FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Quarter Ended September 30, 1996 Commission File Number 1-3489
CLARY CORPORATION
- ------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-0630196
- ------------------------------------------------------------------------------
State or other Jurisdiction of (I.R.S. Employer I.D)
incorporation or organization)
1960 S. Walker Avenue Monrovia, California 91016
Registrant's telephone number, including area code (818)359-4486
Indicated by check 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___
As of October 25,1996 there were 1,807,319 shares of common stock outstanding.
CLARY CORPORATION
Statement of Operations
Three Months Period Ended September 30,
Profit and Loss Information
1996 1995
Net Sales and Other Income $1,217,000 $1,667,000
Cost and Expenses
Cost of products sold 944,000 1,219,000
Engineering and product develop. 97,000 93,000
Selling and Service 171,000 245,000
General and Administrative 81,000 73,000
Interest expense 44,000 40,000
---------- ------------
1,337,000 1,670,000
---------- -----------
Net (loss) ( 120.000) ( 3,000)
============ ============
Net (Loss) per common share ($ .07) $ -0-
============ ============
Average number of shares 1,807,319 1,807,319
------------- --------------
Dividends per share None None
CLARY CORPORATION
Statement of Operations
Nine Months Period Ended September 30,
Profit and Loss Information
1996 1995
Net Sales and Other Revenue $4,416,000 $ 4,901,000
Cost and Expenses
Cost of products sold 3,256,000 3,490,000
Engineering and product develop. 294,000 301,000
Selling and Service 1) 768,000 798,000
General and Administrative 1) 404,000 229,000
Interest expense 133,000 118,000
-------------- ------------
4,855,000 4,936,000
-------------- -------------
(Loss) before income taxes ( 439,000) ( 35,000)
Income tax expense 1,000 1,000
--------------- -------------
Net (loss) ($ 440,000) ($ 36,000)
=============== ==============
Net (Loss) per common share ($ .24) ($ .02)
=============== ==============
Average number of shares 1,807,319 1,807,319
---------------- ----------------
Dividends per share None None
1) In 1996 includes $150,000 in each classification for downsizing,
reorganization and future legal expenses.
CLARY CORPORATION
CONSOLIDATED BALANCE SHEET
ASSETS September 30,1996 December 31,1995
CURRENT ASSETS
Cash $ 136,000 $ 292,000
Cash Restricted 300,000 300,000
Notes and accounts receivable
less allowance for doubtful
amounts of $20,000 in 1996 and
$20,000 in 1995. 734,000 838,000
Inventories, Principally finished goods
and work-in-process 1,968,000 2,010,000
Prepaid Expenses & other assets 50,000 61,000
---------------- ---------------
Total Current Assets 3,188,000 3,501,000
PROPERTY,PLANT & EQUIPMENT
Machinery & Equipment 1,332,000 1,326,000
Dies, Jigs and Fixtures 31,000 31,000
Leasehold improvements 60,000 60,000
---------------- ---------------
1,423,000 1,417,000
Less:
Accumulated Depreciation.
and Amortization 1,303,000 1,266,000
---------------- ----------------
120,000 151,000
OTHER ASSETS
Miscellaneous 65,000 120,000
---------------- ----------------
65,000 120,000
---------------- ---------------
TOTAL ASSETS $ 3,373,000 $ 3,772,000
=============== ================
LIABILITIES AND
STOCKHOLDERS' EQUITY September 30,1996 December31,1995
CURRENT LIABILITIES
Notes Payable $ 760,000 $ 895,000
Accounts Payable and
Accrued Expenses 383,000 421,000
Accrued Payroll and
Related Expenses 184,000 120,000
Customer deposits 31,000 31,000
---------------- --------------
Total Current Liabilities 1,358,000 1,467,000
9.5% Convertible Subordinated Notes due
October 17,2000 600,000 600,000
Long term debt 150,000 - 0-
STOCKHOLDER'S EQUITY
Preferred Stock 55,000 55,000
Common Stock and additional stated
value arising from conversion of preferred
stock 2,509,000 2,509,000
Additional paid-in capital 5,099,000 5,099,000
Beginning of year deficit (5,958,000) (5,958,000)
Current year's earnings ( 440,000 ) -0-
--------------- --------------
Total Equity 1,265,000 1,705,000
--------------- ---------------
TOTAL LIABILITIES & STOCKHOLDER'S
EQUITY $ 3,373,000 $ 3,772,000
============== ==============
CLARY CORPORATION
STATEMENT OF CASH FLOWS
For the Nine Month Period
Ended September 30
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Operating (Loss) ($ 140,000 $ ( 36,000)
Reserve for downsizing and legal losses ( 300,000) -0-
-------------- ------------
Net loss ( 440,000) ( 36,000)
Adjustments to reconcile net loss
to net cash (used) by operating activities:
Depreciation and amortization 37,000 36,000
Provision for losses on accounts receivable -0- 5,000
