Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 10-Q

 

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

OR

 

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 000-01227

 

 

Chicago Rivet & Machine Co.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Illinois   36-0904920
(State or Other Jurisdiction of   (I.R.S. Employer
Incorporation or Organization)   Identification No.)
901 Frontenac Road, Naperville, Illinois   60563
(Address of Principal Executive Offices)   (Zip Code)

(630) 357-8500

Registrant’s Telephone Number, Including Area Code

 

 

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  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically, every interactive data file required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, par value $1.00 per share   CVR   NYSE American (Trading privileges only, not registered)

As of May 6, 2019, there were 966,132 shares of the registrant’s common stock outstanding.

 

 

 


Table of Contents

CHICAGO RIVET & MACHINE CO.

INDEX

 

     Page  

PART I. FINANCIAL INFORMATION (Unaudited)

  

Condensed Consolidated Balance Sheets at March  31, 2019 and December 31, 2018

     2-3  

Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2019 and 2018

     4  

Condensed Consolidated Statements of Shareholders’ Equity for the Three Months Ended March 31, 2019 and 2018

     5  

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2019 and 2018

     6  

Notes to the Condensed Consolidated Financial Statements

     7-9  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

     10-11  

Controls and Procedures

     12  

PART II. OTHER INFORMATION

     13  

 

1


Table of Contents

Item 1. Financial Statements.

CHICAGO RIVET & MACHINE CO.

Condensed Consolidated Balance Sheets

March 31, 2019 and December 31, 2018

 

     March 31,      December 31,  
     2019      2018  
     (Unaudited)         
Assets      

Current Assets:

     

Cash and cash equivalents

   $ 606,213      $ 706,873  

Certificates of deposit

     5,080,000        7,063,000  

Accounts receivable - Less allowances of $ 140,000

     5,954,474        5,529,307  

Inventories, net

     6,832,459        6,100,391  

Prepaid income taxes

     114,186        150,686  

Other current assets

     392,568        438,222  
  

 

 

    

 

 

 

Total current assets

     18,979,900        19,988,479  
  

 

 

    

 

 

 

Property, Plant and Equipment:

     

Land and improvements

     1,636,749        1,632,299  

Buildings and improvements

     8,246,331        8,234,182  

Production equipment and other

     36,154,303        35,627,443  
  

 

 

    

 

 

 
     46,037,383        45,493,924  

Less accumulated depreciation

     32,209,494        32,235,778  
  

 

 

    

 

 

 

Net property, plant and equipment

     13,827,889        13,258,146  
  

 

 

    

 

 

 

Total assets

   $ 32,807,789      $ 33,246,625  
  

 

 

    

 

 

 

 

See Notes to the Condensed Consolidated Financial Statements

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Table of Contents

CHICAGO RIVET & MACHINE CO.

Condensed Consolidated Balance Sheets

March 31, 2019 and December 31, 2018

 

     March 31,     December 31,  
     2019     2018  
     (Unaudited)        

Liabilities and Shareholders’ Equity

    

Current Liabilities:

    

Accounts payable

   $ 1,113,627     $ 1,060,231  

Accrued wages and salaries

     682,890       701,434  

Other accrued expenses

     239,872       475,973  

Unearned revenue and customer deposits

     282,114       328,154  
  

 

 

   

 

 

 

Total current liabilities

     2,318,503       2,565,792  

Deferred income taxes

     945,084       921,084  
  

 

 

   

 

 

 

Total liabilities

     3,263,587       3,486,876  
  

 

 

   

 

 

 

Commitments and contingencies (Note 3)

    

Shareholders’ Equity:

    

Preferred stock, no par value, 500,000 shares authorized: none outstanding

     —         —    

Common stock, $1.00 par value, 4,000,000 shares authorized: 1,138,096 shares issued; 966,132 shares outstanding

     1,138,096       1,138,096  

Additional paid-in capital

     447,134       447,134  

Retained earnings

     31,881,070       32,096,617  

Treasury stock, 171,964 shares at cost

     (3,922,098     (3,922,098
  

 

 

   

 

 

 

Total shareholders’ equity

     29,544,202       29,759,749  
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 32,807,789     $ 33,246,625  
  

 

 

   

 

 

 

See Notes to the Condensed Consolidated Financial Statements

 

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Table of Contents

CHICAGO RIVET & MACHINE CO.

Condensed Consolidated Statements of Income

For the Three Months Ended March 31, 2019 and 2018

(Unaudited)

 

     2019      2018  

Net sales

   $ 8,621,678      $ 10,011,641  

Cost of goods sold

     6,959,915        7,668,636  
  

 

 

    

 

 

 

Gross profit

     1,661,763        2,343,005  

Selling and administrative expenses

     1,342,696        1,464,718  
  

 

 

    

 

 

 

Operating profit

     319,067        878,287  

Other income

     48,775        33,501  
  

 

 

    

 

 

 

Income before income taxes

     367,842        911,788  

Provision for income taxes

     81,000        204,000  
  

 

 

    

 

 

 

Net income

   $ 286,842      $ 707,788  
  

 

 

    

 

 

 

Per share data, basic and diluted:

     

Net income per share

   $ 0.30      $ 0.73  
  

 

 

    

 

 

 

Average common shares outstanding

     966,132        966,132  
  

 

 

    

 

 

 

Cash dividends declared per share

   $ 0.52      $ 0.51  
  

 

 

    

 

 

 

See Notes to the Condensed Consolidated Financial Statements

 

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CHICAGO RIVET & MACHINE CO.

