Exhibit 13

Chicago Rivet & Machine Co.

2018 Annual Report

Highlights

	2018		2017
Net Sales	$	37,174,249	$	35,764,714
Net Income		2,001,185		2,079,082
Net Income Per Share		2.07		2.15
Dividends Per Share		1.14		1.15
Net Cash Provided by Operating Activities		1,880,407		2,993,434
Expenditures for Property, Plant and Equipment		2,023,190		1,337,941
Working Capital		17,422,687		17,040,086
Total Shareholders’ Equity		29,759,749		28,859,955
Common Shares Outstanding at Year-End		966,132		966,132
Shareholders’ Equity Per Common Share		30.80		29.87

Annual Meeting

The annual meeting of shareholders

will be held on May 14, 2019 at 10:00 a.m. at

901 Frontenac Road

Naperville, Illinois

Chicago Rivet & Machine Co. • 901 Frontenac Road • Naperville, Illinois 60563 • www.chicagorivet.com

Management’s Report

on Financial Condition and Results of Operations

To Our Shareholders:

RESULTS OF OPERATIONS

Financial results for 2018 were positive by most measures, as we increased our revenues to the highest level since 2007. However, rising raw material prices constrained gross margins compared to the prior year. Net sales were $37,174,249 in 2018 compared to $35,764,714 in 2017, an increase of $1,409,535, or 3.9%. Net income for 2018 was $2,001,185, or $2.07 per share, compared to $2,079,082, or $2.15 per share, in 2017.

2018 Compared to 2017

Fastener segment revenues were $7,816,286 in the fourth quarter of 2018, an increase of $158,047, or 2.1%, from $7,658,239 reported in the fourth quarter of 2017. Fastener segment revenues for the full year were $33,712,458 in 2018 compared with $31,977,964 in 2017, an increase of $1,734,494, or 5.4%. The automotive sector is the primary market for our fastener segment products and while North American light-vehicle production was relatively flat in 2018 compared to 2017, our sales to automotive customers declined 7.8% during the fourth quarter and 1.4% for the year. However, the decline in automotive sales was more than offset by growth in non-automotive sales which increased 25.9% and 21.7% in the fourth quarter and for the full year of 2018, respectively, compared to 2017. For the fourth quarter, the fastener segment gross margin was $1,468,690 compared to $1,588,746 in the year earlier quarter, a decline of $120,056. Steel is our primary raw material and we have experienced significant increases in our cost of steel during 2018 which was primarily responsible for the net decline in gross margins during the quarter despite the increase in sales. For the full year 2018, segment gross margin was $6,829,211 compared to $6,633,651 in 2017, an increase of $195,560, despite the higher raw material costs.

Assembly equipment segment revenues were $697,489 in the fourth quarter of 2018, a decline of $103,395, or 12.9%, compared to the fourth quarter of 2017, when revenues were $800,884. For the full year 2018, assembly equipment segment revenues were $3,461,791, a decline of $324,959, or 8.6%, compared to $3,786,750 reported in 2017. The decline in fourth quarter and full year sales was primarily due to a reduction in the number of high-dollar specialty machines shipped compared to the prior year periods, as the total number of machines shipped increased during 2018. The decline in assembly equipment segment sales was the primary cause of the reduction in segment gross margins of $72,975 in the fourth quarter and $203,523 for the full year of 2018 compared to 2017.

Selling and administrative expenses were $5,503,111 in 2018 compared to $5,548,541 in 2017, a decline of $45,430, or 0.8%. The reduction was primarily due to the ERP system conversion that was completed at one of our locations in 2017. This accounted for $167,000 of additional expenses in that year, which was only partially offset by a $113,000 increase in sales commissions, related to higher sales, in 2018. As a percentage of net sales, selling and administrative expenses were 14.8% in 2018 compared to 15.5% in 2017.

Other income was $153,537 in 2018 compared to $100,901 in 2017. Other income is primarily comprised of interest income which increased during the year due to rising interest rates.

