-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, AJmQVHijpKwtiVeRKpP2fy1jvrUnPUdVFUXwvmvqAY4TJhwnATBujqxqm9sDj8P2 wfiHQAv9PTc18PwbPtaKKw== 0000912057-95-000938.txt : 19950301 0000912057-95-000938.hdr.sgml : 19950301 ACCESSION NUMBER: 0000912057-95-000938 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19941203 FILED AS OF DATE: 19950224 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-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11024 FILM NUMBER: 95514857 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-K 1 FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 3, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM - ------------------------------------ COMMISSION FILE NUMBER 0-3801 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 ------------
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED - --------------------------------------------------------------------- Common Stock, par value $1.00 per share New York Stock Exchange Preferred Stock Purchase Rights Securities registered pursuant to Section 12(g) of the Act: None ------------------------------------------- (Title of Class)
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 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [x] The aggregate market value (based on the closing price of registrant's Common Stock on February 1, 1995 as reported on the New York Stock Exchange Composite Transactions) of the voting stock held by non-affiliates of the registrant as at February 1, 1995 is $290,741,460. The number of outstanding shares of Common Stock, as of February 1, 1995 is 14,770,017 shares. Certain portions of the registrant's 1994 Annual Report to Shareholders are incorporated by reference in Parts I, II and IV. Certain portions of the registrant's Proxy Statement dated February 23, 1995 for the Annual Meeting of Shareholders to be held on March 30, 1995 are incorporated by reference in Part III. PART I ITEM 1. DESCRIPTION OF BUSINESS. (A) GENERAL DEVELOPMENT OF BUSINESS CLARCOR Inc. ("CLARCOR") was organized in 1904 as an Illinois corporation and in 1969 was reincorporated in the State of Delaware. As used herein, the "Company" refers to CLARCOR and its subsidiaries unless the context otherwise requires. In fiscal 1991, CLARCOR converted from a fiscal year ending on November 30 to a fiscal year ending on the Saturday closest to November 30. For fiscal year 1994, the year ended on December 3, 1994 and for fiscal year 1993 the year ended on November 27, 1993. In this Form 10-K, all references to fiscal year ends are shown to begin as of December 1 and end as of November 30 for clarity of presentation. (I) CERTAIN SIGNIFICANT EVENTS. Effective January 31, 1994, the Company sold the assets and ongoing business of OilpureSystems for cash. OilpureSystems is engaged in manufacturing and purification of industrial process oils. The transaction had no material effect on the Company's results of operations for fiscal 1994. On June 9, 1994, the Consumer Products Group established a European manufacturing site through a strategic alliance between the Company's subsidary, Clark Europe, Inc., and a Netherlands-based European supplier of consumer dispensing products. This alliance gives the Consumer Products Group an important manufacturing source for the fast growing closure business in the European market. On September 14, 1994, the Company acquired the fixed assets and inventory of Filtros Continental S.A. de C.V. in Mexico City and formed a new entity, Filtros Baldwin de Mexico ("FIBAMEX") to manufacture and distribute Baldwin filter products in Mexico. The Company maintains 90% ownership of that business. During October, 1994 the Company reduced its 20% common stock holding in G.U.D. Holdings Limited ("GUD"), an Australian public company, to 5%. Effective October 31, 1994, the Company dissolved its PleaTech joint venture partnership and moved the business to its Airguard facility in Louisville, Kentucky. PleaTech Co., of which 60% was owned by the Company, was a technology and manufacturing joint venture for extended life, high-efficiency filters. (II) SUMMARY OF BUSINESS OPERATIONS. During 1994, the Company conducted business in two principal industry groups: (1) Filtration Products and (2) Consumer Products. FILTRATION PRODUCTS. Filtration Products include filters used primarily in the replacement market in the trucking, construction, industrial, farm equipment, diesel locomotive, automotive and environmental industries. It also includes filters used in clean room applications in the medical, pharmaceutical and food and beverage processing industries. The Company's Filtration Products include filters for oil, air, fuel, coolants and hydraulic fluids for trucks, automobiles, construction and industrial equipment, locomotives, marine and farm equipment. The Company distributes filters and filtration products throughout Europe through its Baldwin Filters N.V. and Baldwin Filters Limited subsidiaries. The Company also owns 5% of the outstanding common stock of GUD and has a 50-50 joint venture with GUD named Baldwin Filters (Aust.) Pty. Ltd. to market heavy duty liquid and air filters in Australia and New Zealand. The Company owns 90% of FIBAMEX which manufactures and distributes filters in Mexico. CONSUMER PRODUCTS. Consumer Products include a wide variety of custom styled containers and packaging items used primarily by the food, spice, drug, toiletries, tobacco and chemical specialties 2 industries. The Company's Consumer Products consist of lithographed metal containers, flat sheet decorating, combination metal and plastic containers, plastic closures, collapsible metal tubes, composite containers and various specialties, such as spools for wire and cable, dispensers for razor blades and outer shells for dry cell batteries. (B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS Business segment information for the fiscal years 1992 through 1994 is included on page 41 of the Company's 1994 Annual Report to Shareholders (the "Annual Report"), is incorporated herein by reference and is filed as part of Exhibit 13(a)(vi) to this 1994 Annual Report on Form 10-K ("1994 Form 10-K"). (C) NARRATIVE DESCRIPTION OF THE BUSINESS FILTRATION PRODUCTS The Company's filtration products business is conducted by the CLARCOR Filtration Products Group which includes the following wholly-owned subsidiaries: Baldwin Filters, Inc.; Airguard Industries, Inc.; Clark Filter, Inc.; MicroPure Filtration, Inc.; Baldwin Filters N.V.; and Baldwin Filters Limited. In addition, the Company owns (i) 5% of GUD, and (ii) 50% of Baldwin Filters (Aust.) Pty. Ltd., and (iii) 90% of FIBAMEX. The Company markets a line of over 18,200 oil, air, fuel, coolant and hydraulic fluid filters. The Company's filters are used in a wide variety of applications including engines, equipment, environmentally controlled areas and processes where effectiveness, reliability and durability are essential. Impure air or fluid impinge upon a paper, cotton, synthetic, chemical or membrane filter media which collects the impurities which are disposed of when the filter is changed. Paper filters have pleated paper elements held in specially treated paper or metal containers and the cotton and synthetic filters use wound or compressed fibers with high absorption characteristics. The Company's filters are sold throughout the United States and Canada and world-wide, primarily in the replacement market for truck, automobile, marine, construction, industrial and farm equipment and food and beverage processing. In addition, some filters are sold to the original equipment market. CONSUMER PRODUCTS The Company's consumer products business is conducted by the Consumer Products Group which includes the Company's wholly-owned subsidiary, J. L. Clark, Inc. ("J. L. Clark"). In fiscal 1994 over 1,500 different types and sizes of containers and metal packaging specialties were manufactured for the Company's customers. Flat sheet decorating is provided by use of state-of-the-art lithography equipment. Metal, plastic and paper containers and plastic closures manufactured by the Company are used in marketing a wide variety of dry and paste form products, such as food specialties (tea, spices, dry bakery products, potato chips, pretzels, candy and other confections); cosmetics and toiletries; drugs and pharmaceuticals; chemical specialties (hand cleaners, soaps and special cleaning compounds); and tobacco products. Metal packaging specialties include shells for dry batteries, dispensers for razor blades, spools for insulated and fine wire, and custom decorated flat steel sheets. Containers and metal packaging specialties are manufactured only upon orders received from customers and individualized containers and packaging specialties are designed and manufactured, usually with distinctive decoration, to meet each customer's marketing and packaging requirements and specifications. Through the Tube Division of J. L. Clark, the Company manufactures collapsible metal tubes for packaging ointments, artists' supplies, adhesives, cosmetic creams and other viscous materials. Over 150 types and sizes of collapsible metal tubes are manufactured. Tubes are custom manufactured from aluminum to the customer's specifications as to size, shape, neck design and decoration. Both coating and lithographic tube printing decoration techniques are used. 3 During 1994, the Consumer Products Group formed a strategic alliance with Europe's leading manufacturer of consumer dispensing products to better serve the growing European market. The new European manufacturing site allows the Company to eliminate the costly freight and import duties for its closure products sold in the European Market. DISTRIBUTION Filtration Products are sold primarily through a combination of independent distributors and dealers for original equipment manufacturers. The Australian joint venture markets heavy duty filtration products through the distributors of GUD, the Company's joint venture partner. Consumer Products Group salespersons call directly on customers and prospective customers for containers and packaging specialties. Each salesperson is trained in all aspects of the Company's manufacturing processes with respect to the products sold and as a result is qualified to consult with customers and prospective customers concerning the details of their particular requirements. CLASS OF PRODUCTS The percentage of the Company's sales volume contributed by each class of similar products within the Company's Consumer Products Group which contributed 10% or more of sales is as follows:
1994 1993 1992 ----- ----- ----- Containers............................................................. 20% 24% 24%
No class of products within the Company's Filtration Products Group accounted for as much as 10% of the total sales of the Company. RAW MATERIAL Steel (black plate and tin plate), filter media, aluminum sheet and coil, stainless steel, chrome vanadium, chrome silicon, resins and aluminum slugs for tubes, roll paper, bulk and roll plastic materials and cotton, wood and synthetic fibers are the most important raw materials used in the manufacture of the Company's products. All of these are purchased or are available from a variety of sources. The Company has no long-term purchase commitments. The Company did not experience shortages in the supply of raw materials during 1994. PATENTS Certain features of some of the Company's Filtration and Consumer Products are covered by domestic and, in some cases, foreign patents or patent applications. While these patents are valuable and important for certain products, the Company does not believe that its competitive position is dependent upon patent protection. CUSTOMERS The largest 10 customers of the Filtration Products Group accounted for 15.5% of the $199,793,000 of fiscal year 1994 sales of such Group. The largest 10 customers of the Consumer Products Group accounted for 45.6% of the $70,330,000 of fiscal year 1994 sales of such Group. No single customer accounted for 10% or more of the Company's consolidated 1994 sales. BACKLOG At November 30, 1994, the Company had a backlog of firm orders for products amounting to approximately $31,200,000. The comparable backlog figure for 1993 was approximately $25,100,000. All of the orders on hand at November 30, 1994 are expected to be filled during fiscal 1995. The Company's backlog is not subject to significant seasonal fluctuations. COMPETITION The Company encounters strong competition in the sale of all of its products. 4 In the Filtration Products Group, the Company competes in a number of markets against a variety of competitors. The Company is unable to state its relative competitive position in all of these markets due to a lack of available industry-wide data. However in the replacement market for heavy duty liquid and air filters used in internal combustion engines the Company believes that it is among the top five measured by annual sales with a market share of approximately 13%. In addition, the Company believes that it is the largest manufacturer of liquid filters for diesel locomotives. In the Consumer Products Group, its principal competitors are approximately 10 manufacturers whose sales and product lines are smaller than the Company's and who often compete on a regional basis only. In the Consumer Products market, strong competition is also presented by manufacturers of paper, plastic and glass containers. The Company's competitors generally manufacture and sell a wide variety of products in addition to packaging products of the type produced by the Company and do not publish separate sales figures relative to these competitive products. Consequently, the Company is unable to state its relative competitive position in those markets. The Company believes that it is able to maintain its competitive position because of the quality of its products and services and the breadth of its Filtration Products line. PRODUCT DEVELOPMENT The Company's laboratories test filters, containers, filter components, paints, inks, varnishes, adhesives and sealing compounds to insure high quality manufacturing results, aid suppliers in the development of special finishes and conduct controlled tests of finishes and newly designed filters and containers being perfected for particular uses. Product development departments are concerned with the improvement of existing filters, consumer products and the creation of new and individualized filters, containers and consumer products, in order to broaden the uses of these items, counteract obsolescence and evaluate other products available in the marketplace. During fiscal 1994, a new 25,000 square foot technical center in Kearney, Nebraska designed to enhance the Company's technology in the heavy duty filter industry became operational. In fiscal 1994, the Company employed 51 professional employees on a full-time basis on research activities relating to the development of new products or the improvement or redesign of its existing products. During this period the Company spent approximately $3,354,000 on such activities as compared with $2,824,000 for 1993 and $2,248,000 for 1992. ENVIRONMENTAL FACTORS The Company is not aware of any facts which would cause it to believe that it is in material violation of existing applicable standards respecting emissions to the atmosphere, discharges to waters, or treatment, storage and disposal of solid or hazardous wastes. There are no pending material claims or actions against the Company alleging violations of such standards. The Company does anticipate, however, that it may be required to install additional pollution control equipment to augment existing equipment in the future in order to meet applicable environmental standards. The Company is presently unable to predict the timing or the cost of such equipment and cannot give any assurance that the cost of such equipment may not have an adverse effect on earnings. However, the Company is not aware, at this time, of any current or pending rquirement to install such equipment at any of its facilities. EMPLOYEES As of November 30, 1994, the Company had approximately 2,211 employees. (D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES Foreign sales were not material in any of the fiscal years ended November 30, 1994, 1993 or 1992. Export sales for the fiscal years ended November 30, 1994, 1993 and 1992 were $21,306,000, $18,008,000 and $10,882,000, respectively. 5 ITEM 2. PROPERTIES. (I) LOCATION The corporate office building located in Rockford, Illinois, houses the Corporate offices and the Group offices for the Filtration and Consumer Products headquarters in 22,000 square feet of office space. FILTRATION PRODUCTS. The following is a description of the principal properties owned and utilized by the Company in conducting its Filtration Products business: The Baldwin Filters' Kearney, Nebraska plant contains 410,000 square feet of manufacturing and warehousing space, 25,000 square feet of research and development space, and 40,000 square feet of office space. It is located on a site of approximately 40 acres. In addition, Baldwin has a capital lease for a 100,000 square foot manufacturing facility on a site of 20 acres in Gothenburg, Nebraska. Airguard Industries has five manufacturing locations. It leases 167,000 square feet in New Albany, Indiana on a 8.5 acre tract of land, 20,000 square feet in Louisville, Kentucky on a 2.5 acre tract of land, 15,000 square feet in Garland, Texas on a .7 acre tract of land, and 15,000 square feet in Tijuana, Mexico on a .7 tract of land. Airguard owns a 38,000 square foot manufacturing facility on a 1.8 acre tract of land in Corona, California. The Airguard High Efficiency Filter plant, located in Louisville, Kentucky on a 7.5 acre tract of land, contains 100,000 square feet of manufacturing and office facilities. Airguard sales outlets with warehousing are located in Louisville, Kentucky; Cincinnati, Ohio; Nashville, Tennessee; Atlanta, Georgia; Columbus, Ohio; Birmingham, Alabama; Dallas, Texas; and Corona, California. The Company also manufactures Clark filters in Lancaster, Pennsylvania. The building, constructed about 1968 on an 11.4 acre tract of land, contains 168,000 square feet of manufacturing and office space. The Company leases 18,000 square feet of manufacturing and office space in Mexico City, Mexico for the manufacture and distribution of Filtration Products. CONSUMER PRODUCTS. The following is a description of the principal properties owned and utilized by the Company in conducting its Consumer Products business: The Company's J. L. Clark, Rockford, Illinois plant, located on 34 acres, consists of one-story manufacturing buildings, the first of which was constructed in 1910. Since then a number of major additions have been constructed and an injection molding plant was constructed in 1972. Approximately 429,000 square feet of floor area are devoted to manufacturing, warehouse and office use. Of the 34 acres, approximately 12 are vacant. A J. L. Clark plant is located in Lancaster, Pennsylvania on approximately 11 acres. It consists of a two-story office building containing approximately 7,500 square feet of floor space and a manufacturing plant and warehouse containing 236,000 square feet of floor space, most of which is on one level. These buildings were constructed between 1924 and 1964. The J. L. Clark Tube Division's manufacturing plant is located in Downers Grove, Illinois on a 5-acre tract of land. The one-story building contains 58,000 square feet of floor space. The various properties owned by the Company are considered by it to be in good repair and well maintained. All of the manufacturing facilities are adequate for the current sales volume of the Company's products and can accommodate significant expansion of production levels before plant additions are required. 6 (II) FUNCTION FILTRATION PRODUCTS. Oil, air, fuel, hydraulic fluid and coolant filters are produced at Baldwin in Kearney, and Gothenburg, Nebraska. Much of the Baldwin plant equipment has been built or modified by Baldwin. The various processes of pleating paper, winding cotton and synthetic fibers, placing the filter element in a metal or fiber container and painting the containers are mechanized but require manual assistance. The plant also maintains an inventory of special dies and molds for filter manufacture. Air filters for the industrial air and environmental markets are produced in the Airguard facilities. Oil, air and fuel filters primarily for use in the railroad industry are produced at Clark Filter in Lancaster, Pennsylvania. CONSUMER PRODUCTS. The Company's metal, combination metal and plastic packaging products are produced in J. L. Clark plants located in Rockford, Illinois, and Lancaster, Pennsylvania. The Rockford and Lancaster metal container plants are completely integrated facilities which include creative and mechanical art departments and photographic facilities for color separation, preparation of multiple-design negatives and lithographing plates. Metal sheets are decorated on high speed coating machines and lithographing presses connected with conveyor ovens. Decorated sheets are then cut to working sizes on shearing equipment, following which fabrication is completed by punch presses, can-forming and can-closing equipment and other specialized machinery for supplementary operations. Most tooling for fabricating equipment is designed and engineered by the Company's engineering staffs, and much of it is produced in the Company's tool rooms. Plastic packaging capabilities include printing and molding of irregular shaped plastic containers and customized plastic closures. J. L. Clark is the only company in the packaging industry to mold and offset lithograph a one-piece irregular shaped semi-rigid plastic container with a living hinge cover. A growing area of specialty is custom-designed plastic closures for products which have tamper-evidence as well as convenience features. Collapsible metal tubes are produced at the J. L. Clark Tube Division plant in Downers Grove, Illinois from aluminum slugs on fully-automated production lines which consist of extrusion presses, trimming machines, annealing ovens, coating machines, printing presses and capping machines. When necessary for customer specifications, tubes can be internally waxed or lined in order to achieve chemical compatibility with products to be packed. Composite containers of both spiral and convolute construction, as well as some specialty items, are produced at J. L. Clark divisions in Rockford, Illinois and Lancaster, Pennsylvania. ITEM 3. LEGAL PROCEEDINGS. The Company is involved in legal actions arising in the normal course of business. After taking into consideration legal counsel's evaluation of such actions, management is of the opinion that their outcome will not have a material adverse effect on the Company's consolidated results of operations or financial position. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. ADDITIONAL ITEM: EXECUTIVE OFFICERS OF THE REGISTRANT
AGE AT YEAR ELECTED NAME 11/30/94 TO OFFICE - ----------------------------------------------------------------------- ----------- ------------- Lawrence E. Gloyd...................................................... 62 1991 Chairman, President and Chief Executive Officer. Mr. Gloyd was elected President and Chief Operating Officer in 1986, President and Chief Executive Officer in 1988 and Chairman, President and Chief Executive Officer in 1991.
