Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Revenues for the first quarter of 2009 were $4,759,290, a decline of $3,655,036, or 43%, compared to the first quarter of last year. The dramatic reduction in automotive production, upon which we rely for the majority of our revenue, and the effects of the current recession on all the markets we serve, were the primary causes of the reduced sales activity. We have made significant reductions in our expenditures since last year in an attempt to bring expenses in line with customer demand, but the continued weak demand resulted in a net loss of $623,861, or $0.65 per share, in the first quarter of 2009 compared to net income of $27,663, or $0.03 per share, in 2008.
Fastener segment revenues declined $3,696,697, or 51%, from $7,326,127 in the first quarter of 2008 to $3,629,430 in 2009. The percentage decline is similar to the drop in North American car and truck production which was at its lowest level of any quarter in 18 years. In response to the reduced demand, we have taken steps to reduce expenses where practicable, including reductions in staffing and work schedules. The elimination of contract labor resulted in $87,000 in savings while an aggressive competitive bid process for various supplies contributed to a $531,000 reduction in such expenses. Even though we reduced all major categories of manufacturing costs, these savings did not fully offset the decline in sales volume, resulting in a $982,000 reduction in fastener segment gross margin.
Assembly equipment segment revenues increased $41,661, or 4%, from $1,088,199 in the first quarter of 2008 to $1,129,860 in 2009. The increase was due to the shipment of certain large machine orders during the current year quarter which offset declines in sales of tools and machine parts. Segment margins were $57,000 lower in the first quarter of 2009 compared to 2008 primarily due to higher material costs.
Selling and administrative expenses during the first quarter of 2009 were $68,000 lower than the first quarter of 2008. Commissions account for approximately $52,000 of the decline due to the lower sales activity in the current year quarter. The remaining net reduction is related to various items including reduced expenditures for office supplies and maintenance.
Working capital amounted to $14.7 million at the end of the first quarter, a decline of $.7 million from the beginning of the year. During the quarter, inventories were reduced by $.6 million as raw material prices retreated from the high levels reached during the second half of 2008 and quantities were reduced. Accounts receivable declined $.3 million during the first quarter primarily due to lower sales during the first three months of the current year compared to the fourth quarter of 2008. Although accounts payable and accrued salaries and wages increased by a combined $.5 million since the beginning of the year, reflecting normal yearly patterns, a reduction in customer deposits and other accrued expenses of $.4 million offset most of that amount. The net result of these changes and other cash flow items on cash and certificates of deposit was an increase of $.1 million, to $7.6 million, as of March 31, 2009. The Company has a $1.0 million line of credit, which expires May 31, 2009. This line of credit remains unused. Management believes that current cash, cash equivalents and operating cash flow will provide adequate working capital for the foreseeable future.
The current economic crisis continues to be the most significant factor affecting our operations. The decline in revenues and the resultant loss in the first quarter of 2009 were primarily due to weak demand in our primary markets. As the largest market for the products we manufacture, the automotive industry greatly impacts our results. The industry is currently faced with many challenges, including excess inventories, that are likely to keep near-term demand restrained. However, even in these challenging times, we believe our sound financial condition leaves us well positioned to take advantage of new opportunities. We will continue to make adjustments to our activities where necessary, without sacrificing quality, in response to changing customer demand and will continue our cost control efforts while pursuing opportunities to improve results.
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, those disclosed under "Risk Factors" in our Annual Report on Form 10-K and in the other filings we make with the United States Securities and Exchange Commission. These factors, include among other things: conditions in the domestic automotive industry, upon which we rely for sales revenue, the intense competition in our markets, the concentration of our sales to two major customers, the price and availability of raw materials, labor relations issues, losses related to product liability, warranty and recall claims, costs relating to environmental laws and regulations, the loss of the

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services of our key employees and difficulties in achieving cost savings. Many of these factors are beyond our ability to control or predict. Readers are cautioned not to place undue reliance on these forward-looking statements. We undertake no obligation to publish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

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CHICAGO RIVET & MACHINE CO.