<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 10-Q
QUARTERLY REPORT
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Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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for quarter ended August 27, 1994
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REGISTRANT: CLARCOR Inc. (DELAWARE)
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<PAGE>
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 August 27, 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.
14,798,169 common shares outstanding
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Page 1 of 12
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Part I - Item 1
- - - ---------------
CLARCOR INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
-------
<TABLE>
<CAPTION>
August 27, November 30,
ASSETS 1994 1993
----------- -----------
(Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash and short-term cash investments $ 3,840 $ 13,838
Accounts receivable less allowance
for losses of $1,619 for 1994
and $1,544 for 1993 42,570 40,911
Inventories:
Raw materials 13,265 9,480
Work-in-process 6,766 3,833
Finished product 15,177 13,683
-------- --------
Total inventories 35,208 26,996
Prepaid expenses 3,272 1,175
Other 3,326 3,241
-------- --------
Total current assets 88,216 86,161
-------- --------
Plant assets, at cost 120,671 112,254
Less accumulated depreciation (69,681) (64,618)
-------- --------
50,990 47,636
-------- --------
Investment in affiliates 8,990 8,002
Excess of cost over fair value of assets
acquired, less accumulated amortization 15,424 15,701
Other noncurrent assets 12,420 12,396
-------- --------
$176,040 $169,896
-------- --------
-------- --------
LIABILITIES
Current liabilities:
Current portion of long-term debt $ 7,636 $ 7,921
Accounts payable 13,971 9,777
Income taxes 2,657 1,592
Dividend payable 2,331 --
Accrued and other liabilities 12,728 13,998
-------- --------
Total current liabilities 39,323 33,288
Long-term debt less current portion 19,003 24,617
Other long-term liabilities 7,424 7,350
Contingencies
SHAREHOLDERS' EQUITY
Capital stock 14,828 14,819
Foreign currency translation adjustments (430) (1,465)
Other shareholders' equity 96,379 91,287
-------- --------
110,777 104,641
Common stock in treasury, at cost (487) --
-------- --------
110,290 104,641
-------- --------
$176,040 $169,896
-------- --------
-------- --------
</TABLE>
See Notes to Consolidated Financial Statements.
Page 2 of 12
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CLARCOR INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Dollars in Thousands Except per Share Data)
(Unaudited)
-----------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------------- ------------------------------
August 27, August 28, August 27, August 28,
1994 1993 1994 1993
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Net sales $67,724 $64,634 $188,745 $156,279
Cost of sales 47,724 45,250 133,642 108,735
------- ------- -------- --------
Gross profit 20,000 19,384 55,103 47,544
Selling and administrative
expenses 10,318 11,425 32,388 29,294
------- ------- -------- --------
Operating profit 9,682 7,959 22,715 18,250
------- ------- -------- --------
Other income (deductions):
Interest expense (659) (904) (2,128) (2,680)
Interest income 113 168 339 684
Other 357 424 750 879
------- ------- -------- --------
(189) (312) (1,039) (1,117)
------- ------- -------- --------
Earnings before
income taxes 9,493 7,647 21,676 17,133
Provision for income taxes 3,614 2,587 8,207 6,201
------- ------- -------- --------
Earnings before cumulative effect
of accounting change 5,879 5,060 13,469 10,932
Cumulative effect of accounting
change -- -- 630 --
------- ------- -------- --------
Net earnings $ 5,879 $ 5,060 $ 14,099 $ 10,932
------- ------- -------- --------
------- ------- -------- --------
Net earnings per common share:
From operations $.40 $.34 $.91 $.74
From cumulative effect of
accounting change -- -- .04 --
------- ------- -------- --------
$.40 $.34 $.95 $.74
----- ----- ----- -----
----- ----- ----- -----
Average number of common shares
outstanding 14,821,256 14,843,398 14,821,256 14,843,398
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Dividends paid per share $.155 $.155 $.465 $.455
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
See Notes to Consolidated Financial Statements
Page 3 of 12
<PAGE>
CLARCOR INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
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<TABLE>
<CAPTION>
Nine Months Ended
-------------------------
August 27, August 28,
1994 1993
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<S> <C> <C>
Cash flows from operating activities $10,349 $ 9,242
------- -------
Cash flows from investing activities:
Proceeds from sale of Precision Products Group -- 20,700
Business acquisitions, net of cash acquired -- (12,824)
Additions to plant assets (7,838) (8,210)
Disposition of plant assets 268 54
Other, net 483 1,266
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Net cash (used in) provided by
investing activities (7,087) 986
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Cash flows from financing activities:
Reduction of long-term debt (5,899) (5,518)
Purchase of treasury stock (487) (3,369)
Cash dividends paid (6,874) (6,746)
Other, net -- (179)
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Net cash used in financing activities (13,260) (15,812)
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Net change in cash and short-term cash
investments (9,998) (5,584)
Cash and short-term cash investments,
beginning of period 13,838 15,051
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Cash and short-term cash investments,
end of period $ 3,840 $ 9,467
------- -------
------- -------
Cash paid during the period for:
Interest $ 2,228 $ 2,678
------- -------
------- -------
Income taxes $ 6,627 $ 6,318
------- -------
------- -------
</TABLE>
See Notes to Consolidated Financial Statements.
