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 March 31,1997 Commission File Number 1-3489
CLARY CORPORATION
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(Exact name of registrant as specified in its charter)
California 95-0630196
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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 April 22,1997 there were 1,807,319 shares of common stock outstanding.
Transitional Small Business Disclosure Format- YES
CLARY CORPORATION
Statement of Operations
Three Months Period Ended March 31,
Profit and Loss Information
1997 1996
Net Sales and Other Income $ 848,000 $1,645,000
Cost and Expenses
Cost of products sold 594,000 1,185,000
Engineering and product develop. 85,000 104,000
Selling and Service 114,000 222,000
General and Administrative 80,000 85,000
Interest expense 30,000 45,000
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903,000 1,641,000
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Net (loss) ( 55,000) ( 4,000)
============ ============
Net (Loss) per common share ($ .03) $ -0-
============ ============
Average number of shares 1,807,319 1,807,319
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Dividends per share None None
CLARY CORPORATION
CONSOLIDATED BALANCE SHEET
ASSETS March 31,1997 December 31,1996
CURRENT ASSETS
Cash $ 259,000 $ 123,000
Cash Restricted 300,000 300,000
Notes and accounts receivable
less allowance for doubtful
amounts of $13,000 in 1997 and
$20,000 in 1996. 372,000 469,000
Inventories, Principally finished goods
and work-in-process 1,826,000 1,908,000
Prepaid Expenses & other assets 61,000 42,000
---------------- ---------------
Total Current Assets 2,818,000 2,842,000
PROPERTY,PLANT & EQUIPMENT
Machinery & Equipment 1,336,000 1,336,000
Dies, Jigs and Fixtures 31,000 31,000
Leasehold improvements 60,000 60,000
---------------- ---------------
1,427,000 1,427,000
Less:
Accumulated Depreciation.
and Amortization 1,324,000 1,312,000
---------------- ----------------
103,000 115,000
OTHER ASSETS
Miscellaneous 59,000 59,000
---------------- ---------------
TOTAL ASSETS $ 2,980,000 $ 3,016,000
=============== ================
LIABILITIES AND
STOCKHOLDERS' EQUITY March 31,1997 December 31,1996
CURRENT LIABILITIES
Notes Payable $ 600,000 $ 650,000
Accounts Payable and
Accrued Expenses 686,000 603,000
Accrued Payroll and
Related Expenses 71,000 90,000
Customer deposits 29,000 24,000
---------------- --------------
Total Current Liabilities 1,386,000 1,367,000
9.5% Convertible Subordinated Notes due
October 17,2000 600,000 600,000
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 (6,614,000) (6,614,000)
Current year's earnings ( 55,000 ) -0-
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Total Equity 994,000 1,049,000
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TOTAL LIABILITIES & STOCKHOLDER'S
EQUITY $ 2,980,000 $ 3,016,000
============== ==============
CLARY CORPORATION
STATEMENT OF CASH FLOWS
For the Three Month Period
Ended March 31
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) earnings ($ 55,000) $ 4,000
Adjustment to reconcile net(loss) earnings
to net cash provided by (used for) operating
activities:
Depreciation and amortization 12,000 13,000
Provision for losses on accounts receivable ( 7,000) -0-
Change in assets and liabilities:
Decrease(increase) in accts. receivable 104,000 59,000
Decrease(Increase) in Inventory 82,000 (84,000)
(Increase)decrease prepaid expenses (19,000) 5,000
Decrease in other assets -0- 1,000
Increase in accounts payable
and accrued Expenses 64,000 40,000
Increase in customer deposits 5,000 32,000
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Net cash provided by (used for) operating
activities 186,000 (375,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures -0- (2,000)
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Net Cash (used) by investing activities -0- ( 2,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (re-payments) borrowing under
line of credit ( 50,000) 155,000
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Net cash provided(used) by financing activities ( 50,000) 155,000
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Net increase(decrease)in cash
and cash equivalents 136,000 (222,000)
Cash and cash equivalents at beginning of period 123,000 292,000
-------------- ----------
Cash and cash equivalents at end of quarter $ 259,000 $ 70,000
============ =========
Part I
Item #2
Management Discussion and Analysis
Results of Operation
Sales and other revenues for the first quarter 1997 decreased $797,000 or 48.5%
from the first quarter of 1996. The decrease was caused by reduced sales
the Registrant's largest customers and a reorganization of the company's
sales department. During 1996 the company entered into strategic alliance
with an affiliate Company to develop a new line of digital power system to
partially replace its older, but still reliable analog power boards.
The first quarter 1996 reflects higher sales of the older line which will
not adequately replaced with the new line until the third quarter of 1997.
Cost of sales decreased $591,000 or 49.9 over the period. This cost decrease
was due to the decreased sales. Selling and administrative expenses decreased
$113,000 or 36.8% over teh period. The majority of this decrease was reduced
commission on the reduced sales as well as general reorganizing of the sales
department. Engineering and development expenses in the quarter for 1997 were
reduced $19,000 or 18.3%. This reduction was due to product development
alliance the Company has with its affiliate. Interest expenses was reduced
by $15,000. or 33.4% due to reduced borrowing as cash flow was enhanced by
reduction of inventories.
Liquidity and Capital Requirements
The Registrant believes funds provided from operations and short-term lines of
credit will be sufficient to fund its immediate needs for working capital.
Capital expenditures will be minimal and funded from working capital or placed
on short-term leases.
The Registrant's short-term secured borrowing with the bank is subject to
renewal in May 1,1997.
Item #3
NOTES TO PART I OF THIS REPORT
NOTE 1: As of March 31,1997, 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 26,000 shares of common stock for purchase
by officers or employees under its 1984 Employee Incentive Stock Option
Plan and an additional 100,000 shares reserved for purchase by officers and
key employees under its 1996 Employee Incentive Stock Option Plan. Also, the
Company has 40,000 shares of common stock for purchase by its Executive Vice-
President under a non-qualified 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 28,1997
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:April 24,1997
John G. CLary
President and Chief Executive Officer
Date:April 24,1997
Donald G. Ash
Treasurer and Chief Financial Officer
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