<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_______
FORM 10-Q
QUARTERLY REPORT
_______
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
_______
for quarter ended May 28, 1994
_______
REGISTRANT: CLARCOR INC. (DELAWARE)
_______
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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended May 28, 1994 Commission File Number 0-3801
CLARCOR INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 36-0922490
- - ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2323 Sixth Street, P. O. Box 7007, Rockford, Illinois 61125
- - ----------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 815-962-8867
------------
No Change
- - -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
14,828,169 common shares outstanding
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Page 1 of 11
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Part I - Item 1
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CLARCOR INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
_______
<TABLE>
<CAPTION>
May 28, November 30,
ASSETS 1994 1993
---------- ---------
(Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash and short-term cash investments $ 3,341 $ 13,838
Accounts receivable less allowance for losses
of $1,658 for 1994 and $1,544 for 1993 41,880 40,911
Inventories:
Raw materials 12,083 9,480
Work-in-process 5,371 3,833
Finished product 15,776 13,683
-------- --------
Total inventories 33,230 26,996
Prepaid expenses 4,182 1,175
Other 3,776 3,241
-------- --------
Total current assets 86,409 86,161
-------- --------
Plant assets, at cost 117,705 112,254
Less accumulated depreciation (68,136) (64,618)
-------- --------
49,569 47,636
-------- --------
Investment in affiliates 8,699 8,002
Excess of cost over fair value of assets
acquired, less accumulated amortization 15,448 15,701
Other noncurrent assets 12,343 12,396
-------- --------
$172,468 $169,896
-------- --------
-------- --------
LIABILITIES
Current liabilities:
Current portion of long-term debt $ 7,768 $ 7,921
Accounts payable 13,174 9,777
Income taxes 876 1,592
Accrued and other liabilities 13,070 13,998
-------- --------
Total current liabilities 34,888 33,288
Long-term debt less current portion 20,894 24,617
Other long-term liabilities 7,414 7,350
Contingencies
SHAREHOLDERS' EQUITY
Capital stock 14,828 14,819
Foreign currency translation adjustments (670) (1,465)
Other shareholders' equity 95,114 91,287
-------- --------
109,272 104,641
-------- --------
$172,468 $169,896
-------- --------
-------- --------
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
Page 2 of 11
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CLARCOR INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Dollars in Thousands Except per Share Data)
(Unaudited)
-------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------- --------------------
May 28, May 29, May 28, May 29,
1994 1993 1994 1993
------ ------- -------- -------
<S> <C> <C> <C> <C>
Net sales $65,131 $49,732 $121,021 $91,645
Cost of sales 46,212 34,647 85,918 63,485
------- ------- -------- -------
Gross profit 18,919 15,085 35,103 28,160
Selling and administrative
expenses 11,785 9,830 22,070 17,869
------- ------- -------- -------
Operating profit 7,134 5,255 13,033 10,291
------- ------- -------- -------
Other income (deductions):
Interest expense (711) (886) (1,469) (1,776)
Interest income 55 286 226 516
Other 166 220 393 455
------- ------- -------- -------
(490) (380) (850) (805)
------- ------- -------- -------
Earnings before
income taxes 6,644 4,875 12,183 9,486
Provision for income taxes 2,469 2,094 4,593 3,614
------- ------- -------- -------
Earnings before cumulative
effect of accounting
change 4,175 2,781 7,590 5,872
Cumulative effect of accounting
change - - 630 -
------- ------- -------- -------
Net earnings $ 4,175 $ 2,781 $ 8,220 $ 5,872
------- ------- -------- -------
------- ------- -------- -------
Net earnings per common share:
From operations $.28 $.19 $.51 $.40
From cumulative effect of
accounting change - - .04 -
------- ------- -------- -------
$.28 $.19 $.55 $.40
---- ---- ---- ----
---- ---- ---- ----
Average number of common shares
outstanding 14,826,865 14,854,806 14,826,865 14,854,806
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Dividends per share $.155 $.150 $.310 $.300
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
See Notes to Consolidated Condensed Financial Statements
Page 3 of 11
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CLARCOR INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
_______
<TABLE>
<CAPTION>
Six Months Ended
--------------------
May 28, May 29,
1994 1993
-------- -------
<S> <C> <C>
Net cash from operating activities $ 1,940 $ 3,245
------- -------
Cash flows from investing activities:
Proceeds from sale of Precision Products Group - 20,700
Business acquisition, net of cash acquired - (11,690)
Additions to plant assets (4,582) (5,751)
Disposition of plant assets 115 10
Other, net 492 1,067
------- -------
Net cash (used in) provided by
investing activities (3,975) 4,336
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Cash flows from financing activities:
Reduction of long-term debt (3,876) (3,042)
Purchase of treasury stock - (3,369)
Cash dividends paid (4,586) (4,456)
Other, net - (168)
------- -------
Net cash used in financing activities (8,462) (11,035)
------- -------
Net change in cash and short-term cash
investments (10,497) (3,454)
Cash and short-term cash investments,
beginning of period 13,838 15,051
------- -------
Cash and short-term cash investments,
end of period $ 3,341 $11,597
------- -------
------- -------
Cash paid during the period for:
Interest $1,580 $1,833
------- -------
------- -------
Income taxes $5,275 $4,312
------- -------
------- -------
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
Page 4 of 11
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CLARCOR INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in Thousands)
(Unaudited)
-------
1. CONSOLIDATED FINANCIAL STATEMENTS
The November 30, 1993 consolidated balance sheet data was derived from
audited financial statements, but does not include all disclosures required
by generally accepted accounting principles.
