<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 March 2, 1996 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.
14,832,845 common shares outstanding
------------------------------------
<PAGE>
PART I - ITEM 1
CLARCOR Inc.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
----------
<TABLE>
<CAPTION>
March 2, November 30
ASSETS 1996 1995
---------- -----------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and short-term cash investments $ 14,151 $ 18,769
Accounts receivable, less allowance for losses of
$1,682 for 1996 and $1,557 for 1995 47,869 50,034
Inventories:
Raw materials 14,603 13,364
Work-in-process 8,749 7,636
Finished products 24,650 21,972
---------- -----------
Total inventories 48,002 42,972
Prepaid expenses 3,995 2,018
Other 3,814 3,777
---------- -----------
Total current assets 117,831 117,570
---------- -----------
Plant assets, at cost 148,429 143,363
Less accumulated depreciation (78,280) (76,327)
---------- -----------
70,149 67,036
---------- -----------
Marketable equity securities, at fair value 4,767 4,696
Excess of cost over fair value of assets acquired,
less accumulated amortization 15,714 14,893
Pension assets 11,563 11,218
Other noncurrent assets 10,010 7,849
---------- -----------
$ 230,034 $ 223,262
---------- -----------
---------- -----------
LIABILITIES
Current liabilities:
Current portion of long-term debt $ 7,610 $ 7,596
Accounts payable 17,985 20,378
Income taxes 3,219 2,013
Accrued and other liabilities 12,143 12,473
---------- -----------
Total current liabilities 40,957 42,460
Long-term debt, less current portion 41,009 34,417
Long-term pension liabilities 5,668 5,226
Other long-term liabilities 9,183 10,003
Minority interest 890 341
Contingencies
SHAREHOLDERS' EQUITY
Capital stock 14,833 14,825
Retained earnings 116,764 115,191
Other shareholders' equity 730 799
---------- -----------
132,327 130,815
---------- -----------
$ 230,034 $ 223,262
---------- -----------
---------- -----------
</TABLE>
See Notes to Consolidated Financial Statements.
Page 2 of 11
<PAGE>
CLARCOR Inc.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
(Unaudited)
-----------
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------
March 2, March 4,
1996 1995
------------ ------------
<S> <C> <C>
Net sales $ 72,084 $ 62,137
Cost of sales 52,108 44,445
------------ ------------
Gross profit 19,976 17,692
Selling and administrative expenses 13,011 11,065
------------ ------------
Operating profit 6,965 6,627
------------ ------------
Other income (expense):
Interest expense (819) (570)
Interest income 231 226
Minority interest in earnings of subsidiary (17) (18)
Other, net (168) 350
------------ ------------
(773) (12)
------------ ------------
Earnings before income taxes 6,192 6,615
Provision for income taxes 2,255 2,643
------------ ------------
Net earnings $ 3,937 $ 3,972
------------ ------------
------------ ------------
Net earnings per common share: $ 0.27 $ 0.27
------------ ------------
------------ ------------
Average number of common shares outstanding 14,830,546 14,768,988
------------ ------------
------------ ------------
Dividends paid per share $ 0.1600 $ 0.1575
------------ -----------
------------ -----------
</TABLE>
See Notes to Consolidated Financial Statements.
