-----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, T2OBhefd4HgNhF7B3l4QWQjAbS39S1H+0QWw6S/Z5+DiDgohyDvxoUUPEQa052Ef RWA5RHKiqpDzCUVtjbAOkw== 0000950137-05-010192.txt : 20050812 0000950137-05-010192.hdr.sgml : 20050812 20050812160358 ACCESSION NUMBER: 0000950137-05-010192 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20050630 FILED AS OF DATE: 20050812 DATE AS OF CHANGE: 20050812 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: 051021751 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 c97683e10vq.txt QUARTERLY REPORT UNITED STATES 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 June 30, 2005 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 June 30, 2005, 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 June 30, 2005 and December 31, 2004 2-3 Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2005 and 2004 4 Consolidated Statements of Retained Earnings for the Six Months Ended June 30, 2005 and 2004 5 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2005 and 2004 6 Notes to the Consolidated Financial Statements 7-9 Management's Discussion and Analysis of Financial Condition and Results of Operations 10-11 Controls and Procedures 12 PART II. OTHER INFORMATION 13-21 1 Item 1. Financial Statements. CHICAGO RIVET & MACHINE CO. Consolidated Balance Sheets June 30, 2005 and December 31, 2004
June 30, December 31, 2005 2004 ------------ ------------ (Unaudited) Assets Current Assets: Cash and cash equivalents $ 4,676,768 $ 5,464,368 Certificates of deposit 805,000 805,000 Accounts receivable - net of allowances 6,438,881 4,867,615 Inventories: Raw materials 1,539,164 1,693,341 Work in process 2,034,931 2,136,996 Finished goods 2,269,304 2,412,133 ----------- ----------- Total inventories 5,843,399 6,242,470 ----------- ----------- Deferred income taxes 571,191 554,191 Other current assets 167,160 219,497 ----------- ----------- Total current assets 18,502,399 18,153,141 ----------- ----------- Property, Plant and Equipment: Land and improvements 1,015,635 1,015,635 Buildings and improvements 5,948,829 5,823,984 Production equipment, leased machines and other 29,639,114 29,272,638 ----------- ----------- 36,603,578 36,112,257 Less accumulated depreciation 25,798,149 24,965,941 ----------- ----------- Net property, plant and equipment 10,805,429 11,146,316 ----------- ----------- Total assets $29,307,828 $29,299,457 =========== ===========
See Notes to the Consolidated Financial Statements 2 CHICAGO RIVET & MACHINE CO. Consolidated Balance Sheets June 30, 2005 and December 31, 2004
June 30, December 31, 2005 2004 ------------ ------------- (Unaudited) Liabilities and Shareholders' Equity Current Liabilities: Accounts payable 2,079,844 1,367,221 Accrued wages and salaries 848,941 706,701 Other accrued expenses 930,444 856,957 ------------ ------------ Total current liabilities 3,859,229 2,930,879 Deferred income taxes 1,353,275 1,551,275 ------------ ------------ Total liabilities 5,212,504 4,482,154 ------------ ------------ 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 26,432,192 27,154,171 Treasury stock, at cost, 171,964 shares (3,922,098) (3,922,098) ------------ ------------ Total shareholders' equity 24,095,324 24,817,303 ------------ ------------ Total liabilities and shareholders' equity $ 29,307,828 $ 29,299,457 ============ ============
See Notes to the Consolidated Financial Statements 3 CHICAGO RIVET & MACHINE CO. Consolidated Statements of Operations For the Three and Six Months Ended June 30, 2005 and 2004 (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, ------------------------------ ------------------------------ 2005 2004 2005 2004 ------------ ------------ ------------ ------------ Net sales $ 10,036,880 $ 10,209,944 $ 20,091,999 $ 20,351,901 Lease revenue 27,512 27,612 55,255 54,619 ------------ ------------ ------------ ------------ 10,064,392 10,237,556 20,147,254 20,406,520 Cost of goods sold and costs related to lease revenue 8,646,641 8,006,988 17,127,064 16,153,546 ------------ ------------ ------------ ------------ Gross profit 1,417,751 2,230,568 3,020,190 4,252,974 Selling and administrative expenses 1,683,491 1,660,438 3,433,257 3,257,217 ------------ ------------ ------------ ------------ Operating profit (loss) (265,740) 570,130 (413,067) 995,757 Other income and expenses: Interest income 33,275 13,974 60,037 28,355 Gain from disposal of equipment -- -- -- 430 Other income 2,978 4,172 7,778 6,722 ------------ ------------ ------------ ------------ Income (loss) before income taxes (229,487) 588,276 (345,252) 1,031,264 Provision (benefit) for income taxes (77,000) 202,000 (116,000) 354,000 ------------ ------------ ------------ ------------ Net income (loss) $ (152,487) $ 386,276 $ (229,252) $ 677,264 ============ ============ ============ ============ Average common shares outstanding 966,132 966,132 966,132 966,132 ============ ============ ============ ============ Per share data: Net income (loss) per share $ (0.16) $ 0.40 $ (0.24) $ 0.70 ============ ============ ============ ============ Cash dividends declared per share $ 0.18 $ 0.18 $ 0.51 $ 0.36 ============ ============ ============ ============
