Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 04, 2019 | |
Details | ||
Registrant CIK | 0000019871 | |
Fiscal Year End | --12-31 | |
Registrant Name | Chicago Rivet & Machine Co. | |
SEC Form | 10-Q | |
Period End date | Sep. 30, 2019 | |
Number of common stock shares outstanding | 966,132 | |
Filer Category | Non-accelerated Filer | |
Current with reporting | Yes | |
Interactive Data Current | Yes | |
Shell Company | false | |
Small Business | true | |
Emerging Growth Company | false | |
Entity File Number | 000-01227 | |
Entity Incorporation, State or Country Code | IL | |
Entity Address, Address Line One | 901 Frontenac Road | |
Entity Address, City or Town | Naperville | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60563 | |
City Area Code | 630 | |
Local Phone Number | 357-8500 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Document Quarterly Report | true | |
Document Transition Report | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Current Assets: | ||
Cash and cash equivalents | $ 1,209,524 | $ 706,873 |
Certificates of deposit | 6,076,000 | 7,063,000 |
Accounts receivable - Less allowances of $140,000 | 5,614,022 | 5,529,307 |
Inventories, net | 5,476,333 | 6,100,391 |
Prepaid income taxes | 74,186 | 150,686 |
Other current assets | 835,333 | 438,222 |
Total current assets | 19,285,398 | 19,988,479 |
Property, Plant and Equipment: | ||
Land and improvements | 1,636,749 | 1,632,299 |
Buildings and improvements | 8,327,006 | 8,234,182 |
Production equipment and other | 36,363,188 | 35,627,443 |
Property, Plant and Equipment, Gross | 46,326,943 | 45,493,924 |
Less accumulated depreciation | 32,536,011 | 32,235,778 |
Net property, plant and equipment | 13,790,932 | 13,258,146 |
Total assets | 33,076,330 | 33,246,625 |
Current Liabilities: | ||
Accounts payable | 987,976 | 1,060,231 |
Accrued wages and salaries | 861,953 | 701,434 |
Other accrued expenses | 304,232 | 475,973 |
Unearned revenue and customer deposits | 202,625 | 328,154 |
Total current liabilities | 2,356,786 | 2,565,792 |
Deferred income taxes | 1,055,084 | 921,084 |
Total liabilities | 3,411,870 | 3,486,876 |
Shareholders' Equity: | ||
Preferred stock, no par value, 500,000 shares authorized: none outstanding | 0 | 0 |
Common stock, $1.00 par value, 4,000,000 shares authorized, 1,138,096 shares issued; 966,132 shares outstanding | 1,138,096 | 1,138,096 |
Additional paid-in capital | 447,134 | 447,134 |
Retained earnings | 32,001,328 | 32,096,617 |
Treasury stock, 171,964 shares at cost | (3,922,098) | (3,922,098) |
Total shareholders' equity | 29,664,460 | 29,759,749 |
Total liabilities and shareholders' equity | $ 33,076,330 | $ 33,246,625 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) - Parenthetical - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Details | ||
Accounts Receivable, Allowance for Credit Loss, Current | $ 140,000 | $ 140,000 |
Preferred Stock, Par or Stated Value Per Share | $ 0 | $ 0 |
Preferred Stock, Shares Authorized | 500,000 | 500,000 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $ 1 | $ 1 |
Common Stock, Shares Authorized | 4,000,000 | 4,000,000 |
Common Stock, Shares, Issued | 1,138,096 | 1,138,096 |
Common Stock, Shares, Outstanding | 966,132 | 966,132 |
Treasury Stock, Shares | 171,964 | 171,964 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Condensed Consolidated Statements of Income (Unaudited) | ||||
Net sales | $ 8,188,905 | $ 8,856,049 | $ 25,686,034 | $ 28,660,474 |
Cost of goods sold | 6,539,138 | 7,221,815 | 20,826,534 | 22,394,801 |
Gross profit | 1,649,767 | 1,634,234 | 4,859,500 | 6,265,673 |
Selling and administrative expenses | 1,282,149 | 1,308,884 | 3,931,510 | 4,185,571 |
Operating profit | 367,618 | 325,350 | 927,990 | 2,080,102 |
Other income | 47,179 | 38,399 | 145,208 | 109,527 |
Income before income taxes | 414,797 | 363,749 | 1,073,198 | 2,189,629 |
Provision for income taxes | 99,000 | 76,000 | 241,000 | 491,000 |
Net income | $ 315,797 | $ 287,749 | $ 832,198 | $ 1,698,629 |
Per share data, basic and diluted: | ||||
Net income per share | $ 0.32 | $ 0.30 | $ 0.86 | $ 1.76 |
Average common shares outstanding | 966,132 | 966,132 | 966,132 | 966,132 |
Cash dividends declared per share | $ 0.22 | $ 0.21 | $ 0.96 | $ 0.93 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) | Total | Preferred Stock | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock |
Beginning Balance at Dec. 31, 2017 | $ 28,859,955 | $ 0 | $ 1,138,096 | $ 447,134 | $ 31,196,823 | $ (3,922,098) |
Common Stock Shares at Dec. 31, 2017 | 966,132 | |||||
Treasury Stock Shares at Dec. 31, 2017 | 171,964 | |||||
Net Income | 707,788 | 707,788 | ||||
Dividends Declared | (492,727) | (492,727) | ||||
Ending Balance at Mar. 31, 2018 | 29,075,016 | 0 | $ 1,138,096 | 447,134 | 31,411,884 | $ (3,922,098) |
Common Stock Shares at Mar. 31, 2018 | 966,132 | |||||
Treasury Stock Shares at Mar. 31, 2018 | 171,964 | |||||
Beginning Balance at Dec. 31, 2017 | 28,859,955 | 0 | $ 1,138,096 | 447,134 | 31,196,823 | $ (3,922,098) |
Common Stock Shares at Dec. 31, 2017 | 966,132 | |||||
Treasury Stock Shares at Dec. 31, 2017 | 171,964 | |||||
Net Income | 1,698,629 | |||||
Ending Balance at Sep. 30, 2018 | 29,660,081 | 0 | $ 1,138,096 | 447,134 | 31,996,949 | $ (3,922,098) |
Common Stock Shares at Sep. 30, 2018 | 966,132 | |||||
Treasury Stock Shares at Sep. 30, 2018 | 171,964 | |||||
Beginning Balance at Mar. 31, 2018 | 29,075,016 | 0 | $ 1,138,096 | 447,134 | 31,411,884 | $ (3,922,098) |
Common Stock Shares at Mar. 31, 2018 | 966,132 | |||||
Treasury Stock Shares at Mar. 31, 2018 | 171,964 | |||||
Net Income | 703,092 | 703,092 | ||||
Dividends Declared | (202,888) | (202,888) | ||||
Ending Balance at Jun. 30, 2018 | 29,575,220 | 0 | $ 1,138,096 | 447,134 | 31,912,088 | $ (3,922,098) |
Common Stock Shares at Jun. 30, 2018 | 966,132 | |||||
Treasury Stock Shares at Jun. 30, 2018 | 171,964 | |||||
Net Income | 287,749 | 287,749 | ||||
Dividends Declared | (202,888) | (202,888) | ||||
Ending Balance at Sep. 30, 2018 | 29,660,081 | 0 | $ 1,138,096 | 447,134 | 31,996,949 | $ (3,922,098) |
Common Stock Shares at Sep. 30, 2018 | 966,132 | |||||
Treasury Stock Shares at Sep. 30, 2018 | 171,964 | |||||
Beginning Balance at Dec. 31, 2018 | $ 29,759,749 | 0 | $ 1,138,096 | 447,134 | 32,096,617 | $ (3,922,098) |
Common Stock Shares at Dec. 31, 2018 | 966,132 | 966,132 | ||||
Treasury Stock Shares at Dec. 31, 2018 | 171,964 | 171,964 | ||||
Net Income | $ 286,842 | 286,842 | ||||
Dividends Declared | (502,389) | (502,389) | ||||
Ending Balance at Mar. 31, 2019 | 29,544,202 | 0 | $ 1,138,096 | 447,134 | 31,881,070 | $ (3,922,098) |
Common Stock Shares at Mar. 31, 2019 | 966,132 | |||||
Treasury Stock Shares at Mar. 31, 2019 | 171,964 | |||||
Beginning Balance at Dec. 31, 2018 | $ 29,759,749 | 0 | $ 1,138,096 | 447,134 | 32,096,617 | $ (3,922,098) |
Common Stock Shares at Dec. 31, 2018 | 966,132 | 966,132 | ||||
Treasury Stock Shares at Dec. 31, 2018 | 171,964 | 171,964 | ||||
Net Income | $ 832,198 | |||||
Ending Balance at Sep. 30, 2019 | $ 29,664,460 | 0 | $ 1,138,096 | 447,134 | 32,001,328 | $ (3,922,098) |
Common Stock Shares at Sep. 30, 2019 | 966,132 | 966,132 | ||||
Treasury Stock Shares at Sep. 30, 2019 | 171,964 | 171,964 | ||||
Beginning Balance at Mar. 31, 2019 | $ 29,544,202 | 0 | $ 1,138,096 | 447,134 | 31,881,070 | $ (3,922,098) |
Common Stock Shares at Mar. 31, 2019 | 966,132 | |||||
Treasury Stock Shares at Mar. 31, 2019 | 171,964 | |||||
Net Income | 229,559 | 229,559 | ||||
Dividends Declared | (212,549) | (212,549) | ||||
Ending Balance at Jun. 30, 2019 | 29,561,212 | 0 | $ 1,138,096 | 447,134 | 31,898,080 | $ (3,922,098) |
Common Stock Shares at Jun. 30, 2019 | 966,132 | |||||
Treasury Stock Shares at Jun. 30, 2019 | 171,964 | |||||
Net Income | 315,797 | 315,797 | ||||
Dividends Declared | (212,549) | (212,549) | ||||
Ending Balance at Sep. 30, 2019 | $ 29,664,460 | $ 0 | $ 1,138,096 | $ 447,134 | $ 32,001,328 | $ (3,922,098) |
Common Stock Shares at Sep. 30, 2019 | 966,132 | 966,132 | ||||
Treasury Stock Shares at Sep. 30, 2019 | 171,964 | 171,964 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - Parenthetical - $ / shares | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Details | ||||||||
Cash dividends declared per share | $ 0.22 | $ 0.22 | $ 0.52 | $ 0.21 | $ 0.21 | $ 0.51 | $ 0.96 | $ 0.93 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net Income | $ 832,198 | $ 1,698,629 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 1,029,998 | 973,182 |
Gain on disposal of equipment | (5,000) | (26,135) |
Deferred income taxes | 134,000 | 118,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (84,715) | (1,175,724) |
Inventories | 624,058 | (726,233) |