Condensed Consolidated Statements of Shareholders’ Equity

For the Three Months Ended March 31, 2019 and 2018

(Unaudited)

 

                                              Less        
     Preferred Stock      Common Stock      Additional Paid-in            Treasury Stock, at Cost        
     Shares      Amount      Shares      Amount      Capital      Retained Earnings     Shares      Amount     Total  

Balance, December 31, 2017

     —        $ —          966,132      $ 1,138,096      $ 447,134      $ 31,196,823       171,964      $ (3,922,098   $ 28,859,955  

Net Income

                  $ 707,788          $ 707,788  

Dividends Declared ($0.51 per share)

                  $ (492,727        $ (492,727
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Balance, March 31, 2018

     —        $ —          966,132      $ 1,138,096      $ 447,134      $ 31,411,884       171,964      $ (3,922,098   $ 29,075,016  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Balance, December 31, 2018

     —        $ —          966,132      $ 1,138,096      $ 447,134      $ 32,096,617       171,964      $ (3,922,098   $ 29,759,749  

Net Income

                  $ 286,842          $ 286,842  

Dividends Declared ($0.52 per share)

                  $ (502,389        $ (502,389
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Balance, March 31, 2019

     —        $ —          966,132      $ 1,138,096      $ 447,134      $ 31,881,070       171,964      $ (3,922,098   $ 29,544,202  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

See Notes to the Condensed Consolidated Financial Statements

 

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CHICAGO RIVET & MACHINE CO.

Condensed Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2019 and 2018

(Unaudited)

 

     2019     2018  

Cash flows from operating activities:

    

Net income

   $ 286,842     $ 707,788  

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

    

Depreciation

     336,389       326,520  

Gain on disposal of equipment

     (5,000     (300

Deferred income taxes

     24,000       (14,000

Changes in operating assets and liabilities:

    

Accounts receivable

     (425,167     (1,427,855

Inventories

     (732,068     (68,578

Other current assets

     82,154       102,899  

Accounts payable

     53,396       908,830  

Accrued wages and salaries

     (18,544     (14,635

Other accrued expenses

     (236,101     (67,446

Unearned revenue and customer deposits

     (46,040     (238,722
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     (680,139     214,501  
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Capital expenditures

     (906,132     (225,000

Proceeds from the sale of equipment

     5,000       300  

Proceeds from certificates of deposit

     3,577,000       1,494,000  

Purchases of certificates of deposit

     (1,594,000     (1,245,000
  

 

 

   

 

 

 

Net cash provided by investing activities

     1,081,868       24,300  
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Cash dividends paid

     (502,389     (492,727
  

 

 

   

 

 

 

Net cash used in financing activities

     (502,389     (492,727
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (100,660     (253,926

Cash and cash equivalents at beginning of period

     706,873       1,152,569  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 606,213     $ 898,643  
  

 

 

   

 

 

 

Supplemental schedule of non-cash investing activities:

    

Capital expenditures in accounts payable

   $ —       $ 1,427  

See Notes to the Condensed Consolidated Financial Statements

 

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Table of Contents

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 March 31, 2019 (unaudited) and December 31, 2018 (audited) and the results of operations and changes in cash flows for the indicated periods. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted from these unaudited financial statements in accordance with applicable rules. Please refer to the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

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. The results of operations for the three month period ended March 31, 2019 are not necessarily indicative of the results to be expected for the year.

In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842).” The ASU increases transparency and comparability among entities by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU requires lessees to recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The ASU is effective for annual reporting periods beginning after December 15, 2018 and interim periods within those annual periods. The Company adopted Topic 842 on January 1, 2019 using the modified retrospective method. Based on the Company’s current lease agreements, adopting this ASU did not have a material impact on the Company’s financial statements.

2. 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.

3. 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.

4. Revenue—The Company operates in the fastener industry and is in the business of manufacturing and selling rivets, cold-formed fasteners and parts, screw machine products, automatic rivet setting machines and parts and tools for such machines. Revenue is recognized when control of the promised goods or services is transferred to our customers, generally upon shipment of goods or completion of services, in an amount that reflects the consideration we expect to receive in exchange for those goods or services. Sales taxes we may collect concurrent with revenue producing activities are excluded from revenue. Revenue is recognized net of certain sales adjustments to arrive at net sales as reported on the statement of income. These adjustments primarily relate to customer returns and allowances. The Company records a liability and reduction in sales for estimated product returns based upon historical experience. If we determine that our obligation under warranty claims is probable and subject to reasonable determination, an estimate of that liability is recorded as an offset against revenue at that time. As of March 31, 2019 and December 31, 2018 reserves for warranty claims were not material. Cash received by the Company prior to shipment is recorded as unearned revenue.

Shipping and handling fees billed to customers are recognized in net sales, and related costs as cost of sales, when incurred.

Sales commissions are expensed when incurred because the amortization period is less than one year. These costs are recorded within selling and administrative expenses in the statement of income.

The following table presents revenue by segment, further disaggregated by end-market:

 

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Table of Contents
     Fastener      Assembly
Equipment
     Consolidated  

Three Months Ended March 31, 2019:

        

Automotive

     4,718,215        41,766        4,759,981  

Non-automotive

     2,860,905        1,000,792        3,861,697  
  

 

 

    

 

 

    

 

 

 

Total net sales

     7,579,120        1,042,558        8,621,678  
  

 

 

    

 

 

    

 

 

 

Three Months Ended March 31, 2018:

        

Automotive

     6,049,194        49,362        6,098,556  

Non-automotive

     2,875,905        1,037,180        3,913,085  
  

 

 

    

 

 

    

 

 

 

Total net sales

     8,925,099        1,086,542        10,011,641  
  

 

 

    

 

 

    

 

 

 

The following table presents revenue by segment, further disaggregated by location:

 

Three Months Ended March 31, 2019:

        

United States

     6,581,338        956,310        7,537,648  

Foreign

     997,782        86,248        1,084,030  
  

 

 

    

 

 

    

 

 

 

Total net sales

     7,579,120        1,042,558        8,621,678  
  

 

 

    

 

 

    

 

 

 

Three Months Ended March 31, 2018:

        

United States

     7,681,647        1,040,869        8,722,516  

Foreign

     1,243,452        45,673        1,289,125  
  

 

 

    

 

 

    

 

 

 

Total net sales

     8,925,099        1,086,542        10,011,641  
  

 

 

    

 

 

    

 

 

 

5. The Company’s effective tax rates were approximately 22.0% and 22.4% for the first quarter of 2019 and 2018, respectively.

