-----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, SpeFSWwQm2y1fKJt6pAHIqn29+myZ0kcI3sxSm7cOfth6aJgTz+zk/rQSAE0uPcF W6h7fURV7kLRvsPeQT25ag== 0000950137-99-001695.txt : 19990518 0000950137-99-001695.hdr.sgml : 19990518 ACCESSION NUMBER: 0000950137-99-001695 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 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: SEC FILE NUMBER: 000-01227 FILM NUMBER: 99626026 BUSINESS ADDRESS: STREET 1: 901 FRONTENAC RD STREET 2: P O BOX 3061 CITY: NAPERVILLE STATE: IL ZIP: 60523 BUSINESS PHONE: 6303578500X550 MAIL ADDRESS: STREET 1: 901 FRONTENAC RD STREET 2: P O BOX 3061 CITY: NAPERVILLE STATE: IL ZIP: 60523 10-Q 1 FORM 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 March 31, 1999 Commission File Number 0-1227 -------------- CHICAGO RIVET & MACHINE CO. --------------------------- (Exact name of registrant as specified in its charter) ILLINOIS 36-0904920 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) P. O. Box 3061 90l Frontenac Road Naperville, Illinois 60566 - -------------------- ----- (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code (630)357-8500 ------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at March 31, 1999 - ----- ----------------------------- COMMON STOCK, $1.00 PAR VALUE 1,153,496 SHARES - ----------------------------- ---------------- DOCUMENTS INCORPORATED BY REFERENCE - ----------------------------------- (1) Portions of the Company's Interim Report to Shareholders for the Quarter ended March 31, 1999 are incorporated by reference in Part I of this Report. 2 CHICAGO RIVET & MACHINE CO. INDEX PART I. FINANCIAL INFORMATION Page ---- Consolidated Balance Sheets at March 31, 1999 and December 31, 1998 2-3 Consolidated Statements of Operations for the Three Months Ended March 31, 1999 and 1998 4 Consolidated Statements of Retained Earnings for the Three Months Ended March 31, 1999 and 1998 5 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1999 and 1998 6 Notes to the Consolidated Financial Statements 7-8 Management's Discussion and Analysis of Financial Condition and Results of Operations 9-11 PART II. OTHER INFORMATION 12-16 1 3 CHICAGO RIVET & MACHINE CO. Consolidated Balance Sheets March 31, 1999 and December 31, 1998 Assets March 31, December 31, 1999 1998 ---- ---- (Unaudited) Current Assets: Cash and cash equivalents $ 3,167,280 $ 3,181,471 Certificates of deposit 1,151,521 550,254 Accounts receivable - net of allowances 7,363,438 6,483,214 Inventories: Raw materials 1,711,551 1,656,179 Work in process 1,849,131 1,777,584 Finished goods 3,106,081 3,095,984 ----------- ----------- Total inventories 6,666,763 6,529,747 ----------- ----------- Deferred income taxes 700,191 691,191 Other current assets 156,795 235,149 ----------- ----------- Total Current Assets 19,205,988 17,671,026 ----------- ----------- Property, Plant and Equipment Land and improvements 1,008,901 1,008,901 Buildings and improvements 5,656,315 5,634,144 Production equipment, leased machines and other 23,848,263 23,737,405 ----------- ----------- 30,513,479 30,380,450 Less accumulated depreciation 16,643,510 16,235,695 ----------- ----------- Net Property, Plant and Equipment 13,869,969 14,144,755 ----------- ----------- Total Assets $33,075,957 $31,815,781 =========== =========== See Notes to the Consolidated Financial Statements 2 4 CHICAGO RIVET & MACHINE CO. Consolidated Balance Sheets March 31, 1999 and December 31, 1998 Liabilities and Shareholders' Equity March 31, December 31, 1999 1998 ---- ---- (Unaudited) Current Liabilities: Current portion of note payable $ 1,800,000 $ 1,800,000 Accounts payable 2,065,562 1,272,462 Wages and salaries 900,959 745,158 Contributions due profit sharing plan 190,182 546,078 Other accrued expenses 605,100 546,068 Unearned lease revenue 18,426 43,267 Federal and state income taxes 912,274 354,814 ----------- ----------- Total Current Liabilities 6,492,503 5,307,847 Note payable 2,700,000 3,150,000 Deferred income taxes 1,329,275 1,345,275 ----------- ----------- Total Liabilities 10,521,778 9,803,122 ----------- ----------- Shareholders' Equity: Preferred stock, no par value-authorized 500,000 shares-none outstanding -- -- Common stock, $1.00 par value; authorized 4,000,000 shares; issued and outstanding 1,153,496 and 1,153,496, respectively 1,153,496 1,153,496 Additional paid-in capital 453,184 453,184 Retained earnings 20,947,499 20,405,979 ----------- ----------- Total Shareholders' Equity 22,554,179 22,012,659 ----------- ----------- Commitments and