-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BA4CxYrc6CVyucnLC+WR33ulRDhRul7/pZAttI8QEqdvXvszLz4WllXOl3n50hVE 96y5NUReyJvJeWMGw4qqDw== 0000950137-06-012282.txt : 20061113 0000950137-06-012282.hdr.sgml : 20061110 20061113110900 ACCESSION NUMBER: 0000950137-06-012282 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20060930 FILED AS OF DATE: 20061113 DATE AS OF CHANGE: 20061113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHICAGO RIVET & MACHINE CO CENTRAL INDEX KEY: 0000019871 STANDARD INDUSTRIAL CLASSIFICATION: METALWORKING MACHINERY & EQUIPMENT [3540] IRS NUMBER: 360904920 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-01227 FILM NUMBER: 061206413 BUSINESS ADDRESS: STREET 1: 901 FRONTENAC RD STREET 2: P O BOX 3061 CITY: NAPERVILLE STATE: IL ZIP: 60566 BUSINESS PHONE: 6303578500 MAIL ADDRESS: STREET 1: 901 FRONTENAC RD STREET 2: P O BOX 3061 CITY: NAPERVILLE STATE: IL ZIP: 60566 10-Q 1 c09821e10vq.txt QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ----------- FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2006 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 0-1227 Chicago Rivet & Machine Co. (Exact Name of Registrant as Specified in Its Charter) Illinois 36-0904920 (State or Other Jurisdiction (I.R.S. Employer of Incorporation or Organization) Identification No.) 901 Frontenac Road, Naperville, Illinois 60563 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code (630) 357-8500 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer X --- --- --- Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X --- --- As of September 30, 2006, 966,132 shares of the registrant's common stock were outstanding. CHICAGO RIVET & MACHINE CO. INDEX PART I. FINANCIAL INFORMATION Page Condensed Consolidated Balance Sheets at September 30, 2006 and December 31, 2005 2-3 Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2006 and 2005 4 Condensed Consolidated Statements of Retained Earnings for the Nine Months Ended September 30, 2006 and 2005 5 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2006 and 2005 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 13-23 1 Item 1. Financial Statements. CHICAGO RIVET & MACHINE CO. Condensed Consolidated Balance Sheets September 30, 2006 and December 31, 2005
September 30, December 31, 2006 2005 ------------- ----------- (Unaudited) Assets Current Assets: Cash and cash equivalents $ 169,029 $ 4,730,837 Certificates of deposit 5,005,000 1,005,000 Accounts receivable, net of allowance of $178,000 and $210,000, respectively 6,666,881 5,370,611 Inventories: Raw materials 1,442,751 1,586,744 Work in process 2,309,076 2,218,774 Finished goods 2,463,165 2,166,177 ----------- ----------- Total inventories 6,214,992 5,971,695 ----------- ----------- Deferred income taxes 529,191 560,191 Other current assets 348,663 232,142 ----------- ----------- Total current assets 18,933,756 17,870,476 ----------- ----------- Property, Plant and Equipment: Land and improvements 1,029,035 1,029,035 Buildings and improvements 6,323,931 6,251,144 Production equipment, leased machines and other 29,597,136 29,163,667 ----------- ----------- 36,950,102 36,443,846 Less accumulated depreciation 26,951,457 26,392,338 ----------- ----------- Net property, plant and equipment 9,998,645 10,051,508 ----------- ----------- Total assets $28,932,401 $27,921,984 =========== ===========
See Notes to the Condensed Consolidated Financial Statements 2 CHICAGO RIVET & MACHINE CO. Condensed Consolidated Balance Sheets September 30, 2006 and December 31, 2005
September 30, December 31, 2006 2005 ------------- ------------ (Unaudited) Liabilities and Shareholders' Equity Current Liabilities: Accounts payable $ 1,644,736 $ 1,452,314 Accrued wages and salaries 907,644 680,969 Contributions due profit sharing plan 252,000 125,000 Accrued plant closing expenses 399,746 -- Other accrued expenses 502,567 772,270 ------------ ------------ Total current liabilities 3,706,693 3,030,553 Deferred income taxes 1,073,275 1,313,275 ------------ ------------ Total liabilities 4,779,968 4,343,828 ------------ ------------ Commitments and contingencies (Note 4) 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 1,138,096 1,138,096 Additional paid-in capital 447,134 447,134 Retained earnings 26,489,301 25,915,024 Treasury stock, 171,964 shares at cost (3,922,098) (3,922,098) ------------ ------------ Total shareholders' equity 24,152,433 23,578,156 ------------ ------------ Total liabilities and shareholders' equity $ 28,932,401 $ 27,921,984 ============ ============