The Company’s federal income tax returns for the 2015 through 2018 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. No statutes have been extended on any of the Company’s federal income tax filings. The statute of limitations on the Company’s 2015 through 2018 federal income tax returns will expire on September 15, 2019 through 2022, respectively.

The Company’s state income tax returns for the 2015 through 2018 tax years remain subject to examination by various state authorities with the latest closing period on October 31, 2022. The Company is not currently 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:

 

     March 31, 2019      December 31, 2018  

Raw material

   $ 3,086,524      $ 2,798,918  

Work-in-process

     2,289,540        1,878,977  

Finished goods

     2,033,395        2,001,496  
  

 

 

    

 

 

 

Inventories, gross

     7,409,459        6,679,391  

Valuation reserves

     (577,000      (579,000
  

 

 

    

 

 

 

Inventories, net

   $ 6,832,459      $ 6,100,391  
  

 

 

    

 

 

 

7. Segment Information—The Company operates in two business segments as determined by its products. The fastener segment includes rivets, cold-formed fasteners and parts and screw machine products. The assembly equipment segment includes automatic rivet setting machines and parts and tools for such machines. Information by segment is as follows:

 

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Table of Contents
     Fastener      Assembly
Equipment
     Other      Consolidated  

Three Months Ended March 31, 2019:

           

Net sales

   $ 7,579,120      $ 1,042,558      $ —        $ 8,621,678  

Depreciation

     297,723        28,924        9,742        336,389  

Segment operating profit

     588,895        336,074        —          924,969  

Selling and administrative expenses

     —          —          (593,402      (593,402

Interest income

     —          —          36,275        36,275  
           

 

 

 

Income before income taxes

            $ 367,842  
           

 

 

 

Capital expenditures

     756,107        124,000        26,025        906,132  

Segment assets:

           

Accounts receivable, net

     5,500,631        453,843        —          5,954,474  

Inventories, net

     5,831,166        1,001,293        —          6,832,459  

Property, plant and equipment, net

     11,184,576        1,674,573        968,740        13,827,889  

Other assets

     —          —          6,192,967        6,192,967  
           

 

 

 
            $ 32,807,789  
           

 

 

 

Three Months Ended March 31, 2018:

           

Net sales

   $ 8,925,099      $ 1,086,542      $ —        $ 10,011,641  

Depreciation

     291,881        27,298        7,341        326,520  

Segment operating profit

     1,177,462        384,185        —          1,561,647  

Selling and administrative expenses

     —          —          (676,939      (676,939

Interest income

     —          —          27,080        27,080  
           

 

 

 

Income before income taxes

            $ 911,788  
           

 

 

 

Capital expenditures

     184,227        31,495        10,705        226,427  

Segment assets:

           

Accounts receivable, net

     6,420,410        334,095        —          6,754,505  

Inventories, net

     3,658,938        937,740        —          4,596,678  

Property, plant and equipment, net

     10,175,256        1,646,752        634,852        12,456,860  

Other assets

     —          —          8,798,774        8,798,774  
           

 

 

 
            $ 32,606,817  
           

 

 

 

 

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Table of Contents

CHICAGO RIVET & MACHINE CO.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Results of Operations

Net sales for the first quarter of 2019 were $8,621,678 compared to $10,011,641 in the first quarter of 2018, a decline of $1,389,963, or 13.9%. The decline was primarily due to reduced demand for fastener segment parts, especially from automotive customers. The lower sales resulted in net income of $286,842, or $0.30 per share, in the first quarter of this year compared to $707,788, or $0.73 per share, in the first quarter of 2018. During the quarter, a regular quarterly dividend of $0.22 per share was paid and an extra dividend of $0.30 per share was paid based on the strong operating results achieved in 2018.

Fastener segment revenues were $7,579,120 in the first quarter of 2019, a decline of $1,345,979, or 15.1%, from $8,925,099 reported in the first quarter of 2018. The automotive sector is the primary market for our fastener segment products and sales to automotive customers accounted for $1,330,979 of the total segment decline. U.S. light-vehicle production and sales both declined during the first quarter of 2019. Our sales to automotive customers in the United States declined $1,059,880, or 21.5%, in the first quarter of the current year compared to the first quarter a year ago. For the same period, our sales to foreign automotive customers declined $271,099, or 24.3%, with most of the decline relating to shipments to China where passenger car sales have declined year-over-year for nine straight months. Fastener segment sales to non-automotive customers declined less than 1% during the first quarter. Production costs in the first quarter were higher than a year earlier, mainly due to higher material costs related to tariffs instituted in 2018. Steel is our primary raw material and on average, steel prices were approximately 15% higher in the first quarter of 2019 than in the year earlier quarter. Higher production costs combined with the decline in sales contributed to a decline in fastener segment gross margins from $1,976,640 in the first quarter of 2018 to $1,325,186 in the first quarter of 2019.

Assembly equipment segment revenues were $1,042,558 in the first quarter of 2019 compared to $1,086,542 in the first quarter of 2018, a decline of $43,984, or 4.0%. Overall, customer demand was relatively stable during the quarter with tools and parts sales reflecting an increase in the current year compared to a year earlier and the total number of machines shipped also increasing. The decline in net sales was primarily due to the shipment of a high-dollar machine order in the prior year quarter. The decline in net sales contributed to a $29,788 decrease in segment gross margin from $366,365 in 2018 to $336,577 in 2019.

Selling and administrative expenses during the first quarter of 2019 were $1,342,696 compared to $1,464,718 recorded in the first quarter of 2018, a decline of $122,022, or 8.3%. The decline was primarily due to a $62,000 reduction in profit sharing expense related to lower operating profit in the current year quarter and a $33,000 reduction in sales commissions due to the drop in net sales. Compared to net sales, selling and administrative expenses were 15.6% in the first quarter of 2019 compared to 14.6% in the first quarter of 2018.

Other Income

Other income in the first quarter of 2019 was $48,775 compared to $33,501 in the first quarter of 2018. The increase is primarily related to an increase in interest income on certificates of deposit due to higher interest rates in the current year.

