Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 02, 2020 | |
Details | ||
Registrant CIK | 0000019871 | |
Fiscal Year End | --12-31 | |
Registrant Name | Chicago Rivet & Machine Co. | |
SEC Form | 10-Q | |
Period End date | Sep. 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 | Q3 | |
Document Quarterly Report | true | |
Document Transition Report | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash and cash equivalents | $ 997,831 | $ 1,429,454 |
Certificates of deposit | 6,476,000 | 6,574,000 |
Accounts receivable - Less allowances of $160,000 and $140,000, respectively | 5,346,916 | 4,609,314 |
Inventories, net | 4,944,806 | 4,951,177 |
Prepaid income taxes | 188,186 | 58,186 |
Other current assets | 446,554 | 427,192 |
Total current assets | 18,400,293 | 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 | 36,685,324 | 36,408,746 |
Property, Plant and Equipment, Gross | 46,663,534 | 46,377,299 |
Less accumulated depreciation | 33,628,740 | 32,703,246 |
Net property, plant and equipment | 13,034,794 | 13,674,053 |
Total assets | 31,435,087 | 31,723,376 |
Current Liabilities: | ||
Accounts payable | 898,714 | 490,580 |
Accrued wages and salaries | 945,133 | 629,972 |
Other accrued expenses | 264,424 | 349,069 |
Unearned revenue and customer deposits | 117,293 | 152,644 |
Total current liabilities | 2,225,564 | 1,622,265 |
Deferred income taxes | 871,084 | 943,084 |
Total liabilities | 3,096,648 | 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 | 30,675,307 | 31,494,895 |
Treasury stock, 171,964 shares at cost | (3,922,098) | (3,922,098) |
Total shareholders' equity | 28,338,439 | 29,158,027 |
Total liabilities and shareholders' equity | $ 31,435,087 | $ 31,723,376 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) - Parenthetical - USD ($) | Sep. 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 | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Condensed Consolidated Statements of Income (Unaudited) | ||||
Net sales | $ 7,645,259 | $ 8,188,905 | $ 19,325,234 | $ 25,686,034 |
Cost of goods sold | 6,004,766 | 6,539,138 | 16,304,164 | 20,826,534 |
Gross profit | 1,640,493 | 1,649,767 | 3,021,070 | 4,859,500 |
Selling and administrative expenses | 1,258,995 | 1,282,149 | 3,758,752 | 3,931,510 |
Operating profit (loss) | 381,498 | 367,618 | (737,682) | 927,990 |
Other income | 32,637 | 47,179 | 122,869 | 145,208 |
Income (loss) before income taxes | 414,135 | 414,797 | (614,813) | 1,073,198 |
Provision (benefit) for income taxes | 105,000 | 99,000 | (201,000) | 241,000 |
Net income (loss) | $ 309,135 | $ 315,797 | $ (413,813) | $ 832,198 |
Per share data, basic and diluted: | ||||
Net income (loss) per share | $ 0.32 | $ 0.32 | $ (0.43) | $ 0.86 |
Average common shares outstanding | 966,132 | 966,132 | 966,132 | 966,132 |
Cash dividends declared per share | $ 0.10 | $ 0.22 | $ 0.42 | $ 0.96 |
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) | 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 | |||||
Treasury Stock Shares at Sep. 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 | |||||
Net Income (Loss) | 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 | |||||
Treasury Stock Shares at Sep. 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) | $ (413,813) | |||||
Ending Balance at Sep. 30, 2020 | $ 28,338,439 | 0 | $ 1,138,096 | 447,134 | 30,675,307 | $ (3,922,098) |
Common Stock Shares at Sep. 30, 2020 | 966,132 | 966,132 | ||||
Treasury Stock Shares at Sep. 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 | |||||
Treasury Stock Shares at Jun. 30, 2020 | 171,964 | |||||
Net Income (Loss) | 309,135 | 309,135 | ||||
Dividends Declared | (96,614) | (96,614) | ||||