Change in assets and liabilities:
decrease in accts. receivable 104,000 59,000
Decrease(Increase) in Inventory 42,000 (436,000)
Decrease prepaid expenses 11,000 18,000
Decrease in other assets 55,000 32,000
Increase in accounts payable
and accrued Expenses 26,000 125,000
(Decrease) in customer deposits -0- ( 10,000)
------------ -----------
Net Cash(used) by Operating Activities ( 165,000) (207,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures ( 6,000) ( 8,000)
-------------- -----------
Net Cash (used) by investing activities ( 6,000) ( 8,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (re-payments) borrowing under
line of credit ( 135,000) ( 3,000)
Principal payments under long-term
debt and capital lease obligations -0- ( 2,000)
Reserve for legal contingencies 150,000 -0-
------------- ----------
Net cash provided(used) by financing activities 15,000 ( 5,000)
-------------- ----------
Net(decrease)in cash and cash equivalents ( 156,000) (220,000)
Cash and cash equivalents at beginning of period 292,000 332,000
-------------- ----------
Cash and cash equivalents at end of period $ 136,000 $ 112,000
============ =========
Part I
Management Discussion and Analysis
Results of Operation
Sales and other income for the third quarter 1996 decreased $450,000 or 27.0%
from the third quarter of 1995. The decrease is due to decreased orders from
the Registrant's two largest customers. Orders from both of these customers
should increase in the fourth quarter of 1996. Cost of sales decreased $275,000
or 31.0% in the third quarter of 1996 as compared to the third quarter in 1995.
This decrease was due primarily by the decrease sales but was partially
credited to the increased margins on the products sold. Engineering and
products development decreased $4000.00. Selling and Administrative expenses
decreased $66,000. over the comparable quarters. This decrease was due to
reduced commission on the reduced sales as well as staff reductions since last
year. Interest expenses increased $4,000 in 1996 over the second quarter in
1995.
Liquidity and Capital Requirements
The registrant believes funds provided from operations, inventory reductions
and short-term lines of credit will be sufficient to fund its immediate needs
for working capital. Capital expenditures over the foreseeable future will be
minimal and funded from working capital or placed on short-term leases.
Over the past year the Registrant believes inflation has not had a material
adverse effect on its revenues and earnings.
Item #3
NOTES TO PART I OF THIS REPORT
NOTE 1: As of September 30,1996, the registrant has 12,688 shares of common
stock reserved for conversion of preferred stock and 600,000 shares reserved
for the conversion of the 9 1/2 % convertible subordinated notes. In addition,
the registrant has reserved 49,000 shares for purchase by officers and key
employees under its 1984 Employee Incentive Stock Option Plan and 100,000
shares for purchase by officers and key employees under its 1996 Employee
Incentive Stock Option Plan.
NOTE 2: This report reflects all adjustments which are, in the opinion of
management, necessary to present a fair statement of the results for the
interim period. The report has not been reviewed by our independent public
accountants and is therefore, unaudited.
PART II
OTHER INFORMATION
Item 1 Legal Proceedings-
Refer to registrant's Annual Report to Shareholders and Form 10KSB filed with
the Securities and Exchange Commission on March 29,1996 and April 9,1996
respectively. Also refer to the Registrant's form 10-QSB for the quarter
ended June 30,1996
Item 2 Changes in Securities - Inapplicable
Item 3 Defaults Upon Senior Securities - Inapplicable
Item 4 Submission of Matters to a Vote of Security Holders-Inapplicable
Item 5 Other Information - Inapplicable
Item 6 Exhibits and Reports on Form 8K - None
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CLARY CORPORATION
(Registrant)
Date: OCTOBER 28,1996
D. G. Ash
Chief Financial Officer
Date:OCTOBER 28,1996
John J. Guerin
Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 436
<SECURITIES> 0
<RECEIVABLES> 734
<ALLOWANCES> 20
<INVENTORY> 1968
<CURRENT-ASSETS> 3188
<PP&E> 1423
<DEPRECIATION> 1303
<TOTAL-ASSETS> 3373
<CURRENT-LIABILITIES> 1358
<BONDS> 600
<COMMON> 2509
0
55
<OTHER-SE> (1299)
<TOTAL-LIABILITY-AND-EQUITY> 3373
<SALES> 4416
<TOTAL-REVENUES> 4416
<CGS> 3256
<TOTAL-COSTS> 3256
<OTHER-EXPENSES> 1166
<LOSS-PROVISION> 300
<INTEREST-EXPENSE> 133
<INCOME-PRETAX> (439)
<INCOME-TAX> 1
<INCOME-CONTINUING> (440)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (440)
<EPS-PRIMARY> (.24)
<EPS-DILUTED> (.24)
</TABLE>
