e10vk
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2009
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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)
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| ILLINOIS
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36-0904920 |
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(I.R.S. Employer Identification Number) |
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| 901 Frontenac Road, Naperville, Illinois
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60563 |
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(Zip Code) |
Registrant’s telephone number, including area code: (630) 357-8500
Securities registered pursuant to Section 12(b) of the Act:
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| Title of Each Class
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Name of Each Exchange on Which Registered |
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| Common Stock — $1.00 Par Value
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NYSE Amex |
| (including Preferred Stock Purchase Rights)
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(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):
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company þ |
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(Do not check if smaller reporting company) |
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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,
2009 was $9,142,221.
As of March 22, 2010, 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, 2009
(the “2009 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 2010 Annual Meeting of Shareholders are
incorporated by reference in Part III of this report.
CHICAGO RIVET & MACHINE CO.
YEAR ENDING DECEMBER 31, 2009
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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 10 of the Company’s 2009 Annual Report to
Shareholders. The 2009 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 2009, sales to two customers exceeded 10% of the Company’s consolidated
revenues. Sales to Fisher & Company accounted for approximately 19% and 25% of the Company’s
consolidated revenues in 2009 and 2008, respectively. Sales to TI Group Automotive Systems
Corporation accounted for approximately 15% of the Company’s consolidated revenues in both 2009 and
2008.
The Company’s business has historically been stronger during the first half of the year,
although demand was greater in the second half of 2009 due to the improvement in economic
conditions in the second 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. Prices for ferrous materials increased dramatically in
2008 before retreating late in the year as much of the world entered into a recession.
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, 2009, the Company employed 208 people.
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The Company has no foreign operations, and sales to foreign customers represent only a minor
portion of the Company’s total sales.
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, and automotive production in the United States has
declined between 1999 and 2009. Certain domestic automakers and component suppliers, including
several of our customers, are financially distressed, may become financially distressed or have
filed for bankruptcy protection. In recent years, our gross margins have been negatively impacted
in part due to the declines in domestic automotive production, and we have experienced increased
accounts receivable write-offs as a result of bankruptcy filings by some of our customers.
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 automobile
sales. Continued weakness or any further decline 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 2009 and 2008 constituted approximately 34% and 40% of our
consolidated revenues, respectively. Sales to Fisher & Company accounted for approximately 19% and
25% of the Company’s consolidated revenues in 2009 and 2008, respectively. Sales to TI Group
Automotive Systems Corporation accounted for approximately 15% of the Company’s consolidated
revenues in both 2009 and 2008. 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.
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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.
We could be adversely impacted by our failure to comply with Section 404 of the Sarbanes-Oxley Act.
As a public company we are required to comply with the reporting obligations of the Exchange
Act and will be required to comply with Section 404 of the Sarbanes-Oxley Act of 2002. If we fail
to comply with the reporting obligations of the Exchange Act and Section 404 of the Sarbanes-Oxley
Act, or if we fail to achieve and maintain adequate internal controls over financial reporting, our
business, results
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of operations and financial condition, and investors’ confidence in us, could be materially
adversely affected.
The price of our common stock is subject to volatility, and our stock is thinly traded.
Various factors, such as general economic changes in the financial markets, announcements or
significant developments with respect to the automotive industry, actual or anticipated variations
in our or our competitors’ quarterly or annual financial results, the introduction of new products
or technologies by us or our competitors, changes in other conditions or trends in our industry or
in the markets of any of our significant customers, changes in governmental regulation, or changes
in securities analysts’ estimates of our competitors or our industry, could cause the market price
of our common stock to fluctuate substantially.
Our common stock is traded on the NYSE Amex (not registered, trading privileges only). The
average daily trading volume for our common stock during 2009 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
Not applicable.
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
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Naperville, Illinois
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Brick, concrete block and partial
metal construction with metal roof. |
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Tyrone, Pennsylvania
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Concrete block with small tapered
beam type warehouse. |
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Albia, Iowa
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Concrete block with prestressed
concrete roof construction. |
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Madison Heights, Michigan
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Concrete, brick and partial metal
construction with metal roof. |
ITEM 3 — Legal Proceedings
The Company is, from time to time involved in litigation, including
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environmental claims, in the normal course of business. While it is not possible at this time to
establish the ultimate amount of liability with respect to contingent liabilities, including those
related to legal proceedings, management is of the opinion that the aggregate amount of any such
liabilities, for which provision has not been made, will not have a material adverse effect on the
Company’s financial position.