Ending Balance at Sep. 30, 2020 | $ 28,338,439 | $ 0 | $ 1,138,096 | $ 447,134 | $ 30,675,307 | $ (3,922,098) |
Common Stock Shares at Sep. 30, 2020 | 966,132 | 966,132 | ||||
Treasury Stock Shares at Sep. 30, 2020 | 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, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Details | ||||||||
Cash dividends declared per share | $ 0.10 | $ 0.10 | $ 0.22 | $ 0.22 | $ 0.22 | $ 0.52 | $ 0.42 | $ 0.96 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net Income (Loss) | $ (413,813) | $ 832,198 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation | 1,014,916 | 1,029,998 |
Gain on disposal of equipment | 0 | (5,000) |
Deferred income taxes | (72,000) | 134,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (737,602) | (84,715) |
Inventories | 6,371 | 624,058 |
Other current assets and prepaid income taxes | (149,362) | (320,611) |
Accounts payable | 408,134 | (72,255) |
Accrued wages and salaries | 315,161 | 160,519 |
Other accrued expenses | (84,645) | (171,741) |
Unearned revenue and customer deposits | (35,351) | (125,529) |
Net cash provided by operating activities | 251,809 | 2,000,922 |
Cash flows from investing activities: | ||
Capital expenditures | (375,657) | (1,562,784) |
Proceeds from the sale of equipment | 0 | 5,000 |
Proceeds from certificates of deposit | 4,831,000 | 5,569,000 |
Purchases of certificates of deposit | (4,733,000) | (4,582,000) |
Net cash used in investing activities | (277,657) | (570,784) |
Cash flows from financing activities: | ||
Cash dividends paid | (405,775) | (927,487) |
Net cash used in financing activities | (405,775) | (927,487) |
Net (decrease) increase in cash and cash equivalents | (431,623) | 502,651 |
Cash and cash equivalents at beginning of period | 1,429,454 | 706,873 |
Cash and cash equivalents at end of period | 997,831 | 1,209,524 |
Supplemental schedule of non-cash investing activities: | ||
Capital expenditures in accounts payable | $ 0 | $ 0 |
Accounting Policies
Accounting Policies | 9 Months Ended |
Sep. 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 September 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 Companys 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 nine-month period ending September 30, 2020 are not necessarily indicative of the results to be expected for the year. |
Risks and Uncertainties
Risks and Uncertainties | 9 Months Ended |
Sep. 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 | 9 Months Ended |
Sep. 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 | 9 Months Ended |
Sep. 30, 2020 | |
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 third 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 September 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 September 30, 2020: Automotive $ 4,660,451 $ 34,687 $ 4,695,138 Non-automotive 2,363,965 586,156 2,950,121 Total net sales $ 7,024,416 $ 620,843 $ 7,645,259 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 Nine Months Ended September 30, 2020: Automotive $ 10,653,621 $ 107,476 $ 10,761,097 Non-automotive 6,621,934 1,942,203 8,564,137 Total net sales $ 17,275,555 $ 2,049,679 $ 19,325,234 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 The following table presents revenue by segment, further disaggregated by location: Fastener Assembly Equipment Consolidated Three Months Ended September 30, 2020: United States $ 5,909,756 $ 603,858 $ 6,513,614 Foreign 1,114,660 16,985 1,131,645 Total net sales $ 7,024,416 $ 620,843 $ 7,645,259 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 Nine Months Ended September 30, 2020: United States $ 14,721,327 $ 1,891,485 $ 16,612,812 Foreign 2,554,228 158,194 2,712,422 Total net sales $ 17,275,555 $ 2,049,679 $ 19,325,234 Nine Months Ended September 30, 2019: United States $ 19,443,934 $ 2,731,126 $ 22,175,060 Foreign 3,258,785 252,189 3,510,874 Total net sales $ 22,702,719 $ 2,983,315 $ 25,686,034 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Notes | |
