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<SEC-DOCUMENT>0000950137-02-001604.txt : 20020415
<SEC-HEADER>0000950137-02-001604.hdr.sgml : 20020415
ACCESSION NUMBER:		0000950137-02-001604
CONFORMED SUBMISSION TYPE:	10-K405
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20011231
FILED AS OF DATE:		20020326

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-K405
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-01227
		FILM NUMBER:		02586580

	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-K405
<SEQUENCE>1
<FILENAME>c68192e10-k405.txt
<DESCRIPTION>ANNUAL REPORT
<TEXT>
<PAGE>

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

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                   FORM 10-K

<Table>
<S>    <C>
(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, 2001,
                                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
</Table>

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

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

     901 Frontenac Road, Naperville, IL                            60563
  (Address of principal executive offices)                      (Zip Code)
</Table>

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

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

                              TITLE OF EACH CLASS
                                ---------------
                        Common Stock -- $1.00 Par Value
                  (including Preferred Stock Purchase Rights)
                             NAME OF EACH EXCHANGE
                              ON WHICH REGISTERED
                              --------------------
                            American Stock Exchange
                   (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  X                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.  [X]

     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.

                      $20,242,333 AS OF FEBRUARY 15, 2002.

 COMMON SHARES OUTSTANDING AS OF FEBRUARY 15, 2002 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, 2001 (THE "2001 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 2002 ANNUAL MEETING OF SHAREHOLDERS ARE INCORPORATED BY REFERENCE IN
PART III OF THIS REPORT.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
                                                                PAGE 1 OF ______
                                                 EXHIBIT INDEX IS ON PAGE ______
<PAGE>
                           CHICAGO RIVET & MACHINE CO.
                         PERIOD ENDING DECEMBER 31, 2001


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                4

                                     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                                         11

                                    Part III

10.  Directors and Executive Officers of the Registrant                11
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>
                                     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 2001 Annual Report to
Shareholders, incorporated herein by reference. The 2001 Annual Report is filed
as an exhibit to this report.

     The principal market for the Company's products is the North American
automotive industry. 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. Revenues are primarily
derived from sales to customers involved, directly or indirectly, in the
manufacture of automobiles and automotive components. 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 2001, sales to three customers
exceeded 10% of the Company's consolidated revenues. Sales to TI Group
Automotive Systems Corporation accounted for approximately 18% of the Company's
consolidated revenues in 2001, 19% in 2000 and 17% in 1999. Sales to Fisher &
Company accounted for approximately 14%, 11% and 11% of the Company's
consolidated revenues in 2001, 2000, and 1999, respectively. Sales to Purchased
Parts Group accounted for approximately 10% of the Company's consolidated
revenues in 2001.

     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.

     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, 2001, the Company employed 336 people.


                                       3
<PAGE>

     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 facilities 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, Michigan                    Concrete, brick and partial metal
                                             construction with 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. 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.


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 2001.


                                       4
<PAGE>
                      Executive Officers of the Registrant

     The names, ages and positions of all executive officers of the Company, as
of March 24, 2002, 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.

                                                               Number of years
Name and Age of Officer             Position                     an Officer
- -----------------------             --------                     ----------

John A. Morrissey          66       Chairman, Chief                  22
                                    Executive Officer

John C. Osterman           50       President, Chief                 18
                                    Operating Officer
                                    and Treasurer

Nirendu Dhar               60       General Manager                   1
                                    H & L Tool Company, Inc.

Donald P. Long             50       Vice-President Sales              7

Kimberly A. Kirhofer       43       Secretary                        11

Michael J. Bourg           39       Controller                        3


- -    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. Dhar has been employed as General Manager of the Company's subsidiary,
     H & L Tool Company, Inc., since 1996. Mr. Dhar was employed as Plant
     Manager and Chief Engineer of H & L Tool Company, Inc. prior to the
     Company's acquisition of H & L Tool Company for more than five years.

- -    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.

- -    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.


                                       5
<PAGE>
                                     PART II

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

     The Company's common stock is traded on the American Stock Exchange
(trading privileges only, not registered). As of December 31, 2001 there were
344 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 2001 Annual Report is incorporated herein by reference. The 2001
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 2001 Annual Report is incorporated herein by reference. The 2001 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 economic malaise that adversely affected our business during the latter
portion of 2000 continued to be the dominant force impacting our business
throughout 2001. Eventually, the economy was officially declared to be in a
recession, and as the effects of this recession became more widespread during
2001, demand for our products continued to weaken. Within the fastener segment,
customers responded to the worsening economic conditions by reducing inventories
and reducing production, which translated into further reductions in purchasing
activity. This same set of circumstances impacted demand for perishable tools
and repair parts within our assembly equipment segment, where revenues from the
sale of new automatic assembly equipment weakened considerably as activity
within that sector of the economy fell to its lowest level in nearly ten years.

     In response to these conditions, we reduced production schedules, trimmed
inventories and moved to control costs to the greatest extent possible, all of
which contributed to results that were respectable in view of overall economic
conditions. In


                                       6
<PAGE>

addition, we completed initiatives that should allow us to expand our market
share in certain niche areas.

2001 COMPARED TO 2000

     The effect of the current recession is apparent in the comparison of
revenues and margins between 2001 and 2000. Net sales and lease revenues fell to
$40,443,010 in 2001, a decline of 11% compared to 2000. This lower level of
operations was the primary factor contributing to the decrease in gross margins,
which fell to $9,187,046 for 2001, compared to $11,943,030 reported for 2000.

     Revenues within the fastener segment declined 8.5% and amounted to
$32,704,142 during 2001. This decline stems from the combination of lower
volumes for existing business, partially offset by successful efforts to win new
business from both new and existing customers. Gross margins within this segment
declined from 22.3% in 2000 to 19.9% for 2001. During the year, the Company was
able to take advantage of softness within the raw materials market, successfully
negotiating price reductions for certain raw materials and supplies.
Unfortunately, the positive contribution from those activities was offset by
increases in the cost of health insurance and a somewhat higher cost for
perishable tooling. Other than those two areas, we were generally successful in
reducing our variable costs in a manner consistent with the reduced level of
operations. Fixed costs, as would be expected, remained relatively unchanged
despite the reduced levels of operations.