See Notes to the Condensed Consolidated Financial Statements 3 CHICAGO RIVET & MACHINE CO. Condensed Consolidated Statements of Operations For the Three and Nine Months Ended September 30, 2006 and 2005 (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ----------------------------- ----------------------------- 2006 2005 2006 2005 Net sales $ 9,107,430 $ 9,691,683 $ 31,053,347 $ 29,783,682 Lease revenue 25,033 26,678 77,433 81,933 ------------ ------------ ------------ ------------ 9,132,463 9,718,361 31,130,780 29,865,615 Cost of goods sold and costs related to lease revenue 7,352,636 8,258,602 24,517,941 25,385,666 ------------ ------------ ------------ ------------ Gross profit 1,779,827 1,459,759 6,612,839 4,479,949 Selling and administrative expenses 1,491,616 1,759,263 4,758,465 5,192,520 Plant closing expenses 8,204 -- 408,605 -- ------------ ------------ ------------ ------------ Operating profit (loss) 280,007 (299,504) 1,445,769 (712,571) Other income and expenses: Interest income 66,572 41,124 176,490 101,161 Other income 3,600 3,600 12,730 11,378 ------------ ------------ ------------ ------------ Income (loss) before income taxes 350,179 (254,780) 1,634,989 (600,032) Provision (benefit) for income taxes 112,000 (85,000) 539,000 (201,000) ------------ ------------ ------------ ------------ Net income (loss) $ 238,179 $ (169,780) $ 1,095,989 $ (399,032) ============ ============ ============ ============ Average common shares outstanding 966,132 966,132 966,132 966,132 ============ ============ ============ ============ Per share data: Net income (loss) per share 0.24 $ (0.17) $ 1.13 $ (0.41) ============ ============ ============ ============ Cash dividends declared per share $ 0.18 $ 0.18 $ 0.54 $ 0.69 ============ ============ ============ ============
See Notes to the Condensed Consolidated Financial Statements 4 CHICAGO RIVET & MACHINE CO. Condensed Consolidated Statements of Retained Earnings For the Nine Months Ended September 30, 2006 and 2005 (Unaudited)
2006 2005 ------------ ------------ Retained earnings at beginning of period $ 25,915,024 $ 27,154,171 Net income (loss) for the nine months ended 1,095,989 (399,032) Cash dividends declared in the period, $.54 and $.69 per share in 2006 and 2005, respectively (521,712) (666,632) ------------ ------------ Retained earnings at end of period $ 26,489,301 $ 26,088,507 ============ ============
See Notes to the Condensed Consolidated Financial Statements 5 CHICAGO RIVET & MACHINE CO. Condensed Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 2006 and 2005 (Unaudited)
2006 2005 ------------ ------------ Cash flows from operating activities: Net income (loss) $ 1,095,989 $ (399,032) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation 1,234,514 1,270,532 Net (gain) loss on the sale of equipment (10,330) 8,003 Deferred income taxes (209,000) (133,000) Changes in operating assets and liabilities: Accounts receivable, net (1,296,270) (1,929,881) Inventories (243,297) 318,433 Other current assets (116,521) (75,266) Accounts payable 159,361 560,267 Other accrued expenses 483,718 (105,966) ------------ ------------ Net cash provided by (used in) operating activities 1,098,164 (485,910) ------------ ------------ Cash flows from investing activities: Capital expenditures (1,154,760) (573,924) Proceeds from the sale of equipment 16,500 500 Proceeds from held-to-maturity securities 6,275,000 805,000 Purchases of held-to-maturity securities (10,275,000) (1,005,000) ------------ ------------ Net cash used in investing activities (5,138,260) (773,424) ------------ ------------ Cash flows from financing activities: Cash dividends paid (521,712) (666,632) ------------ ------------ Net cash used in financing activities (521,712) (666,632) ------------ ------------ Net decrease in cash and cash equivalents (4,561,808) (1,925,966) Cash and cash equivalents at beginning of period 4,730,837 5,464,368 ------------ ------------ Cash and cash equivalents at end of period $ 169,029 $ 3,538,402 ============ ============ Supplemental schedule of non-cash investing activities: Capital expenditures in accounts payable $ 33,061 $ 27,401
See Notes to the Condensed Consolidated Financial Statements 6 CHICAGO RIVET & MACHINE CO. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. In the opinion of the Company, the accompanying unaudited interim financial statements contain all adjustments necessary to present fairly the financial position of the Company as of September 30, 2006 (unaudited) and December 31, 2005 (audited) and the results of operations and changes in cash flows for the indicated periods. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. The results of operations for the three and nine-month period ending September 30, 2006 are not necessarily indicative of the results to be expected for the year. 3. The Company extends credit on the basis of terms that are customary within our markets to various companies doing business primarily in the automotive industry. The Company has a concentration of credit risk primarily within the automotive industry and in the Midwestern United States. 4. The Company is, from time to time, involved in litigation, including environmental claims and contract disputes, in the normal course of business. While it is not possible at this time to establish the ultimate amount of liability with respect to contingent liabilities, including those related to legal proceedings, management is of the opinion that the aggregate amount of any such liabilities, for which provision has not been made, will not have a material adverse effect on the Company's financial position. 