Income Taxes | 5. The Companys effective tax rates were approximately 25.4% and 23.9% for the third quarter of 2020 and 2019, respectively. 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 Companys effective tax rate was approximately (32.7)% for the nine months ended September 30, 2020 compared to 22.5% for the nine months ended September 30, 2019. The Companys federal income tax returns for the 2017, 2018 and 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 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 2017, 2018 and 2019 federal income tax returns will expire on September 15, 2021, 2022 and 2023, respectively. The Companys state income tax returns for the 2017 through 2019 tax years remain subject to examination by various state authorities with the latest closing period on October 31, 2023. 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, 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: September 30, 2020 December 31, 2019 Raw material $ 2,067,234 $ 2,337,278 Work-in-process 1,500,319 1,201,099 Finished goods 1,913,253 1,869,800 Inventories, gross 5,480,806 5,408,177 Valuation reserves (536,000) (457,000) Inventories, net $ 4,944,806 $ 4,951,177 |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2020 | |
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, 2020: Net sales $ 7,024,416 $ 620,843 0 $ 7,645,259 Depreciation 297,533 32,869 8,377 338,779 Segment operating profit 783,234 103,759 0 886,993 Selling and administrative expenses 0 0 (493,370) (493,370) Interest income 0 0 20,512 20,512 Income before income taxes $ 414,135 Capital expenditures 28,165 0 92,140 120,305 Segment assets: Accounts receivable, net 5,059,552 287,364 0 5,346,916 Inventories, net 3,880,189 1,064,617 0 4,944,806 Property, plant and equipment, net 10,381,970 1,588,157 1,064,667 13,034,794 Other assets 0 0 8,108,571 8,108,571 $ 31,435,087 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 Nine Months Ended September 30, 2020: Net sales $ 17,275,555 $ 2,049,679 0 $ 19,325,234 Depreciation 891,177 98,607 25,132 1,014,916 Segment operating profit 533,742 319,340 0 853,082 Selling and administrative expenses 0 0 (1,547,606) (1,547,606) Interest income 0 0 79,711 79,711 Income (loss) before income taxes $ (614,813) Capital expenditures 225,707 0 149,950 375,657 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 |
COVID-19
COVID-19 | 9 Months Ended |
Sep. 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) | 9 Months Ended |
Sep. 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 September 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 Companys 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 nine-month period ending September 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. 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 third 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 September 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 Companys effective tax rates were approximately 25.4% and 23.9% for the third quarter of 2020 and 2019, respectively. 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 Companys effective tax rate was approximately (32.7)% for the nine months ended September 30, 2020 compared to 22.5% for the nine months ended September 30, 2019. The Companys federal income tax returns for the 2017, 2018 and 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 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 2017, 2018 and 2019 federal income tax returns will expire on September 15, 2021, 2022 and 2023, respectively. The Companys state income tax returns for the 2017 through 2019 tax years remain subject to examination by various state authorities with the latest closing period on October 31, 2023. 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 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) | 9 Months Ended |