See Notes to the Consolidated Financial Statements 4 CHICAGO RIVET & MACHINE CO. Consolidated Statements of Retained Earnings For the Six Months Ended June 30, 2005 and 2004 (Unaudited)
2005 2004 ------------ -------------- Retained earnings at beginning of period $ 27,154,171 $ 26,326,352 Net income (loss) for the six months ended (229,252) 677,264 Cash dividends declared in the period, $.51 and $.36 per share in 2005 and 2004, respectively (492,727) (347,808) ------------ -------------- Retained earnings at end of period $ 26,432,192 $ 26,655,808 ============ ==============
See Notes to the Consolidated Financial Statements 5 CHICAGO RIVET & MACHINE CO. Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2005 and 2004 (Unaudited)
2005 2004 ----------- ----------- Cash flows from operating activities: Net income (loss) $ (229,252) $ 677,264 Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: Depreciation 839,826 865,356 Net gain on the sale of properties (300) (430) Deferred income taxes (215,000) (188,000) Changes in operating assets and liabilities: Accounts receivable, net (1,571,266) (1,032,075) Inventories 399,071 107,154 Other current assets 52,337 54,811 Accounts payable 483,562 53,630 Accrued wages and salaries 142,240 111,620 Other accrued expenses 73,487 344,558 ----------- ----------- Net cash (used in) provided by operating activities (25,295) 993,888 ----------- ----------- Cash flows from investing activities: Capital expenditures (269,878) (232,852) Proceeds from the sale of properties 300 430 Proceeds from held-to-maturity securities 405,000 105,000 Purchases of held-to-maturity securities (405,000) (105,000) ----------- ----------- Net cash used in investing activities (269,578) (232,422) ----------- ----------- Cash flows from financing activities: Cash dividends paid (492,727) (347,808) ----------- ----------- Net cash used in financing activities (492,727) (347,808) ----------- ----------- Net (decrease) increase in cash and cash equivalents (787,600) 413,658 Cash and cash equivalents at beginning of period 5,464,368 5,530,099 ----------- ----------- Cash and cash equivalents at end of period $ 4,676,768 $ 5,943,757 =========== =========== Supplemental schedule of noncash investing activities: Capital expenditures in accounts payable $ 229,061 $ 151,563
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 interim financial statements contain all adjustments necessary to present fairly the financial position of the Company as of June 30, 2005 (unaudited) and December 31,2004 (audited) 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 and six-month period ending June 30, 2005 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 and contract disputes, 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:
Assembly Fastener Equipment Other Consolidated ----------- ----------- ---------- ------------- Three Months Ended June 30, 2005: Net sales and lease revenue $ 8,444,808 $ 1,619,584 $10,064,392 Depreciation 376,125 26,106 17,787 420,018 Segment profit 37,349 359,887 397,236 Selling and administrative expenses (659,998) (659,998) Interest income 33,275 33,275 ----------- Income (loss) before income taxes (229,487) ----------- Capital expenditures 351,785 -- 122,245 474,030 Segment assets: Accounts receivable, net 5,654,635 784,246 6,438,881 Inventory 3,972,629 1,870,770 5,843,399 Property, plant and equipment, net 8,532,793 1,304,745 967,891 10,805,429 Other assets 6,220,119 6,220,119 ------------ 29,307,828 ------------ Three Months Ended June 30, 2004: Net sales and lease revenue $ 8,391,416 $ 1,846,140 $ -- $ 10,237,556 Depreciation 371,340 28,518 32,820 432,678 Segment profit 717,247 456,233 -- 1,173,480 Selling and administrative expenses (599,178) (599,178) Interest income 13,974 13,974 ------------ Income before income taxes 588,276 ------------ Capital expenditures 313,853 9,050 -- 322,903 Segment assets: Accounts receivable, net 4,778,575 802,668 -- 5,581,243 Inventory 3,335,421 1,791,213 -- 5,126,634 Property, plant and equipment, net 8,731,688 1,400,545 936,400 11,068,633 Other assets -- -- 7,161,697 7,161,697 ------------ 28,938,207 ------------
