e10vk
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
| |
|
|
| þ |
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2010
OR
| |
|
|
| o |
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number 000-01227
CHICAGO RIVET & MACHINE CO.
(Exact name of registrant as specified in its charter)
| |
|
|
|
| ILLINOIS
|
|
36-0904920 |
| (State of incorporation)
|
|
(I.R.S. Employer Identification Number) |
| |
|
|
| 901 Frontenac Road, Naperville, Illinois
|
|
60563 |
| (Address of principal executive offices)
|
|
(Zip Code) |
Registrant’s telephone number, including area code: (630) 357-8500
Securities registered pursuant to Section 12(b) of the Act:
| |
|
|
|
| Title of Each Class
|
|
Name of Each Exchange on Which Registered |
|
|
|
|
| Common Stock — $1.00 Par Value
|
|
NYSE Amex |
| (including Preferred Stock Purchase Rights)
|
|
(Trading privileges only, not registered) |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act.
Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act.
Yes o No þ
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 has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).
Yes o No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of registrant’s knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. þ
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):
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
| Large accelerated filer o
|
|
Accelerated filer o
|
|
Non-accelerated filer o
|
|
Smaller reporting company þ |
|
|
|
|
|
(Do not check if smaller reporting company) |
|
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes o No þ
The aggregate market value of common stock held by non-affiliates of the Company as of June 30,
2010 was $11,246,464.
As of March 28, 2011, there were 966,132 shares of the Company’s common stock outstanding.
Documents Incorporated By Reference
(1) Portions of the Company’s Annual Report to Shareholders for the year ended December 31, 2010
(the “2010 Report”) are incorporated by reference in Parts I and II of this report.
(2) Portions of the Company’s definitive Proxy Statement which is to be filed with the Securities
and Exchange Commission in connection with the Company’s 2011 Annual Meeting of Shareholders are
incorporated by reference in Part III of this report.
CHICAGO RIVET & MACHINE CO.
YEAR ENDING DECEMBER 31, 2010
2
PART I
ITEM 1 — Business
Chicago Rivet & Machine Co. (the “Company”) was incorporated under the laws of the State of
Illinois in December 1927, as successor to the business of Chicago Rivet & Specialty Co. The
Company operates in two segments of the fastener industry: fasteners and assembly equipment. The
fastener segment consists of the manufacture and sale of rivets, cold-formed fasteners and parts
and screw machine products. The assembly equipment segment consists primarily of the manufacture
of automatic rivet setting machines, automatic assembly equipment and parts and tools for such
machines. For further discussion regarding the Company’s operations and segments, see Note 6 of
the financial statements which appears on page 9 of the Company’s 2010 Annual Report to
Shareholders. The 2010 Annual Report is filed as an exhibit to this report.
The principal market for the Company’s products is the North American automotive industry.
Sales are solicited by employees and by independent sales representatives.
The segments in which the Company operates are characterized by active and substantial
competition. No single company dominates the industry. The Company’s competitors include both
larger and smaller manufacturers, and segments or divisions of large, diversified companies with
substantial financial resources. Principal competitive factors in the market for the Company’s
products are price, quality and service.
The Company serves a variety of customers. Revenues are primarily derived from sales to
customers involved, directly or indirectly, in the manufacture of automobiles and automotive
components. Information concerning backlog of orders is not considered material to the
understanding of the Company’s business due to relatively short production cycles. The level of
business activity for the Company is closely related to the overall level of industrial activity in
the United States. During 2010, sales to two customers exceeded 10% of the Company’s consolidated
revenues. Sales to Fisher & Company accounted for approximately 20% and 19% of the Company’s
consolidated revenues in 2010 and 2009, respectively. Sales to TI Group Automotive Systems
Corporation accounted for approximately 16% and 15% of the Company’s consolidated revenues in 2010
and 2009, respectively.
The Company’s business has historically been stronger during the first half of the year.
The Company purchases raw material from a number of sources, primarily within the United
States. There are numerous sources of raw material, and the Company does not have to rely on a
single source for any of its requirements.
Patents, trademarks, licenses, franchises and concessions are not of significant importance to
the business of the Company.
The Company does not engage in significant research activities, but rather in ongoing product
improvement and development. The amounts spent on product development activities in the last two
years were not material.
