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<SEC-DOCUMENT>0000950137-01-000943.txt : 20010330
<SEC-HEADER>0000950137-01-000943.hdr.sgml : 20010330
ACCESSION NUMBER:		0000950137-01-000943
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20001231
FILED AS OF DATE:		20010329

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CHICAGO RIVET & MACHINE CO
		CENTRAL INDEX KEY:			0000019871
		STANDARD INDUSTRIAL CLASSIFICATION:	METALWORKING MACHINERY & EQUIPMENT [3540]
		IRS NUMBER:				360904920
		STATE OF INCORPORATION:			IL
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-K
		SEC ACT:		
		SEC FILE NUMBER:	000-01227
		FILM NUMBER:		1583387

	BUSINESS ADDRESS:	
		STREET 1:		901 FRONTENAC RD
		STREET 2:		P O BOX 3061
		CITY:			NAPERVILLE
		STATE:			IL
		ZIP:			60566
		BUSINESS PHONE:		6303578500

	MAIL ADDRESS:	
		STREET 1:		901 FRONTENAC RD
		STREET 2:		P O BOX 3061
		CITY:			NAPERVILLE
		STATE:			IL
		ZIP:			60566
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>c61217e10-k.txt
<DESCRIPTION>ANNUAL REPORT
<TEXT>

<PAGE>   1

================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                         -----------------------------
                                   FORM 10-K

(Mark One)

[x]           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended December 31, 2000,
                                       OR

[ ]           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 OF THE
               SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

                  For the transition period from            to
                         Commission File Number: 0-1227

                          CHICAGO RIVET & MACHINE CO.
             (Exact name of registrant as specified in its charter)

                      Illinois                                   36-0904920
          (State or other jurisdiction of                     (I.R.S. Employer
           incorporation or organization)                    Identification No.)

         901 Frontenac Road, Naperville, IL                          60563
      (Address or principal executive offices)                     (Zip Code)

           Registrant's telephone number, including area code (630) 357-8500

              Securities registered pursuant to Section 12(b) of the Act:


                                                        NAME OF EACH EXCHANGE
           TITLE OF EACH CLASS                           ON WHICH REGISTERED
           -------------------                          ---------------------
     Common Stock -- $1.00 Par Value                   American Stock Exchange
  (including Preferred Stock Purchase Rights)      (Trading privileges only, not
                                                             registered)

          Securities registered pursuant to Section 12(g) of the Act:

                                      None
     ---------------------------------------------------------------------
                                (Title of Class)

     INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS, (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [CHECK MARK]        NO___

     INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K.  [  ]

     STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES
OF THE REGISTRANT. THE AGGREGATE MARKET VALUE SHALL BE COMPUTED BY REFERENCE TO
THE PRICE AT WHICH THE STOCK WAS SOLD, OR THE AVERAGE BID AND ASKED PRICES OF
SUCH STOCK, AS OF A SPECIFIED DATE WITHIN 60 DAYS PRIOR TO THE DATE OF FILING.

                       $13,953,453 AS OF JANUARY 31, 2001

  COMMON SHARES OUTSTANDING AS OF JANUARY 31, 2001 WERE 967,132 ($1 PAR VALUE)

                      DOCUMENTS INCORPORATED BY REFERENCE

     (1) PORTIONS OF THE COMPANY'S ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR
ENDED DECEMBER 31, 2000 (THE "2000 REPORT") ARE INCORPORATED BY REFERENCE IN
PARTS I, II AND IV OF THIS REPORT.

     (2) PORTIONS OF THE COMPANY'S DEFINITIVE PROXY STATEMENT WHICH IS TO BE
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN CONNECTION WITH THE
COMPANY'S 2001 ANNUAL MEETING OF SHAREHOLDERS ARE INCORPORATED BY REFERENCE IN
PART III OF THIS REPORT.
================================================================================
                                                                PAGE 1 OF ______
                                                 EXHIBIT INDEX IS ON PAGE ______




<PAGE>   2
                           CHICAGO RIVET & MACHINE CO.
                         PERIOD ENDING DECEMBER 31, 2000


Item                                                                        Page
No.                                                                          No.
- ---                                                                         ----
                                     Part I

1.       Business                                                              3
2.       Properties                                                            4
3.       Legal Proceedings                                                     4
4.       Submission of Matters to a Vote of Security Holders                   5

                                     Part II

5.       Market for Registrant's Common Equity and Related
          Stockholder Matters                                                  6
6.       Selected Financial Data                                               6
7.       Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                             6
7a.      Quantitative and Qualitative Disclosures About Market Risk           11
8.       Financial Statements and Supplementary Data                          11
9.       Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure                                             12

                                    Part III

10.      Directors and Executive Officers of the Registrant                   12
11.      Executive Compensation                                               12
12.      Security Ownership of Certain Beneficial Owners and
         Management                                                           12
13.      Certain Relationships and Related Transactions                       12

                                     Part IV

14.      Exhibits, Financial Statement Schedules and Reports on
         Form 8-K                                                             13







                                       2
<PAGE>   3

                                     PART I

ITEM 1 - BUSINESS

         Chicago Rivet & Machine Co. (the Company) was incorporated under the
laws of the State of Illinois in December, 1927, as successor to the business of
Chicago Rivet & Specialty Co. The Company operates in two segments of the
fastener industry: Fasteners and Assembly Equipment. The Fastener segment
consists of the manufacture and sale of rivets, cold-formed fasteners and parts
and screw machine products. The Assembly Equipment segment consists primarily of
the manufacture of automatic rivet setting machines, automatic assembly
equipment, parts and tools for such machines, and the leasing of automatic rivet
setting machines. For further discussion regarding the Company's operations see
Note 1 which appears on page 8 of the Company's 2000 Annual Report to
Shareholders, incorporated herein by reference. The 2000 Annual Report is filed
as an exhibit to this report.

         The principal market for the fastener segment operations is the
automotive and appliance industries within the United States. Sales are
solicited by employees and by independent sales representatives.

         The segments in which the Company operates are characterized by active
and substantial competition. No single company dominates the industry. The
Company's competitors include both larger and smaller manufacturers, and
segments or divisions of large, diversified companies with substantial financial
resources. Principal competitive factors in the market for the Company's
products are quality, service, reliability and price.

         The Company serves a wide variety of customers. Sales revenues are
primarily derived from sales to customers involved, directly or indirectly, in
the manufacture of automobiles and appliances. Information concerning backlog of
orders is not considered material to the understanding of the Company's business
due to relatively short production cycles. The level of business activity for
the Company is closely related to the overall level of industrial activity in
the United States. During 2000, sales to two customers exceeded 10% of the
Company's consolidated revenues. Sales to TI Group Automotive Systems
Corporation accounted for approximately 19% of the Company's consolidated
revenues in 2000, 17% in 1999 and 15% in 1998. Sales to Fisher & Company
accounted for approximately 11%, 11% and 10% of the Company's consolidated
revenues in 2000, 1999, and 1998, respectively.

         The Company's business has historically been somewhat stronger during
the first half of the year.

         The Company generally does not provide credit terms in excess of thirty
days.

         The Company purchases raw materials from a number of sources, primarily
within the United States. There are numerous sources of raw materials, and the
Company does not have to rely on a single source for any of its requirements.
The Company is not aware of any significant problem in the availability of raw
materials used in its production.

         Patents, trademarks, licenses, franchises and concessions are not of
significant importance to the business of the Company.

                                       3
<PAGE>   4

         The Company does not engage in basic research activities, but rather in
ongoing product improvement and development. The amounts spent on product
development activities in the last three years were not material.

         At December 31, 2000, the Company employed 366 people.

         The Company has no foreign operations, and sales to foreign customers
represent only a minor portion of the Company's total sales.


ITEM 2 - PROPERTIES

         The Company conducts its manufacturing and warehousing operations at
five plants, which are described below. All five plants are owned by the Company
and considered suitable and adequate for their present use. The Company also
currently maintains a small sales office in Norwell, Massachusetts in a leased
facility.

         Of the properties described below, the Jefferson, Iowa and the Madison
Heights, Michigan facilities are used entirely in the fastener segment. The
Albia, Iowa facility is used exclusively in the assembly equipment segment. The
Tyrone, Pennsylvania and the Naperville, Illinois facilites are utilized in both
operating segments.

                        Plant Locations and Descriptions

Naperville, Illinois     Brick, concrete block and partial metal construction
                         with metal roof.

Tyrone, Pennsylvania     Concrete block with small tapered beam type warehouse.

Jefferson, Iowa          Steel tapered beam construction.

Albia, Iowa              Concrete block with prestressed concrete roof
                         construction.

Madison Heights,         Concrete, brick and partial metal construction with
Michigan                 metal roof.


ITEM 3 - LEGAL PROCEEDINGS

         The Company is, from time to time, involved in litigation, including
environmental claims, in the normal course of business. With regard to
environmental claims, the Company has been named by state and/or federal
government agencies as a "potentially responsible party" with respect to certain
waste disposal sites. As a potentially responsible party, the Company may be
considered jointly and severally liable, along with other potentially
responsible parties, for the cost of remediation of these waste sites. The
actual cost of remediation is presently unknown. Despite the joint and several
nature of liability, these proceedings are frequently resolved on the basis of
the quantity and type of waste disposed by the parties. The actual amount of
liability for the Company is unknown due to disagreement concerning the
allocation of responsibility, uncertainties regarding the amount of contribution
that will be available from other parties and uncertainties related to insurance
coverage. After investigation of the quantities and type of waste disposed at
these sites, it is management's opinion that any liability will not be material
to the Company's financial condition. At a number of waste disposal sites, the
issues affecting the Company, have been favorably resolved, or are nearing
resolution, and accordingly, the Company has reduced the amount of reserves
recorded in connection with these sites. Nevertheless, it is likely that the
Company


                                       4
<PAGE>   5

will incur additional costs associated with the remaining proceedings and,
accordingly, the Company has recorded a total liability of $25,000 related to
these matters. The adequacy of this reserve will be reviewed periodically as
more definitive cost information becomes available.


ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matter was submitted to a vote of the Company's shareholders during
the fourth quarter of 2000.

                      Executive Officers of the Registrant

         The names, ages and positions of all executive officers of the Company,
as of March 24, 2001, are listed below. Officers are elected annually by the
Board of Directors at the meeting of the directors immediately following the
Annual Meeting of Shareholders. There are no family relationships among these
officers, nor any arrangement or understanding between any officer and any other
person pursuant to which the officer was selected.

<TABLE>
                                                               Number of years
Name and Age of Officer             Position                    an Officer
- -----------------------             --------                   ---------------
<S>                        <C>     <C>                        <C>
John A. Morrissey          65       Chairman, Chief                    21
                                    Executive Officer

John C. Osterman           49       President, Chief                   17
                                    Operating Officer
                                    and Treasurer

Donald P. Long             49       Vice-President Sales                6

Kimberly A. Kirhofer       42       Secretary                          10

Michael J. Bourg           38       Controller                           2
</TABLE>


- -        Mr. Morrissey has been Chairman of the Board of Directors of the
         Company since November 1979, and Chief Executive Officer since August
         1981. He has been a director of the Company since 1968.

- -        Mr. Osterman has been President, Chief Operating Officer and Treasurer
         of the Company since September 1987. He was Assistant Secretary from
         November 1983 to May 1985 when he became Assistant Vice
         President-Administration. He became Vice President-Administration in
         May 1986 and was named Executive Vice President in May 1987. He has
         been a director of the Company since May 1988.

- -        Mr. Long has been Vice President-Sales of the Company since November
         1994, and was Director of Sales and Marketing of the Company from March
         1993 through November 1994. Prior to that, he was employed by Townsend
         Engineered Products, a maker of rivets, cold-formed fasteners and rivet
         setting equipment in various sales management positions for more than 5
         years.

- -        Mrs. Kirhofer has been Secretary of the Company since August 1991, and
         was Assistant Secretary of the Company from February 1991 through
         August 1991. Prior to that, she held various administrative positions
         with the Company since May 1983.

                                       5
<PAGE>   6

- -        Mr. Bourg has been Controller of the Company since December 1998. Prior
         to that, he was Accounting Manager at Fuchs Lubricants Co., a
         manufacturer of industrial lubricants, for two years and prior to that
         was employed by the public accounting firm of McGladrey & Pullen, LLP
         as a public accountant, for more than five years.


                                     PART II

ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND
 RELATED SECURITY HOLDER MATTERS

         The Company's common stock is traded on the American Stock Exchange
(trading privileges only, not registered). As of December 31, 2000 there were
374 record holders of such stock. The information on the market price of, and
dividends paid with respect to, the Company's common stock, set forth in the
section entitled "Information on Company's Common Stock" which appears on page
12 of the 2000 Annual Report is incorporated herein by reference. The 2000
Annual Report is filed as an exhibit to this report.




ITEM 6 - SELECTED FINANCIAL DATA

         The section entitled "Selected Financial Data" which appears on page 11
of the 2000 Annual Report is incorporated herein by reference. The 2000 Annual
Report is filed as an exhibit to this report.


ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

     This discussion contains certain "forward-looking statements" which are
inherently subject to risks and uncertainties that may cause actual events to
differ materially from those discussed herein. Factors which may cause such
differences in events include, 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, 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.

         In addition to the disclosures contained herein, readers are also urged
to carefully review and consider any risks and uncertainties contained in other
documents filed by the Company with the Securities and Exchange Commission.

RESULTS OF OPERATIONS

         The long running economic expansion that the U.S. economy has enjoyed
appears to have run its course. Though there may be some debate as to the extent
of the slowdown in the overall economy, there is little doubt that the
manufacturing sector slowed dramatically during 2000. Despite record automobile
sales, companies operating within


                                       6
<PAGE>   7

that segment of the economy generally posted weaker results than in the prior
year. This was the case for Chicago Rivet. The softness in new orders that we
reported early in 2000 continued to characterize our markets throughout the
year, and the softening accelerated during the second half. In view of these
conditions, which contributed to both lower revenues and reduced income compared
to the record performance in 1999, our results for the year were respectable.

2000 COMPARED TO 1999

         Conditions in our major markets tended to weaken as the year
progressed. As a result, net sales and lease revenues declined to $45,423,263 in
2000. On an overall basis, this represents a decline of 7.5% compared to the
record level of $49,080,257 recorded in 1999. Revenues within the fastener
segment, which began 2000 at a slightly stronger pace than in the prior year,
ended the year at $35,735,699, a decline of 4.7% compared to 1999, as the second
half of the year was characterized by business levels that were sharply lower
than the preceding six months. This downturn is attributable to a decline in the
level of activity within the motor vehicle and automotive parts sector of the
economy upon which we depend for the majority of our fastener revenues. Within
the assembly equipment segment, demand was comparatively soft early in the year,
and became weaker as the year progressed. As a result, revenues for the full
year declined approximately 16% compared to 1999, totaling $9,687,564 during
2000.

         Given the reduced operating levels, gross margins within the fastener
segment declined compared to the prior year. However, there were other
significant factors that impacted gross margins. Among them were increases in
wage levels necessary to retain skilled labor in the face of very tight labor
markets, increases in the cost of tooling and supplies used in manufacturing,
significantly higher costs for health insurance and higher depreciation expense
associated with recent investments in new manufacturing equipment. While
competitive situations continued to hamper our ability to recover the higher
costs outlined above, favorable conditions in the market for raw materials
enabled us to negotiate modest reductions in the prices paid for certain raw
materials. Overall, however, the combination of lower volume and generally
higher manufacturing costs caused gross margins within the fastener segment to
fall to 22.3% compared to 23.9% in the prior year.


         During 2000, revenues within the assembly equipment segment declined
approximately 16% compared to 1999. Most of this decline was a function of
reduced unit sales, as demand was comparatively weak throughout the year. Gross
margins declined from approximately 45% in 1999 to 42% in 2000, due in part to a
continued shift toward lower priced and lower margin equipment, and also
reflects the impact of higher health insurance costs. Most other costs of
manufacturing were reduced to levels consistent with the lower operating levels.


         Selling and administrative expenses declined 3.6% compared with 1999.
Costs incurred in connection with the implementation of new data processing
systems declined substantially compared with 1999, but still remained at higher
than normal levels for most of the current year. Both commission expense and
profit sharing expense declined in proportion with the decline in sales and
profits, respectively. Offsetting these changes were professional fees incurred
in connection with the Company's "Dutch auction" tender offer, higher health
insurance costs, and increases in salary expense.

         Interest expense increased approximately $123,000 due primarily to
additional borrowing in connection with the tender offer and, to a lesser
extent, higher interest rates.


                                       7
<PAGE>   8

         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 at the
date of the financial statements and the amounts of revenue and expenses during
the reporting period. During interim periods, the Company uses estimated gross
profit rates to determine the cost of goods sold for a portion of its
operations. Actual results can vary from these estimates and these estimates
are adjusted, as necessary, when actual information is available. During the
fourth quarter of 2000, net income included net favorable adjustments to
inventory, accruals and allowances aggregating $.10 per share. Similar
adjustments in the fourth quarter of 1999 and 1998 amounted to $.09 per share
and $.05 per share, respectively.

