##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 OR
 o
    
    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.
  Illinois
    
    36-0904920(State or Other Jurisdiction
    
    (I.R.S. Employerof Incorporation or Organization)
    
    Identification No.)901 Frontenac Road, Naperville, Illinois
    
    60563(Address of Principal Executive Offices)
    
    (Zip Code)
 (630) 357-8500
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ




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##### 



PagePART I. FINANCIAL INFORMATION (Unaudited)Condensed Consolidated Balance Sheets at June 30, 2008 and December 31, 2007
    
    
    2-3Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2008 and 2007
    
    
    4Condensed Consolidated Statements of Retained Earnings for the Six Months Ended June 30, 2008 and 2007
    
    
    5Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2008 and 2007
    
    
    6Notes to the Condensed Consolidated Financial Statements
    
    
    7-9Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10-11Controls and Procedures
    
    
    12PART II. OTHER INFORMATION
    
    
    13-15EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  1




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June 30,
    
    
    December 31,2008
    
    
    2007(Unaudited)AssetsCurrent Assets:Cash and cash equivalents
    
    $
    3,059,551
    
    
    $
    665,072Certificates of deposit
    
    
    4,330,000
    
    
    
    6,880,000Accounts receivable, net of allowance
of $103,000 and $95,000, respectively
    
    
    5,076,029
    
    
    
    5,329,413Inventories
    
    
    5,489,613
    
    
    
    4,975,833Deferred income taxes
    
    
    462,191
    
    
    
    451,191Prepaid income taxes
    
    
    
    
    
    
    211,025Other current assets
    
    
    211,341
    
    
    
    287,542Total current assets
    
    
    18,628,725
    
    
    
    18,800,076Property, Plant and Equipment:Land and improvements
    
    
    1,029,035
    
    
    
    1,029,035Buildings and improvements
    
    
    6,391,952
    
    
    
    6,385,831Production equipment, leased machines and other
    
    
    28,294,349
    
    
    
    28,124,00735,715,336
    
    
    
    35,538,873Less accumulated depreciation
    
    
    26,962,897
    
    
    
    26,431,936Net property, plant and equipment
    
    
    8,752,439
    
    
    
    9,106,937Total assets
    
    $
    27,381,164
    
    
    $
    27,907,013
  2




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June 30,
    
    
    December 31,2008
    
    
    2007(Unaudited)Liabilities and Shareholders EquityCurrent Liabilities:Accounts payable
    
    $
    1,362,573
    
    
    $
    1,147,014Accrued wages and salaries
    
    
    738,015
    
    
    
    679,233Accrued profit sharing plan contribution
    
    
    50,000
    
    
    
    201,000Other accrued expenses
    
    
    219,152
    
    
    
    319,866Total current liabilities
    
    
    2,369,740
    
    
    
    2,347,113Deferred income taxes
    
    
    921,275
    
    
    
    985,275Total liabilities
    
    
    3,291,015
    
    
    
    3,332,388Commitments 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
    
    
    
    1,138,096Additional paid-in capital
    
    
    447,134
    
    
    
    447,134Retained earnings
    
    
    26,427,017
    
    
    
    26,911,493Treasury stock, 171,964 shares at cost
    
    
    (3,922,098
    )
    
    
    (3,922,098
    )Total shareholders equity
    
    
    24,090,149
    
    
    
    24,574,625Total liabilities and shareholders equity
    
    $
    27,381,164
    
    
    $
    27,907,013
  3




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Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net sales
    
    $
    8,025,372
    
    
    $
    10,107,140
    
    
    $
    16,417,150
    
    
    $
    20,031,473Lease revenue
    
    
    21,640
    
    
    
    23,180
    
    
    
    44,188
    
    
    
    46,4238,047,012
    
    
    
    10,130,320
    
    
    
    16,461,338
    
    
    
    20,077,896Cost of goods sold and costs
related to lease revenue
    
    
    6,813,916
    
    
    
    7,942,782
    
    
    
    13,914,995
    
    
    
    15,994,155Gross profit
    
    
    1,233,096
    
    
    
    2,187,538
    
    
    
    2,546,343
    
    
    
    4,083,741Selling and administrative expenses
    
    
    1,323,611
    
    
    
    1,461,021
    
    
    
    2,672,717
    
    
    
    2,927,509Plant closing expenses
    
    
    
    
    
    
    2,722
    
    
    
    
    
    
    
    20,796Operating profit (loss)
    
    
    (90,515
    )
    
    
    723,795
    
    
    
    (126,374
    )
    
    
    1,135,436Other income and expenses:Interest income
    
    
    53,925
    
    
    
    73,026
    
    
    
    129,847
    
    
    
    147,457Other income
    
    
    4,178
    
    
    
    6,578
    
    
    
    7,778
    
    
    
    7,778Income (loss) before income taxes
    
    
    (32,412
    )
    
    
    803,399
    
    
    
    11,251
    
    
    
    1,290,671Provision for income taxes
    
    
    (13,000
    )
    