The Company’s effective income tax rates were 21.7% and 15.7% in 2018 and 2017, respectively. The rate was lower than the U.S. federal statutory rate in 2017 primarily due to the enactment of the Tax Cuts and Jobs Act (“the Act”) in December 2017. Among other changes, the Act reduced the maximum corporate tax rate from 35% to 21% beginning in 2018. Although the lower tax rate took effect in 2018, deferred tax assets and liabilities should be measured using the enacted tax rate expected to apply in the years in which they are expected to be settled. The Company recorded a one-time net income tax benefit of $432,000 in the fourth quarter of 2017 as a result of the revaluation of the Company’s deferred tax assets and liabilities to reflect the lower future U.S. corporate tax rates.

DIVIDENDS

In determining to pay dividends, the Board considers current profitability, the outlook for longer-term profitability, known and potential cash requirements and the overall financial condition of the Company. The Company paid four regular quarterly dividends totaling $.84 per share during 2018. In addition, an extra dividend of $.30 per share was paid during the first quarter, bringing the total distribution for the year to $1.14 per share. On February 18, 2019, the Board of Directors declared a regular quarterly dividend of $.22 per share, an increase of 4.8% from the prior quarter, payable March 20, 2019 to shareholders of record on March 5, 2019. This continues the uninterrupted record of consecutive quarterly dividends paid by the Company to its shareholders that extends over 85 years. At that same meeting, the Board also declared an extra dividend of $.30 per share payable March 20, 2019 to shareholders of record on March 5, 2019.

1

Management’s Report

(Continued)

PROPERTY, PLANT AND EQUIPMENT

Total capital expenditures in 2018 were $2,023,190. Fastener segment additions accounted for $1,635,115 of the total, including $956,739 for cold heading and screw machine equipment additions, $243,194 for equipment to perform secondary operations on parts and $296,289 for inspection equipment. The remaining $138,893 fastener segment additions consisted of general plant equipment and facilities improvements. Assembly equipment segment additions in 2018 were $49,884 for production equipment. Investments for the benefit of both operating segments, primarily for building improvements, totaled $338,191 during 2018.

Capital expenditures during 2017 totaled $1,337,941. The fastener segment accounted for $1,093,539 of the total, including $904,312 for production equipment. Cold heading and screw machine equipment additions were $303,992, quality control equipment additions were $281,983, additions for secondary processing equipment were $261,143 and $57,194 was expended for general plant equipment. The remainder of the fastener segment additions relate to building improvements and technology equipment. Assembly equipment segment additions totaled $178,761, primarily for production equipment. Additional investments of $65,641 were made in 2017 for building improvements that benefit both operating segments.

Depreciation expense amounted to $1,308,448 in 2018 and $1,231,546 in 2017.

LIQUIDITY AND CAPITAL RESOURCES

Working capital at December 31, 2018 was approximately $17.4 million, an increase of $.4 million from the beginning of the year. The improvement was primarily due to continued profitable operations in 2018. The most significant component of the change was an increase in inventories of $1.6 million during the year as raw material purchases were accelerated in advance of price increases. The Company’s holdings in cash, cash equivalents and certificates of deposit amounted to $7.8 million at the end of 2018, a decrease of $1.2 million. The reduction was primarily related to the increase in inventory as well as a $.7 million increase in capital expenditures. The Company’s investing activities in 2018 included capital expenditures of $2 million. The only financing activity during 2018 was the payment of approximately $1.1 million in dividends.

Management believes that current cash, cash equivalents and operating cash flow will be sufficient to provide adequate working capital for the next twelve months.

Off-Balance Sheet Arrangements

The Company has not entered into, and has no current plans to enter into, any off-balance sheet financing arrangements.

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 2019

We started 2018 with some optimism as the addition of new fastener segment customers and parts in 2017 was expected to be more fully reflected in the year’s financial results. That optimism was well placed as our fastener segment sales reflected growth in each quarter of 2018 compared to the year earlier periods. Much of that growth came from non-automotive customers which added to the diversity of industries served. With the majority of our fastener segment revenue continuing to come from the automotive industry, our sales to automotive customers tracked closely to U.S. auto and light truck sales and production during most of the year, before weakening late in the fourth quarter. Current automotive sales forecasts for 2019 and our early 2019 activity indicate further weakness in the near-term, leading to a cautious outlook for our fastener segment demand. While the results for the assembly equipment segment reported in 2018 did not match those of the previous year, it was primarily due to a change in product sales mix that resulted in a lower amount per sales transaction being recognized compared to the prior year, as demand was stable during the year. As we begin 2019, our machine order backlog and overall assembly equipment demand appears consistent with the prior year.

