Chicago Rivet & Machine (CVR) 10-Q 7 Aug 20 2020 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2020	Aug. 03, 2020
Details
Registrant CIK	0000019871
Fiscal Year End	--12-31
Registrant Name	Chicago Rivet & Machine Co.
SEC Form	10-Q
Period End date	Jun. 30, 2020
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	2020
Document Fiscal Period Focus	Q2
Document Quarterly Report	true
Document Transition Report	false

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Current Assets:
Cash and cash equivalents	$ 1,258,864	$ 1,429,454
Certificates of deposit	6,823,000	6,574,000
Accounts receivable - Less allowances of $160,000 and $140,000, respectively	3,557,637	4,609,314
Inventories, net	4,745,786	4,951,177
Prepaid income taxes	316,186	58,186
Other current assets	461,779	427,192
Total current assets	17,163,252	18,049,323
Property, Plant and Equipment:
Land and improvements	1,636,749	1,636,749
Buildings and improvements	8,341,461	8,331,804
Production equipment and other	36,654,440	36,408,746
Property, Plant and Equipment, Gross	46,632,650	46,377,299
Less accumulated depreciation	33,379,382	32,703,246
Net property, plant and equipment	13,253,268	13,674,053
Total assets	30,416,520	31,723,376
Current Liabilities:
Accounts payable	345,179	490,580
Accrued wages and salaries	749,513	629,972
Other accrued expenses	222,205	349,069
Unearned revenue and customer deposits	79,621	152,644
Total current liabilities	1,396,518	1,622,265
Deferred income taxes	894,084	943,084
Total liabilities	2,290,602	2,565,349
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	30,462,786	31,494,895
Treasury stock, 171,964 shares at cost	(3,922,098)	(3,922,098)
Total shareholders' equity	28,125,918	29,158,027
Total liabilities and shareholders' equity	$ 30,416,520	$ 31,723,376

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Unaudited) - Parenthetical - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Details
Accounts Receivable, Allowance for Credit Loss, Current	$ 160,000	$ 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		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Condensed Consolidated Statements of Income (Unaudited)
Net sales	$ 4,103,520	$ 8,875,451	$ 11,679,975	$ 17,497,129
Cost of goods sold	4,033,370	7,327,481	10,299,398	14,287,396
Gross profit	70,150	1,547,970	1,380,577	3,209,733
Selling and administrative expenses	1,214,423	1,306,665	2,499,757	2,649,361
Operating profit (loss)	(1,144,273)	241,305	(1,119,180)	560,372
Other income	43,757	49,254	90,232	98,029
Income (loss) before income taxes	(1,100,516)	290,559	(1,028,948)	658,401
Provision (benefit) for income taxes	(321,000)	61,000	(306,000)	142,000
Net income (loss)	$ (779,516)	$ 229,559	$ (722,948)	$ 516,401
Per share data, basic and diluted:
Net income (loss) per share	$ (0.81)	$ 0.24	$ (0.75)	$ 0.54
Average common shares outstanding	966,132	966,132	966,132	966,132
Cash dividends declared per share	$ 0.10	$ 0.22	$ 0.32	$ 0.74

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, 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
Treasury Stock Shares at Dec. 31, 2018						171,964
Net Income (Loss)	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
Treasury Stock Shares at Dec. 31, 2018						171,964
Net Income (Loss)	516,401
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
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 (Loss)	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
Beginning Balance at Dec. 31, 2019	$ 29,158,027	0	$ 1,138,096	447,134	31,494,895	$ (3,922,098)
Common Stock Shares at Dec. 31, 2019	966,132		966,132
Treasury Stock Shares at Dec. 31, 2019	171,964					171,964
Net Income (Loss)	$ 56,568				56,568
Dividends Declared	(212,549)				(212,549)
Ending Balance at Mar. 31, 2020	29,002,046	0	$ 1,138,096	447,134	31,338,914	$ (3,922,098)
Common Stock Shares at Mar. 31, 2020			966,132
Treasury Stock Shares at Mar. 31, 2020						171,964
Beginning Balance at Dec. 31, 2019	$ 29,158,027	0	$ 1,138,096	447,134	31,494,895	$ (3,922,098)
Common Stock Shares at Dec. 31, 2019	966,132		966,132
Treasury Stock Shares at Dec. 31, 2019	171,964					171,964
Net Income (Loss)	$ (722,948)
Ending Balance at Jun. 30, 2020	$ 28,125,918	0	$ 1,138,096	447,134	30,462,786	$ (3,922,098)
Common Stock Shares at Jun. 30, 2020	966,132		966,132
Treasury Stock Shares at Jun. 30, 2020	171,964					171,964
Beginning Balance at Mar. 31, 2020	$ 29,002,046	0	$ 1,138,096	447,134	31,338,914	$ (3,922,098)
Common Stock Shares at Mar. 31, 2020			966,132
Treasury Stock Shares at Mar. 31, 2020						171,964
Net Income (Loss)	(779,516)				(779,516)
Dividends Declared	(96,612)				(96,612)
Ending Balance at Jun. 30, 2020	$ 28,125,918	$ 0	$ 1,138,096	$ 447,134	$ 30,462,786	$ (3,922,098)
Common Stock Shares at Jun. 30, 2020	966,132		966,132
Treasury Stock Shares at Jun. 30, 2020	171,964					171,964