     The domestic metalworking machinery market suffered a significant decline
in 2001, with overall activity falling to its lowest level in nearly a decade.
These conditions were plainly evident in the results of operations within our
assembly equipment segment. Revenues fell to $7,738,868 during 2001, compared to
$9,687,564 recorded during 2000. Despite our efforts to reduce costs and manage
the negative effects of lower volumes, we were unable to cut costs as quickly
and as deeply as demand declined. Because we believe that this downturn is of a
cyclical nature, we made a decision to attempt to maintain as much of our
skilled workforce as possible, rather than attempt to match volume declines with
a wholesale reduction in the workforce. As a result, labor and benefit costs
remained at levels somewhat higher than might otherwise be expected given recent
business conditions. On a short-term basis, we view this as the most practical
response to what we believe will be a temporary situation. We were able to
achieve only limited reductions in fixed costs compared with the prior year. The
net result was an overall decline in gross margins, which fell to approximately
35% in 2001, compared to 42% recorded in 2000.

     Selling and administrative expenses declined significantly compared with
the prior year. Successful completion of the first phase of implementation of
new data processing systems resulted in a significant reduction in consulting
expenses compared with the prior year. In addition, salary and benefit expenses
declined significantly due to reductions in headcount, achieved mainly through
attrition. Sales commissions and profit sharing expense declined to levels
consistent with the lower sales volume and lower income, respectively.
Unfortunately, bad debt expense increased by a net amount of $114,000, mainly
due to the third quarter bankruptcy filing of a certain customer.

     Lower prevailing interest rates, combined with lower debt, resulted in a
net interest expense reduction of $61,000.

     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 2001, net income included net unfavorable adjustments to inventory


                                       7
<PAGE>

and certain accruals aggregating $.02 per share. Similar adjustments in the
fourth quarter of 2000 and 1999 amounted to net favorable adjustments of $.10
per share and $.09 per share, respectively.

2000 COMPARED TO 1999

     In 2000, 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 due to
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.

DIVIDENDS

     The Company paid four regular quarterly dividends of $.18 per share during
2001. In addition, an extra dividend of $.25 per share was paid during the
second quarter of 2001, bringing the total dividend distribution to $.97 per
share. On February 18, 2002 your Board of Directors declared a regular quarterly
dividend of $.18 per share, payable March 20, 2002 to shareholders of record
March 5, 2002. These dividends continued the uninterrupted record of consecutive
quarterly dividends paid by the Company to its


                                       8
<PAGE>

shareholders that extends over 68 years. At that same meeting, the Board
declared an extra dividend of $.15 per share, payable April 19, 2002 to
shareholders of record, April 5, 2002.

MACHINERY AND EQUIPMENT

     The Company invested approximately $1.4 million in machinery, equipment and
building improvements during 2001. The total amount of investment was lower than
in the recent past, and, as has been the case for the past several years, the
majority of these expenditures were related to the fastener segment of our
operations. Specifically, a total of $1.1 million was expended for the purchase
of equipment used directly in the manufacture of fasteners and $88,000 was
invested in new equipment related to the quality control process related to
fastener manufacturing. $129,000 was expended in connection with data processing
and data communications equipment, $61,000 was spent for building improvements,
primarily related to the fastener segment of our business, and the balance was
expended for a variety of smaller machinery and equipment, including the
manufacture of automatic rivet setting equipment that is leased to our
customers.

     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 totaled $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.

     Depreciation expense amounted to $1,921,703 in 2001, $1,889,849 in 2000,
and $1,711,721 in 1999.

LIQUIDITY AND CAPITAL RESOURCES

     As of December 31, 2001, working capital was $11.6 million. While this is a
modest decline compared with the prior year, our current ratio (current assets
divided by current liabilities) improved to 3.7 from 3.5. The accounts
receivable balance at year-end declined substantially compared with the year
earlier, largely as a result of lower fourth quarter sales. Inventory levels,
which increased slightly during 2000, were significantly reduced during 2001,
and our objective is to further improve our ability to operate with lower levels
of inventory.

     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 December 31, 2001,
the indebtedness under the term loan was


                                       9
<PAGE>

approximately $3.4 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 and was approximately 2.9% at December 31, 2001. Management believes
that current cash, cash equivalents, operating cash flow and the available line
of credit will be sufficient to provide adequate working capital for the
foreseeable future.

     The Company has not entered into, and has no current plans to enter into,
any off-balance sheet financing arrangements. The Company has no long-term
supply contracts that will have a material impact on liquidity and financial
resources.

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. Although no purchases were made during 2001,
it is management's intention to continue this program, provided funding for
repurchases is available and market conditions are favorable.

     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.

OUTLOOK FOR 2002

     The Company's fortunes remain closely tied to the level of industrial
activity in general, with an emphasis on North American automobile production.
While we anticipate that business conditions will improve, the timing and extent
of improvement continues to be uncertain. We have seen some firming in demand on
the fastener side of our business, but it has been customer specific, rather
than a broad-based improvement. Demand for automated assembly equipment and
related perishable tooling remain at very low levels. On an overall basis,
bookings for the first two months of this year lag the levels recorded during
the same period last year, apparently supporting those forecasts that suggest
the timing of the recovery will be later in the year. The prevailing conditions
foster intensified price competition and continued downward pressure on margins.

     We have responded by taking appropriate actions to reduce costs wherever
possible and to contain costs where reductions are not feasible. In addition, in
situations where it is both necessary and economically practical, we have
reduced our prices in order to meet competitive challenges and maintain our
market share. We have actively solicited new business within our existing
customer base as well as from new customers. These efforts have met with varying
degrees of success, and we plan to follow a similar course of action in the
coming months.


