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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, 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 September 30, 2008 and December 31, 2007
    
    
    2-3Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2008 and 2007
    
    
    4Condensed Consolidated Statements of Retained Earnings for the Nine Months Ended September 30, 2008 and 2007
    
    
    5Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 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
    
    
    13-19EX-31.1EX-31.2EX-32.1EX-32.2
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September 30,
    
    
    December 31,2008
    
    
    2007(Unaudited)AssetsCurrent Assets:Cash and cash equivalents
    
    $
    1,582,189
    
    
    $
    665,072Certificates of deposit
    
    
    5,799,000
    
    
    
    6,880,000Accounts receivable, net of allowance
of $103,000 and $95,000, respectively
    
    
    4,525,798
    
    
    
    5,329,413Inventories
    
    
    5,574,925
    
    
    
    4,975,833Deferred income taxes
    
    
    464,191
    
    
    
    451,191Prepaid income taxes
    
    
    58,481
    
    
    
    211,025Other current assets
    
    
    373,560
    
    
    
    287,542Total current assets
    
    
    18,378,144
    
    
    
    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
    
    
    28,182,062
    
    
    
    28,124,00735,603,049
    
    
    
    35,538,873Less accumulated depreciation
    
    
    26,989,924
    
    
    
    26,431,936Net property, plant and equipment
    
    
    8,613,125
    
    
    
    9,106,937Total assets
    
    $
    26,991,269
    
    
    $
    27,907,013
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September 30,
    
    
    December 31,2008
    
    
    2007(Unaudited)Liabilities and Shareholders EquityCurrent Liabilities:Accounts payable
    
    $
    1,059,990
    
    
    $
    1,147,014Accrued wages and salaries
    
    
    749,933
    
    
    
    679,233Accrued profit sharing plan contribution
    
    
    80,000
    
    
    
    201,000Other accrued expenses
    
    
    486,235
    
    
    
    319,866Total current liabilities
    
    
    2,376,158
    
    
    
    2,347,113Deferred income taxes
    
    
    894,275
    
    
    
    985,275Total liabilities
    
    
    3,270,433
    
    
    
    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
    
    
    26,057,704
    
    
    
    26,911,493Treasury stock, 171,964 shares at cost
    
    
    (3,922,098
    )
    
    
    (3,922,098
    )Total shareholders equity
    
    
    23,720,836
    
    
    
    24,574,625Total liabilities and shareholders equity
    
    $
    26,991,269
    
    
    $
    27,907,013
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Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net sales
    
    $
    6,641,826
    
    
    $
    9,020,453
    
    
    $
    23,058,976
    
    
    $
    29,051,926Lease revenue
    
    
    20,195
    
    
    
    23,150
    
    
    
    64,383
    
    
    
    69,5736,662,021
    
    
    
    9,043,603
    
    
    
    23,123,359
    
    
    
    29,121,499Cost of goods sold and costs
related to lease revenue
    
    
    5,759,070
    
    
    
    7,172,837
    
    
    
    19,674,065
    
    
    
    23,166,992Gross profit
    
    
    902,951
    
    
    
    1,870,766
    
    
    
    3,449,294
    
    
    
    5,954,507Selling and administrative expenses
    
    
    1,250,338
    
    
    
    1,373,104
    
    
    
    3,923,055
    
    
    
    4,300,613Plant closing expenses
    
    
    
    
    
    
    (459
    )
    
    
    
    
    
    
    20,337Operating profit (loss)
    
    
    (347,387
    )
    
    
    498,121
    
    
    
    (473,761
    )
    
    
    1,633,557Other income and expenses:Interest income
    
    
    48,378
    
    
    
    77,380
    
    
    
    178,225
    
    
    
    224,837Other income
    
    
    3,600
    
    
    
    3,600
    
    
    
    11,378
    
    
    
    11,378Income (loss) before income taxes
    
    
    (295,409
    )
    
    
    579,101
    
    
    
    (284,158
    )
    
    
    1,869,772Provision (benefit) for income taxes
    
    
    (100,000
    )
    
    
    207,000
    
    
    
    (97,000
    )
    
    
    664,000Net income (loss)
    
    $
    (195,409
    )
    
    $
    372,101
    
    
    $
    (187,158
    )
    
    $
    1,205,772Average common shares outstanding
    
    
    966,132
    
    
    
    966,132
    
    
    
    966,132
    
    
    
    966,132Per share data:Net income (loss) per share
    
    $
    (0.20
    )
    
    $
    0.39
    
    
    $
    (0.19
    )
    
    $
    1.25Cash dividends declared per share
    
    $
    0.18
    
    
    $
    0.18
    
    
    $
    0.69
    
    
    $
    0.54
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2008
    
    
    2007Retained earnings at beginning of period
    
    $
    26,911,493
    
    
    $
    26,340,036Net income (loss) for the nine months ended
    
    
    (187,158
    )
    
    
    1,205,772Cash dividends declared in the period,
$.69 and $.54 per share in 2008 and 2007, respectively
    
    
    (666,631
    )
    
    
    (521,712
    )Retained earnings at end of period
    
    $
    26,057,704
    
    
    $
    27,024,096
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2008
    
    
    2007Cash flows from operating activities:Net income (loss)
    
    $
    (187,158
    )
    
    $
    1,205,772Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation
    
    
    803,352
    
    
    
    845,896Net gain on the sale of equipment
    
    
    (22,753
    )
    
    
    (25,022
    )Deferred income taxes
    
    
    (104,000
    )
    
    
    (86,000
    )Changes in operating assets and liabilities:Accounts receivable, net
    
