EXHIBIT 99.1
To Our Shareholders:
The comparative results of operations of Chicago Rivet & Machine Co. for
the third quarter and first nine months of 2001 and 2000 are summarized below.
Net sales and lease revenues for the third quarter of 2001 amounted to
$9,398,572, which is a decline of 9.2% compared to the same period of 2000.
Revenues continue to reflect the weakness in the manufacturing sector of the
economy and the related lack of spending for capital equipment. Also, third
quarter revenues are traditionally softer than other quarters due to the impact
of vacation schedules at our facilities as well as at those of our customers,
and this also impacted our revenues during the third quarter. For the third
quarter of 2001, revenues from the fastener segment totaled $7,748,260, a
decrease of 3.4% compared to the third quarter of 2000. Revenues within the
assembly equipment segment declined 29% compared to the third quarter of 2000
and amounted to $1,650,312 during the third quarter of 2001. On a year-to-date
basis, 2001 revenues within the fastener segment totaled $25,042,640, a decline
of 9.8% compared with the first nine months of 2000, while revenues within the
assembly equipment segment amounted to $6,200,012, which is a decline of 16.1%
compared to the year earlier period.
Despite the lower sales revenues, the company was able to report an
improvement in net income for the third quarter of 2001, compared with the third
quarter of 2000. Within the fastener segment, a variety of factors allowed us to
post quarterly results that were significantly better than those of the third
quarter of 2000. These factors include the impact of negotiated reductions in
the cost of certain raw material and supplies, reductions in indirect labor and
salary expense, and lower repair and maintenance expenses. The quarter to
quarter comparison is also more favorable because the third quarter of 2000
included certain unfavorable inventory valuation adjustments which reduced
margins in that period. While cost control measures contributed reductions in
costs for both segments of our operations, those achieved within the assembly
equipment segment were not sufficient to offset the effects of lower volume, and
margins fell short of those recorded in the prior year in both the current
quarter and on a year-to-date basis. As has been the case throughout the current
year, selling and administrative expenses during the third quarter were
appreciably below levels of the prior year, mostly due to lower legal and
professional fees, as well as reductions in salaries and commissions.
Unfortunately, the bankruptcy filing of a large customer generated an increase
in bad debt expense of $150,000, which offset much of the savings in
administrative expenses during the third quarter of 2001. Overall, net income
during the quarter amounted to $426,996, or $.44 per share on 967,132 average
shares outstanding during the quarter, compared with $274,583, or $.28 per share
on 978,532 average shares outstanding during the third quarter of 2000.
The first nine months of 2001 have presented a number of challenges that we
anticipate will persist throughout the fourth quarter. The weakness in the
economy, especially within the manufacturing sector, is expected to continue, at
least in the short term. Accordingly, we plan to continue to emphasize cost
controls, to adjust our level of operations in response to any changes in
business conditions, and to continue soliciting new, profitable business. This
approach has served us well in the past, and we expect that it will be
successful in the future, as well.
Respectfully yours,
John A. Morrissey John C. Osterman
Chairman President
October 30, 2001
The foregoing discussion is only intended to provide highlights of operations
for the periods covered. Additional information is contained in our Form 10-Q,
which will be filed with the SEC and is available to shareholders upon request
from the Company, or via the internet through the SEC's EDGAR database. This
discussion contains certain "forward-looking statements" which are inherently
subject to risks and uncertainties that may cause actual events to differ
materially from those discussed herein. Factors which may cause such differences
in events include, among other things, our ability to maintain our relationships
with our significant customers; increases in the prices of, or limitations on
the availability of, our primary raw materials; or a downturn in the automotive
industry, upon which we rely for sales revenue,
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and which is cyclical and dependent on, among other things, consumer spending,
international economic conditions and regulations and policies regarding
international trade. Many of these factors are beyond our ability to control or
predict. Readers are cautioned not to place undue reliance on these
forward-looking statements. We undertake no obligation to publish revised
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
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CHICAGO RIVET & MACHINE CO.
SUMMARY OF CONSOLIDATED RESULTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30
THIRD QUARTER FIRST NINE MONTHS
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2001 2000 2001 2000
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Net sales and lease revenue $ 9,398,572 $10,345,570 $31,242,652 $35,147,394
Income before income taxes 642,996 415,583 2,279,675 3,163,731
Net income 426,996 274,583 1,503,675 2,090,731
Net income per share .44 .28 1.55 2.01
Average shares outstanding 967,132 978,532 967,132 1,039,679
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(All figures subject to year end audit)
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