Contingencies (Note 4) Total Liabilities and Shareholders' Equity $33,075,957 $31,815,781 =========== =========== See Notes to the Consolidated Financial Statements 3 5 CHICAGO RIVET & MACHINE CO. Consolidated Statements of Operations For the Three Months Ended March 31, 1999 and 1998 (Unaudited) March 31, March 31, 1999 1998 ---- ---- Net sales $12,435,788 $11,580,739 Lease revenue 81,692 92,210 ----------- ----------- 12,517,480 11,672,949 Cost of goods sold and costs related to lease revenue 8,656,687 8,271,340 ----------- ----------- Gross profit 3,860,793 3,401,609 Shipping, selling and administrative expenses 1,915,906 1,822,305 Profit sharing expense 190,000 120,299 ----------- ----------- 1,754,887 1,459,005 Other income and expenses: Interest income 47,794 83,982 Interest expense (77,439) (105,525) Gain from sale of leased machines and other equipment 11,428 14,311 Other income (expense) 3,790 (26,953) ----------- ----------- Income before income taxes 1,740,460 1,424,820 Provision for income taxes 588,000 510,000 ----------- ----------- Net income $ 1,152,460 $ 914,820 =========== =========== Average common shares outstanding 1,153,496 1,169,100 =========== =========== Per share data: Net income per share $ 1.00 $ .78 =========== =========== Cash dividends declared per share $ .53 $ .58 =========== =========== See Notes to the Consolidated Financial Statements 4 6 CHICAGO RIVET & MACHINE CO. Consolidated Statements of Retained Earnings For the Three Months Ended March 31, 1999 and 1998 (Unaudited) March 31, March 31, 1999 1998 ---- ---- Retained earnings at beginning of period $20,405,979 $18,882,418 Net income for the three months ended 1,152,460 914,820 Treasury stock retired at cost -- (5,371) Cash dividends declared in the period, $.53 per share in 1999 and $.58 per share in 1998 (610,940) (679,034) ----------- ----------- Retained earnings at end of period $20,947,499 $19,112,833 =========== =========== See Notes to the Consolidated Financial Statements 5 7 CHICAGO RIVET & MACHINE CO. Consolidated Statements of Cash Flows For the Three Months Ended March 31, 1999 and 1998 (Unaudited) March 31, March 31, 1999 1998 ---- ---- Cash flows from operating activities: Net income $1,152,460 $ 914,820 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 424,305 374,071 Net gain on the sale of properties (11,428) (14,311) Deferred income taxes (25,000) 9,392 Changes in working capital components: Accounts receivable (880,224) (402,863) Inventories (137,016) (346,445) Other current assets 78,354 (114,248) Accounts payable 389,376 (26,910) Accrued wages and salaries 155,801 294,129 Accrued profit sharing (355,896) (547,586) Other accrued expenses 59,032 155,543 Unearned lease revenue (24,841) (24,747) Income taxes payable 557,460 299,315 ---------- ----------- Net cash provided by operating activities 1,382,383 570,160 ---------- ----------- Cash flows from investing activities: Capital expenditures (163,843) (761,329) Proceeds from the sale of properties 25,752 18,806 Proceeds from held-to-maturity securities 550,254 2,467,715 Purchases of held-to-maturity securities (1,151,521) (1,359,038) ---------- ----------- Net cash provided by (used in) investing activities (739,358) 366,154 ---------- ----------- Cash flows from financing activities: Payments under term loan agreement (450,000) (450,000) Purchase of treasury stock -- (5,650) Cash dividends paid (207,216) (210,761) ---------- ----------- Net cash used by financing activities (657,216) (666,411) ---------- ----------- Net increase (decrease) in cash and cash equivalents (14,191) 269,903 Cash and cash equivalents at beginning of period 3,181,471 3,983,471 ---------- ----------- Cash and cash equivalents at end of period $3,167,280 $ 4,253,374 ========== =========== Cash paid during the period for: Income taxes $ 55,540 $ 201,293 Interest $ 77,438 $ 105,060 See Notes to the Consolidated Financial Statements 6 8 CHICAGO RIVET & MACHINE CO. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. In the opinion of the Company, the accompanying unaudited financial statements contain all adjustments necessary to present fairly the financial position of the Company as of March 31, 1999 and December 31, 1998 and the results of operations and changes in cash flow for the indicated periods. The Company uses estimated gross profit rates to determine the cost of goods sold during interim periods. Actual results could differ from those estimates and will be adjusted, as necessary, following the Company's annual physical inventory in the fourth quarter. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. The results of operations for the three month period ended March 31, 1999 are not necessarily indicative of the results to be expected for the year. 3. The Company extends credit primarily on the basis of 30-day terms to various companies doing business primarily in the automotive and appliance industries. The Company has a concentration of credit risk primarily within the automotive industry and in the Midwestern United States. 4. The Company is, from time to time involved in litigation, including environmental claims, in the normal course of business. With respect to environmental claims, the Company has recorded a liability of approximately $40,000. The adequacy of this reserve will be reviewed periodically as more definitive cost information becomes available. In addition, the Company was recently notified that certain fasteners it manufactured may not conform to customer specifications. These fasteners become part of an assembly that is ultimately used in the braking system of certain vehicles. The Company believes that approximately 19,000 vehicles that include these assemblies may be recalled. The Company may incur potentially significant costs related to this issue. At this time, the Company cannot quantify its potential financial exposure due to uncertainties regarding the number of vehicles involved, the ultimate costs that may be incurred and the allocation of those costs among the parties involved. 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, therefore no amount has been accrued at March 31, 1999. 7 9 CHICAGO RIVET & MACHINE CO. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 5. Segment Information-The Company operates in two business segments as determined by its products. The fastener segment includes rivets, cold-formed fasteners and screw-machine products. The assembly equipment segment includes automatic rivet setting machines, parts and tools for such machines and the leasing of automatic rivet setting machines. Information by segment is as follows:
Three months ended Assembly March 31, 1999: Fastener Equipment Other Consolidated -------- --------- ----- ------------ Net sales and lease revenue $ 9,737,327 $ 2,780,153 $ -- $12,517,480 Depreciation 299,508 65,517 59,280 424,305 Segment profit 2,284,680 1,146,653 -- 3,431,333 Selling and administrative expenses 1,661,228 1,661,228 Interest expense 77,439 77,439 Interest income (47,794) (47,794) ----------- Income before income taxes 1,740,460 ----------- Capital expenditures 106,599 1,024 56,220 163,843 Segment assets: Inventory 3,777,597 2,889,166 -- 6,666,763 Property, plant and equipment 10,385,719 1,721,228 1,763,022 13,869,969 Other assets -- -- 12,539,225 12,539,225 ----------- 33,075,957 ----------- Three Months Ended March 31, 1998: Net sales and lease revenue $ 8,800,610 $ 2,872,339 $ -- $11,672,949 Depreciation 269,665 62,255 39,151 374,071 Segment profit 1,762,184 1,296,782 -- 3,058,966 Selling and administrative expenses 1,612,603 1,612,603 Interest expense 105,525 105,525 Interest income (83,982) (83,982) ----------- Income before income taxes 1,424,820 ----------- Capital expenditures 604,039 20,574 136,716 761,329 Segment assets: Inventory 3,920,270 2,780,782 -- 6,701,052 Property, plant and equipment 10,275,428 1,560,095 1,501,336 13,336,859 Other assets -- -- 13,373,844 13,373,844 ----------- 33,411,755 -----------
8 10 CHICAGO RIVET & MACHINE CO. Management's Discussion and Analysis of Financial Condition and Results of Operations Financial results for the first quarter of 1999 were excellent. Driven by continued strength in the automotive industry, the net sales and lease revenues increased to $12,517,480 during the quarter, compared with $11,672,949 recorded during the first quarter of 1998. All of the increase is attributable to the fastener segment of our operations, where revenues increased 10.6% to $9,737,327 compared with $8,800,610 during the same period in 1998. Revenues within the assembly equipment segment declined slightly to $2,780,153 in the first quarter of 1999, compared to $2,872,339 during the first quarter of 1998. Net income improved significantly, amounting to $1,152,460 or $1.00 per share on 1,153,496 average shares outstanding during the quarter, compared with $914,820, or $.78 per share on 1,169,100 average shares outstanding during the first quarter of 1998. The success of ongoing efforts to control manufacturing costs, combined with the significant increase in