1999 COMPARED TO 1998

         The Company's net sales and lease revenues increased approximately 9%,
totaling $49,080,257 in 1999, compared with $44,938,184 recorded in 1998.
Revenues within the fastener segment improved 10.5%, reflecting the strength of
the automotive industry, which represents the Company's largest market. While
revenue from sales within the assembly equipment segment improved 6.4%, lease
revenues in that segment declined compared to the prior year, which resulted in
a net increase in sales and lease revenues within the assembly equipment segment
of 5.3%. Overall, gross margins improved to $13,361,375, an increase of
approximately 5%, despite a charge of $910,000 associated with a product recall.
Selling and administrative expenses increased significantly, primarily due to
expenditures for information technology, and net income increased to $3,454,291.

         The fastener segment produced the most dramatic changes compared with
1998. Revenues within this segment increased 10.5% to $37,486,536. This increase
was largely a reflection of very strong growth in the economy in general and
record levels of production within the automotive industry. The increased volume
levels contributed to generally higher margins as fixed costs, with the
exception of depreciation, remained relatively constant compared with 1998. The
strength of the employment market contributed to increases in wage levels that
slightly exceeded the overall inflation level, and the limited availability of
skilled labor necessitated an increase in overtime expense in order to meet
increased demand within this segment of our operations. Despite the strong
market conditions prevalent throughout the year, our markets remained extremely
price competitive, and our ability to obtain price relief continued to be
limited. Fortunately, efforts to control manufacturing costs in other areas
continued to be successful, and the Company also benefited from negotiated
reductions in the costs of certain raw materials. While the fundamental
performance within this segment of our business was very successful, that
success was tarnished by a charge incurred in connection with a recall of
vehicles that contained certain non-conforming parts which were manufactured by
the Company. As previously reported, a settlement was successfully negotiated,
but total costs incurred in connection with this incident amounted to $944,000
before taxes, of which $910,000 was charged to cost of goods sold, offsetting a
portion of the positive improvements recognized in operations.

         Revenues within the assembly equipment segment, as a whole, also
improved compared with 1998. However, competitive conditions caused the Company
to occasionally accept margins below those that were enjoyed in the past, and,
as a result, the increase in revenues was slightly biased toward products with
lower margins. In addition, increases in costs of raw materials and other
manufacturing expenses nearly offset the increase in revenues. As a result, the
margin increase within this segment was minimal.

         Selling and administrative expenses increased approximately 8% compared
to the prior year. Costs incurred in connection with implementation of new data
processing systems, including efforts related to mitigating the impact of any
potential Y2K issues, amounted to nearly $500,000 during the year and represent
the primary factor contributing to the increased level of selling and
administrative expense. Increases in data communications expense and
depreciation related to the new information system added an additional $103,000
to administrative expenses and profit sharing expense increased by $123,000. Bad
debt expense was reduced by $94,000 and travel expense declined by $50,000.
Increases in salary expense were partially offset by a reduction in commission
expense as a larger percentage of sales was handled by Company employees.

         Interest expense during 1999 decreased approximately $120,000 compared
with 1998 as the effect of higher interest rates was offset by a lower
outstanding balance on the loan. Interest income was approximately $51,000 lower
than that recorded in the prior year due to a reduction in the level of funds
available for investment in interest- bearing accounts.

                                       8
<PAGE>   9

DIVIDENDS

         The Company paid four regular quarterly dividends of $.18 per share
during 2000. In addition, an extra dividend of $.35 per share was paid during
the second quarter of 2000, bringing the total dividend payout to $1.07 per
share. On February 19, 2001 the Board of Directors declared a regular quarterly
dividend of $.18 per share, payable March 20, 2001 to shareholders of record
March 5, 2001. These dividends continued the uninterrupted record of consecutive
quarterly dividends paid by the Company to its shareholders that extends over 67
years. At that same meeting, the Board declared an extra dividend of $.25 per
share, payable April 20, 2001 to shareholders of record, April 5, 2001.

MACHINERY AND EQUIPMENT

         Capital investments totaled approximately $2.1 million during 2000.
Slightly over $1.9 million of this total was invested in new equipment related
to the production of fasteners. Of the amount expended within the fastener
segment, $1.5 million was invested in new cold heading and thread-forming
equipment and certain support equipment. This equipment will be utilized to
expand our capacity to manufacture certain specialty products for which demand
has exceeded our capacity. Certain obsolete heat treating equipment was replaced
at a cost of $276,000. The balance was expended for various smaller projects,
including new quality control equipment and building improvements. Within the
assembly equipment segment, capital expenditures totaled $150,372, primarily for
the replacement of machine tools used in the manufacture of perishable tooling
that is sold to our customers. The balance was expended for data processing
equipment and various office equipment.

         Investments in machinery and equipment totaled $1,709,527 during 1999.
Investments in new equipment related to the manufacture of fasteners accounted
for the majority of these investments and amounted to $994,000 during the year.
Investments in hardware and software related to improved information management
technology totaled $267,000. A total of $181,000 was expended for the purchase
of a variety of test and inspection equipment related to quality control
initiatives. Investments in new machine tools used in the manufacture of
assembly equipment totaled $108,000. Approximately $41,000 was invested in new
telephone equipment and the balance was expended for the purchase, or repair, of
various, smaller machine tools and building repairs.

         The Company made a number of significant investments in both equipment
and building improvements during 1998. Capital expenditures totaled nearly
$2,700,000. Expenditures related to new data processing systems, including
computer hardware and software, amounted to approximately $542,000. Expenditures
for the purchase of new equipment used in the manufacture of fasteners amounted
to $1,430,000. The Company also purchased a variety of new machine tools,
material handling equipment and inspection equipment valued at approximately
$313,000. Building improvements, which included the installation of new



                                       9
<PAGE>   10
air compressors at one facility and a new roof at another facility, amounted to
approximately $252,000. Investment in both new equipment and rebuilding of
existing equipment used to plate and heat treat fasteners amounted to $63,000. A
total of $51,000 was expended for the construction of new automatic rivet
setting equipment that is leased to customers. The balance was expended for a
variety of smaller office equipment and for the construction of new rivet
setting machines that will be used for demonstration purposes.

      Depreciation expense amounted to $1,889,849 in 2000, $1,711,721 in 1999
and $1,498,302 in 1998.

LIQUIDITY AND CAPITAL RESOURCES

         Working capital at year-end amounted to $12.0 million. Although this is
a slight decline from the prior year-end, the change is not unexpected given the
significant expenditures for new equipment made during the year. The decline in
accounts receivable balance at year-end reflects the fact that sales during the
latter portion of 2000 were substantially lower than during the same period in
the prior year. This sudden change in demand resulted in an opposite change in
inventory levels, which increased $280,000 compared to the end of 1999.
Production activity has been adjusted to compensate for the lower sales
activity, and we expect that inventories will be reduced to a level consistent
with current sales. In connection with a "Dutch auction" tender offer in April
2000, the Company obtained, on an unsecured basis, a financing commitment that
provided borrowing capacity of up to $9.0 million plus a $1.0 million line of
credit. The new borrowing was used to finance the unpaid balance of a 1996 loan
related to the acquisition of H & L Tool Company, Inc. ($2.7 million) and to
fund the purchase of stock under the terms of the "Dutch auction". At year-end,
the indebtedness under the term loan was approximately $5.2 million. Under the
terms of the note, the Company is scheduled to repay the principal in quarterly
installments of $450,000, plus interest computed on the unpaid balance at a
variable rate that is calculated under one of two methods, selected at the
option of the Company: the London Inter-Bank Offering Rate (LIBOR) plus an
applicable margin; or the lender's prime rate, less an applicable margin. The
applicable margin is based upon the funded debt ratio and, for any portion of
the loan that bears interest at the prime rate, this margin is up to 50 basis
points, and for any portion that bears interest at the LIBOR rate, it is up to
130 basis points. This rate is adjusted quarterly. At year-end 2000, the rate
was approximately 7.5%. Management believes that current cash, cash equivalents
and the available line of credit will be sufficient to provide adequate working
capital for the foreseeable future.

NEW ACCOUNTING STANDARDS

         The Company's financial statements and financial condition were not,
and are not expected to be, materially impacted by any new, or proposed,
accounting standards.

STOCK PURCHASE PROGRAM

         Terms of a stock repurchase authorization originally approved by the
Board of Directors in February of 1990, and subsequently amended to permit the
repurchase of an aggregate of 200,000 shares, provide for purchases of the
Company's common stock to be made from time to time, in the open market or in
private transactions, at prices deemed reasonable by management. Purchases under
the current repurchase authorization have amounted to 161,996 shares at an
average price of $15.58 per share. This includes the purchase of 11,400 shares
during 2000 at an average price of $19.75 per share. It is management's
intention to continue this program, provided market conditions are favorable and
funding for repurchases is available.

         In addition to the purchases described above, the Company purchased
159,564 shares at a price of $23.00 per share pursuant to a "Dutch auction"
tender offer completed in


                                       10
<PAGE>   11
April 2000. Funding for the purchases was provided through additional borrowing
described above.

YEAR 2000 COMPLIANCE

         We are pleased to report that no significant Y2K disruptions were
incurred by the Company.

OUTLOOK FOR 2001

         As this is written, the economic outlook for the balance of 2001 is
uncertain. While experts continue to debate whether the economy is headed for a
recession, there is mounting evidence that the so-called old economy has been in
recession for the past several months. Certainly, we have seen demand in our
markets soften dramatically over that time period. While in many years our first
quarter is often our strongest quarter, bookings for the first quarter of 2001
are well below the levels that we would consider satisfactory. Anecdotal
evidence suggests that our situation is far from unique - especially in the
segment of the economy in which we operate. While we anticipate that conditions
will improve, when that improvement will be manifested is uncertain, and depends
in large measure upon factors over which we have little or no control.

         In the interim, we have taken appropriate actions to adjust operating
levels to match the reduced level of demand that is prevalent in our markets.
Spending will be closely controlled, and every opportunity to reduce costs will
be evaluated. During 2000, we began a program to expand our capacity in certain
products where demand outpaced our capacity. We anticipate that program, which
should be completed in the second quarter of 2001, will have a positive impact
on both revenues and profits. However, the timing and magnitude of its
contribution to revenues and profits will depend, in part, upon a recovery in
the manufacturing sector of the economy.

         The rapidly changing nature of the competitive arena will continue to
present new challenges and new opportunities. We believe that the Company can
continue to meet the challenges presented and take advantage of opportunities as
they arise. We recognize that success depends upon many factors and take this
opportunity to express our gratitude for the loyalty of our customers and for
the continued support of our shareholders. We also take this opportunity to
acknowledge the efforts of our dedicated and skilled workforce. Their
contributions are essential to the Company's success - both past and future.


ITEM 7A  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Over time, the Company is exposed to market risks arising from changes
in interest rates. The Company has not historically used derivative financial
instruments.

         As of December 31, 2000, $5.23 million of floating-rate debt was
exposed to changes in interest rates compared to $3.15 million at the prior
year-end. This exposure was primarily linked to the London Inter-Bank Offering
Rate and the lender's prime rate under the Company's term loan. A hypothetical
10% change in these rates would not have had a material effect on the Company's
annual earnings.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See the sections entitled "Consolidated Financial Statements" and
"Financial Statement Schedule" which appear on pages 15 through 18 of this
report.



                                       11
<PAGE>   12

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
 FINANCIAL DISCLOSURE

         There have been no changes in or disagreements with accountants
requiring disclosure herein.

                                    PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information with respect to the Board of Directors' nominees for
directors that is not related to security ownership, which is set forth in the
section entitled "Election of Directors" on pages 4 through 8 of the Company's
2001 Proxy Statement, is incorporated herein by reference. The information with
regard to compliance with Section 16 (a) of the Exchange Act, which is set forth
at the end of the section entitled "Additional Information Concerning the Board
of Directors and Committees" on pages 7 and 8 of the 2001 Proxy Statement, is
incorporated herein by reference. The 2001 Proxy Statement is to be filed with
the Securities and Exchange Commission in connection with the Company's 2001
Annual Meeting of Shareholders. The information called for with respect to
executive officers of the Company is included in Part I of this Report on Form
10-K under the caption "Executive Officers of the Registrant."


ITEM 11 - EXECUTIVE COMPENSATION

         The information set forth in the section entitled "Executive
Compensation" which appears on pages 9 through 12 of the Company's 2001 Proxy
Statement and the information relating to compensation of directors set forth in
the last paragraph of the section entitled "Additional Information Concerning
the Board of Directors and Committees" which appears on pages 7 and 8 of the
Company's 2001 Proxy Statement is incorporated herein by reference. The 2001
Proxy Statement is to be filed with the Securities and Exchange Commission in
connection with the Company's 2001 Annual Meeting of Shareholders.


ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information set forth in the section entitled "Principal
Shareholders" on page 3 of the Company's 2001 Proxy Statement and the
information with respect to security ownership of the Company's directors and
officers set forth in the section entitled "Election of Directors" on pages 4
through 8 of the Company's 2001 Proxy Statement is incorporated herein by
reference. The 2001 Proxy Statement is to be filed with the Securities and
Exchange Commission in connection with the Company's 2001 Annual Meeting of
Shareholders.


ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information relating to the law firm of Morrissey & Robinson set
forth in the penultimate sentence of footnote (2) on page 6 of the Company's
2001 Proxy Statement is incorporated herein by reference. The 2001 Proxy
Statement is to be filed with the Securities and Exchange Commission in
connection with the Company's 2001 Annual Meeting of Shareholders.



                                       12
<PAGE>   13






                                     PART IV

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT
 SCHEDULES AND REPORTS ON FORM 8-K

     (a)  The following documents are filed as a part of this report:

          1.   Financial Statements:

               See  the section entitled "Consolidated Financial Statements"
               which appears on page 15 of this report.

          2.   Financial statement schedule and supplementary information
               required to be submitted.

               See the section entitled "Financial Statement Schedule" which
               appears on pages 16 through 18 of this report.

          3.   Exhibits:

               See the section entitled "Exhibits" which appears on page 19 of
               this report.

     (b)  Reports on Form 8-K

          1.   The Company did not file any reports on Form 8-K during the
               quarter ended December 31, 2000.






                                       13
<PAGE>   14





                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Chicago Rivet & Machine Co. has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                                            Chicago Rivet & Machine Co.


                                            By   /s/John C. Osterman
                                            --------------------------
                                            John C. Osterman, President
                                            And Chief Operating Officer


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:

/s/John A. Morrissey                              Chairman of the Board of
- --------------------
John A. Morrissey                                 Directors, Chief Executive
                                                  Officer and Member of the
                                                  Executive Committee
                                                  March 29, 2001

/s/John C. Osterman                               President, Chief Operating
- -------------------
John C. Osterman                                  Officer, Treasurer (Chief
                                                  Financial Officer, Principal
                                                  Accounting Officer), Member
                                                  of the Executive Committee
                                                  and Director
                                                  March 29, 2001

/s/John R. Madden                                 Director, Member of the
- ------------------
John R. Madden                                    Executive Committee and
                                                  Member of the Audit Committee
                                                  March 29, 2001


/s/Walter W. Morrissey                            Director, Member of Executive
- ----------------------
Walter W. Morrissey                               Committee
                                                  March 29, 2001







                                       14
<PAGE>   15

CHICAGO RIVET & MACHINE CO.

CONSOLIDATED FINANCIAL STATEMENTS

         The consolidated financial statements, together with the notes thereto
and the report thereon of PricewaterhouseCoopers LLP dated March 2, 2001,
appearing on pages 5 to 11 of the accompanying 2000 Annual Report, and the
section entitled "Quarterly Financial Data (Unaudited)" appearing on page 12 of
the accompanying 2000 Annual Report are incorporated herein by reference. With
the exception of the aforementioned information and the information incorporated
in Items 1, 3, 5, 6 and 7 herein, the 2000 Annual Report is not to be deemed
filed as part of this Form 10-K Annual Report.


Consolidated Financial Statements from 2000 Annual Report (Exhibit 13 hereto):


Consolidated Balance Sheets (page 5 of 2000 Annual Report)

Consolidated Statements of Income (page 6 of 2000 Annual Report)

Consolidated Statements of Retained Earnings (page 6 of 2000 Annual Report)

Consolidated Statements of Cash Flows (page 7 of 2000 Annual Report)

Notes to Consolidated Financial Statements (8, 9, and 10 of 2000 Annual Report)

Report of Independent Accountants (page 11 of 2000 Annual Report)

Quarterly Financial Data (Unaudited) (page 12 of 2000 Annual Report)






                                       15
<PAGE>   16


                          FINANCIAL STATEMENT SCHEDULE

                               2000, 1999 AND 1998

         The following financial statement schedule should be read in
conjunction with the consolidated financial statements and the notes thereto in
the 2000 Annual Report. Financial statement schedules not included herein have
been omitted because they are not applicable or the required information is
shown in the consolidated financial statements or notes thereto.


