EX-13

Chicago Rivet & Machine Co. • 901 Frontenac Road • P.O. Box 3061 • Naperville, Illinois 60566 • www.chicagorivet.com

RESULTS OF OPERATIONS

Results for 2012 were successful by most measures as we increased our revenues to the highest level in five years and our net income to the highest level in ten years. Revenues were $34,223,772 in 2012, a 10.7 percent increase from $30,915,122 in 2011. The increase in revenue was aided by domestic automotive production that reached its highest level since 2007 as well as increased volume to certain non-automotive customers. The increase in revenue more than offset raw material price fluctuations experienced during the year, resulting in net income of $1,745,741, or $1.81 per share, in 2012 compared with net income of $1,254,877, or $1.30 per share, in 2011. These positive results enabled the payment of an extra dividend in the fourth quarter, which brought the total dividend payout for 2012 to the highest amount in nine years.

2012 Compared to 2011

The pace of the domestic economic recovery continued to be slow in 2012, with high unemployment and stagnant wage growth, as well as the lingering effects of the financial crisis, keeping consumer spending restrained. The automotive sector was an exception to these forces as the average age of cars on U.S. roads reached an all-time high, which helped propel auto sales to double digit growth for the third straight year after the recent recession. Our fastener segment, which relies on the automotive sector for the majority of its revenues, benefited from this environment. These favorable conditions in the automotive market, coupled with our ongoing efforts to increase revenues, resulted in fastener segment sales of $30,999,163 in 2012, compared with $27,832,279 in 2011, an increase of 11.4 percent. The fourth quarter of 2012 marked the thirteenth consecutive quarter of sales exceeding the year earlier quarter. Higher raw material prices early in the year receded as the year progressed leaving most cost of sales components increasing at the year’s inflationary rate. The combination of higher sales and moderate increases in cost components resulted in an increase in fastener segment gross margins of $866,485 during 2012 compared to 2011.

Assembly equipment segment revenues were $3,224,609 in 2012, an increase of $141,766, or 4.6 percent, compared to the $3,082,843 recorded in 2011. An increase in the number of machines shipped, as well as a higher average unit value during 2012, accounted for most of the increase in the equipment segment sales. By holding operating costs to levels consistent with the prior year, the higher sales resulted in an increase in assembly equipment gross margins of $135,393 in 2012.

Selling and administrative expenses were $5,186,760 in 2012, an increase of $153,309, or 3 percent, compared to the 2011 total of $5,033,451. The change is primarily due

to an increase in profit sharing expense of $95,322, related to improved operating results. An increase of approximately $39,000 in payroll and related expenses and various smaller items make up the remaining net increase. As a percentage of net sales, selling and administrative expenses declined from 16.3 percent in 2011 to 15.2 percent in 2012.

Other income was $118,099 in 2012 compared to $249,804 in 2011. The decline was primarily due to a gain of approximately $142,000 in 2011 from the sale of our Jefferson, Iowa property, which had formerly been used in our fastener segment operations.

DIVIDENDS

In determining to pay dividends, the Board considers current profitability, the outlook for longer-term profitability, known and potential cash requirements and the overall financial condition of the Company. The Company paid four regular quarterly dividends of $.15 per share during 2012. In addition, an extra dividend of $.30 per share was paid during the fourth quarter, bringing the total distribution for the year to $.90 per share. On February 18, 2013, the Board of Directors declared a regular quarterly dividend of $.15 per share, payable March 20, 2013 to shareholders of record on March 5, 2013. This continues the uninterrupted record of consecutive quarterly dividends paid by the Company to its shareholders that extends over 79 years.

PROPERTY, PLANT AND EQUIPMENT

Capital expenditures during 2012 totaled $1,187,746, of which $1,018,734 was invested in equipment for our fastener operations. Inspection equipment accounted for $450,720 of the fastener segment additions while cold heading and screw machine equipment comprised $371,466 of the total. Equipment to perform secondary operations on parts accounted for $46,582 of the additions, while the remaining additions of $149,966 were for various general plant and office equipment. Assembly equipment segment additions totaled $68,203, for a new turning center. Investments for the benefit of both operating segments, primarily for building improvements, totaled $100,809 during 2012.