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - Parenthetical - $ / shares	3 Months Ended				6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019
Details
Cash dividends declared per share	$ 0.10	$ 0.22	$ 0.22	$ 0.52	$ 0.32	$ 0.74

Condensed Consolidated Statem_4

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash flows from operating activities:
Net Income (Loss)	$ (722,948)	$ 516,401
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	676,137	682,667
Gain on disposal of equipment	0	(5,000)
Deferred income taxes	(49,000)	78,000
Changes in operating assets and liabilities:
Accounts receivable	1,051,677	(258,048)
Inventories	205,391	1,568
Other current assets and prepaid income taxes	(292,587)	72,115
Accounts payable	(145,401)	(265,603)
Accrued wages and salaries	119,541	261,219
Other accrued expenses	(126,864)	(195,368)
Unearned revenue and customer deposits	(73,023)	(178,075)
Net cash provided by operating activities	642,923	709,876
Cash flows from investing activities:
Capital expenditures	(255,352)	(1,283,736)
Proceeds from the sale of equipment	0	5,000
Proceeds from certificates of deposit	3,486,000	4,324,000
Purchases of certificates of deposit	(3,735,000)	(2,839,000)
Net cash (used in) provided by investing activities	(504,352)	206,264
Cash flows from financing activities:
Cash dividends paid	(309,161)	(714,938)
Net cash used in financing activities	(309,161)	(714,938)
Net (decrease) increase in cash and cash equivalents	(170,590)	201,202
Cash and cash equivalents at beginning of period	1,429,454	706,873
Cash and cash equivalents at end of period	1,258,864	908,075
Supplemental schedule of non-cash investing activities:
Capital expenditures in accounts payable	$ 0	$ 9,293

Accounting Policies

Accounting Policies	6 Months Ended
	Jun. 30, 2020
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 June 30, 2020 (unaudited) and December 31, 2019 (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 Company’s Annual Report on Form 10-K for the year ended December 31, 2019. 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 six-month period ending June 30, 2020 are not necessarily indicative of the results to be expected for the year.

Risks and Uncertainties

Risks and Uncertainties	6 Months Ended
	Jun. 30, 2020
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	6 Months Ended
	Jun. 30, 2020
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	6 Months Ended
	Jun. 30, 2020
Notes
Revenue	4. Revenue—The 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 2020, the Company had no such contracts. 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 June 30, 2020 and December 31, 2019 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 June 30, 2020: Automotive $ 1,577,488 $ 38,250 $ 1,615,738 Non-automotive 1,936,254 551,528 2,487,782 Total net sales $ 3,513,742 $ 589,778 $ 4,103,520 Three Months Ended June 30, 2019: Automotive $ 4,880,038 $ 63,650 $ 4,943,688 Non-automotive 2,936,666 995,097 3,931,763 Total net sales $ 7,816,704 $ 1,058,747 $ 8,875,451 Six Months Ended June 30, 2020: Automotive $ 5,991,225 $ 71,709 $ 6,062,934 Non-automotive 4,259,914 1,357,127 5,617,041 Total net sales $ 10,251,139 $ 1,428,836 $ 11,679,975 Six Months Ended June 30, 2019: Automotive $ 9,598,254 $ 105,415 $ 9,703,669 Non-automotive 5,797,570 1,995,890 7,793,460 Total net sales $ 15,395,824 $ 2,101,305 $ 17,497,129 The following table presents revenue by segment, further disaggregated by location: Fastener Assembly Equipment Consolidated Three Months Ended June 30, 2020: United States $ 3,070,643 $ 539,141 $ 3,609,784 Foreign 443,099 50,637 493,736 Total net sales $ 3,513,742 $ 589,778 $ 4,103,520 Three Months Ended June 30, 2019: United States $ 6,612,996 $ 951,679 $ 7,564,675 Foreign 1,203,708 107,068 1,310,776 Total net sales $ 7,816,704 $ 1,058,747 $ 8,875,451 Six Months Ended June 30, 2020: United States $ 8,811,569 $ 1,287,627 $ 10,099,196 Foreign 1,439,570 141,209 1,580,779 Total net sales $ 10,251,139 $ 1,428,836 $ 11,679,975 Six Months Ended June 30, 2019: United States $ 13,194,334 $ 1,907,989 $ 15,102,323 Foreign 2,201,490 193,316 2,394,806 Total net sales $ 15,395,824 $ 2,101,305 $ 17,497,129