                                                                        Page
                                                                        ----

Financial Statement Schedule:

Valuation and Qualifying Accounts (Schedule II)                          17

Report of Independent Accountants on Financial Statement Schedule        18








                                       16
<PAGE>   17

                           CHICAGO RIVET & MACHINE CO.
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998


<TABLE>

                                                          Additions
                                 Balance at               Charged to                                                       Balance
                                 Beginning                Costs and                                    Other               At end
Classification                    of year                 Expenses           Deductions             Adjustments            of year
- --------------                   ----------               ----------         ------------           -----------            -------
<S>                             <C>                      <C>                <C>                    <C>                   <C>

2000
Allowance for doubtful
accounts,
Returns and
allowances                       $ 80,000                 $ 58,993           $ 48,993 (1)           $     -              $ 90,000


1999
Allowance for doubtful
accounts,
Returns and
allowances                       $ 70,000                 $ 47,679           $ 37,679 (1)           $  -                 $ 80,000


1998
Allowance for doubtful
accounts,
Returns and
allowances                       $123,022                $ 141,447            $141,447 (1)          $(53,022)(2)         $ 70,000

</TABLE>

(1)   Accounts receivable written off, net of recoveries.
(2) Balance sheet reclassification.







                                       17
<PAGE>   18




                      Report of Independent Accountants on
                          Financial Statement Schedule




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

Our audits of the consolidated financial statements referred to in our report
dated March 2, 2001 appearing in the 2000 Annual Report to Shareholders of
Chicago Rivet & Machine Co. (which report and financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the Financial Statement Schedule listed in Item 14(a)(2) of this Form
10-K. In our opinion, this Financial Statement Schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.



PricewaterhouseCoopers LLP


Chicago, Illinois
March 2, 2001




                                       18
<PAGE>   19
                           CHICAGO RIVET & MACHINE CO.


                                    EXHIBITS

                                INDEX TO EXHIBITS

Exhibit
Number                                                                     Page
- ------                                                                     ----

2.1               Purchase and Sale Agreement dated February 18,
                  1993.  Incorporated by reference to Company's
                  Current Report on Form 8-K, dated May 7, 1993.

2.2               Purchase and Sale Agreement dated September 18,
                  1996.  Incorporated by reference from Company's
                  Current Report on Form 8-K, dated December 16,
                  1996.

3.1               Articles of Incorporation and Charter.
                  Incorporated by reference to Company's
                  report on Form 10, dated March 30, 1935.

3.2               Certified copy of articles of Amendment to
                  Articles of Incorporation, dated November 4,
                  1959.  Incorporated by reference to Company's
                  report on Form 8-A, dated April 30, 1965.

3.3               Amendment of Articles of Incorporation
                  creating a class of 500,000 shares of no
                  par value preferred stock.  Incorporated by
                  reference to Company's report on Form 10-K,
                  dated April 30, 1972.

3.4               Amended and Restated By-Laws,
                  as amended February 19, 2001.                   20 through  38

3.5               Articles of Incorporation, as amended by the
                  amendment to the Articles of Incorporation,
                  dated August 18, 1997. Incorporated by reference
                  to the Company's report on Form 10-K, dated
                  March 27, 1998.

4.1               Rights Agreement, dated November 22, 1999,
                  between the Company and First Chicago Trust
                  Company of New York as Rights Agent.
                  Incorporated by reference to the Company's
                  report on Form 10-K, dated March 29, 2000.

*13               Annual Report to Shareholders for the year
                  ended December 31, 2000.                         39 through 55

21                Subsidiaries of the Registrant.                       56



* Only the portions of this exhibit which are specifically incorporated herein
by reference shall be deemed to be filed herewith.





                                       19
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.4
<SEQUENCE>2
<FILENAME>c61217ex3-4.txt
<DESCRIPTION>AMENDED & RESTATED BY-LAWS
<TEXT>

<PAGE>   1














                                   EXHIBIT 3.4





                                       20
<PAGE>   2





                          AMENDED AND RESTATED BY-LAWS

                            (AS OF FEBRUARY 19, 2001)

                                       OF

                          CHICAGO RIVET & MACHINE CO.,
                             an Illinois corporation
                               (the "Corporation")



                                    ARTICLE I
                                     OFFICES

The principal office of the Corporation shall be in the City of Naperville,
County of DuPage and State of Illinois. The Corporation may also have offices at
such other places, either within or without the State of Illinois, as the Board
of Directors may from time to time appoint or as the business may require.


                                   ARTICLE II
                             SHAREHOLDERS' MEETINGS

     SECTION 1. THE ANNUAL MEETING. The annual meeting of the shareholders shall
be held at the principal office of the Corporation at 10:00 o'clock A. M.
(Chicago time) on the second Tuesday in May of each year, or if such day be a
holiday, then upon the next succeeding secular day. A written or printed notice
stating the place, day and hour of the meeting shall be mailed by the Secretary
or an Assistant Secretary of the Corporation at least ten days before such
meeting to each shareholder to his, her or its last known post-office address,
as appears on the books of the Corporation. A majority of the capital stock
outstanding represented in person or by proxy shall constitute a quorum at all
shareholders' meetings.

                  SECTION 2.    SPECIAL MEETINGS.

     (a) Special meetings of the shareholders may be called by (i) the President
or (ii) the Board of Directors and shall be called by the President or the Board
of Directors upon the demand, in accordance with this Section 2, of holders of
not less than one-fifth of all the outstanding shares of the Corporation
entitled to vote on the any matter proposed to be considered at the special
meeting, for the purpose or purposes stated in the call of the meeting.

     (b) In order that the Corporation may determine the shareholders entitled
to demand a special meeting, the Board of Directors may fix a record date to
determine the shareholders entitled to make such a demand (the "Demand Record
Date"). The Demand Record Date shall not precede the date upon which the
resolution fixing the Demand Record Date is adopted by the Board of Directors
and shall not be more than 10 days after the date upon which the resolution
fixing the Demand Record Date is adopted by the Board of Directors. Any
shareholder of record seeking to have shareholders demand a special meeting
shall, by sending written notice to the Secretary of the Corporation by hand or
by certified or registered mail, return receipt requested, request the Board of
Directors to fix a Demand Record Date. The Board of Directors shall promptly,
but in all events within 10 days after the date on which a valid request to fix
a Demand Record Date is received, adopt a resolution fixing the Demand Record
Date and shall make a public announcement of such Demand Record Date. If no
Demand Record Date has been fixed by the


                                       21
<PAGE>   3
Board of Directors within 10 days after the date on which such request is
received by the Secretary, the Demand Record Date shall be the 10th day after
the first date on which a valid written request to set a Demand Record Date is
received by the Secretary. To be valid, such written request shall set forth the
purpose or purposes for which the special meeting is to be held, shall be signed
by one or more shareholders of record (or their duly authorized proxies or other
representatives), shall bear the date of signature of each such shareholder (or
proxy or other representative) and shall set forth all information about each
such shareholder and about the beneficial owner or owners, if any, on whose
behalf the request is made that would be required to be set forth in a
shareholder's notice described in paragraph (a) of Section 16 of Article II of
these by-laws.

     (c) In order for a shareholder or shareholders to demand a special meeting,
a written demand or demands for a special meeting by the holders of record as of
the Demand Record Date of not less than one-fifth of all the outstanding shares
of the Corporation entitled to vote on the matter proposed to be considered at
the special meeting must be delivered to the Corporation. To be valid, each
written demand by a shareholder for a special meeting shall set forth the
specific purpose or purposes for which the special meeting is to be held (which
purpose or purposes shall be limited to the purpose or purposes set forth in the
written request to set a Demand Record Date received by the Corporation pursuant
to paragraph (b) of this Section 2), shall be signed by one or more persons who
as of the Demand Record Date are shareholders of record (or their duly
authorized proxies or other representatives), shall bear the date of signature
of each such shareholder (or proxy or other representative), shall set forth the
name and address, as they appear in the Corporation's books, of each shareholder
signing such demand and the class and number of shares of the Corporation which
are owned of record and beneficially by each such shareholder, shall be sent to
the Secretary by hand or by certified or registered mail, return receipt
requested, and shall be received by the Secretary within 60 days after the
Demand Record Date.

     (d) The Corporation shall not be required to call a special meeting upon
shareholder demand unless, in addition to the documents required by paragraph
(c) of this Section 2, the Secretary receives a written agreement signed by each
Soliciting Shareholder (as defined below), pursuant to which each Soliciting
Shareholder, jointly and severally, agrees to pay the Corporation's costs of
holding the special meeting, including the costs of preparing and mailing proxy
materials for the Corporation's own solicitation, provided that if each of the
resolutions introduced by any Soliciting Shareholder at such meeting is adopted,
and each of the individuals nominated by or on behalf of any Soliciting
Shareholder for election as a director at such meeting is elected, then the
Soliciting Shareholders shall not be required to pay such costs. For purposes of
this paragraph (d), the following terms shall have the meanings set forth below:

          (i) "Affiliate" of any Person (as defined herein) shall mean any
     Person controlling, controlled by or under common control with such first
     Person.

          (ii) "Participant" shall have the meaning assigned to such term in
     Rule 14a-11 promulgated under the Securities Exchange Act of 1934, as
     amended (the "Exchange Act")

          (iii) "Person" shall mean any individual, firm, corporation,
     partnership, joint venture, association, trust, unincorporated organization
     or other entity.

          (iv) "Proxy" shall have the meaning assigned to such term in Rule
     14a-1 promulgated under the Exchange Act.



                                       22
<PAGE>   4

          (v) "Solicitation" shall have the meaning assigned to such term in
     Rule 14a-11 promulgated under the Exchange Act.

          (vi) "Soliciting Shareholder" shall mean, with respect to any special
     meeting demanded by a shareholder or shareholders, any of the following
     Persons: (A) if the number of shareholders signing the demand or demands of
     meeting delivered to the corporation pursuant to paragraph (c) of this
     Section 2 is 10 or fewer, each shareholder signing any such demand; (B) if
     the number of shareholders signing the demand or demands of meeting
     delivered to the corporation pursuant to paragraph (c) of this Section 2 is
     more than 10, each Person who either (x) was a Participant in any
     Solicitation of such demand or demands or (y) at the time of the delivery
     to the Corporation of the documents described in paragraph (c) of this
     Section 2 had engaged or intended to engage in any Solicitation of Proxies
     for use at such Special Meeting (other than a Solicitation of Proxies on
     behalf of the Corporation); or (C) any Affiliate of a Soliciting
     Shareholder, if a majority of the Directors then in office determine,
     reasonably and in good faith, that such Affiliate should be required to
     sign the written notice described in paragraph (c) of this Section 2 and/or
     the written agreement described in this paragraph (d) in order to prevent
     the purposes of this Section 2 from being evaded.

     (e) Except as provided in the following sentence, any special meeting shall
be held at such hour and day as may be designated by whichever of the President
or the Board of Directors shall have called such meeting. In the case of any
special meeting called by the Board of Directors or the President upon the
demand of shareholders (a "Demand Special Meeting"), such meeting shall be held
at such hour and day as may be designated by the Board of Directors or the
President; provided, however, that the date of any Demand Special Meeting shall
be not more than 60 days after the Meeting Record Date (as defined in Section 6
of this Article II); and provided further that in the event that the Directors
then in office fail to designate an hour and date for a Demand Special Meeting
within 10 days after the date that valid written demands for such meeting by the
holders of record as of the Demand Record Date of shares representing not less
than one-fifth of all the outstanding shares of the Corporation entitled to vote
on the any matter proposed to be considered at the special meeting are delivered
to the Corporation (the "Delivery Date"), then such meeting shall be held at
2:00 P.M. local time on the 90th day after the Delivery Date or, if such 90th
day is not a Business Day (as defined below), on the first preceding Business
Day. In fixing a meeting date for any special meeting, the President or the
Board of Directors may consider such factors as he or it deems relevant within
the good faith exercise of his or its business judgment, including, without
limitation, the nature of the action proposed to be taken, the facts and
circumstances surrounding any demand for such meeting, and any plan of the Board
of Directors to call an annual meeting or a special meeting for the conduct of
related business.

     (f) The Corporation may engage independent inspectors of elections to act
as an agent of the Corporation for the purpose of promptly performing a
ministerial review of the validity of any purported written demand or demands
for a special meeting received by the Secretary. For the purpose of permitting
the inspectors to perform such review, no purported demand shall be deemed to
have been delivered to the Corporation until the earlier of (i) 5 Business Days
following receipt by the Secretary of such purported demand and (ii) such date
as the independent inspectors certify to the Corporation that the valid demands
received by the Secretary represent not less than one-fifth of all the
outstanding shares of the Corporation entitled to vote on the matter proposed to
be considered at the special meeting. Nothing contained in this paragraph (f)
shall in any way be construed to suggest or imply that the Board of Directors or
any shareholder shall not be entitled to contest the validity of any demand,
whether during or after such 5 Business Day period, or to take any other action
(including, without

                                       23
<PAGE>   5

limitation, the commencement, prosecution or defense of any litigation with
respect thereto).

     (g) For purposes of these by-laws, "Business Day" shall mean any day other
than a Saturday, a Sunday or a day on which banking institutions in the State of
Illinois are authorized or obligated by law or executive order to close.

     SECTION 3. PLACE OF MEETING. The Board of Directors may designate any place
as the place of meeting for any annual meeting or for any special meeting called
by the Board of Directors. If no designation is made or if a special meeting be
otherwise called, the place of meeting shall be at the principal office of the
Company in Naperville, Illinois.

     SECTION 4. TIME OF ELECTING DIRECTORS. Directors shall be elected at the
regular annual meeting of the shareholders. If the election of directors is not
held on the day of the annual meeting, the directors shall cause the election to
be held as soon thereafter as conveniently may be. No failure to elect directors
or to hold the annual meeting at the designated time shall work any forfeiture
or dissolution of the Corporation.

     SECTION 5. NOTICE OF MEETINGS. Written notice stating the place, date, and
hour of the meeting, and in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
nor more than sixty days before the date of the meeting, or in the case of a
merger, consolidation, share exchange, dissolution or sale, lease or exchange of
assets, not less than twenty nor more than sixty days before the meeting, either
personally or by mail, by or at the direction of the President, or the
Secretary, or the officer or persons calling the meeting, to each shareholder of
record entitled to vote at such meeting. If mailed, such notices shall be deemed
to be delivered when deposited in the United States mail, addressed to the
shareholder at his address as it appears on the records of the Corporation, with
postage thereon prepaid. When a meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken. Any previously
scheduled meeting of shareholders may be postponed, and any special meeting of
the shareholders may be cancelled upon public notice given prior to the date
previously scheduled for such meeting of shareholders.

     SECTION 6. FIXING OF RECORD DATE. The Board of Directors may fix in advance
a date not less than ten days and not more than sixty days, or in the case of a
merger, consolidation, share exchange, dissolution or sale, lease or exchange of
assets, not less than twenty and not more than sixty days, prior to the date of
any annual meeting or special meeting as the record date for the determination
of shareholders entitled to notice of, or to vote at, such meeting (the "Meeting
Record Date"). In the case of any Demand Special Meeting, (i) the Meeting Record
Date shall be not later than the 30th day after the Delivery Date and (ii) if
the Board of Directors fails to fix the Meeting Record Date within 30 days after
the Delivery Date, then the close of business on such 30th day shall be the
Meeting Record Date. The Board of Directors may also fix in advance a date as
the record date for the purpose of determining shareholders entitled to take any
other action or determining shareholders for any other purpose. Such record date
shall be not more than sixty days prior to the date on which the particular
action, requiring such determination of shareholders, is to be taken. Except in
the case of a Demand Special Meeting, if no record date is fixed, the record
date for the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders shall be the date on which notice of the meeting is
mailed, and the record date for the determination of shareholders for any other
purpose shall be the date on which the Board of Directors adopts the resolution
relating thereto. A determination of shareholders of record entitled to notice
of or to vote at a meeting of shareholders shall apply to any adjournment of the
meeting. Nothing in this Section 6 shall in any way be construed to

                                       24
<PAGE>   6

change the procedure for setting the record date and for determining the
effectiveness of shareholder action by written consent as set forth in Section 7
of this Article II.

     SECTION 7. WRITTEN CONSENTS.

     (a) In order that the Corporation may determine the shareholders entitled
to consent to corporate action in writing without a meeting, the Board of
Directors may fix a record date (a "Consent Record Date"). The Consent Record
Date shall not precede the date upon which the resolution fixing the Consent
Record Date is adopted by the Board of Directors and shall not be more than 10
days after the date upon which the resolution fixing the Consent Record Date is
adopted by the Board of Directors. Any shareholder of record seeking to consent
to corporate action in writing without a meeting shall, by sending written
notice to the Secretary of the Corporation by hand or by certified or registered
mail, return receipt requested, request the Board of Directors to fix a Consent
Record Date. The Board of Directors shall promptly, but in all events within 10
days after the date on which a valid request to fix a Consent Record Date is
received, adopt a resolution fixing the Consent Record Date and shall make a
public announcement of such Consent Record Date. If no Consent Record Date has
been fixed by the Board of Directors within 10 days after the date on which such
request is received by the Secretary, the Consent Record Date shall be the 10th
day after the first date on which a valid written request to set a Consent
Record Date is received by the Secretary. To be valid, such written request
shall set forth the purpose or purposes for which the written consent is sought
to be used, shall be signed by one or more shareholders of record (or their duly
authorized proxies or other representatives), shall bear the date of signature
of each such shareholder (or proxy or other representative) and shall set forth
all information about each such shareholder and about the beneficial owner or
owners, if any, on whose behalf the request is made that would be required to be
set forth in a shareholder's notice described in paragraph (a) of Section 16 of
Article II of these by-laws.