Total capital expenditures in 2011 were $1,611,789. Fastener segment additions accounted for $1,510,036 of the total, including $838,000 for cold heading and screw machine equipment and $110,000 for secondary processing equipment. These expenditures served to expand our production capacity and capabilities. We invested $241,000 for inspection and other quality related equipment and $251,000 for general plant improvements, including energy efficient lighting and roof repairs. The balance of the fastener segment additions were for packaging and other small equipment. Assembly

equipment segment additions were $61,283, for production equipment. An additional $40,470 was invested in facility improvements and office equipment that benefits both operating segments.

Depreciation expense amounted to $993,951 in 2012 and $971,496 in 2011.

LIQUIDITY AND CAPITAL RESOURCES

Working capital at December 31, 2012 was $15.9 million, an improvement of $.9 million from the beginning of the year. Higher sales caused an increase in accounts receivable of $.2 million as of year-end. A decline in inventory of $.3 million offset this increase, while current liabilities were little changed from the beginning of the year. The Company’s holdings in cash, cash equivalents and certificates of deposit amounted to $7.5 million at the end of 2012, an increase of $.9 million. The Company’s investing activities in 2012 consisted primarily of capital expenditures of $1.2 million. The only financing activity during 2012 was the payment of $.9 million in dividends.

Management believes that current cash, cash equivalents and operating cash flow will be sufficient to provide adequate working capital for the foreseeable future.

Off-Balance Sheet Arrangements

The Company has not entered into, and has no current plans to enter into, any off-balance sheet financing arrangements.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of revenue and expenses during the reporting period. A summary of critical accounting policies can be found in Note 1 of the financial statements.

NEW ACCOUNTING STANDARDS

The Company’s financial statements and financial condition were not, and are not expected to be, materially impacted by new, or proposed, accounting standards. A

summary of recent accounting pronouncements can be found in Note 1 of the financial statements.

OUTLOOK FOR 2013

Forecasts for economic growth in 2013 call for modest improvement over the rate achieved in 2012; however, ongoing uncertainty related to how the federal government may act to improve economic growth while dealing with large deficits continues to threaten the fragile three year old recovery. Unlike a year ago, when domestic automotive sales were projected by many to increase 10 percent, we are starting the new year with more subdued projections regarding automotive sales growth, with most projections in the low single digits. While these forecasts would underpin our outlook for fastener sales, our assembly equipment segment, which derives sales from a broad industry base, may continue to lag in comparison if business sentiment does not improve.

While the overall rate of inflation has been relatively low during the aforementioned recovery, a variety of our cost components have seen greater increases or experienced periods of volatility, including raw materials, certain supplies, fuel and insurance. That history of volatility makes forecasting costs difficult. At this time, there is no expectation that overall inflation will rise significantly in the near-term, but the accommodative monetary policy of recent years may eventually give rise to higher inflation which could negatively impact operations. Given that increases in costs are often difficult to recover, we will continue to concentrate our efforts on mitigating such increases through rigorous quoting and working to improve our operational efficiency.

The improvement in profitability and our sound financial position have allowed us to make significant investments in our operations in recent years while also increasing shareholder distributions. We believe that we remain well positioned to take advantage of opportunities that may improve profitability in the future. We will continue to pursue new customer relationships and work to expand existing ones in all the markets we serve by emphasizing value over price and by concentrating our efforts on more complex parts in order to differentiate ourselves in a very competitive global marketplace.

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, those disclosed under “Risk Factors” in our Annual Report on Form 10-K and in the other filings we make with the United States Securities and Exchange Commission. These factors, include among other things: conditions in the domestic automotive industry, upon which we rely for sales revenue, the intense competition in our markets, the concentration of our sales to two major customers, the price and availability of raw materials, labor relations issues, losses related to product liability, warranty and recall claims, costs relating to environmental laws and regulations, and the loss of the services of our key employees. 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.

The accompanying notes are an integral part of the Consolidated Financial Statements.

1—Nature of Business and Significant Accounting Policies

Nature of Business—The Company operates in the fastener industry and is in the business of producing and selling rivets, cold-formed fasteners and parts, screw machine products, automatic rivet setting machines and parts and tools for such machines.

A summary of the Company’s significant accounting policies follows:

Principles of Consolidation—The consolidated financial statements include the accounts of Chicago Rivet & Machine Co. and its wholly-owned subsidiary, H & L Tool Company, Inc. (H & L Tool). All significant intercompany accounts and transactions have been eliminated.