At December 31, 2010, the Company employed 219 people.
The Company has no foreign operations, and sales to foreign customers represent only a minor
portion of the Company’s total sales.
3
ITEM 1A — Risk Factors
Our business is subject to a number of risks and uncertainties. If any of the events
contemplated by the following risks actually occur, then our business, financial condition or
results of operations could be materially adversely affected. Additional risks and uncertainties
not currently known to us or that we currently deem to be immaterial may also materially and
adversely affect our business, financial condition and results of operations.
We are dependent on the domestic automotive industry.
Demand for our products is directly related to conditions in the domestic automotive industry,
which is highly cyclical and is affected by a variety of factors, including regulatory
requirements, international trade policies, and consumer spending and preferences. The domestic
automotive industry is characterized by significant overcapacity, fierce competition and
significant pension and health care liabilities. Conditions in the domestic automotive industry
declined significantly during 2008, and worsened further in 2009 as the global recession took hold,
resulting in a substantial decline in vehicle sales. Overall, automotive production in the United
States declined approximately 50 percent between 2000 and 2009, before rebounding in 2010. In
recent years, many domestic automotive component suppliers as well as General Motors and Chrysler,
have filed for bankruptcy protection, while others remain financially distressed or may become
financially distressed. Although 2010 saw improved production and sales, further declines in the
domestic automotive industry could have a material adverse effect on our business, results of
operations and financial condition.
We face intense competition.
We compete with a number of other manufacturers and distributors that produce and sell
products similar to ours. Price, quality and service are the primary elements of competition.
Our competitors include a large number of independent domestic and international suppliers. We are
not as large as a number of these companies and do not have as many financial or other resources.
The competitive environment has also changed dramatically over the past several years as our
customers, faced with intense international competition and pressure to reduce costs, have expanded
their worldwide sourcing of components. As a result, we have experienced competition from
suppliers in other parts of the world that enjoy economic advantages, such as lower labor costs,
lower health care costs and fewer regulatory burdens. There can be no assurance that we will be
able to compete successfully with existing or new competitors. Increased competition could have a
material adverse effect on our business, results of operations and financial condition.
We rely on sales to two major customers.
Our sales to two customers in 2010 and 2009 constituted approximately 36% and 34% of our
consolidated revenues, respectively. Sales to Fisher & Company accounted for approximately 20% and
19% of the Company’s consolidated revenues in 2010 and 2009, respectively. Sales to TI Group
Automotive Systems Corporation accounted for approximately 16% and 15% of the Company’s
consolidated revenues in 2010 and 2009, respectively. The loss of any significant portion of our
sales to these customers could have a material adverse effect on our business, results of
operations and financial condition.
4
Increases in our raw material costs or difficulties with our suppliers could negatively affect us.
While we currently maintain alternative sources for raw materials, our business is subject to
the risk of price fluctuations and periodic delays in the delivery of certain raw materials. In
recent years, we have been adversely impacted by increased costs for steel, our principal raw
material, which we have been unable to wholly mitigate, as well as increases in other materials
prices. Any continued fluctuation in the price or availability of our raw materials could have a
material adverse impact on our business, results of operations and financial condition.
We may be adversely affected by labor relations issues.
Although none of our employees are unionized, the domestic automakers and many of their
suppliers, including many of our customers, have unionized work forces. Work stoppages or
slow-downs experienced by automakers or their suppliers could result in slow-downs or closures of
assembly plants where our products are included in assembled components. In the event that one or
more of our customers or their customers experiences a material labor relations issue, our
business, results of operations and financial condition could be materially adversely affected.
We may incur losses as a result of product liability, warranty or other claims that may be brought
against us.
We face risk of exposure to warranty and product liability claims in the event that our
products fail to perform as expected or result, or are alleged to have resulted, in bodily injury,
property damage or other losses. In addition, if any of our products are or are alleged to be
defective, then we may be required to participate in a product recall. We may also be involved
from time to time in legal proceedings and commercial or contractual disputes. Any losses or other
liabilities related to these exposures could have a material adverse effect on our business,
results of operations and financial condition.
We could be adversely impacted by environmental laws and regulations.
Our operations are subject to environmental laws and regulations. Currently, environmental
costs and liabilities with respect to our operations are not material, but there can be no
assurance that we will not be adversely impacted by these costs and liabilities in the future
either under present laws and regulations or those that may be adopted or imposed in the future.