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Executive Officers of the Registrant
The names, ages and positions of all executive officers of the Company, as of March 15, 2010,
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.
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| Name and Age of Officer |
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John A. Morrissey
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Chairman, Chief
Executive Officer
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Michael J. Bourg
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President, Chief Operating
Officer and Treasurer
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Kimberly A. Kirhofer
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Secretary
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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. |
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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. |
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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. |
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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 February 20, 2010 there were approximately 220 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 2009 Annual Report is incorporated herein by reference. The 2009 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 2009 were negatively impacted by the severe economic crisis that existed
throughout the year. The combination of a deep recession that began in 2008, high unemployment and
tight credit markets caused sharply reduced demand in most of the markets we serve. The automotive
market, upon which we rely for the majority of our revenue, was particularly hard hit as North
American auto and truck production
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was 32 percent lower in 2009 than the year before and several high profile bankruptcies further
weakened demand. These conditions contributed to the decline in sales of $7,127,928, or 25
percent, and resulted in a net loss of $1,282,751, or $1.33 per share, for the year.
Although overall results for 2009 were disappointing, we can report that our ongoing efforts
to improve efficiencies and reduce costs have resulted in a lower breakeven point for operations.
That, combined with an increase in sales of 19.8
percent, compared to the year earlier quarter, contributed to reporting a
profit of $.03 per share for the fourth quarter of 2009.
2009 Compared to 2008
Economic conditions, which were weak at the close of 2008, worsened in early 2009 and had a
dramatic impact on revenues in both the fastener and assembly equipment segments. Fastener segment
revenues totaled $18,286,342 for the year, compared to $24,679,510 in 2008, a decline of 25.9
percent. This was largely due to the continued drop in domestic automotive production during the
year, which reached its lowest level since 1982. During the first half of 2009, automotive
production in North America declined over 50 percent compared to the same period of 2008. During
that period, our fastener segment sales declined by 46.2 percent. Sales in this segment improved
in the second half of the year by $2,817,140, or 36.4 percent, compared to the first six months of
2009 and also improved by 2.3 percent compared to the second half of 2008, when the recession
started.
To offset the decline in demand, fastener segment payroll was reduced by more than 20 percent
through reductions in hours worked and headcount. Additional savings were generated by reductions
in all significant overhead categories, including tooling, containers, maintenance and supplies.
While the drop in demand is partially responsible for these declines, a more rigorous quoting
process for obtaining various services and supplies provided additional savings that should
continue to provide benefits as demand improves. Although we were successful in our cost control
efforts, it wasn’t until demand improved late in the year that those savings became apparent in
improved financial results compared to a year earlier. For the whole year period, the decline in
sales was too severe to be offset by cost controls, resulting in a decline in fastener segment
gross margin to $1,891,870, from $2,585,306 reported in 2008.
Assembly
equipment segment revenues were $3,104,661 in 2009, a decline of $734,760, or 19.1
percent, compared to the $3,839,421 recorded in 2008. Demand for our products in this segment
reflected the weakness in domestic manufacturing activity during 2009. Machine sales, which are
included in this segment, are particularly sensitive to economic conditions, and we have seen our
unit shipments and revenues decline as a result of the current environment. In response to the
lower level of sales activity in 2009, we have taken steps to reduce and control expenses to better
match customer demand, including reductions in staffing levels. The cumulative effect of these
actions did not fully offset the effects of reduced volume and, as a result, the assembly equipment
gross margin declined to $788,778 in 2009, from $1,101,401 in 2008.
Selling and administrative expenses were $4,762,284 in 2009, a decline of $423,503, or 8.2
percent, compared with 2008. Salaries and related benefits were reduced approximately $137,000 due
to reduced headcount and benefit changes. Sales commissions declined $114,000 due to the lower
sales level in 2009. Fees paid to directors were reduced by $65,000, reflecting a reduction in the
number of directors and recognition of the overall results of the Company. Bad debt expense
declined by $45,000, partially reversing a prior year increase of $66,000 that was related to
write-offs and an increase in reserve in 2008. The balance of the net reduction includes lower
expenses for various other items, including outside services, travel, office supplies and
maintenance.
