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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 September 30, 2009
 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
(State or Other Jurisdiction 
of Incorporation or Organization)
    
    36-0904920
(I.R.S. Employer
Identification No.)901 Frontenac Road, Naperville, Illinois
(Address of Principal Executive Offices)
    
    60563
(Zip Code)
 (630) 357-8500
 þ o
 o o
  Large accelerated filer oAccelerated 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 September 30, 2009 and December 31, 2008
    
    
    2-3Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2009 and 2008
    
    
    4Condensed Consolidated Statements of Retained Earnings for the Nine Months Ended September 30, 2009 and 2008
    
    
    5Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2009 and 2008
    
    
    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
    
    
    13-19EX-31.1EX-31.2EX-32.1EX-32.2
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September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)AssetsCurrent Assets:Cash and cash equivalents
    
    $
    375,174
    
    
    $
    1,553,226Certificates of deposit
    
    
    6,595,000
    
    
    
    5,997,000Accounts receivable, net of allowance
of $150,000 and $165,000, respectively
    
    
    3,743,940
    
    
    
    3,315,748Inventories
    
    
    3,933,709
    
    
    
    5,048,632Deferred income taxes
    
    
    469,191
    
    
    
    504,191Prepaid income taxes
    
    
    578,099
    
    
    
    355,788Other current assets
    
    
    301,370
    
    
    
    234,412Total current assets
    
    
    15,996,483
    
    
    
    17,008,997Property, Plant and Equipment:Land and improvements
    
    
    1,029,035
    
    
    
    1,029,035Buildings and improvements
    
    
    6,396,487
    
    
    
    6,391,952Production equipment and other
    
    
    28,072,162
    
    
    
    28,163,59035,497,684
    
    
    
    35,584,577Less accumulated depreciation
    
    
    27,531,461
    
    
    
    27,184,604Net property, plant and equipment
    
    
    7,966,223
    
    
    
    8,399,973Total assets
    
    $
    23,962,706
    
    
    $
    25,408,970
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September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)Liabilities and Shareholders EquityCurrent Liabilities:Accounts payable
    
    $
    1,001,497
    
    
    $
    509,657Accrued wages and salaries
    
    
    634,307
    
    
    
    456,687Other accrued expenses
    
    
    267,606
    
    
    
    292,418Unearned revenue and customer deposits
    
    
    64,675
    
    
    
    376,325Total current liabilities
    
    
    1,968,085
    
    
    
    1,635,087Deferred income taxes
    
    
    763,275
    
    
    
    865,275Total liabilities
    
    
    2,731,360
    
    
    
    2,500,362Commitments 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
    
    
    23,568,214
    
    
    
    25,245,476Treasury stock, 171,964 shares at cost
    
    
    (3,922,098
    )
    
    
    (3,922,098
    )Total shareholders equity
    
    
    21,231,346
    
    
    
    22,908,608Total liabilities and shareholders equity
    
    $
    23,962,706
    
    
    $
    25,408,970
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Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net sales
    
    $
    5,490,147
    
    
    $
    6,662,021
    
    
    $
    14,929,260
    
    
    $
    23,123,359Cost of goods sold
    
    
    4,745,979
    
    
    
    5,759,070
    
    
    
    13,376,113
    
    
    
    19,674,065Gross profit
    
    
    744,168
    
    
    
    902,951
    
    
    
    1,553,147
    
    
    
    3,449,294Selling and administrative expenses
    
    
    1,134,805
    
    
    
    1,250,338
    
    
    
    3,649,790
    
    
    
    3,923,055Operating loss
    
    
    (390,637
    )
    
    
    (347,387
    )
    
    
    (2,096,643
    )
    
    
    (473,761
    )Other income and expenses:Interest income
    
    
    16,223
    
    
    
    48,378
    
    
    
    92,029
    
    
    
    178,225Other income
    
    
    3,600
    
    
    
    3,600
    
    
    
    11,482
    
    
    
    11,378Loss before income taxes
    
    
    (370,814
    )
    
    
    (295,409
    )
    
    
    (1,993,132
    )
    
    
    (284,158
    )Benefit from income taxes
    
    
    (124,000
    )
    
    
    (100,000
    )
    
    
    (683,000
    )
    