volumes, are the major factors contributing to the quarter to quarter improvement in results within the fastener segment. Within the assembly equipment segment, operating results trail the year earlier period primarily due to reduced unit sales and a somewhat less favorable product mix compared to the first quarter of 1998. Selling, general and administrative expenses increased by approximately $163,000, or 8.4%, compared to the first quarter of 1998. This change is primarily comprised of higher profit sharing expense, proportionate with increased profitability, and higher state tax expense. These changes were partially offset by reductions in commission and consulting expenses associated with the Company's subsidiary, H & L Tool Company. During the quarter, working capital increased by approximately $0.3 million and totaled $12.7 million at the end of the quarter. Accounts receivable increased compared to the year-end 1998 balances, largely due to the increase in sales during the first quarter compared with the fourth quarter of 1998. As previously disclosed, the Company was recently notified that certain fasteners it manufactured may not conform to customer specifications. These fasteners become part of an assembly that is ultimately used in the braking system of certain vehicles. The Company believes that approximately 19,000 vehicles that include these assemblies may be recalled. The Company may incur potentially significant costs related to this issue. At this time, the Company cannot quantify its potential financial exposure due to uncertainties regarding the number of vehicles involved, the ultimate costs that may be incurred and the allocation of those costs among the parties involved. The Company continues to make quarterly principal payments of $450,000, plus interest at a variable rate, on its term note as scheduled. At March 31, 1999 the principal balance outstanding was $4.5 million and the interest rate was approximately 5.9%. The Company is in full compliance with all terms of the note. The Company also has a $1.0 million line of credit from the Bank of America. This line remains unused and is scheduled to expire on May 30, 1999. Although the Company believes that its current cash, cash equivalents and existing borrowings will be sufficient to provide adequate working capital through at least the next twelve months, consideration will be given to extending the line of credit for an additional twelve months. The Company continues to make ongoing assessments of its state of readiness with respect to Year 2000 ("Y2K") issues. This process can logically be segregated into two major categories - information technology and non-information technology. The first category encompasses issues related to computer equipment and software used in the operation of the business, while the second category deals with all other aspects of Y2K issues including, but not limited to, manufacturing equipment and systems, supplier and customer preparedness and facility related issues such as telecommunications equipment, HVAC systems and facility security. The Company has determined that its information technology systems are not Y2K compliant and has further determined that its existing software will not meet the needs of the organization in the future. Accordingly, significant resources have been allocated to the process of implementing a new data processing solution that will better meet the needs of the organization while also addressing the Y2K issues. The implementation of this solution is planned in three phases. The first two phases include hardware and network installation and the installation of application software related to financial reporting, inventory control, order processing, 9 11 purchasing and payroll. Hardware and network installation has been completed. The software installation and testing is nearly completed, and training is scheduled for completion in May 1999. Implementation of the new application software has been deferred until July 1, 1999 due to a persistent malfunction in the order processing module. The supplier of the software is aware of the issue and a correction to the software is expected in the next few weeks. This delay has also affected the implementation schedule for the final phase of this project, which consists of implementation of the manufacturing software modules. Training for this portion is still scheduled for completion during the second quarter, and implementation is currently scheduled to begin during the third quarter of 