-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PBE1a3q3AL/xP3uZC40cup/4BU4vLNHEfDAhqdc3I9I6V/sIByGMs1xbm2m3Q9fh hUEegAHewEYNAPfhtoFY9w== 0000950137-98-001504.txt : 19980410 0000950137-98-001504.hdr.sgml : 19980410 ACCESSION NUMBER: 0000950137-98-001504 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980228 FILED AS OF DATE: 19980409 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CLARCOR INC CENTRAL INDEX KEY: 0000020740 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 360922490 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11024 FILM NUMBER: 98590365 BUSINESS ADDRESS: STREET 1: 2323 SIXTH ST STREET 2: PO BOX 7007 CITY: ROCKFORD STATE: IL ZIP: 61125 BUSINESS PHONE: 8159628867 MAIL ADDRESS: STREET 1: 2323 SIXTH STREET CITY: ROCKFORD STATE: IL ZIP: 61125 FORMER COMPANY: FORMER CONFORMED NAME: CLARK J L MANUFACTURING CO /DE/ DATE OF NAME CHANGE: 19871001 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 _______ FORM 10-Q QUARTERLY REPORT _______ Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 _______ For the quarter ended February 28, 1998 _______ REGISTRANT: CLARCOR Inc. (Delaware) _______ 2 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 the Quarter Ended February 28, 1998 Commission File Number 1-11024 CLARCOR Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 36-0922490 - ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2323 Sixth Street, P.O. Box 7007, Rockford, Illinois 61125 - ---------------------------------------------------- ------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 815-962-8867 --------------- No Change - -------------------------------------------------------------------------------- (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 --- --- 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. 16,182,228 common shares outstanding - -------------------------------------------------------------------------------- (Not adjusted for the stock split declared on March 24, 1998 distributable April 24, 1998) Page 1 of 12 3 Part I - Item 1 CLARCOR Inc. CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in thousands) ________
February 28, November 30, ASSETS 1998 1997 ------------ ------------ (unaudited) Current assets: Cash and short-term cash investments $ 27,408 $ 30,324 Accounts receivable, less allowance for losses of $2,241 for 1998 and $2,106 for 1997 64,449 62,387 Inventories: Raw materials 19,175 19,980 Work in process 8,332 8,547 Finished products 31,347 29,755 ---------- ---------- Total inventories 58,854 58,282 ---------- ---------- Prepaid expenses 1,059 1,417 Other current assets 5,488 8,117 ---------- ---------- Total current assets 157,258 160,527 ---------- ---------- Plant assets, at cost 183,465 180,619 less accumulated depreciation (100,239) (97,714) ---------- ---------- 83,226 82,905 ---------- ---------- Excess of cost over fair value of assets acquired, less accumulated amortization 20,009 15,777 Pension assets 14,513 13,897 Other noncurrent assets 14,201 9,413 ---------- ---------- $ 289,207 $ 282,519 ========== ========== LIABILITIES Current liabilities: Current portion of long-term debt $ 1,069 $ 1,140 Accounts payable 27,948 22,168 Income taxes 5,635 4,944 Accrued and other liabilities 23,051 25,985 ---------- ---------- Total current liabilities 57,703 54,237 ---------- ---------- Long-term debt, less current portion 37,741 37,656 Long-term pension liabilities 8,080 7,556 Other long-term liabilities 10,893 11,011 Minority interests 872 897 Contingencies SHAREHOLDERS' EQUITY Capital stock 16,182 16,162 Retained earnings 157,521 154,843 Other shareholders' equity 215 157 ---------- ---------- 173,918 171,162 ---------- ---------- $ 289,207 $ 282,519 ========== ==========
See Notes to Consolidated Condensed Financial Statements Page 2 of 12 4 CLARCOR Inc. CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Dollars in thousands except per share data) (Unaudited) _________
Three Months Ended ----------------------- February 28 March 1, 1998 1997 ----------- ---------- Net sales $ 97,786 $ 86,958 Cost of sales 69,011 62,450 ----------- ---------- Gross profit 28,775 24,508 Selling and administrative expenses 19,885 17,166 Merger-related expenses - 2,972 ----------- ---------- Operating profit 8,890 4,370 ----------- ---------- Other income (expense): Interest expense (564) (805) Interest income 438 288 Gain on sale of marketable securities - 1,706 Other, net (231) 89 ----------- ---------- (357) 1,278 ----------- ---------- Earnings before income taxes and minority interests 8,533 5,648 Provision for income taxes 3,205 2,610 ----------- ---------- Earnings before minority interests 5,328 3,038 Minority interests in earnings of subsidiaries 9 (21) ----------- ---------- Net earnings $ 5,337 $ 3,017 =========== ========== Net earnings per common share:* Basic $ 0.22 $ 0.13 =========== ========== Diluted $ 0.22 $ 0.12 =========== ========== Average number of common shares outstanding:* Basic 24,261,292 23,960,306 =========== ========== Diluted 24,670,042 24,350,083 =========== ========== Dividends paid per share* $ 0.1100 0.1083 =========== ==========
