<PAGE>   1
 
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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                            ------------------------
                                   FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
             SECURITIES EXCHANGE ACT OF 1934
 
                  For the fiscal year ended December 31, 1998
 
                                       OR
 
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
             SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
 
          For the transition period from             to             .
 
                         Commission File Number 0-1227
                          CHICAGO RIVET & MACHINE CO.
             (Exact Name of Registrant as Specified in Its Charter)
 
                                    Illinois
                        (State or Other Jurisdiction of
                         Incorporation or Organization)
                                   36-0904920
                                (I.R.S. Employer
                              Identification No.)
 
                               901 Frontenac Road
                                 Naperville, IL
                    (Address of Principal Executive Offices)
                                     60563
                                   (Zip Code)
 
       Registrant's Telephone Number, Including Area Code: (630) 357-8500
 
          Securities registered pursuant to Section 12(b) of the Act:
 
<TABLE>
<CAPTION>
                                NAME OF EACH EXCHANGE
     TITLE OF EACH CLASS         ON WHICH REGISTERED
     -------------------        ---------------------
<S>                            <C>
Common Stock--$1.00 Par Value  American Stock Exchange
                                 (Trading privileges
                                        only,
                                   not registered)
</TABLE>
 
          Securities registered pursuant to Section 12(g) of the Act:
 
                                     None.
--------------------------------------------------------------------------------
                                (Title of Class)
 
     INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS, (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.  YES  X  NO ___.
 
     INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K.  [ X ]
 
     STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES
OF THE REGISTRANT. THE AGGREGATE MARKET VALUE SHALL BE COMPUTED BY REFERENCE TO
THE PRICE AT WHICH THE STOCK WAS SOLD, OR THE AVERAGE BID AND ASKED PRICES OF
SUCH STOCK, AS OF A SPECIFIED DATE WITHIN 60 DAYS PRIOR TO THE DATE OF FILING.
 
                       $24,288,219 AS OF FEBRUARY 2, 1999
 
 COMMON SHARES OUTSTANDING AS OF FEBRUARY 2, 1999 WERE 1,153,496 ($1 PAR VALUE)
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
     (1) PORTIONS OF THE COMPANY'S ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR
ENDED DECEMBER 31, 1998 (THE "1998 REPORT") ARE INCORPORATED BY REFERENCE IN
PARTS I, II AND IV OF THIS REPORT.
 
     (2) PORTIONS OF THE COMPANY'S DEFINITIVE PROXY STATEMENT WHICH IS TO BE
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH THE
COMPANY'S 1999 ANNUAL MEETING OF SHAREHOLDERS ARE INCORPORATED BY REFERENCE IN
PART III OF THIS REPORT.
 
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                                                                  PAGE 1 OF ____
                                                   EXHIBIT INDEX IS ON PAGE ____
<PAGE>   2
                           CHICAGO RIVET & MACHINE CO.
                         PERIOD ENDING DECEMBER 31, 1998


Item                                                                     Page
No.                                                                       No.
---                                                                      ----
                                     Part I

1.      Business                                                           3
2.      Properties                                                         4
3.      Legal Proceedings                                                  4
4.      Submission of Matters to a Vote of Security Holders                5

                                    Part II

5.      Market for Registrant's Common Equity and Related                  
         Stockholder Matters                                               6
6.      Selected Financial Data                                            6
7.      Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                         6
8.      Financial Statements and Supplementary Data                       13
9.      Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure                                         13

                                    Part III

10.     Directors and Executive Officers of the Registrant                14
11.     Executive Compensation                                            14
12.     Security Ownership of Certain Beneficial Owners and
          Management                                                      14
13.     Certain Relationships and Related Transactions                    14

                                    Part IV

14.     Exhibits, Financial Statement Schedules, and Reports on
          Form 8-K                                                        14

                                       2
<PAGE>   3
                                     PART I

ITEM 1 - BUSINESS

         Chicago Rivet & Machine Co. (the Company) was incorporated under the
laws of the State of Illinois in December, 1927, as successor to the business of
Chicago Rivet & Specialty Co. The Company operates in two segments of the
fastener industry: Fasteners and Assembly Equipment. The fastener segment
consists of the manufacture and sale of rivets, cold-headed fasteners and parts
and screw machine products. The Assembly Equipment segment consists primarily of
the manufacture of automatic rivet setting machines, automatic assembly
equipment, parts and tools for such machines, and the leasing of automatic rivet
setting machines. For further discussion regarding the Company's operations see
Note 1 which appears on page 11 of the Company's 1998 Annual Report to
Shareholders, incorporated herein by reference. The 1998 Annual Report is filed
as an exhibit to this report.

         The principal market for the fastener industry operations is the
automotive and appliance industries within the United States. Sales are
generally solicited by independent sales representatives.

         The segments in which the Company operates are characterized by active
and substantial competition. No single company dominates the industry. The
Company's competitors include both larger and smaller manufacturers, and
segments or divisions of large, diversified companies with substantial financial
resources. Principal competitive factors in the market for the Company's
products are quality, service, reliability and price.

         The Company serves a wide variety of customers. Sales revenues are
primarily derived from sales to customers involved, directly or indirectly, in
the manufacture of automobiles and appliances. Information concerning backlog of
orders is not considered material to the understanding of the Company's business
due to relatively short production cycles. The level of business activity for
the Company is closely related to the overall level of industrial activity in
the United States. During 1998, sales to two customers exceeded 10% of the
Company's consolidated revenues. Sales to Bundy Corporation accounted for
approximately 15% of the Company's consolidated revenues, in both 1998 and 1997
and sales to Fisher Dynamics Corporation accounted for approximately 10% of the
Company's consolidated revenues in 1998 and approximately 11% of the Company's
consolidated revenues in 1997. No single customer accounted for more than 10% of
the Company's consolidated revenues in 1996.