    
    (97,000
    )Net Loss
    
    $
    (246,814
    )
    
    $
    (195,409
    )
    
    $
    (1,310,132
    )
    
    $
    (187,158
    )Average common shares outstanding
    
    
    966,132
    
    
    
    966,132
    
    
    
    966,132
    
    
    
    966,132Per share data:Net loss per share
    
    $
    (0.26
    )
    
    $
    (0.20
    )
    
    $
    (1.36
    )
    
    $
    (0.19
    )Cash dividends declared per share
    
    $
    0.10
    
    
    $
    0.18
    
    
    $
    0.38
    
    
    $
    0.69
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2009
    
    
    2008Retained earnings at beginning of period
    
    $
    25,245,476
    
    
    $
    26,911,493Net loss for the nine months ended
    
    
    (1,310,132
    )
    
    
    (187,158
    )Cash dividends declared in the period;
$.38 per share in 2009 and $.69 per share in 2008
    
    
    (367,130
    )
    
    
    (666,631
    )Retained earnings at end of period
    
    $
    23,568,214
    
    
    $
    26,057,704
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2009
    
    
    2008Cash flows from operating activities:Net loss
    
    $
    (1,310,132
    )
    
    $
    (187,158
    )Adjustments to reconcile net loss to net cash
provided by operating activities:Depreciation
    
    
    758,213
    
    
    
    803,352Net gain on disposal of equipment
    
    
    (12,186
    )
    
    
    (22,753
    )Deferred income taxes
    
    
    (67,000
    )
    
    
    (104,000
    )Changes in operating assets and liabilities:Accounts receivable, net
    
    
    (428,192
    )
    
    
    803,615Inventories
    
    
    1,114,923
    
    
    
    (599,092
    )Other current assets
    
    
    (289,269
    )
    
    
    66,526Accounts payable
    
    
    491,840
    
    
    
    (93,598
    )Accrued wages and salaries
    
    
    177,620
    
    
    
    70,700Other accrued expenses
    
    
    (24,812
    )
    
    
    (173,339
    )Unearned revenue and customer deposits
    
    
    (311,650
    )
    
    
    218,708Net cash provided by operating activities
    
    
    99,355
    
    
    
    782,961Cash flows from investing activities:Capital expenditures
    
    
    (337,528
    )
    
    
    (307,317
    )Proceeds from the sale of equipment
    
    
    25,251
    
    
    
    27,104Proceeds from certificates of deposit
    
    
    8,091,000
    
    
    
    11,180,000Purchases of certificates of deposit
    
    
    (8,689,000
    )
    
    
    (10,099,000
    )Net cash (used in) provided by investing activities
    
    
    (910,277
    )
    
    
    800,787Cash flows from financing activities:Cash dividends paid
    
    
    (367,130
    )
    
    
    (666,631
    )Net cash used in financing activities
    
    
    (367,130
    )
    
    
    (666,631
    )Net (decrease) increase in cash and cash equivalents
    
    
    (1,178,052
    )
    
    
    917,117Cash and cash equivalents at beginning of period
    
    
    1,553,226
    
    
    
    665,072Cash and cash equivalents at end of period
    
    $
    375,174
    
    
    $
    1,582,189Supplemental schedule of non-cash investing activities:Capital expenditures in accounts payable
    
    $
    
    
    
    $
    6,574
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September 30, 2009
    
    
    December 31, 2008Raw material
    
    $
    1,306,591
    
    
    $
    1,600,001Work-in-process
    
    
    1,594,373
    
    
    
    1,628,664Finished goods
    
    
    1,627,745
    
    
    
    2,399,9674,528,709
    
    
    
    5,628,632Valuation reserves
    
    
    (595,000
    )
    
    
    (580,000
    )$
    3,933,709
    
    
    $
    5,048,632
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AssemblyFastener
    
    
    Equipment
    
    
    Other
    
    
    ConsolidatedThree Months Ended September 30, 2009:Net sales
    
    $
    4,742,053
    
    
    $
    748,094
    
    
    $
    
    
    
    $
    5,490,147Depreciation
    
    
    218,658
    
    
    
    16,508
    
    
    
    19,386
    
    
    
    254,552Segment profit (loss)
    
    
    (69,866
    )
    
    
    154,043
    
    
    
    
    
    
    