We could be adversely impacted by the loss of the services of key employees.
Successful operations depend, in part, upon the efforts of executive officers and other key
employees. Our future success will depend, in part, upon our ability to attract and retain
qualified personnel. Loss of the services of any of our key employees, or the inability to attract
or retain employees could have a material adverse affect upon our business, financial condition and
results of operations.
The
price of our common stock is subject to volatility, and our stock is thinly traded.
Various factors, such as general economic changes in the financial markets,
announcements or significant developments with respect to the automotive industry, actual or
anticipated variations in our or our competitors’ quarterly or annual financial results, the
introduction of new products or technologies by us or our competitors, changes in other conditions
or trends in our industry or in the markets of any of our significant customers, changes in
governmental regulation, or changes in securities analysts’ estimates of our competitors or our
industry, could cause the market price of our common stock to fluctuate substantially.
5
Our common stock is traded on the NYSE Amex (not registered, trading privileges
only). The average daily trading volume for our common stock during 2010 was less than 2,000
shares per day, and on some days we have zero volume. As a result, you may have difficulty selling
shares of our common stock, and the price of our common stock may vary significantly based on
trading volume.
ITEM 1B — Unresolved Staff Comments
None.
ITEM 2 — Properties
The Company’s headquarters is located in Naperville, Illinois. It conducts its manufacturing
and warehousing operations at three additional facilities. All of these facilities are described
below. Each facility is owned by the Company and considered suitable and adequate for its present
use. The Company currently maintains a small sales and engineering office in Norwell,
Massachusetts in a leased facility. The Company also owns a facility in Jefferson, Iowa, that was
formerly used in the fastener segment.
Of the properties described below, the Madison Heights, Michigan facility is used entirely in
the fastener segment. The Albia, Iowa facility is used exclusively in the assembly equipment
segment. The Tyrone, Pennsylvania and the Naperville, Illinois facilites are utilized in both
operating segments.
Plant Locations and Descriptions
| |
|
|
|
Naperville, Illinois
|
|
Brick, concrete block and partial
metal construction with metal roof. |
|
|
|
Tyrone, Pennsylvania
|
|
Concrete block with small tapered
beam type warehouse. |
|
|
|
Albia, Iowa
|
|
Concrete block with prestressed
concrete roof construction. |
|
|
|
Madison Heights, Michigan
|
|
Concrete, brick and partial metal
construction with metal roof. |
ITEM 3 — Legal Proceedings
The Company is, from time to time involved in litigation, including environmental claims, in
the normal course of business. While it is not possible at this time to establish the ultimate
amount of liability with respect to contingent liabilities, including those related to legal
proceedings, management is of the opinion that the aggregate amount of any such liabilities, for
which provision has not been made, will not have a material adverse effect on the Company’s
financial position.
6
Executive Officers of the Registrant
The
names, ages and positions of all executive officers of the Company, as of March 15, 2011,
are listed below. Officers are elected annually by the Board of Directors at the meeting of the
directors immediately following the Annual Meeting of Shareholders. There are no family
relationships among these officers, nor any arrangement or understanding between any officer and
any other person pursuant to which the officer was selected.
| |
|
|
|
|
|
|
|
|
|
|
| Name and Age of Officer |
|
|
|
|
|
Position |
|
Years an Officer |
John A. Morrissey
|
|
|
75 |
|
|
Chairman, Chief
Executive Officer
|
|
|
30 |
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Bourg
|
|
|
48 |
|
|
President, Chief Operating
Officer and Treasurer
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
Kimberly A. Kirhofer
|
|
|
52 |
|
|
Secretary
|
|
|
20 |
|
| — |
|
Mr. Morrissey has been Chairman of the Board of Directors of the Company since November 1979, and
Chief Executive Officer since August 1981. He has been a director of the Company since 1968. |
| |
| — |
|
Mr. Bourg has been President, Chief Operating Officer and Treasurer of the Company since May 2006.
