<PAGE>

                                   EXHIBIT 13

                                       47
<PAGE>

                              [CHICAGO RIVET LOGO]
                          Chicago Rivet & Machine Co.
                               2003 Annual Report
<PAGE>
                                                                               .
                                                                               .
                                                                               .

[CHICAGO RIVET LETTERHEAD]
--------------------------------------------------------------------------------

HIGHLIGHTS

<Table>
<Caption>
------------------------------------------------------------------------------------------
                                                    2003           2002           2001
------------------------------------------------------------------------------------------
<S>                                              <C>            <C>            <C>
NET SALES AND LEASE REVENUE....................  $38,190,908    $43,012,766    $40,443,010
NET INCOME.....................................      817,527      2,604,075      1,792,270
NET INCOME PER SHARE...........................          .85           2.69           1.85
DIVIDENDS PER SHARE............................          .97            .87            .97
NET CASH PROVIDED BY OPERATING ACTIVITIES......    3,810,415      4,008,006      5,287,476
EXPENDITURES FOR PROPERTY, PLANT AND
  EQUIPMENT....................................      641,715        886,009      1,431,698
WORKING CAPITAL................................   14,020,185     12,874,182     11,616,424
TOTAL SHAREHOLDERS' EQUITY.....................   23,989,484     24,109,105     22,372,924
COMMON SHARES OUTSTANDING AT YEAR-END..........      966,132        966,132        967,132
SHAREHOLDERS' EQUITY PER COMMON SHARE..........        24.83          24.95          23.13
</Table>

ANNUAL MEETING

The annual meeting of shareholders
will be held on May 11, 2004 at 10:00 a.m. at
901 Frontenac Road
Naperville, Illinois

--------------------------------------------------------------------------------
<PAGE>

MANAGEMENT'S REPORT
ON FINANCIAL CONDITION AND RESULTS OF OPERATIONS            [CHIGAGO RIVET LOGO]
--------------------------------------------------------------------------------

TO OUR SHAREHOLDERS:

RESULTS OF OPERATIONS

    The past year was extremely difficult for the Company. After a relatively
auspicious start, which fostered an optimistic outlook for the balance of the
year, our business weakened considerably as production of domestic automobiles
trailed prior year levels and domestic manufacturing activity, in general,
remained weak. In addition, our customers continued to demand price concessions,
while simultaneously raising the bar with respect to quality and service
requirements. In response to these conditions, we relied on the time-tested
approach of cost containment and cost reductions. In retrospect, it is clear
that these actions were insufficient to offset the combined impact of lower
volumes, lower prices and increased service expectations.

2003 COMPARED TO 2002

    Reduced revenues were the dominant factor contributing to reduced margins
within the fastener segment during 2003. Fastener segment revenues declined
abruptly late in the first quarter and remained weak for the balance of the
year. For the year 2003, fastener segment revenues declined 11.3% compared to
2002, totaling a disappointing $31,024,036. Reductions in North American
production of domestic automobiles and trucks contributed to the weakness in our
business as did continuing competitive pressures which contributed to the loss
of some business, as we were unable to meet the price concessions demanded by
certain customers. In addition, some high margin parts were lost in connection
with design changes that accompanied the new model year. Reductions in
manufacturing staff failed to keep pace with the decline in business activity,
and the resultant inefficiencies are reflected in disproportionately higher
labor costs in 2003, compared to 2002. In addition, margins were adversely
affected by increases in the cost of employee health insurance and higher
tooling expenses incurred in connection with the initial production of a variety
of new parts.

    Within the assembly equipment segment, revenues declined 10.6% compared to
2002. As was the case in the fastener segment, lower volumes contributed to
significantly reduced operating efficiencies that were manifested in
disproportionately high labor and benefit costs compared with prior years. Other
factors impacting margins within this segment were increases in the cost of raw
materials, offset in part, by a decrease in depreciation expense.

    Selling and administrative expenses for 2003 were 5.9% below those for 2002.
A $302,000 reduction in profit sharing expense was the largest single factor
contributing to the decrease in this expense category, followed by reductions of
$145,000 in bonus expense, and $96,000 in commission expense due to lower sales
in the current year. These reductions were partially offset by a $74,000 expense
related to an early retirement program and an increase in the cost of employee
health insurance.

    Net interest income increased by approximately $45,000 during 2003,
primarily as a result of lower interest expense related to lower balances on a
note payable, which was paid in full in December.

2002 COMPARED TO 2001

    Net sales and lease revenues improved approximately 6% compared with 2001
and totaled $43,012,766 in 2002. As discussed below, revenue gains were achieved
in both the fastener and assembly equipment segments and the increased volume,
coupled with successful efforts to hold the line on costs, translated into
improvements in gross margins, which amounted to $10,585,563 for 2002, compared
with $9,187,046 recorded in 2001.

    Within the fastener segment, revenues increased 7%, to $34,991,758,
reflecting an overall increase in automobile production. However, it should be
noted that our volumes did not increase across our entire customer base.
Instead, our overall gain was due to increases in business with certain key
customers, bolstered by revenues related to new customers and new products from
existing customers.

    Gross margins within the fastener segment improved to 21.1% in 2002,
compared with 19.9% recorded in 2001. This improvement was largely attributable
to the effects of higher volumes and increases in efficiency associated with
those higher volumes. A number of other factors impacted operations during the
year. While we benefited from reductions in tooling costs, those savings were
offset by increases in the cost of materials and by a substantial increase in
the cost of employee health insurance.

