<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 September 2, 1995 Commission File Number 0-3801
CLARCOR INC.
------------------------------------------------------
(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.
14,821,862 common shares outstanding
------------------------------------
Page 1 of 12
<PAGE>
PART I - ITEM 1
CLARCOR Inc.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
------------
<TABLE>
<CAPTION>
September 2, November 30,
ASSETS 1995 1994
----------- -----------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and short-term cash investments $ 26,320 $ 19,567
Accounts receivable less allowance for losses of
$1,569 for 1995 and $1,580 for 1994 45,640 42,545
Inventories:
Raw materials 15,008 12,009
Work-in-process 6,922 3,799
Finished product 20,017 14,450
----------- -----------
Total inventories 41,947 30,258
Prepaid expenses 3,217 2,926
Other 3,348 3,154
----------- -----------
Total current assets 120,472 98,450
----------- -----------
Plant assets, at cost 131,872 121,659
Less accumulated depreciation (74,549) (69,044)
----------- -----------
57,323 52,615
----------- -----------
Marketable equity securities, at fair value 4,432 3,655
Excess of cost over fair value of assets acquired,
less accumulated amortization 15,042 15,191
Pension assets 11,428 10,237
Other noncurrent assets 7,569 8,300
----------- -----------
$ 216,266 $ 188,448
----------- -----------
----------- -----------
LIABILITIES
Current liabilities:
Current portion of long-term debt $ 7,580 $ 7,579
Accounts payable 14,940 13,769
Income taxes 3,345 2,051
Accrued and other liabilities 13,060 16,062
----------- -----------
Total current liabilities 38,925 39,461
Long-term debt less current portion 36,333 17,013
Long-term pension liabilities 5,998 5,616
Other long-term liabilities 8,886 8,725
Minority interest 341 171
Contingencies
SHAREHOLDERS' EQUITY
Capital stock 14,822 14,804
Retained earnings 110,364 103,013
Other shareholders' equity 597 485
----------- -----------
125,783 118,302
Common stock in treasury, at cost - (840)
----------- -----------
125,783 117,462
----------- -----------
$ 216,266 $ 188,448
----------- -----------
----------- -----------
</TABLE>
See Notes to Consolidated Financial Statements.
Page 2 of 12
<PAGE>
CLARCOR Inc.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
(Unaudited)
-----------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------- ---------------------------
September 2, August 27, September 2, August 27
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 71,829 $ 67,724 $ 204,444 $ 188,745
Cost of sales 51,349 47,724 146,173 133,642
------------ ------------ ------------ ------------
Gross profit 20,480 20,000 58,271 55,103
Selling and administrative expenses 10,751 10,318 33,243 32,388
------------ ------------ ------------ ------------
Operating profit 9,729 9,682 25,028 22,715
------------ ------------ ------------ ------------
Other income (expense):
Interest expense (661) (659) (1,804) (2,128)
Interest income 227 113 609 339
Minority interest in earnings
of subsidiary 21 - 61 -
Other, net 20 357 228 750
------------ ------------ ------------ ------------
(393) (189) (906) (1,039)
------------ ------------ ------------ ------------
Earnings before
income taxes 9,336 9,493 24,122 21,676
Provision for income taxes 3,450 3,614 9,358 8,207
------------ ------------ ------------ ------------
Earnings before cumulative effect
of accounting change 5,886 5,879 14,764 13,469
Cumulative effect of accounting change - - - 630
------------ ------------ ------------ ------------
Net earnings $ 5,886 $ 5,879 $ 14,764 $ 14,099
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net earnings per common share:
From operations $ 0.40 $ 0.40 $ 1.00 $ 0.91
From cumulative effect of
accounting change - - - 0.04
------------ ------------ ------------ ------------
$ 0.40 $ 0.40 $ 1.00 $ 0.95
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Average number of common shares
outstanding 14,813,088 14,813,169 14,793,544 14,821,256
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Dividends paid per share $ 0.1575 $ 0.1550 $ 0.4725 $ 0.4650
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See Notes to Consolidated Financial Statements.