7
AGE AT YEAR ELECTED NAME 11/30/94 TO OFFICE - ----------------------------------------------------------------------- ----------- ------------- Bruce A. Klein......................................................... 47 1995 Vice President-Finance and Chief Financial Officer. Mr. Klein was employed by the Company and elected Vice President-Finance and Chief Financial Officer on January 3, 1995. Norman E. Johnson...................................................... 46 1993 Group Vice President-CLARCOR Filtration Products Group. Mr. Johnson has been employed by the Company since 1990. He was elected President- Baldwin Filters, Inc. in 1990, Vice President-CLARCOR in 1992, and Group Vice President-Filtration Products Group in 1993. Ronald A. Moreau....................................................... 47 1989 Group Vice President-CLARCOR Consumer Products Group and President of J. L. Clark, Inc. Mr. Moreau has been employed by the Company since 1986. He was Vice President of operations for the J. L. Clark subsidiary from 1986 to 1989. He was elected Group Vice President-Consumer Products Group and President of J. L. Clark, Inc. in 1989. David J. Anderson...................................................... 54 1994 Vice President-International/Corporate Development. Mr. Anderson has been employed by the Company since 1990. He was elected Vice President Marketing & Business Development for the CLARCOR Filtration Products subsidiary in 1991 and Vice President-Corporate Development in 1993 and Vice President-International/Corporate Development in 1994. William F. Knese....................................................... 46 1991 Vice President, Treasurer and Controller. Mr. Knese has been employed by the Company since 1979. He was elected Vice President, Treasurer and Controller in 1991. David J. Lindsay....................................................... 39 1994 Vice President-Administration. Mr. Lindsay has been employed by the Company in various administrative positions since 1987. He was elected Vice President-Group Services in 1991 and Vice President-Administration in 1994. Marshall C. Arne....................................................... 64 1991 Vice President-Secretary. Mr. Arne has been employed by the Company in various administrative positions since 1955. He was elected Vice President-Secretary in 1991. Peter F. Nangle........................................................ 33 1994 Vice President-Information Services. Mr. Nangle has been employed by the Company since 1993. He was elected Vice President-Information Services in 1994. Marcia S. Blaylock..................................................... 38 1994 Assistant Secretary. Ms. Blaylock has been an employee of the Company since 1974. She was elected Assistant Secretary on December 13, 1994.
Each executive officer of the Company is elected for a term of one year which begins at the Board of Directors Meeting at which he or she is elected, held following the Annual Meeting of Shareholders, and ends on the date of the next Annual Meeting of Shareholders or upon the due election and qualification of his or her successor. 8 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS. The Company's Common Stock is listed on the New York Stock Exchange; it is traded under the symbol CLC. The following table sets forth the high and low market prices as quoted during the relevant periods by the New York Stock Exchange and dividends paid for each quarter of the last two fiscal years.
MARKET PRICE -------------------- QUARTER ENDED HIGH LOW DIVIDEND - -------------------------------------------------------------------------------------- --------- --------- ----------- February 26, 1994..................................................................... $ 22 3/8 $ 18 1/4 $ .1550 May 28, 1994.......................................................................... 21 5/8 17 .1550 August 27, 1994....................................................................... 20 1/8 15 7/8 .1550 December 3, 1994...................................................................... 21 1/2 18 1/2 .1575 ----------- Total Dividend........................................................................ $ .6225 ----------- ----------- MARKET PRICE -------------------- QUARTER ENDED HIGH LOW DIVIDEND - -------------------------------------------------------------------------------------- --------- --------- ----------- February 27, 1993..................................................................... $ 19 1/4 $ 16 1/2 $ .150 May 29, 1993.......................................................................... 19 1/2 16 .150 August 28, 1993....................................................................... 19 3/4 17 .155 November 27, 1993..................................................................... 20 16 1/2 .155 ----------- Total Dividend........................................................................ $ .610 ----------- -----------
The approximate number of holders of record of Common Stock of the Company as at February 1, 1995 is 1900. In addition, the Company believes that there are approximately 3,800 beneficial owners whose shares are held in street names. ITEM 6. SELECTED FINANCIAL DATA. The information required hereunder is set forth on pages 26 and 27 of the Annual Report under the caption "13-Year Financial Summary", is incorporated herein by reference and is filed as Exhibit 13a(ix) to this 1994 Form 10-K. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION. The information required hereunder is set forth on pages 21 through 25 of the Annual Report under the caption "Financial Review", is incorporated herein by reference and is filed as Exhibit 13a(x) to this 1994 Form 10-K. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The Consolidated Financial Statements, the Notes thereto and the report thereon of Coopers & Lybrand, independent accountants, required hereunder with respect to the Company and its consolidated subsidiaries are set forth on pages 28 through 42, inclusive, of the Annual Report, are incorporated herein by reference and is filed as Exhibits 13(a)(ii) through 13(a)(vii) to this 1994 Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Certain information required hereunder is set forth on pages 1 and 2 of the Company's Proxy Statement dated February 23, 1995 (the "Proxy Statement") for the Annual Meeting of Shareholders to be held on March 30, 1995 under the caption "Election of Directors -- Nominees for Election to the Board" and is incorporated herein by reference. 9 ITEM 11. EXECUTIVE COMPENSATION. The information required hereunder is set forth on pages 6 through 15 inclusive, of the Proxy Statement under the caption "Compensation of Executive Officers and Other Information" and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The information required hereunder is set forth on pages 4 and 5 of the Proxy Statement under the caption "Beneficial Ownership of the Company's Common Stock" and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Mr. L.P. Harnois was the Company's Senior Vice President and Chief Financial Officer until December 1, 1994. On that date he elected early retirement from the Company and resigned as an officer. In that regard the Company agreed to (i) pay Mr. Harnois the present value of his benefits under the Company's Supplemental Retirement Plan, (ii) continue coverages for Mr. Harnois under various Company group insurance plans until December, 1996, (iii) make immediately exercisable all stock options granted to Mr. Harnois, which options will expire on November 30, 1997, (iv) pay consulting fees based on salary at the date of retirement and continuing until fiscal year end 1995 to Mr. Harnois in regard to the completion of certain projects assigned to Mr. Harnois, (v) transfer to Mr. Harnois a split-dollar life insurance policy on his life owned by the Company, and (vi) continue to provide certain other employee benefits until November 30, 1995. On April 5, 1994 the Company loaned $137,500 to Mr. Norman E. Johnson, the Company's Group Vice President -- Filtration Products, on an interest-free basis. The loan was repaid in full on June 10, 1994. The loan was made pursuant to the Company's Relocation Expense Policy and was used by Mr. Johnson to purchase a home in connection with his relocation from Kearney, Nebraska to the Company's headquarters in Rockford, Illinois. Mr. Carl J. Dargene, a Director of the Company, is President, Chief Executive Officer and Director of AMCORE Financial, Inc. ("AMCORE"). During 1994 AMCORE's subsidiary, AMCORE Investment Banking, Inc. provided investment banking services to the Company, including advice regarding certain potential acquisition candidates indentified by the Company. AMCORE also acts as a trustee, administrator or custodian for certain of the Company's employee benefit plans. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K. (A) FINANCIAL STATEMENTS The following financial information is incorporated herein by reference to the Company's Annual Report to Shareholder's for the fiscal year ended November 30, 1994: *Consolidated Balance Sheets at November 30, 1994 and 1993 *Consolidated Statements of Earnings for the years ended November 30, 1994, 1993 and 1992 *Consolidated Statements of Shareholders' Equity for the years ended November 30, 1994, 1993 and 1992 *Consolidated Statements of Cash Flows for the years ended November 30, 1994, 1993 and 1992 *Notes to Consolidated Financial Statements *Report of Independent Accountants *Management's Report on Responsibility for Financial Reporting - ------------------------ *Filed herewith as part of Exhibit 13(a) to this 1994 Form 10-K 10 The following items are set forth herein on the pages indicated: Report of Independent Accountants................................................................. F-1 Financial Statement Schedules: VIII. Valuation and Qualifying Accounts and Reserve............................... F-2
Financial statements and schedules other than those listed above are omitted for the reason that they are not applicable, are not required, or the information is included in the financial statements or the footnotes therein. (B) There were no Reports on Form 8-K filed during the fourth quarter of the fiscal year ended November 30, 1994. (C) Exhibits 3.1 The registrant's Restated Certificate of Incorporation. Incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended November 30, 1983. 3.1(a) Amendment to ARTICLE NINTH of Restated Certificate of Incorporation. Incorporated by reference to Exhibit 3.1(a) to the Company's Annual Report on Form 10-K for the fiscal year ended November 30, 1988 (the "1988 10-K"). 3.1(b) Amendment changing name of Registrant to CLARCOR Inc. Incorporated by reference to Exhibit 3.1(b) to the 1988 10-K. 3.1(c) Amendment to ARTICLE FOURTH of the Restated Certificate of Incorporation. Incorporated by reference to Exhibit 3.1(c) to the Company's Annual Report on Form 10-K for the fiscal year ended November 30, 1990. 3.2 The registrant's By-laws, as amended. Incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended November 27, 1993. 4 Rights Agreement dated as of April 14, 1987 between the registrant and The First National Bank of Chicago. Incorporated by reference to Exhibit 1 to the Registrant's Current Report on Form 8-K dated April 20, 1986. 4.1 Amendment to Rights Agreement dated as of June 27, 1989. Incorporated by reference to Exhibit 4 to the Company's Current Report on Form 8-K filed on August 14, 1989. 10.1* The registrant's Deferred Compensation Plan for Directors. 10.2* The registrant's Supplemental Retirement Plan. 10.2(a) The registrant's 1994 Executive Retirement Plan. 10.2(b) The registrant's 1994 Supplemental Pension Plan. 10.2(c) The registrant's Supplemental Retirement Plan (as amended and restated effective December 1, 1994). 10.3 The registrant's 1984 Stock Option Plan. Incorporated by reference to Exhibit A to the Company's Proxy Statement dated March 2, 1984 for the Annual Meeting of Shareholders held on March 31, 1984. 10.4 Employment Agreements with certain officers. Incorporated by reference to Exhibit 5 to the Company's Current Report on Form 8-K filed July 25, 1989. 10.5 The registrant's 1994 Incentive Plan. Incorporated by reference to Exhibit A to the Company's Proxy Statement dated February 24, 1994 for the Annual Meeting of Shareholders held on March 31, 1994. 11 Computation of Per Share Earnings.
11 13 (a) The following items incorporated by reference herein from the Company's 1994 Annual Report to Shareholder ("1994 Annual Report"), are filed as Exhibits to this 1994 Form 10-K:
(i) Business segment information for the fiscal years 1992 through 1994 set forth on page 41 of the 1994 Annual Report (included in Exhibit 13(a)(vi) -- Note O of Notes to Consolidated Financial Statements); (ii) Consolidated Balance Sheets of the Company and its Subsidiaries at November 30, 1994 and 1993 set forth on page 28 of the 1994 Annual Report; (iii) Consolidated Statements of Earnings of the Company and its Subsidiaries for the years ended November 30, 1994, 1993 and 1992 set forth on page 29 of the 1994 Annual Report; (iv) Consolidated Statement of Shareholders' Equity for the Company and its Subsidiaries for the years ended November 30, 1994, 1993 and 1992 set forth on page 30 of the 1994 Annual Report; (v) Consolidated Statements of Cash Flows of the Company and its Subsidiaries for the years ended November 30, 1994, 1993 and 1992 set forth on page 31 of the 1994 Annual Report; (vi) Notes to Consolidated Financial Statements set forth on pages 32 through 41 of the 1994 Annual Report; (vii) Report of Independent Accountants set forth on page 42 of the 1994 Annual Report; (viii) Management's Report on Responsibility for Financial Reporting set forth on page 43 of the 1994 Annual Report; (ix) Information under the caption "13-Year Financial Summary" set forth on pages 26 and 27 of the 1994 Annual Report; and (x) Management's Discussion and Analysis of Financial Condition and Results of Operation set forth under the caption "Financial Review" on pages 21 through 25 of the 1994 Annual Report.
21 Subsidiaries of the Registrant. 23 Consent of Independent Accountants.
- ------------------------ * Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended November 30, 1984, in which each Exhibit had the same number as herein. 12 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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) By: _LAWRENCE E. GLOYD________ Lawrence E. Gloyd CHAIRMAN, PRESIDENT & CHIEF EXECUTIVE OFFICER Date: February 24, 1995 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: February 24, 1995 By: LAWRENCE E. GLOYD ------------------------------------------- Lawrence E. Gloyd CHAIRMAN, PRESIDENT & CHIEF EXECUTIVE OFFICER AND DIRECTOR Date: February 24, 1995 By: BRUCE A. KLEIN ------------------------------------------- Bruce A. Klein VICE PRESIDENT-FINANCE & CHIEF FINANCIAL OFFICER Date: February 24, 1995 By WILLIAM F. KNESE ------------------------------------------- William F. Knese VICE PRESIDENT, TREASURER, CONTROLLER & CHIEF ACCOUNTING OFFICER Date: February 24, 1995 By J. MARC ADAM ------------------------------------------- J. Marc Adam DIRECTOR Date: February 24, 1995 By MILTON R. BROWN ------------------------------------------- Milton R. Brown DIRECTOR Date: February 24, 1995 By CARL J. DARGENE ------------------------------------------- Carl J. Dargene DIRECTOR
13 Date: February 24, 1995 By FRANK A. FIORENZA ------------------------------------------- Frank A. Fiorenza DIRECTOR Date: February 24, 1995 By DUDLEY J. GODFREY, JR. ------------------------------------------- Dudley J. Godfrey, Jr. DIRECTOR Date: February 24, 1995 By STANTON K. SMITH, JR. ------------------------------------------- Stanton K. Smith, Jr. DIRECTOR Date: February 24, 1995 By RICHARD A. SNELL ------------------------------------------- Richard A. Snell DIRECTOR Date: February 24, 1995 By DON A. WOLF ------------------------------------------- Don A. Wolf DIRECTOR
14 REPORT OF INDEPENDENT ACCOUNTANTS The Board of Directors and Shareholders CLARCOR Inc. Rockford, Illinois Our report on the consolidated financial statements of CLARCOR Inc. has been incorporated by reference in this Form 10-K from page 42 of the 1994 Annual Report to Shareholders of CLARCOR Inc. In connection with our audits of such financial statements, we have also audited the related financial statement schedule listed on page F-2 of this Form 10-K. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. COOPERS & LYBRAND L.L.P. Rockford, Illinois January 6, 1995 F-1 CLARCOR INC. SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE YEARS ENDED NOVEMBER 30, 1994, 1993 AND 1992 (DOLLARS IN THOUSANDS)
COLUMN C ---------------------------- ADDITIONS COLUMN B ---------------------------- ----------- COLUMN E BALANCE AT (1) (2) ----------- COLUMN A BEGINNING CHARGED TO CHARGED TO COLUMN D BALANCE OF - --------------------------------------------------- AT COSTS AND OTHER ------------- AND OF DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD - --------------------------------------------------- ----------- ------------- ------------- ------------- ----------- 1994: Allowance for losses on accounts receivable $ 1,544 $ 474 $ 288(B) $ 726(A) $ 1,580 1993: Allowance for losses on accounts receivable $ 788 $ 610 $ 650(C) $ 504(A) $ 1,544 1992: Allowance for losses on accounts receivable $ 838 $ 647 $ (283)(D) $ 414(A) $ 788 NOTES: (A) Bad debts written off during year, net of recoveries. (B) Due to acquisition addition in 1993 adjusted due to SFAS 109 adoption in 1994. (C) Due to the acquisitions of Airguard Industries and Guardian Filter in 1993. (D) Due to the sale of Precision Products Group in 1992.