         On December 3, 1996, the Company acquired substantially all of the
assets and assumed certain liabilities of H & L Tool Company, Inc. (H & L Tool)
of Madison Heights, Michigan. H & L Tool manufactures specialty cold-formed
parts, including fasteners, and screw machine products for sale to customers
primarily in the automotive industry. The assets purchased included all of H & L
Tool's production equipment, its facilities in Madison Heights, inventories,
accounts receivable and other operating assets. The purchase price was
approximately $19.1 million including $0.3 million of acquisition costs, and was
financed through a $4.8 million credit in consideration of the seller's
retention of all cash and marketable securities, an unsecured loan of $9.0
million and approximately $5.3 million of available cash. The Registrant intends
to continue operations at the Madison Heights location. For further information
regarding this acquisition, see Note 2 which appears on page 11 of the Company's
Annual Report to Shareholders, incorporated herein by reference.


                                       3

<PAGE>   4

         The Company's business has historically been somewhat stronger during
the first half of the year.

         In conformity with industry practice, the Company generally does not
provide credit terms in excess of thirty days.

         The Company purchases raw materials from a number of sources, primarily
within the United States. There are numerous sources of raw materials, and the
Company does not have to rely on a single source for any of its requirements.
The Company is not aware of any significant problem in the availability of raw
materials used in its production.

         Patents, trademarks, licenses, franchises and concessions are not of
significant importance to the business of the Company.

         The Company does not engage in basic research activities, but rather in
ongoing product improvement and development. The amounts spent on product
development activities in the last three years were not material.

         At December 31, 1998, the Company employed 394 people.

         The Company has no foreign operations, and sales to foreign customers
represent only a minor portion of the Company's total sales.


ITEM 2 - PROPERTIES

The Company conducts its manufacturing and warehousing operations at five
plants, which are described below. All Company-owned properties are held in fee
and are used for the manufacture and warehousing of the Company's products. All
plants are considered suitable and adequate for their present use. The Company
also currently maintains a small sales office in Norwell, Massachusetts in a
leased facility.

Of the properties described below, the Jefferson, Iowa and the Madison Heights,
Michigan facilities are used entirely in the fastener segment. The Albia, Iowa
facility is used exclusively in the assembly equipment segment. The Tyrone,
Pennsylvania and the Naperville, Illinois facilities are utilized in both
operating segments.

                        Plant Locations and Descriptions

Naperville, Illinois                    Brick, concrete block and partial metal
                                        construction with metal roof.

Tyrone, Pennsylvania                    Concrete block with small tapered beam
                                        type warehouse.

Jefferson, Iowa                         Steel tapered beam construction.

Albia, Iowa                             Concrete block with prestressed concrete
                                        roof construction.

Madison Heights, Michigan               Concrete, brick and partial metal
                                        construction with metal roof.


ITEM 3 - LEGAL PROCEEDINGS

         The Company is, from time to time, involved in litigation, including
environmental claims, in the normal course of business. With regard to
environmental claims, the 




                                       4

<PAGE>   5

Company has been named by state and/or federal government agencies as a
"potentially responsible party" with respect to certain waste disposal sites. As
a potentially responsible party, the Company may be considered jointly and
severally liable, along with other potentially responsible parties, for the cost
of remediation of these waste sites. The actual cost of remediation is presently
unknown. Despite the joint and several nature of liability, these proceedings
are frequently resolved on the basis of the quantity and type of waste disposed
by the parties. The actual amount of liability for the Company is unknown due to
disagreement concerning the allocation of responsibility, uncertainties
regarding the amount of contribution that will be available from other parties
and uncertainties related to insurance coverage. After investigation of the
quantities and type of waste disposed at these sites, it is management's opinion
that any liability will not be material to the Company's financial condition. At
a number of waste disposal sites, the issues affecting the Company, have been
favorably resolved, or are nearing resolution, and accordingly, the Company has
reduced the amount of reserves recorded in connection with these sites.
Nevertheless, it is likely that the Company will incur additional costs
associated with the remaining proceedings and, accordingly, the Company has
recorded a total liability of $40,000 related to these matters. The adequacy of
this reserve will be reviewed periodically as more definitive cost information
becomes available.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matter was submitted to a vote of the Company's shareholders during
the fourth quarter of 1998.

                      Executive Officers of the Registrant

         The names, ages and positions of all executive officers of the Company,
as of March 25, 1999, are listed below. Officers are elected annually by the
Board of Directors at the meeting of the directors immediately following the
Annual Meeting of Shareholders. There are no family relationships among these
officers, nor any arrangement or understanding between any officer and any other
person pursuant to which the officer was selected.

<TABLE>
<CAPTION>
                                                              Number of years
Name and Age of Officer             Position                    an Officer
-----------------------             --------                    ----------

<S>                        <C>      <C>                                <C>
John A. Morrissey          63       Chairman,Chief                     19
                                    Executive Officer

John C. Osterman           47       President, Chief                   15
                                    Operating Officer
                                    and Treasurer

Donald P. Long             47       Vice-President Sales                4

Kimberly A. Kirhofer       40       Secretary                           8

Michael J. Bourg           36       Corporate Controller            3 Mos.

</TABLE>



-        Mr. Morrissey has been Chairman of the Board of Directors of the
         Company since November 1979, and Chief Executive Officer since August
         1981. He has been a director of the Company since 1968.