Income Tax Expense

The Company’s effective tax rates were approximately 22.0% and 22.4% for the first quarter of 2019 and 2018, respectively.

Liquidity and Capital Resources

Working capital amounted to $16.7 million as of March 31, 2019, a decrease of $0.8 million from the beginning of the current year. Contributing to that decline were capital expenditures in the first quarter of $0.9 million, which primarily consisted of equipment used in production activities, and dividends paid of $0.5 million. Overall, cash, cash equivalents and certificates of deposit balances declined $2.1 million during the first quarter. Partially offsetting that decline was a $0.7 million increase in inventory as raw material purchases were accelerated in advance of price increases and delivery delays by certain customers. Additionally, accounts receivable increased by $0.4 million due to greater sales activity

 

10


Table of Contents

during the quarter compared to the seasonally lower fourth quarter of 2018. The net result of these changes and other cash flow activity was to leave cash, cash equivalents and certificates of deposit at $5.7 million as of March 31, 2019 compared to $7.8 million as of the beginning of the year. Management believes that current cash, cash equivalents and operating cash flow will provide adequate working capital for the next twelve months.

Results of Operations Summary

Results for the first quarter were disappointing, but followed the downturn in automotive activity in the first three months of the year. Additionally, we have experienced increases in steel prices and other materials over the past year that have negatively impacted our gross margins and remain a concern as further increases are expected. Since material price increases can be difficult to mitigate, we will emphasize cost controls in other areas and strive for greater operating efficiencies in an effort to improve operating results as well as pursuing new sales opportunities. In contrast to our fastener segment, our assembly equipment segment demand and machine order backlog have been relatively stable. Given the challenges we currently face, we will continue to make adjustments to our activities which we believe are necessary based on market conditions, while maintaining an emphasis on quality and reliability of service our customers demand.

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 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 with major customers, risks related to export sales, 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, information systems disruptions, the loss of the services of our key employees and difficulties in achieving 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


Table of Contents

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 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 President, Chief Operating Officer and Treasurer 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


Table of Contents

PART II — OTHER INFORMATION

Item 6. 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.
101    Interactive Data File. Includes the following financial and related information from Chicago Rivet & Machine Co.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 formatted in Extensible Business Reporting Language (XBRL): (1) Condensed Consolidated Balance Sheets, (2) Condensed Consolidated Statements of Income, (3) Condensed Consolidated Statements of Retained Earnings, (4) Condensed Consolidated Statements of Cash Flows, and (5) Notes to Condensed Consolidated Financial Statements.

 

13


Table of Contents

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: May 8, 2019      
     

/s/ John A. Morrissey

      John A. Morrissey
      Chairman of the Board of Directors
            and Chief Executive Officer
            (Principal Executive Officer)
Date: May 8, 2019      
     

/s/ Michael J. Bourg

      Michael J. Bourg
      President, Chief Operating
            Officer and Treasurer
            (Principal Financial Officer)

 

 

14

EX-31.1

EXHIBIT 31.1

I, John A. Morrissey, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Chicago Rivet & Machine Co.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

 

  a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date:   May 8, 2019      

/s/ John A. Morrissey

       

John A. Morrissey

       

Chief Executive Officer

       

(Principal Executive Officer)

 

EX-31.2

EXHIBIT 31.2

I, Michael J. Bourg, certify that:

 

  1.

I have reviewed this quarterly report on Form 10-Q of Chicago Rivet & Machine Co.;

 

  2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

  4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date:   May 8, 2019      

/s/ Michael J. Bourg

       

Michael J. Bourg

       

President, Chief Operating Officer

       

and Treasurer (Principal Financial Officer)

 

EX-32.1

EXHIBIT 32.1

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Chicago Rivet & Machine Co. (the “Company”) for the quarterly period ended March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John A. Morrissey, as Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

/s/ John A. Morrissey

Name: John A. Morrissey

Title:

 

Chief Executive Officer

 

(Principal Executive Officer)

Date:

 

May 8, 2019

 

EX-32.2

EXHIBIT 32.2

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Chicago Rivet & Machine Co. (the “Company”) for the quarterly period ended March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael J. Bourg, as President, Chief Operating Officer and Treasurer of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

/s/ Michael J. Bourg

Name: Michael J. Bourg

Title:

 

President, Chief Operating Officer and Treasurer (Principal Financial Officer)

Date:

 