Other current assets and prepaid income taxes | (320,611) | (106,338) |
Accounts payable | (72,255) | 460,603 |
Accrued wages and salaries | 160,519 | 221,074 |
Other accrued expenses | (171,741) | (54,780) |
Unearned revenue and customer deposits | (125,529) | 61,073 |
Net cash provided by operating activities | 2,000,922 | 1,443,351 |
Cash flows from investing activities: | ||
Capital expenditures | (1,562,784) | (1,635,189) |
Proceeds from the sale of equipment | 5,000 | 26,135 |
Proceeds from certificates of deposit | 5,569,000 | 3,735,000 |
Purchases of certificates of deposit | (4,582,000) | (2,739,000) |
Net cash used in investing activities | (570,784) | (613,054) |
Cash flows from financing activities: | ||
Cash dividends paid | (927,487) | (898,503) |
Net cash used in financing activities | (927,487) | (898,503) |
Net increase (decrease) in cash and cash equivalents | 502,651 | (68,206) |
Cash and cash equivalents at beginning of period | 706,873 | 1,152,569 |
Cash and cash equivalents at end of period | 1,209,524 | 1,084,363 |
Supplemental schedule of non-cash investing activities: | ||
Capital expenditures in accounts payable | $ 0 | $ 7,265 |
Accounting Policies
Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Notes | |
Accounting Policies | 1. In the opinion of the Company, the accompanying unaudited interim financial statements contain all adjustments necessary to present fairly the financial position of the Company as of September 30, 2019 (unaudited) and December 31, 2018 (audited) and the results of operations and changes in cash flows for the indicated periods. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted from these unaudited financial statements in accordance with applicable rules. Please refer to the financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2018. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the three and nine-month period ending September 30, 2019 are not necessarily indicative of the results to be expected for the year. In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). The ASU increases transparency and comparability among entities by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU requires lessees to recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The ASU is effective for annual reporting periods beginning after December 15, 2018 and interim periods within those annual periods. The Company adopted Topic 842 on January 1, 2019 using the modified retrospective method. Based on the Companys current lease agreements, adopting this ASU did not have a material impact on the Companys financial statements. |
Risks and Uncertainties
Risks and Uncertainties | 9 Months Ended |
Sep. 30, 2019 | |
Notes | |
Risks and Uncertainties | 2. The Company extends credit on the basis of terms that are customary within our markets to various companies doing business primarily in the automotive industry. The Company has a concentration of credit risk primarily within the automotive industry and in the Midwestern United States. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Notes | |
Commitments and Contingencies | 3. The Company is, from time to time, involved in litigation, including environmental claims and contract disputes, in the normal course of business. While it is not possible at this time to establish the ultimate amount of liability with respect to contingent liabilities, including those related to legal proceedings, management is of the opinion that the aggregate amount of any such liabilities, for which provision has not been made, will not have a material adverse effect on the Company's financial position. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2019 | |
Notes | |
Revenue | 4. RevenueThe Company operates in the fastener industry and is in the business of manufacturing and selling rivets, cold-formed fasteners and parts, screw machine products, automatic rivet setting machines and parts and tools for such machines. Revenue is recognized when control of the promised goods or services is transferred to our customers, generally upon shipment of goods or completion of services, in an amount that reflects the consideration we expect to receive in exchange for those goods or services. For certain assembly equipment segment transactions, revenue is recognized based on progress toward completion of the performance obligation