Page 3 of 12
<PAGE>
CLARCOR Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
-----------
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------
September 2, August 27,
1995 1994
---------- -------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 14,764 $ 14,099
Depreciation and amortization 5,998 5,759
Changes in assets and liabilities (15,857) (8,091)
Other, net (6) (1,418)
---------- -------
Net cash provided by operating activities 4,899 10,349
---------- -------
Cash flows from investing activities:
Additions to plant assets (10,687) (7,838)
Disposition of plant assets 57 268
Other, net (209) 483
---------- -------
Net cash used in investing activities (10,839) (7,087)
---------- -------
Cash flows from financing activities:
Proceeds from long-term debt 25,000 -
Reduction of long-term debt (5,679) (5,899)
Purchase of treasury stock - (487)
Cash dividends paid (6,967) (6,874)
Other, net 281 -
---------- -------
Net cash provided by (used in) financing activities 12,635 (13,260)
---------- -------
Net effect of exchange rate changes on cash 58 -
---------- -------
Net change in cash and short-term cash investments 6,753 (9,998)
Cash and short-term cash investments,
beginning of period 19,567 13,838
---------- -------
Cash and short-term cash investments,
end of period $ 26,320 $ 3,840
---------- -------
---------- -------
Cash paid during the period for:
Interest $ 1,699 $ 2,228
---------- -------
---------- -------
Income taxes $ 7,894 $ 6,627
---------- -------
---------- -------
</TABLE>
See Notes to Consolidated Financial Statements.
Page 4 of 12
<PAGE>
CLARCOR INC .
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. CONSOLIDATED FINANCIAL STATEMENTS
The November 30, 1994 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 September 2, 1995, the consolidated
statements of earnings, and the consolidated statements of cash flows for
the periods ended September 2, 1995 and August 27, 1994, 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 consol-
idated financial statements and notes thereto included in the Company's
November 30, 1994 annual report to shareholders. The results of operations
for the period ended September 2, 1995 are not necessarily indicative of
the operating results for the full year.
2. SHAREHOLDERS' EQUITY
During the quarter ended March 4, 1995, the Company retired all of the
shares of common stock held in treasury. All such shares resumed the
status of authorized and unissued shares of common stock of the Company.
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 No. 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
<PAGE>
CLARCOR INC .
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
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- --------------------------------------------------------------------------------
4. SUBSEQUENT EVENT
The Company purchased certain assets of Hastings Manufacturing Company
constituting its filtration products business on September 3, 1995, for
$14.2 million, subject to adjustment based on physical inventory results.
The assets acquired included filtration inventories, property and
equipment, and three brand names. The acquisition has been accounted for
by the purchase method of accounting and the operating results of the
business named Hastings Filters, Inc., a wholly owned subsidiary of the
Company, will be included in the Company's consolidated results of
operations from the date of acquisition. The Company has not yet completed
an evaluation of the fair value of the acquired assets, but believes, at
this time, that the excess of cost over the fair value of the acquired
assets will not be material.
Page 6 of 12
<PAGE>
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 and net earnings when compared to the prior year. Earnings per share
were unchanged from the third quarter of 1994 to the comparable quarter in 1995.
For the nine months, current year-to-date operations reflected 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, and to service and
repay the Company's debt.
Consolidated net sales of $71,829,000 in the third quarter of 1995 increased
6.1% over sales of $67,724,000 reported in the third quarter of last year.
Compared to the prior year's quarter, sales in both the Filtration Products and
the Consumer Products segments increased by 6.5% and 4.8%, respectively. Sales
increases in the Filtration Products segment were led by strong gains in the
segment's heavy duty and railroad locomotive markets. Current quarter sales of
the Consumer Products segment were above those of the prior year's third quarter
due to growth in plastics and metals business offsetting a decline in the
aluminum tube market.
CLARCOR's third quarter operating profit of $9,729,000 increased $47,000, or
0.5%, over operating profit of $9,682,000 reported last year. Operating profit
in the Filtration Products segment increased 4.2%. This increase reflected
strong current quarter profits in the heavy-duty mobile filtration market
overcoming poor operating results in industrial and environmental businesses and
compares to last year's quarter which included strong operating results from
both heavy-duty and industrial operations. In the Consumer Products segment,
operating profits were lower than last year. This was the result of delays in
shipping commemorative metal containers, a weak aluminum tube market and
temporary technical problems encountered in manufacturing plastic containers.
Other income (expenses) was a net expense of $393,000, compared to expense of
$189,000 in the third quarter of 1994. The current year expense increase
principally reflected increased interest expense from a new $25 million term
loan which more than offset increases in interest income. Also, the third
quarter in 1995 did not include equity earnings from an overseas affiliate which
contributed to other income in 1994. CLARCOR reduced its ownership position in
the overseas affiliate from 20% to 5% in 1994.