    Activity levels within the assembly equipment segment remained well below
historical levels. While revenues within the segment improved to $8,021,008 in
2002, compared with $7,738,868 in 2001, the change is attributable to a few
large orders and not due to any significant improvement in the market for
equipment, which remained adversely affected by a persistent decline in the
broad manufacturing sector and the related restraint on capital spending.
Nevertheless, gross margins within this segment improved to approximately 40% in
2002 compared with 35% for 2001. This improvement is primarily attributable to
higher volumes and reduced labor expense.

    Selling and administrative expenses increased approximately 3.7% compared
with 2001. Both profit sharing and sales commissions increased as a result of
higher sales and increased profits. Other factors contributing to the increase
include higher salary expense and increased health insurance costs, partially
offset by a decrease in the provision for bad

--------------------------------------------------------------------------------

                                                                               1
<PAGE>
MANAGEMENT'S REPORT
(Continued)
--------------------------------------------------------------------------------

debt expense, which was unusually high in the prior year due to the bankruptcy
filing of a certain customer.

    The Company recorded net interest income during 2002 of $4,214, compared
with net interest expense of $114,607 in 2001, as a result of lower prevailing
interest rates and reduced debt levels.

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 $.18 per share during 2003. In addition, an extra
dividend of $.25 per share was paid during the second quarter of 2003, bringing
the total dividend distribution to $.97 per share. On February 16, 2004, your
Board of Directors determined that an extra dividend would not be declared or
paid in the second quarter of 2004; however, the Board did declare a regular
quarterly dividend of $.18 per share, payable March 19, 2004 to shareholders of
record on March 5, 2004. This continues the uninterrupted record of consecutive
quarterly dividends paid by the Company to its shareholders that extends over 70
years.

PROPERTY, PLANT AND EQUIPMENT

    During 2003, capital expenditures amounted to $641,715, of which $535,268
was invested within the fastener segment, $89,379 was invested within the
assembly equipment segment and the remainder was expended for building
improvements that cannot be allocated between segments. Within the fastener
segment, approximately $317,000 was invested in a new solvent-based parts
cleaning system. This system, installed during the second half of the year, is
expected to yield reductions in supply and waste disposal costs. Other
expenditures were approximately $92,000 for vehicles, including $68,000 for a
new delivery truck; $32,000 for in-line wire drawing equipment; some $21,000 for
equipment related to quality control; with the balance expended for smaller
tools and equipment and building improvements. Within the assembly equipment
segment, approximately $86,000 was expended for the purchase of new equipment
related to the manufacture of perishable tooling that is sold to customers. The
balance was expended for building improvements and office equipment.

    Investments in machinery and equipment totaled $886,009 in 2002. The
majority of this investment was related to the fastener segment of our
operations. Approximately $567,000 was invested in new equipment directly
related to the manufacture of fasteners, with an additional $123,000 expended
for equipment related to quality control and finishing operations for the
fastener segment. The balance was expended for a variety of items, including
material handling, data processing and other equipment.

    The Company invested approximately $1.4 million in machinery, equipment and
building improvements during 2001. The majority of these expenditures were
related to the fastener segment of our operations. Specifically, a total of $1.1
million was expended for the purchase of equipment used directly in the
manufacture of fasteners and $88,000 was invested in new equipment related to
the quality control process in fastener manufacturing. $129,000 was expended in
connection with data processing and data communications equipment, $61,000 was
spent for building improvements, primarily related to the fastener segment of
our business, and the balance was expended for a variety of smaller machinery
and equipment, including the manufacture of automatic rivet setting equipment
that is leased to our customers.

    Depreciation expense amounted to $1,861,600 in 2003, $1,915,726 in 2002 and
$1,921,703 in 2001.

LIQUIDITY AND CAPITAL RESOURCES

    The Company's holdings in cash, cash equivalents and certificates of
deposits amounted to nearly $6.0 million at December 31, 2003, an increase of
approximately $.6 million compared with the end of 2002. Accounts receivable
balances decreased approximately $.4 million, reflecting lower sales during the
latter part of 2003, compared to the same period in 2002. Inventory levels, at
the end of 2003, are also less than at the end of 2002 due to efforts taken to
reduce inventories in response to continued weakness in demand for our products.

    In connection with a "Dutch auction" tender offer in April 2000, the Company
obtained, on an unsecured basis, a financing commitment that provided borrowing
capacity of up to $9.0 million plus a $1.0 million line of credit. The new
borrowing was used to finance the unpaid balance of a 1996 loan related to the
acquisition of H & L Tool Company, Inc. ($2.7 million) and to fund the purchase
of stock under the terms of the "Dutch auction." At December 31, 2003, the
indebtedness under the term loan had been extinguished. The line of credit was
extended through May 31, 2004 and remained unused at December 31, 2003.