     (b) Every written consent shall be signed by one or more persons who as of
the Consent Record Date are shareholders of record on the Consent Record Date
(or their duly authorized proxies or other representatives), shall bear the date
of signature of each such shareholder (or proxy or other representative), and
shall set forth the name and address, as they appear in the Corporation's books,
of each shareholder signing such consent and the class and number of shares of
the Corporation which are owned of record and beneficially by each such
shareholder and shall be sent to the Secretary by hand or by certified or
registered mail, return receipt requested. No written consent shall be effective
to take the corporate action referred to therein unless, within 60 days of the
date the earliest dated written consent was received in accordance with this
paragraph (b) of this Section 7, a written consent or consents signed by a
sufficient number of holders to take such action are delivered to the
Corporation. (c) In the event of the delivery, in the manner provided by
paragraph (b) of this Section 7, to the Corporation of the requisite written
consent or consents to take corporate action and/or any related revocation or
revocations, the Corporation shall engage independent inspectors of elections
for the purpose of promptly performing a ministerial review of the validity of
the consents and revocations. For the purpose of permitting the inspectors to
perform such review, no action by written consent without a meeting shall be
effective until such date as the independent inspectors certify to the
Corporation that the consents represent at least the minimum number of votes
that would be necessary to take the corporate action. Nothing contained in this
paragraph (c) of Section 7 shall in any way be construed to suggest or imply
that the Board of Directors or any shareholder shall not be entitled to contest
the validity of any consent or revocation thereof, whether before or after
certification by the independent inspectors, or to take any other action
(including, without limitation, the

                                       25
<PAGE>   7

commencement, prosecution or defense of any litigation with respect thereto, and
the seeking of injunctive relief in such litigation).

     SECTION 8. VOTING LISTS. The officer or agent having charge of the transfer
books for shares of the Corporation shall make, at least ten days before each
meeting of shareholders, a complete list of the shareholders entitled to vote at
such meeting, arranged in alphabetical order, showing the address of and the
number of shares registered in the name of the shareholder, which list, for a
period of ten days prior to such meeting, shall be kept on file at the
registered office of the Corporation and shall be open to inspection by any
shareholder for any purpose germane to the meeting, at any time during usual
business hours. Such list shall also be produced and kept open at the time and
place of the meeting and may be inspected by any shareholder during the whole
time of the meeting. The original share ledger or transfer book, or a duplicate
thereof kept in this State, shall be prima facie evidence as to who are the
shareholders entitled to examine such list or share ledger or transfer book or
to vote at any meeting of shareholders.

     SECTION 9. QUORUM. The holders of a majority of the outstanding shares of
the Corporation, present in person or represented by proxy, shall constitute a
quorum at any meeting of shareholders; provided that if less than a majority of
the outstanding shares are represented at said meeting, a majority of the shares
so represented may adjourn the meeting at any time without further notice. If a
quorum is present, the affirmative vote of the majority of the shares
represented at the meeting shall be the act of the shareholders, unless the vote
of a greater number or voting by classes is required by The Business Corporation
Act, the articles of incorporation or these by-laws. The Chairman of the meeting
or the holders of record of a majority of the shares represented at the meeting
shall have the power to adjourn the meeting from time to time, without notice
other than an announcement at the meeting. At any adjourned meeting at which a
quorum shall be present, any business may be transacted which might have been
transacted at the original meeting. Withdrawal of shareholders from any meeting
shall not cause failure of a duly constituted quorum at that meeting.

     SECTION 10. VOTING BY BALLOT. Voting on any question or in any election may
be by voice unless the presiding officer shall order or any shareholder shall
demand that voting be by ballot.

     SECTION 11. PROXIES. Each shareholder shall have one vote for each share of
stock having voting power and entitled to vote, registered in his name on the
books of the Corporation, and at all meetings of the shareholders, shareholders
may vote either in person or by proxy executed in writing by the shareholders,
or by a duly authorized attorney. No proxy shall be valid after eleven months
from the date of its execution, except where the stock is pledged as security
for a debt to the person holding the proxy.

     SECTION 12. VOTING OF SHARES. Each outstanding share, regardless of class,
shall be entitled to one vote upon each matter submitted to vote at a meeting of
shareholders.

     SECTION 13. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the
name of another corporation, domestic or foreign, may be voted by such officer,
agent, or proxy as the bylaws of such corporation may prescribe, or, in the
absence of such provision, as the Board of Directors of such corporation may
determine.

Shares standing in the name of a deceased person, a minor ward, or an
incompetent person, may be voted by his administrator, executor, court appointed
guardian, or conservator or custodian under a Gift to Minors Act, either in
person or by proxy without a transfer of such shares into the name of such
administrator, executor, court appointed guardian, or


                                       26
<PAGE>   8

conservator. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy.

Shares standing in the name of a receiver may be voted by such receiver, and
shares held by or under the control of a receiver may be voted by such receiver
without the transfer thereof into his name if authority so to do be contained in
an appropriate order of the court by which such receiver was appointed.

A shareholder whose shares are pledged shall be entitled to vote such shares
until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.

Any number of shareholders may create a voting trust for the purpose of
conferring upon a trustee or trustees the right to vote or otherwise represent
their share, for a period not to exceed ten years, by entering into a written
voting trust agreement specifying the terms and conditions of the voting trust,
and by transferring their shares to such trustee or trustees for the purpose of
the agreement. Any such trust agreement shall not become effective until a
counterpart of the agreement is deposited with the Corporation at its registered
office. The counterpart of the voting trust agreement so deposited with the
Corporation shall be subject to the same right of examination by a shareholder
of the Corporation, in person or by agent or attorney, as are the books and
records of the Corporation, and shall be subject to examination by any holder of
a beneficial interest in the voting trust, either in person or by agent or
attorney, at any reasonable time for any proper purpose.

Shares of its own stock belonging to this Corporation shall not be voted,
directly or indirectly, at any meeting and shall not be counted in determining
the total number of outstanding shares at any given time, but shares of its own
stock held by it in a fiduciary capacity may be voted and shall be counted in
determining the total number of outstanding shares at any given time.

     SECTION 14. CUMULATIVE VOTING. In all elections for directors, every
shareholder shall have the right to vote, in person or by proxy, the number of
shares owned by him, for as many persons as there are directors to be elected,
or to cumulate said shares, and give one candidate as many votes as the number
of directors multiplied by the number of his shares shall equal, or to
distribute them on the same principle among as many candidates as he shall see
fit.

     SECTION 15. INSPECTORS. At any meeting of shareholders, the presiding
officer may, or upon the request of any shareholder shall appoint one or more
persons as inspectors for such meeting.

Such inspectors shall ascertain and report the number of shares represented at
the meeting, based upon their determination of the validity and effect of
proxies; count all votes and report the results; and do such other acts as are
proper to conduct the election and voting with impartiality and fairness to all
the shareholders. Each report of an inspector shall be in writing and signed by
him or by a majority of them if there be more than one inspector acting at such
meeting. If there is more than one inspector, the report of a majority shall be
the report of the inspectors. The report of the inspector or inspectors on the
number of shares represented at the meeting and the results of the voting shall
be prima facie evidence thereof.

     SECTION 16. NOTICE OF SHAREHOLDER NOMINATIONS AND BUSINESS PROPOSALS. (a)
Shareholder Nominations. Only persons who are nominated in accordance with the
following procedures shall be eligible for election as directors of the
Corporation, except as may be otherwise provided in the Articles of
Incorporation of the Corporation. Nominations of persons for election to the
Board of Directors may be made at any annual meeting of shareholders (i) by or
at the direction of the Board of Directors (or any duly authorized committee
thereof) or (ii) by any shareholder of the Corporation (A) who is a shareholder

                                       27
<PAGE>   9

of record on the date of the giving of the notice provided for in this Section
16(a) and on the record date for the determination of shareholders entitled to
vote at such annual meeting and (B) who complies with the notice procedures set
forth in this Section 16(a).

In addition to any other applicable requirements, for a nomination to be made by
a shareholder, such shareholder must have given timely notice thereof in proper
written form to the Secretary of the Corporation.

To be timely, a shareholder's notice to the Secretary must be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than ninety (90) days nor more than one hundred twenty (120) days in
advance of the anniversary date of the mailing of the Corporation's proxy
statement in connection with the previous year's annual meeting; provided,
however, that in the event that the date of the applicable annual meeting has
been changed by more than 30 days from the date contemplated at the time of the
previous year's proxy statement, notice by the shareholder in order to be timely
must be so received not later than the close of business on the tenth (10th) day
following the day on which notice of the date of the annual meeting was mailed
or public announcement of the date of the annual meeting was made, whichever
first occurs. In no event shall the public announcement of an adjournment of an
annual meeting commence a new time period for the giving of a shareholder's
notice as described above.

To be in proper written form, a shareholder's notice to the Secretary must set
forth (i) as to each person whom the shareholder proposes to nominate for
election as a director (A) the name, age, business address and residence address
of the person, (B) the principal occupation or employment of the person, (C) the
class or series and number of shares of capital stock of the Corporation which
are owned beneficially or of record by the person and (D) any other information
relating to the person that would be required to be disclosed in a proxy
statement or other filings required to be made in connection with solicitations
of proxies for election of directors pursuant to Section 14 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder; and (ii) as to the shareholder giving the
notice (A) the name and record address of such shareholder, (B) the class or
series and number of shares of capital stock of the Corporation which are owned
beneficially or of record by such shareholder, (C) a description of all
arrangements or understandings between such shareholder and each proposed
nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such shareholder, (D) a representation
that such shareholder intends to appear in person or by proxy at the meeting to
nominate the persons named in its notice and (E) any other information relating
to such shareholder that would be required to be disclosed in a proxy statement
or other filings required to be made in connection with solicitations of proxies
for election of directors pursuant to Section 14 of the Exchange Act and the
rules and regulations promulgated thereunder. Such notice must be accompanied by
a written consent of each proposed nominee to being named as a nominee and to
serve as a director if elected.

No person shall be eligible for election as a director of the Corporation unless
nominated in accordance with the procedures set forth in this Section 16(a). If
the Chairman of the meeting determines that a nomination was not made in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the nomination was defective and such defective nomination shall be
disregarded.

Notwithstanding anything in the third paragraph of this Section 16(a) to the
contrary, in the event that the number of directors to be elected to the Board
of Directors of the Corporation is increased and there is no public announcement
by the Corporation naming all of the nominees for director or specifying the
size of the increased board of directors at least one hundred (100) days prior
to the first anniversary of the preceding year's annual meeting, a shareholder's
notice required by this Section 16(a) shall also be considered timely, but only
with respect to nominees for any new positions created by

                                       28
<PAGE>   10

such increase, if it shall be delivered to the Secretary at the principal
executive offices of the Corporation not later than the close of business on the
tenth (10th) day following the day on which such public announcement is first
made by the Corporation.

     (b) Shareholder Business Proposals. No business may be transacted at an
annual meeting of shareholders, other than business that is either (i) specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the Board of Directors (or any duly authorized committee thereof),
(ii) otherwise properly brought before the annual meeting by or at the direction
of the Board of Directors (or any duly authorized committee thereof) or (iii)
otherwise properly brought before the annual meeting by any shareholder of the
Corporation (A) who is a shareholder of record on the date of the giving of the
notice provided for in this Section 16(b) and on the record date for the
determination of shareholders entitled to vote at such annual meeting and (B)
who complies with the notice procedures set forth in this Section 16(b).

In addition to any other applicable requirements, for business to be properly
brought before an annual meeting by a shareholder, such shareholder must have
given timely notice thereof in proper written form to the Secretary of the
Corporation.

To be timely, a shareholder's notice to the Secretary must be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than ninety (90) days nor more than one hundred twenty (120) days in
advance of the anniversary date of the mailing of the Corporation's proxy
statement in connection with the previous year's annual meeting; provided,
however, that in the event that the date of the applicable annual meeting has
been changed by more than 30 days from the date contemplated at the time of the
previous year's proxy statement, notice by the shareholder in order to be timely
must be so received not later than the close of business on the tenth (10th) day
following the day on which notice of the date of the annual meeting was mailed
or public announcement of the date of the annual meeting was made, whichever
first occurs. In no event shall the public announcement of an adjournment of an
annual meeting commence a new time period for the giving of a shareholder's
notice as described above.

To be in proper written form, a shareholder's notice to the Secretary must set
forth as to each matter such shareholder proposes to bring before the annual
meeting (i) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and record address of such shareholder, (iii) the class
or series and number of shares of capital stock of the Corporation which are
owned beneficially or of record by such shareholder, (iv) a description of all
arrangements or understandings between such shareholder and any other person or
persons (including their names) in connection with the proposal of such business
by such shareholder and any material interest of such shareholder in such
business and (v) a representation that such shareholder intends to appear in
person or by proxy at the annual meeting to bring such business before the
meeting.

No business shall be conducted at the annual meeting of shareholders except
business brought before the annual meeting in accordance with the procedures set
forth in this Section 16(b); provided, however, that, once business has been
properly brought before the annual meeting in accordance with such procedures,
nothing in this Section 16(b) shall be deemed to preclude discussion by any
shareholder of any such business. If the Chairman of an annual meeting
determines that business was not properly brought before the annual meeting in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the business was not properly brought before the meeting and such
business shall not be transacted.

     (c) For purposes of this Section 16, "public announcement" shall mean an
announcement in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by

                                       29
<PAGE>   11

the Corporation with the Securities and Exchange Commission pursuant to Section
13, 14 or 15(d) of the Exchange Act.


                                   ARTICLE III
                               BOARD OF DIRECTORS

     SECTION 1. GENERAL POWERS. The business of the Corporation shall be managed
by its Board of Directors.

     SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors of
the Corporation shall be seven (7). Each director shall hold office until the
next annual meeting of shareholders or until his successor shall have been
elected and qualified. Directors need not be residents of Illinois or
shareholders of the Corporation. The number of directors may be increased or
decreased from time to time by the amendment of this section; but no decreases
shall have the effect of shortening the term of any incumbent director.

     SECTION 3. REGULAR MEETINGS. Immediately after the adjournment of the
annual meeting of the shareholders of the Corporation, the newly elected
Directors shall meet for the purpose of organization, the election of officers
and the transaction of such other business as may properly come before the
meeting. Other regular meetings shall be held at such time as shall from time to
time be determined by the Board.

     SECTION 4. SPECIAL MEETINGS. Special meetings of the Board of Directors
shall be held whenever called by the President or by a majority of the
directors.

     SECTION 5. NOTICE. Notice of any special meeting shall be given, at least
24 hours previous thereto to each director personally by telegraph, telephone,
facsimile transmission or by written notice duly served on each director, or
sent or mailed to each director at his business address. If notice of any
special meeting is to be given less than five days prior to such meeting, notice
shall be by means of telegraph, telephone, facsimile transmission or overnight
courier. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail so addressed, with postage thereon prepaid. If notice
be given by telegram, such notice shall be deemed to be delivered when the
telegram is delivered to the telegram company. The attendance of a director at
any meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.

     SECTION 6. PLACE OF MEETINGS. Regular and Special Meetings of the Board of
Directors shall be held at the Registered Office of the Corporation, or any such
other place, either within or without the State of Illinois, as may from time to
time be determined by the Board of Directors.

     SECTION 7. QUORUM OF DIRECTORS - MANNER OF ACTING. A majority of the number
of directors fixed by the by-laws, or in the absence of a by-law fixing the
number of directors, then of the number stated in the articles of incorporation,
shall constitute a quorum for the transaction of business unless the greater
number is required by the articles of incorporation or the by-laws. The act of
the majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors, unless the act of a greater number
is required by statute, these by-laws, or the articles or incorporation.

     SECTION 8. VACANCIES. Any vacancy occurring in the Board of Directors and
any directorship to be filled by reason of an increase in the number of
directors, may be


                                       30
<PAGE>   12

filled by election at an annual meeting or at a special meeting of shareholders
called for that purpose. A director elected to fill a vacancy shall be elected
for the unexpired term of his predecessor in office.

     SECTION 9. ACTION WITHOUT A MEETING. Unless specifically prohibited by the
articles of incorporation or by-laws, any action required to be taken at a
meeting of the Board of Directors, or any other action which may be taken at a
meeting of the Board of Directors, or of any committee thereof may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all the directors entitled to vote with respect to the
subject matter thereof, or by all the members of such committee, as the case may
be. Any such consent signed by all the directors or all the members of the
committee shall have the same effect as a unanimous vote, and may be stated as
such in any document filed with the Secretary of State or with anyone else.

     SECTION 10. PRESUMPTION OF ASSENT. A director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be conclusively presumed to have assented to the action
taken unless his dissent shall be entered in the minutes of the meeting or
unless he shall file his written dissent to such action with the person acting
as the secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered mail to the secretary of the Corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to a
director who voted in favor of such action.