2

Management’s Report

(Continued)

Higher raw material prices, brought on by tariffs instituted during 2018, had a negative impact on earnings during the year. It is unknown whether there will be relief from higher material prices in 2019 even if the tariffs were to be eliminated. The growth in the domestic economy is also showing signs of slowing as higher interest rates take effect and the long-lived recovery runs its course. Both of these factors will contribute to a more challenging environment for our operations in 2019. In anticipation of the challenges ahead, we will continue our efforts to improve operational efficiency as a means of improving margins. We will also continue our efforts to develop new customer relationships and build on existing ones in all the markets we serve by emphasizing our experience, quality and customer service in a very competitive global marketplace.

In four of the last six years, we invested more than $2 million in equipment and facilities upgrades in order to increase our capabilities, expand production capacity and

improve operating efficiency. We feel these investments are necessary to remain competitive and were made possible by our consistent profitability during that period. In the upcoming year, we expect to make additional investments in order to improve our operations. Our sound financial condition and our profitability has also allowed us to pay dividends of $5.8 million over the same six year period and declare an additional special dividend of $.3 million, to be paid in the first quarter of 2019, based on the results of 2018.

The positive results in the past year would not have been possible without the conscientious efforts of our dedicated employees, who consistently strive to exceed customer expectations related to quality, service and price. We are grateful for their contributions as well as the loyalty of our customers, who have placed their confidence in us to help them achieve their goals. We also take this opportunity to thank our shareholders for their continued support.

Respectfully,

John A. Morrissey	Michael J. Bourg
Chairman	President

March 20, 2019

FORWARD-LOOKING STATEMENTS

This discussion contains certain “forward-looking statements” which are inherently subject to risks and uncertainties that may cause actual events to differ materially from those discussed herein. Factors which may cause such differences in events include, those disclosed under “Risk Factors” in our Annual Report on Form 10-K and in the other filings we make with the United States Securities and Exchange Commission. These factors, include among other things: conditions in the domestic automotive industry, upon which we rely for sales revenue, the intense competition in our markets, the concentration of our sales with major customers, risks related to export sales, the price and availability of raw materials, labor relations issues, losses related to product liability, warranty and recall claims, costs relating to environmental laws and regulations, information systems disruptions 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.

3

Consolidated Balance Sheets

December 31	2018			2017
Assets
Current Assets
Cash and Cash Equivalents	$	706,873		$	1,152,569
Certificates of Deposit		7,063,000			7,810,000
Accounts Receivable – Less allowances of $140,000		5,529,307			5,326,650
Inventories, net		6,100,391			4,528,100
Prepaid Income Taxes		150,686			84,112
Other Current Assets		438,222			357,918
Total Current Assets		19,988,479			19,259,349
Property, Plant and Equipment, net		13,258,146			12,556,953
Total Assets	$	33,246,625		$	31,816,302
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts Payable	$	1,060,231		$	737,040
Accrued Wages and Salaries		701,434			674,316
Other Accrued Expenses		475,973			495,132
Unearned Revenue and Customer Deposits		328,154			312,775
Total Current Liabilities		2,565,792			2,219,263
Deferred Income Taxes, net		921,084			737,084
Total Liabilities		3,486,876			2,956,347
Commitments and Contingencies (Note 7)
Shareholders’ Equity
Preferred Stock, No Par Value,
500,000 Shares Authorized: None Outstanding		—			—
Common Stock, $1.00 Par Value, 4,000,000 Shares Authorized: 1,138,096 Shares Issued, 966,132 Shares Outstanding		1,138,096			1,138,096
Additional Paid-in Capital		447,134			447,134
Retained Earnings		32,096,617			31,196,823
Treasury Stock, 171,964 Shares at cost		(3,922,098	)		(3,922,098	)
Total Shareholders’ Equity		29,759,749			28,859,955
Total Liabilities and Shareholders’ Equity	$	33,246,625		$	31,816,302

The accompanying notes are an integral part of the Consolidated Financial Statements.