    
    803,615
    
    
    
    (249,819
    )Inventories
    
    
    (599,092
    )
    
    
    (82,424
    )Other current assets
    
    
    66,526
    
    
    
    34,416Accounts payable
    
    
    (93,598
    )
    
    
    4,426Accrued wages and salaries
    
    
    70,700
    
    
    
    158,862Accrued profit sharing contribution
    
    
    (121,000
    )
    
    
    (30,000
    )Other accrued expenses
    
    
    166,369
    
    
    
    (198,430
    )Net cash provided by operating activities
    
    
    782,961
    
    
    
    1,577,677Cash flows from investing activities:Capital expenditures
    
    
    (307,317
    )
    
    
    (340,937
    )Proceeds from the sale of equipment
    
    
    27,104
    
    
    
    37,816Proceeds from certificates of deposit
    
    
    11,180,000
    
    
    
    13,405,000Purchases of certificates of deposit
    
    
    (10,099,000
    )
    
    
    (12,880,000
    )Net cash provided by investing activities
    
    
    800,787
    
    
    
    221,879Cash flows from financing activities:Cash dividends paid
    
    
    (666,631
    )
    
    
    (521,712
    )Net cash used in financing activities
    
    
    (666,631
    )
    
    
    (521,712
    )Net increase in cash and cash equivalents
    
    
    917,117
    
    
    
    1,277,844Cash and cash equivalents at beginning of period
    
    
    665,072
    
    
    
    367,581Cash and cash equivalents at end of period
    
    $
    1,582,189
    
    
    $
    1,645,425Supplemental schedule of non-cash investing activities:Capital expenditures in accounts payable
    
    $
    6,574
    
    
    $
    
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September 30, 2008
    
    
    December 31, 2007Raw material
    
    $
    1,738,455
    
    
    $
    1,275,595Work-in-process
    
    
    1,901,981
    
    
    
    1,597,483Finished goods
    
    
    2,498,489
    
    
    
    2,577,7556,138,925
    
    
    
    5,450,833Valuation reserves
    
    
    (564,000
    )
    
    
    (475,000
    )$
    5,574,925
    
    
    $
    4,975,833
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AssemblyFastener
    
    
    Equipment
    
    
    Other
    
    
    ConsolidatedThree Months Ended September 30, 2008:Net sales and lease revenue
    
    $
    5,729,633
    
    
    $
    932,388
    
    
    $
    
    
    
    $
    6,662,021Depreciation
    
    
    228,894
    
    
    
    18,402
    
    
    
    21,510
    
    
    
    268,806Segment profit
    
    
    (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
    
    
    
    8,277,42126,991,269Three Months Ended September 30, 2007:Net sales and lease revenue
    
    $
    7,905,111
    
    
    $
    1,138,492
    
    
    $
    
    
    
    $
    9,043,603Depreciation
    
    
    238,782
    
    
    
    21,250
    
    
    
    23,616
    
    
    
    283,648Segment profit
    
    
    836,182
    
    
    
    171,559
    
    
    
    
    
    
    
    1,007,741Selling and administrative expenses
    
    
    
    
    
    
    
    
    
    
    (506,479
    )
    
    
    (506,479
    )Plant closing expenses
    
    
    459
    
    
    
    
    
    
    
    
    
    
    
    459Interest income
    
    
    
    
    
    
    
    
    
    
    77,380
    
    
    
    77,380Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    579,101Capital expenditures
    
    
    31,267
    
    
    
    1,459
    
    
    
    
    
    
    
    32,726Segment assets:Accounts receivable, net
    
    
    5,631,651
    
    
    
    520,796
    
    
    
    
    
    
    
    6,152,447Inventories
    
    
    4,034,745
    
    
    
    1,528,988
    
    
    
    
    
    
    
    5,563,733Property, plant and equipment, net
    
    
    7,305,274
    
    
    
    1,142,874
    
    
    
    871,359
    
    
    
    9,319,507Other assets
    
    
    
    
    
    
    
    
    
    
    7,400,707
    
    
    
    7,400,70728,436,394
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AssemblyFastener
    
    
    Equipment
    
    
    Other
    
    
    ConsolidatedNine Months Ended September 30, 2008:Net sales and lease revenue
    
    $
    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
    
    
    
    
    
    
    
    
    
    
    
    313,891Nine Months Ended September 30, 2007:Net sales and lease revenue
    
    $
    25,491,263
    
    
    $
    3,630,236
    
    
    $
    
    
    
    $
    29,121,499Depreciation
    
    
    711,539
    
    
    
    63,509
    
    
    
    70,848
    
    
    
    845,896Segment profit
    
    
    2,550,158
    
    
    
    712,971
    
    
    
    
    
    
    
    3,263,129Selling and administrative expenses
    
    
    
    
    
    
    
    
    
    
    (1,597,857
    )
    
    
    (1,597,857
    )Plant closing expenses
    
    
    (20,337
    )
    
    
    
    
    
    
    
    
    
    
    (20,337
    )Interest income
    
    
    
    
    
    
    
    
    
    
    224,837
    
    
    
    224,837Income before income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,869,772Capital expenditures
    
    
    316,971
    
    
    
    23,966
    
    
    
    
    
    
    
    340,937
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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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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, 2008/s/ John A. MorrisseyJohn A. MorrisseyChairman of the Board of Directorsand Chief Executive Officer
  (Principal Executive Officer)Date: November 10, 2008/s/ Michael J. BourgMichael J. BourgPresident, Chief OperatingOfficer and Treasurer(Principal Financial Officer)
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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