SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 10-Q
QUARTERLY REPORT
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PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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FOR QUARTER ENDED MARCH 4, 1995
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REGISTRANT: CLARCOR INC. (DELAWARE)
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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 4, 1995 Commission File Number 0-3801
CLARCOR INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 36-0922490
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2323 Sixth Street, P. O. Box 7007, Rockford, Illinois 61125
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 815-962-8867
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No Change
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(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark 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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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.
14,775,029 common shares outstanding
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Page 1 of 10
CLARCOR INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
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MARCH 4, NOVEMBER 30,
ASSETS 1995 1994
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(UNAUDITED) (AUDITED)
Current assets:
Cash and short-term cash investments $ 8,010 $ 19,567
Accounts receivable less allowance for losses of
$1,531 for 1995 and $1,580 for 1994 41,684 42,545
Inventories:
Raw materials 14,818 12,009
Work-in-process 5,789 3,799
Finished product 18,270 14,450
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Total inventories 38,877 30,258
Prepaid expenses 2,920 2,926
Other 3,233 3,154
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Total current assets 94,724 98,450
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Plant assets, at cost 125,157 121,659
Less accumulated depreciation (70,857) (69,044)
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54,300 52,615
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Marketable equity securities, at fair value 3,627 3,655
Excess of cost over fair value of assets acquired,
less accumulated amortization 15,177 15,191
Pension assets 10,727 10,237
Other noncurrent assets 7,449 8,300
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$ 186,004 $ 188,448
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LIABILITIES
Current liabilities:
Current portion of long-term debt $ 7,579 $ 7,579
Accounts payable 14,052 13,769
Income taxes 3,582 2,051
Accrued and other liabilities 12,629 16,062
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Total current liabilities 37,842 39,461
Long-term debt less current portion 15,167 17,013
Long-term pension liabilities 5,694 5,616
Other long-term liabilities 8,802 8,725
Minority interest 265 171
Contingencies
SHAREHOLDERS' EQUITY
Capital stock 14,775 14,804
Foreign currency translation adjustments (1,748) (609)
Unrealized holding gain on marketable equity
securities, net of taxes 989 911
Other shareholders' equity 104,218 103,196
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118,234 118,302
Common stock in treasury, at cost - (840)
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118,234 117,462
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$ 186,004 $ 188,448
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See Notes to Consolidated Financial Statements.
Page 2 of 10
CLARCOR INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
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THREE MONTHS ENDED
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MARCH 4, FEBRUARY 26,
1995 1994
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Net sales $ 62,137 $ 55,890
Cost of sales 44,445 39,706
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Gross profit 17,692 16,184
Selling and administrative expenses 11,065 10,285
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Operating profit 6,627 5,899
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Other income (expense):
Interest expense (570) (758)
Interest income 226 171
Minority interest in earnings of subsidiary (18) -
Other, net 350 227
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(12) (360)
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Earnings before income taxes 6,615 5,539
Provision for income taxes 2,643 2,124
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Earnings before cumulative effect
of accounting change 3,972 3,415
Cumulative effect of accounting change - 630
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Net earnings $ 3,972 $ 4,045
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Net earnings per common share:
From operations $ 0.27 $ 0.23
From cumulative effect of accounting change - 0.04
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$ 0.27 $ 0.27
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Average number of common shares
outstanding 14,768,988 14,825,888
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Dividends paid per share $ 0.1575 $ 0.1550
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See Notes to Consolidated Financial Statements.
Page 3 of 10
CLARCOR INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
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THREE MONTHS ENDED
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MARCH 4, FEBRUARY 26,
1995 1994
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Cash flows from operating activities $ (3,765) $ 2,132
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Cash flows from investing activities:
Additions to plant assets (3,775) (1,998)
Disposition of plant assets 51 127
Other, net 118 282
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Net cash used in investing activities (3,606) (1,589)
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Cash flows from financing activities:
Reduction of long-term debt (1,846) (1,905)
Cash dividends paid (2,321) (2,292)
Other, net 39 -
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Net cash used in financing activities (4,128) (4,197)
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Net effect of exchange rate changes on cash (58) -
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Net change in cash and short-term cash investments (11,557) (3,654)
Cash and short-term cash investments,
beginning of period 19,567 13,838
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Cash and short-term cash investments,
end of period $ 8,010 $ 10,184
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Cash paid during the period for:
Interest $ 612 $ 848
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Income taxes $ 893 $ 1,120
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See Notes to Consolidated Financial Statements.