Page 3 of 11
<PAGE>
CLARCOR Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
-----------
<TABLE>
<CAPTION>
Three Months Ended
----------------------------
March 2, March 4,
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 3,937 $ 3,972
Depreciation and amortization 2,268 1,913
Changes in assets and liabilities (8,830) (9,660)
Other, net (31) 10
---------- ----------
Net cash used in operating activities (2,656) (3,765)
---------- ----------
Cash flows from investing activities:
Business acquisition, net of cash acquired (1,298) -
Investment in affiliate (111) -
Additions to plant assets (4,777) (3,775)
Disposition of plant assets 129 51
Other, net - 118
---------- ----------
Net cash used in investing activities (6,057) (3,606)
---------- ----------
Cash flows from financing activities:
Proceeds from long-term debt 8,410 -
Reduction of long-term debt (1,847) (1,846)
Purchase of treasury stock (192) -
Cash dividends paid (2,364) (2,321)
Other, net 91 39
---------- ----------
Net cash provided (used in) financing activities 4,098 (4,128)
---------- ----------
Net effect of exchange rate changes on cash (3) (58)
---------- ----------
Net change in cash and short-term cash investments (4,618) (11,557)
Cash and short-term cash investments,
beginning of period 18,769 19,567
---------- ----------
Cash and short-term cash investments,
end of period $ 14,151 $ 8,010
---------- ----------
---------- ----------
Cash paid during the period for:
Interest $ 913 $ 612
---------- ----------
---------- ----------
Income taxes $ 1,159 $ 893
---------- ----------
---------- ----------
</TABLE>
See Notes to Consolidated Financial Statements.
Page 4 of 11
<PAGE>
CLARCOR INC .
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
- -------------------------------------------------------------------------------
1. CONSOLIDATED FINANCIAL STATEMENTS
The November 30, 1995 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 March 2, 1996, the consolidated
statements of earnings, and the consolidated statements of cash flows for
the periods ended March 2, 1996 and March 4, 1995, 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, 1995 annual report to shareholders. The results of
operations for the period ended March 2, 1996 are not necessarily
indicative of the operating results for the full year.
2. SHAREHOLDERS' EQUITY
During the quarter ended March 2, 1996, the Company purchased and retired
10,000 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. BUSINESS ACQUISITION
On February 13, 1996, the Company acquired a 70% ownership in Unifil (Pty.)
Ltd., a South African manufacturer of air filtration products. The
acquisition did not have a significant impact on the results of the
Company.
Also, during the quarter ended March 2, 1995, the Company made an
investment in Baldwin-Weifang Filters Ltd. in Weifang, China.
Page 5 of 11
<PAGE>
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CLARCOR's operations generated increases in sales and operating profit in the
first quarter of 1996 compared to the same quarter last year. Net earnings and
earnings per share were flat. Solid gains were recorded from operations in both
the Filtration Products and Consumer Products segments, and the Company expects
to see continued strength in the operations of both of these segments for the
remainder of fiscal 1996.
Current year consolidated net sales increased 16.0% to $72,084,000 from
$62,137,000 reported in the first quarter of 1995. Filtration Products Segment
sales increased 18.8% over sales in the comparable quarter of last year. Most
of the sales increase was due to the inclusion of sales from the September 1995
acquisition of Hastings Filters, Inc. However, this segment also recorded sales
increases in its heavy duty, railroad locomotive, and industrial air filter
markets. First quarter sales in the Consumer Products Segment increased 5.6%
over those of the prior year, principally the result of increased sales of metal
spice containers and battery shells.
First quarter consolidated operating profit increased 5.1% to $6,965,000 in the
current year from $6,627,000 in the same quarter last year, the result of
increases in both of the Company's segments. Operating profit in the Filtration
Products Segment increased 3.4%, on the strength of gains recorded in the
segment's Baldwin Filters heavy duty operation. Operating profits in the
Airguard Industries industrial air filter and Clark Filter railroad locomotive
operations declined slightly. Current quarter Consumer Products Segment
operating profit increased 20.4% over the first quarter of last year due to
increased metal products volume.
Net other expense in the first quarter of the current year totaled $773,000,
compared to a net expense in the prior year first quarter of $12,000. This
change reflects the impact of income related to currency gains in 1995, which
did not recur in the current year, and increased interest expense resulting from
new borrowings after the first quarter of last year.
Earnings before income taxes in the first quarter totaled $6,192,000 in the
current year, down from $6,615,000 in the comparable quarter last year.
Although operating profit gains were recorded in both of the Company's segments,
these gains were more than offset by the increased other expense.
The income tax provision in the current year first quarter was $2,255,000, an
effective rate of 36.4% of pre-tax earnings. This compares to prior year first
quarter income taxes totaling $2,643,000, or an effective rate of 40.0%. The
current year first quarter effective rate reflected the favorable treatment of
certain income tax items at the end of fiscal year 1995 and a reduction in
previously established accruals for taxes which was not recorded in comparable
quarter last year.