F-2 EX-10.2(A) 2 EXHIBIT 10.2(A) - EXECUTIVE RETIREMENT PLAN EXHIBIT 10.2(a) CLARCOR INC. 1994 EXECUTIVE RETIREMENT PLAN (EFFECTIVE DECEMBER 1, 1994) CLARCOR INC. 1994 EXECUTIVE RETIREMENT PLAN CLARCOR Inc., a Delaware corporation ("CLARCOR"), hereby adopts, effective as of December 1, 1994, this unfunded 1994 Executive Retirement Plan ("Plan") providing for the payment of certain retirement and other benefits to Participants (as hereinafter defined): ARTICLE I DEFINITIONS For all purposes of the Plan, words and phrases as used herein with the initial letter capitalized shall have the respective meanings stated: AVERAGE MONTHLY COMPENSATION means the result obtained by dividing the total Compensation received by a Participant for the three consecutive fiscal years of service for CLARCOR for which such Participant received his or her highest Compensation by 36. In the case of a Participant deemed totally and permanently disabled, the Compensation received in the fiscal year preceding that in which the disability commences shall be appropriately annualized and divided by twelve. The greater of the amount so computed or that based on the three fiscal years shall be the Average Monthly Compensation of the disabled Participant. BOARD means the Board of Directors of CLARCOR Inc. CAUSE means fraud, misappropriation or intentional material damage to the property or business of CLARCOR or commission of a felony. CHANGE OF CONTROL means, with respect to a Participant, a significant change in the ownership of the stock of CLARCOR or in the membership of the Board, as such change may be 1 defined in an employment, severance, change of control or comparable agreement ("Change of Control Agreement"), if any, between CLARCOR and the Participant. CLARCOR PENSION PLAN means the CLARCOR Inc. Pension Plan (formerly the 1984 Restated CLARCOR Pension Trust) as restated or amended from time to time. CLARCOR SUPPLEMENTAL PLAN means the CLARCOR Inc. 1994 Supplemental Pension Plan as restated or amended from time to time. COMPENSATION means the amount received by a Participant for services rendered by such Participant to CLARCOR and its subsidiaries as base salary, bonuses and other annual cash incentives, including amounts of compensation deferred by the Participant under the Retirement Savings Plan or similar programs; compensation excludes (i) any extraordinary cash or imputed compensation, such as the taxable value of benefits or perquisites provided by CLARCOR, (ii) amounts paid or accrued under any long-term incentive plan of CLARCOR, (iii) any cash or securities received by a Participant upon the exercise of a stock appreciation right or stock option, (iv) employer contributions to any tax-qualified retirement plan or to CLARCOR's Monthly Investment Plan, and (v) the difference between the exercise price of any stock option exercised by a Participant and the then fair market value of the securities of CLARCOR thereby acquired. DEFERRED RETIREMENT DATE means the first day of the month coincident with or next following the date the Participant terminates employment with CLARCOR and/or its subsidiaries after his or her Normal Retirement Date. DISABILITY means "total and permanent disability," as defined in the CLARCOR Pension Plan. DISABILITY RETIREMENT DATE means the first day of the month coincident with or next following the date that the Board determines that a Participant has become Disabled. INVOLUNTARY TERMINATION means, with respect to a Participant, a termination of the employment of the Participant under circumstances that entitle the Participant to receive severance benefits that are payable only in the event of an "involuntary termination,"as such change may be defined in a "Change of Control Agreement," if any, between CLARCOR and the Participant. 2 NORMAL RETIREMENT BENEFIT shall have the meaning set forth in Article II. NORMAL RETIREMENT DATE means the first day of the month coincident with or next following the date a Participant attains age 65. PARTICIPANT means those officers or key employees of CLARCOR or a subsidiary who have attained at least 40 years of age and who have been designated by the Board as Participants in the Plan. PBGC means the Pension Benefit Guaranty Corporation. PENSION RETIREMENT BENEFIT means the amount that would be payable to the Participant as a monthly pension payable on a "10 year certain and life annuity basis", as determined in accordance with the provisions of the CLARCOR Pension Plan, as though the Participant had elected such "normal form of benefit" under that plan. PLAN means the CLARCOR Inc. 1994 Executive Retirement Plan, as set forth herein. PLAN ADMINISTRATOR means the individuals or entity responsible for administration of the Plan determined in accordance with Article XVI of the Plan. ARTICLE II NORMAL RETIREMENT BENEFIT In the event the employment of a Participant by CLARCOR and/or its subsidiaries terminates at Normal Retirement Date for any reason other than Cause or death, such Participant shall receive a monthly benefit for his or her life (the "Normal Retirement Benefit") pursuant to this Plan equal to: 3 The product of: (1) four and one-third (4.333%) percent times the number of years of such Participant's actual service to CLARCOR and/or its subsidiaries after attainment of age 40, but not more than sixty-five (65%) percent; and (2) the Participant's Average Monthly Compensation; reduced by (3) the sum of his or her Pension Retirement Benefits payable at Normal Retirement Date under the CLARCOR Pension Plan and the CLARCOR Supplemental Plan. Payment of benefits pursuant to this Article II shall commence on the Participant's Normal Retirement Date and shall be subject to the provisions of Article VII and Article IX of the Plan (relating to death and form of payment of benefits, respectively). ARTICLE III EARLY RETIREMENT BENEFIT In the event the employment of a Participant by CLARCOR and/or its subsidiaries terminates prior to his or her Normal Retirement Date but after he has both attained age 60 and completed at least five years of service, for any reason other than Cause, death or Involuntary Termination following a Change of Control, such Participant shall receive a monthly benefit for his or her life equal to: (a) The product of (1) four and one-third (4.333%) percent times the number of years of service the Participant would have rendered to CLARCOR and/or its subsidiaries after attainment of age 40 if the Participant had continued in the active service of CLARCOR to his or her Normal Retirement Date, but not more than sixty-five (65%) percent; (2) the Participant's Average Monthly Compensation computed at termination; and 4 (3) a fraction, the numerator of which is the number of years of such Participant's actual service to CLARCOR and/or its subsidiaries after attainment of age 40 and the denominator of which is the number of years of such service such Participant would have had if his or her employment had continued until Normal Retirement Date; reduced by (4) the sum of his or her Pension Retirement Benefits payable at Normal Retirement Date under the CLARCOR Pension Plan and the CLARCOR Supplemental Plan; (b) Payment of benefits shall commence either (i) on the Participant's Normal Retirement Date or (ii) the first day of any month beginning after the Participant's termination of employment with CLARCOR and any of its subsidiaries, as the Plan Administrator shall determine and shall be subject to the provisions of Article VII and Article IX of the Plan. (c) If payment of benefits as an annuity commences prior to the Participant's Normal Retirement Date, the benefit determined in (a) above will be actuarially reduced according to the same unisex mortality assumption and interest rate being used on the annuity commencement date to calculate alternate benefits under the CLARCOR Pension Plan. ARTICLE IV INVOLUNTARY TERMINATION FOLLOWING CHANGE OF CONTROL In the event the employment of a Participant by CLARCOR and/or its subsidiaries terminates prior to his or her Normal Retirement Date by reason of an Involuntary Termination following a Change of Control, the Participant shall be entitled to receive a single sum payment, determined in accordance with Article IX of the Plan, in an amount equal to the actuarial equivalent of a monthly benefit for his or her life calculated as follows: 5 (1) Compute an Early Retirement Benefit for the Participant as provided in Article III (whether or not such Participant had reached 60 years of age or completed 5 years of service prior to the date of his or her death), but including in the numerator of clause (a)(3) thereof one additional year of service credit (not to exceed 5 years) for each year between the date of such termination and the Participant's Normal Retirement Date; and, (2) Assume payments of such Early Retirement Benefit commenced on the first day of the month following the date of such termination, without actuarial reduction attributable to the first five years prior to Normal Retirement Date. ARTICLE V TERMINATION OF EMPLOYMENT PRIOR TO EARLY RETIREMENT In the event the employment of a Participant by CLARCOR and/or its subsidiaries terminates prior to his or her attainment of age 60, but after he has both attained age 50 and completed 5 years of service, for any reason other than Cause, death or Involuntary Termination following a Change of Control, such a Participant shall receive a monthly benefit for his or her life equal to: (a) The product of (1) four and one-third (4.333%) percent times the number of years of service the Participant would have rendered to CLARCOR and/or its subsidiaries after attainment of age 40 if the Participant had continued in the active service of CLARCOR to his or her Normal Retirement Date, but not more than sixty-five (65%) percent; (2) the Participant's Average Monthly Compensation computed at termination; and 6 (3) a fraction, the numerator of which is the number of years of such Participant's actual service to CLARCOR and/or its subsidiaries after attainment of age 40 and the denominator of which is the number of years of such service the Participant would have had if his or her employment had continued until Normal Retirement Date; reduced by (4) the sum of his or her Pension Retirement Benefits payable at Normal Retirement Date under the CLARCOR Pension Plan and the CLARCOR Supplemental Plan; (b) Payment of benefits shall commence either (i) on the Participant's Normal Retirement Date or (ii) the first day of any month beginning after the Participant's attainment of age 60 and termination of employment with CLARCOR and all of its subsidiaries, as the Plan Administrator shall determine. (c) If payment of benefits as an annuity commences prior to the Participant's Normal Retirement Date, the benefit determined in (a) above will be actuarially reduced according to the same unisex mortality assumption and interest rate being used on the annuity commencement date to calculate alternate benefits under the CLARCOR Pension Plan. (d) If the employment of a Participant by CLARCOR and/or its subsidiaries terminates before he has attained age 50 and completed 5 years of service for any reason other than Cause, death, disability or Involuntary Termination following a Change of Control, no benefits will be payable from the Plan to or with respect to such Participant. (e) If the employment of a Participant is terminated by CLARCOR and/or its subsidiaries for Cause no benefits will be payable from the Plan to or with respect to such Participant. 7 ARTICLE VI TOTAL AND PERMANENT DISABILITY In the event the employment of a Participant by CLARCOR and/or its subsidiaries terminates prior to his or her Normal Retirement Date under circumstances in which the Board determines that a Participant has become Disabled, such Participant shall be entitled to receive a monthly benefit for his or her life equal to: (a) The product of (1) four and one-third (4.333%) percent times the number of years of such Participant's actual service to CLARCOR and/or its subsidiaries after attainment of age 40, but not more than sixty-five (65%) percent; and (2) the Participant's Average Monthly Compensation computed at termination; reduced by (3) the sum of his or her Pension Retirement Benefits payable at Normal Retirement Date under the CLARCOR Pension Plan and the CLARCOR Supplemental Plan. (b) Payment of benefits shall commence either (i) on the Participant's Normal Retirement Date or (ii) the first day of any month beginning after the Participant's termination of employment with CLARCOR and all of its subsidiaries, as the Plan Administrator shall determine. (c) If payment of benefits as an annuity commences prior to the Participant's Normal Retirement Date, the benefit determined in (a) above will be actuarially reduced according to the same unisex mortality assumption and interest rate being used on the annuity commencement date to calculate alternate benefits under the CLARCOR Pension Plan. 8 ARTICLE VII DEATH In the event that a Participant predeceases his or her spouse, the spouse shall be entitled to receive the following benefits: (a) If death of the Participant occurs prior to the commencement of benefits hereunder, and prior to the Participant's Normal Retirement Date, the Participant's spouse shall receive a monthly benefit calculated in accordance with Article VI, in the amount that would have been payable to the Participant if he or she had terminated employment on the day preceding his or her date of death and had elected an actuarially reduced annuity commencing on that date. If death of the Participant occurs prior to the commencement of benefits hereunder, and on or after the Participant's Normal Retirement Date, the Participant's spouse shall receive a monthly benefit calculated in accordance with Article VIII as if such Participant had retired on the day preceding his or her date of death and had elected an annuity commencing on that date. Payment of monthly benefits to the spouse shall commence on the first day of the month following such Participant's death and continue for 15 years or until the death of the spouse, whichever occurs first. (b) If the death of the Participant occurs after the commencement of payment of benefits hereunder, his or her surviving spouse to whom he was married at the date benefits commenced shall receive monthly payments equal to those being paid to such Participant on the date of his or her death. Such payments shall continue so that the total payment period (including all payments to the Participant) equals 15 years, or until the death of the spouse, whichever occurs first. (c) If the Participant has received the benefits to which he is entitled from this Plan in the form of a single sum prior to his or her death, no further benefits shall be paid. 9 Notwithstanding the foregoing, if benefits under this Plan were payable in a single sum or in installments under an election made by the Participant under Article IX of the Plan, but the full value of the Participant's benefit had not been paid as of the date of his or her death, payment of any unpaid installments, or the balance of any single sum payment that was deferred by CLARCOR to assure its deductibility for federal income tax purposes, shall be made to the Participant's beneficiary, as named in a document filed with the Secretary of CLARCOR, or if none is so named, to the Participant's surviving spouse, if any, or, if none, to the estate or estate planning trust of the Participant, as the Plan Administrator shall determine. ARTICLE VIII DEFERRED RETIREMENT In the event a Participant continues employment beyond his or her Normal Retirement Date, such Participant shall receive a monthly benefit for his or her life alone equal to: The product of (1) four and one-third (4.333%) percent times the number of years of such Participant's actual service to CLARCOR and/or its subsidiaries after attainment of age 40 to the Participant's Deferred Retirement Date, but not more than sixty-five (65%) percent; and (2) the Participant's Average Monthly Compensation computed at termination; reduced by (3) the sum of his or her Pension Retirement Benefits payable at Normal Retirement Date under the CLARCOR Pension Plan and the CLARCOR Supplemental Plan. Payment of benefits pursuant to this Article VIII shall commence on the Participant's Deferred Retirement Date and shall be subject to the provisions of Article VII and Article IX of the Plan. 10 ARTICLE IX FORM OF PAYMENT OF BENEFITS Payment of benefits shall be made either in the form specified in the applicable Article, in the form of a single sum payment, or in substantially equal installments payable at least annually over a period not to exceed 10 years. The form of payment shall be as requested by the Participant prior to the earliest date benefits are payable, and as approved by the Plan Administrator. The determination of the single sum shall be based on the unisex mortality assumptions then being used to calculate alternative benefits under the CLARCOR Pension Plan and on the immediate interest rate that would be used by the PBGC for purposes of determining the present value of a lump sum distribution on plan termination as in effect as of the date of distribution. If payment is to be made in installments, the principal amount thereof shall be the single sum payment as calculated above, and interest shall be paid on the unpaid balance at the prime rate. If all or a part of any payment to be made in any year would not be deductible by CLARCOR under the provisions of the Internal Revenue Code of 1986, CLARCOR may, in its discretion, withhold payment of such non deductible portion and pay that amount in succeeding years, with interest on the unpaid balance at the prime rate. ARTICLE X EXPENSE Costs and expenses of administering this Plan and providing its benefits will be paid by CLARCOR. CLARCOR will pay, to the full extent permitted by law, all legal fees and expenses which the Participant may reasonably incur as a result of any contest (regardless of the outcome thereof) by CLARCOR, the Participant or others of the validity or enforceability of, or liability under, any provision of this Plan or any guarantee of performance thereof (including as a result of any contest by the Participant about the amount of any payment pursuant to this Plan), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended. 11 ARTICLE XI INALIENABILITY No benefit payment under this Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge prior to actual receipt thereof by a Participant or his or her spouse or beneficiary and any attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge prior to such receipt shall be void; nor shall CLARCOR be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of any person entitled to any benefit. ARTICLE XII AMENDMENT AND TERMINATION CLARCOR may amend or terminate this Plan at any time by action of the Board, without the consent of any Participant or his or her spouse or beneficiaries; PROVIDED, HOWEVER, that (i) this Plan shall not be amended or terminated so as to reduce the benefits payable to a Participant to less than the amount the Participant would have been entitled to receive if he had retired (if he was then eligible to do so) immediately preceding the effective date of the amendment or termination, or (if he was not then eligible to retire) if his or her employment had then terminated under Article V (Relating to Termination of Employment Prior to Early Retirement), disregarding any minimum required age or period of service, and (ii) no amendment or termination shall reduce the benefit payable under this Plan to a Participant whose employment terminated prior to such amendment or termination, or to a spouse or beneficiary of such Participant. ARTICLE XIII OBLIGATIONS OF SUCCESSORS CLARCOR will not be a party to any merger, consolidation or reorganization unless its obligations under this Plan are expressly assumed by its successor or successors. 