5. On May 30, 2006 the Board of Directors of Chicago Rivet & Machine Co. determined that the Company would close its fastener operation in Jefferson, Iowa and transfer production activities to its facility in Tyrone, Pennsylvania. The Jefferson, Iowa facility had been operating below capacity, and the Company determined to close the facility as part of its cost savings efforts. While the exact timing is unknown at this time, it is expected that the transfer will be substantially complete by December 31, 2006. The Company has recorded $408,605, through September 30, 2006, relating to termination benefits and equipment moving expenses in connection with the closing of the Jefferson facility. The Company does not anticipate that it will record a material charge related to asset impairment as a result of this closing. Additional costs associated with the relocation of equipment and closing and disposal of the facility are anticipated, but the amount and timing of such costs are not known at this time. 7 CHICAGO RIVET & MACHINE CO. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 6. Segment Information--The Company operates in two business segments as determined by its products. The fastener segment includes rivets, cold-formed fasteners and screw machine products. The assembly equipment segment includes automatic rivet setting machines, parts and tools for such machines and the leasing of automatic rivet setting machines. Information by segment is as follows:
Assembly Fastener Equipment Other Consolidated ------------ ------------ ------------ ------------ Three Months Ended September 30, 2006: Net sales and lease revenue $ 7,833,763 $ 1,298,700 $ -- $ 9,132,463 Depreciation 368,575 25,377 23,152 417,104 Segment profit 441,743 348,214 789,957 Selling and administrative expenses (498,146) (498,146) Plant closing expenses (8,204) (8,204) Interest income 66,572 66,572 ------------ Income before income taxes 350,179 ------------ Capital expenditures 194,275 -- 58,174 252,449 Segment assets: Accounts receivable, net 5,907,432 759,449 6,666,881 Inventories 4,544,100 1,670,892 6,214,992 Property, plant and equipment, net 7,830,427 1,207,493 960,725 9,998,645 Other assets 6,051,883 6,051,883 ------------ 28,932,401 ------------ Three Months Ended September 30, 2005: Net sales and lease revenue $ 8,488,640 $ 1,229,721 $ -- $ 9,718,361 Depreciation 384,206 26,404 20,096 430,706 Segment profit 118,115 202,214 320,329 Selling and administrative expenses (616,233) (616,233) Interest income 41,124 41,124 ------------ Loss before income taxes (254,780) ------------ Capital expenditures 39,155 33,169 30,062 102,386 ------------ Segment assets: Accounts receivable, net 6,245,497 551,999 6,797,496 Inventories 4,030,738 1,893,299 5,924,037 Property, plant and equipment, net 8,179,240 1,311,511 977,855 10,468,606 Other assets 5,378,356 5,378,356 ------------ 28,568,495 ------------
8 CHICAGO RIVET & MACHINE CO. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Assembly Fastener Equipment Other Consolidated -------- --------- ------------- ------------ Nine Months Ended September 30, 2006: Net sales and lease revenue $ 26,543,850 $ 4,586,930 $ -- $ 31,130,780 Depreciation 1,091,291 76,131 67,092 1,234,514 Segment profit 2,291,848 1,201,764 3,493,612 Selling and administrative expenses (1,626,508) (1,626,508) Plant closing expenses (408,605) (408,605) Interest income 176,490 176,490 ------------ Income before income taxes 1,634,989 ------------ Capital expenditures 1,115,104 -- 72,717 1,187,821 Nine Months Ended September 30, 2005: Net sales and lease revenue $ 25,281,006 $ 4,584,609 $ -- $ 29,865,615 Depreciation 1,136,246 78,616 55,670 1,270,532 Segment profit 230,607 984,762 -- 1,215,369 Selling and administrative expenses (1,916,562) (1,916,562) Interest income 101,161 101,161 ------------ Loss before income taxes (600,032) ------------ Capital expenditures 411,720 34,689 154,916 601,325
9 CHICAGO RIVET & MACHINE CO. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Revenues for the third quarter of 2006 declined $585,898, or 6%, compared to the third quarter of 2005, as an increase in assembly equipment segment sales was more than offset by reduced fastener segment demand; however, year to date revenues remain ahead of 2005, reflecting an increase of $1,265,165, or 4%. The decrease in revenues during the quarter was more than offset by reductions in certain manufacturing costs and administrative expenses, which resulted in net income for the quarter of $238,179, or $.24 per share, compared to a loss of $169,780, or $.17 per share, for the third quarter of 2005. This brings the current year to date net income to $1,095,989, or $1.13 per share, compared