8 CHICAGO RIVET & MACHINE CO. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Assembly Fastener Equipment Other Consolidated ------------ ------------ ------------ ------------- Six Months Ended June 30, 2005: Net sales and lease revenue $ 16,792,366 $ 3,354,888 $ 20,147,254 Depreciation 752,040 52,212 35,574 839,826 Segment profit 112,492 782,548 895,040 Selling and administrative expenses (1,300,329) (1,300,329) Interest income 60,037 60,037 ------------ Income (loss) before income taxes (345,252) ------------ Capital expenditures 372,565 1,520 124,854 498,939 Six Months Ended June 30, 2004: Net sales and lease revenue $ 16,652,699 $ 3,753,821 $ -- $ 20,406,520 Depreciation 742,680 57,036 65,640 865,356 Segment profit 1,291,980 890,236 -- 2,182,216 Selling and administrative expenses (1,179,307) (1,179,307) Interest income 28,355 28,355 ------------ Income before income taxes 1,031,264 ------------ Capital expenditures 375,365 9,050 -- 384,415
9 CHICAGO RIVET & MACHINE CO. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. The combination of higher raw material costs, increases in administrative expenses and generally lower volumes adversely impacted our results for the current quarter and for the year to date. Within the fastener segment, revenues increased less than 1%, from $8,391,416 in the second quarter of 2004 to $8,444,808 in the second quarter of 2005. However, that improvement reflects the sale of product with higher unit prices, which partially offset a decline in units sold. It also includes the recovery of a portion of higher raw material costs that were incurred in the second quarter of 2005. Second quarter revenues, excluding the recovery of raw material price increases, were 2.9% lower than in the second quarter of 2004. Gross margins declined approximately $698,000 compared to the second quarter of 2004. A change in product mix that favored product with higher material content caused material costs to increase approximately $200,000 compared to the second quarter of 2004. Material prices remained much higher than during the second quarter of 2004 and market conditions were such that we had to absorb approximately $67,000 of the increase in material prices. Other factors that adversely impacted margins during the second quarter included an increase in expenditures for perishable tooling of $159,000 and a $40,000 increase in repairs and maintenance expense. These increases were more a result of timing as the year to date change in these items is not significant. In addition, outside processing costs increased by $127,000 in connection with the introduction of new parts. The balance of the decline in gross margin is primarily the result of lower volume. For the first six months, fastener segment revenues increased by less than 1%. That change includes the pass through of a portion of higher costs for raw materials. Excluding the material cost recovery, net sales declined by approximately 3.9% in the current year. Gross margins for the first six months of 2005 declined $1,084,000 compared to the first half of 2004. Higher material costs account for $871,000 of this change. Factors affecting material costs include unrecovered material cost increases of $370,000, increases in outside processing (related to a change in product mix) of $219,000, and higher material content, related to a change in product mix, of approximately $282,000. The remainder of the change in gross margin was primarily a factor of lower unit volumes. Revenues within the assembly equipment segment declined $226,556, or 12.3%, in the second quarter of 2005 compared to the second quarter of 2004, as demand for our products in this segment continues to show weakness. Gross margins for this segment declined approximately $115,000, almost entirely due to the reduction in volumes. For the first six months, revenues in this segment declined approximately $399,000, or 10.6%, compared to the first six months of 2004. Although we were able to reduce elements of manufacturing costs consistent with this decline in activity, the decline in volume resulted in a reduction of first half gross margins of $149,000 when comparing 2005 to 2004. Selling and administrative expenses for the second quarter of 2005 were approximately $23,000 higher than during the second quarter of 2004. Major factors contributing to this change include increases in professional services of $95,000 primarily related to compliance with the Sarbanes-Oxley Act of 2002, and legal fees of $34,000 in connection with ongoing litigation and other matters. These increases were partially offset by a reduction of $78,000 in profit sharing expense and smaller, net reductions in a variety of other expenses. On a year to date basis, selling and administrative expenses increased $176,000 compared