Page 4 of 10
CLARCOR INC .
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
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1. CONSOLIDATED FINANCIAL STATEMENTS
The November 30, 1994 consolidated balance sheet data was derived from
audited financial statements, but does not include all disclosures required
by generally accepted accounting principles.
The consolidated balance sheet as of March 4, 1995, the consolidated
statements of earnings, and the consolidated statements of cash flows for
the periods ended March 4, 1995 and February 26, 1994 have been prepared by
the Company without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present
fairly the financial position, results of operations, and cash flows have
been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
consolidated financial statements be read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's November 30, 1994 annual report to shareholders. The results of
operations for the period ended March 4, 1995 are not necessarily
indicative of the operating results for the full year.
2. SHAREHOLDERS' EQUITY
During the quarter ended March 4, 1995, the Company retired all of the
shares of common stock held in treasury. All such shares resumed the
status of authorized and unissued shares of common stock of the Company.
3. INCOME TAXES
In December 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 109 "Accounting for Income
Taxes". SFAS 109 requires a change from the deferred to the liability
method of computing deferred income taxes. The liability method requires
the recognition of deferred tax assets and liabilities for the expected
future tax consequences of temporary differences between the tax basis and
financial reporting basis of assets and liabilities. The cumulative effect
of adoption as of the beginning of fiscal 1994 was to increase net earnings
by $630.
Page 5 of 10
Part I - Item 2
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CLARCOR reported increased sales, operating profit, earnings and earnings per
share from operations over the same quarter last year. Substantial gains were
recorded from operations in the Filtration Products Group, and were aided by
significantly improved results in the Consumer Products Group. For the
remainder of the year, the Company expects continued strength in the operations
of both of these groups.
Consolidated sales in the current year increased 11.2% to $62,137,000 from
$55,890,000 reported in the first quarter of 1994. Sales in the Filtration
Products Group increased 11.1% over sales levels in the comparable quarter of
last year. Increases were recorded in the group's principal markets of heavy
duty, railroad locomotive and industrial air filters. Consumer Products Group
sales increased 11.3% over the prior year's first quarter, due chiefly to
increased sales of plastic closures and metal tubes.
Consolidated operating profit increased $728,000 to $6,627,000 in the current
quarter. This is a 12.3% increase over the first quarter last year. Filtration
Group operating profit increased 7.3%, mainly attributable to gains recorded in
the group's heavy duty and railroad locomotive operations. Operating profits in
the group's industrial air filter operations declined, the result of pricing
pressures and manufacturing inefficiencies. First quarter operating profit in
the Consumer Products Group rose sharply in comparison to last year. Profits
benefited from increased sales of higher margin plastic closures.
Current year first quarter other expense reflected a net $12,000, compared to
prior year first quarter net expense of $360,000, due principally to lower
interest expense on reduced long-term debt balances.
First quarter earnings before income taxes totaled $6,615,000 in the current
year. This was an increase of 19.4% over prior year pre-tax income, and
resulted from operating gains recorded in both of the Company's operating
groups, and, to a lesser extent, from the reduced interest expense.
The current year first quarter provision for income taxes was $2,643,000, and
represented an effective rate of 40.0% of pre-tax earnings. This compares to
prior year first quarter income taxes totaling $2,124,000, or an effective rate
of 38.3%.
Current year first quarter earnings before the cumulative effect of an
accounting change totaled $3,972,000. This was a 16.3% increase over comparable
first quarter earnings of $3,415,000 last year. In the first quarter of 1994,
CLARCOR adopted the provisions of Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes". The adoption of this new standard
resulted in increased earnings of $630,000.
Consolidated net earnings totaled $3,972,000 in the current quarter. This was a
decrease of 1.8% compared to net earnings of $4,045,000 in the first quarter of
1994, a quarter which benefited from the new income tax accounting standard.
