e10vq
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
(Mark One)
| |
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| þ |
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2008
OR
| |
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|
| o |
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 0-1227
CHICAGO RIVET & MACHINE CO.
(Exact Name of Registrant as Specified in Its Charter)
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|
|
| Illinois
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|
36-0904920 |
| (State or Other Jurisdiction
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|
(I.R.S. Employer |
| of Incorporation or Organization)
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|
Identification No.) |
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|
| 901 Frontenac Road, Naperville, Illinois
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|
60563 |
| (Address of Principal Executive Offices)
|
|
(Zip Code) |
Registrant’s Telephone Number, Including Area Code (630) 357-8500
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 þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, or a smaller reporting company.
See the definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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| Large accelerated filer o |
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Accelerated filer o |
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Non-accelerated filer o
(Do not check if a smaller reporting company) |
|
Smaller Reporting Company þ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act).
Yes o No þ
As of September 30, 2008, 966,132 shares of the registrant’s common stock were outstanding.
CHICAGO RIVET & MACHINE CO.
INDEX
1
Item 1. Financial Statements.
CHICAGO RIVET & MACHINE CO.
Condensed Consolidated Balance Sheets
September 30, 2008 and December 31, 2007
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September 30, |
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December 31, |
|
| |
|
2008 |
|
|
2007 |
|
| |
|
(Unaudited) |
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,582,189 |
|
|
$ |
665,072 |
|
Certificates of deposit |
|
|
5,799,000 |
|
|
|
6,880,000 |
|
Accounts receivable, net of allowance
of $103,000 and $95,000, respectively |
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|
4,525,798 |
|
|
|
5,329,413 |
|
Inventories |
|
|
5,574,925 |
|
|
|
4,975,833 |
|
Deferred income taxes |
|
|
464,191 |
|
|
|
451,191 |
|
Prepaid income taxes |
|
|
58,481 |
|
|
|
211,025 |
|
Other current assets |
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|
373,560 |
|
|
|
287,542 |
|
|
|
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|
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Total current assets |
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|
18,378,144 |
|
|
|
18,800,076 |
|
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Property, Plant and Equipment: |
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|
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|
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Land and improvements |
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|
1,029,035 |
|
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|
1,029,035 |
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Buildings and improvements |
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6,391,952 |
|
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|
6,385,831 |
|
Production equipment, leased machines and other |
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|
28,182,062 |
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28,124,007 |
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|
|
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|
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|
35,603,049 |
|
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|
35,538,873 |
|
Less accumulated depreciation |
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|
26,989,924 |
|
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26,431,936 |
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|
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|
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Net property, plant and equipment |
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|
8,613,125 |
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9,106,937 |
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Total assets |
|
$ |
26,991,269 |
|
|
$ |
27,907,013 |
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|
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See Notes to the Condensed Consolidated Financial Statements
2
CHICAGO RIVET & MACHINE CO.
Condensed Consolidated Balance Sheets
September 30, 2008 and December 31, 2007
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September 30, |
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December 31, |
|
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2008 |
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|
2007 |
|
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|
(Unaudited) |
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Liabilities and Shareholders’ Equity |
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Current Liabilities: |
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Accounts payable |
|
$ |
1,059,990 |
|
|
$ |
1,147,014 |
|
Accrued wages and salaries |
|
|
749,933 |
|
|
|
679,233 |
|
Accrued profit sharing plan contribution |
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|
80,000 |
|
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|
201,000 |
|
Other accrued expenses |
|
|
486,235 |
|
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|
319,866 |
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|
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Total current liabilities |
|
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2,376,158 |
|
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2,347,113 |
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|
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Deferred income taxes |
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|
894,275 |
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|
985,275 |
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|
|
|
|
|
|
|
|
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|
|
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Total liabilities |
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|
3,270,433 |
|
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|
3,332,388 |
|
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Commitments and contingencies (Note 4) |
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— |
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— |
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Shareholders’ Equity: |
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Preferred stock, no par value, 500,000 shares
authorized: none outstanding |
|
|
— |
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|
— |
|
Common stock, $1.00 par value, 4,000,000 shares
authorized: 1,138,096 shares issued |
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|
1,138,096 |
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|
1,138,096 |
|
Additional paid-in capital |
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|
447,134 |
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|
447,134 |
|
Retained earnings |
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|
26,057,704 |
|
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|
26,911,493 |
|
Treasury stock, 171,964 shares at cost |
|
|
(3,922,098 |
) |
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|
(3,922,098 |
) |
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Total shareholders’ equity |
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|
23,720,836 |
|
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|
24,574,625 |
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| |
Total liabilities and shareholders’ equity |
|
$ |
26,991,269 |
|
|
$ |
27,907,013 |
|
|
|
|
|
|
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|
See Notes to the Condensed Consolidated Financial Statements
3
CHICAGO RIVET & MACHINE CO.