1999. This project is expected to resolve the fundamental Y2K information technology issues, and we believe that it will also have significant benefits to the organization in terms of more efficient operations, improved access to information related to production control and inventory management as well as improvements in customer service. While it is not possible to segregate the costs of this project into segments that are solely related to resolution of Y2K issues and costs associated with the other aspects of the project, the overall investment in information technology is expected to total approximately $1.1 million. Actual expenditures related to this project, through March 31, 1999, totaled approximately $780,000. This project encompasses the Company's solution to Y2K issues as well as significant improvements in information systems. As such, nearly all of the information technology budget is committed to this project. No other information technology projects have been deferred because of resources committed to this project. Funding for this project is expected to be available from internal sources. While we believe that the timetable for implementation is realistic and attainable, it is not possible to be absolutely certain of completion within the scheduled time frame. The failure to correct a material Y2K issue could result in an interruption in, or failure of, certain normal business activities or operations. Such failures could materially and adversely affect the Company's results of operations, liquidity and financial condition. However, manual systems currently exist for the essential functions covered by this project, and such manual systems could be utilized on a temporary basis if the project falls substantially behind schedule, so the potential disruption resulting from a delay in implementation is expected to be manageable. With respect to non-information technology issues, the Company has completed an inventory of the production and support equipment and systems currently in use and determined that most such equipment does not contain microprocessors or embedded microchips and therefore will not be affected by Y2K issues. Certain, more modern, production equipment contains microprocessors. For the majority of that equipment, we have received the manufacturer's confirmation that the equipment is Y2K compliant. In a limited number of cases, we are awaiting responses from the equipment manufacturer and plan to continue efforts to ascertain the status of that equipment with respect to Y2K issues. We believe that we have alternative equipment available that could be utilized on an interim basis should some of the modern equipment fail unexpectedly. This eventuality would cause disruptions in our production schedules as the older equipment is less efficient than the newer equipment, and our manufacturing costs would be adversely affected as well. At this time, we are unable to quantify the monetary impact of this potential disruption. The Company has also requested that each of its major customers and critical suppliers advise the Company of their current state of readiness as well as their plans to resolve any open Y2K issues. The response to these requests has been varied. In general, most firms contacted have indicated that their systems are Y2K compliant, or that Y2K issues will be resolved during 1999. Typically, larger firms are better prepared than smaller concerns. A number of smaller customers have not, as yet, responded to our inquiries with respect to Y2K compliance. Ongoing follow up contacts with those vendors and customers that have not yet indicated Y2K compliance are being made in an effort to determine that their compliance efforts are 10 12 progressing. The Company will continue to monitor the status of its key vendors and customers and will develop appropriate contingency plans as more information becomes available. The Company's contingency plans related to these issues are not complete at this time. Preliminary work in this area has focused upon information technology issues and in-house manufacturing issues. While we continue to evaluate the situation, based upon information currently available, we anticipate that we will be able to maintain core operations with existing manual systems supplemented by scheduling overtime to offset the reduced efficiency of manual systems. Contingency planning with respect to third parties is limited by incomplete information concerning their state of readiness and we are unable, at this time, to