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 March 31,1999
Commission file Number 1-3489
CLARY CORPORATION
- ----------------------------------------------------------------------------
(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
incororation or organization) Identification No.
1960 So. Walker Avenue Monrovia, California 91016
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(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.
Securities registered under Section 12(b) of Exchange Act:
Title of each class: Common Stock, $1.00 par value
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 April 29, 1999, there were 1,807,419 shares of common stock outstanding.
Transitional Small Business Disclosure Format
Yes X No
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<PAGE>
PART 1
ITEM #1 - FORM 10-QSB
CLARY CORPORATION
(Statement of Operations)
<TABLE>
<CAPTION>
PROFIT AND LOSS INFORMATION Three Months Period Ended March 31,
1999 1998
- ----------------------------------- ---------------------------------
<S> <C> <C>
Sales and other revenue $ 2,025,000 $ 935,000
Cost and expenses:
Cost of products sold 1,247,000 651,000
Engineering and product development 109,000 98,000
Selling and service 349,000 202,000
General and administrative 82,000 76,000
Interest expense 48,000 35,000
--------- ---------
1,835,000 1,062,000
--------- ---------
Earning (loss) before income taxes and
extraordinary item $ 190,000 $( 127,000)
Income taxes 60,000 0
---------- -----------
Earnings (loss) before extraordinary item $ 130,000 $( 127,000)
Extraordinary item-utlization of net
operating loss carryforward 60,000 0
----------- -----------
Net earnings (loss) $ 190,000 $( 127,000)
=========== ===========
Earnings (loss) per common share:
Earnings (loss) before extraordinary
item $ .07 $ (.07)
Extraordinary item .04 0
----------- -----------
Net earnings (loss) per common share $ .11 $ (.07)
=========== ===========
Average number of shares 1,807,419 1,807,319
Dividends per share None None
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
CLARY CORPORATION
CONSOLIDATED BALANCE SHEETS
-----------------------------
ASSETS Mar 31, 1999 Dec. 31, 1998
- ---------------------------------- -------------- -------------
<S> <C> <C>
CURRENT ASSETS
- --------------
<S>
Cash $ 153,000 $ 160,000
Notes and accounts receivable less
allowance for doubtful amounts
of $21,000 in 1999 and $11,000 in
1998. 1,544,000 556,000
Inventories, principally finished
goods and work-in-process 1,561,000 1,685,000
Prepaid expenses and other assets 36,000 34,000
--------- ---------
Total Current Assets $ 3,294,000 $ 2,435,000
PROPERTY, PLANT AND EQUIPMENT
- -----------------------------
Machinery and equipment 1,407,000 1,392,000
Dies, jigs and fixtures 31,000 31,000
Leasehold improvements 71,000 71,000
--------- ---------
1,509,000 1,494,000
Less: Accumulated depreciation
and amortization 1,394,000 1,392,000
--------- ---------
115,000 102,000
OTHER ASSETS
- ------------
Miscellaneous 85,000 67,000
--------- ---------
TOTAL ASSETS $ 3,494,000 $ 2,604,000
========= =========
<PAGE>
PART I
ITEM #1 - FORM 10-QSB
CLARY CORPORATION
CONSOLIDATED BALANCE SHEETS (Continued)
---------------------------------------
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY Mar. 31, 1999 Dec. 31, 1998
- ------------------------------------ -------------- -------------
<S> <C> <C>
CURRENT LIABILITIES
- -------------------
Notes payable $ 950,000 $ 750,000
Accounts payable and accrued expenses 688,000 297,000
Accrued payroll and related expenses 215,000 95,000
Customer deposits 15,000 26,000
------- -------
Total Current Liabilities $ 1,868,000 $ 1,168,000
9-1/2% Convertible Subordinated Notes
due October 17, 2000 600,000 600,000
9% Convertible Subordinated Notes due
May 31,2000 550,000 550,000
STOCKHOLDERS' 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
Accumulated deficit (7,377,000) (7,377,000)
Current years' earnings 190,000 0
----------- ------------
Total Equity 476,000 286,000
----------- ------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 3,494,000 $ 2,604,000
=========== ============