Condensed Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2008 and 2007
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2008 |
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2007 |
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2008 |
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|
2007 |
|
Net sales |
|
$ |
6,641,826 |
|
|
$ |
9,020,453 |
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|
$ |
23,058,976 |
|
|
$ |
29,051,926 |
|
Lease revenue |
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|
20,195 |
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|
23,150 |
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|
64,383 |
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69,573 |
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|
|
|
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6,662,021 |
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9,043,603 |
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23,123,359 |
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|
29,121,499 |
|
Cost of goods sold and costs
related to lease revenue |
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5,759,070 |
|
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|
7,172,837 |
|
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|
19,674,065 |
|
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23,166,992 |
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Gross profit |
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|
902,951 |
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|
1,870,766 |
|
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|
3,449,294 |
|
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|
5,954,507 |
|
Selling and administrative expenses |
|
|
1,250,338 |
|
|
|
1,373,104 |
|
|
|
3,923,055 |
|
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|
4,300,613 |
|
Plant closing expenses |
|
|
— |
|
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|
(459 |
) |
|
|
— |
|
|
|
20,337 |
|
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|
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|
|
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|
Operating profit (loss) |
|
|
(347,387 |
) |
|
|
498,121 |
|
|
|
(473,761 |
) |
|
|
1,633,557 |
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
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|
Other income and expenses: |
|
|
|
|
|
|
|
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|
|
|
|
|
|
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|
Interest income |
|
|
48,378 |
|
|
|
77,380 |
|
|
|
178,225 |
|
|
|
224,837 |
|
Other income |
|
|
3,600 |
|
|
|
3,600 |
|
|
|
11,378 |
|
|
|
11,378 |
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
Income (loss) before income taxes |
|
|
(295,409 |
) |
|
|
579,101 |
|
|
|
(284,158 |
) |
|
|
1,869,772 |
|
Provision (benefit) for income taxes |
|
|
(100,000 |
) |
|
|
207,000 |
|
|
|
(97,000 |
) |
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|
664,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net income (loss) |
|
$ |
(195,409 |
) |
|
$ |
372,101 |
|
|
$ |
(187,158 |
) |
|
$ |
1,205,772 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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| |
Average common shares outstanding |
|
|
966,132 |
|
|
|
966,132 |
|
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|
966,132 |
|
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|
966,132 |
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|
Per share data: |
|
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|
|
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|
Net income (loss) per share |
|
$ |
(0.20 |
) |
|
$ |
0.39 |
|
|
$ |
(0.19 |
) |
|
$ |
1.25 |
|
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|
Cash dividends declared per share |
|
$ |
0.18 |
|
|
$ |
0.18 |
|
|
$ |
0.69 |
|
|
$ |
0.54 |
|
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|
|
|
|
|
|
|
|
|
|
|
|
See Notes to the Condensed Consolidated Financial Statements
4
CHICAGO RIVET & MACHINE CO.
Condensed Consolidated Statements of Retained Earnings
For the Nine Months Ended September 30, 2008 and 2007
(Unaudited)
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|
2008 |
|
|
2007 |
|
Retained earnings at beginning of period |
|
$ |
26,911,493 |
|
|
$ |
26,340,036 |
|
|
|
|
|
|
|
|
|
|
Net income (loss) for the nine months ended |
|
|
(187,158 |
) |
|
|
1,205,772 |
|
|
|
|
|
|
|
|
|
|
Cash dividends declared in the period,
$.69 and $.54 per share in 2008 and 2007, respectively |
|
|
(666,631 |
) |
|
|
(521,712 |
) |
|
|
|
|
|
|
|
| |
Retained earnings at end of period |
|
$ |
26,057,704 |
|
|
$ |
27,024,096 |
|
|
|
|
|
|
|
|
See Notes to the Condensed Consolidated Financial Statements
5
CHICAGO RIVET & MACHINE CO.