*Adjusted to reflect the three-for-two stock split distributable April 24, 1998. See Notes to Consolidated Condensed Financial Statements Page 3 of 12 5 CLARCOR Inc. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) ________
Three Months Ended --------------------- February 28, March 1, 1998 1997 --------- -------- Cash flows from operating activities: Net earnings $ 5,337 $ 3,017 Depreciation and amortization 3,025 2,885 Gain on sale of marketable securities - (1,706) Changes in assets and liabilities (2,722) (3,427) Other, net 29 (57) -------- --------- Net cash provided by operating activities 5,669 712 -------- --------- Cash flows from investing activities: Additions to plant assets (2,704) (2,989) Business acquisition, net of cash acquired (4,800) - Investment in affiliate (260) - Proceeds from sale of marketable securities - 3,322 Proceeds from note receivable 2,500 - Dispositions of plant assets 58 175 -------- --------- Net cash provided by (used in) investing activities (5,206) 508 -------- --------- Cash flows from financing activities: Borrowings under long-term debt - 1,000 Reduction of long-term debt (736) (3,951) Cash dividends paid (2,659) (2,407) Other, net 59 286 -------- --------- Net cash used in financing activities (3,336) (5,072) -------- --------- Net effect of exchange rate changes on cash (43) (17) -------- --------- Net change in cash and short-term cash investments (2,916) (3,869) Cash and short-term cash investments, beginning of period 30,324 18,827 -------- --------- Cash and short-term cash investments, end of period $ 27,408 $ 14,958 ======== ========= Cash paid during the period for: Interest $ 1,005 $ 1,404 ======== ========= Income taxes $ 2,505 $ 1,573 ======== =========
See Notes to Consolidated Condensed Financial Statements Page 4 of 12 6 CLARCOR Inc. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Dollars in Thousands, Except Per Share Data) (Unaudited) - -------------------------------------------------------------------------------- 1. CONSOLIDATED FINANCIAL STATEMENTS The November 30, 1997 consolidated balance sheet data was derived from CLARCOR's year-end audited financial statements, but does not include all disclosures required by generally accepted accounting principles. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The consolidated condensed balance sheet as of February 28, 1998, the consolidated condensed statements of earnings and the consolidated condensed statements of cash flows for the periods ended February 28, 1998, and March 1, 1997, have been prepared by the Company without audit. The financial statements have been prepared on the same basis as those in the Company's November 30, 1997 annual report to shareholders. 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. The results of operations for the period ended February 28, 1998 are not necessarily indicative of the operating results for the full year. 2. STOCK SPLIT AND EARNINGS PER SHARE On March 24, 1998, subsequent to the end of the first quarter, the Company declared a three-for-two stock split effected in the form of a 50% stock dividend distributable April 24, 1998 to shareholders of record April 10, 1998. In connection therewith, the Company will transfer approximately $8,100 from retained earnings to common stock. Earnings per share amounts have been adjusted to reflect the stock split. During the quarter ended February 28, 1998, the Company adopted Statement of Financial Accounting Standards No. 128, "Earnings per Share" (EPS), which simplifies the calculation of earnings per share and requires presentation of both basic and diluted earning per share on the Consolidated Condensed Statements of Earnings. Diluted earnings per share reflects the impact of outstanding stock options if exercised during the periods presented using the treasury stock method. The following table provides a reconciliation of the numerators and denominators utilized in the calculation of basic and diluted EPS. Page 5 of 12 7 CLARCOR Inc. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Dollars in Thousands, Except Per Share Data) (Unaudited) Continued - -------------------------------------------------------------------------------- 2. STOCK SPLIT AND EARNINGS PER SHARE (Continued)