-        Mr. Osterman has been President, Chief Operating Officer and Treasurer
         of the Company since September 1987. He was Assistant Secretary from
         November 1983 to May 


                                       5
<PAGE>   6

         1985 when he became Assistant Vice President-Administration. He became
         Vice President-Administration in May 1986 and was named Executive Vice
         President in May 1987. He has been a director of the Company since May
         1988.

-        Mr. Long has been Vice President - Sales of the Company since November
         1994, and was Director of Sales and Marketing of the Company from March
         1993 through November 1994. Prior to that, he was employed by Townsend
         Engineered Products, a maker of rivets, cold-formed fasteners and rivet
         setting equipment in various sales management positions for more than 5
         years.

-        Mr. Bourg has been Controller of the Company since December 1998. Prior
         to that, he was Accounting Manager at Fuchs Lubricants Co. a
         manufacturer of industrial lubricants for two years and prior to that
         worked was employed by the public accounting firm of McGladrey &
         Pullen, LLP as a public accountant for more than five years.

-        Mrs. Kirhofer has been Secretary of the Company since August 1991, and
         was Assistant Secretary of the Company from February 1991 through
         August 1991. Prior to that, she held various administrative positions 
         with the Company since May 1983.




                                     PART II

ITEM 5 - MARKET FOR REGISTRANT'S COMMON STOCK AND
 RELATED SECURITY HOLDER MATTERS

         The Company's common stock is traded on the American Stock Exchange
(trading privileges only, not registered). As of December 4, 1998 there were 451
record holders of such stock. The information on the market price of, and
dividends paid with respect to, the Company's common stock, set forth in the
section entitled "Information on Company's Common Stock" which appears on page
15 of the 1998 Annual Report is incorporated herein by reference. The 1998
Annual Report is filed as an exhibit to this report.

ITEM 6 - SELECTED FINANCIAL DATA

         The section entitled "Selected Financial Data" which appears on page 14
of the 1998 Annual Report is incorporated herein by reference. The 1998 Annual
Report is filed as an exhibit to this report.

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

         When used in this discussion, the words "believe," "anticipated,"
"expected" and similar expressions are intended to identify "forward-looking
statements," which statements speak only as of the date thereof. Such statements
are subject to certain risks and uncertainties which could cause actual
circumstances to differ materially from those mentioned in this discussion,
including, but not limited to: (i) the ability of the Company to maintain its
relationships with its significant customers, (ii) increases in the prices of,
or limitations on the availability of, the Company's primary raw materials,
(iii) a downturn in the automotive industry, upon which the Company relies for
sales revenue, and which is cyclical and dependent on, among other things,
consumer spending, international economic conditions and regulations and
policies 


                                       6
<PAGE>   7

regarding international trade, and (iv) failure of the Company or its major
customers or suppliers to successfully address Year 2000 issues.

         Readers are cautioned not to place undue reliance on these
forward-looking statements. The Company undertakes 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. In addition to
the disclosures contained herein, readers are also urged to carefully review and
consider any risks and uncertainties contained in other documents filed by the
Company with the Securities and Exchange Commission.


RESULTS OF OPERATIONS

         The recent year was another successful year for the Company. Despite a
number of challenges, the Company posted respectable earnings on modest revenue
growth. The economy continued to be strong throughout the year. In particular,
the strength of the automotive industry was reflected in the growth of revenues
within the fastener segment of our business. Unfortunately, most of that
increase in revenues was offset by a decline in revenues in the assembly
equipment segment of our operations. Demand in this segment was considerably
weaker than in the prior year, and the market was characterized by significant
competitive pressure on pricing. As a result, our overall product mix was more
heavily weighted toward fasteners, a segment with traditionally lower margins.
This resulting change in our product mix, combined with lower margins on
machinery and equipment due to price competition, contributed to a reduction in
net profits, compared to the outstanding results achieved in 1997.

         We are pleased to report that all of the Company's fastener operations
have attained QS-9000 certification in addition to ISO-9002:1994 certification.
Our automotive customers mandated certification to these standards as a
prerequisite to continuing to receive new business, and we are pleased that we
have been able to attain and maintain certification to these standards.

         The Company also made considerable progress in meeting its objective of
implementing a new data management system. This project entails the
implementation of new computer hardware and software that will not only improve
information management in all operational disciplines, but will also ensure Year
2000 compliance. Piloting activity is nearing completion for the sales and
finance portion of this initiative and implementation of the manufacturing
portion is scheduled to begin late in the first half of 1999.

1998 COMPARED TO 1997

         Net sales and lease revenues increased slightly compared with 1997,
totaling $44,938,184 for 1998, compared with $44,543,404 recorded during 1997.
Revenues in the fastener segment increased 3.7%, largely as a result of the
robust conditions in the automotive industry, which is the Company's primary
market. Conversely, revenues from the assembly equipment segment, which includes
sale of automatic assembly equipment, related tools and parts and lease revenue,
declined 7.0% compared to 1997. Several factors contributed to the decline in
revenue within the assembly equipment segment. The primary factor was a decline
in unit volume compared to 1997, which was an uncharacteristically strong year.
Also evident in 1998 was a noticeable change in product mix, with 1998 sales
consisting of more lower margin equipment compared to 1997. Finally, in order
to maintain certain customer relationships, the Company responded to competitive
pricing pressures by accepting margins below those historically associated with
its products in this segment.


