EDGAR 10-K Filing

Company CIK: 19871
Filing Year: 2021
Filename: 19871_10-K_2021_0001193125-21-087465.json

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ITEM 1. BUSINESS
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-formed fasteners and parts, and screw machine products. The assembly equipment segment consists primarily of the manufacture of automatic rivet setting machines, automatic assembly equipment and parts and tools for such machines.
The principal market for the Company’s products is the North American automotive industry. Sales are solicited by employees and 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 price, quality and service.
The Company serves a variety of customers. Revenues are primarily derived from sales to customers involved, directly or indirectly, in the manufacture of automobiles and automotive components. The level of business activity for the Company is closely related to the overall level of industrial activity in the United States. During 2020, sales to three customers were at least 10% of the Company’s consolidated revenues. Sales to TI Group Automotive Systems, LLC accounted for approximately 14% and 16% of the Company’s consolidated revenues in 2020 and 2019, respectively. Sales to Cooper-Standard Holdings Inc. accounted for approximately 12% and 10% of the Company’s consolidated revenues in 2020 and 2019, respectively. Sales to Parker-Hannifin Corporation accounted for approximately 10% of the Company’s consolidated revenues in both 2020 and 2019.
The Company’s business has historically been stronger during the first half of the year.
The Company purchases raw material from a number of sources, primarily within the United States. There are numerous sources of raw material, and the Company does not have to rely on a single source for any of its requirements.
Patents, trademarks, licenses, franchises and concessions are not of significant importance to the business of the Company.
The Company does not engage in significant research activities, but rather in ongoing product improvement and development. The amounts spent on product development activities in the last two years were not material.
At December 31, 2020, the Company employed 209 people.
The Company has no foreign operations. Sales to foreign customers represent approximately 15% of the Company’s total sales.

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ITEM 1A. RISK FACTORS
ITEM 1A - Risk Factors
Our business is subject to a number of risks and uncertainties. If any of the events contemplated by the following risks actually occur, then our business, financial condition or results of operations could be materially adversely affected. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, financial condition and results of operations.
Our business and operations have been, and may continue to be, adversely affected by the COVID-19 pandemic.
In March 2020, the World Health Organization characterized the novel coronavirus (“COVID-19”) a pandemic and the President of the United States declared the COVID-19 outbreak a national emergency. On January 30, 2020, the World Health Organization declared a Public Health Emergency of International Concern regarding the outbreak of COVID-19. In response to the resulting pandemic, governments around the world took various preventative measures in order to control the spread of the virus, including restricting travel, full or partial business shutdowns and implementing social distancing policies. As a result, we experienced a significant drop in orders, especially in the second quarter, and the global economy was plunged into a recession. Although business conditions in our markets had improved by late in the third quarter, the effects of the pandemic have continued to impact our operations and those of our customers and suppliers. The duration of these effects and the timing of any broad economic recovery is uncertain and will likely be tied to the course of the pandemic. As we cannot predict the duration or scope of the COVID-19 pandemic, or its broader impact on the global economy, including the demand for automobiles, it is unknown how long COVID-19 restrictions will remain in place or what the impact of COVID-19 and its related effects will be on our business, results of operations or financial condition, but the impact could be material and last for an extended period of time.
We are dependent on the automotive industry.
Demand for our products is directly related to conditions in the global automotive industry, which is highly cyclical and is affected by a variety of factors, including regulatory requirements, international trade policies, and consumer spending and preferences. The automotive industry is characterized by fierce competition and has undergone major restructuring in recent years. The impact of evolving technological changes, including a growing emphasis on electric vehicles, as well as any decline in the automotive industry, domestic or foreign, could have a material adverse effect on our business, results of operations and financial condition.
We face intense competition.