12 ARTICLE XIV PARTICIPANT'S RIGHTS The right of a Participant or any person claiming under this Plan to receive distributions hereunder shall be an unsecured claim against the general assets of CLARCOR and no Participant shall have any rights in or against any particular asset of CLARCOR. Nothing herein shall confer upon any Participant any right to continue in CLARCOR's employment. ARTICLE XV FORFEITURE OF BENEFITS Anything to the contrary contained in this Plan notwithstanding, unless the Board shall otherwise determine in its sole discretion, all benefits paid or payable to a Participant under this Plan prior to a Change of Control (other than benefits payable pursuant to Article IV) shall be forfeited if the Participant, without the prior written consent of CLARCOR, knowingly engages in (as owner, partner, shareholder, employer, director, officer, agent, consultant or otherwise), with or without compensation, any business which is in competition with CLARCOR or any of its subsidiaries or if the Participant, without the prior written consent of CLARCOR, provides any third party with any confidential information with respect to CLARCOR or any of its subsidiaries. ARTICLE XVI ADMINISTRATION This Plan shall be administered by the Board which may delegate its duties to or request advice from its Compensation and Stock Option Committee. Said Board or Committee in the event of delegation shall have sole discretionary authority to control and manage the operations and administration of this Plan, including the authority to construe and interpret the Plan, decide all questions of eligibility and determine the amount, manner and time of payment of any benefits hereunder, and all other rights and powers necessary and convenient to the carrying out of its functions hereunder. Any decision by the Board or Committee shall be final and binding on all parties hereto, subject to the claims procedure described below. 13 Any denial of a claim for benefits hereunder shall be stated in writing, shall set forth the specific reasons for the denial, and the Participant shall be given a reasonable opportunity for review and appeal of the decision denying the claim, all in accordance with the claims procedures set forth in the CLARCOR Pension Plan for claims with respect to benefits thereunder (the terms of which are hereby incorporated herein by reference), except that the Board or Compensation and Stock Option Committee shall act in place of the Pension Committee under the CLARCOR Pension Plan. This Plan shall be governed by and subject to applicable Federal laws and the laws of the State of Illinois. 14 EX-10.2(B) 3 EXHIBIT 10.2(B) - SUPPLEMENTAL PENSION PLAN EXHIBIT 10.2(b) CLARCOR INC. 1994 SUPPLEMENTAL PENSION PLAN (EFFECTIVE DECEMBER 1, 1994) CLARCOR INC. 1994 SUPPLEMENTAL PENSION PLAN CLARCOR Inc., a Delaware corporation ("CLARCOR"), hereby adopts, effective as of December 1, 1994, this unfunded 1994 Supplemental Pension Plan ("Plan") providing for the payment of certain retirement and other benefits to Participants (as hereinafter defined): ARTICLE I PURPOSE This Plan is intended (i) to provide participants in the CLARCOR Pension Plan (as hereinafter defined) with total retirement or termination benefits that, but for the provisions of certain limitations of the Internal Revenue Code, would be provided by the CLARCOR Pension Plan; and (ii) to provide for selected officers or key employees of CLARCOR or a subsidiary who are not participants in the CLARCOR Pension Plan total retirement or termination benefits comparable to those provided by the CLARCOR Pension Plan. ARTICLE II DEFINITIONS For all purposes of the Plan, words and phrases as used herein with the initial letter capitalized shall have the respective meanings stated: BENEFIT LIMITATIONS means the provisions of Sections 401(a)(17) and 415, or their successors, of the Internal Revenue Code of 1986, as amended and in force from time to time. BOARD means the Board of Directors of CLARCOR Inc. 1 CAUSE means fraud, misappropriation or intentional material damage to the property or business of CLARCOR or commission of a felony. CHANGE OF CONTROL means, with respect to a Participant, a significant change in the ownership of the stock of CLARCOR or in the membership of the Board, as such change may be defined in an employment, severance, change of control or comparable agreement ("Change of Control Agreement"), if any, between CLARCOR and the Participant. CLARCOR PENSION PLAN means the CLARCOR Inc. Pension Plan (formerly the 1984 Restated CLARCOR Pension Trust) as restated or amended from time to time. PARTICIPANT means an officer or key employee of CLARCOR or a subsidiary who (i) is a participant in the CLARCOR Pension Plan and whose anticipated benefit level under that plan is subject to reduction as a result of the Benefit Limitations, or (ii) who is otherwise designated by the Board as a Participant in the Plan. PBGC means the Pension Benefit Guaranty Corporation. PLAN means the CLARCOR Inc. 1994 Supplemental Pension Plan, as set forth herein. PLAN ADMINISTRATOR means the individuals or entity responsible for administration of the Plan determined in accordance with Article XI of the Plan. ARTICLE III ADDITIONAL BENEFITS Each Participant shall be entitled to receive total retirement or termination benefits with respect to his or her total period of service for CLARCOR and its subsidiaries that are equal to the benefits that the Participant would have received (i) if he or she were a Participant under the CLARCOR Pension Plan during the entire period of such service, and (ii) if the CLARCOR Pension Plan did not contain the Benefit Limitations. If upon retirement or other termination a Participant (or spouse, beneficiary or other person entitled to receive benefits on behalf of a Participant) shall receive from the 2 CLARCOR Pension Plan, and from all other tax qualified retirement plans of CLARCOR and its subsidiaries, total retirement or other termination benefits that are less than the amount described in the preceding sentence, such Participant (or other person) shall be entitled to receive, as a benefit under this Plan, an amount equal to the deficiency. If, and to the extent that, retirement or termination benefits are payable under a tax qualified retirement plan other than the CLARCOR Pension Plan, the Plan Administrator shall determine the actuarial equivalent value of the benefits payable under such plan and apply such value in determining the amount of such deficiency. ARTICLE IV FORM OF PAYMENT OF BENEFITS The benefits payable under Article III of this Plan shall be paid at the same time, in the same manner and form and to the same persons as are entitled to receive the benefit payable under the CLARCOR Pension Plan to which such benefit relates. However, the Participant (or other recipient, as appropriate) may request that such benefits shall be paid in the form of a single sum payment. Request for a single sum payment shall be made by the Participant prior to the earliest date benefits are payable, and shall require the approval of the Plan Administrator. The determination of the single sum shall be based on the unisex mortality assumptions then being used to calculate alternative benefits under the CLARCOR Pension Plan and on the immediate interest rate that would be used by the PBGC for purposes of determining the present value of a lump sum distribution on plan termination as in effect as of the date of distribution. If payment is to be made in a single sum and the full amount of the single sum would not be deductible by CLARCOR, under the provisions of the Internal Revenue Code of 1986 if paid in one year, CLARCOR may, in its discretion, withhold payment of any portion that would not be deductible and pay that amount in succeeding years to the extent that it is deductible by CLARCOR. Interest shall be paid on the unpaid balance at the prime rate. ARTICLE V EXPENSE Costs and expenses of administering this Plan and providing its benefits will be paid by CLARCOR. CLARCOR will pay, to the full extent permitted by law, all legal fees and expenses which the Participant may reasonably incur as a result of any contest (regardless of the outcome thereof) by 3 CLARCOR, the Participant or others of the validity or enforceability of, or liability under, any provision of this Plan or any guarantee of performance thereof (including as a result of any contest by the Participant about the amount of any payment pursuant to this Plan), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended. ARTICLE VI INALIENABILITY No benefit payment under this Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge prior to actual receipt thereof by a Participant or his or her spouse or beneficiary and any attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge prior to such receipt shall be void; nor shall CLARCOR be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of any person entitled to any benefit. ARTICLE VII AMENDMENT AND TERMINATION OF THIS PLAN CLARCOR may amend or terminate this Plan at any time by action of the Board, without the consent of any Participant or his or her spouse or beneficiaries; PROVIDED, HOWEVER, that (i) this Plan shall not be amended or terminated so as to reduce the benefits payable to a Participant to less than the amount the Participant would have been entitled to receive if he had retired (if he was then eligible to do so) or otherwise terminated his employment immediately preceding the effective date of the amendment or termination; and (ii) no amendment or termination shall reduce the benefit payable under this Plan to a Participant whose employment terminated prior to such amendment or termination, or to a spouse or beneficiary of such Participant. 4 ARTICLE VIII OBLIGATIONS OF SUCCESSORS CLARCOR will not be a party to any merger, consolidation or reorganization unless its obligations under this Plan are expressly assumed by its successor or successors. ARTICLE IX PARTICIPANT'S RIGHTS The right of a Participant or any person claiming under this Plan to receive distributions hereunder shall be an unsecured claim against the general assets of CLARCOR and no Participant shall have any rights in or against any particular asset of CLARCOR. Nothing herein shall confer upon any Participant any right to continue in CLARCOR's employment. ARTICLE X FORFEITURE OF BENEFITS If the employment of a Participant is terminated by CLARCOR and/or its subsidiaries for Cause no benefits will be payable from the Plan to or with respect to such Participant. Anything to the contrary contained in this Plan notwithstanding, unless the Board shall otherwise determine in its sole discretion, all benefits paid or payable to a Participant under this Plan shall be forfeited if the Participant, prior to a Change of Control and without the prior written consent of CLARCOR, knowingly engages in (as owner, partner, shareholder, employer, director, officer, agent, consultant or otherwise), with or without compensation, any business which is in competition with CLARCOR or any of its subsidiaries or if the Participant, without the prior written consent of CLARCOR, provides any third party with any confidential information with respect to CLARCOR or any of its subsidiaries. 5 ARTICLE XI ADMINISTRATION This Plan shall be administered by the Board which may delegate its duties to or request advice from its Compensation and Stock Option Committee. Said Board or Committee in the event of delegation shall have sole discretionary authority to control and manage the operations and administration of this Plan, including the authority to construe and interpret the Plan, decide all questions of eligibility and determine the amount, manner and time of payment of any benefits hereunder, and all other rights and powers necessary and convenient to the carrying out of its functions hereunder. Any decision by the Board or Committee shall be final and binding on all parties hereto, subject to the claims procedure described below. Any denial of a claim for benefits hereunder shall be stated in writing, shall set forth the specific reasons for the denial, and the Participant shall be given a reasonable opportunity for review and appeal of the decision denying the claim, all in accordance with the claims procedures set forth in the CLARCOR Pension Plan for claims with respect to benefits thereunder (the terms of which are hereby incorporated herein by reference), except that the Board or Compensation and Stock Option Committee shall act in place of the Pension Committee under the CLARCOR Pension Plan. This Plan shall be governed by and subject to applicable Federal laws and the laws of the State of Illinois. 6 EX-10.2(C) 4 EXHIBIT 10.2(C) - SUPPLEMENTAL RETIREMENT PLAN EXHIBIT 10.2(c) CLARCOR INC. SUPPLEMENTAL RETIREMENT PLAN (AS AMENDED AND RESTATED EFFECTIVE DECEMBER 1, 1994) CLARCOR INC. SUPPLEMENTAL RETIREMENT PLAN (AS AMENDED AND RESTATED EFFECTIVE DECEMBER 1, 1994) CLARCOR Inc., a Delaware corporation ("CLARCOR"), hereby amends and restates, effective as of December 1, 1994, this Supplemental Retirement Plan ("Plan") providing for the payment of certain retirement and other benefits to Participants (as hereinafter defined). The provisions of this Plan shall apply to all Participants who retire or otherwise terminate employment with CLARCOR and its subsidiaries on or after December 1, 1994. The benefits, rights and obligations relative to Participants who retired or terminated prior to that date shall be governed by the provisions of this plan as in effect on the date of their retirement or termination. ARTICLE I DEFINITIONS For all purposes of the Plan, words and phrases as used herein with the initial letter capitalized shall have the respective meanings stated: AVERAGE MONTHLY COMPENSATION means the result obtained by dividing the total Compensation received by a Participant for the three consecutive fiscal years of service for CLARCOR for which such Participant received his or her highest Compensation by 36. In the case of a Participant deemed totally and permanently disabled, the Compensation received in the fiscal year preceding that in which the disability commences shall be appropriately annualized and divided by twelve. The greater of the amount so computed or that based on the three fiscal years shall be the Average Monthly Compensation of the disabled Participant. BOARD means the Board of Directors of CLARCOR Inc. CAUSE means fraud, misappropriation or intentional material damage to the property or business of CLARCOR or commission of a felony. 1 CHANGE OF CONTROL means, with respect to a Participant, a significant change in the ownership of the stock of CLARCOR or in the membership of the Board, as such change may be defined in an employment, severance, change of control or comparable agreement ("Change of Control Agreement"), if any, between CLARCOR and the Participant. CLARCOR PENSION PLAN means the CLARCOR Inc. Pension Plan (formerly the 1984 Restated CLARCOR Pension Trust) as restated or amended from time to time. CLARCOR SUPPLEMENTAL PLAN means the CLARCOR Inc. 1994 Supplemental Pension Plan as restated or amended from time to time. COMPENSATION means the amount received by a Participant for services rendered by such Participant to CLARCOR and its subsidiaries as base salary, bonuses and other annual cash incentives, including amounts of compensation deferred by the Participant under the Retirement Savings Plan or similar programs and cash and cash value of shares received under the Long Range Performance Share Plan; compensation excludes (i) any extraordinary cash or imputed compensation, such as the taxable value of benefits or perquisites provided by CLARCOR, (ii) amounts paid or accrued under any other long-term incentive plan of CLARCOR, (iii) any cash or securities received by a Participant upon the exercise of a stock appreciation right or stock option, (iv) employer contributions to any tax-qualified retirement plan or to CLARCOR's Monthly Investment Plan, and (v) the difference between the exercise price of any stock option exercised by a Participant and the then fair market value of the securities of CLARCOR thereby acquired. DEFERRED RETIREMENT DATE means the first day of the month coincident with or next following the date the Participant terminates employment with CLARCOR and/or its subsidiaries after his or her Normal Retirement Date. DISABILITY means "total and permanent disability," as defined in the CLARCOR Pension Plan. DISABILITY RETIREMENT DATE means the first day of the month coincident with or next following the date that the Board determines that a Participant has become Disabled. 