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2020
Notes
Income Taxes	5. The Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020. The CARES Act allows for the carryback of any net operating loss arising in a tax year beginning after December 31, 2017 and before January 1, 2021, to each of the five tax years preceding the tax year in which the loss arises. As a result, the Company’s effective tax rate was approximately (29.2)% for the second quarter of 2020 compared to 21% for the second quarter of 2019. The Company’s effective tax rate was (29.7)% and 21.6% for the six months ended June 30, 2020 and 2019, respectively. The Company’s federal income tax returns for the 2016 through 2019 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 2016 through 2019 federal income tax returns will expire on September 15, 2020 through 2023, respectively. The Company’s state income tax returns for the 2016 through 2019 tax years remain subject to examination by various state authorities with the latest closing period on October 31, 2023. The Company is not currently under examination by any state authority for income tax purposes and no statutes for state income tax filings have been extended.

Inventories

Inventories	6 Months Ended
	Jun. 30, 2020
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: June 30, 2020 December 31, 2019 Raw material $ 2,315,730 $ 2,337,278 Work-in-process 1,091,787 1,201,099 Finished goods 1,865,269 1,869,800 Inventories, gross 5,272,786 5,408,177 Valuation reserves (527,000) (457,000) Inventories, net $ 4,745,786 $ 4,951,177

Segment Reporting

Segment Reporting	6 Months Ended
	Jun. 30, 2020
Notes
Segment Reporting	7. Segment Information—The 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 June 30, 2020: Net sales $ 3,513,742 $ 589,778 0 $ 4,103,520 Depreciation 297,534 32,869 8,378 338,781 Segment operating profit (loss) (653,510) 31,010 0 (622,500) Selling and administrative expenses 0 0 (503,340) (503,340) Interest income 0 0 25,324 25,324 Income (loss) before income taxes $ (1,100,516) Capital expenditures 29,545 0 57,810 87,355 Segment assets: Accounts receivable, net 3,327,037 230,600 0 3,557,637 Inventories, net 3,782,622 963,164 0 4,745,786 Property, plant and equipment, net 10,651,338 1,621,026 980,904 13,253,268 Other assets 0 0 8,859,829 8,859,829 $ 30,416,520 Three Months Ended June 30, 2019: Net sales $ 7,816,704 $ 1,058,747 0 $ 8,875,451 Depreciation 305,082 31,453 9,743 346,278 Segment operating profit 487,305 315,802 0 803,107 Selling and administrative expenses 0 0 (548,052) (548,052) Interest income 0 0 35,504 35,504 Income before income taxes $ 290,559 Capital expenditures 284,573 102,324 0 386,897 Segment assets: Accounts receivable, net 5,426,139 361,216 0 5,787,355 Inventories, net 4,996,608 1,102,215 0 6,098,823 Property, plant and equipment, net 11,164,067 1,745,444 958,997 13,868,508 Other assets 0 0 7,002,868 7,002,868 $ 32,757,554 Six Months Ended June 30, 2020: Net sales $ 10,251,139 $ 1,428,836 0 $ 11,679,975 Depreciation 593,644 65,738 16,755 676,137 Segment operating profit (loss) (249,492) 215,581 0 (33,911) Selling and administrative expenses 0 0 (1,054,236) (1,054,236) Interest income 0 0 59,199 59,199 Income (loss) before income taxes $ (1,028,948) Capital expenditures 197,542 0 57,810 255,352 Six Months Ended June 30, 2019: Net sales $ 15,395,824 $ 2,101,305 0 $ 17,497,129 Depreciation 602,805 60,377 19,485 682,667 Segment operating profit 1,076,200 651,876 0 1,728,076 Selling and administrative expenses 0 0 (1,141,454) (1,141,454) Interest income 0 0 71,779 71,779 Income before income taxes $ 658,401 Capital expenditures 1,040,680 226,324 26,025 1,293,029