We compete with a number of other manufacturers and distributors that produce and sell products similar to ours. Price, quality and service are the primary elements of competition. Our competitors include a large number of independent domestic and international suppliers. We are not as large as a number of these companies and do not have as many financial or other resources. The competitive environment has also changed dramatically over the past several years as our customers, faced with intense international competition and pressure to reduce costs, have expanded their worldwide sourcing of components. As a result, we have experienced competition from suppliers in other parts of the world that benefit from economic advantages, such as lower labor costs, lower health care costs and fewer regulatory burdens. There can be no assurance that we will be able to compete successfully with existing or new competitors. Increased competition could have a material adverse effect on our business, results of operations and financial condition.
We rely on sales to major customers.
Our sales to three customers constituted approximately 36% of our consolidated revenues in 2020. Sales to TI Group Automotive Systems, LLC, Cooper-Standard Holdings Inc. and Parker-Hannifin Corporation accounted for approximately 14%, 12% and 10% of the Company’s consolidated revenues in 2020, respectively. The loss of any significant portion of our sales to these customers could have a material adverse effect on our business, results of operations and financial condition.
We are subject to risks related to export sales.
Our export sales have increased in recent years, and we are working to continue to expand our business relationships with customers outside of the United States. Export sales are subject to various risks, including risks related to changes in local economic, social and political conditions (particularly in emerging markets), changes in tariffs and trade policies and foreign currency exchange rate fluctuations, which could have a material adverse effect on our business, results of operations and financial condition.
Increases in our raw material costs or difficulties with our suppliers could negatively affect us.
While we currently maintain alternative sources for raw materials, our business is subject to the risk of price fluctuations and periodic delays in the delivery of certain raw materials. At various times in recent years, we have been adversely impacted by increased costs for steel, our principal raw material, which we have been unable to wholly mitigate, as well as increases in other materials prices. Any continued fluctuation in the price or availability of our raw materials could have a material adverse impact on our business, results of operations and financial condition.
Supply Chain Disruptions.
Many of our customers depend upon intricate just-in-time supply chains. A disruption in a supply chain caused by one or more suppliers, and/or an unrelated supplier, due to part shortages, work stoppages, bankruptcy, raw material shortages, natural disasters, coronavirus, tariffs, etc. could adversely impact our business, or our customers’ business, which could have a material adverse effect on our results of operations and financial condition.
We may be adversely affected by labor relations issues.
Although none of our employees are unionized, the domestic automakers and many of their suppliers, including many of our customers, have unionized work forces. Work stoppages or slow-downs experienced by automakers or their suppliers could result in slow-downs or closures of assembly plants where our products are included in assembled components. In the event that one or more of our customers or their customers experiences a material labor relations issue, our business, results of operations and financial condition could be materially adversely affected.
We may incur losses as a result of product liability, warranty or other claims that may be brought against us.
We face risk of exposure to warranty and product liability claims in the event that our products fail to perform as expected or result, or are alleged to have resulted, in bodily injury, property damage or other losses. In addition, if any of our products are or are alleged to be defective, then we may be required to
participate in a product recall. We may also be involved from time to time in legal proceedings and commercial or contractual disputes. Any losses or other liabilities related to these exposures could have a material adverse effect on our business, results of operations and financial condition.
We could be adversely impacted by environmental laws and regulations.
Our operations are subject to environmental laws and regulations. Currently, environmental costs and liabilities with respect to our operations are not material, but there can be no assurance that we will not be adversely impacted by these costs and liabilities in the future either under present laws and regulations or those that may be adopted or imposed in the future.
We could be adversely impacted by the loss of the services of key employees.
Successful operations depend, in part, upon the efforts of executive officers and other key employees. Our future success will depend, in part, upon our ability to attract and retain qualified personnel. Loss of the services of any of our key employees, or the inability to attract or retain employees could have a material adverse affect upon our business, financial condition and results of operations.
Any significant disruption, interruption or failure of our information systems could disrupt the operation of our business, result in increased costs and decreased revenues and expose us to liability.