May 8, 2019

v3.19.1
Document and Entity Information - USD ($)
3 Months Ended
Mar. 31, 2019
May 06, 2019
Jun. 30, 2018
Details      
Registrant Name Chicago Rivet & Machine Co.    
Registrant CIK 0000019871    
SEC Form 10-Q    
Period End date Mar. 31, 2019    
Fiscal Year End --12-31    
Trading Symbol CVR    
Tax Identification Number (TIN) 360904920    
Number of common stock shares outstanding   966,132  
Public Float     $ 25,335,536
Filer Category Non-accelerated Filer    
Current with reporting Yes    
Small Business true    
Emerging Growth Company false    
Amendment Flag false    
Document Fiscal Year Focus 2019    
Document Fiscal Period Focus Q1    
Entity Incorporation, State Country Name Illinois    
Entity Address, Address Line One 901 Frontenac Road    
Entity Address, City or Town Naperville    
Entity Address, State or Province Illinois    
Entity Address, Postal Zip Code 60563    
City Area Code 630    
Local Phone Number 357-8500    
v3.19.1
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
Mar. 31, 2019
Dec. 31, 2018
Current Assets:    
Cash and cash equivalents $ 606,213 $ 706,873
Certificates of deposit 5,080,000 7,063,000
Accounts receivable - Less allowances of $140,000 5,954,474 5,529,307
Inventories, net 6,832,459 6,100,391
Prepaid income taxes 114,186 150,686
Other current assets 392,568 438,222
Total current assets 18,979,900 19,988,479
Property, Plant and Equipment:    
Land and improvements 1,636,749 1,632,299
Buildings and improvements 8,246,331 8,234,182
Production equipment and other 36,154,303 35,627,443
Property, Plant and Equipment, Gross 46,037,383 45,493,924
Less accumulated depreciation 32,209,494 32,235,778
Net property, plant and equipment 13,827,889 13,258,146
Total assets 32,807,789 33,246,625
Current Liabilities:    
Accounts payable 1,113,627 1,060,231
Accrued wages and salaries 682,890 701,434
Other accrued expenses 239,872 475,973
Unearned revenue and customer deposits 282,114 328,154
Total current liabilities 2,318,503 2,565,792
Deferred income taxes 945,084 921,084
Total liabilities 3,263,587 3,486,876
Shareholders' Equity:    
Preferred stock, no par value, 500,000 shares authorized: none outstanding 0 0
Common stock, $1.00 par value, 4,000,000 shares authorized, 1,138,096 shares issued; 966,132 shares outstanding 1,138,096 1,138,096
Additional paid-in capital 447,134 447,134
Retained earnings 31,881,070 32,096,617
Treasury stock, 171,964 shares at cost (3,922,098) (3,922,098)
Total shareholders' equity 29,544,202 29,759,749
Total liabilities and shareholders' equity $ 32,807,789 $ 33,246,625
v3.19.1
Condensed Consolidated Balance Sheets (Unaudited) - Parenthetical - USD ($)
Mar. 31, 2019
Dec. 31, 2018
Details    
Accounts Receivable, Allowance for Credit Loss, Current $ 140,000 $ 140,000
Preferred Stock, Par or Stated Value Per Share $ 0 $ 0
Preferred Stock, Shares Authorized 500,000 500,000
Preferred Stock, Shares Outstanding 0 0
Common Stock, Par or Stated Value Per Share $ 1.00 $ 1.00
Common Stock, Shares Authorized 4,000,000 4,000,000
Common Stock, Shares, Issued 1,138,096 1,138,096
Common Stock, Shares, Outstanding 966,132 966,132
Treasury Stock, Shares 171,964 171,964
v3.19.1
Condensed Consolidated Statements of Income (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Condensed Consolidated Statements of Income (Unaudited)    
Net sales $ 8,621,678 $ 10,011,641
Cost of goods sold 6,959,915 7,668,636
Gross profit 1,661,763 2,343,005
Selling and administrative expenses 1,342,696 1,464,718
Operating profit 319,067 878,287
Other income 48,775 33,501
Income before income taxes 367,842 911,788
Provision for income taxes 81,000 204,000
Net income $ 286,842 $ 707,788
Per share data, basic and diluted:    
Net income per share $ 0.30 $ 0.73
Average common shares outstanding 966,132 966,132
Cash dividends declared per share $ 0.52 $ 0.51
v3.19.1
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($)
Preferred Stock
Common Stock
Additional Paid-in Capital
Retained Earnings
Treasury Stock
Total
Beginning Balance at Dec. 31, 2017 $ 0 $ 1,138,096 $ 447,134 $ 31,196,823 $ (3,922,098) $ 28,859,955
Common Stock Shares at Dec. 31, 2017   966,132        
Treasury Stock Shares at Dec. 31, 2017         171,964  
Net Income       707,788   707,788
Dividends Declared       (492,727)   (492,727)
Ending Balance at Mar. 31, 2018 0 $ 1,138,096 447,134 31,411,884 $ (3,922,098) 29,075,016
Common Stock Shares at Mar. 31, 2018   966,132        
Treasury Stock Shares at Mar. 31, 2018         171,964  
Beginning Balance at Dec. 31, 2018 0 $ 1,138,096 447,134 32,096,617 $ (3,922,098) $ 29,759,749
Common Stock Shares at Dec. 31, 2018   966,132       966,132
Treasury Stock Shares at Dec. 31, 2018         171,964 171,964
Net Income       286,842   $ 286,842
Dividends Declared       (502,389)   (502,389)
Ending Balance at Mar. 31, 2019 $ 0 $ 1,138,096 $ 447,134 $ 31,881,070 $ (3,922,098) $ 29,544,202
Common Stock Shares at Mar. 31, 2019   966,132       966,132
Treasury Stock Shares at Mar. 31, 2019         171,964 171,964
v3.19.1
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - Parenthetical - $ / shares
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Details    
Cash dividends declared per share $ 0.52 $ 0.51
v3.19.1
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Cash flows from operating activities:    
Net Income $ 286,842 $ 707,788
Adjustments to reconcile net income to net cash provided by (used in) operating activities:    
Depreciation 336,389 326,520
Gain on disposal of equipment (5,000) (300)
Deferred income taxes 24,000 (14,000)
Changes in operating assets and liabilities:    
Accounts receivable (425,167) (1,427,855)
Inventories (732,068) (68,578)
Other current assets 82,154 102,899
Accounts payable 53,396 908,830
Accrued wages and salaries (18,544) (14,635)
Other accrued expenses (236,101) (67,446)
Unearned revenue and customer deposits (46,040) (238,722)
Net cash provided by (used in) operating activities (680,139) 214,501
Cash flows from investing activities:    
Capital expenditures (906,132) (225,000)
Proceeds from the sale of equipment 5,000 300
Proceeds from certificates of deposit 3,577,000 1,494,000
Purchases of certificates of deposit (1,594,000) (1,245,000)
Net cash provided by investing activities 1,081,868 24,300
Cash flows from financing activities:    
Cash dividends paid (502,389) (492,727)
Net cash used in financing activities (502,389) (492,727)
Net decrease in cash and cash equivalents (100,660) (253,926)
Cash and cash equivalents at beginning of period 706,873 1,152,569
Cash and cash equivalents at end of period 606,213 898,643
Supplemental schedule of non-cash investing activities:    
Capital expenditures in accounts payable $ 0 $ 1,427
v3.19.1
Accounting Policies
3 Months Ended
Mar. 31, 2019
Notes  
Accounting Policies

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 March 31, 2019 (unaudited) and December 31, 2018 (audited) and the results of operations and changes in cash flows for the indicated periods.  Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted from these unaudited financial statements in accordance with applicable rules. Please refer to the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

 

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.  The results of operations for the three month period ended March 31, 2019 are not necessarily indicative of the results to be expected for the year.