Revenue Recognition—Revenues from product sales are recognized upon shipment and an allowance is provided for estimated returns and discounts based on experience. Cash received by the Company prior to shipment is recorded as deferred revenue. The Company experiences a certain degree of sales returns that varies over time. The Company is able to make a reasonable estimation of expected sales returns based upon history. The Company records all shipping and handling fees billed to customers as revenue, and related costs as cost of sales, when incurred.

Credit Risk—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. The Company has established an allowance for accounts that may become uncollectible in the future. This estimated allowance is based primarily on management’s evaluation of the financial condition of the customer and historical experience. The Company monitors its accounts receivable and charges to expense an amount equal to its estimate of potential credit losses. The Company considers a number of factors in determining its estimates, including the length of time its trade accounts receivable are past due, the Company’s previous loss history and the customer’s current ability to pay its obligation. Accounts receivable balances are charged off against the allowance when it is determined that the receivable will not be recovered.

Cash and Cash Equivalents—The Company considers all highly liquid investments, including certificates of deposit, with a maturity of three months or less when purchased to be cash equivalents. The Company maintains cash on deposit in several financial institutions. At times, the account balances may be in excess of FDIC insured limits.

Fair Value of Financial Instruments—The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, certificates of deposit, accounts receivable and accounts payable approximate fair value based on their short term nature.

Inventories—Inventories are stated at the lower of cost or net realizable value, cost being determined by the first-in, first-out method. The value of inventories is reduced for estimated excess and obsolete inventories based on a review of on-hand inventories compared to historical and estimated future sales and usage.

Property, Plant and Equipment—Properties are stated at cost and are depreciated over their estimated useful lives using the straight-line method for financial reporting purposes. Accelerated methods of depreciation are used for income tax purposes. Direct costs related to developing or obtaining software for internal use are capitalized as property and equipment. Capitalized software costs are amortized over the software’s useful life when the software is placed in service. The estimated useful lives by asset category are:


Asset category		Estimated useful life
Land improvements		15 to 25 years
Buildings and improvements		10 to 35 years
Machinery and equipment		7 to 15 years
Capitalized software costs		3 to 5 years
Other equipment		3 to 15 years

The Company reviews the carrying value of property, plant and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. There were no triggering events requiring assessment of impairment as of December 31, 2012 and 2011.

When properties are retired or sold, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss on disposition is recognized in current operations. Maintenance, repairs and minor betterments that do not improve the related asset or extend its useful life are charged to operations as incurred.

Income Taxes—Deferred income taxes are determined under the asset and liability method. Deferred income taxes arise from temporary differences between the income tax basis of assets and liabilities and their reported amounts in the financial statements.

The Company applies a comprehensive model for the financial statement recognition, measurement, classification and disclosure of uncertain tax positions. In the first step of the two-step process, the Company evaluates the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. In the second step, the Company measures the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. As of December 31, 2012 and 2011, the Company determined that there are no uncertain tax positions with a more than 50% likelihood of being realized upon settlement.

The Company classifies interest and penalties related to unrecognized tax benefits as a component of income tax expense. There were no such expenses in 2012.

The Company’s federal income tax returns for the 2009 through 2011 tax years are subject to examination by the Internal Revenue Service (“IRS”). While it may be possible that a reduction could occur with respect to the Company’s unrecognized tax benefits as an outcome of an IRS examination, management does not anticipate any adjustments that would result in a material change to the results of operations or financial condition of the Company.

No statutes have been extended on any of the Company’s federal income tax filings. The statute of limitations on the Company’s 2009, 2010 and 2011 federal income tax returns will expire on September 15, 2013, 2014 and 2015, respectively.

The Company’s state income tax returns for the 2009 through 2011 tax years are subject to examination by various state authorities with the latest closing period on October 31, 2015. The Company is currently not under examination by any state authority for income tax purposes and no statutes for state income tax filings have been extended.

Segment Information—The Company reports segment information based on the internal structure and reporting of the Company’s operations.

Net Income Per Share—Net income per share of common stock is based on the weighted average number of shares outstanding of 966,132 in 2012 and 2011.

Use of Estimates—The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Significant items subject to estimates and assumptions include deferred taxes and valuation allowances for accounts receivable and inventory obsolescence. Actual results could differ from those estimates.