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2008 and 2007
(Unaudited)
| |
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|
|
|
|
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| |
|
2008 |
|
|
2007 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(187,158 |
) |
|
$ |
1,205,772 |
|
Adjustments to reconcile net income (loss) to net cash
provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
803,352 |
|
|
|
845,896 |
|
Net gain on the sale of equipment |
|
|
(22,753 |
) |
|
|
(25,022 |
) |
Deferred income taxes |
|
|
(104,000 |
) |
|
|
(86,000 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
803,615 |
|
|
|
(249,819 |
) |
Inventories |
|
|
(599,092 |
) |
|
|
(82,424 |
) |
Other current assets |
|
|
66,526 |
|
|
|
34,416 |
|
Accounts payable |
|
|
(93,598 |
) |
|
|
4,426 |
|
Accrued wages and salaries |
|
|
70,700 |
|
|
|
158,862 |
|
Accrued profit sharing contribution |
|
|
(121,000 |
) |
|
|
(30,000 |
) |
Other accrued expenses |
|
|
166,369 |
|
|
|
(198,430 |
) |
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
782,961 |
|
|
|
1,577,677 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(307,317 |
) |
|
|
(340,937 |
) |
Proceeds from the sale of equipment |
|
|
27,104 |
|
|
|
37,816 |
|
Proceeds from certificates of deposit |
|
|
11,180,000 |
|
|
|
13,405,000 |
|
Purchases of certificates of deposit |
|
|
(10,099,000 |
) |
|
|
(12,880,000 |
) |
|
|
|
|
|
|
|
Net cash provided by investing activities |
|
|
800,787 |
|
|
|
221,879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Cash dividends paid |
|
|
(666,631 |
) |
|
|
(521,712 |
) |
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(666,631 |
) |
|
|
(521,712 |
) |
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
|
917,117 |
|
|
|
1,277,844 |
|
Cash and cash equivalents at beginning of period |
|
|
665,072 |
|
|
|
367,581 |
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
1,582,189 |
|
|
$ |
1,645,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental schedule of non-cash investing activities: |
|
|
|
|
|
|
|
|
Capital expenditures in accounts payable |
|
$ |
6,574 |
|
|
$ |
— |
|
See Notes to the Condensed Consolidated Financial Statements
6
CHICAGO RIVET & MACHINE CO.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. In the opinion of the Company, the accompanying unaudited interim financial statements contain
all adjustments necessary to present fairly the financial position of the Company as of September
30, 2008 (unaudited) and December 31, 2007 (audited) and the results of operations and changes in
cash flows for the indicated periods.
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 and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Certain items in 2007 have been reclassified to conform to the presentation in 2008. These changes
have no effect on the results of operations or the financial position of the Company.
2. The results of operations for the three and nine-month period ending September 30, 2008 are not
necessarily indicative of the results to be expected for the year.
3. The Company extends credit on the basis of terms that are customary within our markets to
various companies doing business primarily in the automotive industry. The Company has a
concentration of credit risk primarily within the automotive industry and in the Midwestern United
States.
4. The Company is, from time to time, involved in litigation, including environmental claims and
contract disputes, 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.
5. The Company’s federal income tax returns for the 2005, 2006 and 2007 tax years are subject to
examination by the Internal Revenue Service (“IRS”). While it may be possible that a reduction
could occur with respect to the Company’s unrecognized tax benefits as an outcome of an IRS
examination, management does not anticipate any adjustments that would result in a material change
to the results of operations or financial condition of the Company. The 2004 federal income tax
return was examined by the IRS and no adjustments were made as a result of the examination.
No statutes have been extended on any of the Company’s federal income tax filings. The statute of
limitations on the Company’s 2005, 2006 and 2007 federal income tax returns will expire on
September 15, 2009, 2010 and 2011, respectively.
The Company’s state income tax returns for the 2005 through 2007 tax years remain subject to
examination by various state authorities with the latest closing period on October 31, 2011. The
Company is currently not under examination by any state authority for income tax purposes and no
statutes for state income tax filings have been extended.
6. Inventories are stated at the lower of cost or net realizable value, cost being determined by
the first-in, first-out method. A summary of inventories is as follows:
| |
|
|
|
|
|
|
|
|
| |
|
September 30, 2008 |
|
|
December 31, 2007 |
|
Raw material |
|
$ |
1,738,455 |
|
|
$ |
1,275,595 |
|
Work-in-process |
|
|
1,901,981 |
|
|
|
1,597,483 |
|
Finished goods |
|
|
2,498,489 |
|
|
|
2,577,755 |
|
|
|
|
|
|
|
|
|
|
|
6,138,925 |
|
|
|
5,450,833 |
|
Valuation reserves |
|
|
(564,000 |
) |
|
|
(475,000 |
) |
|
|
|
|
|
|
|
|
|
$ |
5,574,925 |
|
|
$ |
4,975,833 |
|
|
|
|
|
|
|
|
7
CHICAGO RIVET & MACHINE CO.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
7. Segment Information—The Company operates in two business segments as determined by its
products. The fastener segment includes rivets, cold-formed fasteners and screw machine products.