Sep. 30, 2020 | |
Location | |
Disaggregation of Revenue | Fastener Assembly Equipment Consolidated Three Months Ended September 30, 2020: United States $ 5,909,756 $ 603,858 $ 6,513,614 Foreign 1,114,660 16,985 1,131,645 Total net sales $ 7,024,416 $ 620,843 $ 7,645,259 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 Nine Months Ended September 30, 2020: United States $ 14,721,327 $ 1,891,485 $ 16,612,812 Foreign 2,554,228 158,194 2,712,422 Total net sales $ 17,275,555 $ 2,049,679 $ 19,325,234 Nine Months Ended September 30, 2019: United States $ 19,443,934 $ 2,731,126 $ 22,175,060 Foreign 3,258,785 252,189 3,510,874 Total net sales $ 22,702,719 $ 2,983,315 $ 25,686,034 |
End Market | |
Disaggregation of Revenue | Fastener Assembly Equipment Consolidated Three Months Ended September 30, 2020: Automotive $ 4,660,451 $ 34,687 $ 4,695,138 Non-automotive 2,363,965 586,156 2,950,121 Total net sales $ 7,024,416 $ 620,843 $ 7,645,259 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 Nine Months Ended September 30, 2020: Automotive $ 10,653,621 $ 107,476 $ 10,761,097 Non-automotive 6,621,934 1,942,203 8,564,137 Total net sales $ 17,275,555 $ 2,049,679 $ 19,325,234 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 |
Inventories_ Inventories (Table
Inventories: Inventories (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Tables/Schedules | |
Inventories | September 30, 2020 December 31, 2019 Raw material $ 2,067,234 $ 2,337,278 Work-in-process 1,500,319 1,201,099 Finished goods 1,913,253 1,869,800 Inventories, gross 5,480,806 5,408,177 Valuation reserves (536,000) (457,000) Inventories, net $ 4,944,806 $ 4,951,177 |
Segment Reporting_ Schedule of
Segment Reporting: Schedule of Segment Reporting, by Segment (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Tables/Schedules | |
Schedule of Segment Reporting, by Segment | Fastener Assembly Equipment Other Consolidated Three Months Ended September 30, 2020: Net sales $ 7,024,416 $ 620,843 0 $ 7,645,259 Depreciation 297,533 32,869 8,377 338,779 Segment operating profit 783,234 103,759 0 886,993 Selling and administrative expenses 0 0 (493,370) (493,370) Interest income 0 0 20,512 20,512 Income before income taxes $ 414,135 Capital expenditures 28,165 0 92,140 120,305 Segment assets: Accounts receivable, net 5,059,552 287,364 0 5,346,916 Inventories, net 3,880,189 1,064,617 0 4,944,806 Property, plant and equipment, net 10,381,970 1,588,157 1,064,667 13,034,794 Other assets 0 0 8,108,571 8,108,571 $ 31,435,087 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 Nine Months Ended September 30, 2020: Net sales $ 17,275,555 $ 2,049,679 0 $ 19,325,234 Depreciation 891,177 98,607 25,132 1,014,916 Segment operating profit 533,742 319,340 0 853,082 Selling and administrative expenses 0 0 (1,547,606) (1,547,606) Interest income 0 0 79,711 79,711 Income (loss) before income taxes $ (614,813) Capital expenditures 225,707 0 149,950 375,657 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 |
Revenue_ Disaggregation of Re_2
Revenue: Disaggregation of Revenue (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue | $ 7,645,259 | $ 8,188,905 | $ 19,325,234 | $ 25,686,034 |
United States | ||||
Revenue | 6,513,614 | 7,075,247 | 16,612,812 | 22,175,060 |
Foreign | ||||
Revenue | 1,131,645 | 1,113,658 | 2,712,422 | 3,510,874 |
Automotive | ||||
Revenue | 4,695,138 | 4,759,596 | 10,761,097 | 14,463,265 |
Nonautomotive | ||||
