UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarter Ended September 30,1999
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
incororation or organization) Identification No.
1960 So. Walker Avenue Monrovia, California 91016
- ------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (626) 359-4486
N/A
- ----------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Name of each exchange on which registered: Pacific Exchange
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 October28, 1999, there were 1,807,419 shares of common stock outstanding.
<PAGE>
PART 1
ITEM #1 - FORM 10-QSB
CLARY CORPORATION
(Statement of Operations)
<TABLE>
<CAPTION>
PROFIT AND LOSS INFORMATION Three Months Period Ended September 30,
1999 1998
- ----------------------------------- ---------------------------------
<S> <C> <C>
Sales and other revenue $ 1,100,000 $ 837,000
Cost and Expenses:
Cost of products sold 783,000 580,000
Engineering and Product Development 98,000 97,000
Selling and Service 208,000 191,000
General and Administrative 76,000 81,000
Interest Expense 37,000 35,000
--------- ----------
1,202,000 984,000
--------- ---------
Net(loss) ( 102,000) ( 147,000)
=========== ===========
Earnings (loss) per common share $ (.06) $ (.08)
=========== ===========
Average number of shares 1,807,419 1,807,419
Dividends per share None None
<PAGE>
PART 1
ITEM#1-FORM 10QSB
CLARY CORPORATION
(Statement of Operation)
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS PERIOD ENDED SEPTEMBER 30,
PROFIT AND LOSS INFORMATION 1999 1998
- ----------------------------- ------------------------------
<S> <C> <C>
Net Sales and other Revenues $4,476,000 $2,792,000
Cost and Expenses:
Cost of Products Sold 2,957,000 1,968,000
Engineering and Products Development 302,000 288,000
Selling and Service 747,000 569,000
General and Administrative 246,000 238,000
Interest Expenses 134,000 106,000
----------- -----------
4,386,000 3,169,000
----------- -----------
Net Earnings (Loss) before income taxes 90,000 ( 377,000)
Income Tax Expense 1,000 1,000
------------ ------------
Net Earnings (loss) $ 89,000 ( 378,000)
============= ==============
Net Earnings (loss) per common Share $ .05 $ (.21)
============= ==============
Average number of shares 1,807,419 1,807,419
Dividends per share None None
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
CLARY CORPORATION
CONSOLIDATED BALANCE SHEETS
-----------------------------
ASSETS Sep. 30, 1999 Dec. 31, 1998
- ---------------------------------- -------------- -------------
<S> <C> <C>
CURRENT ASSETS
- --------------
<S>
Cash $ 334,000 $ 160,000
Notes and accounts receivable less
allowance for doubtful amounts
of $20,000 in 1999 and $13,000 in
1998. 582,000 556,000
Inventories, principally finished
goods and work-in-process 1,805,000 1,685,000
Prepaid expenses and other assets 62,000 34,000
--------- ---------
Total Current Assets $ 2,783,000 $ 2,435,000
PROPERTY, PLANT AND EQUIPMENT
- -----------------------------
Machinery and equipment 1,423,000 1,392,000
Dies, jigs and fixtures 31,000 31,000
Leasehold improvements 71,000 71,000
--------- ---------
1,525,000 1,494,000
Less: Accumulated Depreciation
and Amortization 1,399,000 1,392,000
--------- ---------
126,000 102,000
OTHER ASSETS
- ------------
Miscellaneous 77,000 67,000
--------- ---------
TOTAL ASSETS $ 2,986,000 $ 2,604,000
========== ===========
<PAGE>
PART I
ITEM #1 - FORM 10-QSB
CLARY CORPORATION
CONSOLIDATED BALANCE SHEETS (Continued)
---------------------------------------
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY Sep. 30, 1999 Dec. 31, 1998
- ------------------------------------ -------------- -------------
<S> <C> <C>
CURRENT LIABILITIES
- -------------------
Notes Payable $ 850,000 $ 750,000
Accounts Payable and Accrued Expenses 521,000 297,000
Accrued Payroll and Related Expenses 60,000 95,000
Customer Deposits 30,000 26,000
----------- ------------
Total Current Liabilities $ 1,461,000 $ 1,168,000
9-1/2% Convertible Subordinated Notes
due October 17, 2000 and convertible
into common stock at $1.00 per share 600,000 600,000
9% Convertible Subordinated Notes due
January 15,2000 -0- 550,000
STOCKHOLDERS' EQUITY
- --------------------
Preferred Stock-Class "A" 55,000 55,000
Preferred Stock-Class "B" 550,000 -0-
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
Accumulated deficit ( 7,377,000) ( 7,377,000)
Current years' earnings 89,000 -0-
----------- ------------
Total Equity 925,000 286,000
----------- ------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 2,986,000 $ 2,604,000
============ ============
</TABLE>
<PAGE>
CLARY CORPORATION
STATEMENTS OF CASH FLOWS
------------------------
<TABLE>
<CAPTION> For the Nine Months Period Ended
--------------------------------
September 30,
-------------
1999 1998
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Operating profit (loss) $ 89,000 $( 378,000)
Adjustments to reconcile net earnings
(loss) to net cash (used for)
Operating Activities:
Depreciation and Amortization 7,000 23,000
Provisionfor (used for) for losses on
accts. receivable. 7,000 ( 1,000)
Change in assets and liabilities:
(Increase) decrease in accts. receivable (33,000) 265,000
(Increase) decrease in inventory (120,000) ( 268,000)
(Increase) in prepaid expenses ( 28,000) ( 19,000)
(Increase) in other assets ( 10,000) ( 6,000)
Increase (decrease) in accts. payable
and accrued expenses 189,000 1,000
Increase in customer deposits 4,000 12,000
----------- ----------
Net cash provided by (used for)
Operating Activities: 105,000 ( 71,000)
Cash Flows from Investing Activities:
Capital expenditures (31,000) ( 36,000)
------------ ----------
Net Cash (used for) Investing Acitivities (31,000) ( 36,000)
Cash Flows from Financing Activities:
Net borrowings (repayment)
under line-of-credit 100,000 ( 30,000)
------------ -----------
Net Cash provided by (used for)
Financing Activities 100,000 30,000
Net Increase (Decrease) in cash and cash
equivalents 174,000 ( 137,000)
Cash and cash equivalents at beginning of year 160,000 321,000
---------- ----------
Cash and cash equivalents at end of quarter $ 334,000 $ 184,000
========== ===========
</TABLE>
<PAGE>
PART I
ITEM #2 - FORM 10-QSB
MANAGEMENT DISCUSSION AND ANALYSIS
- ----------------------------------
Results of Operation
- --------------------
Sales and other revenues for the third quarter of 1999 increased
$263,000 or 31.4% from the third quarter of 1998. This increase was due
primarily through the increase of orders by the U.S. Navy for shipboard power
supplies.