to a net loss of $399,032, or $.41 per share, for the first nine months of 2005. Third quarter revenues within the fastener segment totaled $7,833,763, a decrease of $654,877, or 7.7%, compared to the third quarter of 2005. The reduction in fastener segment sales was due to lower demand from automotive industry customers. Despite the lower sales, we realized a net improvement in gross margin of approximately $156,000 during the quarter due primarily to a reduction in tooling costs of $132,000 and lower average material prices during the quarter. Additionally, labor costs declined in the quarter by approximately $113,000, as work schedules were adjusted to match production needs, and expediting costs declined $56,000 as such costs returned to more normal levels compared to the third quarter of 2005. The balance of the improvement in gross margin was the net result of a variety of overhead components. Fastener segment revenues have increased $1,262,844, or 5%, in the first nine months of 2006 compared with 2005, totaling $26,543,850. Gross margins have improved by approximately $1,946,000 in the current year. The combination of higher sales and a $670,000 reduction in tooling expense were the primary factors in this improvement. The reduction in tooling expense is attributed to a higher than normal number of parts being designed during 2005, and the overall longer life of certain tools during the current year. The increased manufacturing volume in the current year has also allowed for greater utilization of plant resources, further contributing to the improvement in margins in 2006. Revenues within the assembly equipment segment increased by $68,979, or 5.6%, during the third quarter of 2006, compared with the third quarter of 2005. The improvement was primarily due to an increase in the number of machines shipped during the quarter. The third quarter increase brings year to date revenues for this segment to $4,586,930, fractionally ahead of 2005. Gross margins for the third quarter of 2006 increased $164,000, benefiting not only from the increase in sales during the quarter, but also a reduction in labor costs and labor related expenses, due to turnover and headcount reductions. Similarly, the results for the first nine months of 2006 also reflect the aforementioned changes, resulting in an increase in gross margin of $187,000 compared with 2005. Selling and administrative expenses for the third quarter of 2006 declined by $268,000 compared with the third quarter of 2005. Professional fees were $72,000 lower in the third quarter of 2006 due to initial procedures performed in 2005 related to compliance with the Sarbanes-Oxley Act of 2002. Expenses were further reduced by $149,000 due to the settlement of a litigation matter in 2005. Bad debt expense was $63,000 lower in the quarter due to the bankruptcy of a certain customer in the third quarter of 2005, and salaries declined $38,000 due to headcount reductions. Partially offsetting these lower expense items is an increase in profit sharing expense of $62,000, related to higher profits for the third quarter of 2006. For the first nine months of 2006, selling and administrative expenses have declined $434,000 compared to 2005. Professional fees have declined $289,000 due to initial consulting incurred in 2005 related to Sarbanes-Oxley compliance. Selling and administrative expenses incurred in 2005 also included $312,000 to resolve a litigation matter. The absence of a bankruptcy filing of a certain customer in the current year has resulted in a net decline in bad debt expense of $73,000. The reduction in these expense items on a year to date basis is partially offset by the increase in profit sharing of $252,000, due to more profitable operating results in 2006. During May of the current year, a decision was made to close our Jefferson, Iowa fastener operation and transfer production activities of that location to our facility in Tyrone, Pennsylvania, to better utilize manufacturing capacity. We continue to make progress in that effort, and expect the transfer to be completed before December 31, 2006. As of September 30, 2006, a charge of $408,605 has been recorded related to the plant closing. Additional costs associated with the relocation of equipment and disposal of the facility are expected, but the amount and timing of such costs are not known at this time. Working capital at September 30, 2006 amounted to $15.2 million, an increase of $.4 million from the beginning of the year. Accounts receivable balances have increased $1.3 million since the beginning of the year due to higher sales volumes. Offsetting this amount is an increase in current liabilities of nearly $.7 million, of which $.4 million relates to the accrual for termination benefits for the Jefferson, Iowa plant closing. Holdings in cash, cash equivalents and certificates of 10 deposit amounted to $5.2 million at the end of the third quarter, a year to date decline of $.5 