                                       10
<PAGE>

     Investments in new equipment to expand our capabilities in the manufacture
of specialty fasteners are finally beginning to bear fruit and should contribute
to both revenues and profits in 2002. We anticipated that this would have
occurred during 2001, but market conditions delayed realization by several
months. We are optimistic that sustainable shipments of these products will
begin late in the first quarter of this year.

     We are glad to leave 2001 behind us and look forward to the opportunities
that lie ahead. Certainly, the future will hold challenges as well as
opportunities, but we believe we are well prepared to meet those challenges and
to take advantage of the opportunities that will arise. We gratefully
acknowledge the support of our shareholders, the loyalty of our customers and
the contributions of our workforce - for each of these elements has been
critical to our past success and each is essential for our future success.

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, 2001, $3.43 million of floating-rate debt was
exposed to changes in interest rates compared to $5.23 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 16 through 18 of this
report.


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
2002 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 2002 Proxy Statement, is
incorporated herein by reference. The 2002 Proxy Statement is to be filed with
the Securities and Exchange Commission in connection with the Company's 2002
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."


                                       11
<PAGE>
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 2002 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
2002 Proxy Statement is incorporated herein by reference. The 2002 Proxy
Statement is to be filed with the Securities and Exchange Commission in
connection with the Company's 2002 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 2002 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
2002 Proxy Statement is incorporated herein by reference. The 2002 Proxy
Statement is to be filed with the Securities and Exchange Commission in
connection with the Company's 2002 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 last sentence of footnote (2) on page 6 of the Company's 2002 Proxy
Statement is incorporated herein by reference. The 2002 Proxy Statement is to be
filed with the Securities and Exchange Commission in connection with the
Company's 2002 Annual Meeting of Shareholders.



                                       12
<PAGE>
                                     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, 2001.


                                       13
<PAGE>
                                   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
- --------------------                        Directors, Chief Executive
John A. Morrissey                           Officer and Member of the
                                            Executive Committee
                                            March 26, 2002



/s/ John C. Osterman                        President, Chief Operating
- -------------------                         Officer, Treasurer (Chief
John C. Osterman                            Financial Officer), Member
                                            of the Executive Committee
                                            and Director
                                            March 26, 2002




/s/ John R. Madden                          Director, Member of the
- ------------------                          Executive Committee and
John R. Madden                              Member of the Audit Committee
                                            March 26, 2002



/s/ Walter W. Morrissey                     Director, Member of Executive
- ----------------------                      Committee
Walter W. Morrissey                         March 26, 2002




/s/ Michael J. Bourg                        Controller (Principal Accounting
- -------------------                         Officer)
Michael J. Bourg                            March 26, 2002



                                       14
<PAGE>
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 1, 2002, appearing
on pages 5 to 11 of the accompanying 2001 Annual Report, and the section
entitled "Quarterly Financial Data (Unaudited)" appearing on page 12 of the
accompanying 2001 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 2001 Annual Report is not to be deemed filed
as part of this Form 10-K Annual Report.


Consolidated Financial Statements from 2001 Annual Report (Exhibit 13 hereto):


Consolidated Balance Sheets (page 5 of 2001 Annual Report)

Consolidated Statements of Income (page 6 of 2001 Annual Report)

Consolidated Statements of Retained Earnings (page 6 of 2001 Annual Report)

Consolidated Statements of Cash Flows (page 7 of 2001 Annual Report)

Notes to Consolidated Financial Statements (pages 8, 9, and 10 of 2001 Annual
Report)

Report of Independent Accountants (page 11 of 2001 Annual Report)

Quarterly Financial Data (Unaudited) (page 12 of 2001 Annual Report)


                                       15
<PAGE>
                          FINANCIAL STATEMENT SCHEDULE

                               2001, 2000 AND 1999

     The following financial statement schedule should be read in conjunction
with the consolidated financial statements and the notes thereto in the 2001
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  Accountants on
      Financial Statement Schedule                      18



                                       16
<PAGE>
                           CHICAGO RIVET & MACHINE CO.
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999


<TABLE>
<CAPTION>

                                                          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>
2001
Allowance for doubtful
accounts,
Returns and
allowances                        $90,000                  $172,728          $22,728(1)              $   --               $240,000


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                        $70,022                  $ 47,679          $37,679(1)              $   --               $ 80,000
</TABLE>


(1) Accounts receivable written off, net of recoveries.


                                       17
<PAGE>
                      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 1, 2002 appearing in the 2001 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 1, 2002



                                       18
<PAGE>
                           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. Incorporated by reference to the Company's report
          on Form 10-K, dated March 29, 2001.


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, 2001.                                       20 through 36

21        Subsidiaries of the Registrant.                               37


          * 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-13
<SEQUENCE>3
<FILENAME>c68192ex13.txt
<DESCRIPTION>ANNUAL REPORT TO SHAREHOLDERS
<TEXT>
<PAGE>

                              [CHICAGO RIVET LOGO]
                          Chicago Rivet & Machine Co.
                               2001 Annual Report
<PAGE>

[CHICAGO RIVET LOGO]
- --------------------------------------------------------------------------------

HIGHLIGHTS

<Table>
<Caption>
- ------------------------------------------------------------------------------------------
                                                    2001           2000           1999
- ------------------------------------------------------------------------------------------
<S>                                              <C>            <C>            <C>
NET SALES AND LEASE REVENUE....................  $40,443,010    $45,423,263    $49,080,257
NET INCOME.....................................    1,792,270      2,656,161      3,454,291
NET INCOME PER SHARE...........................         1.85           2.60           3.00
DIVIDENDS PER SHARE............................          .97           1.07           1.07
NET CASH PROVIDED BY OPERATING ACTIVITIES......    5,287,476      4,773,144      5,283,240
EXPENDITURES FOR PROPERTY, PLANT AND
  EQUIPMENT....................................    1,431,698      2,125,189      1,709,527
WORKING CAPITAL................................   11,616,424     12,001,291     12,447,590
TOTAL SHAREHOLDERS' EQUITY.....................   22,372,924     21,518,773     23,887,278
COMMON SHARES OUTSTANDING AT YEAR-END..........      967,132        967,132      1,138,096
SHAREHOLDERS' EQUITY PER COMMON SHARE..........        23.13          22.25          20.99
</Table>

TRANSFER AGENT AND REGISTRAR

EquiServe Trust Company, N.A.