    
    280,000
    
    
    
    3,000
    
    
    
    457,000Net income (loss)
    
    $
    (19,412
    )
    
    $
    523,399
    
    
    $
    8,251
    
    
    $
    833,671Average common shares outstanding
    
    
    966,132
    
    
    
    966,132
    
    
    
    966,132
    
    
    
    966,132Per share data:Net income (loss) per share
    
    $
    (0.02
    )
    
    $
    0.54
    
    
    $
    0.01
    
    
    $
    0.86Cash dividends declared per share
    
    $
    0.33
    
    
    $
    0.18
    
    
    $
    0.51
    
    
    $
    0.36
  4




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2008
    
    
    2007Retained earnings at beginning of period
    
    $
    26,911,493
    
    
    $
    26,340,036Net income for the six months ended
    
    
    8,251
    
    
    
    833,671Cash dividends declared in the period,
$.51 and $.36 per share in 2008 and 2007, respectively
    
    
    (492,727
    )
    
    
    (347,808
    )Retained earnings at end of period
    
    $
    26,427,017
    
    
    $
    26,825,899
  5




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##### Table of Contents



2008
    
    
    2007Cash flows from operating activities:Net income
    
    $
    8,251
    
    
    $
    833,671Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation
    
    
    534,546
    
    
    
    562,248Net (gain) loss on disposal of equipment
    
    
    3,951
    
    
    
    (17,824
    )Deferred income taxes
    
    
    (75,000
    )
    
    
    (61,000
    )Changes in operating assets and liabilities:Accounts receivable, net
    
    
    253,384
    
    
    
    (746,840
    )Inventories
    
    
    (513,780
    )
    
    
    (391,789
    )Other current assets
    
    
    287,226
    
    
    
    188,370Accounts payable
    
    
    188,759
    
    
    
    264,923Accrued wages and salaries
    
    
    58,782
    
    
    
    140,525Accrued profit sharing contribution
    
    
    (151,000
    )
    
    
    (89,000
    )Other accrued expenses
    
    
    (100,714
    )
    
    
    (110,038
    )Net cash provided by operating activities
    
    
    494,405
    
    
    
    573,246Cash flows from investing activities:Capital expenditures
    
    
    (157,599
    )
    
    
    (252,289
    )Proceeds from the sale of equipment
    
    
    400
    
    
    
    30,618Proceeds from certificates of deposit
    
    
    9,950,000
    
    
    
    10,355,000Purchases of certificates of deposit
    
    
    (7,400,000
    )
    
    
    (9,330,000
    )Net cash provided by investing activities
    
    
    2,392,801
    
    
    
    803,329Cash flows from financing activities:Cash dividends paid
    
    
    (492,727
    )
    
    
    (347,808
    )Net cash used in financing activities
    
    
    (492,727
    )
    
    
    (347,808
    )Net increase in cash and cash equivalents
    
    
    2,394,479
    
    
    
    1,028,767Cash and cash equivalents at beginning of period
    
    
    665,072
    
    
    
    367,581Cash and cash equivalents at end of period
    
    $
    3,059,551
    
    
    $
    1,396,348Supplemental schedule of non-cash investing activities:Capital expenditures in accounts payable
    
    $
    26,800
    
    
    $
    89,224
  6




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June 30, 2008
    
    
    December 31, 2007Raw material
    
    $
    1,849,495
    
    
    $
    1,275,595Work-in-process
    
    
    1,723,458
    
    
    
    1,597,483Finished goods
    
    
    2,434,660
    
    
    
    2,577,7556,007,613
    
    
    
    5,450,833Valuation reserves
    
    
    (518,000
    )
    
    
    (475,000
    )$
    5,489,613
    
    
    $
    4,975,833
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AssemblyFastener
    
    
    Equipment
    
    
    Other
    
    
    ConsolidatedThree Months Ended June 30, 2008:Net sales and lease revenue
    
    $
    7,039,556
    
    
    $
    1,007,456
    
    
    
    
    
    
    $
    8,047,012Depreciation
    
    
    227,970
    
    
    
    18,522
    
    
    
    21,441
    
    
    
    267,933Segment profit
    
    
    269,516
    
    
    
    171,612
    
    
    
    
    
    
    
    441,128Selling and administrative expenses
    
    
    
    
    
    
    
    
    
    
    (527,465
    )
    
    
    (527,465
    )Interest income
    
    
    
    
    
    
    
    
    
    
    53,925
    
    
    
    53,925Loss before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (32,412
    )Capital expenditures
    
    
    53,020
    
    
    
    
    
    
    
    
    
    
    
    53,020Segment assets:Accounts receivable, net
    
    
    4,556,884
    
    
    
    519,145
    
    
    
    
    
    
    
    5,076,029Inventories
    
    
    4,102,430
    
    
    
    1,387,183
    
    
    
    
    
    
    
    5,489,613Property, plant and equipment, net
    
    
    6,861,157
    
    
    
    1,084,905
    
    
    
    806,377
    
    
    