 

In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842).” The ASU increases transparency and comparability among entities by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.  The ASU requires lessees to recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term.  The ASU is effective for annual reporting periods beginning after December 15, 2018 and interim periods within those annual periods.  The Company adopted Topic 842 on January 1, 2019 using the modified retrospective method. The impact of adopting this ASU was not material.

v3.19.1
Risks and Uncertainties
3 Months Ended
Mar. 31, 2019
Notes  
Risks and Uncertainties

2.  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.

 

v3.19.1
Commitments and Contingencies
3 Months Ended
Mar. 31, 2019
Notes  
Commitments and Contingencies

3.  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.

 

v3.19.1
Revenue
3 Months Ended
Mar. 31, 2019
Notes  
Revenue

4.  Revenue—The Company operates in the fastener industry and is in the business of manufacturing and selling rivets, cold-formed fasteners and parts, screw machine products, automatic rivet setting machines and parts and tools for such machines.  Revenue is recognized when control of the promised goods or services is transferred to our customers, generally upon shipment of goods or completion of services, in an amount that reflects the consideration we expect to receive in exchange for those goods or services.   Sales taxes we may collect concurrent with revenue producing activities are excluded from revenue.  Revenue is recognized net of certain sales adjustments to arrive at net sales as reported on the statement of income.  These adjustments primarily relate to customer returns and allowances.  The Company records a liability and reduction in sales for estimated product returns based upon historical experience.  If we determine that our obligation under warranty claims is probable and subject to reasonable determination, an estimate of that liability is recorded as an offset against revenue at that time.  As of March 31, 2019 and December 31, 2018 reserves for warranty claims were not material.  Cash received by the Company prior to shipment is recorded as unearned revenue.

 

Shipping and handling fees billed to customers are recognized in net sales, and related costs as cost of sales, when incurred.

 

Sales commissions are expensed when incurred because the amortization period is less than one year.  These costs are recorded within selling and administrative expenses in the statement of income.

 

 

The following table presents revenue by segment, further disaggregated by end-market:

 

 

  Fastener 

  Assembly Equipment 

  Consolidated 

Three Months Ended March 31, 2019:

 

 

 

Automotive

$  4,718,215

$        41,766

$   4,759,981

Non-automotive

2,860,905

1,000,792

3,861,697

Total net sales

$  7,579,120

$     1,042,558

$   8,621,678

 

 

 

 

Three Months Ended March 31, 2018:

 

 

 

Automotive

$  6,049,194

$        49,362

$   6,098,556

Non-automotive

2,875,905

1,037,180

3,913,085

Total net sales

$  8,925,099

$     1,086,542

$   10,011,641

 

The following table presents revenue by segment, further disaggregated by location:

 

 

  Fastener 

  Assembly Equipment 

  Consolidated 

Three Months Ended March 31, 2019:

 

 

 

United States

$  6,581,338

$       956,310

$   7,537,648

Foreign

997,782

86,248

1,084,030

Total net sales

$  7,579,120

$     1,042,558

$   8,621,678

 

 

 

 

Three Months Ended March 31, 2018:

 

 

 

United States

$  7,681,647

$       1,040,869

$  8,722,516

Foreign

1,243,452

45,673

1,289,125

Total net sales

$  8,925,099

$     1,086,542

$   10,011,641

v3.19.1
Income Taxes
3 Months Ended
Mar. 31, 2019
Notes  
Income Taxes

5.  The Company’s effective tax rates were approximately 22.0% and 22.4% for the first quarter of 2019 and 2018, respectively.

 

The Company’s federal income tax returns for the 2015 through 2018 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.  No statutes have been extended on any of the Company’s federal income tax filings.  The statute of limitations on the Company’s 2015 through 2018 federal income tax returns will expire on September 15, 2019 through 2022, respectively.

 

The Company’s state income tax returns for the 2015 through 2018 tax years remain subject to examination by various state authorities with the latest closing period on October 31, 2022.  The Company is not currently under examination by any state authority for income tax purposes and no statutes for state income tax filings have been extended.

v3.19.1
Inventories
3 Months Ended
Mar. 31, 2019
Notes  
Inventories

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:

 

 

 

March 31, 2019

December 31, 2018

Raw material

 $             3,086,524

 

 $             2,798,918

Work-in-process

                2,289,540

 

                1,878,977

Finished goods

                2,033,395

 

                2,001,496

Inventory, gross

                7,409,459

 

                6,679,391

Valuation reserves

                  (577,000)

 

                  (579,000)

Inventories, net

 $             6,832,459

 

 $             6,100,391

v3.19.1
Segment Reporting
3 Months Ended
Mar. 31, 2019
Notes  
Segment Reporting

7.  Segment Information—The Company operates in two business segments as determined by its products.  The fastener segment includes rivets, cold-formed fasteners and parts and screw machine products.  The assembly equipment segment includes automatic rivet setting machines and parts and tools for such machines.

 

 

Information by segment is as follows:

 

 

 

Fastener

Assembly Equipment

Other

Consolidated

Three Months Ended March 31, 2019:

 

 

 

 

Net sales

$ 7,579,120   

$ 1,042,558   

0   

$ 8,621,678   

 

 

 

 

 

Depreciation

297,723   

28,924   

9,742   

336,389   

 

 

 

 

 

Segment operating profit

588,895   

336,074   

0   

924,969   

Selling and administrative expenses

0   

0   

(593,402)  

(593,402)  

Interest income

0   

0   

36,275   

36,275   

Income before income taxes

 

 

 

$ 367,842   

 

 

 

 

 

Capital expenditures

756,107   

124,000

26,025   

906,132   

 

 

 

 

 

Segment assets:

 

 

 

 