Recent Accounting Pronouncements—Effective January 1, 2012, the Company adopted Accounting Standards Update (“ASU”) No. 2011-04, “Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”, (“ASU 2011-04”). This ASU requires enhanced disclosures for fair value measurements, including quantitative analysis of unobservable inputs used in Level 3 fair value measurements. The ASU also clarifies the Financial Accounting Standards Board’s intent about the application of existing fair value measurement requirements. The adoption of ASU 2011-04 did not have a material impact on our financial condition or results of operation.

2—Balance Sheet Details


	2012		2011
Inventories:
Raw materials	$	2,009,691	$	2,016,032
Work in process		1,869,830		1,984,368
Finished goods		1,606,851		1,760,640

		5,486,372		5,761,040
Valuation reserves		550,000		549,000

	$	4,936,372	$	5,212,040


Property, Plant and Equipment, net:
Land and improvements	$	1,238,150	$	1,238,150
Buildings and improvements		6,244,064		6,169,545
Machinery and equipment and other		29,495,765		28,785,896

		36,977,979		36,193,591
Accumulated depreciation		28,900,113		28,298,066

	$	8,077,866	$	7,895,525


Other Accrued Expenses:
Profit sharing plan contribution	$	278,080	$	182,000
Property taxes		91,547		109,313
All other items		90,618		162,281

	$	460,245	$	453,594

3—Income Taxes—The provision for income tax expense consists of the following:


	2012		2011
Current:
Federal	$	624,000	$	585,000
State		42,000		12,000
Deferred		171,000		14,000

	$	837,000	$	611,000

The following is a reconciliation of the statutory federal income tax rate to the actual effective tax rate:


	2012						2011
	Amount			%			Amount			%
Expected tax at U.S.
Statutory rate	$	878,000			34.0		$	634,000			34.0
Permanent differences		(69,000	)		(2.7	)		(31,000	)		(1.7	)
State taxes, net of federal benefit		28,000			1.1			8,000			.4

Income tax expense	$	837,000			32.4		$	611,000			32.7

The Company’s effective tax rates were lower than the U.S. federal statutory rate in 2012 and 2011 primarily due to the Domestic Production Activities Deduction allowed under Internal Revenue Code Section 199.

The deferred tax liabilities and assets consist of the following:


	2012			2011
Depreciation and amortization	$	(952,275	)	$	(785,275	)

Inventory		274,826			285,516
Accrued vacation		89,785			88,045
Allowance for doubtful accounts		51,450			48,000
Other, net		130			(1,370	)

		416,191			420,191

	$	(536,084	)	$	(365,084	)

Valuation allowances related to deferred taxes are recorded based on the “more likely than not” realization criteria. The Company reviews the need for a valuation allowance on a quarterly basis for each of its tax jurisdictions. A deferred tax valuation allowance was not required at December 31, 2012 or 2011.

4—Profit Sharing Plan—The Company has a noncontributory profit sharing plan covering substantially all employees. Total expenses relating to the profit sharing plan amounted to approximately $277,000 in 2012 and $182,000 in 2011.

5—Other Income—consists of the following:


	2012		2011
Interest income	$	34,138	$	42,282
Gain on sale of property and equipment		67,946		192,544
Other		16,015		14,978

	$	118,099	$	249,804

6—Segment Information—The Company operates, primarily in the United States, in two business segments as determined by its products. The fastener segment, which comprises H & L Tool and the parent company’s fastener operations, includes rivets, cold-formed fasteners and parts and screw machine products. The assembly equipment segment includes automatic rivet setting machines and parts and tools for such machines. Information by segment is as follows:


	Fastener		Assembly Equipment		Other			Consolidated
Year Ended December 31, 2012:
Net sales	$	30,999,163	$	3,224,609	$	—		$	34,223,772
Depreciation		859,045		59,199		75,707			993,951
Segment profit		3,775,045		773,902		—			4,548,947
Selling and administrative expenses						(2,084,305	)		(2,084,305	)
Other income						118,099			118,099

Income before income taxes									2,582,741

Capital expenditures		1,018,734		68,203		100,809			1,187,746
Segment assets:
Accounts receivable, net		4,275,890		302,042		—			4,577,932
Inventories, net		4,175,702		760,670		—			4,936,372
Property, plant and equipment, net		6,363,280		1,106,318		608,268			8,077,866
Other assets		—		—		8,319,333			8,319,333