Net earnings in the first quarter of the current year were flat. Earnings of
$3,937,000 in 1996 compare to earnings of $3,972,000 last year.
Earnings per share from operations in the current quarter were $.27, the same as
in the first quarter of last year.
Page 6 of 11
<PAGE>
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
CLARCOR's March 2, 1996 consolidated balance sheet remained strong and liquid.
Total assets increased 3.0%, or $6,772,000 over the year-end 1995 level.
Current year first quarter total assets were $230,034,000 and compare to
$223,262,000 at year-end 1995. Working capital at the end of the first quater
totaled $76,874,000, compared to $75,110,000 at November 30, 1995. Among the
current assets and liabilities, inventories were increased 11.7% to $48,002,000,
to accommodate increased shipment levels anticipated for the first half of 1996.
Accounts receivable declined 4.3% to $47,869,000, reflecting differences in the
timing of customer collections received at year-end and the end of the first
quarter. Cash and short-term cash investment balances were reduced $4,618,000.
Total current liabilities declined $1,503,000, due chiefly to the timing of
accounts payable payments. The current ratio at the end of the first quarter
was 2.9:1, compared to 2.8:1 at the end of fiscal 1995.
During the first quarter, plant assets net of accumulated depreciation increased
by $3,113,000 to $70,149,000. Major items included in this change are the
expansions of the J. L. Clark plastics facility and the Hastings Filter plant,
the addition of assets related to the Unifil acquisition, and normal replacement
of productive assets.
The long-term debt less the current portion increased to $41,009,000 due chiefly
to the issuance of $8,410,000 of bonds related to the expansion of the Hastings
facility, reduced by scheduled debt repayments.
Operations in the first quarter increased consolidated shareholders' equity
$1,512,000 over the year-end 1995 level, to $132,327,000.
Total capitalization, consisting of shareholders' equity and long-term debt,
totaled $173,336,000 at the end of the first quarter, and compare to
$165,232,000 at fiscal year-end 1995. As a percent of total capitalization,
long-term debt at the end of the first quarter was 23.7% compared to 20.8% at
November 30, 1995.
CLARCOR's first quarter operations resulted in a net cash decrease of $4,618,000
in 1996. In 1995, first quarter operations resulted in a cash decrease of
$11,557,000.
Operating activities in the first quarter used a total of $2,656,000 of cash,
compared to $3,765,000 of cash used in the first quarter of 1995. In both
years, increased investment in inventories and accounts payable and accrued
liabilities more than offset net earnings and noncash items of depreciation and
amortization.
Net cash of $6,057,000 was used in the current first quarter investing
activities, and compares to $3,606,000 of net cash used in the first quarter
last year. The current quarter increase was due principally to investment in
the Unifil acquisition and increased investment in plant asset additions.
Financing activities in the current year first quarter provided net cash of
$4,098,000, compared to $4,128,000 used in the first quarter last year. The
difference reflected $8,410,000 of industrial revenue bonds used to finance the
Hastings Filters plant expansion.
Page 7 of 11
<PAGE>
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
CLARCOR's current operations are sufficient to generate adequate cash to fund
operating needs, pay dividends, and provide for the repayment of the Company's
long-term debt. Sufficient lines of credit remain available to fund current
operating needs.
In the Filtration Products Segment, Baldwin Filters continues to be the
principal contributor to CLARCOR's sales and earnings, and further growth is
anticipated throughout 1996. Baldwin continues to introduce a significant
number of new mobile filtration products, and when combined with Hastings
Filters, offers the widest range of mobile filtration products available.
Airguard Industries set an internal record for productivity in the first quarter
of this year. Airguard appears to have passed the manufacturing and
distribution problems that reduced its profitability last year. Some softness
developed in the sales of environmental and industrial filters toward the end of
the first quarter. It is too early to determine if this is temporary, and
Airguard is in the process of reducing manufacturing and selling costs in the
event sales lag its budget for the year.