to the first six months of 2004. Factors contributing to this increase include $234,000, primarily related to Sarbanes-Oxley Act of 2002 compliance; $120,000 in legal fees incurred in connection with ongoing litigation and other matters; and $44,000 in higher salaries and wages. These higher costs were partially offset by reductions in profit sharing expense of $141,000; a $57,000 reduction in the Michigan single business tax and lower depreciation of $30,000. Working capital at June 30, 2005 amounted to $14.6 million, a decline of $.58 million from the beginning of the year. Inventory balances have declined $.4 million this year. As concerns about the availability of raw materials eased, we have reduced the levels of raw material in stock. Levels of work in process and finished goods are also lower, as production levels have been reduced in response to weaker demand. Holdings in cash and cash equivalents amounted to $5.5 million at the end of the second quarter, a year to date decline of $.8 million. Accounts receivable balances have increased by $1.6 million this year. Collections typically lag shipments by several weeks, and the June 30 balance reflects the fact that second quarter sales were more heavily concentrated in the latter part of the quarter and were higher than those of the fourth quarter of 2004. Current liabilities are $.9 million higher than at the beginning of the year, primarily due to an increase of $.7 million in accounts payable. $.2 million of the increase in payables relates to building improvements while the remainder is caused by the generally higher level of activity at June 30 compared to December 31. 10 The Company has a $1.0 million line of credit, which expires May 31, 2006. This line of credit remains unused. Management believes that current cash, cash equivalents, operating cash flow and the available line of credit will provide adequate working capital for the foreseeable future. This has been a very difficult year. Demand for our products continues to be weak. Many of our customers are subject to foreign competition and have responded by turning to foreign sources for product or by outsourcing their operations to lower cost countries. As a result, the available market for our products is reduced and competition for available market share increases. Past efforts to solicit profitable business from both new and existing customers have not been as successful as we expected. In July, we implemented changes to strengthen our sales efforts and we believe this will yield positive results in the future. While raw material costs have begun to recede to a limited extent, we expect that the market will dictate that these savings be passed on to our customers. As volumes have fallen, it has become increasingly difficult to make matching, incremental changes in our operating levels. We will continue to make adjustments to our staffing levels in response to changing market conditions, subject to limitations that would affect our ability to adequately meet customer's service expectations. Costs associated with Sarbanes-Oxley compliance declined somewhat more than expected during the second quarter as the compliance deadline was extended, but we still expect to incur significant costs related to compliance in the third quarter. We also expect legal expenses will continue to be higher than usual during the coming months. Increasing revenue and controlling costs continue to be critical to our future success, and we remain focused on making progress in both of these critical areas. 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. 11 CHICAGO RIVET & MACHINE CO. Item 4. Controls and Procedures. (a) Disclosure Controls and Procedures. The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act. (b) Internal Control Over Financial Reporting. There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. 12 PART II -- OTHER INFORMATION Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. Under the terms of a stock repurchase authorization originally approved by the Board of Directors of the Company in February of 1990, as amended, the Company is authorized to repurchase up to an aggregate of 200,000 shares of its common stock, in the open market or in private transactions, at prices deemed reasonable by management. Cumulative purchases under the repurchase authorization have amounted to 162,996 shares at an average price of $15.66 per share. The Company has not purchased any shares of its common stock since 2002. Item 4. Submission of Matters to a Vote of Security Holders The Company's Annual Meeting of Stockholders was held on May 10, 2005. The only proposal voted upon was the election of nine directors for a term ending