make a reasonable estimate of the impact Y2K issues will have on our customers or suppliers. We are evaluating the desirability of purchasing additional supplies of raw material and critical operating supplies during the second half of 1999. However, if our customers' plans include a similar contingency, it is possible that we will use any such safety stock to satisfy our customers' requests that we, in turn, supply them with safety stock. We are also evaluating what action will be required to protect the Company's facilities from the effects of cold weather in the event that utility service is disrupted. To date, we have received notification of Y2K compliance from certain utility companies, and most others have advised that they expect to achieve Y2K compliance before the end of 1999. Our plans will continue to be revised as more information becomes available. On an overall basis, we are pleased with the excellent financial results achieved during the first quarter. While demand within the fastener segment exceeded our expectations, the concerted and dedicated efforts of employees in all areas enabled us to successfully meet the needs of our customers and, to do so profitably. Market conditions within the assembly equipment segment are not as strong as we would like and competition continues to be a factor that adversely affects both volume and pricing. While this segment of our business continues to be profitable, margins are not as robust as they have been in the past. We are increasing our efforts to solicit new business within this segment and we continue to work toward reducing our manufacturing costs. The Company's products and service have, over time, earned a reputation that is among the best in the market. While recent developments will certainly affect that reputation, our reputation is underpinned by the billions of parts we have manufactured that consistently met the stringent specifications of our customers. Our objective, of course, is to meet specification 100% of the time, and our manufacturing and quality control procedures are regularly reviewed in order to identify and implement improvements. This discussion contains certain "forward-looking statements" which are inherently subject to risks and uncertainties that may cause actual events to differ materially from those discussed herein. Factors which may cause such differences in events include, among other things, fluctuations in general economic conditions, consumer demand, the gain or loss of a key customer, and the price and availability of the Company's primary raw materials. Therefore, readers are cautioned not to place undue reliance upon such forward-looking statements. 11 13 PART II -- OTHER INFORMATION Item 4. Submission of matters to a vote of security holders The Company's Annual Meeting of Stockholders was held on May 11, 1999. At the meeting, 92.1% of the outstanding shares of the Company's voting stock was represented in person or by proxy. The only proposal voted upon was the election of six directors for a term ending at the Annual Meeting in 2000. The six persons nominated by the Company's Board of Directors received the following votes and were elected:
NAME FOR WITHHELD ---- --- -------- William T. Divane, Jr. 1,060,893 3,062 Stephen L. Levy 1,055,750 6,523 John R. Madden 1,057,142 5,363 John A. Morrissey 1,060,294 3,262 Walter W. Morrissey 1,060,293 3,262 John C. Osterman 1,060,894 3,062
Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 19.1 Interim Report to Shareholders for the quarter ended March 31, 1999. 27.1 Financial Data Schedule. (b) Reports on Form 8-K No reports on Form 8-K were filed during the current period. 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 14, 1999 /s/ John A. Morrissey ----------------------------------- John A. Morrissey Chairman of the Board of Directors and Chief Executive Officer Date: May 14, 1999 /s/ John C. Osterman ----------------------------------- John C. Osterman President, Chief Operating Officer and Treasurer (Principal Financial Officer) Date: May 14, 1999 /s/ Michael J. Bourg ----------------------------------- Michael J. Bourg Controller (Principal Accounting Officer) 12 14 CHICAGO RIVET & MACHINE CO. EXHIBITS INDEX TO EXHIBITS Exhibit Number Page ---- 19.1 Interim Report to Shareholders for the quarter ended March 31, 1999 14-15 27.1 Financial Data Schedule 16 13 EX-19.1 2 INTERIM REPORT TO SHAREHOLDERS 1 EXHIBIT 19.1 To Our Shareholders: The comparative results of operations of Chicago Rivet & Machine Co. for the