									25,911,503

Year Ended December 31, 2011:
Net sales	$	27,832,279	$	3,082,843	$	—		$	30,915,122
Depreciation		836,062		62,463		72,971			971,496
Segment profit		2,997,799		624,234		—			3,622,033
Selling and administrative expenses						(2,005,960	)		(2,005,960	)
Other income						249,804			249,804

Income before income taxes									1,865,877

Capital expenditures		1,510,036		61,283		40,470			1,611,789
Segment assets:
Accounts receivable, net		4,143,186		255,240		—			4,398,426
Inventories, net		4,401,178		810,862		—			5,212,040
Property, plant and equipment, net		6,153,394		1,097,314		644,817			7,895,525
Other assets		—		—		7,352,273			7,352,273

									24,858,264

The Company does not allocate certain selling and administrative expenses for internal reporting, thus, no allocation was made for these expenses for segment disclosure purposes. Segment assets reported internally are limited to accounts receivable, inventory and long-lived assets. Long-lived assets of one plant location are allocated between the two segments based on estimated plant utilization, as this plant serves both fastener and assembly equipment activities. Other assets are not allocated to segments internally and to do so would be impracticable. Sales to two customers in the fastener segment accounted for 18 and 17 percent and 15 and 16 percent of consolidated revenues during 2012 and 2011, respectively. The accounts receivable balances for these customers accounted for 22 and 24 percent of consolidated accounts receivable for the larger customer and 16 and 20 percent for the other customer as of December 31, 2012 and 2011, respectively.

We have audited the accompanying consolidated balance sheets of Chicago Rivet & Machine Co. (an Illinois corporation) and subsidiary (the “Company”) as of December 31, 2012 and 2011, and the related consolidated statements of income, retained earnings and cash flows for each of the two years in the period ended December 31, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Chicago Rivet & Machine Co. and subsidiary as of December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.

The Company’s common stock is traded on the NYSE MKT (trading privileges only, not registered.) The ticker symbol is CVR.

The following table shows the dividends declared and the quarterly high and low prices of the common stock for the last two years.

BOARD OF DIRECTORS

John A. Morrissey (e)

Chairman of the Board

of the Company

Chairman of the Board of

Algonquin State Bank, N.A.

Algonquin, Illinois

Michael J. Bourg (e)

President of the Company

Edward L. Chott (a) (c) (n)

Chairman of the Board of

The Broaster Co.

Beloit, Wisconsin

Kent H. Cooney (a)

Chief Financial Officer of

Heldon Bay Limited Partnership

Bigfork, Montana

William T. Divane, Jr. (a) (c) (n)

Chairman of the Board and

Chief Executive Officer of

Divane Bros. Electric Co.

Franklin Park, Illinois

CORPORATE OFFICERS

John A. Morrissey

Chairman, Chief

Executive Officer

Michael J. Bourg

President, Chief Operating

Officer and Treasurer

Kimberly A. Kirhofer

Secretary

CHICAGO RIVET & MACHINE CO.

Administrative & Sales Offices

Naperville, Illinois

Pembroke, Massachusetts

Manufacturing Facilities

Albia Division

Albia, Iowa

Tyrone Division

Tyrone, Pennsylvania

H & L Tool Company, Inc.

Madison Heights, Michigan

Chicago Rivet & Machine Co. • 901 Frontenac Road • P.O. Box 3061 • Naperville, Illinois 60566 • www.chicagorivet.com

Chicago Rivet & Machine Co. • 901 Frontenac Road • P.O. Box 3061 • Naperville, Illinois 60566 • www.chicagorivet.com


	2012		2011

Net Sales	$	34,223,772	$	30,915,122

Net Income		1,745,741		1,254,877

Net Income Per Share		1.81		1.30

Dividends Per Share		.90		.51

Net Cash Provided by Operating Activities		2,779,342		1,077,898

Expenditures for Property, Plant and Equipment		1,187,746		1,611,789

Working Capital		15,875,145		15,014,263

Total Shareholders’ Equity		23,000,736		22,124,513

Common Shares Outstanding at Year-End		966,132		966,132

Shareholders’ Equity Per Common Share		23.81		22.90


December 31	2012			2011

Assets
Current Assets
Cash and Cash Equivalents	$	392,810		$	704,345
Certificates of Deposit		7,088,000			5,880,000
Accounts Receivable — Less allowances of $150,000 and $140,000, respectively		4,577,932			4,398,426
Inventories, net		4,936,372			5,212,040
Deferred Income Taxes		416,191			420,191
Other Current Assets		422,332			347,737