using a labor-based measure. Labor incurred and specific material costs are compared to milestone payments per sales contract. Based on our experience, this method most accurately reflects the transfer of goods under such contracts. During the second quarter of 2019, the Company realized $219,700 related to such a contract and the remaining performance obligation under that contract of $118,300 was recognized as revenue in the third quarter. Sales taxes we may collect concurrent with revenue producing activities are excluded from revenue. Revenue is recognized net of certain sales adjustments to arrive at net sales as reported on the statement of income. These adjustments primarily relate to customer returns and allowances. The Company records a liability and reduction in sales for estimated product returns based upon historical experience. If we determine that our obligation under warranty claims is probable and subject to reasonable determination, an estimate of that liability is recorded as an offset against revenue at that time. As of September 30, 2019 and December 31, 2018 reserves for warranty claims were not material. Cash received by the Company prior to shipment is recorded as unearned revenue. Shipping and handling fees billed to customers are recognized in net sales, and related costs as cost of sales, when incurred. Sales commissions are expensed when incurred because the amortization period is less than one year. These costs are recorded within selling and administrative expenses in the statement of income. The following table presents revenue by segment, further disaggregated by end-market: Fastener Assembly Equipment Consolidated Three Months Ended September 30, 2019: Automotive $ 4,698,298 $ 61,298 $ 4,759,596 Non-automotive 2,608,597 820,712 3,429,309 Total net sales $ 7,306,895 $ 882,010 $ 8,188,905 Three Months Ended September 30, 2018: Automotive $ 5,291,033 $ 100,751 $ 5,391,784 Non-automotive 2,645,765 818,500 3,464,265 Total net sales $ 7,936,798 $ 919,251 $ 8,856,049 Nine Months Ended September 30, 2019: Automotive $ 14,296,552 $ 166,713 $ 14,463,265 Non-automotive 8,406,167 2,816,602 11,222,769 Total net sales $ 22,702,719 $ 2,983,315 $ 25,686,034 Nine Months Ended September 30, 2018: Automotive $ 17,225,475 $ 189,656 $ 17,415,131 Non-automotive 8,670,697 2,574,646 11,245,343 Total net sales $ 25,896,172 $ 2,764,302 $ 28,660,474 The following table presents revenue by segment, further disaggregated by location: Fastener Assembly Equipment Consolidated Three Months Ended September 30, 2019: United States $ 6,252,110 $ 823,137 $ 7,075,247 Foreign 1,054,785 58,873 1,113,658 Total net sales $ 7,306,895 $ 882,010 $ 8,188,905 Three Months Ended September 30, 2018: United States $ 6,926,372 $ 856,248 $ 7,782,620 Foreign 1,010,426 63,003 1,073,429 Total net sales $ 7,936,798 $ 919,251 $ 8,856,049 Nine Months Ended September 30, 2019: United States $ 19,443,934 $ 2,731,126 $ 22,175,060 Foreign 3,258,785 252,189 3,510,974 Total net sales $ 22,702,719 $ 2,983,315 $ 25,686,034 Nine Months Ended September 30, 2018: United States $ 22,659,279 $ 2,608,197 $ 25,267,476 Foreign 3,236,893 156,105 3,392,998 Total net sales $ 25,896,172 $ 2,764,302 $ 28,660,474 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Notes | |
Income Taxes | 5. The Companys effective tax rates were approximately 23.9% and 20.9% for the third quarter of 2019 and 2018, respectively, and 22.5% and 22.4% for the nine months ended September 30, 2019 and 2018, respectively. The Companys federal income tax returns for the 2016, 2017 and 2018 tax years are subject to examination by the Internal Revenue Service (IRS). While it may be possible that a reduction could occur with respect to the Companys 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 Companys federal income tax filings. The statute of limitations on the Companys 2016, 2017 and 2018 federal income tax returns will expire on September 15, 2020, 2021 and 2022, respectively. The Companys state income tax returns for the 2016 through 2018 tax years remain subject to examination by various state authorities with the latest closing period on October 31, 2022. 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. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2019 | |
Notes | |