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 14, 2002 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
- --------------------------------------------------------------------------------
<PAGE>

MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                                            [CHIGAGO RIVET LOGO]
- --------------------------------------------------------------------------------

TO OUR SHAREHOLDERS:

RESULTS OF OPERATIONS

    The economic malaise that adversely affected our business during the latter
portion of 2000 continued to be the dominant force impacting our business
throughout 2001. Eventually, the economy was officially declared to be in a
recession, and as the effects of this recession became more widespread during
2001, demand for our products continued to weaken. Within the fastener segment,
customers responded to the worsening economic conditions by reducing inventories
and reducing production, which translated into further reductions in purchasing
activity. This same set of circumstances impacted demand for perishable tools
and repair parts within our assembly equipment segment, where revenues from the
sale of new automatic assembly equipment weakened considerably as activity
within that sector of the economy fell to its lowest level in nearly ten years.

    In response to these conditions, we reduced production schedules, trimmed
inventories and moved to control costs to the greatest extent possible, all of
which contributed to results that were respectable in view of overall economic
conditions. In addition, we completed initiatives that should allow us to expand
our market share in certain niche areas.

2001 COMPARED TO 2000

    The effect of the current recession is apparent in the comparison of
revenues and margins between 2001 and 2000. Net sales and lease revenues fell to
$40,443,010 in 2001, a decline of 11% compared to 2000. This lower level of
operations was the primary factor contributing to the decrease in gross margins,
which fell to $9,187,046 for 2001, compared to $11,943,030 reported for 2000.

    Revenues within the fastener segment declined 8.5% and amounted to
$32,704,142 during 2001. This decline stems from the combination of lower
volumes for existing business, partially offset by successful efforts to win new
business from both new and existing customers. Gross margins within this segment
declined from 22.3% in 2000 to 19.9% for 2001. During the year, the Company was
able to take advantage of softness within the raw materials market, successfully
negotiating price reductions for certain raw materials and supplies.
Unfortunately, the positive contribution from those activities was offset by
increases in the cost of health insurance and a somewhat higher cost for
perishable tooling. Other than those two areas, we were generally successful in
reducing our variable costs in a manner consistent with the reduced level of
operations. Fixed costs, as would be expected, remained relatively unchanged
despite the reduced levels of operations.

    The domestic metalworking machinery market suffered a significant decline in
2001, with overall activity falling to its lowest level in nearly a decade.
These conditions were plainly evident in the results of operations within our
assembly equipment segment. Revenues fell to $7,738,868 during 2001, compared to
$9,687,564 recorded during 2000. Despite our efforts to reduce costs and manage
the negative effects of lower volumes, we were unable to cut costs as quickly
and as deeply as demand declined. Because we believe that this downturn is of a
cyclical nature, we made a decision to attempt to maintain as much of our
skilled workforce as possible, rather than attempt to match volume declines with
a wholesale reduction in the workforce. As a result, labor and benefit costs
remained at levels somewhat higher than might otherwise be expected given recent
business conditions. On a short-term basis, we view this as the most practical
response to what we believe will be a temporary situation. We were able to
achieve only limited reductions in fixed costs compared with the prior year. The
net result was an overall decline in gross margins, which fell to approximately
35% in 2001, compared to 42% recorded in 2000.

    Selling and administrative expenses declined significantly compared with the
prior year. Successful completion of the first phase of implementation of new
data processing systems resulted in a significant reduction in consulting
expenses compared with the prior year. In addition, salary and benefit expenses
declined significantly due to reductions in headcount, achieved mainly through
attrition. Sales commissions and profit sharing expense declined to levels
consistent with the lower sales volume and lower income, respectively.
Unfortunately, bad debt expense increased by a net amount of $114,000, mainly
due to the third quarter bankruptcy filing of a certain customer.

    Lower prevailing interest rates, combined with lower debt, resulted in a net
interest expense reduction of $61,000.

2000 COMPARED TO 1999

    In 2000, 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.

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

                                                                               1
<PAGE>
MANAGEMENT'S DISCUSSION
(Continued)
- --------------------------------------------------------------------------------

    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 due to
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.

DIVIDENDS

    The Company paid four regular quarterly dividends of $.18 per share during
2001. In addition, an extra dividend of $.25 per share was paid during the
second quarter of 2001, bringing the total dividend distribution to $.97 per
share. On February 18, 2002 your Board of Directors declared a regular quarterly
dividend of $.18 per share, payable March 20, 2002 to shareholders of record
March 5, 2002. This continues the uninterrupted record of consecutive quarterly
dividends paid by the Company to its shareholders that extends over 68 years. At
that same meeting, the Board declared an extra dividend of $.15 per share,
payable April 19, 2002 to shareholders of record, April 5, 2002.

MACHINERY AND EQUIPMENT

    The Company invested approximately $1.4 million in machinery, equipment and
building improvements during 2001. The total amount of investment was lower than
in the recent past, and, as has been the case for the past several years, the
majority of these expenditures were related to the fastener segment of our
operations. Specifically, a total of $1.1 million was expended for the purchase
of equipment used directly in the manufacture of fasteners and $88,000 was
invested in new equipment related to the quality control process in fastener
manufacturing. $129,000 was expended in connection with data processing and data
communications equipment, $61,000 was spent for building improvements, primarily
related to the fastener segment of our business, and the balance was expended
for a variety of smaller machinery and equipment, including the manufacture of
automatic rivet setting equipment that is leased to our customers.

    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 totaled $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.

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

 2
<PAGE>
MANAGEMENT'S DISCUSSION
(Continued)                                                 [CHIGAGO RIVET LOGO]
- --------------------------------------------------------------------------------

    Depreciation expense amounted to $1,921,703 in 2001, $1,889,849 in 2000, and
$1,711,721 in 1999.