OFF-BALANCE SHEET ARRANGEMENTS

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

--------------------------------------------------------------------------------

 2
<PAGE>
MANAGEMENT'S REPORT
(Continued)                                                 [CHIGAGO RIVET LOGO]
--------------------------------------------------------------------------------

    The following table presents a summary of the Company's contractual
obligations as of December 31, 2003:

<Table>
<Caption>
                                     PAYMENTS DUE BY PERIOD
                       ---------------------------------------------------
                                    LESS                            MORE
CONTRACTUAL                         THAN      1 - 3      4 - 5     THAN 5
OBLIGATION              TOTAL      1 YEAR     YEARS      YEARS     YEARS
-----------            --------   --------   --------   -------   --------
<S>                    <C>        <C>        <C>        <C>       <C>
Long-term Debt.......  $     --   $     --   $     --   $    --   $     --
Capital Lease
 Obligations.........        --         --         --        --         --
Operating Leases.....    36,657     27,493      9,164        --         --
Purchase
 Obligations.........   378,686    160,750    200,256    17,680         --
                       --------   --------   --------   -------   --------
Total................  $415,343   $188,243   $209,420   $17,680   $     --
                       ========   ========   ========   =======   ========
</Table>

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

QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISKS

    As of December 31, 2003, the Company did not have any outstanding debt,
compared to $1.6 million of outstanding debt at the prior year-end, that was
exposed to changes in interest rates. During 2003 the Company did not use
derivative financial instruments relating to this interest rate exposure.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

    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 at the
date of the financial statements and the amounts of revenue and expenses during
the reporting period. During interim periods, the Company uses estimated gross
profit rates to determine the cost of goods sold for a portion of its
operations. Actual results can vary from these estimates, and these estimates
are adjusted, as necessary, when actual information is available. The effect of
these estimates is described in Note 11 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.

STOCK PURCHASE PROGRAM

    Terms of a stock repurchase authorization originally approved by the Board
of Directors in February of 1990, and subsequently amended to permit the
repurchase of an aggregate of 200,000 shares, permit purchases of the Company's
common stock to be made from time to time, in the open market or in private
transactions, at prices deemed reasonable by management. The company did not
purchase any of its shares during 2003. During 2002, the company purchased 1,000
shares at an average price of $26.98 per share. Cumulative purchases under the
repurchase authorization have amounted to 162,996 shares at an average price of
$15.66 per share.

OUTLOOK FOR 2004

    The anticipated improvement in economic activity has not yet generated a
meaningful increase in orders for our products. While we are encouraged by the
fact that we have been awarded contracts for a number of new parts in the
fastener segment, we are concerned about conditions within the assembly
equipment segment, which remains very weak. Domestic competition remains intense
and foreign competition, which affects us directly through the increase of
imported fasteners and indirectly through the import of products that were
previously assembled domestically, is a growing concern. These conditions
increase the risk that our markets will not only become even more price
competitive due to imports, but will shrink in size as domestic assembly
operations are supplanted by imports of products that were traditionally
assembled domestically, utilizing domestic fasteners and domestic assembly
equipment.

    As mentioned above, we are pleased that we have been awarded new business
within the fastener segment, but, in many instances, production volumes related
to this new business will not reach significant levels until later in 2004. We
will continue soliciting additional business from our current customers as well
as from new customers. We face challenges in the form of recent and significant
increases in the cost of raw materials utilized in the production of fasteners.
While we have not experienced shortages of raw material, some of our suppliers
report that increases in global demand may constrain availability of raw
materials later this year. Our success in maintaining supply and recovering
these higher costs, without losing market share, will be a critical determinant
of our success in the coming year.

    Cost reduction will be another critical factor influencing future results.
As previously reported, we have already taken actions to reduce our
manufacturing costs, but the cost reductions realized have not fully offset the
impact of lower volumes. We will continue exploring alternatives that will yield
positive changes in our cost structure and our ability to

--------------------------------------------------------------------------------

                                                                               3
<PAGE>
MANAGEMENT'S REPORT
(Continued)
--------------------------------------------------------------------------------

compete. Margins, at least in the near term, will remain under pressure from the
combination of rising costs and increasing foreign competition.

    We gratefully acknowledge that the Company's success, both past and future,
would not be possible without: the conscientious efforts of our employees, who
consistently demonstrate their dedication to meeting the formidable and
ever-changing challenges that characterize today's manufacturing environment;
the loyalty of our customers, many of whom face the same set of challenges; and,
the continuing support of our shareholders.

                                     Respectfully,

<Table>
  <S>                                         <C>

      /s/ J. A. MORRISSEY                         /s/ JOHN C. OSTERMAN
       John A. Morrissey                            John C. Osterman
            Chairman                                   President
</Table>

February 25, 2004

FORWARD-LOOKING STATEMENTS

     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, our ability to maintain our
relationships with our significant customers; increased global competition;
increases in the prices of, or limitations on the availability of, our primary
raw materials; or a downturn in the automotive industry, upon which we rely for
sales revenue, and which is cyclical and dependent on, among other things,
consumer spending, international economic conditions and regulations and
policies regarding international trade. 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.

--------------------------------------------------------------------------------

 4
<PAGE>

                                                            [CHICAGO RIVET LOGO]
--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>

-----------------------------------------------------------------------------------------------
December 31                                                        2003                2002
-----------------------------------------------------------------------------------------------
<S>                                                             <C>                 <C>
                           ASSETS
Current Assets
  Cash and Cash Equivalents.................................    $ 5,530,099         $ 2,204,430
  Certificates of Deposit...................................        455,000           3,157,733
  Accounts Receivable -- Less allowances of $220,000 and
     $240,000, respectively.................................      4,549,168           4,994,697
  Inventories...............................................      5,233,788           6,089,941
  Deferred Income Taxes.....................................        602,191             581,191
  Other Current Assets......................................        218,560             277,983
                                                                -----------         -----------
  Total Current Assets......................................     16,588,806          17,305,975
Net Property, Plant and Equipment...........................     11,549,574          12,782,198
                                                                -----------         -----------
Total Assets................................................    $28,138,380         $30,088,173
                                                                ===========         ===========


            LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
  Current Portion of Note Payable...........................    $        --         $ 1,632,760
  Accounts Payable..........................................      1,310,044           1,121,195
  Accrued Wages and Salaries................................        754,394             795,920
  Contributions Due Profit Sharing Plan.....................        133,243             435,542
  Other Accrued Expenses....................................        370,940             446,376
                                                                -----------         -----------
  Total Current Liabilities.................................      2,568,621           4,431,793
Deferred Income Taxes.......................................      1,580,275           1,547,275
                                                                -----------         -----------
  Total Liabilities.........................................      4,148,896           5,979,068
                                                                -----------         -----------
Commitments and Contingencies (Note 12)
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.........................................     26,326,352          26,445,973
  Treasury Stock, 171,964 Shares at cost....................     (3,922,098)         (3,922,098)
                                                                -----------         -----------
  Total Shareholders' Equity................................     23,989,484          24,109,105
                                                                -----------         -----------
Total Liabilities and Shareholders' Equity..................    $28,138,380         $30,088,173
                                                                ===========         ===========
</Table>

       THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.

--------------------------------------------------------------------------------
                                                                               5
<PAGE>
[CHICAGO RIVET LOGO]
--------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF INCOME

<Table>
<Caption>

-----------------------------------------------------------------------------------------------
For the Years Ended December 31                          2003           2002           2001
-----------------------------------------------------------------------------------------------
<S>                                                   <C>            <C>            <C>
Net Sales and Lease Revenue.......................    $38,190,908    $43,012,766    $40,443,010
Cost of Goods Sold and Costs Related to Lease
  Revenue.........................................     30,744,104     32,427,203     31,255,964
                                                      -----------    -----------    -----------
Gross Profit......................................      7,446,804     10,585,563      9,187,046
Selling and Administrative Expenses...............      6,280,455      6,674,821      6,439,603
Other (Income) Expense, net.......................        (76,178)       (50,333)        56,173
                                                      -----------    -----------    -----------
Income Before Income Taxes........................      1,242,527      3,961,075      2,691,270
Provision for Income Taxes........................        425,000      1,357,000        899,000
                                                      -----------    -----------    -----------
Net Income........................................    $   817,527    $ 2,604,075    $ 1,792,270
                                                      ===========    ===========    ===========
Net Income Per Share..............................    $       .85    $      2.69    $      1.85
                                                      ===========    ===========    ===========
</Table>

CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

<Table>
<Caption>

-----------------------------------------------------------------------------------------------
For the Years Ended December 31                          2003           2002           2001
-----------------------------------------------------------------------------------------------
<S>                                                   <C>            <C>            <C>
Retained Earnings at Beginning of Year............    $26,445,973    $24,682,816    $23,828,665
Net Income........................................        817,527      2,604,075      1,792,270
Cash Dividends Paid, $.97 Per Share in 2003, $.87
  Per Share in 2002 and $.97 Per Share in 2001....       (937,148)      (840,918)      (938,119)
                                                      -----------    -----------    -----------
Retained Earnings at End of Year..................    $26,326,352    $26,445,973    $24,682,816
                                                      ===========    ===========    ===========
</Table>

       THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.

--------------------------------------------------------------------------------
 6
<PAGE>
                                                            [CHIGAGO RIVET LOGO]
--------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>

         ---------------------------------------------------------------------------------------------------
         For the Years Ended December 31                                2003          2002          2001
         ---------------------------------------------------------------------------------------------------
         <S>                                                         <C>           <C>           <C>
         Cash Flows from Operating Activities:
         Net Income................................................  $   817,527   $ 2,604,075   $ 1,792,270
         Adjustments to Reconcile Net Income to Net Cash Provided
           by Operating Activities:
           Depreciation and Amortization...........................    1,861,600     1,915,726     1,921,703
           Net Gain on the Sale of Properties......................      (11,405)      (30,559)      (42,917)
           Deferred Income Taxes...................................       12,000       144,000       154,000
           Changes in Operating Assets and Liabilities:
             Accounts Receivable, net..............................      445,529      (999,549)    1,042,083
             Inventories...........................................      856,153       (39,273)    1,153,516
             Other Current Assets..................................       59,423        57,607      (143,922)
             Accounts Payable......................................      188,849       191,561      (135,927)
             Accrued Wages and Salaries............................      (41,526)       44,338        (1,995)
             Accrued Profit Sharing Plan Contributions.............     (302,299)      140,556      (142,090)
             Other Accrued Expenses................................      (75,436)      (20,476)     (309,245)
                                                                     -----------   -----------   -----------