Inventories | 6. Inventories are stated at the lower of cost or net realizable value, cost being determined by the first-in, first-out method. A summary of inventories is as follows: September 30, 2019 December 31, 2018 Raw material $ 2,342,744 $ 2,798,918 Work-in-process 1,508,728 1,878,977 Finished goods 2,181,861 2,001,496 Inventory, gross 6,033,333 6,679,391 Valuation reserves (557,000) (579,000) Inventories, net $ 5,476,333 $ 6,100,391 |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2019 | |
Notes | |
Segment Reporting | 7. Segment InformationThe Company operates in two business segments as determined by its products. The fastener segment includes rivets, cold-formed fasteners and parts and screw machine products. The assembly equipment segment includes automatic rivet setting machines and parts and tools for such machines. Information by segment is as follows: Fastener Assembly Equipment Other Consolidated Three Months Ended September 30, 2019: Net sales $ 7,306,895 $ 882,010 0 $ 8,188,905 Depreciation 305,082 32,507 9,742 347,331 Segment operating profit 605,503 336,320 0 941,823 Selling and administrative expenses 0 0 (563,705) (563,705) Interest income 0 0 36,679 36,679 Income before income taxes $ 414,797 Capital expenditures 267,179 2,576 0 269,755 Segment assets: Accounts receivable, net 5,174,674 439,348 0 5,614,022 Inventories, net 4,294,760 1,181,573 0 5,476,333 Property, plant and equipment, net 11,126,165 1,715,513 949,254 13,790,932 Other assets 0 0 8,195,043 8,195,043 $ 33,076,330 Three Months Ended September 30, 2018: Net sales $ 7,936,798 $ 919,251 0 $ 8,856,049 Depreciation 281,418 28,358 9,869 319,645 Segment operating profit 599,188 297,009 0 896,197 Selling and administrative expenses 0 0 (563,347) (563,347) Interest income 0 0 30,899 30,899 Income before income taxes $ 363,749 Capital expenditures 813,649 5,489 187,598 1,006,736 Segment assets: Accounts receivable, net 5,961,946 540,428 0 6,502,374 Inventories, net 4,226,263 1,028,070 0 5,254,333 Property, plant and equipment, net 10,696,801 1,596,585 932,839 13,226,225 Other assets 0 0 8,446,731 8,446,731 $ 33,429,663 Nine Months Ended September 30, 2019: Net sales $ 22,702,719 $ 2,983,315 0 $ 25,686,034 Depreciation 907,887 92,884 29,227 1,029,998 Segment operating profit 1,681,703 988,196 0 2,669,899 Selling and administrative expenses 0 0 (1,705,159) (1,705,159) Interest income 0 0 108,458 108,458 Income before income taxes $ 1,073,198 Capital expenditures 1,307,859 228,900 26,025 1,562,784 Nine Months Ended September 30, 2018: Net sales $ 25,896,172 $ 2,764,302 0 $ 28,660,474 Depreciation 865,677 82,954 24,551 973,182 Segment operating profit 3,006,367 930,570 0 3,936,937 Selling and administrative expenses 0 0 (1,831,926) (1,831,926) Interest income 0 0 84,618 84,618 Income before income taxes $ 2,189,629 Capital expenditures 1,279,568 36,984 325,902 1,642,454 |
Accounting Policies (Policies)
Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Policies | |
Accounting Policies | 1. In the opinion of the Company, the accompanying unaudited interim financial statements contain all adjustments necessary to present fairly the financial position of the Company as of September 30, 2019 (unaudited) and December 31, 2018 (audited) and the results of operations and changes in cash flows for the indicated periods. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted from these unaudited financial statements in accordance with applicable rules. Please refer to the financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2018. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the three and nine-month period ending September 30, 2019 are not necessarily indicative of the results to be expected for the year. In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). The ASU increases transparency and comparability among entities by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU requires lessees to recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The ASU is effective for annual reporting periods beginning after December 15, 2018 and interim periods within those annual periods. The Company adopted Topic 842 on January 1, 2019 using the modified retrospective method. Based on the Companys current lease agreements, adopting this ASU did not have a material impact on the Companys financial statements. |