at the Annual Meeting in 2006. The nine persons nominated by the Company's Board of Directors received the following votes and were elected: NAME VOTES FOR VOTES WITHHELD ---- --------- -------------- Edward L. Chott 896,022 37,953 Kent H. Cooney 899,273 35,433 Nirendu Dhar 899,272 35,433 William T. Divane, Jr. 900,892 34,533 George P. Lynch 898,731 35,903 John R. Madden 898,036 37,059 John A. Morrissey 900,780 34,634 Walter W. Morrissey 897,634 37,059 John C. Osterman 900,891 34,533 Item 6. Exhibits 31 Rule 13a-14(a) or 15d-14(a) Certifications 31.1 Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32 Section 1350 Certifications 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 99.1 Interim Report to Shareholders for the quarter ended June 30, 2005. 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: August 12, 2005 /s/ John A. Morrissey ---------------------------------- John A. Morrissey Chairman of the Board of Directors and Chief Executive Officer Date: August 12, 2005 /s/ John C. Osterman ---------------------------------- John C. Osterman President, Chief Operating Officer and Treasurer (Principal Financial Officer) Date: August 12, 2005 /s/ Michael J. Bourg ---------------------------------- Michael J. Bourg Controller (Principal Accounting Officer) 14 CHICAGO RIVET & MACHINE CO. EXHIBITS INDEX TO EXHIBITS Exhibit Page Number ------- 31 Rule 13a-14(a) or 15d-14(a) Certifications 31.1 Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 16 31.2 Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 17 32 Section 1350 Certifications 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 18 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 19 99.1 Interim Report to Shareholders for the quarter ended June 30, 2005 20 - 21 15 EX-31.1 2 c97683exv31w1.txt CERTIFICATION EXHIBIT 31.1 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 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 12, 2005 /s/ John A. Morrissey ---------------------- John A. Morrissey Chairman 16 EX-31.2 3 c97683exv31w2.txt CERTIFICATION EXHIBIT 31.2 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 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 12, 2005 /s/ John C. Osterman -------------------- John C. Osterman President/Treasurer 17 EX-32.1 4 c97683exv32w1.txt CERTIFICATION EXHIBIT 32.1 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 June 30, 2005 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: August 12, 2005 18 EX-32.2 5 c97683exv32w2.txt CERTIFICATION EXHIBIT 32.2 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 June 30, 2005 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: August 12, 2005 19 EX-99.1 6 c97683exv99w1.txt INTERIM REPORT TO SHAREHOLDERS EXHIBIT 99.1 To Our Shareholders: The combination of higher raw material costs, increases in administrative expenses and generally lower volumes adversely impacted our results for the current quarter and for the year to date. Within the fastener segment, revenues increased less than 1%, from $8,391,416 in the second quarter of 2004 to $8,444,808 in the second quarter of 2005. However, that improvement reflects the sale of product with higher unit prices, which partially offset a decline in units sold. It also includes the recovery of a portion of higher raw material costs that were incurred in the second quarter of 2005. Second quarter revenues, excluding the recovery of raw material price increases, were 2.9% lower than in the second quarter of 2004. Gross margins declined approximately $698,000 compared to the second quarter of 2004. A change in product mix that favored product with higher material content caused material costs to increase approximately $200,000 compared to the second quarter of 2004. Material prices remained much higher than during the second quarter of 2004 and market conditions were such that we had to absorb approximately $67,000 of the increase in material prices. Other factors that adversely impacted margins during the second quarter included an increase in expenditures for perishable tooling of $159,000 and a $40,000 increase in repairs and maintenance expense. These increases were more a result of timing as the year to date change in these items is not significant. In addition, outside processing costs increased by $127,000 in connection with the introduction of new parts. The balance of the decline in gross margin is primarily the result of lower volume. For the first six months, fastener segment revenues increased by less than 1%. That change includes the pass through of a portion of higher costs for raw materials. Excluding the material cost recovery, net sales declined by approximately 3.9% in the current year. Gross margins for the