    84,177Selling and administrative expenses
    
    
    
    
    
    
    
    
    
    
    (471,214
    )
    
    
    (471,214
    )Interest income
    
    
    
    
    
    
    
    
    
    
    16,223
    
    
    
    16,223Loss before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (370,814
    )Capital expenditures
    
    
    215,530
    
    
    
    4,534
    
    
    
    
    
    
    
    220,064Segment assets:Accounts receivable, net
    
    
    3,420,388
    
    
    
    323,552
    
    
    
    
    
    
    
    3,743,940Inventories
    
    
    2,861,971
    
    
    
    1,071,738
    
    
    
    
    
    
    
    3,933,709Property, plant and equipment, net
    
    
    6,252,042
    
    
    
    1,017,532
    
    
    
    696,649
    
    
    
    7,966,223Other assets
    
    
    
    
    
    
    
    
    
    
    8,318,834
    
    
    
    8,318,83423,962,706Three Months Ended September 30, 2008:Net sales
    
    $
    5,729,633
    
    
    $
    932,388
    
    
    $
    
    
    
    $
    6,662,021Depreciation
    
    
    228,894
    
    
    
    18,402
    
    
    
    21,510
    
    
    
    268,806Segment profit (loss)
    
    
    (33,995
    )
    
    
    164,928
    
    
    
    
    
    
    
    130,933Selling and administrative expenses
    
    
    
    
    
    
    
    
    
    
    (474,720
    )
    
    
    (474,720
    )Interest income
    
    
    
    
    
    
    
    
    
    
    48,378
    
    
    
    48,378Loss before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (295,409
    )Capital expenditures
    
    
    129,492
    
    
    
    
    
    
    
    
    
    
    
    129,492Segment assets:Accounts receivable, net
    
    
    4,036,269
    
    
    
    489,529
    
    
    
    
    
    
    
    4,525,798Inventories
    
    
    4,185,094
    
    
    
    1,389,831
    
    
    
    
    
    
    
    5,574,925Property, plant and equipment, net
    
    
    6,761,755
    
    
    
    1,066,503
    
    
    
    784,867
    
    
    
    8,613,125Other assets
    
    
    
    
    
    
    
    
    
    
    8,277,421
    
    
    
    8,277,42126,991,269
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AssemblyFastener
    
    
    Equipment
    
    
    Other
    
    
    ConsolidatedNine Months Ended September 30, 2009:Net sales
    
    $
    12,476,654
    
    
    $
    2,452,606
    
    
    $
    
    
    
    $
    14,929,260Depreciation
    
    
    650,631
    
    
    
    49,424
    
    
    
    58,158
    
    
    
    758,213Segment profit (loss)
    
    
    (883,517
    )
    
    
    299,338
    
    
    
    
    
    
    
    (584,179
    )Selling and administrative expenses
    
    
    
    
    
    
    
    
    
    
    (1,500,982
    )
    
    
    (1,500,982
    )Interest income
    
    
    
    
    
    
    
    
    
    
    92,029
    
    
    
    92,029Loss before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,993,132
    )Capital expenditures
    
    
    332,994
    
    
    
    4,534
    
    
    
    
    
    
    
    337,528Nine Months Ended September 30, 2008:Net sales
    
    $
    20,095,316
    
    
    $
    3,028,043
    
    
    $
    
    
    
    $
    23,123,359Depreciation
    
    
    683,514
    
    
    
    55,446
    
    
    
    64,392
    
    
    
    803,352Segment profit
    
    
    562,399
    
    
    
    538,645
    
    
    
    
    
    
    
    1,101,044Selling and administrative expenses
    
    
    
    
    
    
    
    
    
    
    (1,563,427
    )
    
    
    (1,563,427
    )Interest income
    
    
    
    
    
    
    
    
    
    
    178,225
    
    
    
    178,225Loss before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (284,158
    )Capital expenditures
    
    
    313,891
    
    
    
    
    
    
    
    
    
    
    
    313,891
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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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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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CHICAGO RIVET & MACHINE CO.
          (Registrant)Date: November 10, 2009
    /s/ John A. MorrisseyJohn A. MorrisseyChairman of the Board of Directors
and Chief Executive Officer
(Principal Executive Officer) Date:  November 10, 2009
    /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