The consolidated balance sheet as of May 28, 1994, the consolidated state-
ments of earnings, and the consolidated statements of cash flows for the
periods ended May 28, 1994 and May 29, 1993 have been prepared by the
Company without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present
fairly the financial position, results of operations, and cash flows have
been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
consolidated financial statements be read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's November 30, 1993 annual report to shareholders. The results of
operations for the period ended May 28, 1994 are not necessarily indicative
of the operating results for the full year.
2. ACQUISITIONS
The Company purchased all of the shares of Airguard Industries, Inc. on
April 30, 1993 and the assets of Guardian Filter/United Engine Life effec-
tive June 1, 1993, for $13,504 in cash, including acquisition expenses.
Unaudited pro forma net sales for the Company would have been $114,500 for
the six months ended May 29, 1993. Net earnings and earnings per share for
this period would not have been significantly affected. These 1993
unaudited pro forma amounts are presented as if the acquisitions had
occurred at the beginning of the period presented and does not purport to
be indicative of what would have occurred had the acquisitions been made as
of that date or of results which may occur in the future.
3. INCOME TAXES
In December 1993, the Company adopted the provisions of Statement of Finan-
cial Accounting Standards (SFAS) No. 109 "Accounting for Income Taxes".
SFAS 109 requires a change from the deferred to the liability method of
computing deferred income taxes. The liability method requires the
recognition of deferred tax assets and liabilities for the expected future
tax consequences of temporary differences between the tax basis and
financial reporting basis of assets and liabilities. The cumulative effect
of adoption as of the beginning of fiscal 1994 was to increase net earnings
by $630.
Page 5 of 11
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Part I - Item 2
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
The strong performance reported by CLARCOR in the first quarter of this year
continued in the second quarter. Second quarter operations generated increased
sales, operating profit, net earnings and earnings per share compared to the
same quarter last year. Substantial gains were reported in the Filtration
Products Group, aided by the results reported by the group's 1993 acquisitions.
Operations in the Consumer Products Group improved substantially over the second
quarter of last year. For the remainder of the year, the Company expects
continued strength in both the Filtration and Consumer operations.
Consolidated second quarter sales of $65,131,000 increased 31.0% over the 1993
level of $49,732,000. Sales in the Filtration Products Group increased 39.0%
over sales in the second quarter of last year. This increase was principally
the result of the group's two 1993 acquisitions, whose sales were included in
the current year's second quarter for three months, but were reflected in the
prior year's quarter as one month of Airguard sales. Without the sales contrib-
uted by the acquisitions, the group recorded a 7.5% sales increase. Sales
increases were recorded in the group's heavy duty business, and in the railroad
locomotive business. Consumer Products Group sales in the current quarter
improved 9.0% over last year, due to increased sales of promotional, general
canline, and plastics products.