Risks and Uncertainties | 2. The Company extends credit on the basis of terms that are customary within our markets to various companies doing business primarily in the automotive industry. The Company has a concentration of credit risk primarily within the automotive industry and in the Midwestern United States. |
Commitments and Contingencies | 3. The Company is, from time to time, involved in litigation, including environmental claims and contract disputes, in the normal course of business. While it is not possible at this time to establish the ultimate amount of liability with respect to contingent liabilities, including those related to legal proceedings, management is of the opinion that the aggregate amount of any such liabilities, for which provision has not been made, will not have a material adverse effect on the Company's financial position. |
Revenue | 4. RevenueThe Company operates in the fastener industry and is in the business of manufacturing and selling rivets, cold-formed fasteners and parts, screw machine products, automatic rivet setting machines and parts and tools for such machines. Revenue is recognized when control of the promised goods or services is transferred to our customers, generally upon shipment of goods or completion of services, in an amount that reflects the consideration we expect to receive in exchange for those goods or services. For certain assembly equipment segment transactions, revenue is recognized based on progress toward completion of the performance obligation using a labor-based measure. Labor incurred and specific material costs are compared to milestone payments per sales contract. Based on our experience, this method most accurately reflects the transfer of goods under such contracts. During the second quarter of 2019, the Company realized $219,700 related to such a contract and the remaining performance obligation under that contract of $118,300 was recognized as revenue in the third quarter. Sales taxes we may collect concurrent with revenue producing activities are excluded from revenue. Revenue is recognized net of certain sales adjustments to arrive at net sales as reported on the statement of income. These adjustments primarily relate to customer returns and allowances. The Company records a liability and reduction in sales for estimated product returns based upon historical experience. If we determine that our obligation under warranty claims is probable and subject to reasonable determination, an estimate of that liability is recorded as an offset against revenue at that time. As of September 30, 2019 and December 31, 2018 reserves for warranty claims were not material. Cash received by the Company prior to shipment is recorded as unearned revenue. Shipping and handling fees billed to customers are recognized in net sales, and related costs as cost of sales, when incurred. Sales commissions are expensed when incurred because the amortization period is less than one year. These costs are recorded within selling and administrative expenses in the statement of income. |
Income Taxes | 5. The Companys effective tax rates were approximately 23.9% and 20.9% for the third quarter of 2019 and 2018, respectively, and 22.5% and 22.4% for the nine months ended September 30, 2019 and 2018, respectively. The Companys federal income tax returns for the 2016, 2017 and 2018 tax years are subject to examination by the Internal Revenue Service (IRS). While it may be possible that a reduction could occur with respect to the Companys 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 Companys federal income tax filings. The statute of limitations on the Companys 2016, 2017 and 2018 federal income tax returns will expire on September 15, 2020, 2021 and 2022, respectively. The Companys state income tax returns for the 2016 through 2018 tax years remain subject to examination by various state authorities with the latest closing period on October 31, 2022. 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. |
Inventories | 6. Inventories are stated at the lower of cost or net realizable value, cost being determined by the first-in, first-out method. |
Segment Reporting | 7. Segment InformationThe Company operates in two business segments as determined by its products. The fastener segment includes rivets, cold-formed fasteners and parts and screw machine products. The assembly equipment segment includes automatic rivet setting machines and parts and tools for such machines. |