COVID-19

COVID-19	6 Months Ended
	Jun. 30, 2020
Notes
COVID-19	8.  COVID-19 -- In March 2020, the World Health Organization characterized the novel coronavirus (“COVID-19”) a pandemic and the President of the United States declared the COVID-19 outbreak a national emergency.  The rapid spread of the virus and the evolving response domestically and internationally to combat it have had a significant negative impact on the global economy, including the automotive industry upon which we rely for sales.  Beginning in March, most states issued executive orders which temporarily closed businesses deemed non-essential in an effort to prevent the spread of the coronavirus.  Similar measures also took place in foreign markets we serve.  As a result, our operations and the operations of our customers and suppliers have been adversely affected.  Since some of our customers are classified as essential businesses and were allowed to continue to operate during this period, we were able to continue our operations, but at a significantly reduced level, in order to service those customers.  Our automotive customers were particularly affected, as much of the sector was idled for an extended period of time during the second quarter due to employee safety concerns.  While most shut-down orders were lifted late in the second quarter, various work-related restrictions remain in place.  Due to the rapidly changing business environment and heightened degree of uncertainty resulting from COVID-19, we have taken measures to reduce expenses and conserve capital during this period, including reduced work schedules, delayed capital expenditures and a reduction in dividend payments.  We have seen improved demand since government-imposed restrictions were relaxed, however the timing of any broad economic recovery is uncertain and will likely be tied to the course of the pandemic.  As we cannot predict the duration or scope of the COVID-19 pandemic, or its broader impact on the global economy, including the demand for automobiles, it is unknown how long the COVID-19 restrictions will remain in place or what the impact of COVID-19 and its related effects will be on our business, results of operations or financial condition, but the impact could be material and last for an extended period of time.

Accounting Policies (Policies)

Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2020
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 June 30, 2020 (unaudited) and December 31, 2019 (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 Company’s Annual Report on Form 10-K for the year ended December 31, 2019. 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 six-month period ending June 30, 2020 are not necessarily indicative of the results to be expected for the year.
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. Revenue—The 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 2020, the Company had no such contracts. 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 June 30, 2020 and December 31, 2019 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 Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020. The CARES Act allows for the carryback of any net operating loss arising in a tax year beginning after December 31, 2017 and before January 1, 2021, to each of the five tax years preceding the tax year in which the loss arises. As a result, the Company’s effective tax rate was approximately (29.2)% for the second quarter of 2020 compared to 21% for the second quarter of 2019. The Company’s effective tax rate was (29.7)% and 21.6% for the six months ended June 30, 2020 and 2019, respectively. The Company’s federal income tax returns for the 2016 through 2019 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 2016 through 2019 federal income tax returns will expire on September 15, 2020 through 2023, respectively. The Company’s state income tax returns for the 2016 through 2019 tax years remain subject to examination by various state authorities with the latest closing period on October 31, 2023. The Company is not currently 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 Information—The 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)	6 Months Ended
	Jun. 30, 2020
Location
Disaggregation of Revenue	Fastener Assembly Equipment Consolidated Three Months Ended June 30, 2020: United States $ 3,070,643 $ 539,141 $ 3,609,784 Foreign 443,099 50,637 493,736 Total net sales $ 3,513,742 $ 589,778 $ 4,103,520 Three Months Ended June 30, 2019: United States $ 6,612,996 $ 951,679 $ 7,564,675 Foreign 1,203,708 107,068 1,310,776 Total net sales $ 7,816,704 $ 1,058,747 $ 8,875,451 Six Months Ended June 30, 2020: United States $ 8,811,569 $ 1,287,627 $ 10,099,196 Foreign 1,439,570 141,209 1,580,779 Total net sales $ 10,251,139 $ 1,428,836 $ 11,679,975 Six Months Ended June 30, 2019: United States $ 13,194,334 $ 1,907,989 $ 15,102,323 Foreign 2,201,490 193,316 2,394,806 Total net sales $ 15,395,824 $ 2,101,305 $ 17,497,129
End Market
Disaggregation of Revenue	Fastener Assembly Equipment Consolidated Three Months Ended June 30, 2020: Automotive $ 1,577,488 $ 38,250 $ 1,615,738 Non-automotive 1,936,254 551,528 2,487,782 Total net sales $ 3,513,742 $ 589,778 $ 4,103,520 Three Months Ended June 30, 2019: Automotive $ 4,880,038 $ 63,650 $ 4,943,688 Non-automotive 2,936,666 995,097 3,931,763 Total net sales $ 7,816,704 $ 1,058,747 $ 8,875,451 Six Months Ended June 30, 2020: Automotive $ 5,991,225 $ 71,709 $ 6,062,934 Non-automotive 4,259,914 1,357,127 5,617,041 Total net sales $ 10,251,139 $ 1,428,836 $ 11,679,975 Six Months Ended June 30, 2019: Automotive $ 9,598,254 $ 105,415 $ 9,703,669 Non-automotive 5,797,570 1,995,890 7,793,460 Total net sales $ 15,395,824 $ 2,101,305 $ 17,497,129