LIQUIDITY AND CAPITAL RESOURCES

    As of December 31, 2001, working capital was $11.6 million. While this is a
modest decline compared with the prior year, our current ratio (current assets
divided by current liabilities) improved to 3.7 from 3.5. The accounts
receivable balance at year-end declined substantially compared with the year
earlier, largely as a result of lower fourth quarter sales. Inventory levels,
which increased slightly during 2000, were significantly reduced during 2001,
and our objective is to further improve our ability to operate with lower levels
of inventory.

    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 December 31, 2001, the
indebtedness under the term loan was approximately $3.4 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 and was approximately 2.9% at
December 31, 2001. Management believes that current cash, cash equivalents,
operating cash flow and the available line of credit will be sufficient to
provide adequate working capital for the foreseeable future.

    The Company has not entered into, and has no current plans to enter into,
any off-balance sheet financing arrangements. The Company has no long-term
supply contracts that will have a material impact on liquidity and financial
resources.

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, 2001, $3.43 million of floating-rate debt was
exposed to changes in interest rates compared to $5.23 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.

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. Although no purchases were made during 2001,
it is management's intention to continue this program, provided funding for
repurchases is available and market conditions are favorable.

    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.

OUTLOOK FOR 2002

    The Company's fortunes remain closely tied to the level of industrial
activity in general, with an emphasis on North American automobile production.
While we anticipate that business conditions will improve, the timing and extent
of improvement continues to be uncertain. We have seen some firming in demand on
the fastener side of our business, but it has been customer specific, rather
than a broad-based improvement. Demand for automated assembly equipment and
related perishable tooling remains at very low levels. On an overall basis,
bookings for the first two months of this year lag the levels recorded during
the same period last year, apparently supporting those forecasts that suggest
the timing of the recovery will be later in the year. The prevailing conditions
foster intensified price competition and continued downward pressure on margins.

    We have responded by taking appropriate actions to reduce costs wherever
possible and to contain costs where reductions are not feasible. In addition, in
situations where it is both necessary and economically practical, we have
reduced our prices in order to meet competitive challenges and maintain our
market share. We have actively solicited new business within our existing
customer base as well as from

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

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

new customers. These efforts have met with varying degrees of success, and we
plan to follow a similar course of action in the coming months.

    Investments in new equipment to expand our capabilities in the manufacture
of specialty fasteners are finally beginning to bear fruit and should contribute
to both revenues and profits in 2002. We anticipated that this would have
occurred during 2001, but market conditions delayed realization by several
months. We are optimistic that sustainable shipments of these products will
begin late in the first quarter of this year.

    We are glad to leave 2001 behind us and look forward to the opportunities
that lie ahead. Certainly, the future will hold challenges as well as
opportunities, but we believe we are well prepared to meet those challenges and
to take advantage of the opportunities that will arise. We gratefully
acknowledge the support of our shareholders, the loyalty of our customers and
the contributions of our workforce -- for each of these elements has been
critical to our past success and each is essential for our future success.

                                     Respectfully,

<Table>
  <S>                                         <C>

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

March 1, 2002

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
<PAGE>

                                                            [CHICAGO RIVET LOGO]
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
- -----------------------------------------------------------------------------------------------
                        DECEMBER 31                                2001                2000
- -----------------------------------------------------------------------------------------------
<S>                                                             <C>                 <C>
                           ASSETS
Current Assets
  Cash and Cash Equivalents.................................    $ 4,692,999         $ 2,265,442
  Certificates of Deposit...................................        177,882           1,429,886
  Accounts Receivable--Less allowances of $240,000 and
     $90,000, respectively..................................      3,995,148           5,037,231
  Inventories...............................................      6,050,668           7,204,184
  Deferred Income Taxes.....................................        607,191             705,191
  Other Current Assets......................................        335,590             191,668
                                                                -----------         -----------
  Total Current Assets......................................     15,859,478          16,833,602
Net Property, Plant and Equipment...........................     13,818,535          14,323,517
                                                                -----------         -----------
Total Assets................................................    $29,678,013         $31,157,119
                                                                ===========         ===========

            LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
  Current Portion of Note Payable...........................    $ 1,800,000         $ 1,800,000
  Accounts Payable..........................................        929,634           1,065,561
  Accrued Wages and Salaries................................        751,582             753,577
  Contributions Due Profit Sharing Plan.....................        294,986             437,076
  Other Accrued Expenses....................................        384,110             774,974
  Federal and State Income Taxes Payable....................         82,742               1,123
                                                                -----------         -----------
  Total Current Liabilities.................................      4,243,054           4,832,311
Note Payable................................................      1,632,760           3,432,760
Deferred Income Taxes.......................................      1,429,275           1,373,275
                                                                -----------         -----------
  Total Liabilities.........................................      7,305,089           9,638,346
                                                                -----------         -----------
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.........................................     24,682,816          23,828,665
  Treasury Stock, 170,964 Shares at cost....................     (3,895,122)         (3,895,122)
                                                                -----------         -----------
  Total Shareholders' Equity................................     22,372,924          21,518,773
                                                                -----------         -----------
Total Liabilities and Shareholders' Equity..................    $29,678,013         $31,157,119
                                                                ===========         ===========
</Table>

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

- --------------------------------------------------------------------------------
                                                                               5
<PAGE>
[CHICAGO RIVET LOGO]
- --------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF INCOME

<Table>
<Caption>
- -----------------------------------------------------------------------------------------------
         FOR THE YEARS ENDED DECEMBER 31                 2001           2000           1999
- -----------------------------------------------------------------------------------------------
<S>                                                   <C>            <C>            <C>
Net Sales and Lease Revenue.......................    $40,443,010    $45,423,263    $49,080,257
Cost of Goods Sold and Costs Related to Lease
  Revenue.........................................     31,255,964     33,480,233     35,718,882
                                                      -----------    -----------    -----------
Gross Profit......................................      9,187,046     11,943,030     13,361,375
Selling and Administrative Expenses...............      6,439,603      7,801,089      8,094,719
Other Expense, net................................         56,173        155,780         37,365
                                                      -----------    -----------    -----------
Income Before Income Taxes........................      2,691,270      3,986,161      5,229,291
Provision for Income Taxes........................        899,000      1,330,000      1,775,000
                                                      -----------    -----------    -----------
Net Income........................................    $ 1,792,270    $ 2,656,161    $ 3,454,291
                                                      ===========    ===========    ===========
Net Income Per Share..............................    $      1.85    $      2.60    $      3.00
                                                      ===========    ===========    ===========
</Table>