He was Corporate Controller from December 1998 to November 2005. He became Vice President —
Finance in November 2005 and was named Executive Vice President in February 2006. He has been a
director of the Company since May 2006. |
| |
| — |
|
Mrs. Kirhofer has been Secretary of the Company since August 1991, and was Assistant Secretary of
the Company from February 1991 through August 1991. Prior to that, she held various administrative
positions with the Company since May 1983. |
7
PART II
ITEM 5 — Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
The Company’s common stock is traded on the NYSE Amex (trading privileges only, not
registered). As of March 4, 2011 there were approximately 210 shareholders of record of such
stock. The information on the market price of, and dividends paid with respect to, the Company’s
common stock, set forth in the section entitled “Information on Company’s Common Stock” which
appears on page 12 of the 2010 Annual Report is incorporated herein by reference. The 2010 Annual
Report is filed as an exhibit to this report. See Item 7 — “Management’s Discussion and Analysis
of Financial Condition and Results of Operations — Dividends,” for additional information about
the Company’s dividend policy.
Under the terms of a stock repurchase authorization originally approved by the Board of
Directors of the Company in February of 1990, as amended, the Company is authorized to repurchase
up to an aggregate of 200,000 shares of its common stock, in the open market or in private
transactions, at prices deemed reasonable by management. Cumulative purchases under the repurchase
authorization have amounted to 162,996 shares at an average price of $15.66 per share. The Company
has not purchased any shares of its common stock since 2002.
ITEM 6 — Selected Financial Data
As a Smaller Reporting Company as defined in Rule 12b-2 of the Exchange Act and in item
10(f)(1) of Regulation S-K, we have elected scaled disclosure reporting obligations with respect to
this item and therefore are not required to provide the information requested by this Item 6.
ITEM 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This discussion contains certain “forward-looking statements” which are inherently subject to risks
and uncertainties that may cause actual events to differ materially from those discussed herein.
Factors which may cause such differences in events include those disclosed above under “Risk
Factors” and elsewhere in this Form 10-K. As stated elsewhere in this filing, such factors
include, among other things: 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, and the loss of the services of our key employees. Many of these factors are beyond
our ability to control or predict. Readers are cautioned not to place undue reliance on these
forward-looking statements. We undertake no obligation to publish revised forward-looking
statements to reflect events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
RESULTS OF OPERATIONS
Results for 2010 reflect significant improvement over 2009 when business conditions were at
their weakest due to the global economic crisis. Revenues rebounded strongly during the year,
increasing 33.3 percent, from $21,391,003 in 2009 to $28,520,510 in 2010. The increase in revenue,
combined with a lower cost base
achieved in 2009, resulted in a net profit of $606,025, or $.63 per share, in 2010 compared with a
net loss of $1,282,751, or $1.33 per share, in 2009.
8
2010 Compared to 2009
The domestic economy returned to growth in 2010 which provided the backdrop for improved
operating conditions for both of our operating segments. Rebounding from the depressed levels of
the prior year, fastener segment sales totaled $25,252,093 in 2010, compared to $18,286,342 in
2009, an increase of 38.1 percent. The fourth quarter marked the fifth consecutive quarter to
exceed the year earlier quarterly sales figure. With the majority of such revenues derived from
the automotive industry, the segment has benefited from a 38 percent rebound in domestic auto and
truck production experienced in 2010, which had fallen to its lowest level since 1982 during the
prior year. As we increased production activity to meet the improved demand, segment payroll was
increased by $1,808,000. However, increased production allowed for more optimal utilization of
resources, so that while higher on an absolute dollar basis, overall payroll and plant overhead
comprised a smaller percentage of net sales than a year ago. The only notable exception was state
unemployment taxes which increased by approximately $109,000 during the year due to higher tax
rates. The combination of higher sales, better utilization of resources and an ongoing emphasis on
efficiency contributed to an increase in fastener segment gross margins of $2,642,000 during 2010
compared to 2009.
Assembly equipment segment revenues were $3,268,417 in 2010, an increase of $163,756, or 5.3
percent, compared with the $3,104,661 recorded in 2009. Machine sales, which are included in this
segment, are particularly sensitive to economic conditions, and while the number of machines
shipped during 2010 increased over the prior year by 20 percent, there were fewer high-dollar
specialty machines in sales which may be attributable to lingering uncertainty about the economy.
Actions taken during the economic downturn combined with the increase in sales, resulted in
an improvement in assembly equipment gross margins of approximately $311,000 in 2010.