The assembly equipment segment includes automatic rivet setting machines, parts and tools for such
machines and the leasing of automatic rivet setting machines. Information by segment is as
follows:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Assembly |
|
|
|
|
|
|
|
| |
|
Fastener |
|
|
Equipment |
|
|
Other |
|
|
Consolidated |
|
Three Months Ended September 30, 2008: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and lease revenue |
|
$ |
5,729,633 |
|
|
$ |
932,388 |
|
|
$ |
— |
|
|
$ |
6,662,021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
228,894 |
|
|
|
18,402 |
|
|
|
21,510 |
|
|
|
268,806 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit |
|
|
(33,995 |
) |
|
|
164,928 |
|
|
|
|
|
|
|
130,933 |
|
Selling and administrative expenses |
|
|
|
|
|
|
|
|
|
|
(474,720 |
) |
|
|
(474,720 |
) |
Interest income |
|
|
|
|
|
|
|
|
|
|
48,378 |
|
|
|
48,378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(295,409 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
129,492 |
|
|
|
— |
|
|
|
— |
|
|
|
129,492 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
4,036,269 |
|
|
|
489,529 |
|
|
|
|
|
|
|
4,525,798 |
|
Inventories |
|
|
4,185,094 |
|
|
|
1,389,831 |
|
|
|
|
|
|
|
5,574,925 |
|
Property, plant and equipment, net |
|
|
6,761,755 |
|
|
|
1,066,503 |
|
|
|
784,867 |
|
|
|
8,613,125 |
|
Other assets |
|
|
|
|
|
|
|
|
|
|
8,277,421 |
|
|
|
8,277,421 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,991,269 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2007: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and lease revenue |
|
$ |
7,905,111 |
|
|
$ |
1,138,492 |
|
|
$ |
— |
|
|
$ |
9,043,603 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
238,782 |
|
|
|
21,250 |
|
|
|
23,616 |
|
|
|
283,648 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit |
|
|
836,182 |
|
|
|
171,559 |
|
|
|
|
|
|
|
1,007,741 |
|
Selling and administrative expenses |
|
|
|
|
|
|
|
|
|
|
(506,479 |
) |
|
|
(506,479 |
) |
Plant closing expenses |
|
|
459 |
|
|
|
|
|
|
|
|
|
|
|
459 |
|
Interest income |
|
|
|
|
|
|
|
|
|
|
77,380 |
|
|
|
77,380 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
579,101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
31,267 |
|
|
|
1,459 |
|
|
|
— |
|
|
|
32,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
5,631,651 |
|
|
|
520,796 |
|
|
|
|
|
|
|
6,152,447 |
|
Inventories |
|
|
4,034,745 |
|
|
|
1,528,988 |
|
|
|
|
|
|
|
5,563,733 |
|
Property, plant and equipment, net |
|
|
7,305,274 |
|
|
|
1,142,874 |
|
|
|
871,359 |
|
|
|
9,319,507 |
|
Other assets |
|
|
|
|
|
|
|
|
|
|
7,400,707 |
|
|
|
7,400,707 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,436,394 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8
CHICAGO RIVET & MACHINE CO.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Assembly |
|
|
|
|
|
|
|
| |
|
Fastener |
|
|
Equipment |
|
|
Other |
|
|
Consolidated |
|
Nine Months Ended September 30, 2008: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and lease revenue |
|
$ |
20,095,316 |
|
|
$ |
3,028,043 |
|
|
$ |
— |
|
|
$ |
23,123,359 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
683,514 |
|
|
|
55,446 |
|
|
|
64,392 |
|
|
|
803,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit |
|
|
562,399 |
|
|
|
538,645 |
|
|
|
|
|
|
|
1,101,044 |
|
Selling and administrative expenses |
|
|
|
|
|
|
|
|
|
|
(1,563,427 |
) |
|
|
(1,563,427 |
) |
Interest income |
|
|
|
|
|
|
|
|
|
|
178,225 |
|
|
|
178,225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(284,158 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
313,891 |
|
|
|
— |
|
|
|
— |
|
|
|
313,891 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2007: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and lease revenue |
|
$ |
25,491,263 |
|
|
$ |
3,630,236 |
|
|
$ |
— |
|
|
$ |
29,121,499 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
711,539 |
|
|
|
63,509 |
|
|
|
70,848 |
|
|
|
845,896 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit |
|
|
2,550,158 |
|
|
|
712,971 |
|
|
|
|
|
|
|
3,263,129 |
|
Selling and administrative expenses |
|
|
|
|
|
|
|
|
|
|
(1,597,857 |
) |
|
|
(1,597,857 |
) |
Plant closing expenses |
|
|
(20,337 |
) |
|
|
|
|
|
|
|
|
|
|
(20,337 |
) |
Interest income |
|
|
|
|
|
|
|
|
|
|
224,837 |
|
|
|
224,837 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,869,772 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
316,971 |
|
|
|
23,966 |
|
|
