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 30,2000
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
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
Securities registered under Section 12(b) of the 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
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As of October 23, 2000, 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
(Statements of Operations)
<TABLE>
<CAPTION>
PROFIT AND LOSS INFORMATION Three Months Period Ended September 30,
2000 1999
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<S> <C> <C>
Sales and other revenue $ 1,465,000 $ 1,100,000
Cost and Expenses:
Cost of products sold 1,045,000 783,000
Engineering and Product Development 94,000 98,000
Selling and Service 215,000 208,000
General and Administrative 55,000 76,000
Interest Expense 41,000 37,000
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1,450,000 1,202,000
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Net Earnings (loss) $ 15,000 $ (102,000)
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Net Earnings (loss) per common share $ .01 $ (.06)
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Average number of shares 1,807,419 1,807,419
Dividends per share None None
<PAGE>
CLARY CORPORATION
-------------------
(Statements of Operations)
</TABLE>
<TABLE>
<CAPTION>
PROFIT AND LOSS INFORMATION Nine Months Period Ended Sept.30
2000 1999
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<S> <C> <C>
Net Sales and Other Revenue $4,216,000 $4,476.000
Cost and Expenses:
Cost of products sold 2,949,000 2,957.000
Engineering and Product Development 301,000 302,000
Selling and Service 581,000 747,000
General and Administrative 201,000 246,000
Interest Expenses 116,000 134,000
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4,148,000 4,386,000
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Earnings before income taxes 68,000 90,000
Income Tax Expense 1,000 1,000
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Net Earnings $ 67,000 $ 89,000
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Net Earnings per common share $ .04 $ .05
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Average number of common shares 1,807,419 1,807,419
Dividends per share None None
<PAGE>
CLARY CORPORATION
CONSOLIDATED BALANCE SHEETS
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</TABLE>
<TABLE>
<CAPTION>
ASSETS Sept. 30,2000 Dec. 31, 1999
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<S> <C> <C>
CURRENT ASSETS
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<S>
Cash $ 507,000 $ 284,000
Notes and accounts receivable less
allowance for doubtful accounts
of $10,000 in 2000 and $20,000 in
1999. 691,000 587,000
Inventories, principally finished
goods and work-in-process 2,019,000 1,783,000
Prepaid expenses and other assets 69,000 57,000
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Total Current Assets $ 3,286,000 $ 2,711,000
PROPERTY, PLANT AND EQUIPMENT
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Machinery and equipment 1,460,000 1,428,000
Less: Accumulated Depreciation
and Amortization 1,315,000 1,298,000
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145,000 130,000
OTHER ASSETS
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Miscellaneous 33,000 12,000
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TOTAL ASSETS $ 3,464,000 $ 2,853,000
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<PAGE>
PART I
ITEM #1 - FORM 10-QSB
CLARY CORPORATION
CONSOLIDATED BALANCE SHEETS (Continued)
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</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY Sept. 30,2000 Dec. 31, 1999
------------------------------------ -------------- -------------
<S> <C> <C>
CURRENT LIABILITIES
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Notes Payable $ 975,000 $ 815,000
Accounts Payable and Accrued Expenses 883,000 473,000
Accrued Payroll and Related Expenses 56,000 77,000
Customer Deposits 20,000 25,000
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Total Current Liabilities $ 1,934,000 $ 1,390,000
9-1/2% Convertible Subordinated Notes
due January 17,2002 and convertible
into common stock at $1.00 per share 600,000 600,000
STOCKHOLDERS' EQUITY
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Preferred Stock - Series "A" 55,000 55,000
Preferred Stock - Series "B" 550,000 550,000
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 ( 7,350,000) (7,350,000)
Current years' earnings 67,000 -0-
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Total Equity 930,000 863,000
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 3,464,000 $ 2,853,000
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</TABLE>
<PAGE>
CLARY CORPORATION
STATEMENTS OF CASH FLOWS
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<TABLE>
<CAPTION> For the Nine-month Period Ended
--------------------------------
Sept,30
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Cash Flows From Operating Activities: 2000 1999
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<S> <C> <C>
Operating earnings $ 67,000 $ 89,000
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and Amortization 15,000 7,000
Provision for(used for) losses on
accts. receivable. (10,000) 7,000
Change in assets and liabilities:
(Increase) in accounts receivable (94,000) (33,000)
(Increase) in inventory (236,000) (120,000)
(Increase) in prepaid expenses (12,000) (28,000)
(Increase) in other assets (21,000) (10,000)
Increase in accounts payable
and accrued expenses 391,000 189,000
(Decrease) Increase in customer deposits (5,000) 4,000
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Net cash provided by Operating Activities: 95,000 105,000
Cash Flows from Investing Activities:
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Capital expenditures ( 32,000) ( 31,000)
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Net Cash (used for) Investing Activities ( 32,000) ( 31,000)
Cash Flows from Financing Activities:
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Net borrowings under line-of-credit 160,000 100,000
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Net Cash provided by financing activities 160,000 100,000
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Net Increase in cash and cash equivalents 223,000 174,000
Cash and cash equivalents at beginning of year 284,000 160,000
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Cash and cash equivalents at end of period $ 507,000 $ 334,000
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</TABLE>
<PAGE>
PART I
ITEM #2 - FORM 10-QSB
MANAGEMENT DISCUSSION AND ANALYSIS
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Results of Operation
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Sales and other revenues for the third quarter of 2000 increased $365,000
or 33.2% from the third quarter of 1999. This increase was due primarily through
the increase of sales to the Registrant's major customer on a navy program.
Cost of sales increased $262,000 or 33.4% over the two periods. This cost was
due to the sales increase. Selling and administrative decreased $14,000 due to
higher commission sales in 1999 vs. higher in house sales in 2000.
No other expense differences were significant for the three month period.
A small profit of $15,000 or $.01 cent per share were recorded for the quarter
in 2000 vs. a loss in 1999 due to higher sales volume.
Liquidity and Capital Requirements
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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 1,2000
<PAGE>
PART I
ITEM #3 - FORM 10-QSB
CLARY CORPORATION
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NOTES TO PART I OF THIS REPORT
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NOTE 1. As of September 30,2000 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 the conversion of the 9-1/2% convertible subordinated notes.
In addition, the Registrant has 76,000 shares reserved 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.
NOTE 3. The registrant's short-term bank borrowing Agreement requires the
maintenance of certain ratios pertaining to working capital and debt to equity.
At September 30,2000, the Registrant was not in compliance with the debt to
equity ratio, however, this non-compliance was waived by the bank for this
period.
<PAGE>
FORM 10-QSB
CLARY CORPORATION
PART II
OTHER INFORMATION
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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
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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: October 23,2000
SIGNATURE TITLE
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<S> <C>
/s/ John G. Clary President, 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>