Revenue_ Disaggregation of Reve
Revenue: Disaggregation of Revenue (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Location | |
Disaggregation of Revenue | Fastener Assembly Equipment Consolidated Three Months Ended September 30, 2019: United States $ 6,252,110 $ 823,137 $ 7,075,247 Foreign 1,054,785 58,873 1,113,658 Total net sales $ 7,306,895 $ 882,010 $ 8,188,905 Three Months Ended September 30, 2018: United States $ 6,926,372 $ 856,248 $ 7,782,620 Foreign 1,010,426 63,003 1,073,429 Total net sales $ 7,936,798 $ 919,251 $ 8,856,049 Nine Months Ended September 30, 2019: United States $ 19,443,934 $ 2,731,126 $ 22,175,060 Foreign 3,258,785 252,189 3,510,974 Total net sales $ 22,702,719 $ 2,983,315 $ 25,686,034 Nine Months Ended September 30, 2018: United States $ 22,659,279 $ 2,608,197 $ 25,267,476 Foreign 3,236,893 156,105 3,392,998 Total net sales $ 25,896,172 $ 2,764,302 $ 28,660,474 |
End Market | |
Disaggregation of Revenue | Fastener Assembly Equipment Consolidated Three Months Ended September 30, 2019: Automotive $ 4,698,298 $ 61,298 $ 4,759,596 Non-automotive 2,608,597 820,712 3,429,309 Total net sales $ 7,306,895 $ 882,010 $ 8,188,905 Three Months Ended September 30, 2018: Automotive $ 5,291,033 $ 100,751 $ 5,391,784 Non-automotive 2,645,765 818,500 3,464,265 Total net sales $ 7,936,798 $ 919,251 $ 8,856,049 Nine Months Ended September 30, 2019: Automotive $ 14,296,552 $ 166,713 $ 14,463,265 Non-automotive 8,406,167 2,816,602 11,222,769 Total net sales $ 22,702,719 $ 2,983,315 $ 25,686,034 Nine Months Ended September 30, 2018: Automotive $ 17,225,475 $ 189,656 $ 17,415,131 Non-automotive 8,670,697 2,574,646 11,245,343 Total net sales $ 25,896,172 $ 2,764,302 $ 28,660,474 |
Inventories_ Inventories (Table
Inventories: Inventories (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Tables/Schedules | |
Inventories | September 30, 2019 December 31, 2018 Raw material $ 2,342,744 $ 2,798,918 Work-in-process 1,508,728 1,878,977 Finished goods 2,181,861 2,001,496 Inventory, gross 6,033,333 6,679,391 Valuation reserves (557,000) (579,000) Inventories, net $ 5,476,333 $ 6,100,391 |
Segment Reporting_ Schedule of
Segment Reporting: Schedule of Segment Reporting, by Segment (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Tables/Schedules | |
Schedule of Segment Reporting, by Segment | Fastener Assembly Equipment Other Consolidated Three Months Ended September 30, 2019: Net sales $ 7,306,895 $ 882,010 0 $ 8,188,905 Depreciation 305,082 32,507 9,742 347,331 Segment operating profit 605,503 336,320 0 941,823 Selling and administrative expenses 0 0 (563,705) (563,705) Interest income 0 0 36,679 36,679 Income before income taxes $ 414,797 Capital expenditures 267,179 2,576 0 269,755 Segment assets: Accounts receivable, net 5,174,674 439,348 0 5,614,022 Inventories, net 4,294,760 1,181,573 0 5,476,333 Property, plant and equipment, net 11,126,165 1,715,513 949,254 13,790,932 Other assets 0 0 8,195,043 8,195,043 $ 33,076,330 Three Months Ended September 30, 2018: Net sales $ 7,936,798 $ 919,251 0 $ 8,856,049 Depreciation 281,418 28,358 9,869 319,645 Segment operating profit 599,188 297,009 0 896,197 Selling and administrative expenses 0 0 (563,347) (563,347) Interest income 0 0 30,899 30,899 Income before income taxes $ 363,749 Capital expenditures 813,649 5,489 187,598 1,006,736 Segment assets: Accounts receivable, net 5,961,946 540,428 0 6,502,374 Inventories, net 4,226,263 1,028,070 0 5,254,333 Property, plant and equipment, net 10,696,801 1,596,585 932,839 13,226,225 Other assets 0 0 8,446,731 8,446,731 $ 33,429,663 Nine Months Ended September 30, 2019: Net sales $ 22,702,719 $ 2,983,315 0 $ 25,686,034 Depreciation 907,887 92,884 29,227 1,029,998 Segment operating profit 1,681,703 988,196 0 2,669,899 Selling and administrative expenses 0 0 (1,705,159) (1,705,159) Interest income 0 0 108,458 108,458 Income before income taxes $ 1,073,198 Capital expenditures 1,307,859 228,900 26,025 1,562,784 Nine Months Ended September 30, 2018: Net sales $ 25,896,172 $ 2,764,302 0 $ 28,660,474 Depreciation 865,677 82,954 24,551 973,182 Segment operating profit 3,006,367 930,570 0 3,936,937 Selling and administrative expenses 0 0 (1,831,926) (1,831,926) Interest income 0 0 84,618 84,618 Income before income taxes $ 2,189,629 Capital expenditures 1,279,568 36,984 325,902 1,642,454 |