Cybersecurity threats are growing in number and sophistication and include, among others, malicious software, attempts to gain unauthorized access to data, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information and corruption of data. In addition to security threats, we are also subject to other systems failures, including network, software or hardware failures, whether caused by us, third-party service providers, natural disasters, power shortages, terrorist attacks or other events. The unavailability of our information systems, the failure of these systems to perform as anticipated or any significant breach of data security could cause loss of data, disrupt our operations, lead to financial losses from remedial actions, require significant management attention and resources, and negatively impact our reputation among our customers, which could have a negative impact on our business, results of operations and financial condition.
The price of our common stock is subject to volatility, and our stock is thinly traded.
Various factors, such as general economic changes in the financial markets, announcements or significant developments with respect to the automotive industry, actual or anticipated variations in our or our competitors’ quarterly or annual financial results, the introduction of new products or technologies by us or our competitors, changes in other conditions or trends in our industry or in the markets of any of our significant customers, changes in governmental regulation, or changes in securities analysts’ estimates of our competitors or our industry, could cause the market price of our common stock to fluctuate substantially.
Our common stock is traded on the NYSE American (not registered, trading privileges only). The average daily trading volume for our common stock during 2020 was less than 1,000 shares per day. As a result, you may have difficulty selling shares of our common stock, and the price of our common stock may vary significantly based on trading volume.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B - Unresolved Staff Comments
None.

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ITEM 2. PROPERTIES
ITEM 2 - Properties
The Company’s headquarters is located in Naperville, Illinois. The Company conducts its manufacturing and warehousing operations at three additional facilities. All of these facilities are described below. Each facility is owned by the Company and considered suitable and adequate for its present use. The Company also maintains a small sales and engineering office in Pembroke, Massachusetts in a leased office.
Of the properties described below, the Madison Heights, Michigan facility is 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 facilites 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.
Albia, Iowa
Concrete block with prestressed concrete roof construction.
Madison Heights, Michigan
Concrete, brick and partial metal construction with metal roof.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3 - Legal Proceedings
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.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4 - Mine Safety Disclosures
Not applicable.
Information about our Executive Officers
The names, ages and positions of all executive officers of the Company, as of March 15, 2021, 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.
Name and Age of Officer
Position
Years an Officer
Walter W. Morrissey 78
Chairman, Chief Executive Officer
Michael J. Bourg 58
President, Chief Operating Officer and Treasurer
- Mr. Morrissey has been Chairman of the Board of Directors of the Company and Chief Executive Officer since May 2020. He has been a director of the Company since 1972.
- Mr. Bourg has been President, Chief Operating Officer and Treasurer of the Company since May 2006. Prior to that, he served in various executive roles since joining the Company in December 1998. He has been a director of the Company since May 2006.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5 - Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
The Company’s common stock is traded on the NYSE American (trading privileges only, not registered). As of March 5, 2021 there were approximately 140 shareholders of record of such stock.
Under the terms of a stock repurchase authorization originally approved by the Board of Directors of the Company in February of 1990, as amended, the Company is authorized to repurchase up to an aggregate of 200,000 shares of its common stock, in the open market or in private transactions, at prices deemed reasonable by management. Cumulative purchases under the repurchase authorization have amounted to 162,996 shares at an average price of $15.66 per share. The Company has not purchased any shares of its common stock since 2002.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6 - Selected Financial Data
As a Smaller Reporting Company as defined in Rule 12b-2 of the Exchange Act and in item 10(f)(1) of Regulation S-K, we have elected scaled disclosure reporting obligations with respect to this item and therefore are not required to provide the information requested by this Item 6.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations
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 those disclosed above under “Risk Factors” and elsewhere in this Form 10-K. As stated elsewhere in this filing, such factors include, among other things: risk related to the COVID-19 pandemic and its related adverse effects, conditions in the domestic automotive industry, upon which we rely for sales revenue, the intense competition in our markets, the concentration of our sales with major customers, risks related to export sales, the price and availability of raw materials, supply chain disruptions, labor relations issues, losses related to product liability, warranty and recall claims, costs relating to environmental laws and regulations, information systems disruptions and the loss of the services of our key employees. 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.