million. In the current year, almost $1.2 million has been spent for capital items, primarily to expand our fastener segment production capabilities. The Company has a $1.0 million line of credit, which expires May 31, 2007. This line of credit remains unused. Management believes that current cash, cash equivalents, operating cash flow and the available line of credit will provide adequate working capital for the foreseeable future. Although we are pleased to report a return to profitability for the third quarter and the first nine months of the year, the decline in sales for the third quarter is a matter of concern. News accounts related to the automotive sector, upon which we rely for revenue, continue to be dominated by reports on the challenging conditions in the domestic market. Given the current environment, we do not foresee significant improvements in that market in the short term. Competition from foreign sources also continues to be a significant factor, as domestic manufacturers struggle to deal with higher legacy costs, while their share of the automotive market continues to decline. In response, we will continue our efforts to develop relationships with foreign manufacturers to supplement our existing customer base. We will also continue to work to control costs and make the most of available resources while actively pursuing new business from both new and existing customers. This discussion contains certain "forward-looking statements" which are inherently subject to risks and uncertainties that may cause actual events to differ materially from those discussed herein. Factors which may cause such differences in events include, those disclosed under "Risk Factors" in our Annual Report on Form 10-K and in the other filings we make with the United States Securities and Exchange Commission. These factors, include among other things: conditions in the domestic automotive industry, upon which we rely for sales revenue, the intense competition in our markets, the concentration of our sales to two major customers, the price and availability of raw materials, labor relations issues, losses related to product liability, warranty and recall claims, costs relating to environmental laws and regulations, the loss of the services of our key employees and difficulties in achieving expected cost savings. Many of these factors are beyond our ability to control or predict. Readers are cautioned not to place undue reliance on these forward-looking statements. We undertake no obligation to publish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. 11 CHICAGO RIVET & MACHINE CO. Item 4. Controls and Procedures. (a) Disclosure Controls and Procedures. The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act. (b) Internal Control Over Financial Reporting. There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. 12 PART II -- OTHER INFORMATION Item 5. Other Information. On November 9, 2006, the Company entered into a Consulting Agreement with John C. Osterman, the Company's former President, Chief Operating Officer and Treasurer. Mr. Osterman retired from the Company on May 9, 2006. Under the terms of the consulting agreement, Mr. Osterman will receive a quarterly consulting fee of $15,000. The consulting agreement is effective as of July 1, 2006, and unless terminated earlier by either party, the term of the agreement is through June 30, 2007. A copy of the consulting agreement is attached hereto as Exhibit 10.1. Item 6. Exhibits. 10.1 Consulting Agreement, dated November 9, 2006, between the Company and John C. Osterman 31 Rule 13a-14(a) or 15d-14(a) Certifications 31.1 Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification Pursuant to Rule 13a-14(a) or 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32 Section 1350 Certifications 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CHICAGO RIVET & MACHINE CO. ----------------------------------- (Registrant) Date: November 13, 2006 /s/ John A. Morrissey ----------------------------------- John A. Morrissey Chairman of the Board of Directors and Chief Executive Officer Date: November 13, 2006 /s/ Michael J. Bourg ----------------------------------- Michael J. Bourg President, Chief Operating Officer and Treasurer (Principal Financial Officer) 14 CHICAGO RIVET & MACHINE CO. EXHIBITS INDEX TO EXHIBITS
Exhibit Number Page 10.1 Consulting Agreement, dated November 9, 2006, between the Company and John C. Osterman 16-19 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 20 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 21 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 22 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 23