Selling and administrative expenses were $4,808,292 in 2010, a net increase of $46,008,
compared to the 2009 total of $4,762,284. The largest components of the change were a $99,000
increase in commissions, due to higher sales during the year and a $69,000 increase in director
fees, which reflects the restoration of certain fees which had been voluntarily suspended in 2009
in recognition of business conditions that prevailed during that year. These items were partially
offset by a $102,000 reduction in payroll and related expenses as well as various other smaller
items resulting from cost control efforts, for a net increase of less than 1 percent. Compared to
net sales, selling and administrative expenses declined from 22.3 percent in 2009 to 16.9 percent
in 2010.
DIVIDENDS
In determining to pay dividends, the Board considers current profitability, the outlook for
longer-term profitability, known and potential cash requirements and the overall financial
condition of the Company. The total distribution for the year was $.42 per share. On February 21,
2011, the Board of Directors declared a regular quarterly dividend of $.12 per share, payable March
18, 2011 to shareholders of record on March 4, 2011. This continues the uninterrupted record of
consecutive quarterly dividends paid by the Company to its shareholders that extends over 77 years.
PROPERTY, PLANT AND EQUIPMENT
Capital expenditures during 2010 totaled $687,108, of which $459,084 was invested in equipment
for our fastener operations. Equipment to perform secondary
9
operations on parts accounted for $146,000 of the additions, while inspection equipment
comprised $46,000 of the total. Plating system upgrades totaled $57,000 and facilities
improvements were $152,000. The remaining additions of $58,000 were for miscellaneous smaller
items and a delivery vehicle. Assembly equipment segment additions totaled $157,548, comprised of
$84,874 for a new cylindrical grinder and $72,674 for facility improvements. An additional $70,476
was invested in computer equipment and software related to a computer system upgrade that benefits
both operating segments.
Total capital expenditures in 2009 were $448,177. Fastener segment additions totaled
$443,643, which included: $115,000 for cold heading and screw machine equipment, $92,000 for
various equipment that expanded our secondary processing capabilities, $63,000 for inspection and
other quality related equipment, and the balance for general plant and material handling equipment.
The majority of these additions were acquired in the used equipment market as economic conditions
created opportunities to expand our capabilities at favorable prices. Assembly equipment segment
additions were $4,534, for building improvements.
Depreciation expense amounted to $1,000,354 in 2010 and $1,028,610 in 2009.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at December 31, 2010 was $14.6 million, an increase of $.5 million from the
beginning of the year. Improved customer demand, as well as rising raw material prices, resulted
in an increase in inventories of $.6 million during 2010, following a year when inventories were
reduced by $1.3 million due to poor business conditions. Offsetting the increase in inventories is
a decline of $.5 million in prepaid income taxes, primarily related to the receipt of net operating
loss carryback claims. The Company’s holdings in cash, cash equivalents and certificates of
deposit amounted to $7.1 million at the end of 2010, increasing from $7 million held at the
beginning of the year. The Company’s investing activities in 2010 consisted of capital
expenditures of $.7 million, which was partially offset by a net reduction in investment in
certificates of deposit of $.1 million. The only financing activity during 2010 was the payment of
$.4 million in dividends.
Off-Balance Sheet Arrangements
The Company has not entered into, and has no current plans to enter into, any off-balance
sheet financing arrangements.
Management believes that current cash, cash equivalents and operating cash flow will be
sufficient to provide adequate working capital for the foreseeable future.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
The preparation of financial statements and related disclosures in conformity with accounting
principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of revenue and expenses during the reporting period. A
summary of critical accounting policies can be found in Note 1 of the financial statements.
NEW ACCOUNTING STANDARDS
The Company’s financial statements and financial condition were not, and are not expected to
be, materially impacted by new, or proposed, accounting standards. A
10
summary of recent accounting pronouncements can be found in Note 1 of the financial statements.
OUTLOOK FOR 2011
The adjustments we made to our operations as the recent economic crisis unfolded and the
growth in automotive production in 2010, allowed us to report profitable results from our
operations in 2010, when two years earlier similar sales resulted in significant losses. We
believe our success at re-engineering our operations, while maintaining our sound financial
condition, leaves us well positioned to take advantage of new opportunities in 2011.
Both of our operating segments reported increased sales and profits in 2010, however the
recovery in the assembly equipment segment has been more muted and early 2011 order activity would
seem to continue this trend.