|
|
|
|
|
340,937 |
|
9
CHICAGO RIVET & MACHINE CO.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Results for the third quarter of 2008, as well as the current year to date, continued to be
negatively impacted by the decline in domestic automotive production compared to the year earlier
periods, as well as worsening overall economic conditions. Net revenues in the third quarter of
2008 were $6,662,021, a decline of 26.3% compared to 2007, when revenues were $9,043,603. Year to
date revenues total $23,123,359, a decline of 20.6% compared to the $29,121,499 recorded for the
first three quarters of 2007. Although we have reduced expenses, cost reductions were not
sufficient to offset the effects of the decline in sales. The net result was a net loss of
$195,409, or $0.20 per share, in the third quarter of 2008 compared to net income of $372,101, or
$0.39 per share, in 2007. The year to date net loss is $187,158, or $0.19 per share, compared to
net income of $1,205,772, or $1.25 per share, for 2007.
Within the fastener segment, third quarter revenues declined by $2,175,478, or 27.5%, from
$7,905,111 in 2007, to $5,729,633 in 2008. On a year to date basis, 2008 fastener segment revenues
have declined by $5,395,947, or 21.2%, from $25,491,263 in 2007 to $20,095,316 in 2008. Demand
among automotive sector customers, which has been down since late last year due to slumping U.S.
auto sales, weakened further during the quarter as U.S. auto sales near a two-decade low. The
spreading economic crisis further negatively impacted most other markets we serve. Along with the
drop in demand, we have seen a dramatic increase in the cost of certain items we purchase, most
notably steel and natural gas. While the price of steel has risen dramatically this year, our
overall raw material costs are down due to the reduction in production activity. The increase in
material prices results in raw materials accounting for a larger percentage of cost of sales
compared to last year. In addition to natural gas, which increased by $14,000 during the third
quarter and $49,000 year to date, the only significant increase in overhead during 2008 was tooling
expense, which increased $65,000 through three quarters of 2008, down from $105,000 for the
first half of the year, as certain design work was performed in an attempt to improve production
efficiency. The closing of the Jefferson, Iowa plant in 2007 has resulted in approximately
$106,000 in overhead cost reductions during 2008 compared to 2007. The net result of these factors
was a $927,000 reduction in fastener segment gross margin during the third quarter and a $2,237,000
reduction in the year to date amount.
Assembly equipment segment revenues totaled $932,388 in the third quarter of 2008, a decline
of $206,104, or 18.1%, compared to the third quarter of 2007, when revenues were $1,138,492.
Demand for our products in this segment continues to be weak and the lower level of production
activity, brought on by reduced demand, resulted in a $41,000 decline in gross margin compared to
the third quarter of 2007. For the first nine months of 2008, revenues in this segment amounted to
$3,028,043, a $602,193 decline, or 16.6%, compared to the first nine months of 2007 when net
revenues totaled $3,630,236. In response to the lower level of sales activity in 2008, we have
implemented steps to reduce and control expenses, including reductions in both
staffing levels and work schedules. The cumulative effect of these actions, however, has not been sufficient
to fully offset the effects of reduced volume and, as a result, gross margins declined to $917,000
from $1,186,000 last year.
Selling and administrative expenses for the third quarter of 2008 were $122,766 lower than
during the third quarter of 2007. The lower sales in the quarter resulted in a $43,000 reduction
in commission expense. Profit sharing expense declined $29,000 in the third quarter compared with
last year due to the reduction in earnings, while office supplies and sales promotion expenses were
reduced $15,000 and $11,000, respectively. Lastly, salaries and related benefits account for
approximately $10,000 of the net decline due to reduced headcount. The remaining net decrease in
the quarter relates to various items with smaller changes. On a year to date basis, selling and
administrative expenses have declined $377,558 in 2008 compared with the first nine months of 2007.