                                       7
<PAGE>   8
         The positive impact from the increased level of fastener business was
largely offset by increases in wages, higher costs related to health insurance
and additional tooling expense in connection with initial production of a
variety of new fasteners. In addition, depreciation expense increased 7.4%
compared to 1997 due to increased capital expenditures. Competitive conditions
within the fastener industry, in conjunction with our major customers'
continuing policy of not accepting price increases, restricted our ability to
recover these higher costs. The net result is reflected in only nominal
improvement in gross profit within this segment of our operations. The Company's
investment in newer, more efficient equipment and procedures is intended to
reduce costs as well as expand capabilities, and should contribute to improved
operating margins in the future.

         As would be expected given 1998's lower volume, gross profits in the
assembly equipment segment declined compared to 1997. While variable costs were
reduced in proportion to the reduced level of operations, fixed costs increased
slightly due primarily to higher wage and depreciation expense. Finally, the
competitive situation discussed above also had an adverse impact upon margins
within this segment.

         Selling and administrative expenses, net of certain favorable
adjustments to environmental reserve accounts, increased approximately 5.8%
compared to 1997. Three factors comprise the majority of this increase. First,
expenses incurred in connection with the development and implementation of new
data processing software amounted to approximately $135,000; second, bad debt
expense increased by $145,000 due to the voluntary reorganization of a certain
fastener customer; and third, the Company incurred certain state taxes, totaling
$225,000 during 1998. While the Company was subject to this same state tax
during 1997, no tax liability was incurred in that year due to certain
deductions allowed in the computation of the tax. In addition, the company
incurred higher selling expense as a result of increased staffing designed to
strengthen our presence in certain key markets. A portion of these increased
costs were offset by reductions in commission expense, reductions in expenses
related to attaining QS-9000 certification and a reduction in profit sharing
expense.

         Net non-operating expense declined approximately 24% compared with
1997, primarily as a result of reduced interest expense, which decreased from
$546,666 in 1997 to $376,098 during 1998. This interest expense is related to
borrowing in connection with the 1996 acquisition of H & L Tool Company, Inc.
The decrease in interest expense reflects both lower interest rates in 1998 and
a lower principal balance outstanding compared with 1997. Interest income
increased approximately 12% compared with 1997 due primarily to a higher level
of investment during the year.

         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. Actual results can vary from
these estimates and these estimates are adjusted, as necessary, when actual
information is available. During the fourth quarter of 1998, net income included
net favorable adjustments to inventory, accruals and allowances aggregating $.05
per share. Similar adjustments in the fourth quarter of 1997 and 1996 amounted
to $.16 per share and $.36 per share, respectively.

1997 COMPARED TO 1996

         Revenues increased in both the fastener and assembly equipment segments
compared with 1996. Overall, net sales and lease revenues amounted to
$44,543,404 in 1997 compared with $22,510,953 recorded in 1996. Revenues related
to the sale of fasteners increased to $32,712,820 compared with $11,263,822
recorded in 1996. Revenues from H & L Tool are included for the full twelve
months of 1997, compared with only one month in 


                                       8
<PAGE>   9
1996, and this accounts for the largest share of the change, although revenues
from the Company's historical product lines also increased compared with the
prior year. Revenues in the assembly equipment segment increased 5.2%, and
amounted to $11,830,584 compared with $11,247,131 in 1996.

         In line with the increase in revenues, the Company's total gross profit
increased substantially compared with the prior year. The addition of H & L Tool
accounts for a significant portion of the absolute increase; however, it should
be noted that H & L Tool's revenues are entirely related to the sale of
fasteners, and similar products, and the profit margins for those products, when
expressed as a percentage of sales, are below the aggregate margins historically
reported by the Company. As a result, even though gross margins increased
substantially, gross profit margins, when expressed as a percentage of sales,
declined from historical levels. Margins for our fastener products have been
constrained by the highly competitive nature of the market. Further, the
automotive customer base, which accounts for the majority of our sales, has
established purchasing guidelines that discourage the acceptance of price
increases, while simultaneously adding quality and service requirements that
tend to increase operating costs for its suppliers. This has been the case for a
number of years and is expected to continue in the years ahead. Accordingly, we
have continued to invest in equipment and production methods designed to allow
us to remain competitive and to control our manufacturing costs in order to
produce an acceptable level of profitability. This strategy has been successful
in the past and we intend to continue in a similar manner in the future. The
success of this approach, coupled with increased volumes, contributed to
improvements in gross margins from the sale of the Company's historical
products, in both the fastener and assembly equipment segments, during 1997.
Increases in fixed costs incurred are attributable to the acquisition and are
consistent with expectations.

         Additional selling and administrative expenses incurred in connection
with the operations of H & L Tool account for the majority of the increase
experienced in 1997. While the total expense increased over prior years, the
proportionate amount of the increase was substantially less than the increase in
revenues, and is in line with expectations. Sales commission expense decreased
as a percentage of sales, as a larger portion of revenues were generated from
customers serviced on a direct basis, rather than through commissioned sales
representatives.

         A number of factors contributed to a decrease of approximately $488,000
in net non-operating income compared to 1996. Interest expense increased by
approximately $500,000, while interest income declined approximately $140,000.
Both of these changes stem from the use of cash and debt to finance the H & L
Tool purchase. Gains from the sale of surplus equipment, including sale of lease
machines, and a loss due to the write off of an investment in computer software,
resulted in a net gain of approximately $175,000.

DIVIDENDS

         The Company paid four regular quarterly dividends of $.18 per share
during 1998. In addition, an extra dividend of $.40 per share was paid during
the second quarter of 1998, bringing the total dividend payout to $1.12 per
share. On February 15, 1999 your Board of Directors declared a regular quarterly
dividend of $.18 per share, payable March 20, 1999 to shareholders of record
March 5, 1999. This continues the uninterrupted record of consecutive quarterly
dividends paid by the Company to its shareholders that extends over 65 years. At
that same meeting, the Board declared an extra dividend of $.35 per share,
payable April 20, 1999 to shareholders of record, April 5, 1999.