                  Net Cash Provided by Operating Activities........    3,810,415     4,008,006     5,287,476
                                                                     -----------   -----------   -----------
         Cash Flows from Investing Activities:
           Capital Expenditures....................................     (641,715)     (886,009)   (1,431,698)
           Proceeds from the Sale of Properties....................       24,144        37,179        57,894
           Proceeds from Held-to-Maturity Securities...............    3,207,733     3,007,882     3,815,989
           Purchases of Held-to-Maturity Securities................     (505,000)   (5,987,733)   (2,563,985)
                                                                     -----------   -----------   -----------
                Net Cash Provided by (Used in) Investing
                  Activities.......................................    2,085,162    (3,828,681)     (121,800)
                                                                     -----------   -----------   -----------
         Cash Flows from Financing Activities:
           Payments under Term Loan Agreement......................   (1,632,760)   (1,800,000)   (1,800,000)
           Purchases of Treasury Stock.............................           --       (26,976)           --
           Cash Dividends Paid.....................................     (937,148)     (840,918)     (938,119)
                                                                     -----------   -----------   -----------
                Net Cash Used in Financing Activities..............   (2,569,908)   (2,667,894)   (2,738,119)
                                                                     -----------   -----------   -----------
         Net Increase (Decrease) in Cash and Cash Equivalents......    3,325,669    (2,488,569)    2,427,557
         Cash and Cash Equivalents:
           Beginning of Year.......................................    2,204,430     4,692,999     2,265,442
                                                                     -----------   -----------   -----------
           End of Year.............................................  $ 5,530,099   $ 2,204,430   $ 4,692,999
                                                                     ===========   ===========   ===========
         Cash Paid During the Year for:
           Income Taxes............................................  $   508,213   $ 1,247,000   $   663,381
           Interest................................................  $    20,633   $    79,708   $   354,649
</Table>

       THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.

--------------------------------------------------------------------------------
                                                                               7
<PAGE>

[CHIGAGO RIVET LOGO]
--------------------------------------------------------------------------------
NOTES TO 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, screw machine
products, automatic rivet setting machines, parts and tools for such machines,
and the leasing of automatic rivet setting 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.

LEASE INCOME--Automatic rivet setting machines are available to customers on
either a sale or lease basis. The leases, generally are for a quarterly or
one-year term, are cancelable at the option of the Company or the customer and
are accounted for under the operating method, which recognizes lease revenue
over the term of the lease. Rentals are billed in advance, and revenues
attributable to future periods are included in unearned revenue in the
consolidated balance sheets. Costs related to lease revenue, other than the cost
of the machines, are expensed as 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.

CASH AND CASH EQUIVALENTS--The Company considers all highly liquid investments
with a maturity of three months or less when purchased to be cash equivalents.

FAIR VALUE OF FINANCIAL INSTRUMENTS--The carrying amounts reported in the
consolidated balance sheets for cash and cash equivalents and certificates of
deposit approximate fair value. The carrying amount reported for the note
payable approximated fair market value.

INVENTORIES--Inventories are stated at the lower of cost or net realizable
value, cost being determined principally by the first-in, first-out method.

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 ready for its
intended use. The estimated useful lives by asset category are:

Asset category                                             Estimated useful life
------------------------------------------------------------

<Table>
<S>                                          <C>
Land improvements...........................    15 to 25 years
Buildings and improvements..................    10 to 35 years
Machinery and equipment.....................     7 to 15 years
Automatic rivet setting machines on lease...          10 years
Capitalized software costs..................      3 to 5 years
Other equipment.............................     3 to 15 years
</Table>

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.

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 currently. 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 in accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." Deferred income taxes arise from temporary
differences between the income tax basis of assets and liabilities and their
reported amounts in the financial statements.

SEGMENT INFORMATION--The Company reports segment information in accordance with
Statement of Financial Accounting Standards No. 131 ("FAS 131"), "Disclosures
about Segments of an Enterprise and Related Information." FAS 131 requires that
segments be 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 2003, 966,537 in
2002 and 967,132 in 2001.

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 financial statements and the
accompanying notes. Actual results could differ from those estimates.

RECLASSIFICATIONS--Certain items in 2002 and 2001 have been reclassified to
conform to the presentation in 2003. These changes have no effect on the
financial position of the Company.

--------------------------------------------------------------------------------
 8
<PAGE>

                                                            [CHIGAGO RIVET LOGO]
--------------------------------------------------------------------------------

2--BALANCE SHEET DETAILS

<Table>
<Caption>
                                      2003            2002
                                  ------------    ------------
<S>                               <C>             <C>
Inventories:
  Raw materials.................  $ 1,109,463     $ 1,636,216
  Work in process...............    1,760,990       1,818,106
  Finished goods................    2,363,335       2,635,619
                                  -----------     -----------
                                  $ 5,233,788     $ 6,089,941
                                  ===========     ===========
Net Property, Plant and
  Equipment:
  Land and improvements.........  $ 1,015,635     $ 1,010,595
  Buildings and improvements....    5,779,993       5,743,325
  Production equipment, leased
    machines and other..........   28,201,191      27,774,278
                                  -----------     -----------
                                   34,996,819      34,528,198
  Accumulated depreciation......   23,447,245      21,746,000
                                  -----------     -----------
                                  $11,549,574     $12,782,198
                                  ===========     ===========
Other Accrued Expenses:
  Property taxes................  $   112,794     $   116,837
  Unearned revenue and customer
    deposits....................      120,893         140,390
  All other items...............      137,253         189,149
                                  -----------     -----------
                                  $   370,940     $   446,376
                                  ===========     ===========
</Table>

3--LEASED MACHINES--Lease revenue amounted to $160,312 in 2003, $198,869 in 2002
and $225,948 in 2001. Future minimum rentals on leases beyond one year are not
significant. The cost and carrying value of leased automatic rivet setting
machines at December 31 were:

<Table>
<Caption>
                                          2003         2002
                                        ---------    ---------
<S>                                     <C>          <C>
Cost..................................  $343,833     $450,717
Accumulated depreciation..............   331,933      422,828
                                        --------     --------
Carrying value........................  $ 11,900     $ 27,889
                                        ========     ========
</Table>

4--INCOME TAXES--The provision for income tax expense consists of the following:

<Table>
<Caption>
                              2003         2002          2001
                           ----------   -----------   -----------
<S>                        <C>          <C>           <C>
Current:
  Federal................  $  408,000   $ 1,203,000   $   739,000
  State..................       5,000        10,000         6,000
Deferred.................      12,000       144,000       154,000
                           ----------   -----------   -----------
                           $  425,000   $ 1,357,000   $   899,000
                           ==========   ===========   ===========
</Table>

The deferred tax liabilities and assets consist of the following:

<Table>
<Caption>
                                      2003            2002
                                  ------------    ------------
<S>                               <C>             <C>
Depreciation....................  $(1,592,820)    $(1,560,005)
                                  -----------     -----------
Inventory.......................      338,281         311,911
Accrued vacation................      171,491         170,292
Allowance for doubtful
  accounts......................       76,800          83,800
Other, net......................       28,164          27,918
                                  -----------     -----------
                                      614,736         593,921
                                  -----------     -----------
                                  $  (978,084)    $  (966,084)
                                  ===========     ===========
</Table>

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

<Table>
<Caption>
                                      2003               2002               2001
                                 ---------------   -----------------   ---------------
                                  AMOUNT     %       Amount      %      Amount     %
                                 ---------------   -----------------   ---------------
<S>                              <C>        <C>    <C>          <C>    <C>        <C>
Expected tax at U.S. Statutory
 rate..........................  $422,000   34.0   $1,347,000   34.0   $915,000   34.0
State taxes, net of federal
 benefit.......................     3,000     .2        7,000     .2      4,000     .1
Other, net.....................        --     --        3,000     .1      5,000     .2
Adjustment to prior year
 accrual.......................        --     --           --     --    (25,000)   (.9)
                                 --------   ----   ----------   ----   --------   ----
Income tax expense.............  $425,000   34.2   $1,357,000   34.3   $899,000   33.4
                                 ========   ====   ==========   ====   ========   ====
</Table>

5--NOTE PAYABLE-- In connection with the tender offer completed in April 2000,
the Company obtained, on an unsecured basis, a financing commitment that
provided borrowing capacity of up to $9 million plus a $1 million line of
credit. The new borrowing was used to repay an existing loan and to fund
purchases of stock under the terms of a "Dutch auction." As of December 31,
2003, the term loan was paid off. The line of credit was extended through May
31, 2004 and remained unused at December 31, 2003.

6--TREASURY STOCK TRANSACTIONS--In 2002, the Company purchased 1,000 shares of
its common stock for $26,976. These shares are being held in treasury. During
2003 and 2001, no shares were purchased.

7--SHAREHOLDER RIGHTS AGREEMENT--On November 22, 1999, the Company adopted a
shareholder rights agreement and declared a dividend distribution of one right
for each outstanding share of Company common stock to shareholders of record at
the close of business on December 3, 1999. Each right entitles the holder, upon
occurrence of certain events, to buy one one-hundredth of a share of Series A
Junior Participating Preferred Stock at a price of $90, subject to adjustment.
The rights may only become exercisable under certain circumstances involving
acquisition of the Company's common stock, including the purchase of 10 percent
or more by any person or group. The rights will expire on December 2, 2009
unless they are extended, redeemed or exchanged.

8--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 $133,000 in 2003, $435,000 in 2002 and
$295,000 in 2001.

--------------------------------------------------------------------------------
                                                                               9
<PAGE>

[CHIGAGO RIVET LOGO]
--------------------------------------------------------------------------------

9--OTHER INCOME (EXPENSE), NET--consists of the following:

<Table>
<Caption>
                                2003        2002         2001
                              ---------   ---------   ----------
<S>                           <C>         <C>         <C>
Interest income.............  $  72,087   $  83,770   $  145,233
Interest expense............    (22,847)    (79,556)    (259,840)
Gain on sale of property and
  equipment.................     11,405      30,559       42,917
Other.......................     15,533      15,560       15,517
                              ---------   ---------   ----------
                              $  76,178   $  50,333   $  (56,173)
                              =========   =========   ==========
</Table>

10--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 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:

<Table>
<Caption>
                                          ASSEMBLY
                           FASTENER       EQUIPMENT       OTHER      CONSOLIDATED
                          -----------   -------------   ----------   ------------
<S>                       <C>           <C>             <C>          <C>
YEAR ENDED DECEMBER 31,
 2003:
Net sales and lease
 revenue................  $31,024,036    $7,166,872     $       --   $38,190,908
Depreciation............    1,490,592       161,200        209,808     1,861,600
Segment profit..........    2,084,889     1,482,888             --     3,567,777
Selling and
 administrative
 expenses...............                                 2,374,490     2,374,490
Interest expense........                                    22,847        22,847
Interest income.........                                   (72,087)      (72,087)
                                                                     -----------
Income before income
 taxes..................                                               1,242,527
                                                                     -----------
Capital expenditures....      535,268        89,379         17,068       641,715
Segment assets:
 Accounts receivable....    3,836,968       712,200             --     4,549,168
 Inventory..............    3,191,132     2,042,656             --     5,233,788
 Property, plant and
   equipment............    9,099,003     1,448,530      1,002,041    11,549,574
 Other assets...........           --            --      6,805,850     6,805,850
                                                                     -----------
                                                                      28,138,380
                                                                     -----------
Year Ended December 31,
 2002:
Net sales and lease
 revenue................  $34,991,758    $8,021,008     $       --   $43,012,766
Depreciation............    1,474,228       217,665        223,833     1,915,726
Segment profit..........    4,499,657     2,325,353             --     6,825,010
Selling and
 administrative
 expenses...............                                 2,868,149     2,868,149
Interest expense........                                    79,556        79,556
Interest income.........                                   (83,770)      (83,770)
                                                                     -----------
Income before income
 taxes..................                                               3,961,075
                                                                     -----------
Capital expenditures....      790,261        13,446         82,302       886,009
Segment assets:
 Accounts receivable....    4,115,988       878,709             --     4,994,697
 Inventory..............    3,874,804     2,215,137             --     6,089,941
 Property, plant and
   equipment............   10,054,327     1,530,960      1,196,911    12,782,198
 Other assets...........           --            --      6,221,337     6,221,337
                                                                     -----------
                                                                      30,088,173
                                                                     -----------
</Table>

<Table>
<Caption>
                                          Assembly
                           Fastener       Equipment       Other      Consolidated
                          -----------   -------------   ----------   ------------
<S>                       <C>           <C>             <C>          <C>
Year Ended
 December 31, 2001:
Net sales and lease
 revenue................  $32,704,142    $7,738,868     $       --   $40,443,010
Depreciation............    1,446,254       242,517        232,932     1,921,703
Segment profit..........    3,892,772     1,860,559             --     5,753,331
Selling and
 administrative
 expenses...............                                 2,947,454     2,947,454
Interest expense........                                   259,840       259,840
Interest income.........                                  (145,233)     (145,233)
                                                                     -----------
Income before income
 taxes..................                                               2,691,270
                                                                     -----------
Capital expenditures....    1,283,566        17,209        130,923     1,431,698
Segment assets:
 Accounts receivable....    3,276,948       718,200             --     3,995,148
 Inventory..............    3,636,677     2,413,991             --     6,050,668
 Property, plant and
   equipment............   10,741,793     1,737,603      1,339,139    13,818,535
 Other assets...........           --            --      5,813,662     5,813,662
                                                                     -----------
                                                                      29,678,013
                                                                     -----------
</Table>

    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 13, 18 and 18 percent and 21, 17 and 14 percent of consolidated revenues
during 2003, 2002 and 2001, respectively. Sales to a third customer amounted to
10 percent in 2001.

11--OTHER UNUSUAL ITEMS OF INCOME AND EXPENSE-- During interim periods, the
Company uses estimated gross profit rates to determine the cost of goods sold
for a portion of its operations. Actual results can vary from these estimates,
and these estimates are adjusted, as necessary, when actual information is
available. Fourth quarter net income includes the net favorable (unfavorable)
effect of certain adjustments related to inventory and certain accruals of $.01
and $(.02) per share, for 2002 and 2001, respectively. There was no fourth
quarter adjustment in 2003.

12--COMMITMENTS AND CONTINGENCIES--The Company recorded rent expense aggregating
approximately $40,000, $41,000 and $40,000 for 2003, 2002 and 2001,
respectively. Total future minimum rentals at December 31, 2003 are not
significant.

The Company is, from time to time involved in litigation, including
environmental claims, in the normal course of business. While 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, management
is of the opinion that the aggregate amount of any such liabilities, for which
provision has not been made, will not have a material adverse effect on the
Company's financial position.

--------------------------------------------------------------------------------
 10
<PAGE>

                                                            [CHIGAGO RIVET LOGO]
--------------------------------------------------------------------------------

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders of
Chicago Rivet & Machine Co.

    In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, retained earnings and cash flows present
fairly, in all material respects, the financial position of Chicago Rivet &
Machine Co. and its subsidiary at December 31, 2003 and 2002, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2003 in conformity with accounting principles generally
accepted in the United States of America. 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 of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit 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, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois
February 25, 2004

SELECTED FINANCIAL DATA

<Table>
<Caption>
-------------------------------------------------------------------------------------------------------------------------------
                                                           2003           2002           2001           2000           1999
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>            <C>            <C>            <C>            <C>
Net Sales and Lease Revenue                             $38,190,908    $43,012,766    $40,443,010    $45,423,263    $49,080,257
-------------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes                                1,242,527      3,961,075      2,691,270      3,986,161      5,229,291
-------------------------------------------------------------------------------------------------------------------------------
Net Income                                                  817,527      2,604,075      1,792,270      2,656,161      3,454,291
-------------------------------------------------------------------------------------------------------------------------------
Net Income Per Share                                            .85           2.69           1.85           2.60           3.00
-------------------------------------------------------------------------------------------------------------------------------
Dividends Per Share                                             .97            .87            .97           1.07           1.07
-------------------------------------------------------------------------------------------------------------------------------
Average Common Shares Outstanding                           966,132        966,537        967,132      1,022,627      1,151,333
-------------------------------------------------------------------------------------------------------------------------------
Working Capital                                          14,020,185     12,874,182     11,616,424     12,001,291     12,447,590
-------------------------------------------------------------------------------------------------------------------------------
Total Debt                                                       --      1,632,760      3,432,760      5,232,760      3,150,000
-------------------------------------------------------------------------------------------------------------------------------
Total Assets                                             28,138,380     30,088,173     29,678,013     31,157,119     32,621,585
-------------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity                                     23,989,484     24,109,105     22,372,924     21,518,773     23,887,278
-------------------------------------------------------------------------------------------------------------------------------
</Table>