   Accounts receivable, net

5,500,631   

453,843   

0   

5,954,474   

   Inventories, net

5,831,166   

1,001,293   

0   

6,832,459   

   Property, plant and equipment, net

11,184,576   

1,674,573   

968,740   

13,827,889   

   Other assets

0   

0   

6,192,967   

6,192,967   

 

 

 

 

$ 32,807,789   

 

 

 

 

 

Three Months Ended March 31, 2018:

 

 

 

 

Net sales

$ 8,925,099   

$ 1,086,542   

0   

$ 10,011,641   

 

 

 

 

 

Depreciation

291,881   

27,298   

7,341   

326,520   

 

 

 

 

 

Segment operating profit

1,177,462   

384,185   

0   

1,561,647   

Selling and administrative expenses

0   

0   

(676,939)  

(676,939)  

Interest income

0   

0   

27,080   

27,080   

Income before income taxes

 

 

 

$      911,788   

 

 

 

 

 

Capital expenditures

184,227   

31,495   

10,705

226,427   

 

 

 

 

 

Segment assets:

 

 

 

 

   Accounts receivable, net

6,420,410   

334,095   

0   

6,754,505   

   Inventories, net

3,658,938   

937,740   

0   

4,596,678   

   Property, plant and equipment, net

10,175,256   

1,646,752   

634,852   

12,456,860   

   Other assets

0   

0   

8,798,774   

8,798,774   

 

 

 

 

$ 32,606,817   

 

 

 

 

 

v3.19.1
Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2019
Policies  
Accounting Policies

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 March 31, 2019 (unaudited) and December 31, 2018 (audited) and the results of operations and changes in cash flows for the indicated periods.  Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted from these unaudited financial statements in accordance with applicable rules. Please refer to the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

 

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.  The results of operations for the three month period ended March 31, 2019 are not necessarily indicative of the results to be expected for the year.

 

In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842).” The ASU increases transparency and comparability among entities by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.  The ASU requires lessees to recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term.  The ASU is effective for annual reporting periods beginning after December 15, 2018 and interim periods within those annual periods.  The Company adopted Topic 842 on January 1, 2019 using the modified retrospective method. The impact of adopting this ASU was not material.

Risks and Uncertainties

2.  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.

Commitments and Contingencies

3.  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.

Revenue

4.  Revenue—The Company operates in the fastener industry and is in the business of manufacturing and selling rivets, cold-formed fasteners and parts, screw machine products, automatic rivet setting machines and parts and tools for such machines.  Revenue is recognized when control of the promised goods or services is transferred to our customers, generally upon shipment of goods or completion of services, in an amount that reflects the consideration we expect to receive in exchange for those goods or services.   Sales taxes we may collect concurrent with revenue producing activities are excluded from revenue.  Revenue is recognized net of certain sales adjustments to arrive at net sales as reported on the statement of income.  These adjustments primarily relate to customer returns and allowances.  The Company records a liability and reduction in sales for estimated product returns based upon historical experience.  If we determine that our obligation under warranty claims is probable and subject to reasonable determination, an estimate of that liability is recorded as an offset against revenue at that time.  As of March 31, 2019 and December 31, 2018 reserves for warranty claims were not material.  Cash received by the Company prior to shipment is recorded as unearned revenue.

 

Shipping and handling fees billed to customers are recognized in net sales, and related costs as cost of sales, when incurred.

 

Sales commissions are expensed when incurred because the amortization period is less than one year.  These costs are recorded within selling and administrative expenses in the statement of income.

Income Taxes

5.  The Company’s effective tax rates were approximately 22.0% and 22.4% for the first quarter of 2019 and 2018, respectively.

 

The Company’s federal income tax returns for the 2015 through 2018 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.  No statutes have been extended on any of the Company’s federal income tax filings.  The statute of limitations on the Company’s 2015 through 2018 federal income tax returns will expire on September 15, 2019 through 2022, respectively.

 

The Company’s state income tax returns for the 2015 through 2018 tax years remain subject to examination by various state authorities with the latest closing period on October 31, 2022.  The Company is not currently under examination by any state authority for income tax purposes and no statutes for state income tax filings have been extended.

Inventories

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

Segment Reporting

7.  Segment Information—The Company operates in two business segments as determined by its products.  The fastener segment includes rivets, cold-formed fasteners and parts and screw machine products.  The assembly equipment segment includes automatic rivet setting machines and parts and tools for such machines.

v3.19.1
Revenue: Disaggregation of Revenue (Tables)
3 Months Ended
Mar. 31, 2019
Location  
Disaggregation of Revenue

 

 

  Fastener 

  Assembly Equipment 

  Consolidated 

Three Months Ended March 31, 2019:

 

 

 

United States

$  6,581,338

$       956,310

$   7,537,648

Foreign

997,782

86,248

1,084,030

Total net sales

$  7,579,120

$     1,042,558

$   8,621,678

 

 

 

 

Three Months Ended March 31, 2018:

 

 

 

United States

$  7,681,647

$       1,040,869

$  8,722,516

Foreign

1,243,452

45,673

1,289,125

Total net sales

$  8,925,099

$     1,086,542

$   10,011,641

End Market  
Disaggregation of Revenue

 

 

  Fastener 

  Assembly Equipment 

  Consolidated 

Three Months Ended March 31, 2019:

 

 

 

Automotive

$  4,718,215

$        41,766

$   4,759,981

Non-automotive

2,860,905

1,000,792

3,861,697

Total net sales

$  7,579,120

$     1,042,558

$   8,621,678

 

 

 

 

Three Months Ended March 31, 2018:

 

 

 

Automotive

$  6,049,194

$        49,362

$   6,098,556

Non-automotive

2,875,905

1,037,180

3,913,085

Total net sales

$  8,925,099

$     1,086,542

$   10,011,641

 

v3.19.1
Inventories: Inventories (Tables)
3 Months Ended
Mar. 31, 2019
Tables/Schedules  
Inventories

 

 

March 31, 2019

December 31, 2018

Raw material

 $             3,086,524

 

 $             2,798,918

Work-in-process

                2,289,540

 

                1,878,977

Finished goods

                2,033,395

 