The largest components of the year to date decline are sales commissions, profit sharing and
salaries and related benefits, which have declined by $134,000, $115,000 and $104,000, respectively
for the reasons stated above.
Working capital at September 30, 2008 was approximately $16 million, a reduction of $.5
million from the beginning of the year. While accounts receivable have declined $.8 million since
the beginning of the year, primarily due to the lower sales in the third quarter of 2008 compared
to the fourth quarter of last year, inventories have increased $.6 million, due to higher
raw material prices compared to last year as well as larger
quantities of raw material on hand due to reduced customer demand. The net result of these changes and other cash flow
items on cash, cash equivalents and certificates of deposit was a decrease of $.2 million, to $7.4
million, as of September 30, 2008.
The Company has a $1.0 million line of credit, which expires May 31, 2009. This line of
credit remains unused. Management believes that current cash, cash equivalents, operating cash
flow and the available line of credit will provide adequate working capital for the foreseeable
future.
10
The decline in revenues in the third quarter and year to date reflects the continued drop in
production activity in our primary markets. The fastener segment, which is primarily dependent on
sales to companies in the automotive industry, has experienced five straight quarters of declining
sales. What began late last year as weakness in the automotive market has now spread to other
markets due to the weak economy. The assembly equipment segment, while not as reliant on the
automotive sector for revenues, has been hurt by the overall decline in domestic manufacturing
activity. Predicting future demand in our markets is difficult and that uncertainty will keep us
cautious in the near-term. In response to these challenging market conditions, we will continue to
make adjustments to our activities where possible without sacrificing the unsurpassed quality and
excellent customer service that is the basis for our success.
This discussion contains certain “forward-looking statements” which are inherently subject to risks
and uncertainties that may cause actual events to differ materially from those discussed herein.
Factors which may cause such differences in events include, those disclosed under “Risk Factors” in
our Annual Report on Form 10-K and in the other filings we make with the United States Securities
and Exchange Commission. These factors, include among other things: conditions in the domestic
automotive industry, upon which we rely for sales revenue, the intense competition in our markets,
the concentration of our sales to two major customers, the price and availability of raw materials,
labor relations issues, losses related to product liability, warranty and recall claims, costs
relating to environmental laws and regulations, the loss of the services of our key employees and
difficulties in achieving expected cost savings. Many of these factors are beyond our ability to
control or predict. Readers are cautioned not to place undue reliance on these forward-looking
statements. We undertake no obligation to publish revised forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
11
CHICAGO RIVET & MACHINE CO.
Item 4. Controls and Procedures.
(a) Disclosure Controls and Procedures. The Company’s management, with the participation of
the Company’s Chief Executive Officer and Chief 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.
(b) 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 fiscal quarter to which this report relates that have
materially affected, or are reasonably likely to materially affect, the Company’s internal control
over financial reporting.
12
PART II — OTHER INFORMATION
Item 4. Exhibits
| |
|
|
31 |
|
Rule 13a-14(a) or 15d-14(a) Certifications |
|
|
|
31.1
|
|
Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
31.2
|
|
Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32
|
|
Section 1350 Certifications |
|
|
|
32.1
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.2
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
| |
|
|
|
|
|
CHICAGO RIVET & MACHINE CO. |
|
|
(Registrant) |
|
|
|
|
|
|
Date: November 10, 2008 |
|
|
|
|
/s/ John A. Morrissey |
|
|
|
|
|
John A. Morrissey |
|
|
Chairman of the Board of Directors |
|
|
and Chief Executive Officer
(Principal Executive Officer) |
|
|
|
Date: November 10, 2008 |
|
|
|
|
/s/ Michael J. Bourg |
|
|
|
|
|
Michael J. Bourg |
|
|
President, Chief Operating |
|
|
Officer and Treasurer |
|
|
(Principal Financial Officer) |
14
CHICAGO RIVET & MACHINE CO.
EXHIBITS
INDEX TO EXHIBITS
| |
|
|
|
|
|
|
| Exhibit |
|
|
|
|
| Number |
|
|
|
Page |
31
|
|
Rule 13a-14(a) or 15d-14(a) Certifications |
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
|
16 |
|
|
|
|
|
|
|
|
31.2
|
|
Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
|
17 |
|
|
|
|
|
|
|
|
32
|
|
Section 1350 Certifications |
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
|
|
|
18 |
|
|
|
|
|
|
|
|
32.2
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
|
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19 |
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15