Inventories_ Inventories (Table

Inventories: Inventories (Tables)	6 Months Ended
	Jun. 30, 2020
Tables/Schedules
Inventories	June 30, 2020 December 31, 2019 Raw material $ 2,315,730 $ 2,337,278 Work-in-process 1,091,787 1,201,099 Finished goods 1,865,269 1,869,800 Inventories, gross 5,272,786 5,408,177 Valuation reserves (527,000) (457,000) Inventories, net $ 4,745,786 $ 4,951,177

Segment Reporting_ Schedule of

Segment Reporting: Schedule of Segment Reporting, by Segment (Tables)	6 Months Ended
	Jun. 30, 2020
Tables/Schedules
Schedule of Segment Reporting, by Segment	Fastener Assembly Equipment Other Consolidated Three Months Ended June 30, 2020: Net sales $ 3,513,742 $ 589,778 0 $ 4,103,520 Depreciation 297,534 32,869 8,378 338,781 Segment operating profit (loss) (653,510) 31,010 0 (622,500) Selling and administrative expenses 0 0 (503,340) (503,340) Interest income 0 0 25,324 25,324 Income (loss) before income taxes $ (1,100,516) Capital expenditures 29,545 0 57,810 87,355 Segment assets: Accounts receivable, net 3,327,037 230,600 0 3,557,637 Inventories, net 3,782,622 963,164 0 4,745,786 Property, plant and equipment, net 10,651,338 1,621,026 980,904 13,253,268 Other assets 0 0 8,859,829 8,859,829 $ 30,416,520 Three Months Ended June 30, 2019: Net sales $ 7,816,704 $ 1,058,747 0 $ 8,875,451 Depreciation 305,082 31,453 9,743 346,278 Segment operating profit 487,305 315,802 0 803,107 Selling and administrative expenses 0 0 (548,052) (548,052) Interest income 0 0 35,504 35,504 Income before income taxes $ 290,559 Capital expenditures 284,573 102,324 0 386,897 Segment assets: Accounts receivable, net 5,426,139 361,216 0 5,787,355 Inventories, net 4,996,608 1,102,215 0 6,098,823 Property, plant and equipment, net 11,164,067 1,745,444 958,997 13,868,508 Other assets 0 0 7,002,868 7,002,868 $ 32,757,554 Six Months Ended June 30, 2020: Net sales $ 10,251,139 $ 1,428,836 0 $ 11,679,975 Depreciation 593,644 65,738 16,755 676,137 Segment operating profit (loss) (249,492) 215,581 0 (33,911) Selling and administrative expenses 0 0 (1,054,236) (1,054,236) Interest income 0 0 59,199 59,199 Income (loss) before income taxes $ (1,028,948) Capital expenditures 197,542 0 57,810 255,352 Six Months Ended June 30, 2019: Net sales $ 15,395,824 $ 2,101,305 0 $ 17,497,129 Depreciation 602,805 60,377 19,485 682,667 Segment operating profit 1,076,200 651,876 0 1,728,076 Selling and administrative expenses 0 0 (1,141,454) (1,141,454) Interest income 0 0 71,779 71,779 Income before income taxes $ 658,401 Capital expenditures 1,040,680 226,324 26,025 1,293,029

