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 June 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 July 28, 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 June 30,
2000 1999
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<S> <C> <C>
Sales and other revenue $ 1,334,000 $ 1,351,000
Cost and Expenses:
Cost of products sold 931,000 927,000
Engineering and Product Development 86,000 95,000
Selling and Service 173,000 190,000
General and Administrative 66,000 88,000
Interest Expense 39,000 49,000
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1,295,000 1,349,000
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Net Earnings 39,000 2,000
Income tax expenses 1,000 1,000
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Net Earnings $ 38,000 $ 1,000
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Earnings per common share $ .02 $ .00
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Average number of shares 1,807,419 1,807,419
Dividends per share None None
<PAGE>
CLARY CORPORATION
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(Statements of Operations)
</TABLE>
<TABLE>
<CAPTION>
PROFIT AND LOSS INFORMATION Six Months Period Ended June 30
2000 1999
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<S> <C> <C>
Net Sales and Other Revenue $2,751,000 $3,376.000
Cost and Expenses:
Cost of products sold 1,904,000 2,174.000
Engineering and Product Development 207,000 204,000
Selling and Service 366,000 539,000
General and Administrative 146,000 170,000
Interest Expenses 75,000 97,000
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2,698,000 3,184,000
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Net Earnings before income taxes 53,000 192,000
Income Tax Expense 1,000 1,000
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Net Earnings $ 52,000 $ 191,000
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Net Earnings per common share $ .03 $ .11
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Average number of 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 June 30,2000 Dec. 31, 1999
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<S> <C> <C>
CURRENT ASSETS
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<S>
Cash $ 494,000 $ 284,000
Notes and accounts receivable less
allowance for doubtful accounts
of $29,000 in 2000 and $24,000 in
1999. 706,000 587,000
Inventories, principally finished
goods and work-in-process 2,096,000 1,783,000
Prepaid expenses and other assets 118,000 57,000
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Total Current Assets $ 3,414,000 $ 2,711,000
PROPERTY, PLANT AND EQUIPMENT
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Machinery and equipment 1,454,000 1,428,000
Less: Accumulated Depreciation
and Amortization 1,310,000 1,298,000
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144,000 130,000
OTHER ASSETS
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Miscellaneous 19,000 12,000
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TOTAL ASSETS $ 3,577,000 $ 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 June 30,2000 Dec. 31, 1999
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<S> <C> <C>
CURRENT LIABILITIES
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Notes Payable $ 900,000 $ 815,000
Accounts Payable and Accrued Expenses 1,081,000 473,000
Accrued Payroll and Related Expenses 69,000 77,000
Customer Deposits 12,000 25,000
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Total Current Liabilities $ 2,062,000 $ 1,390,000
9-1/2% Convertible Subordinated Notes
due January 17,2002 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 series "A"
preferred stock 2,509,000 2,509,000
Additional paid-in capital 5,099,000 5,099,000
Accumulated deficit ( 7,350,000) (7,350,000)
Current years' earnings 52,000 -0-
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Total Equity 915,000 863,000
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 3,577,000 $ 2,853,000
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</TABLE>
<PAGE>
CLARY CORPORATION
STATEMENTS OF CASH FLOWS
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<TABLE>
<CAPTION> For the Six-month Period Ended
--------------------------------
June,30
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Cash Flows From Operating Activities: 2000 1999
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<S> <C> <C>
Operating profit $ 52,000 $ 191,000
Adjustments to reconcile net profit to net
cash provided by (used for) Operating Activities:
Depreciation and Amortization 12,000 5,000
Provision for losses on accts. receivable. 5,000 10,000
Change in assets and liabilities:
(Increase) in accounts receivable (124,000) (451,000)
(Increase) in inventory (313,000) ( 51,000)
(Increase) in prepaid expenses ( 61,000) ( 50,000)
(Increase) in other assets ( 7,000) ( 6,000)
Increase in accounts payable
and accrued expenses 600,000 259,000
(Decrease) in customer deposits ( 13,000) -0-
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Net cash provided by (used for)
operating Activities: 151,000 ( 93,000)
Cash Flows from Investing Activities:
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Capital expenditures ( 26,000) ( 26,000)
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Net Cash (used for) Investing Activities ( 26,000) ( 26,000)
Cash Flows from Financing Activities:
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Net borrowings under line-of-credit 85,000 250,000
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Net Cash provided by financing activities 85,000 250,000
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Net Increase in cash and cash equivalents 210,000 131,000
Cash and cash equivalents at beginning of year 284,000 160,000
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Cash and cash equivalents at end of quarter $ 494,000 $ 291,000
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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 second quarter of 2000 decreased
$7,000 or 1.3% from the second quarter of 1999. This decrease was insignificant
Cost of sales increased $4,000 or less than 1.0% over the two periods.
This cost increase was again insignificant.Selling and administrative and
Engineering and development decreased a total of $48,000 or 12.9% for the
quarter in 2000 as compared to 1999. This decrease was due to staff realignment
or voluntary termination during the quarter in 2000. Replacements have already
been or will be added in the third quarter 2000. Interest cost was reduced by
$10,000 for the quarter in 2000 due to a conversion of debt to Series "B"
Preferred Stock over the last year. A slightly larger profit was shown in 2000
due to the mentioned cost reductions.
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 will be minimal.
The registrant's short term secured borrowing with the bank is subject to
renewal on May 1,2001.
<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 June 30,2000 the Registrant has 12,688 shares of
common stock reserved for conversion of it's Series "A" preferred stock,
440,000 shares of common stock 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 100,000 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 June 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: August 7,2000
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>