ACQUISITION

         On December 3, 1996, the Company acquired substantially all of the
assets and assumed certain liabilities of H & L Tool Company, Inc. of Madison
Heights, Michigan. The purchase price was approximately $19.1 million, including
acquisition costs of $0.3 


                                       9
<PAGE>   10
million, and was financed through a $4.8 million credit against the purchase
price in consideration of the seller's retention of all cash and marketable
securities, an unsecured loan of $9.0 million and approximately $5.3 million in
available cash. Additional information is contained in Note 2 to the
Consolidated Financial Statements. H & L Tool is a leading manufacturer of
specialty screw-machine and cold-headed products serving the automotive
industry. This acquisition significantly enhanced the Company's product
offerings and strengthened our relationships with certain key customers.

MACHINERY & EQUIPMENT

         The Company made a number of significant investments in both equipment
and building improvements during 1998. Capital expenditures totaled nearly
$2,700,000. Expenditures related to new data processing systems, including
computer hardware and software, totaled approximately $542,000. Expenditures for
the purchase of new equipment used in the manufacture of fasteners amounted to
$1,430,000. The Company also purchased a variety of new machine tools, material
handling equipment and inspection equipment valued at approximately $313,000.
Building improvements, which included the installation of new air compressors at
one facility and a new roof at another facility, amounted to approximately
$252,000. Investment in both new equipment and rebuilding of existing equipment
used to plate and heat treat fasteners amounted to $63,000. A total of $51,000
was expended for the construction of new automatic rivet setting equipment that
is leased to customers. The balance was expended for a variety of smaller office
equipment and for the construction of new rivet setting machines that will be
used for demonstration purposes.

         During 1997, capital investments totaled $963,917. Significant
expenditures included approximately $540,000 for equipment used in the
manufacture of fasteners and assembly equipment, $117,000 for data processing
and telecommunications equipment, building improvements amounting to $87,000 and
approximately $58,000 which was invested in new equipment related to quality
control. The balance consists of investments in material handling equipment and
other miscellaneous equipment.

         Capital investments during 1996, exclusive of expenditures related to
the acquisition of the assets of H & L Tool, totaled $861,128. Of this total,
approximately $289,000 was invested in equipment used in the manufacture of
fasteners and machinery and $193,000 was expended for the purchase of a new
boiler to provide heat and process steam for our Tyrone facility. Approximately
$280,000 was invested in new data processing equipment and software. A total of
approximately $22,000 was invested in new automatic rivet setting machines
manufactured by the Company and leased to its customers. The balance was
expended for the purchase of various, smaller machine tools and office
equipment.

         Depreciation expense was $1,498,302 in 1998, $1,372,415 in 1997 and
$709,678 in 1996.

LIQUIDITY AND CAPITAL RESOURCES

         Working capital, at the end of 1998, amounted to approximately $12.4
million. While this is a decrease of $1.4 million compared to the beginning of
the year, the current level is considered sufficient for current operations. The
primary factor contributing to this decrease was the use of cash to fund the
unusually high level of capital expenditures made during 1998. Accounts
receivable balances at year-end increased by approximately $821,000 compared to
1997. Shipping activity during the latter part of 1998 was approximately 12%
higher than during the same period in 1997, and the normal timing difference
between shipment and the receipt of payment is reflected in the higher year-end
accounts receivable balance. Long-term debt was reduced by $1.8 million as the
Company continued to meet the repayment obligations of a commercial loan
obtained in connection with the 1996 acquisition of H & L Tool. The Company
borrowed 


                                       10
<PAGE>   11

$9.0 million, on an unsecured basis, subject to certain customary covenants.
(The note includes a covenant limiting annual capital expenditures to $2.5
million. During 1998, the Company's capital expenditures exceeded that limit due
to a delay in receipt of certain equipment that was ordered for delivery in 1997
but was not delivered until 1998. The lender waived compliance with this
covenant for 1998. The Company was in compliance with all other terms of the
note throughout 1998.) Under the terms of the note, the Company is scheduled to
repay the principal in 20 quarterly installments of $450,000, plus interest
computed on the unpaid balance at a variable rate that is calculated under one
of two methods: the London Inter Bank Offering Rate, plus 80 basis points; or
the lender's reference rate, less 75 basis points. The interest rate is adjusted
quarterly and at year-end was approximately 6.26% and the unpaid balance of the
note was $4.95 million. Capital expenditures for new equipment and data
processing implementation are expected to total approximately $2.5 million
during 1999 and early 2000. Management believes that this level of investment
can be funded internally, nevertheless, a $1.0 million line of credit, which was
obtained from the Bank of America in connection with the acquisition, remains
available to the Company. There was no charge for this facility, and as of
December 31, 1998, it was unused. The facility is scheduled to expire on May 30,
1999, but may be extended beyond that date.

NEW ACCOUNTING STANDARDS

         In 1998, the Company adopted Statement of Financial Accounting
Standards No. 131 ("FAS 131"), "Disclosures about Segments of an Enterprise and
Related Information." The adoption of FAS 131 did not affect results of
operations or financial position but did affect the disclosure of segment
information.
         The Company's financial statements and financial condition were not,
and are not expected to be, materially impacted by any other new, or proposed,
accounting standards.