One of the constant challenges we face is intense competition in the marketplace and the
expectation of providing the highest quality products at prices competitive with foreign sources
that benefit from lower labor costs and fewer regulatory burdens. Although there has been
improvement recently in domestic employment statistics, the unemployment rate remains high
and there are other challenges that may act to keep economic growth in 2011 at a relatively low
level. One of those challenges is the threat of inflation, of which we have seen evidence in
higher raw material prices. These increases are often difficult to recover as many of our
customers expect our prices to be held constant over the life of a part, if not reduced.
Based on current conditions, the best opportunity to further improve our bottom line
performance rests with our ability to grow revenues. We were successful in that regard in 2010 and
will continue our efforts to grow our sales to existing customers, as well as pursuing new
customer relationships in 2011, by emphasizing value over price and by providing excellent customer service.
Additionally, we will continue to look for operational improvements and make investments in our
business that we feel will lead to improved profitability.
The positive results for the past year would not have been possible without the conscientious
efforts of our dedicated workforce, and we take this opportunity to gratefully acknowledge their
contribution to the Company’s success. We also wish to express our appreciation for the loyalty of
our customers and the support of our shareholders.
ITEM 7A Quantitative and Qualitative Disclosures About Market Risk
As a Smaller Reporting Company as defined in Rule 12b-2 of the Exchange Act and in item
10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations with respect to
this item and therefore are not required to provide the information requested by this Item 7A.
ITEM 8 — Financial Statements and Supplementary Data
See the sections entitled “Consolidated Financial Statements” and “Financial Statement
Schedule” which appear on pages 16 through 19 of this report.
ITEM 9 — Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
11
ITEM 9A — Controls and Procedures
Disclosure Controls and Procedures.
The Company’s management, with the participation of the Company’s Chief Executive Officer and
President, Chief Operating Officer and Treasurer (the Company’s principal financial officer), has
evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the
Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of
such period, the Company’s disclosure controls and procedures are effective in recording,
processing, summarizing and reporting, on a timely basis, information required to be disclosed by
the Company in the reports that it files or submits under the Exchange Act.
Management’s Report on Internal Control Over Financial Reporting.
The Company’s management is responsible for establishing and maintaining adequate internal
control over financial reporting, as that term is defined in Exchange Act Rules 13a-15(f) and
15d-15(f). The Company’s management, with the participation of the Company’s Chief Executive
Officer and President, Chief Operating Officer and Treasurer (the Company’s principal financial
officer), assessed the effectiveness of the Company’s internal control over financial reporting as
of December 31, 2010, based on criteria established in Internal Control—Integrated Framework,
issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on
this assessment, the Company’s management has concluded that the Company’s internal controls over
financial reporting are effective as of December 31, 2010.
The attestation report requirement for non-accelerated filers was permanently removed from the
Sarbanes-Oxley Act by Section 989C of the Dodd-Frank Act as adopted by the SEC.
Changes in Internal Control Over Financial Reporting.
There have not been any changes in the Company’s internal control over financial reporting (as
such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter
ended December 31, 2010 that have materially affected, or are reasonably likely to materially
affect, the Company’s internal control over financial reporting.
12
PART III
ITEM 10 — Directors, Executive Officers and Corporate Governance
The information in the Company’s 2011 Proxy Statement (i) with respect to the Board of
Directors’ nominees for directors that is not related to security ownership in “Security Ownership
of Management” (ii) in the third paragraph in “Additional Information Concerning the Board of
Directors and Committees” and (iii) in “Section 16(a) Beneficial Ownership Reporting Compliance” is
incorporated herein by reference. The 2011 Proxy Statement is to be filed with the Securities and
Exchange Commission in connection with the Company’s 2011 Annual Meeting of Shareholders. The
information called for with respect to executive officers of the Company is included in Part I of
this Report on Form 10-K under the caption “Executive Officers of the Registrant.”
The Company has adopted a code of ethics for its principal executive officer, chief operating
officer and senior financial officers. A copy of this code of ethics was filed as Exhibit 14 to
the Company’s Annual Report on Form 10-K dated March 29, 2005.
ITEM 11 — Executive Compensation
The information set forth in the Company’s 2011 Proxy Statement in “Compensation of Directors
and Executive Officers” is incorporated herein by reference.