CLARCOR's consolidated operating profit in the second quarter of 1994 increased
35.8% over the prior year to $7,134,000. Filtration Group operating profit
increased 32.3%, mainly attributable to the $1,164,000 Baldwin N.V. charge in
1993, the profit in 1994 contributed by the acquisitions, and the aggressive
productivity improvement and cost reduction programs implemented in the group's
heavy duty filter operations. Without the acquisitions, and before the 1993
Baldwin N.V. charge taken in the second quarter of last year, Filtration
operating profit increased 5.0%. Second quarter operating profit in the
Consumer Products Group increased 64.0% when compared to last year. Profits
increased due to the group's higher shipments volume and cost reduction efforts.
Second quarter other expense reflected a net $490,000 in the current year,
compared to a net expense of $380,000 in the prior year. The current year
expense increased over last year, due chiefly to reduced interest income caused
by interest rate declines and lower cash and investment balances.
Earnings before income taxes totaled $6,644,000 in the second quarter. This was
a 36.3% increase over prior year second quarter pre-tax income, and resulted
from the earnings gains recorded in both of the Company's operating groups.
The provision for income taxes in the current second quarter was $2,469,000, and
represented an effective rate of 37.2% of pre-tax earnings. This compares to
prior year second quarter income taxes totaling $2,094,000, or an effective rate
of 43.0% The higher effective tax rate in the prior year reflects no tax
benefit resulting from the Baldwin N.V. charge taken in 1993.
Second quarter consolidated net earnings totaled $4,175,000, a 50.1% increase
over comparable earnings of $2,781,000 last year. The prior year's results
include the unfavorable impact of the $1,164,000 Baldwin N.V. write-off.
Net earnings per share from operations in the current quarter were $.28, and
compare to $.19 in the second quarter of 1993. The 1993 earnings reflect a
charge of $.08 related to the Baldwin N.V. write-off.
Page 6 of 11
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Part I - Item 2
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
-----------------------------------------------------------
CLARCOR's year-to-date consolidated sales of $121,021,000 increased 32.1% over
the prior year's sales of $91,645,000. Filtration Products Group sales in-
creased 46.0% over sales last year. This increase was principally the result of
the group's two 1993 acquisitions, whose sales were included in the current year
for six months, but were reflected in the prior year as one month of Airguard
sales. Without the acquisitions, the Filtration Group reported a 7.8% sales
increase. Sales increases were recorded in the group's heavy duty business, and
in the railroad locomotive business. Year-to-date Consumer Products sales were
down 1.8% from last year, and reflect the reduced sales level experienced in the
first quarter of this year.
Year-to-date consolidated operating profit increased 26.6% over the prior year
to $13,033,000. Operating profit in the Filtration Products Group increased
36.6%, on the strength of the current year inclusion of a full six months of
profit contributed by the acquisitions and to the group's aggressive productivi-
ty improvement and cost reduction programs. The prior year operating profit was
reduced by the $1,500,000 Baldwin N.V. charge. Without the profits from the
acquisitions, and before the 1993 Baldwin N.V. charge taken last year, Filtra-
tion operating profit increased 12.2%. Consumer Products Group operating profit
was down 24.4% compared to last year. Although profit is higher in the second
quarter, year-to-date profits are lower because of the significantly lower first
quarter profits.
Other expense reflected a year-to-date net $850,000 in the current year,
compared to a net expense of $805,000 in the prior year. The current year
expense increased slightly over last year. Although interest expense declined,
interest earnings were lower due to interest rate declines and lower cash and
investment balances.
Earnings before income taxes totaled $12,183,000 for the current six months.
This was a 28.4% increase over prior year six month pre-tax income. The
comparison benefitted from current year earnings gains recorded in the Filtra-
tion operations, and lower prior year earnings caused by the Baldwin N.V.
charge.
The provision for income taxes in the current six months was $4,593,000, and
represented an effective rate of 37.7% of pre-tax earnings. This compares to
prior year six month income taxes totaling $3,614,000, or an effective rate of
38.1%.
Consolidated year-to-date net earnings before the cumulative effect of an
accounting change totaled $7,590,000, an increase of 29.3% over comparable
earnings of $5,872,000 last year. The prior year's results include the unfavor-
able impact of the Baldwin N.V. write-off.
The Company adopted the provisions of Statement of Financial Accounting Stan-
dards No. 109, "Accounting for Income Taxes" in the first quarter of 1994. This
statement establishes financial and reporting standards for the effects of
income taxes that result from an enterprise's activities during the current and
preceding years. The first quarter adoption of this standard resulted in
increased year-to-date earnings of $630,000.