YEAR 2000 COMPLIANCE

         The Company continues to make ongoing assessments of its state of
readiness with respect to Year 2000 ("Y2K") issues. This process can logically
be segregated into two major categories -- information technology and
non-information technology. The first category encompasses issues related to
computer equipment and software used in the operation of the business, while the
second category deals with all other aspects of Y2K issues, including, but not
limited to, manufacturing equipment and systems, supplier and customer
preparedness and facility related issues such as telecommunications equipment,
HVAC systems and facility security. The Company has determined that its
information technology systems are not Y2K compliant and has further determined
that its existing software will not meet the needs of the organization in the
future. Accordingly, significant resources have been allocated to the process of
implementing a new data processing solution that will better meet the needs of
the organization while also addressing the Y2K issues. The implementation of
this solution is planned in three phases. The first two phases include hardware
and network installation and the installation of application software related to
financial reporting, inventory control, order processing, purchasing and
payroll. Hardware and network installation has been completed. The software
installation and testing is nearly completed, and training is scheduled for
completion in May 1999. The final phase consists of implementation of the
manufacturing software modules and is currently scheduled to begin late in the
second quarter or early in the third quarter of 1999. This project is expected
to resolve the fundamental Y2K information technology issues, and we believe
that it will also have significant benefits to the organization in terms of more
efficient operations, improved access to information related to production
control and inventory management as well as improvements in customer service.
While it is not possible to segregate the costs of this project into segments
that are solely related to resolution of Y2K issues and costs associated with
the other aspects of the project, the overall investment in information
technology is expected to total 


                                       11
<PAGE>   12
approximately $1.1 million. Actual expenditures related to this project, through
the end of 1998, totaled approximately $700,000. This project encompasses the
Company's solution to Y2K issues as well as significant improvements in
information systems. As such, nearly all of the information technology budget is
committed to this project. No other information technology projects have been
deferred because of resources committed to this project. Funding for this
project is expected to be available from internal sources.

         While we believe that the timetable for implementation is realistic and
attainable, it is not possible to be absolutely certain of completion within the
scheduled time frame. The failure to correct a material Y2K issue could result
in an interruption in, or failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. However, manual
systems currently exist for the essential functions covered by this project, and
such manual systems could be utilized on a temporary basis if the project falls
substantially behind schedule, so the potential disruption resulting from a
delay in implementation is expected to be manageable.
         With respect to non-information technology issues, the Company has
completed an inventory of the production and support equipment and systems
currently in use and determined that most such equipment does not contain
microprocessors or embedded microchips and therefore will not be affected by Y2K
issues. Certain, more modern, production equipment contains microprocessors. For
the majority of that equipment, we have received the manufacturer's confirmation
that the equipment is Y2K compliant. In a limited number of cases, we are
awaiting responses from the equipment manufacturer and plan to continue efforts
to ascertain the status of that equipment with respect to Y2K issues. We believe
that we have alternative equipment available that could be utilized on an
interim basis should some of the modern equipment fail unexpectedly. This
eventuality would cause disruptions in our production schedules as the older
equipment is less efficient than the newer equipment, and our manufacturing
costs would be adversely affected as well. At this time, we are unable to
quantify the monetary impact of this potential disruption.
         The Company has also requested that each of its major customers and
critical suppliers advise the Company of their current state of readiness as
well as their plans to resolve any open Y2K issues. The response to these
requests has been varied. In general, most firms contacted have indicated that
their systems are Y2K compliant, or that Y2K issues will be resolved during
1999. Typically, larger firms are better prepared than smaller concerns. A
number of smaller customers have not, as yet , responded to our inquiries with
respect to Y2K compliance. Ongoing follow up contacts with those vendors and
customers that have not yet indicated Y2K compliance are being made in an effort
to determine that their compliance efforts are progressing. The Company will
continue to monitor the status of its key vendors and customers and will develop
appropriate contingency plans as more information becomes available. The
Company's contingency plans related to these issues are not complete at this
time. Preliminary work in this area has focused upon information technology
issues and in-house manufacturing issues. while we continue to evaluate the
situation, based upon information currently available, we anticipate that we
will be able to maintain core operations with existing manual systems
supplemented by scheduling overtime to offset the reduced efficiency of manual
systems. Contingency planning with respect to third parties is limited by
incomplete information concerning their state of readiness and we are unable, at
this time, to make a reasonable estimate of the impact Y2K issues will have on
our customers or suppliers. We are evaluating the desirability of purchasing
additional supplies of raw material and critical operating supplies during the
second half of 1999. However, if our customers' plans include a similar
contingency, it is possible that we will use any such safety stock to satisfy
our customers' requests that we, in turn, supply them with safety stock. We are
also evaluating what action will be required to protect the Company's facilities
from the effects of cold weather in the event that utility service is disrupted.
To date, we have received notification Y2K compliance from certain utility
companies, but others have yet to respond to our requests for information. Our
plans will be revised as more information becomes available.


                                       12
<PAGE>   13
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, provide for purchases to be made
from time to time, in the open market or in private transactions, at prices
deemed reasonable by management. Purchases under the current repurchase
authorization have amounted to 135,196 shares at an average price of $14.44 per
share. This includes the purchase of 15,800 shares during 1998 at an average
price of $35.26 per share. It is management's intention to continue this
program, provided market conditions are favorable and funding for repurchases is
available.

PERSONNEL

         We are pleased to report that Michael J. Bourg joined the Company as
Controller in December 1998. Mr. Bourg is a CPA with both public accounting and
private industry experience and is a welcome addition to the staff.