CONSOLIDATED STATEMENTS OF
RETAINED EARNINGS

<Table>
<S>                                                   <C>            <C>            <C>
Retained Earnings at Beginning of Year............    $23,828,665    $22,302,048    $20,405,979
Net Income........................................      1,792,270      2,656,161      3,454,291
Treasury Stock Retired............................             --             --       (325,793)
Cash Dividends Paid, $.97 Per Share in 2001, $1.07
  Per Share in 2000 and $1.07 Per Share in 1999...       (938,119)    (1,129,544)    (1,232,429)
                                                      -----------    -----------    -----------
Retained Earnings at End of Year..................    $24,682,816    $23,828,665    $22,302,048
                                                      ===========    ===========    ===========
</Table>

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

- --------------------------------------------------------------------------------
 6
<PAGE>
                                                            [CHIGAGO RIVET LOGO]
- --------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
         ---------------------------------------------------------------------------------------------------
                      FOR THE YEARS ENDED DECEMBER 31                   2001          2000          1999
         ---------------------------------------------------------------------------------------------------
         <S>                                                         <C>           <C>           <C>
         Cash Flows from Operating Activities:
         Net Income................................................  $ 1,792,270   $ 2,656,161   $ 3,454,291
         Adjustments to Reconcile Net Income to Net Cash Provided
           by Operating Activities:
           Depreciation and Amortization...........................    1,921,703     1,889,849     1,711,721
           Net Gain on the Sale of Properties......................      (42,917)       (2,439)       (6,690)
           Deferred Income Taxes...................................      154,000        45,000        30,000
           Changes in Operating Assets and Liabilities:
             Accounts Receivable...................................    1,042,083     1,644,428      (198,445)
             Inventories...........................................    1,153,516      (280,463)     (393,974)
             Other Current Assets..................................     (143,922)       54,329       (10,848)
             Accounts Payable......................................     (135,927)     (372,586)      165,685
             Accrued Wages and Salaries............................       (1,995)      (39,029)       47,448
             Accrued Profit Sharing Plan Contributions.............     (142,090)     (231,977)      122,975
             Other Accrued Expenses................................     (390,864)      174,401        11,238
             Income Taxes Payable..................................       81,619      (764,530)      349,839
                                                                     -----------   -----------   -----------
                  Net Cash Provided by Operating Activities........    5,287,476     4,773,144     5,283,240
                                                                     -----------   -----------   -----------
         Cash Flows from Investing Activities:
           Capital Expenditures....................................   (1,431,698)   (2,125,189)   (1,709,527)
           Proceeds from the Sale of Properties....................       57,894        22,225        41,288
           Proceeds from Held-to-Maturity Securities...............    3,815,989     2,506,327     6,151,774
           Purchases of Held-to-Maturity Securities................   (2,563,985)   (3,383,619)   (6,154,114)
                                                                     -----------   -----------   -----------
                  Net Cash Used in Investing Activities............     (121,800)   (2,980,256)   (1,670,579)
                                                                     -----------   -----------   -----------
         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)
           Cash Dividends Paid.....................................     (938,119)   (1,129,544)   (1,232,429)
                                                                     -----------   -----------   -----------
                  Net Cash Used in Financing Activities............   (2,738,119)   (2,941,906)   (3,379,672)
                                                                     -----------   -----------   -----------
         Net Increase (Decrease) in Cash and Cash Equivalents......    2,427,557    (1,149,018)      232,989
         Cash and Cash Equivalents:
           Beginning of Year.......................................    2,265,442     3,414,460     3,181,471
                                                                     -----------   -----------   -----------
           End of Year.............................................  $ 4,692,999   $ 2,265,442   $ 3,414,460
                                                                     ===========   ===========   ===========
           Cash Paid During the Year for:
             Income Taxes..........................................  $   663,381   $ 2,049,530   $ 1,395,161
             Interest..............................................  $   354,649   $   288,769   $   264,684
</Table>

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

- --------------------------------------------------------------------------------
                                                                               7
<PAGE>

[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 industry. 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--The Company reports segment information in accordance with
Statement of Financial Accounting Standards No. 131 ("FAS 131"), "Disclosures
about Segments of an Enterprise and Related Information." FAS 131 requires that
segments be based on the internal structure and reporting of the Company's
operations.

NET INCOME PER SHARE--Net income per share of common stock is based on the
weighted average number of shares outstanding of 967,132 in 2001, 1,022,627 in
2000 and 1,151,333 in 1999.

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.

- --------------------------------------------------------------------------------
 8
<PAGE>

                                                            [CHIGAGO RIVET LOGO]
- --------------------------------------------------------------------------------

2--BALANCE SHEET DETAILS

<Table>
<Caption>
                                      2001            2000
                                  ------------    ------------
<S>                               <C>             <C>
Inventories:
  Raw materials.................  $ 1,649,051     $ 2,010,984
  Work in process...............    1,766,068       2,156,092
  Finished goods................    2,635,549       3,037,108
                                  -----------     -----------
                                  $ 6,050,668     $ 7,204,184
                                  ===========     ===========
Net Property, Plant and
  Equipment:
  Land and improvements.........  $ 1,010,595     $ 1,010,595
  Buildings and improvements....    5,738,460       5,677,680
  Production equipment, leased
    machines and other..........   27,958,777      26,686,705
                                  -----------     -----------
                                   34,707,832      33,374,980
Less accumulated depreciation...   20,889,297      19,051,463
                                  -----------     -----------
                                  $13,818,535     $14,323,517
                                  ===========     ===========
Other Accrued Expenses:
  Property taxes................  $   120,189     $   114,490
  Interest......................        7,688         105,497
  Unearned revenue and customer
    deposits....................       99,733         355,874
  All other items...............      156,500         199,113
                                  -----------     -----------
                                  $   384,110     $   774,974
                                  ===========     ===========
</Table>