Cost of sales increased $203,000 or 35.% over the two periods. This cost
increase was due to the sales increase. Selling and administrative increased
$12,000 due to commissions on the sales increase. Engineering and development
cost increased $1,000. This increase was not significant. Interest cost
increased $2,000 due to bank financing to support the higher accounts
receivable level.
The registrant showed a loss for the quarter of $102,000 compared to loss
of $147,000 for the third quarter of1998. The $45,000 improvement was due to
the sales increase.
Liquidity and Capital Requirements
- ----------------------------------
The registrant believes funds provided from operations,short-term lines of
credit and short as well as long-term financing through an Affiliate Company
will be sufficient to fund its immediate needs for working capital. Capital
expenditures, if any, will be minimal.
The registrant's short term secured borrowing with the bank was renewed on
May 1,1999.
<PAGE>
PART I
ITEM #2
YEAR 2000 COMPLIANCE
- --------------------
Clary Corporation manufactures Uninterrumpible Power Systmes that provide
clean continuous power for commercial, medical, industrial and military
applications. Questions concerning issued related to the processing of dates are
not applicable to our equipment. The millenium or century change will not impact
the operation of a Clary UPS and will not result in any loss of power to equip-
ment being supplied power by a Clary UPS through internal unit fault.
Most Clary equipment manufactured to date does not have microprocessors.
Of the equipment that does have a microprocessors and electronically store a
date; this date is for customer reference only and is not a factor in the
actual operation.
Clary Corporation has no plans to modify any prior models with regard to the
way they handle dates.
Internally, Clary Corporation has obtained and installed Y2K compliant
versions of our Accounting and Manufacturing software programs.
Some of our customers use third party software installed in a host computer
to communicate with our equipment. Clary has supplied its customers the names,
addresses and phone numbers of software supplier to contact regarding the host
software.
ITEM #3 - FORM 10-QSB
CLARY CORPORATION
-----------------
NOTES TO PART I OF THIS REPORT
------------------------------
NOTE 1. As of September 30, 1999, the Registrant has 12,688 shares of
common stock reserved for conversion of the Series "A" preferred stock,
440,000 shares reserved for the conversion of the Series "B" preferred stock
and 600,000 shares reserved for tha conversion of the 9-1/2% convertible
subordinated notes. In addition, the Registrant has reserved 100,000 shares
of common stock 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 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. This report has not been reviewed by
our independent public accountants and is, therefore, unaudited.
<PAGE>
FORM 10-QSB
CLARY CORPORATION
PART II
OTHER INFORMATION
-----------------
Item 1 Legal Proceedings - None of any significance
Item 2 Change 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
<PAGE>
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)
<TABLE>
<CAPTION>
Date:November 4,1999
SIGNATURE TITLE
========= =====
<S> <C>
/s/ John G. Clary Chairman of the Board and
- ----------------- Chief Executive Officer
John G. Clary
/s/ Donald G. Ash Treasurer and Chief Financial Officer,
- -----------------
Donald G. Ash
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Sep-30-1999
<CASH> 334
<SECURITIES> 0
<RECEIVABLES> 602
<ALLOWANCES> 20
<INVENTORY> 1805
<CURRENT-ASSETS> 2783
<PP&E> 1525
<DEPRECIATION> 1399
<TOTAL-ASSETS> 2986
<CURRENT-LIABILITIES> 1461
<BONDS> 600
<COMMON> 2509
0
605
<OTHER-SE> (2189)
<TOTAL-LIABILITY-AND-EQUITY> 2986
<SALES> 4476
<TOTAL-REVENUES> 4476
<CGS> 2957
<TOTAL-COSTS> 2957
<OTHER-EXPENSES> 1295
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 134
<INCOME-PRETAX> 90
<INCOME-TAX> 1
<INCOME-CONTINUING> 89
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 191
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