     SECTION 11. EXECUTIVE COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the number of directors fixed by the by-laws or
otherwise, may appoint an executive committee, which committee, to the extent
provided in such resolution, shall have and exercise all of the authority of the
Board of Directors in the management of the Corporation, except as otherwise
required by law. Vacancies in the membership of the committee shall be filled by
the Board of Directors at a regular or special meeting of the Board of
Directors. The executive committee shall keep regular minutes of its proceedings
and report the same to the board when required.

     SECTION 12. COMMITTEES. The Board of Directors may from its membership
appoint other committees as it may from time to time by resolution determine and
fix the number of members thereof, and the board may delegate to such committees
such of the powers vested in it as it may by the resolution of appointment
determine. Such committees so appointed shall observe such rules and regulations
for their conduct and keep such records as the board may from time to time by
resolution determine.

     SECTION 13. COMPENSATION. The Board of Directors, by the affirmative vote
of a majority of the acting and qualified directors, and notwithstanding any
personal interest of any director, shall have authority to establish reasonable
compensation of all directors for services to the Corporation as directors,
officers or otherwise. By resolution of the Board of Directors, the directors
may be paid their expenses of attending each meeting of the board.

     SECTION 14. INDEMNIFICATION. (a) Generally. Each person who was or is made
a party or is threatened to be made a party to or is involved in or called as a
witness in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, and any appeal therefrom (hereinafter,
collectively a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is, was or had agreed to become a
director of the Corporation or is, was or had agreed to become an officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, shall be indemnified and held harmless by the
Corporation to the fullest extent permitted under the Illinois Business
Corporation Act of 1983 (the


                                       31
<PAGE>   13

"IBCA"), as the same now exists or may hereafter be amended (but, in the case of
any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than the IBCA permitted
the Corporation to provide prior to such amendment), against all expenses,
liabilities and losses (including attorneys' fees, judgments, fines, excise
taxes or penalties pursuant to the Employee Retirement Income Security Act of
1974, as amended, and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith; provided that,
except as explicitly provided herein, prior to a Change in Control of the
Corporation, as defined herein, a person seeking indemnity in connection with a
proceeding (or part thereof) initiated by such person against the Corporation or
any director, officer, employee or agent of the Corporation shall not be
entitled thereto unless the Corporation has joined in or consented to such
proceeding (or part thereof). For purposes of this Section 14, a "Change in
Control of the Corporation" shall be deemed to have occurred if the conditions
set forth in any one of the following clauses shall have been satisfied: (i) any
"person" (as such term is used in Section 13(d) and 14(d) of the Exchange Act)
other than (A) the Corporation, (B) a trustee or other fiduciary holding
securities under an employee benefit plan of the Corporation, (C) an underwriter
temporarily holding securities pursuant to an offering of such securities, or
(D) a corporation owned, directly or indirectly, by the shareholders of the
Corporation in substantially the same proportions as their ownership of shares
of the Corporation (any such person is hereinafter referred to as a "Person"),
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Corporation
representing more than 50% of the combined voting power of the Corporation's
then outstanding securities (not including in the securities beneficially owned
by such Person any securities acquired directly from the Corporation); (ii)
there is consummated a merger or consolidation of the Corporation with or into
any other corporation, other than a merger or consolidation which would result
in the holders of the voting securities of the Corporation outstanding
immediately prior thereto holding securities which represent, in combination
with the ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation, immediately after such merger or
consolidation, more than 70% of the combined voting power of the voting
securities of either the Corporation or the other entity which survives such
merger or consolidation or the parent of the entity which survives such merger
or consolidation; (iii) the shareholders of the Corporation approve any plan or
proposal for the liquidation or dissolution of the Corporation or an agreement
for the sale or disposition by the Corporation of all or substantially all the
Corporation's assets; or (iv) during any period of two consecutive years (not
including any period prior to January 1, 1997), individuals who at the beginning
of such period constitute the Board of Directors and any new director (other
than a director designated by a Person who has entered into an agreement with
the Corporation to effect a transaction described in clause (i), (ii) or (iii)
of this paragraph) whose election by the board or nomination for election by the
Corporation's shareholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof. For purposes of
this Section 14, where a Change in Control of the Corporation results from a
series of related transactions, the Change in Control of the Corporation shall
be deemed to have occurred on the date of the consummation of the first such
transaction. For purposes of clause (i) of this paragraph, the shareholders of
another corporation (other than this Corporation or a corporation described in
clause (i)(D) of this paragraph), in the aggregate, shall be deemed to
constitute a Person.

Prior to a Change in Control of the Corporation, any indemnification under this
Section 14(a) (unless ordered by a court) shall be made by the Corporation only
as authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances because
he or she has met the applicable standard of conduct set forth in the IBCA. Such
determination shall be made (i) by the Board of Directors by a majority vote of
a quorum consisting of directors who were

                                       32
<PAGE>   14

not parties to such action, suit or proceeding, or (ii) if such quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested directors so
directs, by independent legal counsel (who may be the regular counsel of the
Corporation) in a written opinion or (iii) by the shareholders.

Following a Change in Control of the Corporation, any indemnification under this
Section 14(a) (unless ordered by a court) shall be paid by the Corporation
unless within 60 days of such request for indemnification a determination is
made, in a written opinion, by special independent counsel selected by the
person requesting indemnification and approved by the Corporation (which
approval shall not be unreasonably withheld), which counsel has not otherwise
performed services (other than in connection with similar matters) within the
five years preceding its engagement to render such opinion for such person or
for the Corporation or any affiliates (as such term is defined in Rule 405 under
the Securities Act of 1933, as amended) of the Corporation (whether or not they
were affiliates when services were so performed) ("Independent Counsel"), that
indemnification of such person is not proper under the circumstances because
such person has not met the necessary standard of conduct under the IBCA. Unless
such person has theretofore selected Independent Counsel pursuant to this
Section 14(a) and such Independent Counsel has been approved by the Corporation,
legal counsel approved by a resolution or resolutions of the Board of Directors
prior to a Change in Control of the Corporation shall be deemed to have been
approved by the Corporation as required. Such Independent Counsel shall
determine as promptly as practicable whether and to what extent such person
would be permitted to be indemnified under applicable law and shall render its
written opinion to the Corporation and such person to such effect. The
Corporation agrees to pay the reasonable fees of the Independent Counsel
referred to above and to fully indemnify such Independent Counsel against any
and all expenses, claims, liabilities and damages arising out of or relating to
this Section 14 or its engagement pursuant hereto. In making a determination
under this Section 14(a), the Independent Counsel referred to above shall
determine that indemnification is permissible unless clearly precluded by this
Section 14 or the applicable provisions of the IBCA.

     (b) Payment of Expenses in Advance. Expenses, including attorneys' fees,
incurred by a person referred to in Subsection (a) of this Section 14 in
defending a proceeding shall be paid by the Corporation in advance of the final
disposition of such proceeding, including any appeal therefrom, upon receipt of
an undertaking (the "Undertaking") by or on behalf of such person to repay such
amount if it shall ultimately be determined that he or she is not entitled to be
indemnified by the Corporation.

     (c) Right of Claimant to Bring Suit. If a claim under Subsection (a) of
this Section 14 is not paid in full by the Corporation within 60 days after a
written claim has been received by the Corporation or if expenses pursuant to
Subsection (b) of this Section 14 hereof have not been advanced within 10 days
after a written request for such advancement, accompanied by the Undertaking,
has been received by the Corporation, the claimant may at any time thereafter
bring suit against the Corporation to recover the unpaid amount of the claim or
the advancement of expenses. (If the claimant is successful, in whole or in
part, in such suit or any other suit to enforce a right for expenses or
indemnification against the Corporation or any other party under any other
agreement, such claimant shall also be entitled to be paid the reasonable
expense of prosecuting such claim.) It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
Undertaking has been tendered to the Corporation) that the claimant has not met
the standards of conduct which make it permissible under the IBCA for the
Corporation to indemnify the claimant for the amount claimed. After a Change in
Control of the Corporation, the burden of proving such defense shall be on the
Corporation, and any determination by the Corporation (including its Board of
Directors, independent legal counsel or its shareholders) that the claimant had
not met the applicable standard of conduct required under the IBCA shall not be
a



                                       33
<PAGE>   15

defense to the action nor create a presumption that claimant had not met such
applicable standard of conduct.

     (d) Indemnity Not Exclusive. The indemnification and advancement of
expenses provided by, or granted pursuant to, the other Subsections of this
Section 14 shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
statute, by-law, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding such office. The Board of Directors shall have
the authority, by resolution, to provide for such other indemnification of
directors, officers, employees or agents as it shall deem appropriate.

     (e) Insurance. The Corporation shall have power to purchase and maintain
insurance to protect itself and any director, officer, employee or agent of this
Corporation or another Corporation, partnership, joint venture, trust or other
enterprise, against any expenses, liabilities or losses, whether or not the
Corporation would have the power to indemnify such person against such expenses,
liabilities or losses under the provisions of this Section 14 or the IBCA.

     (f) Continuation of Indemnification; Enforceability. The provisions of this
Section 14 shall be applicable to all proceedings commenced after its adoption,
whether such proceedings arise out of events, acts, omissions or circumstances
which occurred or existed prior or subsequent to such adoption, and shall,
unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such person. This
Section 14 shall be deemed to grant each person who, at any time that this
Section 14 is in effect, serves or agrees to serve in any capacity which
entitles him to indemnification hereunder rights against the Corporation to
enforce the provisions of this Section 14, and any repeal or other modification
of this Section 14 or any repeal or modification of the IBCA or any other
applicable law shall not limit any rights of indemnification then existing or
arising out of events, acts, omissions or circumstances occurring or existing
prior to such repeal or modification, including, without limitation, the right
to indemnification for proceedings commenced after such repeal or modification
to enforce this Section 14 with regard to acts, omissions, events or
circumstances occurring or existing prior to such repeal or modification.

     (g) Severability. If this Section 14 or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director and officer of the
Corporation as to costs, charges and expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement with respect to any proceeding,
whether civil, criminal, administrative or investigative, including an action by
or in the right of the Corporation, to the full extent permitted by any
applicable portion of this Section 14 that shall not have been invalidated and
to the full extent permitted by applicable law.


                                   ARTICLE IV
                        OFFICERS AND DEFINITION OF DUTIES

     SECTION 1. OFFICERS - REMOVAL. The officers of this Corporation shall
consist of a Chairman of the Board, a President, one or more Vice-Presidents, a
Secretary and a Treasurer, and such other officers, including one or more
Assistant Secretaries and one or more Assistant Treasurers, as the Board of
Directors may from time to time determine. In addition, the Board of Directors
may from time to time elect a Vice Chairman and an Executive Vice President if
it so determines. Such officers, when elected, shall hold office for the period
of one year and thereafter until their respective successors shall have been
duly elected, and shall have qualified; provided,

                                       34
<PAGE>   16

however, that all officers, agents and employees of the Corporation shall be
subject to removal at any time by the affirmative vote by a majority of the
Board. Any one person may hold two offices at the same time, except that the
same person shall not hold at the same time the office of Chairman of the Board
and Secretary, President and Vice President, President and Secretary, Treasurer
and Assistant Treasurer, or Secretary and Assistant Secretary.

     SECTION 2. VACANCIES. If any vacancy shall occur among the officers of the
Corporation, by resignation or otherwise, such vacancy may be filled by the
Board of Directors.

     SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board shall supervise
and control the officers, policies and programs of the Corporation. The Chairman
shall preside at all meetings of the Board of Directors and shareholders. The
Chairman shall initiate acquisition, merger and investment banking activities.
The Chairman shall recommend to the Board of Directors the nominees for the
position of Director. The Chairman, from time to time, may delegate powers and
duties to the Vice-Chairman, President and other officers. The Chairman shall
possess the power to sign all certificates, contracts and other instruments of
the Corporation as authorized by the Board of Directors. In the event of the
absence, inability to act or disability of the President, the Chairman shall
exercise all powers and discharge all duties of the President. The Chairman
shall possess such other duties and powers as may be prescribed from time to
time by the Board of Directors and the by-laws.

     SECTION 4. VICE-CHAIRMAN OF THE BOARD. The Vice Chairman of the Board, if
elected, and in the event of the absence, inability to act or disability of the
Chairman, shall carry out the responsibilities of the Chairman. The Vice-
Chairman when so acting shall exercise the powers and discharge the duties of
the Chairman, including presiding at meetings of shareholders and the Board of
Directors. The Vice-Chairman shall possess such other duties and powers as may
be prescribed from time to time by the Board of Directors, Chairman and By-Laws.
In the event of the absence, inability to act or disability of the Chairman and
Vice-Chairman, the Board of Directors shall elect an acting Chairman.

     SECTION 5. PRESIDENT. The President shall be the chief operating officer of
the Corporation. The President shall conduct the daily business and affairs of
the Corporation as so authorized by the by-laws. The President may delegate
powers and duties to the Vice-Presidents or other officers. The President shall
have the power to sign all certificates, contracts, and other instruments of the
Corporation as authorized by the Board of Directors. The President shall perform
such other duties as may be prescribed from time to time by the Board of
Directors, Chairman and by-laws. In the event of the absence, inability to act
or disability of the Chairman, Vice-Chairman and acting Chairman, the President
shall preside at meetings of shareholders and the Board of Directors.

     SECTION 6. THE EXECUTIVE VICE PRESIDENT. In the absence of, or in the case
of the inability of the Chairman of the Board of the Vice Chairman (in the
absence of the Chairman), and the President to act, the Executive Vice
President, if one be elected by the Board, shall perform all duties and have the
powers of the President. The Executive Vice President shall, in addition,
perform such other duties and have such other powers as the Board of Directors
may, from time to time, by resolution determine.

     SECTION 7. OTHER VICE PRESIDENTS. Other Vice Presidents, including one or
more Senior Vice Presidents, if such officers shall have been elected, shall
perform such duties and have such duties and powers as the Board of Directors
may from time to time by resolution determine, or, in the absence of such
determination, as the President, with the consent of the Chairman or Vice
Chairman, shall determine.


                                       35
<PAGE>   17

     SECTION 8. THE TREASURER. The Treasurer shall be the principal accounting
and financial officer of the Corporation. He shall: (a) have charge of and be
responsible for the maintenance of adequate books of account for the
Corporation; (b) have charge and custody of all funds and securities of the
Corporation; and be responsible therefor and for the receipt and disbursement
thereof; and (c) perform all the duties incident to the office of treasurer and
such other duties as from time to time may be assigned to him by the President
or by the Board of Directors. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his duties in such sum
and with such surety or sureties as the Board of Directors may determine.

     SECTION 9. THE SECRETARY. The Secretary shall: (a) record the minutes of
the shareholders' and of the Board of Directors' meetings in one or more books
provided for that purpose; (b) see that all notices are duly given in accordance
with the provisions of these by-laws or as required by law; (c) be custodian of
the corporate records and of the seal of the Corporation; (d) keep a register of
the post-office address of each shareholder which shall be furnished to the
secretary by such shareholder; (e) sign with the President, or a Vice President,
or any other officer thereunto authorized by the Board of Directors,
certificates for shares of the Corporation, the issue of which shall have been
authorized by the Board of Directors, and any contracts, deeds, mortgages,
bonds, or other instruments which the Board of Directors has authorized to be
executed, according to the requirement of the form of the instrument, except
when a different mode of execution is expressly prescribed by the Board of
Directors or these by-laws; (f) have general charge of the stock transfer books
of the Corporation and (g) perform all duties incident to the office of
secretary and such other duties as from time to time may be assigned to him by
the President or by the Board of Directors.

     SECTION 10. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The Assistant
Treasurers and Assistant Secretaries shall perform such duties as shall be
assigned to them by the Treasurer or the Secretary, respectively, or by the
President or the Board of Directors. The Assistant Secretaries may sign with the
President, or a Vice President, or any other officer thereunto authorized by the
Board of Directors, certificates for shares of the Corporation, the issue of
which shall have been authorized by the Board of Directors, and any contracts,
deeds, mortgages, bonds or other instruments which the Board of Directors has
authorized to be executed, according to the requirements of the form of the
instrument, except when a different mode of execution is expressly prescribed by
the Board of Directors or these by-laws. The assistant treasurers shall
respectively, if required by the Board of Directors, give bonds for the faithful
discharge of their duties in such sums and with sureties as the Board of
Directors shall determine.

     SECTION 11. SALARIES. The salaries of the officers shall be fixed from time
to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
Corporation.


                                    ARTICLE V
                   SHARES OF CAPITAL STOCK AND THEIR TRANSFER

     SECTION 1. STOCK ISSUE. Whenever stock, not previously reported to the
Secretary of State as issued, has been issued within the authorized limit fixed
by the statement of incorporation of a certificate of increase in capital stock,
a statement subscribed and sworn to by the President or any Vice President, and
attested by the Secretary or by an Assistant Secretary shall be filed in the
office of the Secretary of State within ninety days after the issuance of such
additional stock pursuant to authorization thereof by the Board of Directors in
the form prescribed by the General Corporation Act of the State of Illinois.
Promissory notes shall not be accepted for payment or part payment of stock
issued by this Corporation.