Page 4 of 12
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CLARCOR INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(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 August 27, 1994, the consolidated
statements of earnings, and the consolidated statements of cash flows for
the periods ended August 27, 1994 and August 28, 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 August 27, 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
effective June 1, 1993, for $13,504 in cash, including acquisition
expenses.
Unaudited pro forma net sales for the Company would have been $179,131 for
the nine months ended August 28, 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 acquisitons 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
Financial 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 12
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PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CLARCOR's operations in the third quarter reflected increased sales, operating
profit, net earnings and earnings per share when compared to the prior year.
For the nine months, current year-to-date operations also reflected substantial
increases in sales, operating profit, net earnings and earnings per share when
compared to the same period last year. The Company continued to maintain a
strong and liquid balance sheet, and cash flow remained adequate to meet
CLARCOR's current operating needs, to provide for additional productive assets,
to service and repay the Company's debt, and pay dividends.
Consolidated net sales of $67,724,000 in the third quarter of 1994 increased
4.8% over sales of $64,634,000 reported in the third quarter of last year.
Compared to the prior year's quarter, sales in the Filtration Products Group
increased, while sales in the Consumer Products Group declined. Sales increases
in the Filtration Products Group were led by strong gains in the group's heavy
duty, air filtration, and railroad locomotive markets. Current quarter sales of
Consumer Products fell below those of the prior year's third quarter due to the
nonrecurrence in the current year of the sale of engineering services recorded
last year, and to customer-delayed shipments of promotional containers to the
fourth quarter.
CLARCOR's third quarter operating profit of $9,682,000 increased $1,723,000, or
21.6%, over operating profit of $7,959,000 reported last year. Operating profit
in the Filtration Products Group increased 42.6%. This increase reflected the
group's strong current quarter profits, and compares to last year's quarter
which included reduced profits resulting from the establishment of reserves for
the settlement of legal issues. In the Consumer Products Group, operating
profits were lower than last year. This was the result of the inclusion in last
year's operations of profit from the sale of engineering services which did not
recur in the current year, and a lower level of promotional container shipments.
Other income (deductions) was a net expense of $189,000, compared to expense of
$312,000 in the third quarter of 1993. The current year reduction principally
reflected reduced interest expense, and a higher level of recorded equity
earnings from affiliates. These more than offset reductions in interest income
and currency gains from levels recorded in the prior year.
The provision for income taxes in the third quarter totaled $3,614,000, and
reflected an effective rate of 38.1%. This compares to a total of $2,587,000 in
the prior year's quarter, an effective rate of 33.8%. The lower rate in the
prior year reflected a reduction in that period of previously established
accruals for taxes.
Consolidated net earnings in the third quarter totaled $5,879,000 in the current
year, an increase of $819,000, or 16.2% compared to earnings of $5,060,000
recorded in the same quarter last year.
Earnings per share from operations were $.40 in the current quarter, up
significantly from $.34 reported in the third quarter of the prior year.