The Compensation Committee of the Board of Directors currently consists of Directors Edward L.
Chott, William T. Divane, Jr. and George P. Lynch.
ITEM 12 — Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information set forth in the Company’s 2011 Proxy Statement in “Principal Shareholders”
and the information with respect to security ownership of the Company’s directors and officers set
forth in “Security Ownership of Management” is incorporated herein by reference.
The Company does not have any equity compensation plans or arrangements.
ITEM 13 — Certain Relationships and Related Transactions, and Director Independence
The information set forth in the Company’s 2011 Proxy Statement in (i) “Additional Information
Concerning the Board of Directors and Committees — Policy Regarding Related Person Transactions”
and (ii) the first paragraph under “Additional Information Concerning the Board of Directors and
Committees” is incorporated herein by reference.
ITEM 14 — Principal Accountant Fees and Services
The information set forth in the Company’s 2011 Proxy Statement in “Ratification of
Selection of Independent Auditor — Audit and Non-Audit Fees” is incorporated herein by reference.
13
PART IV
ITEM 15 — Exhibits and Financial Statement Schedules
| |
(a) |
|
The following documents are filed as a part of this report: |
| |
1. |
|
Financial Statements: |
| |
| |
|
|
See the section entitled “Consolidated Financial Statements” which appears on
page 16 of this report. |
| |
| |
2. |
|
Financial statement schedule and supplementary information
required to be submitted: |
| |
| |
|
|
See the section entitled “Financial Statement Schedule” which appears on pages
17 through 19 of this report. |
| |
| |
3. |
|
Exhibits: |
| |
| |
|
|
See the section entitled “Exhibits” which appears on page 20 of this report. |
14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
Chicago Rivet & Machine Co. has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
| |
|
|
|
|
| |
Chicago Rivet & Machine Co.
|
|
| |
By |
/s/ Michael J. Bourg
|
|
| |
|
Michael J. Bourg |
|
| |
|
President and Chief Operating Officer |
|
| |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated:
| |
|
|
/s/ John A. Morrissey
John A. Morrissey
|
|
Chairman of the Board of Directors,
Chief
Executive Officer (Principal
Executive Officer) and Member of the
Executive Committee
March 28, 2011 |
|
|
|
/s/ Michael J. Bourg
Michael J. Bourg
|
|
President, Chief Operating Officer,
Treasurer
(Principal Financial and
Accounting Officer), Director and
Member of the
Executive Committee
March 28, 2011 |
|
|
|
/s/ Edward L. Chott
Edward L. Chott
|
|
Director, Member of
the
Audit Committee
March 28, 2011 |
|
|
|
/s/ Kent H. Cooney
Kent H. Cooney
|
|
Director, Member of
the
Audit Committee
March 28, 2011 |
|
|
|
/s/ William T. Divane, Jr.
William T. Divane
|
|
Director, Member of
the
Audit Committee
March 28, 2011 |
|
|
|
/s/ George P. Lynch
George P. Lynch
|
|
Director
March 28,
2011 |
|
|
|
/s/ Walter W. Morrissey
Walter W. Morrissey
|
|
Director, Member of the Executive
Committee
March 28,
2011 |
15
CHICAGO RIVET & MACHINE CO.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements, together with the notes thereto and the report thereon
of Grant Thornton LLP dated March 28, 2011, appearing on pages 4 to 11 of the accompanying 2010
Annual Report, are incorporated herein by reference. With the exception of the aforementioned
information and the information incorporated in Items 1, 5 and 8 herein, the 2010 Annual Report is
not to be deemed filed as part of this Form 10-K Annual Report.
Consolidated Financial Statements from 2010 Annual Report (Exhibit 13 hereto):
Consolidated Balance Sheets (page 4 of 2010 Annual Report)
Consolidated Statements of Operations (page 5 of 2010 Annual Report)
Consolidated Statements of Retained Earnings (page 5 of 2010 Annual Report)
Consolidated Statements of Cash Flows (page 6 of 2010 Annual Report)
Notes to Consolidated Financial Statements (pages 7, 8, 9, and 10 of 2010 Annual Report)
Report of Independent Registered Public Accounting Firm (page 11 of 2010 Annual Report)
16
FINANCIAL STATEMENT SCHEDULE
2010 and 2009
The following financial statement schedule should be read in conjunction with the consolidated
financial statements and the notes thereto in the 2010 Annual Report. Financial statement
schedules not included herein have been omitted because they are not applicable or the required
information is shown in the consolidated financial statements or notes thereto.