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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. During the second quarter of 2009, the regular quarterly dividend was
reduced from $.18 to $.10 per share, due to prevailing economic conditions and uncertainty with
respect to the strength and timing of any future economic recovery, especially within the
automotive sector upon which we rely for the majority of our revenue. The total distribution for
the year was $.48 per share. On February 15, 2010, your Board of Directors declared a regular
quarterly dividend of $.10 per share, payable March 19, 2010 to shareholders of record on March 5,
2010. This continues the uninterrupted record of consecutive quarterly dividends paid by the
Company to its shareholders that extends over 76 years.
PROPERTY, PLANT AND EQUIPMENT
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.
Capital expenditures during 2008 totaled $373,183, of which $358,148 was invested in equipment
for our fastener operations. Electrical system upgrades account for $103,000 of the additions.
Inspection equipment comprises $72,000 of the total, while vehicle purchases account for an
additional $86,000. The remaining $97,000 of fastener segment additions related to miscellaneous
items, including conveyors and waste treatment equipment. Assembly equipment segment additions
totaled $15,035, for a new vertical mill.
Depreciation expense amounted to $1,028,610 in 2009 and $1,075,796 in 2008.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at December 31, 2009 was $14.1 million, a reduction of $1.3 million from the
beginning of the year. Due to the dramatic drop in customer demand experienced during most of
2009, inventories were aggressively reduced by $1.3 million. Improved sales in the fourth quarter
of 2009 compared to the year earlier period accounts for the $.5 million increase in accounts
receivable since the beginning of the year. Offsetting the increase in accounts receivable is a
similar increase in accounts payable as purchasing activity increased late in the year to meet
improved customer demand. The Company’s holdings in cash, cash equivalents and certificates of
deposit amounted to $7 million at the end of 2009, declining from approximately $7.6 million held
at the beginning of the year. The Company’s investing activities in 2009 consisted of capital
expenditures of $.4 million and a net investment in certificates of deposit of $.4 million. The
only financing activity during 2009 was the payment of $.5 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.
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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 summary of recent accounting
pronouncements can be found in Note 1 of the financial statements.
OUTLOOK FOR 2010
As we begin 2010, the worst of the economic crisis appears to be behind us, but current
conditions remain challenging. Credit markets today are functioning very differently compared to
two years ago, which has had a dampening effect on demand for equipment and has caused many
companies to keep inventory at relatively low levels. While we are pleased to report a return to
profitability in the fourth quarter, we remain cautious as the economic recovery struggles to
remain on track. Demand from our automotive customers, in particular, is likely to remain restrained
while unemployment remains at current levels or until consumer confidence improves.
We have made significant changes to our operations due to the difficult environment that has
existed in the last two years, and we will continue to look for additional improvements while
pursuing profitable opportunities. The best opportunity to further improve our bottom line
performance rests with our ability to grow revenues. During 2009, we were able to add to our
customer base, which along with an improving economy, should aid our top line growth in 2010. As
always, we face intense competition in the marketplace and expect customers will continue to demand
higher quality and lower prices as their own operations look to recover from recent setbacks. We
will continue our efforts to increase sales revenues in all markets we serve by emphasizing value
over price and excellent customer service as well as our sound financial condition, which provides
our customers with a stable sourcing alternative in uncertain times.
We gratefully acknowledge our dedicated workforce that has met the challenges of the worst
economic disruption since the Great Depression, the loyalty of our customers and the continuing
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 17 through 20 of this report.
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ITEM 9 — Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
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) of the Exchange Act. 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, 2009, 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, 2009.
This annual report does not include an attestation report of the Company’s registered public
accounting firm regarding internal control over financial reporting. Management’s report was not
subject to attestation by the Company’s registered public accounting firm pursuant to temporary
rules of the Securities and Exchange Commission that permit the Company to provide only
management’s report in this annual report.
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, 2009 that have materially affected, or are reasonably likely to materially
affect, the Company’s internal control over financial reporting.
13
PART III
ITEM 10 — Directors, Executive Officers and Corporate Governance
The information in the Company’s 2010 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 2010 Proxy Statement is to be filed with the Securities and
Exchange Commission in connection with the Company’s 2010 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 2010 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 2010 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 2010 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 2010 Proxy Statement in “Ratification of Selection
of Independent Auditor — Audit and Non-Audit Fees” is incorporated herein by reference.