4

Consolidated Statements of Income

For the Years Ended December 31	2018		2017
Net Sales	$	37,174,249	$	35,764,714
Cost of Goods Sold		29,268,490		27,850,992
Gross Profit		7,905,759		7,913,722
Selling and Administrative Expenses		5,503,111		5,548,541
Operating Profit		2,402,648		2,365,181
Other Income		153,537		100,901
Income Before Income Taxes		2,556,185		2,466,082
Provision for Income Taxes		555,000		387,000
Net Income	$	2,001,185	$	2,079,082
Net Income Per Share	$	2.07	$	2.15

Consolidated Statements of Retained Earnings

For the Years Ended December 31	2018			2017
Retained Earnings at Beginning of Year	$	31,196,823		$	30,228,793
Net Income		2,001,185			2,079,082
Cash Dividends Paid, $1.14 and $1.15 Per Share in 2018 and 2017, respectively		(1,101,391	)		(1,111,052	)
Retained Earnings at End of Year	$	32,096,617		$	31,196,823

The accompanying notes are an integral part of the Consolidated Financial Statements.

5

Consolidated Statements of Cash Flows

For the Years Ended December 31	2018			2017
Cash Flows from Operating Activities:
Net Income	$	2,001,185		$	2,079,082
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization		1,308,448			1,231,546
Gain on the Sale of Equipment		(13,086	)		(1,700	)
Deferred Income Taxes		184,000			(291,000	)
Changes in Operating Assets and Liabilities:
Accounts Receivable, net		(202,657	)		(3,131	)
Inventories, net		(1,572,291	)		9,593
Other Current Assets		(146,878	)		38,034
Accounts Payable		298,348			29,620
Accrued Wages and Salaries		27,118			(16,210	)
Other Accrued Expenses		(19,159	)		(109,042	)
Unearned Revenue and Customer Deposits		15,379			26,642
Net Cash Provided by Operating Activities		1,880,407			2,993,434
Cash Flows from Investing Activities:
Capital Expenditures		(1,998,347	)		(1,333,988	)
Proceeds from the Sale of Equipment		26,635			1,700
Proceeds from Certificates of Deposit		5,727,000			7,063,000
Purchases of Certificates of Deposit		(4,980,000	)		(6,814,000	)
Net Cash Used in Investing Activities		(1,224,712	)		(1,083,288	)
Cash Flows from Financing Activities:
Cash Dividends Paid		(1,101,391	)		(1,111,052	)
Net Cash Used in Financing Activities		(1,101,391	)		(1,111,052	)
Net Increase (Decrease) in Cash and Cash Equivalents		(445,696	)		799,094
Cash and Cash Equivalents:
Beginning of Year		1,152,569			353,475
End of Year	$	706,873		$	1,152,569
Net Cash Paid for Income Taxes	$	437,574		$	706,000
Supplemental Schedule of Non-cash Investing Activities:
Capital Expenditures in Accounts Payable	$	24,843		$	3,953

The accompanying notes are an integral part of the Consolidated Financial Statements.

6

Notes to Consolidated

Financial Statements

1—Nature of Business and Significant Accounting Policies

Nature of Business—The Company operates in the fastener industry and is in the business of producing and selling rivets, cold-formed fasteners and parts, screw machine products, automatic rivet setting machines and parts and tools for such machines.

A summary of the Company’s significant accounting policies follows:

Principles of Consolidation—The consolidated financial statements include the accounts of Chicago Rivet & Machine Co. and its wholly-owned subsidiary, H & L Tool Company, Inc. (“H & L Tool”). All significant intercompany accounts and transactions have been eliminated.

Revenue Recognition—On January 1, 2018, the Company adopted Accounting Standard Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” using the modified retrospective method. The adoption did not result in the recognition of a cumulative adjustment to beginning retained earnings. For the Company, the most significant impact of the new standard was the addition of required disclosures within the notes to the financial statements.