Quarter Ended -------------------------------- February 28, 1998 March 1, 1997 ----------------- ------------- Net Earnings (Numerator) $5,337 $3,017 Basic EPS: Weighted average number of common shares outstanding (denominator) 24,261,292 23,960,306 Basic per share amount $.22 $.13 Diluted EPS: Weighted average number of common shares outstanding 24,261,292 23,960,306 Effect of dilutive securities due to stock options 408,750 389,777 ------- ------- Diluted weighted average number of common shares outstanding (denominator) 24,670,042 24,350,083 Diluted per share amount $.22 $.12
All of the amounts listed in the table above have been adjusted for the stock split effected in the form of a stock dividend. 3. BUSINESS COMBINATIONS AND MERGER-RELATED COSTS On February 20, 1998, the Company purchased Air Technologies, Inc.(ATI), an Ottawa, Kansas manufacturer of air filtration products for cash. ATI will become a part of Airguard Industries, a subsidiary of the Company. The acquisition did not have a significant impact on the results of the Company. On February 28, 1997, the Company completed its acquisition of United Air Specialists, Inc. (UAS), a manufacturer of air quality equipment based in Cincinnati, Ohio. The Company issued 1,081,741 shares of its common stock in exchange for all the shares of UAS stock. Additional shares of its common stock (approximately 127,590 shares) will be issued upon exercise of UAS options. The transaction has been structured as a statutory merger accounted for as a pooling of interests. As a result of the acquisition, UAS became a subsidiary of the Company. During the three months ended March 1, 1997, the Company incurred a one-time pre-tax charge of $2,972 ($2,390 net of tax) covering the costs of the merger including legal and professional fees, non-compete agreements, and costs to integrate the businesses of the two companies. Page 6 of 12 8 CLARCOR Inc. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Dollars in Thousands, Except Per Share Data) (Unaudited) Continued - -------------------------------------------------------------------------------- 4. SEGMENT DATA The Company operates in three principal product segments: Engine/Mobile Filtration, Industrial/Environmental Filtration, and Consumer Packaging. The segment data for the three-month periods ended February 28, 1998 and March 1, 1997, respectively, are shown below. Net sales represent sales to unaffiliated customers, as reported in the consolidated condensed statements of earnings. Intersegment sales were not material.
Quarter Ended -------------------------------------- February 28, March 1, 1998 1997 -------------- -------------- NET SALES BY SEGMENT: Engine/Mobile Filtration $ 51,625 $ 46,353 Industrial/Environmental Filtration 31,621 26,201 Consumer Packaging 14,540 14,404 -------------- -------------- $ 97,786 $ 86,958 ============== ============== OPERATING PROFIT BY SEGMENT: Engine/Mobile Filtration $ 7,418 $ 6,282 Industrial/Environmental Filtration 538 214 Consumer Packaging 934 846 -------------- -------------- 8,890 7,342 Merger-related expenses - (2,972) -------------- -------------- $ 8,890 $ 4,370 ============== ==============
Page 7 of 12 9 Part II - Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS: FIRST QUARTER OF 1998 COMPARED WITH FIRST QUARTER OF 1997. CLARCOR reported record sales, operating profit, net earnings and earnings per share in the first quarter of 1998. On March 24, 1998, which was subsequent to the end of the fiscal quarter, CLARCOR's Board of Directors declared a three-for-two stock split of its common shares effected in the form of a 50% stock dividend distributable April 24, 1998. All earnings per share amounts have been adjusted to reflect the stock split. The effect of this stock split has not been reflected in the February 28, 1998 consolidated balance sheet. On February 28, 1997, the Company completed the merger of United Air Specialists, Inc. (UAS) which was accounted for as a pooling of interests, and as a result, all periods presented include UAS. The first quarter of 1997 included the effect of costs related to the UAS merger of $2,972,000 ($2,390,000 or $0.10 basic earnings per share after-tax) and a gain from the sale of marketable securities of $1,706,000 ($1,092,000 or $0.05 basic earnings per share after-tax.) Net sales of $97,786,000 increased 12.5% from $86,958,000 reported for the first quarter of 1997. The Engine/Mobile Filtration segment reported increased sales of 11.4% to $51,625,000 from $46,353,000 recorded in 1997. The strength of sales to the heavy-duty aftermarket and increased sales of filtration products for the railroad industry contributed to this increase. In addition, sales of light-duty engine filters stabilized reversing a trend of lower sales over the last two years. The Company's Industrial/Environmental Filtration segment, which includes Airguard Industries and UAS, increased sales 