14
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 17 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
18 through 20 of this report. |
| |
| |
3. |
|
Exhibits: |
| |
| |
|
|
See the section entitled “Exhibits” which appears on page 21 of this report. |
15
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 23, 2010 |
|
|
|
/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 23, 2010 |
|
|
|
/s/ Edward L. Chott
Edward L. Chott
|
|
Director, Member of
the
Audit Committee
March 23, 2010 |
|
|
|
/s/ Kent H. Cooney
Kent H. Cooney
|
|
Director, Member of
the
Audit Committee
March 23, 2010 |
|
|
|
/s/ William T. Divane, Jr.
William T. Divane
|
|
Director, Member of
the
Audit Committee
March 23, 2010 |
|
|
|
/s/ George P. Lynch
George P. Lynch
|
|
Director
March 23,
2010 |
|
|
|
/s/ Walter W. Morrissey
Walter W. Morrissey
|
|
Director, Member of the Executive
Committee
March 23,
2010 |
16
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 23, 2010, appearing on pages 4 to 11 of the accompanying 2009
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 2009 Annual Report is
not to be deemed filed as part of this Form 10-K Annual Report.
Consolidated Financial Statements from 2009 Annual Report (Exhibit 13 hereto):
Consolidated Balance Sheets (page 4 of 2009 Annual Report)
Consolidated Statements of Operations (page 5 of 2009 Annual Report)
Consolidated Statements of Retained Earnings (page 5 of 2009 Annual Report)
Consolidated Statements of Cash Flows (page 6 of 2009 Annual Report)
Notes to Consolidated Financial Statements (pages 7, 8, 9, and 10 of 2009 Annual Report)
Report of Independent Registered Public Accounting Firm (page 11 of 2009 Annual Report)
17
FINANCIAL STATEMENT SCHEDULE
2009 and 2008
The following financial statement schedule should be read in conjunction with the consolidated
financial statements and the notes thereto in the 2009 Annual Report. Financial statement
schedules not included herein have been omitted because they are not applicable or the required
information is shown in the consolidated financial statements or notes thereto.
| |
|
|
|
|
| |
|
Page |
Financial Statement Schedule: |
|
|
|
|
| |
Valuation and Qualifying Accounts (Schedule II) |
|
|
19 |
|
| |
Report of Independent Registered Public Accounting Firm
on Financial Statement Schedule |
|
|
20 |
|
18
Chicago Rivet & Machine Co.
Schedule II — Valuation and Qualifying Accounts
For the Years Ended December 31, 2009 and 2008
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Balance at |
|
Additions |
|
|
|
|
|
Balance at |
| |
|
Beginning |
|
Charged to |
|
|
|
|
|
End |
| Classification |
|
of Year |
|
Expenses |
|
Deductions(1) |
|
of Year |
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for
doubtful accounts,
returns
and allowances |
|
$ |
95,000 |
|
|
$ |
58,715 |
|
|
$ |
(11,285 |
) |
|
$ |
165,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory valuation
allowance |
|
$ |
475,000 |
|
|
$ |
385,166 |
|
|
$ |
280,166 |
|
|
$ |
580,000 |
|
|
|
|
| (1) |
|
Accounts receivable written off are net of recoveries. |
19
Report of Independent Registered Public Accounting Firm on
Financial Statement Schedule
To the 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 23, 2010, which is included in the 2009 Annual
Report to Shareholders. Our audits of the basic 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 basic financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
Grant Thornton LLP
Chicago, Illinois
March 23, 2010
20
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
|
|
22 – 46
|
| |
|
|
|
|
|
|
|
|
| |
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, 2009.
|
|
47 – 62
|
| |
|
|
|
|
|
|
|
|
| |
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.
|
|
|
63 |
|
| |
|
|
|
|
|
|
|
|
| |
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.
|
|
|
64 |
|
| |
|
|
|
|
|
|
|
|
| |
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.
|
|
|
65 |
|
| |
|
|
|
|
|
|
|
|
| |
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.
|
|
|
66 |
|
| |
|
|
|
|
|
|
|
|
| |
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.
|
|
|
67 |
|
|
|
|
| * |
|
Only the portions of this exhibit which are specifically incorporated herein
by reference shall be deemed to be filed herewith. |
21