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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 February 26, 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 February 26, 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
Page 1 of 10
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PART I - ITEM 1
CLARCOR INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
_______
<TABLE>
<CAPTION>
February 26, November 30,
ASSETS 1994 1993
------------ ------------
(Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash and short-term cash investments $ 10,184 $ 13,838
Accounts receivable less allowance for losses
of $1,679 for 1994 and $1,544 for 1993 37,008 40,911
Inventories:
Raw materials 11,828 9,480
Work-in-process 4,685 3,833
Finished product 14,735 13,683
-------- --------
Total inventories 31,248 26,996
Prepaid expenses 2,076 1,175
Other 3,718 3,241
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Total current assets 84,234 86,161
-------- --------
Plant assets, at cost 115,208 112,254
Less accumulated depreciation (66,353) (64,618)
-------- --------
48,855 47,636
-------- --------
Investment in affiliates 8,793 8,002
Excess of cost over fair value of assets
acquired, less accumulated amortization 15,574 15,701
Other noncurrent assets 12,396 12,396
-------- --------
$169,852 $169,896
-------- --------
-------- --------
LIABILITIES
Current liabilities:
Current portion of long-term debt $ 7,870 $ 7,921
Accounts payable 10,581 9,777
Income taxes 2,500 1,592
Accrued and other liabilities 11,264 13,998
-------- --------
Total current liabilities 32,215 33,288
Long-term debt less current portion 22,763 24,617
Other long-term liabilities 7,421 7,350
Contingencies
SHAREHOLDERS' EQUITY
Capital stock 14,828 14,819
Foreign currency translation adjustments (608) (1,465)
Other shareholders' equity 93,233 91,287
-------- --------
107,453 104,641
-------- --------
$169,852 $169,896
-------- --------
-------- --------
</TABLE>
See Notes to Consolidated Financial Statements.
Page 2 of 10
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CLARCOR INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in Thousands Except per Share Data)
(Unaudited)
---------
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------
February 26, February 27,
1994 1993
------------ ------------
<S> <C> <C>
Net sales $55,890 $41,913
Cost of sales 39,706 28,838
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Gross profit 16,184 13,075
Selling and administrative expenses 10,285 8,039
------ ------
Operating profit 5,899 5,036
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Other income (deductions):
Interest expense (758) (890)
Interest income 171 230
Other 227 235
------ ------
(360) (425)
------ ------
Earnings before income taxes 5,539 4,611
Provision for income taxes 2,124 1,520
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Earnings before cumulative effect of
accounting change 3,415 3,091
Cumulative effect of accounting change 630 -
------ ------
Net earnings $ 4,045 $ 3,091
------ ------
------ ------
Net earnings per common share:
From operations $.23 $.21
From cumulative effect of accounting change .04 -
--- ---
$.27 $.21
--- ---
--- ---
Average number of common shares outstanding 14,825,888 14,887,176
---------- ----------
---------- ----------
Dividends per share $.155 $.150
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---- ----
</TABLE>
See Notes to Consolidated Financial Statements
Page 3 of 10
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CLARCOR INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
_______
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------
February 26, February 27,
1994 1993
------------ ------------
<S> <C> <C>
Net cash from operating activities $ 2,132 $ 2,971
------ ------
Cash flows from investing activities:
Proceeds from sale of Precision Products Group - 20,700
Additions to plant assets (1,998) (2,981)
Disposition of plant assets 127 -
Other, net 282 495
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Net cash (used in) provided by
investing activities (1,589) 18,214
------ ------
Cash flows from financing activities:
Reduction of long-term debt (1,905) (1,215)
Purchase of treasury stock - (3,369)
Cash dividends paid (2,292) (2,241)
Other, net - (14)
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Net cash used in financing activities (4,197) (6,839)
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Net change in cash and short-term cash
investments (3,654) 14,346
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 $10,184 $29,397
------ ------
------ ------
Cash paid during the period for:
Interest $848 $908
--- ---
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Income taxes $1,120 $1,105
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</TABLE>
See Notes to Consolidated Financial Statements.