3--LEASED MACHINES--Lease revenue amounted to $225,948 in 2001, $246,940 in 2000
and $283,269 in 1999. 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>
                                          2001         2000
                                        ---------    ---------
<S>                                     <C>          <C>
Cost..................................  $506,208     $531,509
Accumulated depreciation..............   465,884      484,956
                                        --------     --------
Carrying value........................  $ 40,324     $ 46,553
                                        ========     ========
</Table>

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

<Table>
<Caption>
                              2001         2000          1999
                            ---------   -----------   -----------
<S>                         <C>         <C>           <C>
Current:
  Federal.................  $ 739,000   $ 1,271,000   $ 1,639,000
  State...................      6,000        14,000       106,000
Deferred..................    154,000        45,000        30,000
                            ---------   -----------   -----------
                            $ 899,000   $ 1,330,000   $ 1,775,000
                            =========   ===========   ===========
</Table>

The deferred tax liabilities and assets consist of the following:

<Table>
<Caption>
                                      2001            2000
                                  ------------    ------------
<S>                               <C>             <C>
Depreciation....................  $(1,444,861)    $(1,392,656)
                                  -----------     -----------
Inventory.......................      329,485         475,255
Accrued vacation................      175,866         176,033
Allowance for doubtful
  accounts......................       83,800          31,300
Other, net......................       33,626          41,984
                                  -----------     -----------
                                      622,777         724,572
                                  -----------     -----------
                                  $  (822,084)    $  (668,084)
                                  ===========     ===========
</Table>

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

<Table>
<Caption>
                                    2001               2000                1999
                               ---------------   -----------------   -----------------
                                AMOUNT     %       AMOUNT      %       AMOUNT      %
                               ---------------   -----------------   -----------------
<S>                            <C>        <C>    <C>          <C>    <C>          <C>
Expected tax at U.S.
 Statutory rate..............  $915,000   34.0   $1,355,000   34.0   $1,778,000   34.0
State taxes, net of federal
 benefit.....................     4,000     .1        9,000     .2       73,000    1.4
Other, net...................     5,000     .2        5,000     .1        5,000     --
Adjustment to prior year
 accrual.....................   (25,000)   (.9)     (39,000)   (.9)     (81,000)  (1.5)
                               --------   ----   ----------   ----   ----------   ----
Income tax expense...........  $899,000   33.4   $1,330,000   33.4   $1,775,000   33.9
                               ========   ====   ==========   ====   ==========   ====
</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 a "Dutch auction." As of December
31, 2001, total indebtedness under the term loan was $3,432,760. 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 2.9% at
December 31, 2001. This note is subject to the maintenance of certain financial
covenants, including net worth, funded debt ratio and debt coverage ratio. The
line of credit was extended through May 31, 2002 and remained unused at December
31, 2001. 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, the Company purchased 15,400 common shares for $347,243. The stock
purchased in 1999 was retired and the excess of cost over par value was charged
proportionately to additional paid-in capital and retained earnings. In 2001, no
shares were purchased.

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--PROFIT SHARING PLAN--The Company has a noncontributory profit sharing plan
covering substantially all employees. Total expenses relating to the profit
sharing plan amounted to approximately $295,000 in 2001, $437,000 in 2000 and
$669,000 in 1999.

- --------------------------------------------------------------------------------
                                                                               9
<PAGE>

[CHIGAGO RIVET LOGO]
- --------------------------------------------------------------------------------

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

<Table>
<Caption>
                               2001         2000         1999
                            ----------   ----------   ----------
<S>                         <C>          <C>          <C>
Interest income...........  $  145,233   $  202,915   $  196,769
Interest expense..........    (259,840)    (378,640)    (255,908)
Gain on sale of property
  and equipment...........      42,917        2,439        6,690
Other.....................      15,517       17,506       15,084
                            ----------   ----------   ----------
                            $  (56,173)  $ (155,780)  $ ( 37,365)
                            ==========   ==========   ==========
</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, 2001:
Net sales and lease
 revenue...............  $32,704,142    $ 7,738,868    $        --   $40,443,010
Depreciation...........    1,446,254        242,517        232,932     1,921,703
Segment profit.........    3,892,772      1,860,559             --     5,753,331
Selling and
 administrative
 expenses..............                                  2,947,454     2,947,454
Interest expense.......                                    259,840       259,840
Interest income........                                   (145,233)     (145,233)
                                                                     -----------
Income before income
 taxes.................                                                2,691,270
                                                                     -----------
Capital expenditures...    1,283,566         17,209        130,923     1,431,698
Segment assets:
 Inventory.............    3,636,677      2,413,991             --     6,050,668
 Property, plant and
   equipment...........   10,741,793      1,737,603      1,339,139    13,818,535
 Other assets..........           --             --      9,808,810     9,808,810
                                                                     -----------
                                                                      29,678,013
                                                                     -----------
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
                                                                     -----------
</Table>

<Table>
<Caption>
                                         ASSEMBLY
                          FASTENER       EQUIPMENT        OTHER      CONSOLIDATED
                         -----------   -------------   -----------   ------------
<S>                      <C>           <C>             <C>           <C>
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
                                                                     -----------
</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 18, 19 and 17 percent and
14, 11 and 11 percent of consolidated revenues during 2001, 2000 and 1999,
respectively. Sales to a third customer amounted to 10 percent in 2001.

11--OTHER UNUSUAL ITEMS OF INCOME AND EXPENSE--Fourth quarter net income
includes the net favorable (unfavorable) effect of certain adjustments related
to inventory and certain accruals of $(.02), $.10 and $.09 per share, for 2001,
2000 and 1999, respectively.