Revenue_ Revenue (Details)
Revenue: Revenue (Details) - USD ($) | 3 Months Ended | |
Sep. 30, 2019 | Jun. 30, 2019 | |
Details | ||
Revenue Recognized, Performance Obligation | $ 118,300 | $ 219,700 |
Revenue_ Disaggregation of Re_2
Revenue: Disaggregation of Revenue (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenue | $ 8,188,905 | $ 8,856,049 | $ 25,686,034 | $ 28,660,474 |
United States | ||||
Revenue | 7,075,247 | 7,782,620 | 22,175,060 | 25,267,476 |
Foreign | ||||
Revenue | 1,113,658 | 1,073,429 | 3,510,974 | 3,392,998 |
Automotive | ||||
Revenue | 4,759,596 | 5,391,784 | 14,463,265 | 17,415,131 |
Nonautomotive | ||||
Revenue | 3,429,309 | 3,464,265 | 11,222,769 | 11,245,343 |
Fastener | ||||
Revenue | 7,306,895 | 7,936,798 | 22,702,719 | 25,896,172 |
Fastener | United States | ||||
Revenue | 6,252,110 | 6,926,372 | 19,443,934 | 22,659,279 |
Fastener | Foreign | ||||
Revenue | 1,054,785 | 1,010,426 | 3,258,785 | 3,236,893 |
Fastener | Automotive | ||||
Revenue | 4,698,298 | 5,291,033 | 14,296,552 | 17,225,475 |
Fastener | Nonautomotive | ||||
Revenue | 2,608,597 | 2,645,765 | 8,406,167 | 8,670,697 |
Assembly Equipment | ||||
Revenue | 882,010 | 919,251 | 2,983,315 | 2,764,302 |
Assembly Equipment | United States | ||||
Revenue | 823,137 | 856,248 | 2,731,126 | 2,608,197 |
Assembly Equipment | Foreign | ||||
Revenue | 58,873 | 63,003 | 252,189 | 156,105 |
Assembly Equipment | Automotive | ||||
Revenue | 61,298 | 100,751 | 166,713 | 189,656 |
Assembly Equipment | Nonautomotive | ||||
Revenue | $ 820,712 | $ 818,500 | $ 2,816,602 | $ 2,574,646 |
Inventories_ Inventories (Detai
Inventories: Inventories (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Details | ||
Raw material | $ 2,342,744 | $ 2,798,918 |
Work-in-process | 1,508,728 | 1,878,977 |
Finished goods | 2,181,861 | 2,001,496 |
Inventory, gross | 6,033,333 | 6,679,391 |
Valuation reserves | (557,000) | (579,000) |
Inventories, net | $ 5,476,333 | $ 6,100,391 |
Segment Reporting_ Schedule o_2
Segment Reporting: Schedule of Segment Reporting, by Segment (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Net sales | $ 8,188,905 | $ 8,856,049 | $ 25,686,034 | $ 28,660,474 | |
Depreciation | 1,029,998 | 973,182 | |||
Accounts receivable - Less allowances of $140,000 | 5,614,022 | 5,614,022 | $ 5,529,307 | ||
Inventories, net | 5,476,333 | 5,476,333 | 6,100,391 | ||
Net property, plant and equipment | 13,790,932 | 13,790,932 | $ 13,258,146 | ||
Fastener | |||||
Net sales | 7,306,895 | 7,936,798 | 22,702,719 | 25,896,172 | |
Depreciation | 305,082 | 281,418 | 907,887 | 865,677 | |
Segment operating profit | 605,503 | 599,188 | 1,681,703 | 3,006,367 | |
Selling and administrative expenses | 0 | 0 | 0 | 0 | |
Interest income | 0 | 0 | 0 | 0 | |
Capital expenditures | 267,179 | 813,649 | 1,307,859 | 1,279,568 | |
Accounts receivable - Less allowances of $140,000 | 5,174,674 | 5,961,946 | 5,174,674 | 5,961,946 | |
Inventories, net | 4,294,760 | 4,226,263 | 4,294,760 | 4,226,263 | |
Net property, plant and equipment | 11,126,165 | 10,696,801 | 11,126,165 | 10,696,801 | |
Other Assets | 0 | 0 | 0 | 0 | |
Assembly Equipment | |||||
Net sales | 882,010 | 919,251 | 2,983,315 | 2,764,302 | |
Depreciation | 32,507 | 28,358 | 92,884 | 82,954 | |
Segment operating profit | 336,320 | 297,009 | 988,196 | 930,570 | |
Selling and administrative expenses | 0 | 0 | 0 | 0 | |
Interest income | 0 | 0 | 0 | 0 | |
Capital expenditures | 2,576 | 5,489 | 228,900 | 36,984 | |
Accounts receivable - Less allowances of $140,000 | 439,348 | 540,428 | 439,348 | 540,428 | |
Inventories, net | 1,181,573 | 1,028,070 | 1,181,573 | 1,028,070 | |
Net property, plant and equipment | 1,715,513 | 1,596,585 | 1,715,513 | 1,596,585 | |
Other Assets | 0 | 0 | 0 | 0 | |
Unallocated Corporate | |||||
Net sales | 0 | 0 | 0 | 0 | |
Depreciation | 9,742 | 9,869 | 29,227 | 24,551 | |
Segment operating profit | 0 | 0 | 0 | 0 | |
Selling and administrative expenses | (563,705) | (563,347) | (1,705,159) | (1,831,926) | |
Interest income | 36,679 | 30,899 | 108,458 | 84,618 | |
Capital expenditures | 0 | 187,598 | 26,025 | 325,902 | |
Accounts receivable - Less allowances of $140,000 | 0 | 0 | 0 | 0 | |
Inventories, net | 0 | 0 | 0 | 0 | |
Net property, plant and equipment | 949,254 | 932,839 | 949,254 | 932,839 | |
Other Assets | $ 8,195,043 | $ 8,446,731 | $ 8,195,043 | $ 8,446,731 |