Consolidated net sales for the nine months year-to-date totaled $188,745,000, an
increase of $32,466,000, or 20.8%, over year-to-date net sales of $156,279,000
recorded in 1993. Compared to the prior year, net sales in the Filtration
Products Group increased, while sales in the Consumer Products Group declined.
Sales in the Company's Filtration Products Group increased 30.5% over the prior
year's total. This increase was attributable to sales reported in the current
period for a full nine months from the group's 1993 acquisitions compared to
acquisition sales reported for a period of four months in the prior year, and
increased sales in the heavy duty, railroad locomotive, and air filtration
markets. Without the impact of the acquisitions, Filtration sales for the nine
months increased 8.0%. Consumer Products Group sales declined 3.0% from the
level of the prior year-to-date. This decline reflected the nonrecurrence in
the current year of the sale of engineering services, and customer-delayed
shipments in the promotional container segment of the business.
Page 6 of 12
<PAGE>
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
Consolidated current year-to-date operating profit totaled $22,715,000, and was
$4,465,000, or 24.5% higher than profit of $18,250,000 recorded last year. The
increase reflected higher profits in the Filtration Products Group and lower
profits in the Consumer Products Group. Profits in the Filtration Products
Group increased significantly over the level of 1993. The 1993 profit included
the result of the non-recurring Baldwin N.V. charge, and a charge for the
establishment of reserves for the settlement of legal issues. Consumer Products
operating profit was lower than in the prior nine month period due to profit
reductions from the nonrecurrence in the current year of the sale of engineering
services, and to lower sales in the promotional container segment.
Other income (deductions) was a net expense of $1,039,000, compared to expense
of $1,117,000 in 1993. The current year reduction originated principally from
reduced interest expense on the lower long-term debt balances, partially offset
by lower interest earnings.
Consolidated net earnings before the cumulative effect of an accounting change
for the current nine months totaled $13,469,000, an increase of $2,537,000, or
23.2% over net earnings of $10,932,000 in the prior nine months. The 1993
earnings were reduced by the Filtration $1,500,000 nonrecurring charge,
unreduced by any tax benefits, and the after-tax effect of the establishment of
the legal reserve. Total net earnings in the current year were $14,099,000,
compared to $10,932,000 last year, after the impact of the adoption of FAS 109.
Earnings per share from operations for the nine month period totaled $.91,
compared to $.74 per share earned during the comparable period last year. The
prior year per share earnings were reduced by $.10 from the recognition of the
non-recurring Baldwin N.V. charge.
Effective with the first quarter of the current year, CLARCOR adopted Financial
Accounting Standards No. 109, "Accounting for Income Taxes". As a result of the
adoption of this standard, the Company recorded $.04 per share in additional
first quarter earnings.
Total earnings per share in the current year were $.95, compared to $.74 last
year.
The Company maintained a strong and liquid consolidated balance sheet through
the nine month period of the current year. Current assets increased to
$88,216,000, from $86,161,000 at the beginning of the period. Within the
current assets, cash needs relating chiefly to increased inventories and plant
and equipment additions reduced the cash and short-term investments balance to
$3,840,000 from the beginning of the year total of $13,838,000. Inventories
were increased $8,212,000 to $35,208,000 in preparation for heavy fourth quarter
shipments. Working capital totaled $48,893,000 at the end of the current nine
months, and compares to $52,873,000 at November 30, 1993. The current ratio was
2.2:1 at August 27, 1994. This compares to 2.6:1 at the beginning of the year.
Continued investment in productive assets increased the level of net plant
assets $3,354,000, to $50,990,000. Total assets of $176,040,000 increased
$6,144,000, or 3.6%, over total assets of $169,896,000 at the beginning of the
year.
CLARCOR's current liabilities increased $6,035,000 in the current year, to
$39,323,000. This increase resulted principally from increased accounts payable
and a current year dividends payable balance which was not present at year-end.
The higher accounts payable balance is related to the higher level of current
year operations, and the dividends payable balance is the result of the timing
of the dividend declaration.
The long-term portion of notes payable decreased to $19,003,000 from
$24,617,000, principally the result of payments made on the Company's fixed rate
debt.