Page 4 of 10
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CLARCOR INC.
NOTES TO CONSOLIDATED 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 February 26, 1994, the consolidated
statements of earnings, and the consolidated statements of cash flows for
the periods ended February 26, 1994 and February 27, 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 February 26, 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 $54,600 for
the three months ended February 27, 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
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 10
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PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CLARCOR's strong first quarter 1994 operations generated increased sales,
operating profit, net earnings and earnings per share over the same quarter
last year. Substantial gains were recorded from operations in the filtration
markets, and were aided by the results from the Company's recent acquisitions.
Operations in CLARCOR's Consumer Products Group lagged in the first quarter,
and were down compared to last year. For the remainder of the year, the
Company expects continued strength in the Filtration operations, and a rebound
in Consumer operations.
Consolidated sales in the first quarter of 1994 increased 33.3% to $55,890,000
from the 1993 level of $41,913,000. Sales in the Filtration Products Group
increased 55.0% over sales of the comparable quarter last year. This was due
principally to the sales from the Company's second quarter 1993 acquisitions,
but also to market share gains recorded in the group's heavy duty and railroad
locomotive markets. Consumer Products Group sales in the current quarter
were down 12.4% compared to last year, due to reduced shipments of bandage and
spice containers.
First quarter consolidated operating profit increased to $5,899,000 in 1994.
This is a 17.1% increase compared to profit recorded in the first quarter of
1993. Filtration Group operating profit increased 41.7%, and is mainly
attributable to aggressive productivity improvement and cost reduction
programs implemented last year in the group's heavy duty filter operations.
Without the acquisitions, and before the 1993 Baldwin N.V. charge taken in the
first quarter of last year, Filtration operating profit increased 21.7%.
First quarter operating profit in the Consumer Products Group declined sharply
when compared to last year. Profits suffered due to the group's level of
fixed costs in the face of reduced shipments volume.
Other expense reflected a net $360,000 in the first quarter of the current
year, compared to first quarter net expense of $425,000 in the prior year.
The current year expense is down from last year, due chiefly to reduced
interest expense on the lower long-term debt level.
Earnings before income taxes totaled $5,539,000 in the current year first
quarter. This was an increase of 20.1% over prior year pre-tax income, and
resulted from the strong gains recorded in the Filtration operations, and, to
a lesser extent, from the reduced net other expense.
The current year first quarter provision for income taxes was $2,124,000, and
represented an effective rate of 38.3% of pretax earnings. This compares to
prior year first quarter income taxes totaling $1,520,000, or an effective
rate of 33.0%. The effective tax rate for the current year reflects higher
statutory rates and no reduction of previously established accruals for income
taxes, as did the rate in 1993.
Current year first quarter net earnings before the cumulative effect of an
accounting change totaled $3,415,000. This was a 10.5% increase over
comparable first quarter earnings of $3,091,000 last year.
The Company adopted the provisions of Statement of Financial Accounting
Standards 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 current quarter adoption of this standard
resulted in increased earnings of $630,000.
Consolidated net earnings totaled $4,045,000 in the current quarter. This
was an increase of 30.9% compared to net earnings in the first quarter of
1993.
Page 6 of 10
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PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED
Net earnings per share from operations in the current quarter were $.23, and
compare to $.21 in the first quarter of last year. The cumulative effect of
the income tax accounting change contributed $.04 per share to current quarter
earnings, making total earnings per share $.27, compared to total earnings per
share of $.21 in 1993.
CLARCOR continued to maintain a strong and liquid consolidated balance sheet.
Working capital at February 26, 1994 totaled $52,019,000, down slightly from
$52,873,000 at November 30, 1993. Among the current assets and liabilities,
working capital was generated by increases in inventory assets, and decreases
in accrued and other liabilities. Working capital declined due to lower cash
and investment balances and accounts receivable, and also to increases in
accounts payable. The current ratio at the end of the first quarter was
2.6:1, the same as at the end of 1993.
During the first quarter, plant assets net of accumulated depreciation
increased $1,219,000 to $48,855,000, as the Company continued to invest in
productive capacity.