Year-to-date net earnings per share from operations before the cumulative effect
of an accounting change were $.51, and compare to $.40 in 1993. The 1993
earnings were reduced by a charge of $.10 related to the Baldwin N.V. write-off.
The cumulative effect of the income tax accounting change contributed $.04 per
share to current year earnings, making total earnings per share $.55, compared
to total earnings per share of $.40 in 1993.
CLARCOR continued to maintain a strong balance sheet and sufficient liquidity
for its consolidated operations.
Page 7 of 11
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Part I - Item 2
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
-----------------------------------------------------------
Consolidated working capital at May 28, 1994 totaled $51,521,000, down slightly
from $52,873,000 at year-end 1993. Among the current assets and liabilities,
working capital was generated by increases in accounts receivable and inventory
assets, and decreases in accrued and other liabilities. Working capital
declined due to lower cash and investment balances, and also due to increases in
accounts payable. The current ratio at the end of the second quarter was 2.5:1,
compared to 2.6:1 at November 30, 1993.
During the first six months, plant assets net of accumulated depreciation
increased $1,933,000 to $49,569,000, as the Company continued its 1994 planned
investment in productive capacity.
The long-term debt less the current portion continued to decline in the second
quarter to $20,894,000, as scheduled debt repayments were made during the
period.
Consolidated shareholders' equity increased $4,631,000 in the current six months
to $109,272,000 from the November 30, 1993 level.
Total capitalization at the end of the second quarter increased $908,000 to
$130,166,000. This compares to $129,258,000 at the prior year-end. As a
percent of total capitalization, long-term debt at the end of the second quarter
was 16.1%, compared to 19.0% at the end of fiscal 1993.
CLARCOR recorded a $10,497,000 year-to-date net reduction of cash in 1994. This
compares to a year-to-date cash decrease of $3,454,000 in 1993. The prior year
included the collection of the $20,700,000 proceeds related to the sale of the
Precision Products Group.
Consolidated net cash from year-to-date operating activities totaled $1,940,000,
compared to a total of $3,245,000 in the first six months of 1993. Although the
current six months reflected greater net earnings, this period also saw in-
creased current year investment in current operating assets.
Net cash used in current year investing activities totaled $3,975,000, compared
to $4,336,000 of net cash generated in the first six months of the prior year.
The current year cash usage reflected investment in plant assets, while the
prior year saw the collection of the $20,700,000 proceeds from the sale of the
Precision Products Group, and the subsequent investment in acquisitions and
additions to plant assets.
Current year financing activities used net cash of $8,462,000, compared to
$11,035,000 of net cash used in the prior year. The difference is mainly
attributable to $3,369,000 used in the previous year to purchase shares of the
Company's stock for the treasury.
CLARCOR's operations, at their current level, continue to generate sufficient
cash to fund operating needs, add necessary productive capacity, and provide for
the repayment of the Company's long-term debt. Sufficient lines of credit
remain available to the Company to meet the needs of its current operations.
Page 8 of 11
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Part II - Other Information
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Item 6a - Exhibit (11), Computations of Per Share Earnings are presented on
page 10.
Item 6b - No reports on Form 8-K have been filed during the quarter ended
May 28, 1994.
Page 9 of 11
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SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CLARCOR INC.
------------
(Registrant)
July 6, 1994 By /s/ L. P. Harnois
- - ------------------ ----------------------------------------
(Date) L. P. Harnois, Senior Vice President and
Chief Financial Officer
Page 11 of 11
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CLARCOR INC.
EXHIBIT (11) - COMPUTATIONS OF PER SHARE EARNINGS
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<TABLE>
<CAPTION>
Six Months Ended
------------------------
May 28, May 29,
1994 1993
------ ---------
AVERAGE SHARES OUTSTANDING
- - --------------------------
<S> <C> <C>
1. Average number of shares outstanding 14,826,865 14,854,806
2. Net additional shares resulting from
assumed exercise of stock options * 249,398 203,045
--------- ----------
3. Adjusted average shares outstanding
for fully diluted computation
(1 plus 2) 15,076,263 15,057,851
---------- ----------
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Earnings per share of common stock (before
cumulative effect of accounting change):
Primary $.51 $.40
---- ----
---- ----
Assuming full dilution $.50 $.39
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<FN>
* Assumes proceeds from exercise of stock options used to purchase treasury
shares at the greater of the quarter-end or the average market price during
the period.
</TABLE>
Page 10 of 11