Total Current Assets		17,833,637			16,962,739
Property, Plant and Equipment, net		8,077,866			7,895,525

Total Assets	$	25,911,503		$	24,858,264


Liabilities and Shareholders’ Equity
Current Liabilities
Accounts Payable	$	1,003,647		$	968,266
Accrued Wages and Salaries		409,695			374,964
Other Accrued Expenses		460,245			453,594
Unearned Revenue and Customer Deposits		84,905			151,652

Total Current Liabilities		1,958,492			1,948,476
Deferred Income Taxes		952,275			785,275

Total Liabilities		2,910,767			2,733,751

Commitments and Contingencies (Note 8)
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		25,337,604			24,461,381
Treasury Stock, 171,964 Shares at cost		(3,922,098	)		(3,922,098	)

Total Shareholders’ Equity		23,000,736			22,124,513

Total Liabilities and Shareholders’ Equity	$	25,911,503		$	24,858,264


For the Years Ended December 31	2012		2011

Net Sales	$	34,223,772	$	30,915,122
Cost of Goods Sold		26,572,370		24,265,598

Gross Profit		7,651,402		6,649,524
Selling and Administrative Expenses		5,186,760		5,033,451

Operating Profit		2,464,642		1,616,073
Other Income		118,099		249,804

Income Before Income Taxes		2,582,741		1,865,877
Provision for Income Taxes		837,000		611,000

Net Income	$	1,745,741	$	1,254,877

Net Income Per Share	$	1.81	$	1.30


For the Years Ended December 31	2012			2011

Retained Earnings at Beginning of Year	$	24,461,381		$	23,699,232
Net Income		1,745,741			1,254,877
Cash Dividends Paid, $.90 and $.51 Per Share in 2012 and 2011, respectively		(869,518	)		(492,728	)

Retained Earnings at End of Year	$	25,337,604		$	24,461,381


For the Years Ended December 31	2012			2011

Cash Flows from Operating Activities:
Net Income	$	1,745,741		$	1,254,877
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization		993,951			971,496
Gain on the Sale of Property and Equipment		(67,946	)		(192,544	)
Deferred Income Taxes		171,000			14,000
Changes in Operating Assets and Liabilities:
Accounts Receivable, net		(179,506	)		(381,345	)
Inventories, net		275,668			(901,886	)
Other Current Assets		(74,595	)		5,280
Accounts Payable		(59,606	)		130,235
Accrued Wages and Salaries		34,731			(30,640	)
Other Accrued Expenses		6,651			141,471
Unearned Revenue and Customer Deposits		(66,747	)		66,954

Net Cash Provided by Operating Activities		2,779,342			1,077,898

Cash Flows from Investing Activities:
Capital Expenditures		(1,092,759	)		(1,522,539	)
Proceeds from the Sale of Properties		79,400			416,190
Proceeds from Certificates of Deposit		5,160,000			5,630,000
Purchases of Certificates of Deposit		(6,368,000	)		(5,130,000	)

Net Cash Used in Investing Activities		(2,221,359	)		(606,349	)

Cash Flows from Financing Activities:
Cash Dividends Paid		(869,518	)		(492,728	)

Net Cash Used in Financing Activities		(869,518	)		(492,728	)

Net Decrease in Cash and Cash Equivalents		(311,535	)		(21,179	)
Cash and Cash Equivalents:
Beginning of Year		704,345			725,524

End of Year	$	392,810		$	704,345

Net Cash Paid for Income Taxes	$	812,298		$	490,846

Supplemental Schedule of Non-cash Investing Activities:
Capital Expenditures in Accounts Payable	$	94,987		$	89,250


	Dividends Declared					Market Range
Quarter	2012			2011		2012				2011
First	$	.15		$	.12	$	23.50	$	17.05	$	20.58	$	15.96
Second		.15			.12	$	20.50	$	18.36	$	18.93	$	14.90
Third		.15			.12	$	19.30	$	18.35	$	17.96	$	15.50
Fourth		.45	*		.15	$	20.30	$	18.17	$	18.00	$	15.56




John A. Morrissey		Michael J. Bourg
Chairman		President