                                       36
<PAGE>   18

     SECTION 2. CERTIFICATES. Each shareholder shall be entitled to a
certificate of stock, executed by the President or Vice President and the
Secretary or Assistant Secretary, and under the corporate seal, certifying the
number of shares owned by him in such Corporation. When such certificate is
countersigned by a transfer agent other than the Corporation itself, or an
employee of the Corporation, or by a transfer clerk and registered by a
registrar, the signatures of the President or Vice President and the Secretary
or Assistant Secretary upon such certificates may be facsimiles, engraved or
printed.

     SECTION 3. TRANSFERS. Transfers of shares of capital stock shall be made
only upon the books of the Corporation by the holder in person or by power of
attorney, duly executed, and filed with the Secretary, and on surrender of a
certificate or certificates for such shares.

     SECTION 4. ADDRESSES. Every shareholder shall furnish the Secretary with
his address, at which notice of meetings and all other notices may be served
upon, or mailed to him. In default thereof, notices may be addressed to him at
the principal office of the Corporation.

     SECTION 5. LOST CERTIFICATES. The Chairman or President, as officers of the
Company, acting, singly, may direct new certificates of stock to be issued in
the place of certificates theretofore issued, alleged to have been lost or
destroyed, and may, in their discretion, require the owner of such certificate
or certificates, or his legal representative, to give the Corporation a bond in
such sum as they may direct, as indemnity against any claim that may be made
against the Corporation. Said officers may issue instructions to the Transfer
Agents and Registrars of the capital stock of the Company, may enter into such
agreements and may sign such documents as may be necessary to effectuate the
issuance of said certificates. Said officers, however, may refuse to issue or
direct the issuance of any new certificates except upon institution of legal
proceedings as required by statute, in such case made and provided.


                                   ARTICLE VI
                                    DIVIDENDS

     SECTION 1. DECLARATION. Dividends may be declared by the Board of Directors
from time to time out of the surplus or net profits of the Corporation, and
shall be payable at such times as the Board of Directors may determine.

     SECTION 2. RESERVES. Before payment of any dividend or making any
distribution of profits, there may be set aside out of the surplus or net
profits of the Corporation such sum or sums as the Directors from time to time,
in their absolute discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for such other purposes as the Directors shall
think conducive to the interests of the Corporation.


                                   ARTICLE VII
                                      SEAL

The corporate seal is and until otherwise ordered by the Board of Directors,
shall be, an impression bearing the corporate name and the words "corporate
seal" and "Illinois."


                                       37
<PAGE>   19


                                  ARTICLE VIII
                                   FISCAL YEAR

The fiscal year of the Corporation shall begin on the first day of January and
end on the 31st day of December of each year.

                                   ARTICLE IX
                               INSPECTION OF BOOKS

The books kept for transferring stock and the names and addresses of the
shareholders, during the usual business hours shall be open to examination for
all proper purposes by every shareholder, at its principal office or place of
business in the State of Illinois. Each shareholder of the Corporation shall
have the right, at all reasonable times, by himself or by his attorney, to
examine the records and books of account.


                                    ARTICLE X
                                WAIVER OF NOTICE

Whenever any action is to be taken after notice either to the shareholders or
directors, or after the lapse of a prescribed period of time, such action may be
taken without notice and without the lapse of such prescribed period of time, if
such action be taken while all persons interested are present, and consenting
thereto or be authorized or approved or such requirement be waived in writing by
each person interested and entitled to notice, or by his attorney thereto
authorized.


                                   ARTICLE XI
                                   AMENDMENTS

These By-Laws may be altered, amended or repealed by the affirmative vote of a
majority of the Board of Directors at any regular or special meeting of the
Board.




                                       38
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>3
<FILENAME>c61217ex13.txt
<DESCRIPTION>ANNUAL REPORT TO SHAREHOLDERS
<TEXT>

<PAGE>   1












                                   EXHIBIT 13






















                                       39
<PAGE>   2




                              [CHICAGO RIVET LOGO]

                          CHICAGO RIVET & MACHINE CO.
                               2000 ANNUAL REPORT






                                       40
<PAGE>   3
[CHICAGO RIVET LOGO]
- --------------------------------------------------------------------------------

HIGHLIGHTS

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
                                                    2000           1999           1998
- ------------------------------------------------------------------------------------------
<S>                                              <C>            <C>            <C>
NET SALES AND LEASE REVENUE....................  $45,423,263    $49,080,257    $44,938,184
NET INCOME.....................................    2,656,161      3,454,291      3,360,480
NET INCOME PER SHARE...........................         2.60           3.00           2.90
DIVIDENDS PER SHARE............................         1.07           1.07           1.12
EXPENDITURES FOR PROPERTY, PLANT AND
  EQUIPMENT....................................    2,125,189      1,709,527      2,696,701
DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT..    1,889,849      1,711,721      1,498,302
WORKING CAPITAL................................   12,001,291     12,447,590     12,302,179
TOTAL SHAREHOLDERS' EQUITY.....................   21,518,773     23,887,278     22,012,659
COMMON SHARES OUTSTANDING AT YEAR-END..........      967,132      1,138,096      1,153,496
SHAREHOLDERS' EQUITY PER COMMON SHARE..........        22.25          20.99          19.08
APPROXIMATE NUMBER OF SHAREHOLDERS OF RECORD...          374            425            451
</TABLE>

REGISTRAR
First Chicago Trust Company, a division of EquiServe

TRANSFER AGENT
First Chicago Trust Company, a division of EquiServe

STOCK EXCHANGE
The Company's stock is traded on the American Stock Exchange (Ticker symbol CVR)

ANNUAL MEETING
The annual meeting of shareholders
will be held on May 8, 2001 at 10:00 a.m. at
901 Frontenac Road
Naperville, Illinois 60566

Chicago Rivet & Machine Co.-901 Frontenac Road-P.O. Box 3061-Naperville,
Illinois 60566-Telephone: (630) 357-8500

- --------------------------------------------------------------------------------

                                       41
<PAGE>   4
MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                                            [CHIGAGO RIVET LOGO]
- --------------------------------------------------------------------------------

TO OUR SHAREHOLDERS:

RESULTS OF OPERATIONS

    The long running economic expansion that the U.S. economy has enjoyed
appears to have run its course. Though there may be some debate as to the extent
of the slowdown in the overall economy, there is little doubt that the
manufacturing sector slowed dramatically during 2000. Despite record automobile
sales, companies operating within that segment of the economy generally posted
weaker results than in the prior year. This was the case for Chicago Rivet. The
softness in new orders that we reported early in 2000 continued to characterize
our markets throughout the year, and the softening accelerated during the second
half. In view of these conditions, which contributed to both lower revenues and
reduced income compared to the record performance in 1999, our results for the
year were respectable.

2000 COMPARED TO 1999

    As previously indicated, conditions in our major markets tended to weaken as
the year progressed. As a result, net sales and lease revenues declined to
$45,423,263 in 2000. On an overall basis, this represents a decline of 7.5%
compared to the record level of $49,080,257 recorded in 1999. Revenues within
the fastener segment, which began 2000 at a slightly stronger pace than in the
prior year, ended the year at $35,735,699, a decline of 4.7% compared to 1999,
as the second half of the year was characterized by business levels that were
sharply lower than the preceding six months. This downturn is attributable to a
decline in the level of activity within the motor vehicle and automotive parts
sector of the economy upon which we depend for the majority of our fastener
revenues. Within the assembly equipment segment, demand was comparatively soft
early in the year, and became weaker as the year progressed. As a result,
revenues for the full year declined approximately 16% compared to 1999, totaling
$9,687,564 during 2000.

    Given the reduced operating levels, gross margins within the fastener
segment declined compared to the prior year. However, there were other
significant factors that impacted gross margins. Among them were increases in
wage levels necessary to retain skilled labor in the face of very tight labor
markets, increases in the cost of tooling and supplies used in manufacturing,
significantly higher costs for health insurance and higher depreciation expense
associated with recent investments in new manufacturing equipment. While
competitive situations continued to hamper our ability to recover the higher
costs outlined above, favorable conditions in the market for raw materials
enabled us to negotiate modest reductions in the prices paid for certain raw
materials. Overall, however, the combination of lower volume and generally
higher manufacturing costs caused gross margins within the fastener segment to
fall to 22.3% compared to 23.9% in the prior year.

    During 2000, revenues within the assembly segment declined approximately 16%
compared to 1999. Most of this decline was a function of reduced unit sales, as
demand was comparatively weak throughout the year. Gross margins declined from
approximately 45% in 1999 to 42% in 2000, due in part to a continued shift
toward lower priced and lower margin equipment, and also reflects the impact of
higher health insurance costs. Most other costs of manufacturing were reduced to
levels consistent with the lower operating rates.

    Selling and administrative expenses declined 3.6% compared with 1999. Costs
incurred in connection with the implementation of new data processing systems
declined substantially compared with 1999, but still remained at higher than
normal levels for most of the current year. Both commission expense and profit
sharing expense declined in proportion with the decline in sales and profits,
respectively. Offsetting these changes were professional fees incurred in
connection with the Company's "Dutch auction" tender offer, higher health
insurance costs, and increases in salary expense.

    Interest expense increased approximately $123,000 due primarily to
additional borrowing in connection with the tender offer and, to a lesser
extent, higher interest rates.

1999 COMPARED TO 1998

     The Company's net sales and lease revenues increased approximately 9%,
totaling $49,080,257 in 1999, compared with $44,938,184 recorded in 1998.
Revenues within the fastener segment improved 10.5%, reflecting the strength of
the automotive industry, which represents the Company's largest market. While
revenue from sales within the assembly equipment segment improved 6.4%, lease
revenues in that segment declined compared to the prior year, which resulted in
a net increase in sales and lease revenues within the assembly equipment segment
of 5.3%. Overall, gross margins improved to $13,361,375, an increase of
approximately 5%, despite a charge of $910,000 associated with a product recall.
Selling and administrative expenses increased significantly, primarily due to
expenditures for information technology, and net income increased to $3,454,291.

    The fastener segment produced the most dramatic changes compared with 1998.
Revenues within this segment increased 10.5% to $37,486,536. This increase was
largely a reflection of very strong growth in the economy in general and record
levels of production within the automotive industry. The increased volume levels
contributed to generally higher margins as fixed costs, with the exception of
depreciation,

- --------------------------------------------------------------------------------

                                                                               1

                                       42
<PAGE>   5
MANAGEMENT'S DISCUSSION
(Continued)
- --------------------------------------------------------------------------------
remained relatively constant compared with 1998. The strength of the employment
market contributed to increases in wage levels that slightly exceeded the
overall inflation level, and the limited availability of skilled labor
necessitated an increase in overtime expense in order to meet increased demand
within this segment of our operations. Despite the strong market conditions
prevalent throughout the year, our markets remained extremely price competitive,
and our ability to obtain price relief continued to be limited. Fortunately,
efforts to control manufacturing costs in other areas continued to be
successful, and the Company also benefited from negotiated reductions in the
costs of certain raw materials. While the fundamental performance within this
segment of our business was very successful, that success was tarnished by a
charge incurred in connection with a recall of vehicles that contained certain
non-conforming parts which were manufactured by the Company. As previously
reported, a settlement was successfully negotiated, but total costs incurred in
connection with this incident amounted to $944,000 before taxes, of which
$910,000 was charged to cost of goods sold, offsetting a portion of the positive
improvements recognized in operations.

    Revenues within the assembly equipment segment, as a whole, also improved
compared with 1998. However, competitive conditions caused the Company to
occasionally accept margins below those that were enjoyed in the past, and, as a
result, the increase in revenues was slightly biased toward products with lower
margins. In addition, increases in costs of raw materials and other
manufacturing expenses nearly offset the increase in revenues. As a result, the
margin increase within this segment was minimal.

    Selling and administrative expenses increased approximately 8% compared to
the prior year. Costs incurred in connection with implementation of new data
processing systems, including efforts related to mitigating the impact of any
potential Y2K issues, amounted to nearly $500,000 during the year and represent
the primary factor contributing to the increased level of selling and
administrative expense. Increases in data communications expense and
depreciation related to the new information system added an additional $103,000
to administrative expenses, and profit sharing expense increased by $123,000.
Bad debt expense was reduced by $94,000 and travel expense declined by $50,000.
Increases in salary expense were partially offset by a reduction in commission
expense as a larger percentage of sales was handled by Company employees.

    Interest expense during 1999 decreased approximately $120,000 compared with
1998 as the effect of higher interest rates was offset by a lower outstanding
balance on the loan. Interest income was approximately $51,000 lower than that
recorded in the prior year due to a reduction in the level of funds available
for investment in interest-bearing accounts.

DIVIDENDS

    The Company paid four regular quarterly dividends of $.18 per share during
2000. In addition, an extra dividend of $.35 per share was paid during the
second quarter of 2000, bringing the total dividend payout to $1.07 per share.
On February 19, 2001 your Board of Directors declared a regular quarterly
dividend of $.18 per share, payable March 20, 2001 to shareholders of record
March 5, 2001. This continues the uninterrupted record of consecutive quarterly
dividends paid by the Company to its shareholders that extends over 67 years. At
that same meeting, the Board declared an extra dividend of $.25 per share,
payable April 20, 2001 to shareholders of record, April 5, 2001.

MACHINERY AND EQUIPMENT

     Capital investments totaled approximately $2.1 million during 2000.
Slightly over $1.9 million of this total was invested in new equipment related
to the production of fasteners. Of the amount expended within the fastener
segment, $1.5 million was invested in new cold heading and thread-forming
equipment and certain support equipment. This equipment will be utilized to
expand our capacity to manufacture certain specialty products for which demand
has exceeded our capacity. Certain obsolete heat treating equipment was replaced
at a cost of $276,000. The balance was expended for various smaller projects,
including new quality control equipment and building improvements. Within the
assembly equipment segment, capital expenditures totaled $150,372, primarily for
the replacement of machine tools used in the manufacture of perishable tooling
that is sold to our customers. The balance was expended for data processing
equipment and various office equipment.

    Investments in machinery and equipment totaled $1,709,527 during 1999. Once
again, investments in new equipment related to the manufacture of fasteners
accounted for the majority of these investments and amounted to $994,000 during
the year. Investments in hardware and software related to improved information
management technology totaled $267,000. A total of $181,000 was expended for the
purchase of a variety of test and inspection equipment related to quality
control initiatives. Investments in new machine tools used in the manufacture of
assembly equipment totaled $108,000. Approximately $41,000 was invested in new
telephone equipment and the balance was expended for the purchase, or repair, of
various, smaller machine tools and building repairs.

    The Company made a number of significant investments in both equipment and
building improvements during 1998. Capital expenditures totaled nearly
$2,700,000. Expenditures related to new data processing systems, including
computer hardware and software, amounted to approximately $542,000. Expenditures
for the purchase of new equipment

- --------------------------------------------------------------------------------

 2


                                       43
<PAGE>   6
MANAGEMENT'S DISCUSSION
(Continued)                                                 [CHIGAGO RIVET LOGO]
- --------------------------------------------------------------------------------
used in the manufacture of fasteners amounted to $1,430,000. The Company also
purchased a variety of new machine tools, material handling equipment and
inspection equipment valued at approximately $313,000. Building improvements,
which included the installation of new air compressors at one facility and a new
roof at another facility, amounted to approximately $252,000. Investment in both
new equipment and rebuilding of existing equipment used to plate and heat treat
fasteners amounted to $63,000. A total of $51,000 was expended for the
construction of new automatic rivet setting equipment that is leased to
customers. The balance was expended for a variety of smaller office equipment
and for the construction of new rivet setting machines that will be used for
demonstration purposes.

    Depreciation expense amounted to $1,889,849 in 2000, $1,711,721 in 1999 and
$1,498,302 in 1998.

LIQUIDITY AND CAPITAL RESOURCES

    Working capital at year-end amounted to $12.0 million. Although this is a
slight decline from the prior year-end, the change is not unexpected given the
significant expenditures for new equipment made during the year. The decline in
accounts receivable balance at year-end reflects the fact that sales during the
latter portion of 2000 were substantially lower than during the same period in
the prior year. This sudden change in demand resulted in an opposite change in
inventory levels, which increased $280,000 compared to the end of 1999.
Production activity has been adjusted to compensate for the lower sales
activity, and we expect that inventories will be reduced to a level consistent
with current sales. In connection with a "Dutch auction" tender offer in April
2000, the Company obtained, on an unsecured basis, a financing commitment that
provided borrowing capacity of up to $9.0 million plus a $1.0 million line of
credit. The new borrowing was used to finance the unpaid balance of a 1996 loan
related to the acquisition of H & L Tool Company, Inc. ($2.7 million) and to
fund the purchase of stock under the terms of the "Dutch auction". At year-end,
the indebtedness under the term loan was approximately $5.2 million. Under the
terms of the note, the Company is scheduled to repay the principal in quarterly
installments of $450,000, plus interest computed on the unpaid balance at a
variable rate that is calculated under one of two methods, selected at the
option of the Company: the London Inter-Bank Offering Rate (LIBOR) plus an
applicable margin; or the lender's prime rate, less an applicable margin. The
applicable margin is based upon the funded debt ratio and, for any portion of
the loan that bears interest at the prime rate, this margin is up to 50 basis
points, and for any portion that bears interest at the LIBOR rate, it is up to
130 basis points. This rate is adjusted quarterly. At year-end 2000, the rate
was approximately 7.5%. Management believes that current cash, cash equivalents
and the available line of credit will be sufficient to provide adequate working
capital for the foreseeable future.