RESULTS OF OPERATIONS
Financial results for 2020 were adversely impacted by the COVID-19 pandemic that resulted in broad disruptions in most markets we serve. On January 30, 2020, the World Health Organization declared a Public Health Emergency of International Concern regarding the outbreak of the novel coronavirus COVID-19. In response to the resulting pandemic, governments around the world took various preventative measures in order to control the spread of the virus, including restricting travel, full or partial business shutdowns and implementing social distancing policies. As a result,
we experienced a significant drop in orders, especially during the second quarter, and the global economy was plunged into a recession. Although business conditions had improved by late in the third quarter, the effects of the pandemic continued to impact our operations and those of our customers and suppliers. We saw further improvement in the markets we serve in the fourth quarter and recorded sales of $8,265,419 for the quarter compared to $7,645,259 in the previous quarter and $7,186,968 in the fourth quarter of 2019. The increase in sales resulted in an improvement in net income to $464,263, or $0.48 per share, in the fourth quarter of 2020 compared to a net loss of $293,884, or $0.30 per share, in the fourth quarter of 2019. Full year net sales were $27,590,653 in 2020 compared to $32,873,002 in 2019, a decline of $5,282,349, or 16.1%. Full year net income in 2020 was $50,450, or $0.05 per share, compared to $538,314, or $0.56 per share, in 2019.
2020 Compared to 2019
Fastener segment revenues were $7,332,308 in the fourth quarter of 2020 compared to $6,286,948 reported in the relatively weak fourth quarter of 2019, an increase of $1,045,360, or 16.6%. Fastener segment revenues for the full year were $24,607,863 in 2020 compared to $28,989,667 in 2019, a decline of $4,381,804, or 15.1%. The drop in sales in 2020 was primarily related to the COVID-19 pandemic that resulted in shutdowns of business in many parts of the world starting late in the first quarter. Those shutdowns became widespread in the second quarter as different governments struggled to contain the spread of the virus. The automotive sector is the primary market for our fastener segment products and much of that sector was idled for an extended period of time during the second quarter when government-imposed restrictions were the most severe. While sales to automotive customers improved in the fourth quarter of 2020 compared to the prior quarter and the year earlier quarter, such sales declined $2,906,738, or 15.7% for the year. Similarly, sales to non-automotive customers improved in the fourth quarter, but declined $1,475,066, or 14.1%, for the year. The rebound in sales in the fourth quarter, combined with the reduction in certain overhead expenses in the wake of pandemic-related shutdowns, resulted in fastener segment gross margin of $1,638,836 compared to $794,076 in the year earlier quarter, an increase of $844,760. The reduction in sales for the full year was the primary factor impacting gross margins for 2020. For the full year 2020, fastener segment gross margins were $4,170,276 compared to $4,652,353 in 2019, a decline of $482,077.
Assembly equipment segment revenues were $933,111 in the fourth quarter of 2020, compared to $900,020 in the fourth quarter of 2019, an increase of $33,091, or 3.7%. The increase was due to improved machine sales which offset declines in parts and tool sales during the quarter. For the full year 2020, assembly equipment segment revenues were $2,982,790, compared to $3,883,335 reported in 2019, a decline of $900,545, or 23.2%. The year to date decline was primarily due to the broad impact of the COVID-19 pandemic that dramatically reduced demand in the second and third quarters. Gross margins improved in the fourth quarter of 2020 to $255,296 from $90,954 in the fourth quarter of 2019, due in part to 2020 revenue being more heavily weighted toward higher margin machine sales and due to the disposal of certain excess inventory items in 2019. For the full year, assembly equipment segment gross margins declined, along with sales, to $744,926 from $1,092,177.