15 EX-10.1 2 c09821exv10w1.txt CONSULTING AGREEMENT EXHIBIT 10.1 CONSULTING AGREEMENT CONSULTING AGREEMENT, effective as of July 1, 2006, between Chicago Rivet & Machine Co., an Illinois corporation (the "Company"), and John C. Osterman (the "Consultant"). WHEREAS, the Company and the Consultant wish to enter into a consulting agreement upon the terms and subject to the conditions set forth below. NOW THEREFORE, in consideration of the premises and the respective covenants and agreements of the parties herein contained, and intending to be legally bound hereby, the parties hereto agree as follows: 1. General. The Company hereby agrees to engage the Consultant, and the Consultant hereby agrees to perform services for the Company on the terms and conditions set forth herein. 2. Term. The Term of this Agreement (the "Term") shall commence as of the date hereof and, unless extended by mutual written agreement of the parties, shall automatically terminate on the first anniversary of the date hereof without any further action by either party. The Consultant's engagement as a consultant hereunder and the Term may also be terminated by either party at any time with thirty (30) days' advance written notice to the other party. The Term shall also terminate automatically on the death or disability of the Consultant. Sections 5 (with respect to fees accrued and expenses incurred prior to the date of termination), 6 and 8-16 shall survive the expiration or termination of this Agreement and the Term. 3. Duties. From time to time during the Term, the Consultant shall render to the Company such services as Consultant and the Company may agree upon in writing from time to time, including those set forth on Exhibit A, as amended from time to time. 4. Place of Performance/Office Use. The Consultant shall perform his duties and conduct his business at such locations as are reasonably acceptable to him and the Company, such locations shall include the Consultant's place of residence and the Company's offices. 5. Compensation. (a) Fees. During the Term, the Company shall pay to the Consultant, $60,000.00 as compensation for the services to be performed by the Consultant hereunder, such payments to be made quarterly. (b) Business Expenses. In connection with the performance by the Consultant of consulting services hereunder, the Company shall reimburse the Consultant for all reasonable business expenses in accordance with the Company's normal reimbursement procedures. (c) Independent Contractor. It is understood and agreed that this Agreement is not an employment agreement and the Consultant shall at no time and under no circumstances be an employee, representative, or agent of the Company or any of its subsidiaries. The Consultant is an independent contractor and the Company shall exercise no immediate control over the Consultant or the manner in which he performs his services under this Agreement except to the extent that the Company provides instructions to the Consultant and exercises the right to accept or reject any submissions made by the Consultant. The Consultant may not bind or sign any documents on behalf of the Company or any of its operating subsidiaries. The Consultant shall be responsible for payment of all taxes for remuneration received under this Agreement, including Federal and State income tax, Social Security tax, Unemployment Insurance tax, and any other taxes or business license fees as required. 6. Exclusivity; No-Conflict of Interests. The Consultant agrees that during the Term, the Consultant shall not render services similar to the services the Consultant provides hereunder to other companies in the cold heading, screw machine or assembly equipment industries, whether as an employee, consultant or otherwise. In addition, the Consultant agrees to promptly inform the Company of any business or professional activities or interests which may give rise to a conflict of interest with respect to the Consultant's performance of services hereunder. 7. Confidential Information. The Consultant agrees that any confidential information received by the Consultant during any furtherance of the Consultant's obligations under this Agreement, which concerns the affairs of 16 the Company or its affiliates shall be treated by the Consultant in confidence and shall not be revealed to any other individual, partnership, company or other organization except as may be required by law, as directed by any regulatory authority or by order of any court. To the extent practicable, prior to disclosing any confidential information to a court or other governmental authority, Consultant shall notify the Company so that the Company may protect any rights it may have, including by seeking a protective order or other appropriate remedy or relief. Upon the expiration or termination of this Agreement or upon the request of the Company, the Consultant shall promptly return to the Company all such written confidential information in his possession or control. 