NEW ACCOUNTING STANDARDS

    The Company's financial statements and financial condition were not, and are
not expected to be, materially impacted by any new, or proposed, accounting
standards.

STOCK PURCHASE PROGRAM

    Terms of a stock repurchase authorization originally approved by the Board
of Directors in February of 1990, and subsequently amended to permit the
repurchase of an aggregate of 200,000 shares, provide for purchases of the
Company's common stock to be made from time to time, in the open market or in
private transactions, at prices deemed reasonable by management. Purchases under
the current repurchase authorization have amounted to 161,996 shares at an
average price of $15.58 per share. This includes the purchase of 11,400 shares
during 2000 at an average price of $19.75 per share. It is management's
intention to continue this program, provided market conditions are favorable and
funding for repurchases is available.

    In addition to the purchases described above, the Company purchased 159,564
shares at a price of $23.00 per share pursuant to a "Dutch auction" tender offer
completed in April 2000. Funding for the purchases was provided through
additional borrowing described above.

OUTLOOK FOR 2001

    As this is written, the economic outlook for the balance of 2001 is
uncertain. While experts continue to debate whether the economy is headed for a
recession, there is mounting evidence that the so-called old economy has been in
recession for the past several months. Certainly, we have seen demand in our
markets soften dramatically over that time period. While in many years our first
quarter is often our strongest quarter, bookings for the first quarter of 2001
are well below the levels that we would consider satisfactory. Anecdotal
evidence suggests that our situation is far from unique -- especially in the
segment of the economy in which we operate. While we anticipate that conditions
will improve, when that improvement will be manifested is uncertain, and depends
in large measure upon factors over which we have little or no control.

    In the interim, we have taken appropriate actions to adjust operating levels
to match the reduced level of demand that is prevalent in our markets. Spending
will be closely controlled and every opportunity to reduce costs will be
evaluated. During 2000, we began a program to expand our capacity in certain
products where demand outpaced our capacity. We anticipate that program, which
should be com-
- --------------------------------------------------------------------------------

                                                                               3
                                       44
<PAGE>   7
MANAGEMENT'S DISCUSSION
(Continued)
- --------------------------------------------------------------------------------

in the second quarter of 2001, will have a positive impact on both revenues and
profits. However, the timing and magnitude of its contribution to revenues and
profits will depend, in part, upon a recovery in the manufacturing sector of the
economy.

    The rapidly changing nature of the competitive arena will continue to
present new challenges and new opportunities. We believe that the Company can
continue to meet the challenges presented and take advantage of opportunities as
they arise. We recognize that success depends upon many factors and take this
opportunity to express our gratitude for the loyalty of our customers and for
the continued support of our shareholders. We also take this opportunity to
acknowledge the efforts of our dedicated and skilled workforce. Their
contributions are essential to the Company's success -- both past and future.

                                          Respectfully,

<TABLE>
  <S>                                         <C>

        J. A. MORRISSEY                             JOHN C. OSTERMAN
       John A. Morrissey                            John C. Osterman
            Chairman                                   President
</TABLE>

March 2, 2001

FORWARD-LOOKING STATEMENTS

     This discussion contains certain "forward-looking statements" which are
inherently subject to risks and uncertainties that may cause actual events to
differ materially from those discussed herein. Factors which may cause such
differences in events include, 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, 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.

- --------------------------------------------------------------------------------
4

                                       45
<PAGE>   8
                                                            [CHICAGO RIVET LOGO]

- --------------------------------------------------------------------------------

CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
DECEMBER 31                                                2000                1999
- --------------------------------------------------------------------------------------
<S>                                                    <C>                 <C>
ASSETS
Current Assets
  Cash and Cash Equivalents........................    $ 2,265,442         $ 3,414,460
  Certificates of Deposit..........................      1,429,886             552,594
  Accounts Receivable--Less allowances of $90,000
     and $80,000, respectively.....................      5,037,231           6,681,659
  Inventories......................................      7,204,184           6,923,721
  Deferred Income Taxes............................        705,191             695,191
  Other Current Assets.............................        191,668             245,997
                                                       -----------         -----------
  Total Current Assets.............................     16,833,602          18,513,622
Net Property, Plant and Equipment..................     14,323,517          14,107,963
                                                       -----------         -----------
Total Assets.......................................    $31,157,119         $32,621,585
                                                       ===========         ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
  Current Portion of Note Payable..................    $ 1,800,000         $ 1,800,000
  Accounts Payable.................................      1,065,561           1,438,147
  Accrued Wages and Salaries.......................        753,577             792,606
  Contributions Due Profit Sharing Plan............        437,076             669,053
  Other Accrued Expenses...........................        774,974             600,573
  Federal and State Income Taxes Payable...........          1,123             765,653
                                                       -----------         -----------
  Total Current Liabilities........................      4,832,311           6,066,032
Note Payable.......................................      3,432,760           1,350,000
Deferred Income Taxes..............................      1,373,275           1,318,275
                                                       -----------         -----------
  Total Liabilities................................      9,638,346           8,734,307
                                                       -----------         -----------
Commitments and Contingencies (Note 12)
Shareholders' Equity
  Preferred Stock, No Par Value, 500,000 Shares
     Authorized: None Outstanding..................             --                  --
  Common Stock, $1.00 Par Value, 4,000,000 Shares
     Authorized: 1,138,096 Shares Issued...........      1,138,096           1,138,096
  Additional Paid-in Capital.......................        447,134             447,134
  Retained Earnings................................     23,828,665          22,302,048
  Treasury Stock, 170,964 Shares at cost...........     (3,895,122)                 --
                                                       -----------         -----------
  Total Shareholders' Equity.......................     21,518,773          23,887,278
                                                       -----------         -----------
Total Liabilities and Shareholders' Equity.........    $31,157,119         $32,621,585
                                                       ===========         ===========
</TABLE>

       THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.

- --------------------------------------------------------------------------------
                                                                               5

                                       46
<PAGE>   9
[CHIGAGO RIVET LOGO]

- --------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<S>                                           <C>            <C>            <C>
- ---------------------------------------------------------------------------------------
For the Years Ended December 31                      2000           1999           1998
- ---------------------------------------------------------------------------------------
Net Sales and Lease Revenue...............    $45,423,263    $49,080,257    $44,938,184
Cost of Goods Sold and Costs Related to
  Lease
  Revenue.................................     33,480,233     35,718,882     32,256,849
                                              -----------    -----------    -----------
Gross Profit..............................     11,943,030     13,361,375     12,681,335
Selling and Administrative Expenses.......      7,801,089      8,094,719      7,506,339
Other Expense, net........................        155,780         37,365         97,516
                                              -----------    -----------    -----------
Income Before Income Taxes................      3,986,161      5,229,291      5,077,480
Provision for Income Taxes................      1,330,000      1,775,000      1,717,000
                                              -----------    -----------    -----------
Net Income................................    $ 2,656,161    $ 3,454,291    $ 3,360,480
                                              ===========    ===========    ===========
Net Income Per Share......................    $      2.60    $      3.00    $      2.90
                                              ===========    ===========    ===========
</TABLE>

CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

<TABLE>
<S>                                           <C>            <C>            <C>
Retained Earnings at Beginning of Year....    $22,302,048    $20,405,979    $18,882,418
Net Income................................      2,656,161      3,454,291      3,360,480
Treasury Stock Retired....................             --       (325,793)      (535,058)
Cash Dividends Paid, $1.07 Per Share in
  2000, $1.07 Per Share in 1999 and $1.12
  Per Share in 1998.......................     (1,129,544)    (1,232,429)    (1,301,861)
                                              -----------    -----------    -----------
Retained Earnings at End of Year..........    $23,828,665    $22,302,048    $20,405,979
                                              ===========    ===========    ===========
</TABLE>

       THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.

- --------------------------------------------------------------------------------
6

                                       47
<PAGE>   10

                                                            [CHIGAGO RIVET LOGO]

- --------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
         -------------------------------------------------------------------------------------------
                  FOR THE YEARS ENDED DECEMBER 31               2000          1999          1998
         -------------------------------------------------------------------------------------------
         <S>                                                 <C>           <C>           <C>
         Cash Flows from Operating Activities:
         Net Income........................................  $ 2,656,161   $ 3,454,291   $ 3,360,480
         Adjustments to Reconcile Net Income to Net
           Cash Provided by Operating Activities:
           Depreciation and Amortization...................    1,889,849     1,711,721     1,498,302
           Net Gain on the Sale of Properties..............       (2,439)       (6,690)      (14,787)
           Deferred Income Taxes...........................       45,000        30,000        98,000
           Changes in Working Capital Components:
             Accounts Receivable...........................    1,644,428      (198,445)     (820,676)
             Inventories...................................     (280,463)     (393,974)     (175,140)
             Other Current Assets..........................       54,329       (10,848)      125,299
             Accounts Payable..............................     (372,586)      165,685      (427,834)
             Accrued Wages and Salaries....................      (39,029)       47,448       (27,089)
             Accrued Benefit Plan Contributions............     (231,977)      122,975      (161,669)
             Other Accrued Expenses........................      174,401        11,238        82,282
             Income Taxes Payable..........................     (764,530)      349,839      (323,529)
                                                             -----------   -----------   -----------
                  Net Cash Provided by Operating
                    Activities.............................    4,773,144     5,283,240     3,213,639
                                                             -----------   -----------   -----------
         Cash Flows from Investing Activities:
           Capital Expenditures............................   (2,125,189)   (1,709,527)   (2,696,701)
           Proceeds from the Sale of Properties............       22,225        41,288        22,524
           Proceeds from Held-to-Maturity Securities.......    2,506,327     6,151,774     5,831,753
           Purchases of Held-to-Maturity Securities........   (3,383,619)   (6,154,114)   (3,514,292)
                                                             -----------   -----------   -----------
                  Net Cash Used in Investing Activities....   (2,980,256)   (1,670,579)     (356,716)
                                                             -----------   -----------   -----------
         Cash Flows from Financing Activities:
           Borrowings under Term Loan Agreement............    3,882,760            --            --
           Payments under Term Loan Agreement..............   (1,800,000)   (1,800,000)   (1,800,000)
           Purchases of Treasury Stock.....................   (3,895,122)     (347,243)     (557,062)
           Cash Dividends Paid.............................   (1,129,544)   (1,232,429)   (1,301,861)
                                                             -----------   -----------   -----------
                  Net Cash Used in Financing Activities....   (2,941,906)   (3,379,672)   (3,658,923)
                                                             -----------   -----------   -----------
         Net Increase (Decrease) in Cash and Cash
           Equivalents.....................................   (1,149,018)      232,989      (802,000)
         Cash and Cash Equivalents:
           Beginning of Year...............................    3,414,460     3,181,471     3,983,471
                                                             -----------   -----------   -----------
           End of Year.....................................  $ 2,265,442   $ 3,414,460   $ 3,181,471
                                                             ===========   ===========   ===========
           Cash Paid During the Year for:
             Income Taxes..................................  $ 2,049,530   $ 1,395,161   $ 1,942,529
             Interest......................................  $   288,769   $   264,684   $   458,080
</TABLE>

       THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.

- --------------------------------------------------------------------------------
                                                                               7

                                       48
<PAGE>   11
[CHIGAGO RIVET LOGO]

- --------------------------------------------------------------------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1--NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

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

A SUMMARY OF THE COMPANY'S SIGNIFICANT ACCOUNTING POLICIES FOLLOWS:

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

REVENUE RECOGNITION--Revenues from product sales are recognized upon shipment
and an allowance is provided for estimated returns and discounts based on
experience.

LEASE INCOME--Automatic rivet setting machines are available to customers on
either a sale or lease basis. The leases, generally for a one-year term, are
cancelable at the option of the Company or the customer and are accounted for
under the operating method, which recognizes lease revenue over the term of the
lease. Rentals are billed in advance, and revenues attributable to future
periods are included in unearned revenue in the consolidated balance sheets.
Costs related to lease revenue, other than the cost of the machines, are
expensed as incurred.

CREDIT RISK--The Company extends credit primarily on the basis of 30-day terms
to various companies doing business primarily in the automotive and appliance
industries. The Company has a concentration of credit risk primarily within the
automotive industry and in the Midwestern United States.

CASH AND CASH EQUIVALENTS--The Company considers all highly liquid investments
with a maturity of three months or less when purchased to be cash equivalents.

FAIR VALUE OF FINANCIAL INSTRUMENTS--The carrying amounts reported in the
consolidated balance sheets for cash and cash equivalents and certificates of
deposit approximate fair value. The carrying amount reported for the note
payable approximates fair market value.

INVENTORIES--Inventories are stated at the lower of cost or net realizable
value, cost being determined principally by the first-in, first-out method.

PROPERTY, PLANT AND EQUIPMENT--Properties are stated at cost and are depreciated
over their estimated useful lives using the straight-line method for financial
reporting purposes. Accelerated methods of depreciation are used for income tax
purposes. Direct costs related to developing or obtaining software for internal
use are capitalized as property and equipment. Capitalized software costs are
amortized over the software's useful life when the software is ready for its
intended use. The estimated useful lives by asset category are:

Asset category                                             Estimated useful life
- ------------------------------------------------------------

<TABLE>
<S>                                          <C>
Land improvements...........................    15 to 25 years
Buildings and improvements..................    10 to 35 years
Machinery and equipment.....................     7 to 15 years
Automatic rivet setting machines on lease...          10 years
Capitalized software costs..................      3 to 5 years
Other equipment.............................     3 to 15 years
</TABLE>

The Company reviews the carrying value of property, plant and equipment for
impairment whenever events and circumstances indicate that the carrying value of
an asset may not be recoverable from the estimated future cash flows expected to
result from its use and eventual disposition. In cases where undiscounted
expected future cash flows are less than the carrying value, an impairment loss
is recognized equal to an amount by which the carrying value exceeds the fair
value of assets.

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

INCOME TAXES--Deferred income taxes are determined under the asset and liability
method in accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes". Deferred income taxes arise from temporary
differences between the income tax basis of assets and liabilities and their
reported amounts in the financial statements.

SEGMENT INFORMATION--In 1998, the Company adopted Statement of Financial
Accounting Standards No. 131 ("FAS 131"), "Disclosures about Segments of an
Enterprise and Related Information." FAS 131 established new standards for
defining a Company's segments and disclosing information about them. It requires
that segments be based on the internal structure and reporting of the Company's
operations. The adoption of FAS 131 did not affect results of operations or
financial position but did affect the disclosure of segment information.

NET INCOME PER SHARE--Net income per share of common stock is based on the
weighted average number of shares outstanding of 1,022,627 in 2000, 1,151,333 in
1999 and 1,159,360 in 1998.

ESTIMATES--The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and the
accompanying notes. Actual results could differ from those estimates.

RECLASSIFICATIONS--Certain items in 1999 and 1998 have been reclassified to
conform to the presentation in 2000. These changes have no effect on the
financial position of the Company.

- --------------------------------------------------------------------------------
8
                                       49
<PAGE>   12
                                                            [CHIGAGO RIVET LOGO]
- --------------------------------------------------------------------------------

2--BALANCE SHEET DETAILS

<TABLE>
<CAPTION>
                                       2000           1999
                                    -----------    -----------
<S>                                 <C>            <C>
Inventories:
Raw materials.....................  $ 2,010,984    $ 2,002,490
Work in process...................    2,156,092      1,782,944
Finished goods....................    3,037,108      3,138,287
                                    -----------    -----------
                                    $ 7,204,184    $ 6,923,721
                                    ===========    ===========
Net Property, Plant and Equipment:
Land and improvements.............  $ 1,010,595    $ 1,010,595
Buildings and improvements........    5,677,680      5,646,956
Production equipment, leased
  machines and other..............   26,686,705     25,239,969
                                    -----------    -----------
                                     33,374,980     31,897,520
Less accumulated depreciation.....   19,051,463     17,789,557
                                    -----------    -----------
                                    $14,323,517    $14,107,963
                                    ===========    ===========
Other Accrued Expenses:
Property taxes....................  $   114,490    $   122,436
Interest..........................      105,497         17,876
Unearned revenue and customer
  deposits........................      355,874         85,970
All other items...................      199,113        374,291
                                    -----------    -----------
                                    $   774,974    $   600,573
                                    ===========    ===========
</TABLE>

3--LEASED MACHINES--Lease revenue amounted to $246,940 in 2000, $283,269 in 1999
and $376,644 in 1998. Future minimum rentals on leases beyond one year are not
significant.