OUTLOOK FOR 1999

         We anticipate that 1999 will be another successful year for Chicago
Rivet & Machine Co. Consensus forecasts suggest that the economy will continue
to grow at a moderate rate, and we expect to maintain, or increase our business
relationships with our major existing customers and to aggressively solicit
business from new customers. That optimism is tempered by the recognition that
the ongoing consolidation among companies that supply the automotive industry
has affected some of our long-term customer relationships in the past and may
impact other relationships in the future. Revenues from the assembly equipment
segment of our business were less robust in 1998 than in 1997 and, at the
present time, we have no indications that a significant change will occur in
1999. While demand for fasteners continues to be relatively strong, our
customers continue to challenge us with expectations of reductions in product
costs. These expectations are manifested in many ways, including new quality
initiatives, reductions in manufacturing lot sizes combined with more frequent
shipments, or, on an increasing basis, requests for progressive annual price
reductions. Our goal is to meet these challenges more successfully in 1999 by
focusing on cost reduction strategies in all areas of our operations, while
still providing the level of service and quality that our customers expect and
deserve. The investments that have been made in equipment and technology are
essential elements of that strategy. But we recognize that success, both past
and future, is dependent upon intangible elements as well and take this
opportunity to acknowledge, with gratitude, the support of our shareholders, the
loyalty of our customers and suppliers and the conscientious efforts of our
workforce.

ITEM 8 - FINANCIAL STATEMENTS AND
 SUPPLEMENTARY DATA

         See the sections entitled "Consolidated Financial Statements" and
"Financial Statement Schedule" which appear on pages 17 through 19 of this
report.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
 ACCOUNTING AND FINANCIAL DISCLOSURE

         There have been no changes in or disagreements with accountants
requiring disclosure herein.

PART III


                                       13
<PAGE>   14
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information with respect to the Board of Directors' nominees for
directors that is not related to security ownership, which is set forth in the
section entitled "Election of Directors" on pages 4 through 8 of the Company's
1999 Proxy Statement, is incorporated herein by reference. The information with
regard to compliance with Section 16 (a) of the Exchange Act, which is set forth
at the end of the section entitled "Additional Information Concerning the Board
of Directors and Committees" on pages 7 and 8 of the 1999 Proxy Statement, is
incorporated herein by reference. The 1999 Proxy Statement is to be filed with
the Securities and Exchange Commission in connection with the Company's 1999
Annual Meeting of Shareholders. The information called for with respect to
executive officers of the Company is included in Part I of this Report on Form
10-K under the caption "Executive Officers of the Registrant."

ITEM 11 - EXECUTIVE COMPENSATION

         The information set forth in the section entitled "Executive
Compensation" which appears on pages 9 through 14 of the Company's 1999 Proxy
Statement and the information relating to compensation of directors set forth in
the last paragraph of the section entitled "Additional Information Concerning
the Board of Directors and Committees" which appears on pages 7 and 8 of the
Company's 1999 Proxy Statement is incorporated herein by reference. The 1999
Proxy Statement is to be filed with the Securities and Exchange Commission in
connection with the Company's 1999 Annual Meeting of Shareholders.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN
 BENEFICIAL OWNERS AND MANAGEMENT

         The information set forth in the section entitled "Principal
Shareholders" on page 3 of the Company's 1999 Proxy Statement and the
information with respect to security ownership of the Company's directors and
officers set forth in the section entitled "Election of Directors" on pages 4
through 8 of the Company's 1999 Proxy Statement is incorporated herein by
reference. The 1999 Proxy Statement is to be filed with the Securities and
Exchange Commission in connection with the Company's 1999 Annual Meeting of
Shareholders.

ITEM 13 - Certain Relationships and Related Transactions

         The information relating to the law firm of Morrissey & Robinson set
forth in the penultimate sentence of footnote (2) on page 6 of the Company's
1999 Proxy Statement is incorporated herein by reference. The 1999 Proxy
Statement is to be filed with the Securities and Exchange Commission in
connection with the Company's 1999 Annual Meeting of Shareholders.


PART IV

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT
 SCHEDULES AND REPORTS ON FORM 8-K

         (a)               The following documents are filed as a part of this 
                           report:

                  1.       Financial Statements:

                           See the section entitled "Consolidated Financial
                           Statements" which appears on page 17 of this report.

                  2.       Financial statement schedule and supplementary 
                           information required to be submitted.


                                       14
<PAGE>   15

                           See the section entitled "Financial Statement
                           Schedule" which appears on pages 18 and 19 of this
                           report.

                  3.       Exhibits:

                           See the section entitled "Exhibits" which appears on
                           page 21 of this report.

         (b)               Reports on Form 8-K

                  1.       The Company was not required to file Form 8-K during
                           the quarter ended December 31, 1998.


                                       15
<PAGE>   16
                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Chicago Rivet & Machine Co. has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                                            Chicago Rivet & Machine Co.


                                            By /s/ John C. Osterman    
                                              -------------------------
                                            John C. Osterman, President
                                            And Chief Operating Officer


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:

/s/ John A. Morrissey                       Chairman of the Board of
-----------------------                     Directors, Chief Executive
John A. Morrissey                           Officer and Member of the
                                            Executive Committee
                                            March 26, 1999
                                            --------------

/s/ John C. Osterman
-----------------------                     President, Chief Operating
John C. Osterman                            Officer, Treasurer (Chief 
                                            Financial Officer), Member
                                            of the Executive Committee
                                            and Director              
                                            March 26, 1999            
                                            --------------

/s/ Robert K. Brown
-----------------------                     Director and Member of the 
Robert K. Brown                             Executive Committee        
                                            March 26, 1999             
                                            --------------


/s/ Walter W. Morrissey                     
-----------------------                     Director, Member of Executive
Walter W. Morrissey                         Committee and Member of Audit
                                            Committee                    
                                            March 26, 1999               
                                            --------------


/s/ Michael J. Bourg
-----------------------                     Controller (Principal  
Michael J. Bourg                            Accounting Officer)
                                            March 26, 1999
                                            --------------


                                       16
<PAGE>   17
CHICAGO RIVET & MACHINE CO.