2 INVOLUNTARY TERMINATION means, with respect to a Participant, a termination of the employment of the Participant under circumstances that entitle the Participant to receive severance benefits that are payable only in the event of an "involuntary termination," as such change may be defined in a "Change of Control Agreement," if any, between CLARCOR and the Participant. NORMAL RETIREMENT BENEFIT shall have the meaning set forth in Article II. NORMAL RETIREMENT DATE means the first day of the month coincident with or next following the date a Participant attains age 65. PARTICIPANT means those officers or key employees of CLARCOR or a subsidiary who have been designated by the Board as Participants in the Plan. PBGC means the Pension Benefit Guaranty Corporation. PENSION RETIREMENT BENEFIT means the amount that would be payable to the Participant as a monthly pension for life if the Participant had elected to receive a pension payable for his or her life with two-thirds (66-2/3 %) of such amount payable to his or her surviving spouse, if any, for the life of such surviving spouse, determined in accordance with the provisions of the CLARCOR Pension Plan, as though the Participant had elected such optional form of pension. If the Participant does not have a spouse at the time of his or her retirement or other termination, his or her Pension Retirement Benefit shall be the amount payable to the Participant as a monthly pension for his or her life. PLAN means the CLARCOR Inc. Supplemental Retirement Plan, as set forth herein. PLAN ADMINISTRATOR means the individuals or entity responsible for administration of the Plan determined in accordance with Article XVI of the Plan. 3 ARTICLE II NORMAL RETIREMENT BENEFIT In the event the employment of a Participant by CLARCOR and/or its subsidiaries terminates at Normal Retirement Date for any reason other than Cause or death, such Participant shall receive a monthly benefit for his or her life (the "Normal Retirement Benefit") pursuant to this Plan equal to: (1) sixty five (65%) percent of the Participant's Average Monthly Compensation; reduced by (2) the sum of his or her Pension Retirement Benefits payable at Normal Retirement Date under the CLARCOR Pension Plan and the CLARCOR Supplemental Plan; and by (3) the retirement benefits, if any, that may have been provided to the Participant by a prior employer, if such reduction has been specified by the Board as a condition of the Participant's entry into this Plan. Payment of benefits pursuant to this Article II shall commence on the Participant's Normal Retirement Date and shall be subject to the provisions of Article VII and Article IX of the Plan (relating to death and form of payment of benefits, respectively). ARTICLE III EARLY RETIREMENT BENEFIT In the event the employment of a Participant by CLARCOR and/or its subsidiaries terminates prior to his or her Normal Retirement Date but after he has both attained age 60 and completed at least five years of service, for any reason other than Cause, death or Involuntary Termination following a Change of Control, such Participant shall receive a monthly benefit for his or her life equal to: (a) The product of 4 (1) sixty five (65%) percent of the Participant's Average Monthly Compensation computed at termination; and (2) a fraction, the numerator of which is the number of years of such Participant's actual service to CLARCOR and/or its subsidiaries (plus, in the case of a Participant whose benefit is reduced under clause (4) of this paragraph by any retirement benefits provided by a prior employer, the Participant's years of service for such prior employer). and the denominator of which is the number of years of such service the Participant would have had if his or her employment had continued until Normal Retirement Date; reduced by (3) the sum of his or her Pension Retirement Benefits payable at Normal Retirement Date under the CLARCOR Pension Plan and the CLARCOR Supplemental Plan; and by (4) the retirement benefits, if any, that may have been provided to the Participant by a prior employer, if such reduction has been specified by the Board as a condition of the Participant's entry into this Plan. (b) Payment of benefits shall commence either (i) on the Participant's Normal Retirement Date or (ii) the first day of any month beginning after the Participant's termination of employment with CLARCOR and any of its subsidiaries, as the Plan Administrator shall determine and shall be subject to the provisions of Article VII and Article IX of the Plan. (c) If payment of benefits as an annuity commences prior to the Participant's Normal Retirement Date, the benefit determined in (a) above will be actuarially reduced according to the same unisex mortality assumption and interest rate being used on the annuity commencement date to calculate alternate benefits under the CLARCOR Pension Plan. 5 ARTICLE IV INVOLUNTARY TERMINATION FOLLOWING CHANGE OF CONTROL In the event the employment of a Participant by CLARCOR and/or its subsidiaries terminates prior to his or her Normal Retirement Date by reason of an Involuntary Termination following a Change of Control, the Participant shall be entitled to receive a single sum payment, determined in accordance with Article IX of the Plan, in an amount equal to the actuarial equivalent of a monthly benefit for his or her life calculated as follows: (1) Compute an Early Retirement Benefit for the Participant as provided in Article III (whether or not such Participant had reached 60 years of age or completed 5 years of service prior to the date of his or her death), but including in the numerator of clause (a)(3) thereof one additional year of service credit (not to exceed 5 years) for each year between the date of such termination and the Participant's Normal Retirement Date; and, (2) Assume payments of such Early Retirement Benefit commenced on the first day of the month following the date of such termination, without actuarial reduction attributable to the first five years prior to Normal Retirement Date. ARTICLE V TERMINATION OF EMPLOYMENT PRIOR TO EARLY RETIREMENT In the event the employment of a Participant by CLARCOR and/or its subsidiaries terminates prior to his or her attainment of age 60, but after he has both attained age 50 and completed 5 years of service, for any reason other than Cause, death or Involuntary Termination following a Change of Control, such a Participant shall receive a monthly benefit for his or her life equal to: 6 (a) The product of (1) sixty five (65%) percent of the Participant's Average Monthly Compensation computed at termination; and (2) a fraction, the numerator of which is the number of years of such Participant's actual service to CLARCOR and/or its subsidiaries (plus, in the case of a Participant whose benefit is reduced under clause (4) of this paragraph by any retirement benefits provided by a prior employer, the Participant's years of service for such prior employer). and the denominator of which is the number of years of such service the Participant would have had if his or her employment had continued until Normal Retirement Date; reduced by (3) the sum of his or her Pension Retirement Benefits payable at Normal Retirement Date under the CLARCOR Pension Plan and the CLARCOR Supplemental Plan; and by (4) the retirement benefits, if any, that may have been provided to the Participant by a prior employer, if such reduction has been specified by the Board as a condition of the Participant's entry into this Plan. (b) Payment of benefits shall commence either (i) on the Participant's Normal Retirement Date or (ii) the first day of any month beginning after the Participant's attainment of age 60 and termination of employment with CLARCOR and all of its subsidiaries, as the Plan Administrator shall determine. (c) If payment of benefits as an annuity commences prior to the Participant's Normal Retirement Date, the benefit determined in (a) above will be actuarially reduced according to the same unisex mortality assumption and interest rate being used on the annuity commencement date to calculate alternate benefits under the CLARCOR Pension Plan. 7 (d) If the employment of a Participant by CLARCOR and/or its subsidiaries terminates before he has attained age 50 and completed 5 years of service for any reason other than Cause, death, disability or Involuntary Termination following a Change of Control, no benefits will be payable from the Plan to or with respect to such Participant. (e) If the employment of a Participant is terminated by CLARCOR and/or its subsidiaries for Cause no benefits will be payable from the Plan to or with respect to such Participant. ARTICLE VI TOTAL AND PERMANENT DISABILITY In the event the employment of a Participant by CLARCOR and/or its subsidiaries terminates prior to his or her Normal Retirement Date under circumstances in which the Board determines that a Participant has become Disabled, such Participant shall be entitled to receive a monthly benefit for his or her life equal to: (a) (1) sixty five (65%) percent of the Participant's Average Monthly Compensation computed at termination; and reduced by (2) the sum of his or her Pension Retirement Benefits payable at Normal Retirement Date under the CLARCOR Pension Plan and the CLARCOR Supplemental Plan. and by (3) the retirement benefits, if any, that may have been provided to the Participant by a prior employer, if such reduction has been specified by the Board as a condition of the Participant's entry into this Plan. (b) Payment of benefits shall commence either (i) on the Participant's Normal Retirement Date or (ii) the first day of any month beginning after the 8 Participant's termination of employment with CLARCOR and all of its subsidiaries, as the Plan Administrator shall determine. (c) If payment of benefits as an annuity commences prior to the Participant's Normal Retirement Date, the benefit determined in (a) above will be actuarially reduced according to the same unisex mortality assumption and interest rate being used on the annuity commencement date to calculate alternate benefits under the CLARCOR Pension Plan. ARTICLE VII DEATH In the event that a Participant predeceases his or her spouse, the spouse shall be entitled to receive the following benefits: (a) If death of the Participant occurs prior to the commencement of benefits hereunder, and prior to the Participant's Normal Retirement Date, the Participant's spouse shall receive a monthly benefit calculated in accordance with Article VI, in the amount that would have been payable to the Participant if he or she had terminated employment on the day preceding his or her date of death and had elected an actuarially reduced annuity commencing on that date. If death of the Participant occurs prior to the commencement of benefits hereunder, and on or after the Participant's Normal Retirement Date, the Participant's spouse shall receive a monthly benefit calculated in accordance with Article VIII as if such Participant had retired on the day preceding his or her date of death and had elected an annuity commencing on that date. Payment of monthly benefits to the spouse shall commence on the first day of the month following such Participant's death and continue for 15 years or until the death of the spouse, whichever occurs first. (b) If the death of the Participant occurs after the commencement of payment of benefits hereunder, his or her surviving spouse to whom he was married at the date benefits commenced shall receive monthly payments equal to those being 9 paid to such Participant on the date of his or her death. Such payments shall continue so that the total payment period (including all payments to the Participant) equals 15 years, or until the death of the spouse, whichever occurs first. (c) If the Participant has received the benefits to which he is entitled from this Plan in the form of a single sum prior to his or her death, no further benefits shall be paid. Notwithstanding the foregoing, if benefits under this Plan were payable in a single sum or in installments under an election made by the Participant under Article IX of the Plan, but the full value of the Participant's benefit had not been paid as of the date of his or her death, payment of any unpaid installments, or the balance of any single sum payment that was deferred by CLARCOR to assure its deductibility for federal income tax purposes, shall be made to the Participant's beneficiary, as named in a document filed with the Secretary of CLARCOR, or if none is so named, to the Participant's surviving spouse, if any, or, if none, to the estate or estate planning trust of the Participant, as the Plan Administrator shall determine. ARTICLE VIII DEFERRED RETIREMENT In the event a Participant continues employment beyond his or her Normal Retirement Date, such Participant shall receive a monthly benefit for his or her life alone equal to: (1) sixty five (65%) percent of the Participant's Average Monthly Compensation; reduced by (2) the sum of his or her Pension Retirement Benefits payable at Normal Retirement Date under the CLARCOR Pension Plan and the CLARCOR Supplemental Plan; and by 10 (3) the retirement benefits, if any, that may have been provided to the Participant by a prior employer, if such reduction has been specified by the Board as a condition of the Participant's entry into this Plan. Payment of benefits pursuant to this Article VIII shall commence on the Participant's Deferred Retirement Date and shall be subject to the provisions of Article VII and Article IX of the Plan. ARTICLE IX FORM OF PAYMENT OF BENEFITS Payment of benefits shall be made either in the form specified in the applicable Article, in the form of a single sum payment, or in substantially equal installments payable at least annually over a period not to exceed 10 years. The form of payment shall be as requested by the Participant prior to the earliest date benefits are payable, and as approved by the Plan Administrator. The determination of the single sum shall be based on the unisex mortality assumptions then being used to calculate alternative benefits under the CLARCOR Pension Plan and on the immediate interest rate that would be used by the PBGC for purposes of determining the present value of a lump sum distribution on plan termination as in effect as of the date of distribution. If payment is to be made in installments, the principal amount thereof shall be the single sum payment as calculated above, and interest shall be paid on the unpaid balance at the prime rate. If all or a part of any payment to be made in any year would not be deductible by CLARCOR under the provisions of the Internal Revenue Code of 1986, CLARCOR may, in its discretion, withhold payment of such non deductible portion and pay that amount in succeeding years, with interest on the unpaid balance at the prime rate. ARTICLE X EXPENSE Costs and expenses of administering this Plan and providing its benefits will be paid by CLARCOR. CLARCOR will pay, to the full extent permitted by law, all legal fees and expenses which the Participant may reasonably incur as a result of any contest (regardless of the outcome thereof) by CLARCOR, the Participant or others of the validity or enforceability of, or liability under, any 11 provision of this Plan or any guarantee of performance thereof (including as a result of any contest by the Participant about the amount of any payment pursuant to this Plan), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended. ARTICLE XI INALIENABILITY No benefit payment under this Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge prior to actual receipt thereof by a Participant or his or her spouse or beneficiary and any attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge prior to such receipt shall be void; nor shall CLARCOR be in any manner liable for or subject to the debts, contracts, liabilities, engagements or torts of any person entitled to any benefit. ARTICLE XII AMENDMENT AND TERMINATION CLARCOR may amend or terminate this Plan at any time by action of the Board, without the consent of any Participant or his or her spouse or beneficiaries; PROVIDED, HOWEVER, that (i) this Plan shall not be amended or terminated so as to reduce the benefits payable to a Participant to less than the amount the Participant would have been entitled to receive if he had retired (if he was then eligible to do so) immediately preceding the effective date of the amendment or termination, or (if he was not then eligible to retire) if his or her employment had then terminated under Article V (Relating to Termination of Employment Prior to Early Retirement), disregarding any minimum required age or period of service, and (ii) no amendment or termination shall reduce the benefit payable under this Plan to a Participant whose employment terminated prior to such amendment or termination, or to a spouse or beneficiary of such Participant. 12 ARTICLE XIII OBLIGATIONS OF SUCCESSORS CLARCOR will not be a party to any merger, consolidation or reorganization unless its obligations under this Plan are expressly assumed by its successor or successors. ARTICLE XIV PARTICIPANT'S RIGHTS The right of a Participant or any person claiming under this Plan to receive distributions hereunder shall be an unsecured claim against the general assets of CLARCOR and no Participant shall have any rights in or against any particular asset of CLARCOR. Nothing herein shall confer upon any Participant any right to continue in CLARCOR's employment. ARTICLE XV FORFEITURE OF BENEFITS Anything to the contrary contained in this Plan notwithstanding, unless the Board shall otherwise determine in its sole discretion, all benefits paid or payable to a Participant under this Plan prior to a Change of Control (other than benefits payable pursuant to Article IV) shall be forfeited if the Participant, without the prior written consent of CLARCOR, knowingly engages in (as owner, partner, shareholder, employer, director, officer, agent, consultant or otherwise), with or without compensation, any business which is in competition with CLARCOR or any of its subsidiaries or if the Participant, without the prior written consent of CLARCOR, provides any third party with any confidential information with respect to CLARCOR or any of its subsidiaries. 13 ARTICLE XVI ADMINISTRATION This Plan shall be administered by the Board which may delegate its duties to or request advice from its Compensation and Stock Option Committee. Said Board or Committee in the event of delegation shall have sole discretionary authority to control and manage the operations and administration of this Plan, including the authority to construe and interpret the Plan, decide all questions of eligibility and determine the amount, manner and time of payment of any benefits hereunder, and all other rights and powers necessary and convenient to the carrying out of its functions hereunder. Any decision by the Board or Committee shall be final and binding on all parties hereto, subject to the claims procedure described below. Any denial of a claim for benefits hereunder shall be stated in writing, shall set forth the specific reasons for the denial, and the Participant shall be given a reasonable opportunity for review and appeal of the decision denying the claim, all in accordance with the claims procedures set forth in the CLARCOR Pension Plan for claims with respect to benefits thereunder (the terms of which are hereby incorporated herein by reference), except that the Board or Compensation and Stock Option Committee shall act in place of the Pension Committee under the CLARCOR Pension Plan. This Plan shall be governed by and subject to applicable Federal laws and the laws of the State of Illinois. 14 EX-11 5 EXHIBIT 11 CLARCOR INC. EXHIBIT 11 -- COMPUTATIONS OF PER SHARE EARNINGS FOR THE FIVE YEARS ENDED NOVEMBER 30, 1994 (DOLLARS IN THOUSANDS)
FISCAL YEARS ENDED NOVEMBER 30, ------------------------------------------------------------------------- AVERAGE SHARES OUTSTANDING 1994 1993 1992 1991 1990 - ---------------------------------------------- ------------- ------------- ------------- ------------- ------------- 1. Average Number of shares outstanding....................... 14,813,925 14,837,741 14,972,639 14,873,282 14,843,279 2. Net additional shares resulting from assumed exercise of stock options*.......................... 225,599 213,725 230,202 253,518 123,549 ------------- ------------- ------------- ------------- ------------- 3. Adjusted average shares outstanding for fully diluted computation (1 plus 2)........................... 15,039,524 15,051,466 15,202,841 15,126,800 14,966,828 ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- Earnings per share of common stock: Primary............................ $1.43 $1.16 $0.94 $1.26 $1.37 ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- Assuming full dilution............. $1.41 $1.15 $0.93 $1.24 $1.36 ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- - ------------------------ * Assumes proceeds from exercise of stock options used to purchase treasury shares at the greater of the year-end or the average market price during the period.