The provision for income taxes in the third quarter totaled $3,450,000,
reflecting an effective rate of 37.0%. This compares to a total of $3,614,000
in the prior year's quarter, an effective rate of 38.1%. The lower rate in the
current year reflected a reduction in previously established accruals for taxes
which was not recorded in the previous quarter.
Consolidated net earnings in the third quarter totaled $5,886,000 in the current
year, an increase of $7,000, or 0.1% compared to earnings of $5,879,000 recorded
in the same quarter last year.
Earnings per share from operations were $.40 in the current quarter, unchanged
from the $.40 reported in the third quarter of the prior year.
Page 7 of 12
<PAGE>
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED
Consolidated net sales for the nine months year-to-date totaled $204,444,000, an
increase of $15,699,000 or 8.3%, over year-to-date net sales of $188,745,000
recorded in 1994. Compared to the prior year, net sales in both the Filtration
Products segment and the Consumer Products segment increased. Sales in the
Company's Filtration Products segment increased 8.2% over the prior year's
total. This increase is attributed to increased sales in the heavy duty and
railroad locomotive markets offsetting a small decline for the nine-month period
in the industrial and environmental air filtration market. Consumer Products
segment sales increased 8.8% from the level of the prior year-to-date. This
increase reflected strong growth in the segment's plastic business which
increased its sales by nearly 77%. The segment's metal and tube business
recorded small declines in sales for the nine-month period from the comparable
period in 1994.
Consolidated current year-to-date operating profit totaled $25,028,000 and was
$2,313,000, or 10.2% higher than profit of $22,715,000 recorded last year. The
increase reflected higher profits in both the Filtration Products and Consumer
Products segments. Profits in the Filtration Products segment increased by 9.6%
or $1,841,000 over 1994. Consumer Products operating profit was higher than in
the prior nine-month period by $472,000 or 13.7% due primarily to profits in the
plastic container business line which operated at a loss in 1994.
Other income (expenses) for the current nine months was a net expense of
$906,000, compared to expense of $1,039,000 in 1994. The current year net
expense was a combination of reduced equity earnings from an overseas affiliate,
lower interest expense and higher interest income compared to amounts recorded
in 1994.
Consolidated net earnings for the current nine months totaled $14,764,000, an
increase of $665,000 or 4.7% over net earnings of $14,099,000 in the prior nine
months. The 1994 earnings were increased by $630,000 due to the cumulative
effect of an accounting change from the adoption of SFAS No. 109.
Earnings per share from operations for the nine-month period totaled $1.00,
compared to $.95 per share earned during the comparable period last year. The
prior year per share earnings were increased by $.04 from the adoption of SFAS
No. 109.
The Company maintained a strong and liquid consolidated balance sheet through
the nine-month period of the current year. Current assets increased to
$120,472,000 from $98,450,000 at the beginning of fiscal 1995. Within the
current assets, cash increased due to funds received from a new $25,000,000
long-term borrowing. Accounts receivable increased from $42,545,000 at the
beginning of the year to $45,640,000 at the end of the third quarter, an amount
in line with the increase in sales for the nine-month period. Inventories
increased $11,689,000 to $41,947,000 in preparation for heavy fourth quarter
shipments and a new Filtration Products segment distribution center which was
completed and stocked in the summer of 1995. Working capital totaled
$81,547,000 at the end of the current nine months and compares to $58,989,000 at
November 30, 1994, an increase due primarily to the new long-term borrowing
agreement. The current ratio was 3.1:1 at September 2, 1995. This compares to
2.5:1 at the beginning of the year. Continued investment in productive assets
increased the level of net plant assets $4,708,000 to $57,323,000. Total assets
of $216,266,000 increased $27,818,000, or 14.8%, over total assets of
$188,448,000 at the beginning of the year.
Page 8 of 12
<PAGE>
PART I - ITEM
MANAGEMENT'S DISCUSSION AND ANALYSTS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED
The long-term portion of notes payable increased to $36,333,000 from
$17,013,000, principally the result of a new long-term borrowing of $25,000,000
offset by payments made on the Company's other fixed rate debt. The new
borrowing will be used to fund acquisitions, an increased level of capital
equipment purchases in 1995 and for general corporate purposes. The new
borrowing bears interest at a fixed rate of 6.69% and pays interest only for
four years with amortization of $5,000,000 per year in the succeeding five year
period.