12--COMMITMENTS AND CONTINGENCIES--The Company recorded rent expense aggregating
approximately $40,000, $36,000 and $29,000 for 2001, 2000 and 1999,
respectively. Total future minimum rentals at December 31, 2001 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 has reviewed Statement of Financial
Accounting Standards No. 143, "Accounting for Asset Retirement Obligations" and
Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" and has determined that their
implementation will not materially impact the financial statements.

- --------------------------------------------------------------------------------
 10
<PAGE>

                                                            [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, 2001 and 2000, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2001 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 1, 2002

SELECTED FINANCIAL DATA

<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------------------------------
                                                           2001           2000           1999           1998           1997
- -------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>            <C>            <C>            <C>            <C>
Net Sales and Lease Revenue                             $40,443,010    $45,423,263    $49,080,257    $44,938,184    $44,543,404
- -------------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes                                2,691,270      3,986,161      5,229,291      5,077,480      6,044,510
- -------------------------------------------------------------------------------------------------------------------------------
Net Income                                                1,792,270      2,656,161      3,454,291      3,360,480      3,861,510
- -------------------------------------------------------------------------------------------------------------------------------
Net Income Per Share                                           1.85           2.60           3.00           2.90           3.30
- -------------------------------------------------------------------------------------------------------------------------------
Dividends Per Share                                             .97           1.07           1.07           1.12            .91
- -------------------------------------------------------------------------------------------------------------------------------
Average Common Shares Outstanding                           967,132      1,022,627      1,151,333      1,159,360      1,170,988
- -------------------------------------------------------------------------------------------------------------------------------
Working Capital                                          11,616,424     12,001,291     12,447,590     12,302,179     13,766,681
- -------------------------------------------------------------------------------------------------------------------------------
Total Debt                                                3,432,760      5,232,760      3,150,000      4,950,000      6,750,000
- -------------------------------------------------------------------------------------------------------------------------------
Total Assets                                             29,678,013     31,157,119     32,621,585     31,815,781     32,947,460
- -------------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity                                     22,372,924     21,518,773     23,887,278     22,012,659     20,511,102
- -------------------------------------------------------------------------------------------------------------------------------
</Table>

- --------------------------------------------------------------------------------
                                                                              11
<PAGE>

[CHIGAGO RIVET LOGO]
- --------------------------------------------------------------------------------
QUARTERLY FINANCIAL DATA (UNAUDITED)

<Table>
<Caption>
                           1ST           2ND           3RD           4TH
                         QUARTER       QUARTER       QUARTER       QUARTER
                       -----------   -----------   -----------   -----------
<S>                    <C>           <C>           <C>           <C>
2001
Net Sales and Lease
 Revenue.............  $10,627,831   $11,216,249   $ 9,398,572   $ 9,200,358
Gross Profit.........    2,249,917     2,819,622     2,330,542     1,786,965
Net Income...........      339,241       737,438       426,996       288,595
Per Share Data:
 Net Income Per
   Share.............          .35           .76           .44           .30
 Average Common
   Shares
   Outstanding.......      967,132       967,132       967,132       967,132

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
</Table>

INFORMATION ON COMPANY'S COMMON STOCK

The Company's common stock is traded on the American Stock Exchange. The
following table 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                2001    2000          2001                2000
- -------                ----    ----    ----------------    ----------------
<S>                    <C>     <C>     <C>       <C>       <C>       <C>
First................  $.43*   $.53*   $21.50    $16.50    $23.25    $19.00
Second...............   .18     .18    $19.70    $18.70    $23.25    $21.13
Third................   .18     .18    $22.75    $19.00    $23.00    $19.50
Fourth...............   .18     .18    $22.90    $20.00    $19.88    $16.13
</Table>

- ---------------
* Includes an extra dividend of $.25 and $.35 per share in 2001 and 2000,
  respectively.

At December 31, 2001, there were approximately 344 shareholders of record.

- --------------------------------------------------------------------------------
 12
<PAGE>

                                                            [CHIGAGO RIVET LOGO]
- --------------------------------------------------------------------------------

BOARD OF DIRECTORS

EDWARD L. CHOTT(a)
Chairman and Chief
Executive Officer of
The Broaster Co.
Beloit, Wisconsin
NIRENDU DHAR
General Manager of
H & L Tool Company, Inc.
WILLIAM T. DIVANE, JR.(a)(c)
Chairman of the Board and
Chief Executive Officer of
Divane Bros. Electric Co.
Franklin Park, Illinois
JOHN R. MADDEN(a)(c)(e)
Chairman of the Board of
The First National Bank
of La Grange
La Grange, Illinois
JOHN A. MORRISSEY(e)
Chairman of the Board
of the Company
President and Director of
Algonquin State Bank
Algonquin, Illinois
WALTER W. MORRISSEY(c)(e)
Attorney at Law
Morrissey & Robinson
Oakbrook Terrace, Illinois
JOHN C. OSTERMAN(e)
President of the Company
CORPORATE OFFICERS
JOHN A. MORRISSEY
Chairman, Chief
Executive Officer
JOHN C. OSTERMAN
President, Chief Operating
Officer and Treasurer
NIRENDU DHAR
General Manager of
H & L Tool Company, Inc.
DONALD P. LONG
Vice President-Sales
KIMBERLY A. KIRHOFER
Secretary
MICHAEL J. BOURG
Corporate Controller

CHICAGO RIVET & MACHINE CO.

ADMINISTRATIVE & SALES OFFICES
Naperville, Illinois
Norwell, Massachusetts
MANUFACTURING FACILITIES
Albia Division
Albia, Iowa

Jefferson Division
Jefferson, Iowa

Tyrone Division
Tyrone, Pennsylvania

H & L Tool Company, Inc.
Madison Heights, Michigan
WEB SITE
www.chicagorivet.com

(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

- --------------------------------------------------------------------------------
<PAGE>

                              [CHICAGO RIVET LOGO]

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

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>4
<FILENAME>c68192ex21.txt
<DESCRIPTION>SUBSIDIARIES OF THE REGISTRANT
<TEXT>
<PAGE>

                           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.




                               37

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