CONSOLIDATED FINANCIAL STATEMENTS

         The consolidated financial statements, together with the notes thereto
and the report thereon of PricewaterhouseCoopers LLP dated March 5, 1999,
appearing on pages 7 to 14 of the accompanying 1998 Annual Report, and the
section entitled "Quarterly Financial Data (Unaudited)" appearing on page 15 of
the accompanying 1998 Annual Report are incorporated herein by reference. With
the exception of the aforementioned information and the information incorporated
in Items 1, 3, 5, 6 and 7 herein, the 1998 Annual Report is not to be deemed
filed as part of this Form 10-K Annual Report.


Consolidated Financial Statements from 1998 Annual Report (Exhibit 13 hereto):


Consolidated Balance Sheets(pages 7 & 8 of 1998 Annual Report)

Consolidated Statements of Operations (page 9 of 1998 Annual Report)

Consolidated Statements of Retained Earnings (page 9 of 1998 Annual Report)
Consolidated Statements of Cash Flows (page 10 of 1998 Annual Report)

Notes to Consolidated Financial Statements (pages 11,12 and 13 of 1998 Annual
Report)

Report of Independent Accountants (page 14 of 1998 Annual Report)

Quarterly Financial Data (Unaudited) (page 15 of 1998 Annual
Report)


                                       17
<PAGE>   18
                          FINANCIAL STATEMENT SCHEDULE

                               1998, 1997 and 1996

         The following financial statement schedule should be read in
conjunction with the consolidated financial statements and the notes thereto in
the 1998 Annual Report. Financial statement schedules not included herein have
been omitted because they are not applicable or the required information is
shown in the consolidated financial statements or notes thereto.


                                                               Page
                                                               ----
Financial statement schedule:

Valuation and Qualifying Accounts (Schedule VIII)               19

Report of Independent Accountants on
         Financial Statement Schedule                           20



                                       18
<PAGE>   19
      
                          CHICAGO RIVET & MACHINE CO.
               SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>

                                                    Additions
                                                    Charged
                                      Balance         to                                               Balance
                                   at beginning     Costs and                          Other           At end
Classification                       of year        Expenses       Deductions       Adjustments        of year
--------------                     ------------     --------       ----------       -----------        --------
1998
<S>                                  <C>            <C>            <C>              <C>                <C>
Allowance for doubtful
accounts,
Returns and
allowances                           $123,022       $141,447       $141,447 (1)     $(53,022) (3)      $ 70,000
                                             
                                             
1997                                         
Allowance for doubtful                       
accounts,                                    
Returns and                                  
allowances                           $108,652        $48,412        $34,042 (1)           --           $123,022
                                             
                                             
1996                                         
Allowance for doubtful                       
accounts,                                    
Returns and                                  
allowances                           $166,634        $30,000        $34,042 (1)     $(53,940) (2)      $108,652
</TABLE>


(1) Accounts receivable written off, net of recoveries.
(2) Reduction of allowance.
(3) Balance sheet reclassification.


                                       19
<PAGE>   20
                      Report of Independent Accountants on
                          Financial Statement Schedule




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

Our audits of the consolidated financial statements referred to in our report
dated March 5, 1999 appearing in the 1998 Annual Report to Shareholders of
Chicago Rivet & Machine Co. (which report and financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the Financial Statement Schedule listed in Item 14(a)(2) of this Form
10-K. In our opinion, this Financial Statement Schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.



PricewaterhouseCoopers  LLP


Chicago, Illinois
March 5, 1999


                                       20
<PAGE>   21
                           CHICAGO RIVET & MACHINE CO.

                                    EXHIBITS

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit
Number                                                                      Page
-------                                                                     ----
<S>         <C>                                                         <C>
2.1         Purchase and Sale Agreement dated February 18,
            1993.  Incorporated by reference to Company's
            Current Report on Form 8-K, dated May 7, 1993.

2.2         Purchase and Sale Agreement dated September 18,
            1996.  Incorporated by reference from Company's
            Current Report on Form 8-K, dated December 16,
            1996.

3.1         Articles of Incorporation and Charter.
            Incorporated by reference to Company's
            report on Form 10, dated March 30, 1935.

3.2         Certified copy of articles of Amendment to
            Articles of Incorporation, dated November 4,
            1959. Incorporated by reference to Company's
            report on Form 8-A, dated April 30, 1965.

3.3         Amendment of Articles of Incorporation
            creating a class of 500,000 shares of no
            par value preferred stock.  Incorporated by
            reference to Company's report on Form 10-K,
            dated April 30, 1972.

3.4         Amended and Restated By-Laws, dated January
            20, 1997. Incorporated by reference to the
            Company's report on Form 8-K, dated January 24, 1997.

3.5         Articles of Incorporation, as amended by the amendment
            to the Articles of Incorporation, dated August 18, 1997.
            Incorporated by reference to the Company's report on
            Form 10-K dated March 27, 1998.

*13         Annual Report to Shareholders for the year
            ended December 31, 1998.                                    23 through 42

21          Subsidiaries of the Registrant.                                  43

27.1        Financial Data Schedule.                                         44

            * Only the portions of this exhibit which are specifically incorporated herein 
              by reference shall be deemed to be filed herewith.
</TABLE>

                                       21