Selling and administrative expenses were $4,998,216 in 2020 compared to $5,252,946 in 2019, a decline of $254,730, or 4.8%. The decline was primarily due to a $214,000 reduction in salaries and benefits necessitated by the pandemic and a commission expense reduction of $117,000 related to lower sales in 2020. These reductions were partially offset by consulting expenses of $124,000 related to an ERP system conversion that was completed at one of our locations during the year. As a percentage of net sales, selling and administrative expenses were 18.1% in 2020 compared to 16.0% in 2019.
Other income was $148,464 in 2020 compared to $191,730 in 2019. Other income is primarily comprised of interest income which declined during the year due to lower interest rates.
The Company’s effective income tax rates were 22.9% and 21.2% in 2020 and 2019, respectively.
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. At the onset of the COVID-19 pandemic, the Company reduced the regular quarterly dividend from $0.22 per share to $0.10 per share. The Company paid four regular quarterly dividends totaling $0.52 per share during 2020. On February 22, 2021, the Board of Directors declared a regular quarterly dividend of $0.22 per share, restoring the dividend to the pre-pandemic amount. This dividend will be payable March 19, 2021 to shareholders of record on March 5, 2021. This continues the uninterrupted record of consecutive quarterly dividends paid by the Company to its shareholders that extends over 87 years.
PROPERTY, PLANT AND EQUIPMENT
Total capital expenditures in 2020 were $824,136. Fastener segment additions accounted for $614,835 of the total, including $410,114 for cold heading and screw machine equipment, $97,908 for inspection equipment and $40,000 for equipment to perform secondary operations on parts. The remaining $66,813 fastener segment additions consisted of parts cleaning and loading equipment. Assembly equipment segment additions in 2020 were $13,924 for production equipment. Investments for the benefit of both operating segments, primarily for building improvements, totaled $195,377 during 2020.
Capital expenditures during 2019 totaled $1,802,914. The fastener segment accounted for $1,522,541 of the total, including cold heading and screw machine equipment additions of $567,963, secondary processing equipment of $631,089, quality control equipment additions of $268,468 and $46,066 for general plant equipment. The remainder of the fastener segment additions relate to technology equipment. Assembly equipment segment additions totaled $233,697, primarily for production equipment. Additional investments of $46,676 were made in 2019 for building improvements and office equipment that benefit both operating segments.
Depreciation expense amounted to $1,347,305 in 2020 and $1,382,235 in 2019.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at December 31, 2020 was approximately $16.6 million, an increase of $0.1 million from the beginning of the year. The net change was primarily due to increases in accounts receivable and inventory of $0.6 million and $0.2 million, respectively, which were only partially offset by a reduction in cash, cash equivalents and certificates of deposit of $0.7 million. The Company’s investing activities in 2020 included the net maturities of certificates of deposit of $1.8 million, due to the near-zero interest rates brought on in response to the COVID-19 pandemic, and capital expenditures of $0.8 million. The only financing activity during 2020 was the payment of approximately $0.5 million in dividends. The Company’s holdings in cash, cash equivalents and certificates of deposit amounted to $7.3 million at the end of 2020.
Management believes that current cash, cash equivalents and operating cash flow will be sufficient to provide adequate working capital for the next twelve months.
Off-Balance Sheet Arrangements
The Company has not entered into, and has no current plans to enter into, any off-balance sheet financing arrangements.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America 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. A summary of critical accounting policies can be found in Note 1 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. A summary of recent accounting pronouncements can be found in Note 1 of the financial statements.
OUTLOOK FOR 2021
After overcoming the worst period of the pandemic in the second quarter, the second half of 2020 results were more positive than those of the year earlier period which were negatively impacted by protracted trade disputes and slowing automotive sales. While the overall results in 2020 were heavily impacted by the global pandemic, the recent introduction of vaccines to guard against the worst effects of the virus offer hope of a return to more normal activities throughout the economy that could spur a broader economic recovery.