Revenue is recognized when control of the promised goods or services is transferred to our customers, generally upon shipment of goods or completion of services, in an amount that reflects the consideration we expect to receive in exchange for those goods or services. Sales taxes we may collect concurrent with revenue producing activities are excluded from revenue. Revenue is recognized net of certain sales adjustments to arrive at net sales as reported on the statement of income. These adjustments primarily relate to customer returns and allowances, which vary over time. The Company records a liability and reduction in sales for estimated product returns based upon historical experience. If we determine that our obligation under warranty claims is probable and subject to reasonable determination, an estimate of that liability is recorded as an offset against revenue at that time. As of December 31, 2018 and 2017, reserves for warranty claims were not material. Cash received by the Company prior to shipment is recorded as unearned revenue. Shipping and handling fees billed to customers are recognized in net sales, and related costs as cost of sales, when incurred.

Credit Risk—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. The Company has established

an allowance for accounts that may become uncollectible in the future. This estimated allowance is based primarily on management’s evaluation of the financial condition of the customer and historical experience. The Company monitors its accounts receivable and charges to expense an amount equal to its estimate of potential credit losses. The Company considers a number of factors in determining its estimates, including the length of time its trade accounts receivable are past due, the Company’s previous loss history and the customer’s current ability to pay its obligation. Accounts receivable balances are charged off against the allowance when it is determined that the receivable will not be recovered.

Cash and Cash Equivalents and Certificates of Deposit—The Company considers all highly liquid investments, including certificates of deposit, with a maturity of three months or less when purchased to be cash equivalents. Certificates of deposit with an original maturity of greater than three months are separately presented at cost which approximates market value. The Company maintains cash on deposit in several financial institutions. At times, the account balances may be in excess of Federal Deposit Insurance Corporation insured limits.

Fair Value of Financial Instruments—The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, certificates of deposit, accounts receivable and accounts payable approximate fair value based on their short term nature.

Inventories—Inventories are stated at the lower of cost or net realizable value, cost being determined by the first-in, first-out method. The value of inventories is reduced for estimated excess and obsolete inventories based on a review of on-hand inventories compared to historical and estimated future sales and usage.

Property, Plant and Equipment—Properties are stated at cost and are depreciated over their estimated useful lives using the straight-line method for financial reporting purposes. Accelerated methods of depreciation are used for income tax purposes. Direct costs related to developing or obtaining software for internal use are capitalized as property and equipment. Capitalized software costs are amortized over the software’s useful life when the software is placed in service. The estimated useful lives by asset category are:

Asset category	Estimated useful life
Land improvements		15 to 40 years
Buildings and improvements		10 to 40 years
Machinery and equipment		5 to 18 years
Capitalized software costs		3 to 5 years
Other equipment		3 to 10 years

7

The Company reviews the carrying value of property, plant and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. There were no triggering events requiring assessment of impairment as of December 31, 2018 and 2017.

When properties are retired or sold, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss on disposition is recognized in current operations. Maintenance, repairs and minor betterments that do not improve the related asset or extend its useful life are charged to operations as incurred.

Income Taxes—Deferred income taxes are determined under the asset and liability method. Deferred income taxes arise from temporary differences between the income tax basis of assets and liabilities and their reported amounts in the financial statements. Deferred taxes are shown on the balance sheet as a net long-term asset or liability.

The Company applies a comprehensive model for the financial statement recognition, measurement, classification and disclosure of uncertain tax positions. In the first step of the two-step process, the Company evaluates the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. In the second step, the Company measures the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. As of December 31, 2018 and 2017, the Company determined that there are no uncertain tax positions with a more than 50% likelihood of being realized upon settlement.

The Company classifies interest and penalties related to unrecognized tax benefits as a component of income tax expense. There were no such expenses in 2018 or 2017.

The Company’s federal income tax returns for the 2015 through 2017 tax years are subject to examination by the Internal Revenue Service (“IRS”). While it may be possible that a reduction could occur with respect to the Company’s unrecognized tax benefits as an outcome of an IRS examination, management does not anticipate any adjustments that would result in a material change to the results of operations or financial condition of the Company.

No statutes have been extended on any of the Company’s federal income tax filings. The statute of limitations on the Company’s 2015, 2016 and 2017 federal income tax returns will expire on September 15, 2019, 2020 and 2021, respectively.

The Company’s state income tax returns for the 2015 through 2017 tax years are subject to examination by various state

authorities with the latest closing period on October 31, 2021. The Company is currently not under examination by any state authority for income tax purposes and no statutes for state income tax filings have been extended.