The cost and carrying value of leased automatic rivet setting machines at
December 31 were:

<TABLE>
<CAPTION>
                                           2000        1999
                                         --------    --------
<S>                                      <C>         <C>
Cost...................................  $531,509    $577,932
Accumulated depreciation...............   484,956     512,125
                                         --------    --------
Carrying value.........................  $ 46,553    $ 65,807
                                         ========    ========
</TABLE>

4--INCOME TAXES--The provision for income tax expense consists of the following:

<TABLE>
<CAPTION>
                                2000         1999         1998
                             ----------   ----------   ----------
<S>                          <C>          <C>          <C>
Current:
  Federal..................  $1,271,000   $1,639,000   $1,492,000
  State....................      14,000      106,000      127,000
Deferred...................      45,000       30,000       98,000
                             ----------   ----------   ----------
                             $1,330,000   $1,775,000   $1,717,000
                             ==========   ==========   ==========
</TABLE>

The deferred tax liabilities and assets are comprised of the following:

<TABLE>
<CAPTION>
                                       2000           1999
                                    -----------    -----------
<S>                                 <C>            <C>
Depreciation......................  $(1,392,656)   $(1,338,597)
                                    -----------    -----------
Inventory.........................      475,255        457,501
Accrued vacation..................      176,033        177,595
Allowance for doubtful accounts...       31,300         27,800
Other, net........................       41,984         52,617
                                    -----------    -----------
                                        724,572        715,513
                                    -----------    -----------
                                    $  (668,084)   $  (623,084)
                                    ===========    ===========
</TABLE>

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

<TABLE>
<CAPTION>
                                      2000                 1999               1998
                               ------------------   ------------------  -----------------
                                 AMOUNT       %       AMOUNT       %      AMOUNT      %
                               ------------------   ------------------  -----------------
<S>                            <C>           <C>    <C>           <C>   <C>          <C>
Expected tax at U.S.
 Statutory rate..............   $1,355,000   34.0    $1,778,000   34.0   $1,726,000  34.0
State taxes, net of federal
 benefit.....................        9,000     .2        73,000    1.4       84,000   1.7
Other, net...................        5,000     .1         5,000     --        7,000    .1
Adjustment to prior year
 accrual.....................      (39,000)   (.9)      (81,000)  (1.5)   (100,000)  (2.0)
                               -----------   ----   -----------   ----  -----------  ----
Income tax expense...........   $1,330,000   33.4    $1,775,000   33.9   $1,717,000  33.8
                               ===========   ====   ===========   ====  ===========  ====
</TABLE>

5--NOTE PAYABLE-- In connection with the tender offer completed in April 2000,
the Company obtained, on an unsecured basis, a financing commitment that
provided borrowing capacity of up to $9.0 million plus a $1.0 million line of
credit. The new borrowing was used to repay an existing loan ($2.7 million) and
to fund purchases of stock under the terms of the "Dutch auction". As of
December 31, 2000, total indebtedness under the term loan was $5,232,760. Under
the terms of the note evidencing such debt, the Company will repay the principal
in quarterly installments of $450,000, plus interest computed on the unpaid
balance at a variable rate that is based upon, at the election of the Company,
the Bank of America's prime rate less an applicable margin or the London
Inter-Bank Offering Rate (LIBOR) plus an applicable margin. The applicable
margin is based upon the funded debt ratio. For any portion of the loan that
bears interest at the prime rate, this margin is up to 50 basis points, for any
portion of the loan that bears interest at the LIBOR rate, the margin is up to
130 basis points. The interest rate is adjusted quarterly and was approximately
7.5% at December 31, 2000. This note is subject to the maintenance of certain
financial covenants. The line of credit was extended through May 31, 2002 and
remained unused at December 31, 2000. The loan agreement expires on March 1,
2005, at which time any unpaid principal and interest is due.

6--TREASURY STOCK TRANSACTIONS--In 2000, the Company purchased 170,964 shares of
its common stock for $3,895,122. These shares are being held in treasury. In
1999 and 1998, the Company purchased 15,400 common shares for $347,243 and
15,800 common shares for $557,062, respectively. The stock purchased in 1999 and
1998 was retired and the excess of cost over par value was charged
proportionately to additional paid-in capital and retained earnings.

7--SHAREHOLDER RIGHTS AGREEMENT--On November 22, 1999, the Company adopted a
shareholder rights agreement and declared a dividend distribution of one right
for each outstanding share of Company common stock to shareholders of record at
the close of business on December 3, 1999. Each right entitles the holder, upon
occurrence of certain events, to buy one one-hundredth of a share of Series A
Junior Participating Preferred Stock at a price of $90, subject to adjustment.
The rights may only become exercisable under certain circumstances involving
acquisition of the Company's common stock, including the purchase of 10 percent
or more by any person or group. The rights will expire on December 2, 2009
unless they are extended, redeemed or exchanged.

8--PENSIONS--The Company has a noncontributory profit sharing plan covering
substantially all employees. Total expenses relating to the profit sharing plan
amounted to approximately $437,000 in 2000, $669,000 in 1999 and $546,000 in
1998.


- --------------------------------------------------------------------------------
                                                                              9
                                       50
<PAGE>   13
[CHIGAGO RIVET LOGO]
- --------------------------------------------------------------------------------

9--OTHER EXPENSE, NET--Other expense, net consists of the following:

<TABLE>
<CAPTION>
                                 2000        1999        1998
                               ---------   ---------   ---------
<S>                            <C>         <C>         <C>
Interest income..............  $ 202,915   $ 196,769   $ 247,889
Interest expense.............   (378,640)   (255,908)   (376,098)
Gain on sale of property and
  equipment..................      2,439       6,690      14,787
Other........................     17,506      15,084      15,906
                               ---------   ---------   ---------
                               $(155,780)  $ (37,365)  $ (97,516)
                               =========   =========   =========
</TABLE>

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

<TABLE>
<CAPTION>
                                              ASSEMBLY
                               FASTENER       EQUIPMENT        OTHER      CONSOLIDATED
                              -----------   -------------   -----------   ------------
<S>                           <C>           <C>             <C>           <C>
YEAR ENDED DECEMBER 31, 2000:
Net sales and lease
 revenue....................  $35,735,699    $ 9,687,564    $        --   $45,423,263
Depreciation................    1,399,029        254,398        236,422     1,889,849
Segment profit..............    4,878,808      3,070,744             --     7,949,552
Selling and administrative
 expenses...................                                  3,787,666     3,787,666
Interest expense............                                    378,640       378,640
Interest income.............                                   (202,915)     (202,915)
                                                                          -----------
Income before income
 taxes......................                                                3,986,161
                                                                          -----------
Capital expenditures........    1,933,638        150,372         41,179     2,125,189
                                                                          -----------
Segment assets:
 Inventory..................    4,401,873      2,802,311             --     7,204,184
 Property, plant and
   equipment................   10,898,517      1,965,616      1,459,384    14,323,517
 Other assets...............           --             --      9,629,418     9,629,418
                                                                          -----------
                                                                           31,157,119
                                                                          -----------
YEAR ENDED DECEMBER 31, 1999:
Net sales and lease
 revenue....................  $37,486,536    $11,593,721    $        --   $49,080,257
Depreciation................    1,255,975        252,772        202,974     1,711,721
Segment profit..............    4,882,568      4,232,296             --     9,114,864
Selling and administrative
 expenses...................                                  3,826,434     3,826,434
Interest expense............                                    255,908       255,908
Interest income.............                                   (196,769)     (196,769)
                                                                          -----------
Income before income
 taxes......................                                                5,229,291
                                                                          -----------
Capital expenditures........    1,464,857        150,387         94,283     1,709,527
Segment assets:
 Inventory..................    4,269,533      2,654,188             --     6,923,721
 Property, plant and
   equipment................   10,778,383      1,672,189      1,657,391    14,107,963
 Other assets...............           --             --     11,589,901    11,589,901
                                                                          -----------
                                                                           32,621,585
                                                                          -----------
YEAR ENDED DECEMBER 31, 1998:
Net sales and lease
 revenue....................  $33,931,740    $11,006,444    $        --   $44,938,184
Depreciation................    1,148,343        213,294        136,665     1,498,302
Segment profit..............    4,121,130      4,293,452             --     8,414,582
Selling and administrative
 expenses...................                                  3,208,893     3,208,893
Interest expense............                                    376,098       376,098
Interest income.............                                   (247,889)     (247,889)
                                                                          -----------
Income before income
 taxes......................                                                5,077,480
                                                                          -----------
Capital expenditures........    1,992,015        229,553        475,133     2,696,701
Segment assets:
 Inventory..................    3,761,580      2,768,167             --     6,529,747
 Property, plant and
   equipment................   10,588,483      1,790,190      1,766,082    14,144,755
 Other assets...............           --             --     11,141,279    11,141,279
                                                                          -----------
                                                                           31,815,781
                                                                          -----------
</TABLE>

     The Company does not allocate certain selling and administrative expenses
for internal reporting, thus, no allocation was made for these expenses for
segment disclosure purposes. Segment assets reported internally are limited to
inventory and long-lived assets. Long-lived assets of one plant location are
allocated between the two segments based on estimated plant utilization, as this
plant serves both fastener and assembly equipment activities. Other assets are
not allocated to segments internally and to do so would be impracticable. Sales
to two customers in the fastener segment accounted for 19, 17 and 15 percent
and 11, 11 and 10 percent of consolidated revenues during 2000, 1999 and 1998,
respectively.

11--OTHER UNUSUAL ITEMS OF INCOME AND EXPENSE--Fourth quarter net income
includes the net favorable effect of certain adjustments related to inventory,
accruals and allowances of $.10, $.09 and $.05 per share, for 2000, 1999 and
1998, respectively. The 1998 adjustment includes $.09 per share related to the
reduction of accrued income taxes.

12--COMMITMENTS AND CONTINGENCIES--The Company recorded rent expense aggregating
approximately $36,000, $29,000 and $26,000 for 2000, 1999 and 1998,
respectively. Total future minimum rentals at December 31, 2000 are not
significant.

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

13--NEW ACCOUNTING STANDARDS--The Company's financial statements and financial
condition were not, and are not expected to be, materially impacted by any new,
or proposed, accounting standards.

- --------------------------------------------------------------------------------
10

                                       51
<PAGE>   14

                                                            [CHIGAGO RIVET LOGO]

- --------------------------------------------------------------------------------

REPORT OF INDEPENDENT ACCOUNTANTS

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

    In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, retained earnings and cash flows present
fairly, in all material respects, the financial position of Chicago Rivet &
Machine Co. and its subsidiary at December 31, 2000 and 1999, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2000 in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

PRICE WATERHOUSE LLP

Chicago, Illinois
March 2, 2001

SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
                                                           2000           1999           1998           1997           1996
- -------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>            <C>            <C>            <C>            <C>
Net Sales and Lease Revenue                             $45,423,263    $49,080,257    $44,938,184    $44,543,404    $22,510,953
- -------------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes                                3,986,161      5,229,291      5,077,480      6,044,510      3,174,001
- -------------------------------------------------------------------------------------------------------------------------------
Net Income                                                2,656,161      3,454,291      3,360,480      3,861,510      1,948,001
- -------------------------------------------------------------------------------------------------------------------------------
Net Income Per Share                                           2.60           3.00           2.90           3.30           1.66
- -------------------------------------------------------------------------------------------------------------------------------
Dividends Per Share                                            1.07           1.07           1.12            .91            .90
- -------------------------------------------------------------------------------------------------------------------------------
Average Common Shares Outstanding                         1,022,627      1,151,333      1,159,360      1,170,988      1,171,496
- -------------------------------------------------------------------------------------------------------------------------------
Working Capital                                          12,001,291     12,447,590     12,302,179     13,766,681     12,040,579
- -------------------------------------------------------------------------------------------------------------------------------
Total Debt                                                5,232,760      3,150,000      4,950,000      6,750,000      9,000,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Assets                                             31,157,119     32,621,585     31,815,781     32,947,460     31,326,552
- -------------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity                                     21,518,773     23,887,278     22,012,659     20,511,102     17,776,760
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>

     In November 1996 the Company acquired H & L Tool Company, Inc. The results
of operations for H & L Tool are included above from the date of acquisition.

- --------------------------------------------------------------------------------
                                                                              11

                                       52
<PAGE>   15
[CHIGAGO RIVET LOGO]

- --------------------------------------------------------------------------------

QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                             1ST           2ND           3RD           4TH
                           QUARTER       QUARTER       QUARTER       QUARTER
                         -----------   -----------   -----------   -----------
<S>                      <C>           <C>           <C>           <C>
2000
Net Sales and Lease
 Revenue...............  $12,435,736   $12,366,088   $10,345,570   $10,275,869
Gross Profit...........    3,543,512     3,646,726     2,262,689     2,490,103
Net Income.............      921,435       894,713       274,583       565,430
Per Share Data:
 Net Income Per Share..          .81           .89           .28           .58
 Average Common Shares
   Outstanding.........    1,138,096     1,003,080       978,532       971,841

1999
Net Sales and Lease
 Revenue...............  $12,517,480   $12,933,690   $11,721,458   $11,907,629
Gross Profit...........    3,643,041     2,758,165     3,297,581     3,662,588
Net Income.............    1,152,460       481,112       816,774     1,003,945
Per Share Data:
 Net Income Per Share..         1.00           .42           .71           .87
 Average Common Shares
   Outstanding.........    1,153,496     1,152,832     1,152,139     1,147,005

1998
Net Sales and Lease
 Revenue...............  $11,672,949   $10,822,531   $10,331,367   $12,111,337
Gross Profit...........    3,241,963     3,043,413     3,058,459     3,337,500
Net Income.............      914,820       783,924       718,506       943,230
Per Share Data:
 Net Income Per Share..          .78           .68           .62           .82
 Average Common Shares
   Outstanding.........    1,169,100     1,159,793     1,155,535     1,153,764
</TABLE>

INFORMATION ON COMPANY'S COMMON STOCK

The Company's common stock is traded on the American Stock Exchange. The
following chart shows the dividends declared and the quarterly high and low
prices of the common stock for the last two years.

<TABLE>
<CAPTION>
                        Dividends
                         Declared                                  Market Range
                       ------------------------------------------------------------------------------------
       QUARTER         2000    1999                  2000                                1999
       -------         ----    ----    --------------------------------    --------------------------------
<S>                    <C>     <C>     <C>  <C>          <C>  <C>          <C>  <C>          <C>  <C>
First................  $.53*   $.53*   $23   1/4         $19               $27   3/4         $23
Second...............   .18     .18    $23   1/4         $21   1/8         $28   3/8         $19   1/8
Third................   .18     .18    $23               $19   1/2         $26   7/8         $20   5/8
Fourth...............   .18     .18    $19   7/8         $16   1/8         $24   1/2         $21   3/8
</TABLE>

- ---------------
* Includes an extra dividend of $.35 per share.

- --------------------------------------------------------------------------------
12

                                       53
<PAGE>   16
                                                            [CHIGAGO RIVET LOGO]

- --------------------------------------------------------------------------------

<TABLE>
BOARD OF DIRECTORS              CORPORATE OFFICERS              CHICAGO RIVET & MACHINE CO.
- ------------------              ------------------              ---------------------------
<S>                             <C>                             <C>
EDWARD L. CHOTT(a)              JOHN A. MORRISSEY               ADMINISTRATIVE & SALES OFFICES
Chairman and Chief              Chairman, Chief                 Naperville, Illinois
Executive Officer               Executive Officer               Norwell, Massachusetts
The Broaster Co.
Beloit, Wisconsin               JOHN C. OSTERMAN                MANUFACTURING FACILITIES
                                President, Chief Operating      Albia Division
WILLIAM T. DIVANE, Jr. (a)(c)  Officer and Treasurer            Albia, Iowa
President and Chairman of
Divane Bros. Electric Co.       DONALD P. LONG                  Jefferson Division
Franklin Park, Illnois          Vice President-Sales            Jefferson, Iowa

JOHN R. MADDEN(a)(c)(e)         KIMBERLY A. KIRHOFER            Tyrone Division
Chairman of the Board           Secretary                       Tyrone, Pennsylvania
The First National
of La Grange                    MICHAEL J. BOURG                H & L Tool Company, Inc.
La Grange, Illinois             Corporate Controller            Madison Heights, Michigan

JOHN A. MORRISSEY(e)                                            WEB SITE
Chairman of the Board                                           www.chicagorivet.com
of the Company
President and Director of
Algonquin State Bank
Algonquin, Illinois

WALTER W. MORRISSEY(c)(e)
Attorney at Law
Morrissey & Robinsn
Oak Brook, Illinois

JOHN C. OSTERMAN(e)
President of the Company

</TABLE>

(a) Member of Audit Committee
(c) Member of Compensation Committee
(e) Member of Executive Committee

Chicago Rivet & Machine Co.-901 Frontenac Road-P.O. Box 3061-Naperville,
Illinois 60566-Telephone: (630) 357-8500

- --------------------------------------------------------------------------------

                                       54
<PAGE>   17
















                              [CHICAGO RIVET LOGO]

 Chicago Rivet & Machine Co. - 901 Frontenac Road - P.O. Box 3061 - Naperville,
                   Illinois 60566 - Telephone: (630) 357-8500



                                       55
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>4
<FILENAME>c61217ex21.txt
<DESCRIPTION>SUBSIDIARIES OF THE REGISTRANT
<TEXT>

<PAGE>   1



                                   EXHIBIT 21

                           CHICAGO RIVET & MACHINE CO.

                         SUBSIDIARIES OF THE REGISTRANT



         The Company's only subsidiary is H & L Tool Company, Inc., which is
wholly-owned and is organized in the State of Illinois.













                                       56












































</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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