20.7% for the 1998 quarter over 1997. This sales increase included a significant sale of gas turbine filtration equipment and filters to an overseas buyer. Excluding this sale, the segment's Airguard Industries sales level increased over 10% for the quarter and UAS' sales increased by over 13% compared to the first quarter of 1997. The Consumer Packaging segment reported a 0.9% increase in sales for the 1998 quarter; however, the 1997 quarter included $1.6 million in sales from the segment's Tube Division which was sold in November 1997. The segment's metal and plastics sales both increased in 1998 compared to 1997. Operating profit for first quarter 1998 was $8,890,000 which compares to $4,370,000 in 1997. The 1997 operating profit was reduced by merger-related costs of $2,972,000. Excluding the merger costs recorded in 1997, operating profit increased 21.1% to $8,890,000 in 1998 from $7,342,000 in 1997. Operating profit was 9.1% of net sales in 1998 compared to 8.4%, excluding the merger-related costs, in 1997. The Engine/Mobile Filtration segment recorded an operating profit increase of 18.1% in the first quarter of 1998 as a result of higher sales volumes, continued productivity improvements, and significantly improved operating results for the segment's light-duty product line from the 1997 quarter. The Industrial/Environmental Filtration segment reported a $324,000 increase in operating profit in 1998 due to increased sales volumes and productivity improvements from both of the segment's operating companies. The Consumer Packaging segment's 10.4% increase in operating profit resulted from higher sales of both metal and plastic products. Page 8 of 12 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued Net other expense for the quarter of $357,000 included reduced interest expense and higher interest income than recorded in 1997 as a result of lower debt and higher cash balances during the 1998 quarter. The 1997 quarter also included a $1,706,000 gain from the sale of shares held by the Company in G.U.D. Holdings Ltd. (GUD). Earnings before income taxes and minority interests for the first quarter of 1998 totaled $8,533,000, up from $5,648,000 in the comparable quarter last year. Excluding the merger-related costs and gain on sale of securities in 1997, earnings before income taxes and minority interests increased to $8,533,000 from $6,914,000 in 1997 and resulted from increased operating profit of $1,548,000 and reduced other expense of $71,000. The provision for income taxes in 1998 was $3,205,000, an effective rate of 37.6%. Certain of the merger-related costs recorded in 1997 were not fully deductible for tax purposes which created an unusually high effective tax rate of 46.2% of pre-tax earnings in the 1997 quarter. Net earnings in the first quarter of the current year were $5,337,000, or, as adjusted for the stock split, $0.22 per share on a diluted basis. The 1997 net earnings for the quarter of $3,017,000, or $0.12 per share on a diluted basis as adjusted for the stock split, reflect the merger-related costs and the gain from sale of the GUD shares. Without these two unusual items, 1997 net earnings would have been approximately $4,315,000, or $0.18 per share on a diluted basis as adjusted for the stock split. Adjusted for the stock split, average shares outstanding were 24,261,292 and diluted average shares outstanding were 24,670,042 at the end of the first quarter of 1998. LIQUIDITY AND CAPITAL RESOURCES Cash provided by operating activities totaled $5,669,000 and included increased net earnings and reduced investment in assets, net of liabilities, from the first quarter of 1997. Cash flows used in investing activities increased in the first quarter of 1998 primarily due to the cash used to acquire Air Technologies, Inc. on February 20, 1998. The 1998 quarter also included $2,500,000 received as payment on a note receivable, and the 1997 quarter included the proceeds of $3,322,000 received from the sale of the GUD shares. Cash flows used by financing activities of $3,336,000 in 1998 included payments on long-term debt of $736,000 compared to $3,951,000 in 1997. The additional borrowing of $1,000,000 in first quarter 1997 related to UAS' additional use of a line of credit prior to the merger. CLARCOR's current operations continue to generate adequate cash to fund operating needs, pay dividends, and provide for the repayment of the Company's long-term debt. Sufficient lines of credit remain available to fund current operating needs. Capital expenditures of approximately $20,000,000 for fiscal year 1998 will be greater than 1997 as a result of an expansion to the Kearney, Nebraska facility. The Company's financial position at the end of the first quarter was not significantly