Segment Information—The Company reports segment information based on the internal structure and reporting of the Company’s operations.

Net Income Per Share—Net income per share of common stock is based on the weighted average number of shares outstanding of 966,132 in 2018 and 2017.

Use of Estimates—The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Significant items subject to estimates and assumptions include depreciable lives, deferred taxes and valuation allowances for accounts receivable and inventory obsolescence. Actual results could differ from those estimates.

Recent Accounting Pronouncements—In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (”ASU”) No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years, with early adoption permitted. The guidance can be applied prospectively or retrospectively. We expect to adopt this standard effective January 1, 2020 and are currently evaluating the impact that it will have on our consolidated financial statements and disclosures.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. The new guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. Management has not yet completed its assessment of the impact of the new standard on the Company’s consolidated financial statements. Currently, the Company believes that the most notable impact of this ASU may relate to its processes around the assessment of the adequacy of its allowance for doubtful accounts on trade accounts receivable.

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In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” The ASU is intended to increase transparency and comparability among entities by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements when the lease has a term of more than 12 months. The ASU will require lessees to recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The ASU is effective for annual reporting periods beginning after December 15, 2018 and interim periods within those annual periods. The impact of adopting this ASU is not expected to be significant based on current lease agreements.

2—Balance Sheet Details

	2018			2017
Inventories:
Raw materials	$	2,798,918		$	1,812,603
Work in process		1,878,977			1,604,867
Finished goods		2,001,496			1,674,630
		6,679,391			5,092,100
Valuation reserves		(579,000	)		(564,000	)
	$	6,100,391		$	4,528,100
Property, Plant and Equipment, net:
Land and improvements	$	1,632,299		$	1,571,552
Buildings and improvements		8,292,749			8,039,831
Machinery and equipment		34,196,661			33,208,675
Capitalized software and other		1,372,215			1,362,714
		45,493,924			44,182,772
Accumulated depreciation		(32,235,778	)		(31,625,819	)
	$	13,258,146		$	12,556,953
Other Accrued Expenses:
Profit sharing plan contribution	$	277,743		$	266,398
Property taxes		91,527			92,620
All other items		106,703			136,114
	$	475,973		$	495,132
Allowance for Doubtful Accounts:
Balance at beginning of year	$	140,000		$	150,000
Charges to statement of income		—			6,435
Write-offs		—			(16,435	)
Balance at end of year	$	140,000		$	140,000
Inventory Valuation Reserves:
Balance at beginning of year	$	564,000		$	562,000
Charges to statement of income		17,870			75,023
Write-offs		(2,870	)		(73,023	)
Balance at end of year	$	579,000		$	564,000

3—Income Taxes—The provision for income tax expense consists of the following:

	2018		2017
Current:
Federal	$	351,000	$	647,000
State		20,000		31,000
Deferred		184,000		(291,000	)
	$	555,000	$	387,000

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into law. The Act includes significant changes to the taxation of corporations, including a reduction in the top corporate tax rate from 35% to 21%, effective January 1, 2018. Due to the enactment of the new tax law, we re-measured our deferred tax assets and liabilities using the rate at which we expect them to be recovered or settled. As a result, the Company recognized a $432,000 tax benefit for the year ended December 31, 2017 that is reflected in the 2017 income tax expense.

The following is a reconciliation of the statutory federal income tax rate to the actual effective tax rate:

	2018				2017
	Amount		%		Amount			%
Expected tax at U.S. statutory rate	$	537,000		21.0	$	838,000			34.0
Impact of the Act		—		—		(432,000	)		(17.5	)
Permanent differences		2,000		0.1		(39,000	)		(1.6	)
State taxes, net of federal benefit		16,000		0.6		20,000			0.8
Income tax expense	$	555,000		21.7	$	387,000			15.7

The Company’s effective tax rate was lower than the U.S. federal statutory rate in 2017 primarily due to the impact of the new tax law.