                2,001,496

Inventory, gross

                7,409,459

 

                6,679,391

Valuation reserves

                  (577,000)

 

                  (579,000)

Inventories, net

 $             6,832,459

 

 $             6,100,391

v3.19.1
Segment Reporting: Schedule of Segment Reporting Information, by Segment (Tables)
3 Months Ended
Mar. 31, 2019
Tables/Schedules  
Schedule of Segment Reporting Information, by Segment

 

 

 

Fastener

Assembly Equipment

Other

Consolidated

Three Months Ended March 31, 2019:

 

 

 

 

Net sales

$ 7,579,120   

$ 1,042,558   

0   

$ 8,621,678   

 

 

 

 

 

Depreciation

297,723   

28,924   

9,742   

336,389   

 

 

 

 

 

Segment operating profit

588,895   

336,074   

0   

924,969   

Selling and administrative expenses

0   

0   

(593,402)  

(593,402)  

Interest income

0   

0   

36,275   

36,275   

Income before income taxes

 

 

 

$ 367,842   

 

 

 

 

 

Capital expenditures

756,107   

124,000

26,025   

906,132   

 

 

 

 

 

Segment assets:

 

 

 

 

   Accounts receivable, net

5,500,631   

453,843   

0   

5,954,474   

   Inventories, net

5,831,166   

1,001,293   

0   

6,832,459   

   Property, plant and equipment, net

11,184,576   

1,674,573   

968,740   

13,827,889   

   Other assets

0   

0   

6,192,967   

6,192,967   

 

 

 

 

$ 32,807,789   

 

 

 

 

 

Three Months Ended March 31, 2018:

 

 

 

 

Net sales

$ 8,925,099   

$ 1,086,542   

0   

$ 10,011,641   

 

 

 

 

 

Depreciation

291,881   

27,298   

7,341   

326,520   

 

 

 

 

 

Segment operating profit

1,177,462   

384,185   

0   

1,561,647   

Selling and administrative expenses

0   

0   

(676,939)  

(676,939)  

Interest income

0   

0   

27,080   

27,080   

Income before income taxes

 

 

 

$      911,788   

 

 

 

 

 

Capital expenditures

184,227   

31,495   

10,705

226,427   

 

 

 

 

 

Segment assets:

 

 

 

 

   Accounts receivable, net

6,420,410   

334,095   

0   

6,754,505   

   Inventories, net

3,658,938   

937,740   

0   

4,596,678   

   Property, plant and equipment, net

10,175,256   

1,646,752   

634,852   

12,456,860   

   Other assets

0   

0   

8,798,774   

8,798,774   

 

 

 

 

$ 32,606,817   

 

 

 

 

 

v3.19.1
Revenue: Disaggregation of Revenue (Details) - USD ($)
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Revenue $ 8,621,678 $ 10,011,641
United States    
Revenue 7,537,648 8,722,516
Foreign    
Revenue 1,084,030 1,289,125
Automotive    
Revenue 4,759,981 6,098,556
Nonautomotive    
Revenue 3,861,697 3,913,085
Fastener    
Revenue 7,579,120 8,925,099
Fastener | United States    
Revenue 6,581,338 7,681,647
Fastener | Foreign    
Revenue 997,782 1,243,452
Fastener | Automotive    
Revenue 4,718,215 6,049,194
Fastener | Nonautomotive    
Revenue 2,860,905 2,875,905
Assembly Equipment    
Revenue 1,042,558 1,086,542
Assembly Equipment | United States    
Revenue 956,310 1,040,869
Assembly Equipment | Foreign    
Revenue 86,248 45,673
Assembly Equipment | Automotive    
Revenue 41,766 49,362
Assembly Equipment | Nonautomotive    
Revenue $ 1,000,792 $ 1,037,180
v3.19.1
Inventories: Inventories (Details) - USD ($)
Mar. 31, 2019
Dec. 31, 2018
Details    
Raw material $ 3,086,524 $ 2,798,918
Work-in-process 2,289,540 1,878,977
Finished goods 2,033,395 2,001,496
Inventory, gross 7,409,459 6,679,391
Valuation reserves (577,000) (579,000)
Inventories, net $ 6,832,459 $ 6,100,391
v3.19.1
Segment Reporting: Schedule of Segment Reporting Information, by Segment (Details) - USD ($)
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Dec. 31, 2018
Net sales $ 8,621,678 $ 10,011,641  
Depreciation 336,389 326,520  
Accounts receivable - Less allowances of $140,000 5,954,474   $ 5,529,307
Inventories, net 6,832,459   6,100,391
Net property, plant and equipment 13,827,889   $ 13,258,146
Fastener      
Net sales 7,579,120 8,925,099  
Depreciation 297,723 291,881  
Segment operating profit 588,895 1,177,462  
Selling and adminstrative expenses 0 0  
Interest income 0 0  
Capital expenditures 756,107 184,227  
Accounts receivable - Less allowances of $140,000 5,500,631 6,420,410  
Inventories, net 5,831,166 3,658,938  
Net property, plant and equipment 11,184,576 10,175,256  
Other Assets 0 0  
Assembly Equipment      
Net sales 1,042,558 1,086,542  
Depreciation 28,924 27,298  
Segment operating profit 336,074 384,185  
Selling and adminstrative expenses 0 0  
Interest income 0 0  
Capital expenditures 124,000 31,495  
Accounts receivable - Less allowances of $140,000 453,843 334,095  
Inventories, net 1,001,293 937,740  
Net property, plant and equipment 1,674,573 1,646,752  
Other Assets 0 0  
Unallocated Corporate      
Net sales 0 0  
Depreciation 9,742 7,341  
Segment operating profit 0 0  
Selling and adminstrative expenses (593,402) (676,939)  
Interest income 36,275 27,080  
Capital expenditures 26,025 10,705  
Accounts receivable - Less allowances of $140,000 0 0  
Inventories, net 0 0  
Net property, plant and equipment 968,740 634,852  
Other Assets $ 6,192,967 $ 8,798,774