8. Hold Harmless. The Company shall indemnify and advance expenses to the Consultant for any and all costs, damages and expenses incurred or suffered by the Consultant in connection with the services provided by Consultant hereunder, provided that the foregoing indemnification and advancement of expenses will not apply to any costs, damages or expenses to the extent that they are finally judicially determined to have resulted from the gross negligence or willful misconduct of the Consultant. The Company also agrees that the Consultant shall not have any liability to the Company in connection with the services provided by the Consultant hereunder, except to the extent that any such liability is finally judicially determined to have resulted from the Consultant's gross negligence or willful misconduct. 9. Successors; Binding Agreement. This Agreement shall be binding on the Company and it successors. This Agreement and all rights of the Consultant hereunder shall inure to the benefit of and be enforceable by the Consultant's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. This Agreement is personal to Consultant and may not be assigned by the Consultant or the Company. 10. Notice. For the purposes of this Agreement, notices, demands and all other communications provided for herein shall be in writing and shall be deemed to have been duly given when delivered or (unless otherwise specified) mailed by United States certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Consultant: Mr. John C. Osterman 1325 Pickwick Court Naperville, IL 60563 If to the Company: Mr. Michael J. Bourg, President Chicago Rivet & Machine Co. 901 Frontenac Road Naperville, IL 60563 or to such other address as any party may have furnished to the others in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 11. Modification; Waiver; Discharge. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the parties hereto. No waiver by a party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. 12. Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 13. Entire Agreement. This Agreement sets forth the entire agreement of the parties hereto solely in respect of the services of the Consultant as a consultant and, supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties whether oral or written, with respect thereto. 14. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. 15. Headings. The headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. 17 16. Governing Law. The validity, interpretation, construction and performance of this Agreement and any disputes between the parties relating to this Agreement shall be governed by the laws of the state of Illinois without regard to principles of conflicts of laws. IN WITNESS WHEREOF, the parties have executed this Agreement on November 9, 2006. CHICAGO RIVET & MACHINE CO. By: /s/ Michael J. Bourg --------------------------------- Michael J. Bourg Its: President /s/ John C. Osterman ------------------------------------ John C. Osterman 18 Exhibit A 1. Consultant shall render such assistance and advice as may be reasonably requested to provide for the orderly transfer of knowledge related to the duties and responsibilities associated with the office of President of the Company. 2. Consultant shall render such assistance as may be reasonably requested with respect to the shutdown and orderly wind down of business at the Company's Jefferson, Iowa facility. 3. Consultant shall be available to attend, at the invitation of the Board or Executive Committee of the Board, any meeting of the Company' Board of Directors or of the Executive Committee of the Board. 4. Consultant shall undertake such other projects and assignments as may be reasonably directed by the President of the Company. 19 EX-31.1 3 c09821exv31w1.txt SECTION 302 CERTIFICATION 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)) 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) 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 c) 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: November 13, 2006 /s/ John A. Morrissey ---------------- ---------------------- John A. Morrissey Chairman 20 EX-31.2 4 c09821exv31w2.txt SECTION 302 CERTIFICATION 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)) 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) 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 c) 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: November 13, 2006 /s/ Michael J. Bourg ---------------- -------------------- Michael J. Bourg President/Treasurer 21 EX-32.1 5 c09821exv32w1.txt SECTION 1350 CERTIFICATION 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 September 30, 2006 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. Section 1350, as adopted pursuant to Section 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 Date: November 13, 2006 22 EX-32.2 6 c09821exv32w2.txt SECTION 1350 CERTIFICATION 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 September 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John C. Osterman, as Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 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: Chief Financial Officer Date: November 13, 2006 23 -----END PRIVACY-ENHANCED MESSAGE-----