first six months of 2005 declined $1,084,000 compared to the first half of 2004. Higher material costs account for $871,000 of this change. Factors affecting material costs include unrecovered material cost increases of $370,000, increases in outside processing (related to a change in product mix) of $219,000, and higher material content, related to a change in product mix, of approximately $282,000. The remainder of the change in gross margin was primarily a factor of lower unit volumes. Revenues within the assembly equipment segment declined $226,556, or 12.3%, in the second quarter of 2005 compared to the second quarter of 2004, as demand for our products in this segment continues to show weakness. Gross margins for this segment declined approximately $115,000, almost entirely due to the reduction in volumes. For the first six months, revenues in this segment declined approximately $399,000, or 10.6%, compared to the first six months of 2004. Although we were able to reduce elements of manufacturing costs consistent with this decline in activity, the decline in volume resulted in a reduction of first half gross margins of $149,000 when comparing 2005 to 2004. Selling and administrative expenses for the second quarter of 2005 were approximately $23,000 higher than during the second quarter of 2004. Major factors contributing to this change include increases in professional services of $95,000 primarily related to compliance with the Sarbanes-Oxley Act of 2002 and legal fees of $34,000 in connection with ongoing litigation and other matters. These increases were partially offset by a reduction of $78,000 in profit sharing expense and smaller, net reductions in a variety of other expenses. On a year to date basis, selling and administrative expenses increased $176,000 compared to the first six months of 2004. Factors contributing to this increase include $234,000, primarily related to Sarbanes-Oxley Act of 2002 compliance; $120,000 in legal fees incurred in connection with ongoing litigation and other matters; and $44,000 in higher salaries and wages. These higher costs were partially offset by reductions in profit sharing expense of $141,000; a $57,000 reduction in the Michigan single business tax and lower depreciation of $30,000. This has been a very difficult year. Demand for our products continues to be weak. Many of our customers are subject to foreign competition and have responded by turning to foreign sources for product or by outsourcing their operations to lower cost countries. As a result, the available market for our products is reduced and competition for available market share increases. Past efforts to solicit profitable business from both new and existing customers have not been as successful as we expected. In July, we implemented changes to strengthen our sales efforts and we believe this will yield positive results in the future. While raw material costs have begun to recede to a limited extent, we expect that the market will dictate that these savings be passed on to our customers. As volumes have fallen, it has become increasingly difficult to make matching, incremental changes in our operating levels. We will continue to make adjustments to our staffing levels in response to changing market conditions, subject to limitations that would affect our ability to adequately meet customer's service expectations. Costs associated with Sarbanes-Oxley compliance declined somewhat more than expected during the second quarter as the compliance deadline was extended, but we still expect to incur significant costs related to compliance in the third quarter. We also expect legal expenses will continue to be higher 20 than usual during the coming months. Increasing revenue and controlling costs continue to be critical to our future success, and we remain focused on making progress in both of these critical areas. Respectfully yours, John A. Morrissey John C. Osterman Chairman President August 12, 2005 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. CHICAGO RIVET & MACHINE CO. SUMMARY OF CONSOLIDATED RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30
SECOND QUARTER FIRST SIX MONTHS ----------------------------- ------------------------------ 2005 2004 2005 2004 ------------ ------------ ------------ ------------- Net sales and lease revenue $ 10,064,392 $ 10,237,556 $ 20,147,254 $ 20,406,520 Income (loss) before income taxes (229,487) 588,276 (345,252) 1,031,264 Net income (loss) (152,487) 386,276 (229,252) 677,264 Net income (loss) per share (.16) .40 (.24) .70 Average shares outstanding 966,132 966,132 966,132 966,132
- ------------ (All figures subject to year-end audit) 21 -----END PRIVACY-ENHANCED MESSAGE-----