Revenue | 2,950,121 | 3,429,309 | 8,564,137 | 11,222,769 |
Fastener | ||||
Revenue | 7,024,416 | 7,306,895 | 17,275,555 | 22,702,719 |
Fastener | United States | ||||
Revenue | 5,909,756 | 6,252,110 | 14,721,327 | 19,443,934 |
Fastener | Foreign | ||||
Revenue | 1,114,660 | 1,054,785 | 2,554,228 | 3,258,785 |
Fastener | Automotive | ||||
Revenue | 4,660,451 | 4,698,298 | 10,653,621 | 14,296,552 |
Fastener | Nonautomotive | ||||
Revenue | 2,363,965 | 2,608,597 | 6,621,934 | 8,406,167 |
Assembly Equipment | ||||
Revenue | 620,843 | 882,010 | 2,049,679 | 2,983,315 |
Assembly Equipment | United States | ||||
Revenue | 603,858 | 823,137 | 1,891,485 | 2,731,126 |
Assembly Equipment | Foreign | ||||
Revenue | 16,985 | 58,873 | 158,194 | 252,189 |
Assembly Equipment | Automotive | ||||
Revenue | 34,687 | 61,298 | 107,476 | 166,713 |
Assembly Equipment | Nonautomotive | ||||
Revenue | $ 586,156 | $ 820,712 | $ 1,942,203 | $ 2,816,602 |
Inventories_ Inventories (Detai
Inventories: Inventories (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Details | ||
Raw material | $ 2,067,234 | $ 2,337,278 |
Work-in-process | 1,500,319 | 1,201,099 |
Finished goods | 1,913,253 | 1,869,800 |
Inventories, gross | 5,480,806 | 5,408,177 |
Valuation reserves | (536,000) | (457,000) |
Inventories, net | $ 4,944,806 | $ 4,951,177 |
Segment Reporting_ Schedule o_2
Segment Reporting: Schedule of Segment Reporting, by Segment (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Net sales | $ 7,645,259 | $ 8,188,905 | $ 19,325,234 | $ 25,686,034 | |
Depreciation | 1,014,916 | 1,029,998 | |||
Accounts receivable - Less allowances of $160,000 and $140,000, respectively | 5,346,916 | 5,346,916 | $ 4,609,314 | ||
Inventories, net | 4,944,806 | 4,944,806 | 4,951,177 | ||
Net property, plant and equipment | 13,034,794 | 13,034,794 | $ 13,674,053 | ||
Fastener | |||||
Net sales | 7,024,416 | 7,306,895 | 17,275,555 | 22,702,719 | |
Depreciation | 297,533 | 305,082 | 891,177 | 907,887 | |
Segment operating profit (loss) | 783,234 | 605,503 | 533,742 | 1,681,703 | |
Selling and Administrative Expenses | 0 | 0 | 0 | 0 | |
Interest income | 0 | 0 | 0 | 0 | |
Capital expenditures | 28,165 | 267,179 | 225,707 | 1,307,859 | |
Accounts receivable - Less allowances of $160,000 and $140,000, respectively | 5,059,552 | 5,174,674 | 5,059,552 | 5,174,674 | |
Inventories, net | 3,880,189 | 4,294,760 | 3,880,189 | 4,294,760 | |
Net property, plant and equipment | 10,381,970 | 11,126,165 | 10,381,970 | 11,126,165 | |
Other Assets | 0 | 0 | 0 | 0 | |
Assembly Equipment | |||||
Net sales | 620,843 | 882,010 | 2,049,679 | 2,983,315 | |
Depreciation | 32,869 | 32,507 | 98,607 | 92,884 | |
Segment operating profit (loss) | 103,759 | 336,320 | 319,340 | 988,196 | |
Selling and Administrative Expenses | 0 | 0 | 0 | 0 | |
Interest income | 0 | 0 | 0 | 0 | |
Capital expenditures | 0 | 2,576 | 0 | 228,900 | |
Accounts receivable - Less allowances of $160,000 and $140,000, respectively | 287,364 | 439,348 | 287,364 | 439,348 | |
Inventories, net | 1,064,617 | 1,181,573 | 1,064,617 | 1,181,573 | |
Net property, plant and equipment | 1,588,157 | 1,715,513 | 1,588,157 | 1,715,513 | |
Other Assets | 0 | 0 | 0 | 0 | |
Unallocated Corporate | |||||
Net sales | 0 | 0 | 0 | 0 | |
Depreciation | 8,377 | 9,742 | 25,132 | 29,227 | |
Segment operating profit (loss) | 0 | 0 | 0 | 0 | |
Selling and Administrative Expenses | (493,370) | (563,705) | (1,547,606) | (1,705,159) | |
Interest income | 20,512 | 36,679 | 79,711 | 108,458 | |
Capital expenditures | 92,140 | 0 | 149,950 | 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 | 1,064,667 | 949,254 | 1,064,667 | 949,254 | |
Other Assets | $ 8,108,571 | $ 8,195,043 | $ 8,108,571 | $ 8,195,043 |