CLARCOR increased the shareholders' equity balance by $8,321,000 to
$125,783,000. This increase results from current year operations, net of
dividend payments to shareholders.
The Company's capitalization remained healthy at the end of the third quarter.
Total capitalization at the end of the current quarter was $162,116,000 (equity
plus long-term debt). Equity capital was 77.6% of the total, while debt capital
was 22.4%. This compares to total capitalization at the end of the prior year
of $134,475,000. Of this total, equity capital was 87.3% while debt capital was
12.7%
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 $4,899,000, compared to net cash of $10,349,000 from operating
activities in the prior year. The decrease in the cash produced is chiefly the
result of increased investment in inventories. Net cash of $10,839,000 was used
in the current nine months for investing activities, principally plant asset
additions. Cash provided by current year financing activities totaled
$12,635,000, compared to cash used in financing activities of $13,260,000 in
1994. The current year usage reflects $5,679,000 of long-term debt payments,
dividend payments of $6,967,000 offset by $25,000,000 from the new borrowing
agreement.
CLARCOR's core businesses remain healthy and are projected to generate continued
growth in sales, operating profit and cash flow.
On September 3, 1995, CLARCOR purchased the filtration products business of
Hastings Manufacturing Company. CLARCOR acquired inventories, production and
distribution facilities in Yankton, South Dakota and Knoxville, Tennessee, and
filtration machinery and equipment for approximately $14,200,000. The asset
purchase price may be changed based upon a physical count and valuation of
inventories. The acquisition will be accounted for in the fourth quarter of
1995 and has not been reflected in the accounting records for the nine months
ended September 2, 1995. Costs associated with integrating the acquired
filtration business into CLARCOR's other filtration operations are expected to
lower earnings by approximately $0.05 per share in the fourth quarter of 1995.
Page 9 of 12
<PAGE>
PART II - OTHER INFORMATION
Item 6a - Exhibit (11), Computations of Per Share Earnings are presented on
page 11.
Item 6b - A Form 8-K was filed on June 26, 1995. It announced the Board of
Directors' appointment of Norman E. Johnson as President and
Chief Operating Officer. Also, a Form 8-K was filed subsequent
to the quarter ending September 2, 1995 to report the acquisition
of Hastings Filters, Inc.
Page 10 of 12
<PAGE>
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 10, 1995 By /s/ Bruce A. Klein
- ----------------------------- -----------------------------------------
(Date) Bruce A. Klein, Vice President - Finance
and Chief Financial Officer
Page 12 of 12
<PAGE>
CLARCOR INC.
EXHIBIT (11) - COMPUTATIONS OF PER SHARE EARNINGS
---
<TABLE>
<CAPTION>
NINE MONTHS ENDED
--------------------------
SEPTEMBER 2, AUGUST 27,
1995 1994
--------------------------
<S> <C> <C>
AVERAGE SHARES OUTSTANDING
- --------------------------
1. Average number of shares 14,793,544 14,821,256
2. Net additional shares resulting from assumed
exercise of stock options* 372,223 222,219
--------------------------
3. Adjusted average shares outstanding for fully
diluted computation (1 plus 2) 15,165,767 15,043,475
--------------------------
--------------------------
Earnings per share of common stock:
Primary $1.00 $ .95
----- -----
----- -----
Assuming full dilution $ .97 $ .94
----- -----
----- -----
</TABLE>
* 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.
Page 11 of 12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-02-1995
<PERIOD-START> DEC-04-1994
<PERIOD-END> SEP-02-1995
<CASH> 26,320
<SECURITIES> 0
<RECEIVABLES> 47,209
<ALLOWANCES> 1,569
<INVENTORY> 41,947
<CURRENT-ASSETS> 120,472
<PP&E> 131,872
<DEPRECIATION> 74,549
<TOTAL-ASSETS> 216,266
<CURRENT-LIABILITIES> 38,925
<BONDS> 36,333
<COMMON> 14,822
0
0
<OTHER-SE> 110,961
<TOTAL-LIABILITY-AND-EQUITY> 125,783
<SALES> 204,444
<TOTAL-REVENUES> 204,444
<CGS> 146,173
<TOTAL-COSTS> 146,173
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,804
<INCOME-PRETAX> 24,122
<INCOME-TAX> 9,358
<INCOME-CONTINUING> 14,764
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,764
<EPS-PRIMARY> 1.00
<EPS-DILUTED> .97
</TABLE>