different from fiscal year-end 1997. Cash and short-term investments totaled $27,408,000 at the end of the quarter, a reduction of $2,916,000 from year-end. On February 20, 1998, the Company Page 9 of 12 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued completed the acquisition of Air Technologies, Inc. for cash. The current ratio at the end of the first quarter was 2.7:1 compared to 3.0:1 at the end of fiscal 1997. The current year ratio of long-term debt to total capitalization was 17.8% which approximated the level at year-end. At February 28, 1998, CLARCOR had 16,182,228 shares of common stock outstanding, or as adjusted for the stock split, 24,273,342. OUTLOOK Overall the Company's domestic sales and orders remain strong in each of the segments. While not material at current sales levels, some softening in export sales to both Europe and Asia has occurred. Management continues to be watchful over these events and expects to reduce operating costs if these trends become significant to CLARCOR. The Company believes that 1998 will be another record year of sales, operating profit and net earnings for CLARCOR. FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY Certain statements quoted in the body of this report, and statements in the "Outlook" section of this report are forward-looking. These statements involve risk and uncertainty. Actual future results and trends may differ materially depending on a variety of factors, including the volume and timing of orders received during the quarter, the mix of changes in distribution channels through which the Company's products are sold, the timing and acceptance of new products and product enhancements by the Company or its competitors, changes in pricing, product life cycles, purchasing patterns of distributors and customers, competitive conditions in the industry, business cycles affecting the markets in which the Company's products are sold, extraordinary events, such as litigation or acquisitions, including related charges, and economic conditions generally or in various geographic areas. All of the foregoing matters are difficult to forecast. The future results of the Company may fluctuate as a result of these and the other risk factors detailed from time to time in the Company's Securities and Exchange Commission reports. Due to the foregoing items, it is possible that, in some future quarters, the Company's operating results will be below the expectation of some stock market analysts and investors. In such event, the price of the CLARCOR common stock could be materially adversely affected. Page 10 of 12 12 Part II - Other Information Item 4 - Submission of Matters to a Vote of Security Holders --------------------------------------------------- At the annual meeting of shareholders of CLARCOR Inc. held on March 24, 1998, all of management's nominees for directors, as listed in the proxy statement dated February 18, 1998, were elected. In addition, the shareholders approved the First Amendment to the CLARCOR Inc. 1994 Incentive Plan, as described in the proxy statement dated February 18, 1998. Without adjustment for the stock split distributable April 24, 1998, the Company had 16,182,228 shares of common stock outstanding as of the close of business on the February 11, 1998 record date, and the holders of 14,652,820 shares of common stock were present at the meeting, in person or by proxy. The following amounts do not reflect the three-for-two stock split declared on March 24, 1998 distributable on April 24, 1998. The three nominees elected received votes as follows:
For Withheld --- -------- Carl J. Dargene 14,489,881 162,939 Lawrence E. Gloyd 14,451,709 201,111 Norman E. Johnson 14,491,250 161,570
The proposal to approve the First Amendment to the CLARCOR Inc. 1994 Incentive Plan received votes as follows:
For Against Withheld Non-votes --- ------- -------- --------- 8,939,312 4,612,389 105,429 995,690
Item 6a - Exhibit (11), Computations of Per Share Earnings are presented in Note 2 to the financial statements. Item 6b - No Form 8-K was filed for the quarter ended February 28, 1998. Subsequent to the end of the quarter, a Form 8-K was filed to announce the three-for-two stock split. Page 11 of 12 13 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. (Registrant) April 9, 1998 By /s/ Bruce A. Klein - ------------------- ------------------------------------------ (Date) Bruce A. Klein, Vice President - Finance and Chief Financial Officer Page 12 of 12 EX-27 2 FDS
5 1000 U.S. DOLLAR 3-MOS NOV-28-1998 NOV-30-1997 FEB-28-1998 1.0 27408 0 66690 2241 58854 157258 183465 100239 289207 57703 37741 0 0 16182 157736 289207 97786 97786 69011 69011 0 198 564 8533 3205 5337 0 0 0 5337 .22 .22
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