Revenue_ Disaggregation of Re_2

Revenue: Disaggregation of Revenue (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenue	$ 4,103,520	$ 8,875,451	$ 11,679,975	$ 17,497,129
United States
Revenue	3,609,784	7,564,675	10,099,196	15,102,323
Foreign
Revenue	493,736	1,310,776	1,580,779	2,394,806
Automotive
Revenue	1,615,738	4,943,688	6,062,934	9,703,669
Nonautomotive
Revenue	2,487,782	3,931,763	5,617,041	7,793,460
Fastener
Revenue	3,513,742	7,816,704	10,251,139	15,395,824
Fastener | United States
Revenue	3,070,643	6,612,996	8,811,569	13,194,334
Fastener | Foreign
Revenue	443,099	1,203,708	1,439,570	2,201,490
Fastener | Automotive
Revenue	1,577,488	4,880,038	5,991,225	9,598,254
Fastener | Nonautomotive
Revenue	1,936,254	2,936,666	4,259,914	5,797,570
Assembly Equipment
Revenue	589,778	1,058,747	1,428,836	2,101,305
Assembly Equipment | United States
Revenue	539,141	951,679	1,287,627	1,907,989
Assembly Equipment | Foreign
Revenue	50,637	107,068	141,209	193,316
Assembly Equipment | Automotive
Revenue	38,250	63,650	71,709	105,415
Assembly Equipment | Nonautomotive
Revenue	$ 551,528	$ 995,097	$ 1,357,127	$ 1,995,890

Inventories_ Inventories (Detai

Inventories: Inventories (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Details
Raw material	$ 2,315,730	$ 2,337,278
Work-in-process	1,091,787	1,201,099
Finished goods	1,865,269	1,869,800
Inventories, gross	5,272,786	5,408,177
Valuation reserves	(527,000)	(457,000)
Inventories, net	$ 4,745,786	$ 4,951,177

Segment Reporting_ Schedule o_2

Segment Reporting: Schedule of Segment Reporting, by Segment (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Net sales	$ 4,103,520	$ 8,875,451	$ 11,679,975	$ 17,497,129
Depreciation			676,137	682,667
Accounts receivable - Less allowances of $160,000 and $140,000, respectively	3,557,637		3,557,637		$ 4,609,314
Inventories, net	4,745,786		4,745,786		4,951,177
Net property, plant and equipment	13,253,268		13,253,268		$ 13,674,053
Fastener
Net sales	3,513,742	7,816,704	10,251,139	15,395,824
Depreciation	297,534	305,082	593,644	602,805
Segment operating profit (loss)	(653,510)	487,305	(249,492)	1,076,200
Selling and Administrative Expenses	0	0	0	0
Interest income	0	0	0	0
Capital expenditures	29,545	284,573	197,542	1,040,680
Accounts receivable - Less allowances of $160,000 and $140,000, respectively	3,327,037	5,426,139	3,327,037	5,426,139
Inventories, net	3,782,622	4,996,608	3,782,622	4,996,608
Net property, plant and equipment	10,651,338	11,164,067	10,651,338	11,164,067
Other Assets	0	0	0	0
Assembly Equipment
Net sales	589,778	1,058,747	1,428,836	2,101,305
Depreciation	32,869	31,453	65,738	60,377
Segment operating profit (loss)	31,010	315,802	215,581	651,876
Selling and Administrative Expenses	0	0	0	0
Interest income	0	0	0	0
Capital expenditures	0	102,324	0	226,324
Accounts receivable - Less allowances of $160,000 and $140,000, respectively	230,600	361,216	230,600	361,216
Inventories, net	963,164	1,102,215	963,164	1,102,215
Net property, plant and equipment	1,621,026	1,745,444	1,621,026	1,745,444
Other Assets	0	0	0	0
Unallocated Corporate
Net sales	0	0	0	0
Depreciation	8,378	9,743	16,755	19,485
Segment operating profit (loss)	0	0	0	0
Selling and Administrative Expenses	(503,340)	(548,052)	(1,054,236)	(1,141,454)
Interest income	25,324	35,504	59,199	71,779
Capital expenditures	57,810	0	57,810	26,025
Accounts receivable - Less allowances of $160,000 and $140,000, respectively	0	0	0	0
Inventories, net	0	0	0	0
Net property, plant and equipment	980,904	958,997	980,904	958,997
Other Assets	$ 8,859,829	$ 7,002,868	$ 8,859,829	$ 7,002,868