EX-13 6 EXHIBIT 13 - ANNUAL REPORT EXHIBIT 13(a)(ii) CONSOLIDATED BALANCE SHEETS November 30, 1994 and 1993 (DOLLARS IN THOUSANDS) ================================================================================
ASSETS 1994 1993 - ------------------------------------------------------------------------------------------------------------ Current assets: Cash and short-term cash investments............................................ $ 19,567 $ 13,838 Accounts receivable, less allowance for losses of $1,580 for 1994 and $1,544 for 1993........................................ 42,545 40,911 Inventories..................................................................... 30,258 26,996 Prepaid expenses................................................................ 2,926 1,175 Deferred income taxes........................................................... 3,154 3,241 ---------------------- Total current assets................................ 98,450 86,161 ---------------------- Marketable equity securities, at fair value....................................... 3,655 -- Investment in affiliates.......................................................... 248 8,002 Plant assets, at cost less accumulated depreciation............................... 52,615 47,636 Excess of cost over fair value of assets acquired, less accumulated amortization................................................... 15,191 15,701 Pension assets.................................................................... 10,237 9,056 Other assets...................................................................... 8,052 7,011 ---------------------- Total assets........................................ $188,448 $173,567 ---------------------- ---------------------- LIABILITIES - ------------------------------------------------------------------------------------------------------------ Current liabilities: Current portion of long-term debt............................................... $ 7,579 $ 7,921 Accounts payable and accrued liabilities........................................ 29,831 23,775 Income taxes.................................................................... 2,051 1,592 ---------------------- Total current liabilities........................... 39,461 33,288 ---------------------- Long-term debt, less current portion.............................................. 17,013 24,617 Postretirement health care benefits............................................... 3,039 3,111 Long-term pension liabilities..................................................... 5,616 3,671 Deferred income taxes............................................................. 5,686 4,239 Minority interest................................................................. 171 -- Contingencies SHAREHOLDERS' EQUITY - ------------------------------------------------------------------------------------------------------------ Capital stock: Preferred, par value $1, authorized 1,300,000 shares, issuable in series, none issued....................................... -- -- Common, par value $1, authorized 30,000,000 shares, issued 14,803,788 in 1994 and 14,819,199 in 1993............................................................ 14,804 14,819 Capital in excess of par value.................................................... 183 328 Foreign currency translation adjustments.......................................... (609) (1,465) Unrealized holding gain on marketable equity securities, net of taxes............. 911 -- Retained earnings................................................................. 103,013 90,959 ---------------------- 118,302 104,641 Common stock in treasury at cost; 42,900 shares in 1994 (840) -- ---------------------- Total shareholders' equity.......................... 117,462 104,641 ---------------------- Total liabilities and shareholders' equity.......... $188,448 $173,567 ---------------------- ----------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS. EXHIBIT 13(a)(iii) CONSOLIDATED STATEMENTS OF EARNINGS for the years ended November 30, 1994, 1993 and 1992 (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) ================================================================================
1994 1993 1992 - ----------------------------------------------------------------------------------------------------------- Net sales............................................................. $270,123 $225,319 $188,625 Cost of sales......................................................... 192,456 155,615 129,287 ---------------------------------- Gross profit................................................ 77,667 69,704 59,338 Selling and administrative expenses................................... 45,301 40,637 31,708 ---------------------------------- Operating profit............................................ 32,366 29,067 27,630 ---------------------------------- Other income (expense): Interest expense.................................................... (2,788) (3,525) (3,803) Interest income..................................................... 548 875 298 Equity in net earnings of affiliates................................ 959 745 873 Gain on sale of investment in affiliate............................. 4,166 -- -- Minority interest in earnings of subsidiary......................... (2) -- -- Other, net.......................................................... (2,689) (84) 307 ---------------------------------- 194 (1,989) (2,325) ---------------------------------- Earnings from continuing operations before income taxes and cumulative effect of change in accounting method..................... 32,560 27,078 25,305 Provision for income taxes............................................ 11,935 9,827 8,796 ---------------------------------- Earnings from continuing operations before cumulative effect of change in accounting method............................... 20,625 17,251 16,509 Discontinued operations: Gain on disposition, net of income taxes of $1,342 in 1992........................................... -- -- -- Cumulative effect of changes in accounting methods, net of income tax benefit of $1,477 in 1992................................................... 630 -- (2,370) ---------------------------------- Net earnings.......................................................... $ 21,255 $ 17,251 $ 14,139 ---------------------------------- ---------------------------------- Net earnings (loss) per common share: Continuing operations............................................... $1.39 $1.16 $1.10 Discontinued operations............................................. -- -- -- Cumulative effect of accounting changes............................. 0.04 -- (0.16) ---------------------------------- $1.43 $1.16 $ .94 ---------------------------------- ----------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS. EXHIBIT 13(a)(iv) CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY for the years ended November 30, 1994, 1993 and 1992 (DOLLARS IN THOUSANDS EXCEPT SHARE DATA) ================================================================================
Common Stock ---------------------------------------------- Issued In Treasury Foreign ---------------------- ---------------------- Capital in Currency Unrealized Number Number Excess of Translation Holding Retained of Shares Amount of Shares Amount Par Value Adjustments Gain Earnings - ------------------------------------------------------------------------------------------------------------------------------------ Balance, November 30, 1991...... 22,379,030 $14,920 7,471,748 $ 72,260 $ 4,323 $ -- $ -- $148,679 Net earnings.................... -- -- -- -- -- -- -- 14,139 Retirement of treasury stock................ (7,413,671) (7,414) (7,413,671) (72,974) (4,986) -- -- (60,574) Stock split..................... -- 7,459 -- -- -- -- -- (7,459) Stock options exercised......... 25,678 26 (18,145) 785 635 -- -- -- Issuance of stock under award plans................... (5,206) (5) (39,932) (71) 300 -- -- -- Cash dividends-$.60 per common share.............. -- -- -- -- -- -- -- (8,958) Translation adjustments......... -- -- -- -- -- (1,534) -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Balance, November 30, 1992...... 14,985,831 14,986 -- -- 272 (1,534) -- 85,827 Net earnings.................... -- -- -- -- -- -- -- 17,251 Purchase of treasury stock................ -- -- 202,359 3,369 -- -- -- -- Retirement of treasury stock................ (202,359) (202) (202,359) ( 3,369) (84) -- -- (3,083) Stock options exercised......... 27,223 27 -- -- 66 -- -- -- Issuance of stock under award plans................... 8,504 8 -- -- 74 -- -- -- Cash dividends-$.61 per common share.............. -- -- -- -- -- -- -- (9,036) Translation adjustments......... -- -- -- -- -- 69 -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Balance, November 30, 1993...... 14,819,199 14,819 -- -- 328 (1,465) -- 90,959 Net earnings.................... -- -- -- -- -- -- -- 21,255 Purchase of treasury stock................ -- -- 72,900 1,327 -- -- -- -- Retirement of treasury stock................ (30,000) (30) (30,000) (487) (457) -- -- -- Stock options exercised......... 5,775 6 -- -- 78 -- -- -- Issuance of stock under award plans................... 8,814 9 -- -- 234 -- -- -- Cash dividends-$.6225 per common share.............. -- -- -- -- -- -- -- (9,201) Unrealized holding gain on marketable equity securities.. -- -- -- -- -- -- 911 -- Translation adjustments......... -- -- -- -- -- 856 -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Balance, November 30, 1994...... 14,803,788 $14,804 42,900 $ 840 $ 183 $ (609) $ 911 $103,013 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS. EXHIBIT 13(a)(v) CONSOLIDATED STATEMENTS OF CASH FLOWS for the years ended November 30, 1994, 1993 and 1992 (DOLLARS IN THOUSANDS) ================================================================================
1994 1993 1992 - ----------------------------------------------------------------------------------------------------------- Cash flows from continuing operations: Net earnings and cumulative effect of accounting change............. $ 21,255 $ 17,251 $ 14,139 Adjustments to reconcile net earnings to net cash provided by continuing operations: Depreciation.................................................... 6,778 5,816 4,952 Amortization.................................................... 514 479 428 Equity in net earnings of affiliates............................ (959) (745) (873) Gain on sale of investment in affiliate......................... (4,166) -- -- Minority interest in earnings of subsidiary..................... 2 -- -- Net loss (gain) on disposition of plant assets.................. 1,862 168 (1) Cumulative effect of accounting changes, net.................... (630) -- 2,370 Changes in assets and liabilities: Accounts receivable........................................... (1,981) (3,357) (513) Inventories................................................... (2,863) 2,992 (694) Prepaid expenses.............................................. (1,786) 707 (718) Accounts payable and accrued liabilities...................... 4,021 (2,319) 2,032 Pension assets and liabilities, net........................... 681 (1,248) (822) Income taxes.................................................. (137) (605) 23 Deferred income taxes......................................... 2,012 853 (590) ---------------------------------- Cash provided by continuing operations...................... 24,603 19,992 19,733 Cash provided by discontinued operations.................... -- -- 3,074 ---------------------------------- Net cash provided by operating activities................... 24,603 19,992 22,807 ---------------------------------- Cash flows from investing activities: Proceeds from sale of investment in affiliate....................... 10,731) -- -- Business accquisitions, net of cash acquired........................ (1,512) (12,824) -- Dividends from affiliates, net of reinvestments..................... 363 439 92 Additions to plant assets........................................... (11,416) (10,218) (6,557) Proceeds from sale of Precision Products Group...................... -- 20,700 -- Disposition of plant assets......................................... 331 2 232 Other, net.......................................................... 1,034 708 (118) Cash used by discontinued operations, principally for plant assets...................................................... -- -- (834) ---------------------------------- Net cash used in investing activities....................... (469) (1,193) (7,185) ---------------------------------- Cash flows from financing activities: Reduction of long-term debt......................................... (7,946) (7,614) (1,357) Sale of capital stock, stock option plan............................ 69 7 115 Purchase of treasury stock.......................................... (1,327) (3,369) -- Cash dividends paid................................................. (9,201) (9,036) (8,958) ---------------------------------- Net cash used in financing activities....................... (18,405) (20,012) (10,200) ---------------------------------- Net change in cash and short-term cash investments.................... 5,729 (1,213) 5,422 Cash and short-term cash investments, beginning of year............... 13,838 15,051 9,629 ---------------------------------- Cash and short-term cash investments, end of year..................... $ 19,567 $ 13,838 $ 15,051 ---------------------------------- ----------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS. EXHIBIT 13(a)(vi) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) ================================================================================ At November 30, 1994, the Company has two principal product segments: Filtration Products and Consumer Products. During 1993, the Company acquired Airguard Industries and Guardian/U.E.L. to be part of Filtration Products. Effective November 30, 1992, the Company sold its Precision Products Group, which had been previously reported as Discontinued Operations. A. ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include all domestic and foreign subsidiaries which are more than 50% owned and controlled. Investments in nonconsolidated companies which are at least 20% owned are carried at cost plus equity in undistributed earnings since acquisition. Minority interest represents a minority shareholder's 10% ownership of the common stock of Filtros Baldwin de Mexico (FIBAMEX). FOREIGN CURRENCY TRANSLATION Financial statements of foreign subsidiaries are translated into U.S. dollars at current rates, except that revenues, costs and expenses are translated at average current rates during each reporting period. Net exchange gains or losses resulting from the translation of foreign financial statements and the effect of exchange rate changes on intercompany transactions of a long- term investment nature are accumulated and credited or charged directly to a separate component of shareholders' equity. INVESTMENTS IN MARKETABLE SECURITIES The Company adopted Statement of Financial Accounting Standards No. 115, (SFAS 115) "Accounting for Certain Investments in Debt and Equity Securities". As permitted, the Company implemented this Standard on November 30, 1994. The Company's marketable equity securities have been classified as available-for- sale. PLANT ASSETS Depreciation is provided by the straight-line and accelerated methods for financial statement purposes and by the accelerated method for tax purposes. Provision for depreciation is made over the estimated useful lives of the assets. It is the policy of the Company to capitalize renewals and betterments, and to charge to expense the cost of current maintenance and repairs. EXCESS OF COST OVER FAIR VALUE OF ASSETS ACQUIRED Excess of cost over fair value of assets acquired is being amortized over a forty-year period, using the straight-line method. Accumulated amortization was $5,405 and $4,891 at November 30, 1994 and 1993, respectively. STATEMENTS OF CASH FLOWS All highly liquid investments purchased with an original maturity of three months or less are considered to be short-term cash investments. The carrying amount approximates fair value. The Company has certain noncash transactions related to stock option and award plans, and the disposition of certain assets and businesses, which are described in Footnotes L. and M. CONCENTRATIONS OF CREDIT Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments and trade receivables. The Company places its temporary cash investments with high credit quality financial institutions and in high grade municipal securities. At November 30, 1994 and 1993, the Company held short-term securities of municipal government agencies with a total cost of $13,471 and $7,680, respectively. Concentrations of credit risk with ================================================================================ respect to trade receivables are limited due to the Company's large number of customers and their dispersion across many different industries. INCOME TAXES As of December 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes" which changes the Company's method of accounting for income taxes from the deferred method to an asset and liability approach. SFAS 109 requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities. Previously, the Company deferred the past tax effects of timing differences between financial reporting and taxable income. NET EARNINGS PER COMMON SHARE Net earnings per common share is based on the weighted average number of common shares outstanding during the respective years. ACCOUNTING PERIOD The Company's fiscal year ends on the Saturday closest to November 30. The fiscal years ended December 3, 1994, November 27, 1993 and November 28, 1992, were comprised of fifty-three, fifty-two, and fifty-two weeks, respectively. In the consolidated financial statements, all fiscal years are shown to begin as of December 1 and end as of November 30 for clarity of presentation. RECLASSIFICATION The 1993 consolidated balance sheet includes a reclassification of certain assets and liabilities to be consistent with the 1994 balance sheet. B. ACQUISITIONS AND INVESTMENT IN AFFILIATES ACQUISITIONS During 1994, FIBAMEX was incorporated in Mexico, in which the Company owns a 90% equity interest. FIBAMEX acquired certain assets from Filtros Continental, S.A. de C.V. for $1,512 in cash. The acquisition did not have a significant impact on the results of the Company. The Company purchased all of the shares of Airguard Industries, Inc. on April 30, 1993 and the assets of Guardian/U.E.L. effective June 1, 1993, for $13,504 in cash, including acquisition expenses. Airguard is a manufacturer of environmental and industrial air filtration products. Guardian/U.E.L. manufactures air and liquid filtration products. The acquisitions have been accounted for by the purchase method of accounting and the operating results of Airguard and Guardian/U.E.L. are included in the Company's consolidated results of operations from the date of the acquisitions. The excess of cost over fair value of assets acquired is being amortized over a forty year period, using the straight-line method. The following unaudited pro forma amounts are presented as if the 1993 acquisitions had occurred at the beginning of the periods presented and does not purport to be indicative of what would have occurred had the acquisitions been made as of those dates or of results which may occur in the future. Unaudited pro forma net sales for the Company would have been $248,171 and $237,575 for the years ended November 30, 1993 and 1992, respectively. Net earnings and earnings per share for each of these periods would not have been significantly affected. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) ================================================================================ INVESTMENT IN AFFILIATES In July 1991, the Company acquired for cash a 20% interest in the outstanding common stock of G.U.D. Holdings Limited, an Australian filter manufacturer. The acquisition cost exceeded the underlying equity in net assets by $2,107 and was being amortized over an original period of 40 years. The carrying value of this investment was $7,716 at November 30, 1993. The quoted market value of the Company's investment in G.U.D. was $15,300 at November 30, 1993. In October 1994, the Company sold 75% of its 20% interest in G.U.D. Holdings Limited, recognizing a gain on the sale of $4,166. The remaining 5% interest has been classified as available-for-sale under the provisions of SFAS 115 and has been recorded at the quoted market value of $3,655 as of November 30, 1994. The 1994 quoted market value includes an unrealized holding gain of $911, net of deferred income taxes, which has been included as a component of shareholders' equity at November 30, 1994. The Company has a standstill agreement which limits the Company's ability to own greater than a 20% interest and governs the manner in which the stock can be disposed. C. INVENTORIES Inventories are stated at the lower of cost or market. Cost is determined by the last-in, first-out (LIFO) method for approximately 65% and 59% of the Company's inventories at November 30, 1994 and 1993, respectively, and by the first-in, first-out (FIFO) method for all other inventories. The FIFO method would approximate the current cost. The inventories are summarized as follows:
1994 1993 ---------------------- Raw materials................................... $12,836 $10,471 Work-in-process................................. 4,624 4,947 Finished products............................... 15,552 14,977 ---------------------- Total at FIFO............................... 33,012 30,395 Less excess of FIFO cost over LIFO values......................... 2,754 3,399 ---------------------- $30,258 $26,996 ---------------------- ----------------------
During 1994, 1993 and 1992, inventory quantities were reduced resulting in a partial liquidation of the LIFO bases, the effect of which increased net earnings by approximately $480, $650 and $400, respectively. D. PLANT ASSETS Plant assets at November 30, 1994 and 1993 were as follows:
1994 1993 ----------------------- Land............................................ $ 2,015 $ 1,931 Buildings and building fixtures................. 39,095 37,964 Machinery and equipment......................... 74,364 67,666 Construction-in-process......................... 6,185 4,693 ----------------------- 121,659 112,254 Less accumulated depreciation................... 69,044 64,618 ----------------------- $ 52,615 $ 47,636 ----------------------- -----------------------
E. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities at November 30, 1994 and 1993 were as follows:
1994 1993 ---------------------- Accounts payable $13,769 $ 9,777 Accrued salaries, wages and commissions 3,874 3,575 Compensated absences 2,628 2,433 Accrued pension liabilities 2,414 1,318 Other accrued liabilities 7,146 6,672 ---------------------- $29,831 $23,775 ---------------------- ----------------------
================================================================================ F. LONG-TERM DEBT Long-term debt at November 30, 1994 and 1993 consists of the following:
1994 1993 ---------------------- Promissory note $20,416 $27,416 Other obligations, at 6% - 10% interest 4,176 5,122 ---------------------- 24,592 32,538 Less current portion 7,579 7,921 ---------------------- $17,013 $24,617 ---------------------- ----------------------
The promissory note matures March 31, 1997, but the Company is required to prepay, without premium, certain principal amounts as stated in the agreement. Interest at 9.71% per annum is payable quarterly. A fair value estimate of $24,400 and $34,500 for the long-term debt, in 1994 and 1993, respectively, is based on the current interest rates offered to the Company for debt with similar remaining maturities. Under the note agreement, the Company must meet certain restrictive covenants. The primary covenants include maintaining minimum consolidated working capital at $25,000, a minimum consolidated current ratio of 1.5 to 1, and limiting dividends and new borrowings as stipulated in the agreement. The dividend limitation includes a base amount, reductions for treasury stock acquisitions, and increases for one-half of net earnings. As of November 30, 1994, $2,990 of retained earnings was available to the Company under this covenant for future cash dividends and future treasury stock acquisitions. Other obligations include a 15 year capital lease for a manufacturing facility acquired in 1991 from the Community Development Authority of the City of Gothenburg, Nebraska, and debt acquired in the acquisitions of Airguard Industries and Guardian/U.E.L., including an industrial revenue bond due in 2003. Additionally, the Company had unused bank lines of credit at November 30, 1994 which permitted borrowings of $9,000. The agreements related to these obligations include certain restrictive covenants for the Company or certain subsidiaries that are similar to the promissory note. Principal maturities of long-term debt for the next five fiscal years ending November 30, approximates: $7,579 in 1995, $7,600 in 1996, $6,986 in 1997, $448 in 1998, $256 in 1999 and $1,723 thereafter. Interest paid totaled $2,916, $3,560 and $3,878 during 1994, 1993 and 1992, respectively. G. RETIREMENT PLANS The Company has defined benefit pension plans covering most of its employees and directors. Plan benefits are principally based upon years of service, compensation, and social security benefits. The Company's funding policy is to contribute annually the maximum amount that can be deducted for federal income tax purposes. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) ================================================================================ The following table sets forth the plans' funded status and amounts recognized in the Com-pany's consolidated balance sheet at November 30:
1994 1993 ----------------------------------------------- Assets Accumulated Assets Accumulated exceed benefits exceed benefits accumulated exceed accumulated exceed benefits assets benefits assets ----------------------------------------------- Accumulated benefit obligation, including vested benefits of $47,080 and $48,020, in 1994 and 1993, respectively.............. $41,841 $ 8,051 $44,259 $ 6,284 -------------------------------------------- -------------------------------------------- Plan assets at fair value................ $56,848 $ -- $59,237 $ -- Less projected benefit obligation for service rendered to date.......... 46,380 9,137 49,345 6,327 -------------------------------------------- Plan assets in excess of (less than) projected benefit obligation........ 10,468 (9,137) 9,892 (6,327) Unrecognized net loss from past experience different from that assumed................... 6,297 2,286 6,779 1,338 Unrecognized net asset being recognized over approximately 15 years.... (6,528) -- (7,615) -- Recognition of additional minimum liability......... -- (1,179) -- -- -------------------------------------------- Accrued pension asset (liability) for defined benefit plans..... $10,237 $(8,030) $9,056 $(4,989) -------------------------------------------- --------------------------------------------
In addition to the plan assets related to qualified plans of $56,848, the Company has funded approximately $3,000 at November 30, 1994 in a restricted trust for its nonqualified plans. This trust is included in other long-term assets in the Company's consolidated balance sheets. The net pension expense includes the following components for the three years ended November 30:
1994 1993 1992 ---------------------------------- Service cost-benefits earned during the period........................... $ 1,979 $ 2,127 $ 2,379 Interest cost on projected benefit obligation........................... 4,046 3,644 3,760 Actual return on assets.............. (298) (6,581) (4,506) Net amortization and deferral......................... (4,646) 918 (1,382) ---------------------------------- Net pension expense.................. $ 1,081 $ 108 $ 251 ---------------------------------- ----------------------------------
The projected benefit obligation has been determined with a weighted average discount rate of 8.0% and 7.0% in 1994 and 1993, respectively and a rate of increase in future compensation of 5.0% for both years. The expected weighted average long-term rate of return was 9.0% and 8.5% in 1994 and 1993, respectively. Plan assets consist of group annuity insurance contracts, corporate stocks, bonds and notes, certificates of deposit and U.S. Government securities. The Company also has various defined contribution plans. The Company recognized expense related to these plans of $499, $400 and $322 in 1994, 1993 and 1992, respectively. H. POSTRETIREMENT HEALTH CARE BENEFITS The Company provides certain health care benefits for certain of the Company's retired employees. These employees become eligible for these benefits if they meet minimum age and service requirements, are eligible for retirement benefits and contribute a portion of the cost. The Company has the right to modify or terminate these benefits. During 1992, the provisions of Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than ================================================================================ Pensions" were adopted. The Statement requires companies to accrue the expected cost of providing postretirement benefits other than pensions over the years that the employees render service rather than the cash basis previously used. The projected benefit obligation of $2,370, net of income taxes of $1,477, relating to prior service cost was a noncash transaction recognized as a cumulative effect of a change in accounting method, effective December 1, 1991. The following table sets forth the plan's obligation and cost at November 30, 1994 and 1993:
1994 1993 ---------------------- Accumulated postretirement benefit obligation: Retirees....................................... $2,398 $3,184 Fully eligible active plan participants........ 13 -- Other active plan participants................. 506 545 ---------------------- Accumulated postretirement benefit obligation............................. 2,917 3,729 Unrecognized gain/(loss)......................... 419 (320) ---------------------- Accrued postretirement benefit liability......... 3,336 3,409 Less current portion, included in accrued liabilities........................ 297 298 ---------------------- $3,039 $3,111 ---------------------- ----------------------
The net periodic postretirement benefit cost includes the following components for the three years ended November 30:
1994 1993 1992 -------------------------------- Service cost-benefits attributed to service during the period........... $ 28 $ 23 $ 26 Interest cost on accumulated postretirement benefit obligations..... 216 275 286 -------------------------------- Net periodic postretirement benefit cost........................... $244 $298 $312 -------------------------------- --------------------------------
Substantially all health care benefit cost increases will be assumed by the participants, and therefore future increases in the health care costs will not increase the postretirement benefit obligation or cost to the Company. The weighted average discount rate used in determining the accumulated postretirement benefit obligation was 8% in 1994 and 7% in 1993. I. INCOME TAXES The provision for income taxes for continuing operations consists of:
1994 1993 1992 ---------------------------------- Current: Federal............................. $ 8,886 $ 7,573 $ 7,032 State............................... 1,577 1,342 1,454 Foreign............................. 84 59 -- Deferred.............................. 1,388 853 310 ---------------------------------- $11,935 $ 9,827 $ 8,796 ---------------------------------- ----------------------------------
The cumulative effect of adopting SFAS 109 in the first quarter of 1994 was a favorable adjustment of $630. Total income taxes paid, net of refunds, totaled $10,087, $9,860 and $10,982 during 1994, 1993 and 1992, respectively. The components of the net deferred tax liability as of November 30, 1994 were as follows:
1994 ---------- Deferred tax assets: Deferred compensation...................................... $ 1,591 Other postretirement benefits.............................. 1,335 Other reserves............................................. 1,213 ---------- Total gross deferred tax assets.............................. 4,139 ---------- Deferred tax liabilities: Pensions................................................... (2,026) Plant assets............................................... (4,645) ---------- Total gross deferred tax liabilities......................... (6,671) ---------- Net deferred tax liability................................... $(2,532) ---------- ----------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) ================================================================================ For 1993 and 1992, deferred income taxes for continuing operations resulted principally from timing differences in the recognition of depreciation, accrued pension liabilities and compensation expenses. The deferred income tax provisions for continuing operations in 1993 and 1992 include $487 and $315, respectively, resulting from the excess of tax over book depreciation; $2 and $93, respectively, resulting from differences in the recognition of accrued pension liabilities; and $305 and ($107), respectively, resulting from differences in recognizing compensation expenses. Income (loss) before income taxes included the following components:
1994 1993 1992 ---------------------------------- Domestic income...................... $33,511 $28,950 $25,139 Foreign income (loss)................ (951) (1,872) 166 ---------------------------------- Total................................ $32,560 $27,078 $25,305 ---------------------------------- ----------------------------------
The provision for income taxes for continuing operations resulted in effective tax rates which differ from the statutory federal income tax rates. The reasons for these differences are as follows:
Percent of Pretax Earnings -------------------------------- 1994 1993 1992 -------------------------------- Statutory U. S. tax rates............... 35.0% 34.9% 34.0% State income taxes, net of federal benefit................ 3.2 3.2 3.8 Reduction of previously established accruals.................. (1.4) (2.6) -- Capital loss utilization................ (1.3) -- -- Foreign tax credit utilization.......... -- (1.7) (1.5) Foreign net operating losses............ 1.3 2.6 -- Other, net.............................. (0.1) (0.1) (1.5) -------------------------------- Consolidated effective income tax rates 36.7% 36.3% 34.8% -------------------------------- --------------------------------
J. CONTINGENCIES In December 1992, a trial jury in Texas entered a judgment against Baldwin Filters, Inc., a subsidiary of the Company, in the amount of $4,900 that resulted from the termination of a sales representative. In November 1993, the district court in Texas ordered that a joint motion filed by the two parties to dismiss the judgment be granted, that the judgment of the trial court be vacated, and that the cause be remanded to the trial court for entry of a take- nothing judgment pursuant to a settlement agreement by the two parties. The Company is involved in other legal actions arising in the normal course of business. After taking into consideration legal counsel's evaluation of such actions, management is of the opinion that their outcome will not have a material adverse effect on the Company's consolidated results of operations or financial position. K. PREFERRED STOCK PURCHASE RIGHTS In April 1986, the Board of Directors of CLARCOR Inc. adopted a Shareholder Rights Plan (which was amended by the Board of Directors in June 1989) and declared a dividend of one preferred stock purchase right (a "right") for each outstanding share of CLARCOR common stock held as of April 25, 1986. Each full right entitles shareholders of record to purchase from the Company, until the earlier of April 25, 1996 or the redemption of the rights, one one-hundredth of a share of Series A Junior Participating Preferred Stock at an exercise price of $75, subject to certain adjustments or, under certain circumstances, to obtain additional shares of common stock of the Company (or of a corporation acquiring the Company) in exchange for the rights. The rights will not be exercisable or transferable apart from the CLARCOR common stock ================================================================================ until the earlier of (1) 10 days following the public announcement that a person or affiliated group has acquired or obtained the right to acquire 15% or more of CLARCOR's common stock, or (2) 10 days following the commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of which would result in the ownership by a person or group of 30% or more of the Company's outstanding common stock. The Board of Directors may redeem the rights at a price of $.05 per right at any time prior to the acquisition by a person of 15% or more of the outstanding CLARCOR common stock. The authorized preferred stock includes 300,000 shares designated as Series A Junior Participating Preferred Stock. L. INCENTIVE PLAN In 1994, the shareholders of CLARCOR Inc. adopted the 1994 Incentive Plan, which allows the Company to grant stock options, restricted stock and performance awards to officers, directors and key employees. The 1994 Incentive Plan incorporates the various incentive plans in existence prior to March 1994, including the 1984 Stock Option Plan, the 1987 Long Range Performance Share Plan, and the 1990 Directors' Restricted Stock Compensation Plan. At the inception of the 1994 Incentive Plan there were 1,000,000 shares authorized for future grants. At November 30, 1994 there were 930,000 shares reserved for future grants, of which 189,531 shares were granted in December 1994. The remaining ungranted shares expire in December 2003. The following is a description and a summary of key provisions related to this plan. STOCK OPTIONS Nonqualified stock options may, at the discretion of the Board of Directors, be granted at the fair market value at the date of grant or an exercise price less than the fair market value at the date of grant. Shares under nonqualified stock options are as follows:
1994 1993 1992 ----------------------------------- Outstanding at beginning of year..... 862,206 852,609 755,109 Granted (prices ranging from $17.33 to $19.625 per share)..... 261,500 158,000 219,000 Exercised/surrendered................ (11,437) (148,403) (121,500) ----------------------------------- Outstanding at end of year (prices ranging from $9.33 to $19.625 per share)............ 1,112,269 862,206 852,609 ----------------------------------- ----------------------------------- Exercisable at end of year........... 572,033 431,891 390,182 ----------------------------------- -----------------------------------