first quarter of 1999 and 1998 are summarized below. Results for the first quarter of 1999 were excellent. Driven by continued strength in the automotive industry, the net sales and lease revenues increased to $12,517,480 during the quarter, compared with $11,672,949 recorded during the first quarter of 1998. All of the increase is attributable to the fastener segment of our operations, where revenues increased 10.6% to $9,737,327 compared with $8,800,610 during the same period in 1998. Revenues within the assembly equipment segment declined slightly to $2,780,153 in the first quarter of 1999, compared to $2,872,339 during the first quarter of 1998. Net income improved significantly, amounting to $1,152,460 or $1.00 per share on 1,153,496 average shares outstanding during the quarter, compared with $914,820, or $.78 per share on 1,169,100 average shares outstanding during the first quarter of 1998. The success of ongoing efforts to control manufacturing costs, combined with the significant increase in volume, are the major factors contributing to the quarter to quarter improvement in results within the fastener segment. Within the assembly equipment segment, operating results trail the year earlier period primarily due to reduced unit sales and a somewhat less favorable product mix compared to the first quarter of 1998. On an overall basis, we are pleased with the excellent results achieved during the first quarter. While demand within the fastener segment exceeded our expectations, the concerted and dedicated efforts of employees in all areas enabled us to successfully meet the needs of our customers, and, to do so profitably. Market conditions within the assembly segment are not as strong as we would like, and competition continues to be a factor that adversely affects both volume and pricing. While this segment of our business continues to be profitable, margins are not as robust as they have been in the past. We are increasing our efforts to solicit new business within this segment, and we continue to work toward reducing our manufacturing costs. Our products and service are among the best in the market, and we expect to maintain, or improve, our market position in the months ahead. The 1999 annual meeting of shareholders will be held at the Company's headquarters in Naperville, Illinois at 10:00 AM on Tuesday, May 11, 1999. All shareholders are cordially invited to attend. Formal notice of the meeting and proxy materials, including the Company's 1998 Annual Report to Shareholders were distributed early in April. If you have not already completed and returned your proxy, we ask that you do so at your earliest convenience, even if you plan to attend the meeting. Thank you. Respectfully yours, John A. Morrissey John C. Osterman Chairman President April 23, 1999 The foregoing discussion is only intended to provide highlights of operations for the periods covered. Additional information is contained in our Form 10-Q, which 14 2 will be filed with the SEC and is available to shareholders upon request from the Company, or via the internet through the SEC's EDGAR database. This discussion contains certain "forward-looking statements" which are inherently subject to risks and uncertainties that may cause actual events to differ materially from those discussed herein. Factors which may cause such differences in events include, among other things, fluctuations in general economic conditions, consumer demand, the gain or loss of a key customer, and the price and availability of the Company's primary raw materials. Therefore, readers are cautioned not to place undue reliance upon such forward-looking statements. CHICAGO RIVET & MACHINE CO. Summary of Consolidated Results of Operations For the Three Months Ended: March 31, March 31, 1999 1998 ---- ---- Net sales and lease revenue................. $12,517,480 $11,672,949 Income before taxes......................... 1,740,460 1,424,820 Income after taxes.......................... 1,152,460 914,820 Net income per share........................ 1.00 .78 Average shares outstanding.................. 1,153,496 1,169,100 (All figures subject to year end audit) 15 EX-27 3 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1999 MAR-31-1999 3,167,280 1,151,521 7,440,364 76,926 6,666,763 19,205,988 30,513,479 16,643,510 33,075,957 6,492,503 2,700,000 0 0 1,153,496 21,400,683 33,075,957 12,435,788 12,517,480 8,656,687 8,656,687 2,105,906 0 77,439 1,740,460 588,000 1,152,460 0 0 0 1,152,460 1.00 1.00
-----END PRIVACY-ENHANCED MESSAGE-----