Earnings per share from operations in the current quarter were $.27, and compare
to per share earnings of $.23 from operations in the first quarter of last year.
The cumulative effect of the income tax accounting change contributed $.04 per
share to earnings in the prior year, making total earnings per share $.27.
Page 6 of 10
Part I - Item 2
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
CLARCOR continued to maintain a strong and liquid consolidated balance sheet.
Total assets at March 4, 1995 were $186,004,000. Working capital at the end of
the first quarter totaled $56,882,000, compared to $58,989,000 at November 30,
1994. Among the current assets and liabilities, inventories were increased to
take advantage of opportunistic purchases. As a result, cash and investment
balances were reduced. Accrued and other liabilities were also reduced during
the quarter. The current ratio at the end of the first quarter was 2.5:1, the
same as at the end of 1994.
During the first quarter, plant assets net of accumulated depreciation increased
$1,685,000 to $54,300,000, as the Company continued to invest in productive
capacity.
The long-term debt less the current portion declined to $15,167,000 as scheduled
debt repayments continued to be made during the quarter.
Consolidated shareholders' equity increased in the current quarter to
$118,234,000, an increase of $772,000 over the year-end 1994 level.
Total capitalization at the end of the first quarter declined $1,074,000 to
$133,401,000. This compares to $134,475,000 at November 30, 1994. As a percent
of total capitalization, long-term debt at the end of the first quarter was
11.4%, compared to 12.7% at the end of fiscal 1994.
CLARCOR recorded a net cash decrease of $11,557,000 in the first quarter of
1995. This compares to a cash decrease of $3,654,000 during the first quarter
of 1994.
Net cash from operating activities in the first quarter reflected a total use of
$3,765,000 compared to a total of $2,132,000 generated in the first quarter of
1994. The difference is due to increased current year investment in
inventories.
Net cash used in current year first quarter investing activities totaled
$3,606,000, compared to $1,589,000 of net cash used in the first quarter of
1994. This current quarter figure reflected higher levels of investment in
plant assets.
Current quarter financing activities used net cash of $4,128,000, compared to
$4,197,000 in the first quarter last year. Reductions of long-term debt and
cash dividends paid in the current quarter approximated those of a year earlier.
The current level of CLARCOR's operations continue to generate sufficient cash
to fund operating needs, to pay dividends, and to provide for the repayment of
the Company's long-term debt. Sufficient lines of credit remain available to
meet these current operating needs. CLARCOR currently anticipates capital
expenditures in fiscal 1995 of approximately $15,500,000, up from the level of
$11,400,000 in fiscal 1994. These expenditures are primarily for the expansion
of manufacturing capacity for both the Filtration and Consumer operations, and
to continue investments in productivity improvement programs. The Company is in
the process of securing additional lines of credit to meet these needs.
Page 7 of 10
Part II - Other Information
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Item 4 - Submission of Matters to a Vote of Security Holders
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At the annual meeting of shareholders of CLARCOR Inc. held on
March 30, 1995, all of management's nominees for directors, as
listed in the proxy statement dated February 23, 1995, were
elected. There were outstanding, as of the close of business on
the February 16, 1995 record date, 14,770,017 shares of common
stock. There were present at the meeting, in person or by proxy,
the holders of 12,900,803 shares of common stock.
The three nominees elected received votes as follows:
For Withheld
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Carl J. Dargene 12,857,719 43,084
Lawrence E. Gloyd 12,857,817 42,986
Richard A. Snell 12,857,219 43,584
The terms of J. Marc Adam, Milton R. Brown, Frank A. Fiorenza,
Dudley J. Godfrey, Jr., Stanton K. Smith, Jr. and Don A. Wolf
were continued.
Item 6a - Exhibit (11), Computations of Per Share Earnings are presented on
page 9.
Item 6b - No reports on Form 8-K have been filed during the quarter ended
March 4, 1995.
Page 8 of 10
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CLARCOR INC.
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(Registrant)
April 10, 1995 By /s/ Bruce A. Klein
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(Date) Bruce A. Klein, Vice President-Finance
and Chief Financial Officer
Page 10 of 10