The first quarter is always the slowest for the Consumer Products Segment.
Despite this, the Consumer segment did well with growth in both metal and
plastic products. Consumer's metal and plastics lines each increased operating
profits compared to last year's first quarter. The expansion of the Rockford,
Illinois plastics manufacturing facility was completed, and it is anticipated
that plastics sales will continue the growth trend of the past several years.
It is too early to forecast metal sales for 1996, due to the seasonal nature of
the business, with most of the business coming in the third and fourth quarters.
However, early order indications from customers are promising, and the Company
is optimistic about metal sales and operating profits for the year.
Page 8 of 11
<PAGE>
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 28, 1996, all of management's nominees for directors, as
listed in the proxy statement dated February 22, 1996, were
elected. There were outstanding, as of the close of business on
the February 15, 1996 record date, 14,832,845 shares of common
stock. There were present at the meeting, in person or by proxy,
the holders of 13,511,606 shares of common stock.
The three nominees elected received votes as follows:
<TABLE>
<CAPTION>
FOR WITHHELD
--- --------
<S> <C> <C>
Milton R. Brown 13,416,181 95,425
Frank A. Fiorenza 13,410,560 101,046
Don A. Wolf 13,407,085 104,521
</TABLE>
The terms of J. Marc Adam, Carl J. Dargene, Lawrence E. Gloyd,
Dudley J. Godfrey, Jr., Stanton K. Smith, Jr. and Richard A.
Snell were continued.
Item 6a - Exhibit (11), Computations of Per Share Earnings are presented on
page 10.
Item 6b - Subsequent to the end of the quarter ended March 2, 1996, the
Company filed a Form 8-K disclosing the adoption by the Board of
Directors of a new shareholder rights plan to replace an existing
plan that expires on April 25, 1996. The new plan, as was the
old plan, is designed to deter coercive takeover tactics and
provide the Company's Board with the opportunity to fully analyze
and consider any offers for the Company.
Page 9 of 11
<PAGE>
CLARCOR INC.
EXHIBIT (11) - COMPUTATIONS OF PER SHARE EARNINGS
----
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------
MARCH 2, MARCH 4,
1996 1995
-------------------------------
AVERAGE SHARES OUTSTANDING
- --------------------------
<S> <C> <C>
1. Average number of shares outstanding 14,830,546 14,768,988
2. Net additional shares resulting from
assumed exercise of stock options* 316,543 222,592
-------------------------------
3. Adjusted average shares outstanding
for fully diluted computation (1 plus 2) 15,147,089 14,991,580
-------------------------------
-------------------------------
Earnings per share of common stock:
Primary $.27 $.27
---- ----
---- ----
Assuming full dilution $.26 $.26
---- ----
---- ----
</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 10 of 11
<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)
April 11, 1996 By /s/ Bruce A. Klein
- -------------------------- -----------------------------
(Date) Bruce A. Klein, Vice President -
Finance and Chief
Financial Officer
Page 11 of 11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-03-1995
<PERIOD-END> MAR-02-1996
<CASH> 14,151
<SECURITIES> 0
<RECEIVABLES> 49,551
<ALLOWANCES> 1,682
<INVENTORY> 48,002
<CURRENT-ASSETS> 117,831
<PP&E> 148,429
<DEPRECIATION> 78,280
<TOTAL-ASSETS> 230,034
<CURRENT-LIABILITIES> 40,957
<BONDS> 41,009
0
0
<COMMON> 14,833
<OTHER-SE> 117,494
<TOTAL-LIABILITY-AND-EQUITY> 230,034
<SALES> 72,084
<TOTAL-REVENUES> 72,084
<CGS> 52,108
<TOTAL-COSTS> 52,108
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 819
<INCOME-PRETAX> 6,192
<INCOME-TAX> 2,255
<INCOME-CONTINUING> 3,937
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,937
<EPS-PRIMARY> .27
<EPS-DILUTED> .26
</TABLE>