17
Chicago Rivet & Machine Co.
Schedule II — Valuation and Qualifying Accounts
For the Years Ended December 31, 2010 and 2009
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Balance at |
|
Additions |
|
|
|
|
|
Balance at |
| |
|
Beginning |
|
Charged to |
|
|
|
|
|
End |
| Classification |
|
of Year |
|
Expenses |
|
Deductions(1) |
|
of Year |
2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for
doubtful accounts,
returns
and allowances |
|
$ |
155,000 |
|
|
$ |
11,943 |
|
|
$ |
31,943 |
|
|
$ |
135,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory valuation
allowance |
|
$ |
564,500 |
|
|
$ |
122,814 |
|
|
$ |
170,714 |
|
|
$ |
516,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for
doubtful accounts,
returns
and allowances |
|
$ |
165,000 |
|
|
$ |
13,702 |
|
|
$ |
23,702 |
|
|
$ |
155,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory valuation
allowance |
|
$ |
580,000 |
|
|
$ |
316,065 |
|
|
$ |
331,565 |
|
|
$ |
564,500 |
|
|
|
|
| (1) |
|
Accounts receivable written off are net of recoveries. |
18
Report of Independent Registered Public Accounting Firm on
Financial Statement Schedule
Board of Directors and Shareholders
of Chicago Rivet & Machine Co.
We have audited in accordance with the standards of the Public Company Accounting Oversight
Board (United States) the consolidated financial statements of Chicago Rivet & Machine Co. and
subsidiary referred to in our report dated March 28, 2011, which is included in the 2010 Annual
Report to Shareholders. Our audits of the consolidated financial statements included the financial
statement schedule listed in the index appearing under Item 15(a)(2), which is the responsibility
of the Company’s management. In our opinion, this financial statement schedule, when considered in
relation to the consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
GRANT THORNTON LLP
Chicago, Illinois
March 28, 2011
19
CHICAGO RIVET & MACHINE CO.
EXHIBITS
INDEX TO EXHIBITS
| |
|
|
|
|
|
|
| Exhibit |
|
|
|
|
| Number |
|
|
|
Page |
|
|
|
|
|
|
|
3.1
|
|
Articles of Incorporation, as last amended
August 18, 1997. Incorporated by reference to
the Company’s report on Form 10-K,
dated March 27, 1998. File number 0000-01227 |
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
Amended and Restated By-Laws, as amended through
August 17, 2009. Incorporated by reference to the
Company’s report on Form 10-K, dated March 23, 2010.
File number 0000-01227 |
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
Rights Agreement, dated December 3, 2009, between
the Company and Continental Stock Transfer & Trust
Company as Rights Agent. Incorporated by reference
to the Company’s report on Form 8-K, dated
November 16, 2009. File number 0000-01227 |
|
|
|
|
|
|
|
|
|
|
|
13*
|
|
Annual Report to Shareholders for the year
ended December 31, 2010.
|
|
22 – 37
|
|
|
|
|
|
|
|
14
|
|
Code of Ethics for Principal Executive and Senior
Financial Officers. Incorporated by reference to
the Company’s report on Form 10K, dated
March 29, 2005. File number 0000-01227 |
|
|
|
|
|
|
|
|
|
|
|
21
|
|
Subsidiaries of the Registrant.
|
|
|
38 |
|
|
|
|
|
|
|
|
31.1
|
|
Certification of Principal Executive Officer Pursuant to
Rule 13a-14(a) or 15d-14(a) as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
39 |
|
|
|
|
|
|
|
|
31.2
|
|
Certification of Principal Financial Officer Pursuant to
Rule 13a-14(a) or 15d-14(a) as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
40 |
|
|
|
|
|
|
|
|
32.1
|
|
Certification of Principal Executive Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
41 |
|
|
|
|
|
|
|
|
32.2
|
|
Certification of Principal Financial Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
42 |
|
|
|
|
| * |
|
Only the portions of this exhibit which are specifically incorporated herein
by reference shall be deemed to be filed herewith. |
20