Page 7 of 12
<PAGE>
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
CLARCOR increased the shareholders' equity balance by $5,649,000 to $110,290,000
since November 30, 1993. This increase results from strong current year
operations, reduced by dividends and the acquisition of $487,000 of treasury
shares within the shareholders' equity section.
The Company's capitalization remained healthy at the end of the third quarter.
Total capitalization at the end of the current quarter was $129,293,000. Equity
capital was 85.3% of the total, while debt capital was 14.7%. This compares to
total capitalization at the end of the prior year of $129,258,000. Of this
total, equity capital was 81.0%, while debt capital was 19.0%.
The Company's ability to generate cash remains strong. CLARCOR continues to
generate sufficient cash to maintain the current level of operations, to fund
needed capital additions, and to meet current debt obligations. Adequate lines
of credit remain open to the Company as needed.
Net cash produced from operating activities in the nine months of the current
year totaled $10,349,000, compared to net cash of $9,242,000 from operating
activities in the prior year. The increase in the cash produced is chiefly the
result of higher net earnings, partially offset by increased investment in
inventories. Net cash of $7,087,000 was used in the current nine months for
investing activities, principally plant asset additions. Net cash of $986,000
was provided by investing activities in the prior year, and reflects the
collection of the Precision Products Group sale receivable and the subsequent
1993 business acquisitions and plant asset additions. Cash used in current year
financing activities totaled $13,260,000, compared to $15,812,000 in 1993. The
current year usage reflects $5,899,000 of long-term debt payments and $487,000
of treasury stock repurchases, whereas the prior year included $3,369,000 of
treasury share purchases and $5,518,000 of long-term debt payments. Cash
dividend payments approximate the prior year.
CLARCOR's core businesses remain healthy, and are projected to generate
continued growth in sales, operating profit and cash flow. The Company also
expects the acquisitions made in 1993 to show continued improvements in sales,
operating profit and cash flow.
Page 8 of 12
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PART II - OTHER INFORMATION
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
August 27, 1994.
Page 9 of 12
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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)
October 7, 1994 By /s/ L. P. HARNOIS
- - - -------------------------- -----------------------------------------
(Date) L. P. Harnois, Senior Vice President and
Chief Financial Officer
Page 11 of 12
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CLARCOR INC.
EXHIBIT (11) - COMPUTATIONS OF PER SHARE EARNINGS
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<TABLE>
<CAPTION>
Nine Months Ended
------------------------
August 27, August 28,
1994 1993
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AVERAGE SHARES OUTSTANDING
<S> <C> <C>
1. Average number of shares outstanding 14,821,256 14,843,398
2. Net additional shares resulting from
assumed exercise of stock options* 222,219 186,685
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3. Adjusted average shares outstanding
for fully diluted computation
(1 plus 2) 15,043,475 15,030,083
---------- ----------
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Earnings per share of common stock:
Primary $.95 $.74
---- ----
---- ----
Assuming full dilution $.94 $.73
---- ----
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* 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 12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-03-1994
<PERIOD-START> NOV-28-1993
<PERIOD-END> AUG-27-1994
<CASH> 3,840
<SECURITIES> 0
<RECEIVABLES> 44,189
<ALLOWANCES> 1,619
<INVENTORY> 35,208
<CURRENT-ASSETS> 88,216
<PP&E> 120,671
<DEPRECIATION> 69,681
<TOTAL-ASSETS> 176,040
<CURRENT-LIABILITIES> 39,323
<BONDS> 19,003
<COMMON> 14,828
0
0
<OTHER-SE> 95,462
<TOTAL-LIABILITY-AND-EQUITY> 176,040
<SALES> 188,745
<TOTAL-REVENUES> 188,745
<CGS> 133,642
<TOTAL-COSTS> 133,642
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,128
<INCOME-PRETAX> 21,676
<INCOME-TAX> 8,207
<INCOME-CONTINUING> 13,469
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 630
<NET-INCOME> 14,099
<EPS-PRIMARY> .95
<EPS-DILUTED> .94
</TABLE>