As we begin 2021, both our fastener segment and our assembly equipment segment have recently seen improved demand. However, both segments face challenges in the form of higher prices for raw materials, increased wages related to a tight labor market and sporadic supply chain disruptions that started during the pandemic. These factors, as well as the uncertainties that COVID-19 still presents, are expected to continue to provide challenges in the near-term. As we face the challenges ahead, we will continue our efforts to improve operational efficiency and pursue opportunities to develop new customer relationships and build on existing ones in all the markets we serve by emphasizing our experience, quality and customer service in a very competitive global marketplace.
While 2020 will likely be remembered for the COVID-19 pandemic and its impact on everyday life, it also marked Chicago Rivet’s 100th year in existence. Such longevity is the result of the dedicated efforts of many people over the years, who consistently worked to exceed customer expectations related to quality, service and price. We are grateful for their contributions as well as for the loyalty of our customers and the support of our shareholders.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A Quantitative and Qualitative Disclosures About Market Risk
As a Smaller Reporting Company as defined in Rule 12b-2 of the Exchange Act and in item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations with respect to this item and therefore are not required to provide the information requested by this Item 7A.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8 - Financial Statements and Supplementary Data
See the section entitled “Consolidated Financial Statements” which appears on page 19 of this report.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A - Controls and Procedures
Disclosure Controls and Procedures.
The Company’s management, with the participation of the Company’s Chief Executive Officer and President, Chief Operating Officer and Treasurer (the Company’s principal financial officer), has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.
Management’s Report on Internal Control Over Financial Reporting.
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as that term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). The Company’s management, with the participation of the Company’s Chief Executive Officer and President, Chief Operating Officer and Treasurer (the Company’s principal financial officer), assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020, based on the 2013 criteria established in Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, the Company’s management has concluded that the Company’s internal controls over financial reporting are effective as of December 31, 2020.
Management’s assessment of internal control has not been audited, as the attestation report requirement for non-accelerated filers was permanently removed from the Sarbanes-Oxley Act by Section 989C of the Dodd-Frank Act as adopted by the SEC.
Changes in Internal Control Over Financial Reporting.
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
ITEM 9B - Other Information
None.
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10 - Directors, Executive Officers and Corporate Governance
The information in the Company’s 2021 Proxy Statement (i) with respect to the Board of Directors’ nominees for directors that is not related to security ownership in “Security Ownership of Management” and (ii) in the third paragraph in “Additional Information Concerning the Board of Directors and Committees” is incorporated herein by reference. The 2021 Proxy Statement is to be filed with the Securities and Exchange Commission in connection with the Company’s 2021 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 “Information about our Executive Officers.”
The Company has adopted a code of ethics for its principal executive officer, chief operating officer and senior financial officers. A copy of this code of ethics was filed as Exhibit 14 to the Company’s Annual Report on Form 10-K dated March 29, 2005.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11 - Executive Compensation
The information set forth in the Company’s 2021 Proxy Statement in “Compensation of Directors and Executive Officers” is incorporated herein by reference.
The Compensation Committee of the Board of Directors currently consists of Directors Kent H. Cooney and Kurt Moders.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12 - Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information set forth in the Company’s 2021 Proxy Statement in “Principal Shareholders” and the information with respect to security ownership of the Company’s directors and officers set forth in “Security Ownership of Management” is incorporated herein by reference.
The Company does not have any equity compensation plans or arrangements.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13 - Certain Relationships and Related Transactions, and Director Independence
The information set forth in the Company’s 2021 Proxy Statement in (i) “Additional Information Concerning the Board of Directors and Committees - Policy Regarding Related Person Transactions” and (ii) the first paragraph under “Additional Information Concerning the Board of Directors and Committees” is incorporated herein by reference.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14 - Principal Accountant Fees and Services
The information set forth in the Company’s 2021 Proxy Statement in “Ratification of Selection of Independent Auditor - Audit and Non-Audit Fees” is incorporated herein by reference.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15 - Exhibits and Financial Statement Schedules
(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 19 of this report.
2. Financial Statement Schedules:
Financial statement schedules and supplementary information has been omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.
3. Exhibits:
See the section entitled “Exhibits” which appears on page 17 of this report.