</TABLE>
<PAGE>
CLARY CORPORATION
STATEMENTS OF CASH FLOWS
------------------------
<TABLE>
<CAPTION> For the Three Month Period Ended
--------------------------------
March 31,
------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 190,000 $ (127,000)
Adjustments to reconcile net earnings
(loss) to net cash (used for)
operating activities:
Depreciation and amortization 2,000 8,000
Provision for losses on accts. rec. 10,000 0
Change in assets and liabilities:
(Increase) decrease in accts. receivable (998,000) 177,000
Decrease (increase) in inventory 124,000 (53,000)
(Increase) in prepaid expenses (2,000) (20,000)
(Increase) in other assets (18,000) 0
Increase (decrease) in accts. payable
and accrued expenses 511,000 (86,000)
(Decrease) in customer deposits (11,000) (6,000)
---------- ----------
Net cash (used for) Operating Activities: (192,000) (95,000)
Cash Flows from Investing Activities:
Capital expenditures (15,000) (31,000)
---------- ---------
Net Cash (used for) Investing
Activities: (15,000) (31,000)
Cash Flows from Financing Activities:
Net borrowings under line-of-credit 200,000 0
---------- ----------
Net Cash provided by
Financing Activities 200,000 0
----------- -----------
Net (decrease) increase in cash and cash
equivalents (7,000) (126,000)
Cash and cash equivalents at beginning of year 160,000 321,000
---------- ----------
Cash and cash equivalents at end of quarter $ 153,000 $ 195,000
========== ===========
</TABLE>
<PAGE>
PART I
ITEM #2 - FORM 10-QSB
MANAGEMENT DISCUSSION AND ANALYSIS
- ----------------------------------
Results of Operation
- --------------------
Sales and other revenues for the first quarter of 1999 increased
$1,090,000 or 116.6% from the first quarter of 1998. This increase was due
primarily through the delivery of one large order to Celera Genomics Corp.
Although there may be follow-on orders on this program, there is no assurance
the volume will compare to this first quarter deliveries.
Cost of sales increased $596,000 or 91.6% over the two periods. This cost
increase was due to the sales increase. Selling and administrative increased
$153,000 due to commissions on the sales increase. Engineering and development
cost increased $11,000 or 11.2%. This increase was not significant. Interest
cost increased $13,000 due to bank financing to support the higher accounts
receivable level.
The registrant returned to profitability due to the increased sales volume.
Operating loss carryforwards are available for quite some time to offset current
and future potential earnings
Liquidity and Capital Requirements
- ----------------------------------
The registrant believes funds provided from operations,short-term lines of
credit and short as well as long-term financials through an Affiliate Company
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 on May 1,1999.
<PAGE>
PART I
ITEM #3 - FORM 10-QSB
CLARY CORPORATION
-----------------
NOTES TO PART I OF THIS REPORT
------------------------------
NOTE 1. As of March 31, 1999, 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 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. 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>
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: April 30,1999
SIGNATURE TITLE
========= =====
<S> <C>
/s/ John G. Clary Chairman of the Board and
- ----------------- Chief Executive Officer
John G. Clary
/s/ Donald G. Ash Treasurer, Chief Financial Officer,
- ----------------- Assistant Secretary and Director
Donald G. Ash
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Mar-31-1999
<CASH> 153
<SECURITIES> 0
<RECEIVABLES> 1565
<ALLOWANCES> 21
<INVENTORY> 1561
<CURRENT-ASSETS> 3294
<PP&E> 1508
<DEPRECIATION> 1394
<TOTAL-ASSETS> 3494
<CURRENT-LIABILITIES> 1873
<BONDS> 1150
<COMMON> 2509
0
55
<OTHER-SE> 2093
<TOTAL-LIABILITY-AND-EQUITY> 3494
<SALES> 2036
<TOTAL-REVENUES> 2036
<CGS> 1176
<TOTAL-COSTS> 1176
<OTHER-EXPENSES> 622
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48
<INCOME-PRETAX> 190
<INCOME-TAX> 0
<INCOME-CONTINUING> 190
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 190
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