--------------------------------------------------------------------------------
                                                                              11
<PAGE>

[CHIGAGO RIVET LOGO]
--------------------------------------------------------------------------------
QUARTERLY FINANCIAL DATA (UNAUDITED)

<Table>
<Caption>
                           1ST           2ND          3RD           4TH
                         QUARTER       QUARTER      QUARTER       QUARTER
                       -----------   -----------   ----------   -----------
<S>                    <C>           <C>           <C>          <C>
2003
Net Sales and Lease
 Revenue.............  $10,236,463   $10,005,944   $8,831,742   $ 9,116,759
Gross Profit.........    2,385,529     1,929,633    1,539,172     1,592,470
Net Income...........      465,241       221,621        5,431       125,234
Per Share Data:
 Net Income Per
   Share.............          .48           .23          .01           .13
 Average Common
   Shares
   Outstanding.......      966,132       966,132      966,132       966,132

2002
Net Sales and Lease
 Revenue.............  $10,452,326   $12,437,856   $9,832,012   $10,290,572
Gross Profit.........    2,575,805     3,116,223    2,280,903     2,612,632
Net Income...........      625,116       902,589      435,015       641,355
Per Share Data:
 Net Income Per
   Share.............          .65           .93          .45           .66
 Average Common
   Shares
   Outstanding.......      967,132       966,768      966,132       966,132

2001
Net Sales and Lease
 Revenue.............  $10,627,831   $11,216,249   $9,398,572   $ 9,200,358
Gross Profit.........    2,249,917     2,819,622    2,330,542     1,786,965
Net Income...........      339,241       737,438      426,996       288,595
Per Share Data:
 Net Income Per
   Share.............          .35           .76          .44           .30
 Average Common
   Shares
   Outstanding.......      967,132       967,132      967,132       967,132
</Table>

INFORMATION ON COMPANY'S COMMON STOCK

The Company's common stock is traded on the American Stock Exchange. The ticker
symbol is: CVR.

At December 31, 2003, there were approximately 310 shareholders of record.

The transfer agent and registrar for the Company's common stock is:

EquiServe Trust Company, N.A.
P.O. Box 43069
Providence, RI 02940-3069

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

<Table>
<Caption>


                        Dividends
                         Declared                  Market Range
                       ----------------------------------------------------
Quarter                2003    2002          2003                2002
---------------------  ----    ----    ----------------    ----------------
<S>                    <C>     <C>     <C>       <C>       <C>       <C>
First................  $.43*   $.33*   $25.50    $22.80    $28.80    $22.70
Second...............   .18     .18    $26.26    $24.10    $28.80    $25.65
Third................   .18     .18    $29.99    $26.30    $26.60    $23.50
Fourth...............   .18     .18    $28.24    $25.00    $26.66    $22.40
</Table>

---------------
* Includes an extra dividend of $.25 and $.15 per share in 2003 and 2002,
  respectively.

--------------------------------------------------------------------------------
 12
<PAGE>

                                                      [CHIGAGO RIVET LETTERHEAD]
--------------------------------------------------------------------------------

BOARD OF DIRECTORS

EDWARD L. CHOTT(a)(c)(n)
Chairman and Chief
Executive Officer of
The Broaster Co.
Beloit, Wisconsin

NIRENDU DHAR
General Manager of
H & L Tool Company, Inc.

WILLIAM T. DIVANE, JR.(a)(c)(n)
Chairman of the Board and
Chief Executive Officer of
Divane Bros. Electric Co.
Franklin Park, Illinois

JOHN R. MADDEN(a)(c)(e)(n)
Chairman of the Board of
First National Bank
of La Grange
La Grange, Illinois

JOHN A. MORRISSEY(e)
Chairman of the Board
of the Company
President and Director of
Algonquin State Bank
Algonquin, Illinois

WALTER W. MORRISSEY(e)
Attorney at Law
Morrissey & Robinson
Oakbrook Terrace, Illinois

JOHN C. OSTERMAN(e)
President of the Company

CORPORATE OFFICERS

JOHN A. MORRISSEY
Chairman, Chief
Executive Officer

JOHN C. OSTERMAN
President, Chief Operating
Officer and Treasurer
NIRENDU DHAR
General Manager of
H & L Tool Company, Inc.

DONALD P. LONG
Vice President-Sales

KIMBERLY A. KIRHOFER
Secretary

MICHAEL J. BOURG
Corporate Controller

CHICAGO RIVET & MACHINE CO.

ADMINISTRATIVE & SALES OFFICES
Naperville, Illinois
Norwell, Massachusetts

MANUFACTURING FACILITIES
Albia Division
Albia, Iowa

Jefferson Division
Jefferson, Iowa

Tyrone Division
Tyrone, Pennsylvania

H & L Tool Company, Inc.
Madison Heights, Michigan

WEB SITE
www.chicagorivet.com

(a) Member of Audit Committee
(c) Member of Compensation Committee
(e) Member of Executive Committee
(n) Member of Nominating Committee

--------------------------------------------------------------------------------
<PAGE>

                      [CHICAGO RIVET GRAPHIC & LETTERHEAD]

--------------------------------------------------------------------------------