The deferred tax assets (liabilities) consist of the following:

	2018			2017
Depreciation and amortization	$	(1,190,597	)	$	(988,334	)
Inventory		164,220			149,460
Accrued vacation		74,177			70,973
Allowance for doubtful accounts		31,500			31,500
Other, net		(384	)		(683	)
	$	(921,084	)	$	(737,084	)

Valuation allowances related to deferred taxes are recorded based on the “more likely than not” realization criteria. The Company reviews the need for a valuation allowance on a quarterly basis for each of its tax jurisdictions. A deferred tax valuation allowance was not required at December 31, 2018 or 2017.

4—Profit Sharing Plan—The Company has a noncontributory profit sharing plan covering substantially all employees. Total expenses relating to the profit sharing plan amounted to approximately $278,000 in 2018 and $266,000 in 2017.

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5—Other Income—consists of the following:

	2018		2017
Interest income	$	120,141	$	75,926
Other		33,396		24,975
	$	153,537	$	100,901

6—Segment Information—The Company operates, primarily in the United States, in two business segments as determined by its products. The fastener segment, which comprises H & L Tool and the parent company’s fastener operations, includes rivets, cold-formed fasteners and parts and screw machine products. The assembly equipment segment includes automatic rivet setting machines and parts and tools for such machines. Information by segment is as follows:

	Fastener		Assembly Equipment		Other			Consolidated
Year Ended December 31, 2018:
Net sales	$	33,712,458	$	3,461,791	$	—		$	37,174,249
Depreciation		1,161,082		112,942		34,424			1,308,448
Segment operating profit		3,731,998		1,108,248		—			4,840,246
Selling and administrative expenses						(2,437,598	)		(2,437,598	)
Other income						153,537			153,537
Income before income taxes									2,556,185
Capital expenditures		1,635,115		49,884		338,191			2,023,190
Segment assets:
Accounts receivable, net		5,196,437		332,870		—			5,529,307
Inventories, net		5,075,290		1,025,101		—			6,100,391
Property, plant and equipment, net		10,726,191		1,579,497		952,458			13,258,146
Other assets		—		—		8,358,781			8,358,781
									33,246,625
Year Ended December 31, 2017:
Net sales	$	31,977,964	$	3,786,750	$	—		$	35,764,714
Depreciation		1,093,476		100,908		37,162			1,231,546
Segment operating profit		3,574,783		1,350,111		—			4,924,894
Selling and administrative expenses						(2,559,713	)		(2,559,713	)
Other income						100,901			100,901
Income before income taxes									2,466,082
Capital expenditures		1,093,539		178,761		65,641			1,337,941
Segment assets:
Accounts receivable, net		5,080,191		246,459		—			5,326,650
Inventories, net		3,565,361		962,739		—			4,528,100
Property, plant and equipment, net		10,282,910		1,642,555		631,488			12,556,953
Other assets		—		—		9,404,599			9,404,599
									31,816,302

The Company does not allocate certain selling and administrative expenses for internal reporting, thus, no allocation was made for these expenses for segment disclosure purposes. Segment assets reported internally are limited to accounts receivable, inventory and long-lived assets. Certain long-lived assets of one plant location are allocated between the two segments based on estimated plant utilization, as this plant serves both fastener and assembly equipment activities. Other assets are not allocated to segments internally and to do so would be impracticable.

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

	Fastener		Assembly Equipment		Consolidated
Year Ended December 31, 2018:
Automotive	$	22,215,719	$	237,565	$	22,453,284
Non-automotive		11,496,739		3,224,226		14,720,965
Total net sales	$	33,712,458	$	3,461,791	$	37,174,249
Year Ended December 31, 2017:
Automotive	$	22,527,813	$	192,091	$	22,719,904
Non-automotive		9,450,151		3,594,659		13,044,810
Total net sales	$	31,977,964	$	3,786,750	$	35,764,714

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

Year Ended December 31, 2018:
United States	$	29,470,140	$	3,260,683	$	32,730,823
Foreign		4,242,318		201,108		4,443,426
Total net sales	$	33,712,458	$	3,461,791	$	37,174,249
Year Ended December 31, 2017:
United States	$	27,681,055	$	3,684,135	$	31,365,190
Foreign		4,296,909		102,615		4,399,524
Total net sales	$	31,977,964	$	3,786,750	$	35,764,714

Sales to one customer in the fastener segment accounted for 17 percent of consolidated revenues during 2018 and 19 percent in 2017. The accounts receivable balance for this customer accounted for 15 and 25 percent of consolidated accounts receivable as of December 31, 2018 and 2017, respectively. Sales to two other customers were each 10 percent of consolidated revenue in 2018 and accounted for 12 percent and 17 percent of consolidated accounts receivable as of December 31, 2018.