    8,752,439Other assets
    
    
    
    
    
    
    
    
    
    
    8,063,083
    
    
    
    8,063,08327,381,164Three Months Ended June 30, 2007:Net sales and lease revenue
    
    $
    8,860,781
    
    
    $
    1,269,539
    
    
    
    
    
    
    $
    10,130,320Depreciation
    
    
    236,859
    
    
    
    21,190
    
    
    
    23,616
    
    
    
    281,665Segment profit
    
    
    960,507
    
    
    
    306,315
    
    
    
    
    
    
    
    1,266,822Selling and administrative expenses
    
    
    
    
    
    
    
    
    
    
    (533,727
    )
    
    
    (533,727
    )Plant closing expenses
    
    
    (2,722
    )
    
    
    
    
    
    
    
    
    
    
    (2,722
    )Interest income
    
    
    
    
    
    
    
    
    
    
    73,026
    
    
    
    73,026Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    803,399Capital expenditures
    
    
    159,388
    
    
    
    22,507
    
    
    
    
    
    
    
    181,895Segment assets:Accounts receivable, net
    
    
    6,057,791
    
    
    
    591,677
    
    
    
    
    
    
    
    6,649,468Inventories
    
    
    4,245,827
    
    
    
    1,627,271
    
    
    
    
    
    
    
    5,873,098Property, plant and equipment, net
    
    
    7,546,091
    
    
    
    1,162,665
    
    
    
    894,975
    
    
    
    9,603,731Other assets
    
    
    
    
    
    
    
    
    
    
    6,497,676
    
    
    
    6,497,67628,623,973
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AssemblyFastener
    
    
    Equipment
    
    
    Other
    
    
    ConsolidatedSix Months Ended June 30, 2008:Net sales and lease revenue
    
    $
    14,365,683
    
    
    $
    2,095,655
    
    
    
    
    
    
    $
    16,461,338Depreciation
    
    
    454,620
    
    
    
    37,044
    
    
    
    42,882
    
    
    
    534,546Segment profit
    
    
    596,394
    
    
    
    373,717
    
    
    
    
    
    
    
    970,111Selling and administrative expenses
    
    
    
    
    
    
    
    
    
    
    (1,088,707
    )
    
    
    (1,088,707
    )Interest income
    
    
    
    
    
    
    
    
    
    
    129,847
    
    
    
    129,847Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,251Capital expenditures
    
    
    184,399
    
    
    
    
    
    
    
    
    
    
    
    184,399Six Months Ended June 30, 2007:Net sales and lease revenue
    
    $
    17,586,152
    
    
    $
    2,491,744
    
    
    
    
    
    
    $
    20,077,896Depreciation
    
    
    472,757
    
    
    
    42,259
    
    
    
    47,232
    
    
    
    562,248Segment profit
    
    
    1,713,976
    
    
    
    541,412
    
    
    
    
    
    
    
    2,255,388Selling and administrative expenses
    
    
    
    
    
    
    
    
    
    
    (1,091,378
    )
    
    
    (1,091,378
    )Plant closing expenses
    
    
    (20,796
    )
    
    
    
    
    
    
    
    
    
    
    (20,796
    )Interest income
    
    
    
    
    
    
    
    
    
    
    147,457
    
    
    
    147,457Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,290,671Capital expenditures
    
    
    319,006
    
    
    
    22,507
    
    
    
    
    
    
    
    341,513
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10




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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, the loss of the services of our key employees and
difficulties in achieving expected cost savings. 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.
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12




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NAME
    
    VOTES FOR
    
    VOTES WITHHELDMichael J. Bourg
    
    
    721,578
    
    
    
    185,165Edward L. Chott
    
    
    721,834
    
    
    
    185,230Kent H. Cooney
    
    
    722,184
    
    
    
    185,010William T. Divane, Jr.
    
    
    722,743
    
    
    
    184,755George P. Lynch
    
    
    721,514
    
    
    
    185,430John R. Madden
    
    
    721,505
    
    
    
    185,555John A. Morrissey
    
    
    724,132
    
    
    
    184,850Walter W. Morrissey
    
    
    723,062
    
    
    
    184,555
  31
    
    Rule 13a-14(a) or 15d-14(a) Certifications31.1
    
    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 Certifications32.1
    
    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.
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Date:  August 11, 2008

CHICAGO RIVET & MACHINE CO.(Registrant)/s/
John A. MorrisseyJohn A. MorrisseyChairman of the Board of Directors

   and Chief Executive Officer

   (Principal Executive Officer)Date:  August 11, 2008

/s/ Michael J. BourgMichael J. BourgPresident, Chief Operating
   Officer and Treasurer

   (Principal Financial Officer) 14




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ExhibitNumber
    
    
    
    
    Page31
    
    
    Rule 13a-14(a) or 15d-14(a) Certifications31.1
    
    
    Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    
    
    1631.2
    
    
    Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    
    
    1732
    
    
    Section 1350 Certifications32.1
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    
    
    1832.2
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    
    
    19
 15