The long-term debt less the current portion declined in the first quarter to
$22,763,000 as scheduled debt repayments were made during the quarter.
Consolidated shareholders' equity increased $2,812,000 in the current quarter
to $107,453,000 from the year-end 1993 level.
Total capitalization at the end of the first quarter increased $958,000 to
$130,216,000. This compares to $129,258,000 at November 30, 1993. As a
percent of total capitalization, long-term debt at the end of the first
quarter was 17.5%, compared to 19.0% at the end of fiscal 1993.
CLARCOR recorded a $3,654,000 net reduction of cash in the first quarter of
1994. This compares to a cash increase of $14,346,000 in the first quarter of
1993, a quarter which included the collection of the $20,700,000 proceeds
related to the sale of the Precision Products Group.
Net cash from operating activities totaled $2,132,000 compared to a total of
$2,971,000 in the first quarter of 1993. The difference is due to increased
current year investment in operating assets.
Net cash used in current year first quarter investing activities totaled
$1,589,000, compared to $18,214,000 of net cash generated in the first quarter
of 1993. This current quarter figure reflected investment in plant assets,
while the previous year's first quarter saw the collection of the proceeds
from the sale of the Precision Products Group, which totalled $20,700,000.
Current quarter financing activities used net cash of $4,197,000, compared to
$6,839,000 in the first quarter last 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.
The current level of CLARCOR's operations continue to generate sufficient cash
to fund operating needs, add needed productive capacity, and provide for the
repayment of the Company's long-term debt. Sufficient lines of credit remain
available to meet CLARCOR's current operating needs.
Page 7 of 10
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PART II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the annual meeting of shareholders of CLARCOR Inc. held on
March 31, 1994, all of management's nominees for directors, as
listed in the proxy statement dated February 24, 1994, were
elected and the proposal for adoption of the Company's 1994
Incentive Plan was approved. There were outstanding, as of the
close of business on the February 17, 1994 record date,
14,828,169 shares of common stock. There were present at the
meeting, in person or by proxy, the holders of 13,080,434 shares
of common stock.
The three nominees elected received votes as follows:
<TABLE>
<CAPTION>
FOR WITHHELD
--- --------
<S> <C> <C>
J. Marc Adam 12,534,144 546,290
Dudley J. Godfrey, Jr. 12,534,342 546,092
Stanton K. Smith, Jr. 12,534,382 546,052
</TABLE>
The terms of Milton R. Brown, Frank A. Fiorenza, Don A. Wolf,
Carl J. Dargene, Lawrence E. Gloyd and Richard A. Snell were
continued.
The 1994 Incentive Plan, as described in the proxy statement, was
adopted based on the following votes:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN NON VOTES
--- ------- ------- ---------
<S> <C> <C> <C>
9,063,137 2,523,230 702,236 791,831
</TABLE>
ITEM 6a - Exhibit (11), Computations of Per Share Earnings are presented on
page 9.
ITEM 6b - No reports on Form 8-K have been filed during the quarter ended
February 26, 1994.
Page 8 of 10
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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)
APRIL 8, 1994 By /S/ L. P. HARNOIS
- ------------------- -------------------------------------------
(Date) L. P. Harnois, Senior Vice President and
Chief Financial Officer
Page 10 of 10
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CLARCOR INC.
EXHIBIT (11) - COMPUTATIONS OF PER SHARE EARNINGS
----------
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------
February 26, February 27,
1994 1993
------------ ------------
AVERAGE SHARES OUTSTANDING
- --------------------------
<S> <C> <C>
1. Average number of shares outstanding 14,825,888 14,887,176
2. Net additional shares resulting from
assumed exercise of stock options * 278,193 235,648
------------ ------------
3. Adjusted average shares outstanding
for fully diluted computation
(1 plus 2) 15,104,081 15,122,824
------------ ------------
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Earnings per share of common stock (before
cumulative effect of accounting change):
Primary $.23 $.21
--- ---
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Assuming full dilution $.23 $.20
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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 9 of 10