7—Commitments and Contingencies—The Company recorded rent expense aggregating approximately $26,000 and $30,000 in 2018 and 2017, respectively. Total future minimum rentals at December 31, 2018 are not significant.

The Company is, from time to time involved in litigation, including environmental claims, in the normal course of business. While it is not possible at this time to establish the ultimate amount of liability with respect to contingent liabilities, including those related to legal proceedings, management is of the opinion that the aggregate amount of any such liabilities, for which provision has not been made, will not have a material adverse effect on the Company’s financial position.

8—Subsequent Events—On February 18, 2019, the Board of Directors declared a regular quarterly dividend of $.22 per share, or $212,549, and an extra dividend of $.30 per share, or $289,840, payable March 20, 2019 to shareholders of record on March 5, 2019.

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Chicago Rivet & Machine Co.

Naperville, Illinois

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Chicago Rivet & Machine Co. (the “Company”) as of December 31, 2018 and 2017, the related consolidated statements of income, retained earnings, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Crowe LLP

We have served as the Company’s auditor since 2014.

Oak Brook, Illinois

March 20, 2019

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INFORMATION ON COMPANY’S COMMON STOCK

The Company’s common stock is traded on the NYSE American (trading privileges only, not registered).

The ticker symbol is CVR.

At December 31, 2018, there were approximately 150 shareholders of record.

The transfer agent and registrar for the Company’s common stock is:

Continental Stock Transfer & Trust Company

1 State Street, 30^th Floor

New York, New York 10004-1561

The following table shows the dividends declared and the quarterly high and low prices of the common stock for the last two years.

	Dividends Declared				Market Range
Quarter	2018		2017		2018				2017
First*	$	.51	$	.55	$	33.41	$	29.89	$	49.34	$	36.93
Second		.21		.20	$	32.40	$	28.70	$	41.90	$	36.02
Third		.21		.20	$	32.65	$	30.18	$	37.35	$	26.50
Fourth		.21		.20	$	34.90	$	30.19	$	33.52	$	28.90

* Includes an extra dividend of $.30 and $.35 per share in 2018 and 2017, respectively.

BOARD OF DIRECTORS

John A. Morrissey (e)

Chairman of the Board

of the Company

Chairman of the Board of

Algonquin State Bank, N.A.

Algonquin, Illinois

Michael J. Bourg (e)

President of the Company

Edward L. Chott (a) (c) (n)

Chairman of the Board of

The Broaster Co.

Beloit, Wisconsin

Kent H. Cooney (a)

Private Investor

Woodstock, Illinois

William T. Divane, Jr. (a) (c) (n)

Chairman of the Board and

Chief Executive Officer of

Divane Bros. Electric Co.

Franklin Park, Illinois

Walter W. Morrissey (e)

Attorney at Law

Lillig & Thorsness, Ltd.

Oak Brook, Illinois

John L. Showel (n)

Portfolio Manager

Maggiore Fund I, LP

Chicago, Illinois

(a) Member of Audit Committee

(c) Member of Compensation Committee

(e) Member of Executive Committee

(n) Member of Nominating Committee

CORPORATE OFFICERS

John A. Morrissey

Chairman, Chief

Executive Officer

Michael J. Bourg

President, Chief Operating

Officer and Treasurer

Kimberly A. Kirhofer

Secretary

CHICAGO RIVET & MACHINE CO.

Administrative & Sales Offices

Naperville, Illinois

Pembroke, Massachusetts

Manufacturing Facilities

Albia Division

Albia, Iowa

Tyrone Division

Tyrone, Pennsylvania

H & L Tool Company, Inc.

Madison Heights, Michigan

Chicago Rivet & Machine Co. • 901 Frontenac Road • Naperville, Illinois 60563 • www.chicagorivet.com

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Chicago Rivet & Machine Co. • 901 Frontenac Road • Naperville, Illinois 60563 • www.chicagorivet.com