIFICATIONS I, John A. Morrissey, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Chicago Rivet & Machine Co.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 5, 2003 /s/ John A. Morrissey ----------- ---------------------- John A. Morrissey Chairman 13 I, John C. Osterman, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Chicago Rivet & Machine Co.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 5, 2003 /s/ John C. Osterman ----------- -------------------- John C. Osterman President/Treasurer 14 CHICAGO RIVET & MACHINE CO. EXHIBITS INDEX TO EXHIBITS
Exhibit Number Page ---- 99.1 Interim Report to Shareholders for the quarter ended March 31, 2003 16-17 99.2 Certification of CEO Pursuant to 18 U.S.C. Section 1350,as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 18 99.3 Certification of CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 19
15 EX-99.1 3 c76694exv99w1.txt INTERIM REPORT TO SHAREHOLDERS EXHIBIT 99.1 To Our Shareholders: The comparative results of operations of Chicago Rivet & Machine Co. for the first quarter of 2003 and 2002 are summarized below. The recent quarter was more difficult than anticipated. The quarter began with an increase in revenues compared with the prior year, building expectations for a good start to 2003. Unfortunately, conditions changed abruptly as our major customers reduced, or delayed, orders as the quarter progressed. Revenues for the quarter amounted to $10,236,463, which is a decrease of approximately 2% compared to the first quarter of 2002. Revenues within the assembly equipment segment increased slightly, but that gain was more than offset by the decline in revenues within the fastener segment. The increase in volumes within the assembly equipment segment helped to offset higher costs incurred for labor, raw material, health insurance and utilities. As a result, gross margins within this segment were essentially unchanged from one year ago. However, within the fastener segment, gross margins declined, compared to the first quarter of last year, not only due to the decrease in volume, but also due to significant increases in labor expense and increases in the cost of employee health insurance, the cost of utilities, and higher repair expense. The higher labor costs were due to the combination of higher wage rates compared to the prior year and reduced labor efficiencies as a result of our inability to reduce labor hours as quickly as demand declined, particularly in the latter part of the quarter. First quarter selling and administrative expenses increased modestly during 2003 compared to the first quarter of 2002, due to increased payroll and fringe benefit costs. As a result, net income for the first quarter of 2003 fell to $465,241, or $.48 per share on 966,132 shares outstanding, compared to $625,116, or $.65 per share on 967,132 shares outstanding during the first quarter of 2002. Our markets continue to be extremely competitive and demand continues to be constrained by the lingering weakness that has characterized the manufacturing sector of the domestic economy for quite some time. We have taken action to reduce labor costs, and we continue to pursue every opportunity to secure new business. However, until there is sustained improvement within the overall manufacturing sector, our margins will continue to be constrained by lower than ideal levels of operation and by continued downward pressure on the price of our products. In the interim, we will continue to focus our efforts on controlling costs, improving profitability, and on obtaining new business. Respectfully yours, John A. Morrissey John C. Osterman Chairman President May 5, 2003 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 has been 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, our ability to maintain our relationships with our significant customers; increased global competition; increases in the prices of, or limitations on the availability of, our primary raw materials; or a downturn in the automotive industry, upon which we rely for sales revenue, and which is cyclical and dependent on, among other things, consumer spending, international economic conditions and regulations and policies regarding international trade. Many of these factors are beyond our ability to control or predict. Readers are cautioned not to place undue reliance on these forward- 16 looking statements. We undertake no obligation to publish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. CHICAGO RIVET & MACHINE CO. Summary of Consolidated Results of Operations For the Three Months Ended March 31
2003 2002 ---- ---- Net sales and lease revenue........ $ 10,236,463 $ 10,452,326 Income before taxes................ 709,241 947,116 Net income......................... 465,241 625,116 Net income per share............... .48 .65 Average shares outstanding......... 966,132 967,132
(All figures subject to year-end audit) 17 EX-99.2 4 c76694exv99w2.txt CERTIFICATION OF CHIEF EXECUTIVE OFFICER EXHIBIT 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of Chicago Rivet & Machine Co. (the "Company") for the quarterly period ended March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John A. Morrissey, as Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ John A. Morrissey - ----------------------------- Name: John A. Morrissey Title: Chief Executive Officer Date: May 5, 2003 This certification accompanies the Report pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of ss.18 of the Securities Exchange Act of 1934, as amended. A signed original of this written statement required by Section 906 has been provided to Chicago Rivet & Machine Co. and will be retained by Chicago Rivet & Machine Co. and furnished to the Securities and Exchange Commission or its staff upon request. 18 EX-99.3 5 c76694exv99w3.txt CERTIFICATION OF CHIEF FINANCIAL OFFICER EXHIBIT 99.3 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of Chicago Rivet & Machine Co. (the "Company") for the quarterly period ended March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John C. Osterman, as Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ John C. Osterman - ----------------------------- Name: John C. Osterman Title: Chief Financial Officer Date: May 5, 2003 This certification accompanies the Report pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of ss.18 of the Securities Exchange Act of 1934, as amended. A signed original of this written statement required by Section 906 has been provided to Chicago Rivet & Machine Co. and will be retained by Chicago Rivet & Machine Co. and furnished to the Securities and Exchange Commission or its staff upon request. 19 -----END PRIVACY-ENHANCED MESSAGE-----