LONG RANGE PERFORMANCE AWARDS Officers and key employees may be granted target awards of Company shares of common stock and performance units which represent the right to a cash payment. The awards are earned and shares are issued only to the extent that the Company achieves performance goals determined by the Board of Directors, during a three-year performance period. During the performance period, officers and key employees are permitted to vote the restricted stock and receive compensation equal to dividends declared on common shares. The Company accrues compensation expense for the performance opportunity ratably during the performance cycle. Compensation expense for the plan totaled $284, $364 and $196 in 1994, 1993 and 1992, respectively. Distribution of Company common stock and cash for the performance periods ended November 30, 1994, 1993 and 1992 were $237, $432 and $268, respectively. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) ================================================================================ DIRECTORS' RESTRICTED STOCK COMPENSATION The 1994 Incentive Plan grants all nonemployee directors, in lieu of cash, shares of common stock equal to five years directors' annual retainer. The directors' rights to the shares vest 20% on date of grant and 20% annually during the next four years. The directors are entitled to receive dividends and exercise voting rights with respect to all shares prior to vesting. Any unvested shares are forfeited if the director ceases to be a nonemployee director for any reason. Compensation expense for the plan totaled $125, $131 and $135 in 1994, 1993 and 1992, respectively. During 1992, $43 of Company common stock were issued, net of forfeitures, under the plan. M. DISCONTINUED OPERATIONS In June 1991, the Company adopted a plan to dispose of its Precision Products Group (Group). Effective November 30, 1992 the Company sold the Group for $20,700 in cash, with settlement on December 31, 1992, and a $2,500 note receivable, included in other assets. The 8% note receivable, due December 30, 1997, has certain collateral pledged from the buyer, a highly leveraged entity. The sale was recorded as of November 30, 1992 and resulted in a pretax gain of $1,342 after considering estimated costs to be incurred in connection with the sale, operating results through the date of disposition, and including a $686 curtailment gain of certain pension benefits related to the Group. The income tax effects, net of $1,342, which offsets the gain, exceeds the normal statutory tax rate due principally to nontax deductible costs. Revenues applicable to the Group were $40,698 for the year ended November 30, 1992. N. UNAUDITED QUARTERLY FINANCIAL DATA The unaudited quarterly data for 1994 and 1993 are as follows:
First Second Third Fourth Quarter Quarter Quarter Quarter Total - -------------------------------------------------------------------------------- 1994: Net sales................. $55,890 $65,131 $67,724 $81,378 $270,123 Gross profit.............. 16,184 18,919 20,000 22,564 77,667 Earnings before cumulative effect of accounting change.................. 3,415 4,175 5,879 7,156 20,625 Cumulative effect of accounting change.................. 630 -- -- -- 630 -------------------------------------------------- Net earnings.............. $ 4,045 $ 4,175 $ 5,879 $ 7,156 $ 21,255 -------------------------------------------------- -------------------------------------------------- Net earnings per common share: Continuing operations.............. $0.23 $0.28 $0.40 $0.48 $1.39 Cumulative effect of accounting change.................. .04 -- -- -- .04 -------------------------------------------------- $0.27 $0.28 $0.40 $0.48 $1.43 -------------------------------------------------- -------------------------------------------------- First Second Third Fourth Quarter Quarter Quarter Quarter Total - -------------------------------------------------------------------------------- 1993: Net sales................. $41,913 $49,732 $64,634 $69,040 $225,319 Gross profit.............. 13,075 15,085 19,384 22,160 69,704 Net earnings.............. 3,091 2,781 5,060 6,319 17,251 Net earnings per common share........ $0.21 $0.19 $0.34 $0.42 $1.16
NOTES TO QUARTERLY FINANCIAL DATA In the fourth quarter of 1994, the Company recorded a nonoperating gain of $4,166 related to the sale of an investment in an affiliate and nonoperating expenses of approximately $1,900 related to the disposal of certain assets. During the fourth quarters of 1994 and 1993, LIFO inventory reductions increased net earnings by approximately $480 and $650, respectively. ================================================================================ The second quarter of 1993 includes a charge to net earnings of approximately $1,200 related to the Company's subsidiary in Belgium. O. SEGMENT INFORMATION The Company operates in two principal product segments: Filtration Products and Consumer Products. The Filtration Products Group manufactures and markets a complete line of filters used in the filtration of internal combustion engines, clean rooms, sterile air and gases, and lubrication oils, air, fuel, coolant, hydraulic and transmission fluids. The Consumer Products Group manufactures and markets plastic closures, custom designed lithographed metal and metal-plastic containers, spiral and convolute-wound composite containers and collapsible metal tubes. Net sales represent sales to unaffiliated customers, as reported in the consolidated statements of earnings. Intersegment sales were not material. Assets are those assets used in each business segment. Corporate assets consist of cash and short-term cash investments, receivable from sale of Precision Products Group in 1992, deferred income taxes, world headquarters facility, pension assets and various other assets which are not specific to an industry segment. The segment data for the years ended November 30, 1994, 1993 and 1992 are as follows:
1994 1993 1992 - -------------------------------------------------------------------------- Net sales: Filtration Products.............. $199,793 $156,165 $118,215 Consumer Products................ 70,330 69,154 70,410 ----------------------------------- Total...................... $270,123 $225,319 $188,625 ----------------------------------- ----------------------------------- Operating profit: Filtration Products.............. $ 26,597 $ 19,661 $ 18,666 Consumer Products................ 5,769 9,406 8,964 ----------------------------------- Total...................... $ 32,366 $ 29,067 $ 27,630 ----------------------------------- ----------------------------------- - -------------------------------------------------------------------------- Assets: Filtration Products.............. $114,501 $105,278 $ 74,364 Consumer Products................ 32,386 30,377 28,588 Corporate........................ 41,561 37,912 58,303 ----------------------------------- Total...................... $188,448 $173,567 $161,255 ----------------------------------- ----------------------------------- - -------------------------------------------------------------------------- Additions to plant assets: Filtration Products.............. $ 6,715 $ 6,339 $ 3,861 Consumer Products................ 4,157 3,816 2,652 Corporate........................ 544 63 44 Discontinued Operations.......... -- -- 893 ----------------------------------- Total...................... $ 11,416 $ 10,218 $ 7,450 ----------------------------------- ----------------------------------- - -------------------------------------------------------------------------- Depreciation: Filtration Products.............. $ 3,840 $ 2,758 $ 2,063 Consumer Products................ 2,763 2,912 2,738 Corporate........................ 175 146 151 Discontinued operations.......... -- -- 2,092 ----------------------------------- Total...................... $ 6,778 $ 5,816 $ 7,044 ----------------------------------- -----------------------------------
EXHIBIT 13(a)(vii) REPORT OF INDEPENDENT ACCOUNTANTS ================================================================================ The Board of Directors and Shareholders CLARCOR Inc. Rockford, Illinois We have audited the accompanying consolidated balance sheets of CLARCOR Inc. and Subsidiaries as of November 30, 1994 and 1993, and the related consolidated statements of earnings, shareholders' equity, and cash flows for each of the three years in the period ended November 30, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of CLARCOR Inc. and Subsidiaries as of November 30, 1994 and 1993, and the consolidated results of their operations and their cash flows for each of the three years in the period ended November 30, 1994, in conformity with generally accepted accounting principles. As discussed in Notes A and H to the consolidated financial statements, the Company changed its method of accounting for postretirement benefits other than pensions, effective December 1, 1991; changed its method of accounting for income taxes, effective December 1, 1993; and changed its method of accounting for certain investments in debt and equity securities, effective November 30, 1994. /s/ Coopers & Lybrand L.L.P. Rockford, Illinois January 6, 1995 EXHIBIT 13(a)(viii) MANAGEMENT'S REPORT ON RESPONSIBILITY FOR FINANCIAL REPORTING ================================================================================ The management of CLARCOR is responsible for the preparation, integrity and objectivity of the Company's financial statements and the other financial information in this report. The financial statements were prepared in conformity with generally accepted accounting principles and reflect in all material respects the results of operations and the Company's financial position for the periods shown. The financial statements are presented on the accrual basis of accounting and, where appropriate, reflect estimates based upon judgments of management. In addition, management maintains a system of internal controls designed to assure that Company assets are safeguarded from loss or unauthorized use or disposition. Also, the controls system provides assurance that transactions are authorized according to the intent of management and are accurately recorded to permit the preparation of financial statements in accordance with generally accepted accounting principles. For the periods covered by the financial statements in this report, management believes this system of internal controls was effective concerning all material matters. The effectiveness of the controls system is supported by the selection and training of qualified personnel, an organizational structure that provides an appropriate division of responsibility, a strong budgetary system of control and a comprehensive internal audit program. The Audit Committee of the Board of Directors, which is composed of four outside directors, serves in an oversight role to assure the integrity and objectivity of the Company's financial reporting process. The Committee meets periodically with representatives of management and the independent and internal auditors to review matters of a material nature related to financial reporting and the planning, results and recommendations of audits. The independent and internal auditors have free access to the Audit Committee. The Committee is also responsible for making recommendations to the Board of Directors concerning the selection of the independent auditors. /s/ Lawrence E. Gloyd /s/ William F. Knese Lawrence E. Gloyd William F. Knese Chairman, President and Vice President, Chief Executive Officer Treasurer and Controller January 6, 1995 EXHIBIT 13(a)(ix) CLARCOR 13-YEAR FINANCIAL SUMMARY ================================================================================
1994 1993 1992 1991 1990 - ------------------------------------------------------------------------------------------------ PER SHARE Equity.............................. $ 7.96 $ 7.06 $ 6.64 $ 6.42 $ 5.57 Earnings from Continuing Operations........................ 1.39 1.16 1.10 1.24 1.29 Net Earnings........................ 1.43 1.16 0.94 1.26 1.37 Dividends........................... 0.6225 0.610 0.600 0.550 0.520 Price: High......................... 22.38 20.00 22.50 22.67 17.83 Low.......................... 15.88 16.00 15.00 13.00 11.83 - ------------------------------------------------------------------------------------------------ EARNINGS DATA ($000) Net Sales........................... $270,123 $225,319 $188,625 $179,538 $170,279 Operating Profit.................... 32,366 29,067 27,630 30,853 30,832 Interest Expense.................... 2,788 3,525 3,803 3,682 3,675 Pretax Income....................... 32,560 27,078 25,305 28,543 30,204 Income Taxes........................ 11,935 9,827 8,796 10,068 10,999 Earnings from Continuing Operations........................ 20,625 17,251 16,509 18,475 19,205 Earnings from Discontinued Operations........................ -- -- -- 297 1,200 Net Earnings........................ 21,255 17,251 14,139 18,772 20,405 Average Shares Outstanding.......... 14,814 14,838 14,973 14,873 14,843 - ------------------------------------------------------------------------------------------------ EARNINGS ANALYSIS Operating Margin.................... 12.0% 12.9% 14.6% 17.2% 18.1% Pretax Margin....................... 12.1% 12.0% 13.4% 15.9% 17.7% Effective Tax Rate.................. 36.7% 36.3% 34.8% 35.3% 36.4% Net Margin-Continuing Operations.... 7.6% 7.7% 8.8% 10.3% 11.3% Net Margin.......................... 7.9% 7.7% 7.5% 10.5% 12.0% Asset Turnover...................... 1.56x 1.40x 1.19x 1.25x 1.30x Return on Assets.................... 12.2% 10.7% 8.9% 13.0% 15.6% Financial Leverage.................. 1.66x 1.62x 1.66x 1.74x 1.80x Return on Equity.................... 20.3% 17.3% 14.8% 22.7% 28.1% Dividend Payout to Net Earnings..... 43.3% 52.4% 63.4% 43.5% 37.8% - ------------------------------------------------------------------------------------------------ BALANCE SHEET ($000) Current Assets...................... $ 98,450 $ 86,161 $ 93,627 $ 75,207 $ 72,623 Plant Assets, net................... 52,615 47,636 35,584 45,712 42,748 Total Assets........................ 188,448 173,567 161,255 157,999 144,127 Current Liabilities................. 39,461 33,288 25,272 20,570 20,758 Long-Term Debt...................... 17,013 24,617 29,325 35,834 35,810 Shareholders' Equity................ 117,462 104,641 99,551 95,662 82,689 - ------------------------------------------------------------------------------------------------ BALANCE SHEET ANALYSIS ($000) Debt to Capitalization.............. 12.7% 19.0% 22.8% 27.3% 30.2% Working Capital..................... 58,989 52,873 68,355 54,637 51,865 Quick Ratio......................... 1.6:1 1.6:1 2.5:1 2.1:1 2.1:1 - ------------------------------------------------------------------------------------------------ CASH FLOW DATA ($000) From Operations..................... $ 24,603 $ 19,992 $ 22,807 $ 18,343 $ 25,284 Used for Investment................. (469) (1,193) (7,185) (14,719) (4,973) Used for Financing.................. (18,405) (20,012) (10,200) (8,805) (10,316) Change in Cash & Equivalents........ 5,729 (1,213) 5,422 (5,181) 9,995 Capital Expenditures................ 11,416 10,218 7,450 8,128 8,638 Depreciation........................ 6,778 5,816 7,044 6,707 6,619 Dividends Paid...................... 9,201 9,036 8,958 8,165 7,708 Interest (Income)/Expense........... 2,240 2,650 3,505 2,560 3,143 Taxes Paid.......................... 10,087 9,860 10,982 9,474 10,068 - ------------------------------------------------------------------------------------------------ CASH FLOW ANALYSIS ($000) Operating Cash Flow (1)............. $ 36,930 $ 32,502 $ 37,294 $ 30,377 $ 38,495 Net Cash Flow (2)................... 25,514 22,284 29,844 22,249 29,857 Elective Cash Flow (3).............. 3,986 738 6,399 2,050 8,938 - ------------------------------------------------------------------------------------------------ (1) From operations before interest income/expense and taxes paid. (2) Operating cash flow less capital expenditures before interest income/expense and taxes paid. (3) Net cash flow less dividends +(-) interest income/expense and less taxes paid.
CLARCOR ================================================================================
1989 1988 1987 1986 1985 1984 1983 1982 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE Equity.............................. $ 4.83 $ 6.99 $ 6.36 $ 5.76 $ 5.22 $ 4.68 $ 4.13 $ 3.69 Earnings from Continuing Operations........................ 0.69 1.02 0.95 0.90 0.86 0.82 0.73 0.69 Net Earnings........................ 0.42 1.15 1.04 0.96 0.93 0.91 0.79 0.73 Dividends........................... 0.480 0.453 0.431 0.418 0.391 0.365 0.338 0.338 Price: High......................... 18.92 14.59 16.89 14.17 12.78 12.89 15.33 8.00 Low.......................... 11.75 9.75 9.25 10.09 10.00 9.56 7.61 5.28 - ------------------------------------------------------------------------------------------------------------------------------------ EARNINGS DATA ($000) Net Sales........................... $156,530 $149,468 $146,225 $135,319 $143,716 $163,059 $150,840 $148,604 Operating Profit.................... 22,128 27,287 29,045 25,032 27,222 27,816 25,551 25,177 Interest Expense.................... 1,327 151 176 192 216 766 1,503 3,503 Pretax Income....................... 22,084 28,833 30,378 29,769 30,139 29,167 25,730 24,411 Income Taxes........................ 10,474 10,647 13,270 13,566 14,492 14,439 12,600 11,983 Earnings from Continuing Operations........................ 11,610 18,186 17,108 16,203 15,647 14,728 13,130 12,428 Earnings from Discontinued Operations........................ (4,493) 2,412 1,672 1,165 1,250 1,634 1,039 728 Net Earnings........................ 7,117 20,598 18,780 17,368 16,897 16,362 14,169 13,156 Average Shares Outstanding.......... 17,040 17,926 18,121 18,094 18,074 18,062 18,050 18,025 - ------------------------------------------------------------------------------------------------------------------------------------ EARNINGS ANALYSIS Operating Margin.................... 14.1% 18.3% 19.9% 18.5% 18.9% 17.1% 16.9% 16.9% Pretax Margin....................... 14.1% 19.3% 20.8% 22.0% 21.0% 17.9% 17.1% 16.4% Effective Tax Rate.................. 47.4% 36.9% 43.7% 45.6% 48.1% 49.5% 49.0% 49.1% Net Margin-Continuing Operations.... 7.4% 12.2% 11.7% 12.0% 10.9% 9.0% 8.7% 8.4% Net Margin.......................... 4.5% 13.8% 12.8% 12.8% 11.8% 10.0% 9.4% 8.9% Asset Turnover...................... 1.09x 1.11x 1.19x 1.16x 1.34x 1.58x 1.45x 1.38x Return on Assets.................... 4.9% 15.3% 15.3% 14.9% 15.7% 15.8% 13.7% 12.2% Financial Leverage.................. 1.16x 1.17x 1.18x 1.23x 1.27x 1.38x 1.56x 1.81x Return on Equity.................... 5.7% 17.9% 18.0% 18.4% 20.0% 21.9% 21.3% 22.2% Dividend Payout to Net Earnings..... 116.5% 39.4% 41.6% 43.5% 41.8% 40.2% 43.0% 46.3% - ------------------------------------------------------------------------------------------------------------------------------------ BALANCE SHEET ($000) Current Assets...................... $ 58,019 $ 70,028 $ 67,523 $ 75,457 $ 72,837 $ 61,806 $ 56,345 $ 53,932 Plant Assets, net................... 44,223 42,063 39,828 32,431 27,934 27,482 30,742 31,818 Total Assets........................ 131,009 143,842 134,877 122,779 116,184 107,423 103,381 103,707 Current Liabilities................. 21,405 14,244 15,899 13,153 15,815 16,805 17,424 18,455 Long-Term Debt...................... 32,634 1,116 1,507 1,634 1,875 2,197 8,508 16,902 Shareholders' Equity................ 72,662 125,012 115,015 104,186 94,372 84,466 74,663 66,412 - ------------------------------------------------------------------------------------------------------------------------------------ BALANCE SHEET ANALYSIS ($000) Debt to Capitalization.............. 31.0% 0.9% 1.3% 1.5% 1.9% 2.5% 10.2% 20.3% Working Capital..................... 36,614 55,784 51,624 62,304 57,022 45,001 38,921 35,477 Quick Ratio......................... 1.4:1 3.3:1 2.9:1 4.2:1 3.4:1 2.4:1 2.0:1 1.9:1 - ------------------------------------------------------------------------------------------------------------------------------------ CASH FLOW DATA ($000) From Operations..................... $ 17,791 $ 18,545 $ 22,015 $ 16,330 $ 22,752 $ 22,423 $ 13,871 $ 24,023 Used for Investment................. (8,251) (1,374) (16,231) (7,923) (22,511) (3,057) (2,499) (2,181) Used for Financing.................. (23,915) (11,105) (8,374) (7,767) (7,306) (12,870) (14,312) (16,501) Change in Cash & Equivalents........ (14,375) 6,066 (2,590) 640 (7,065) 6,496 (2,940) 5,341 Capital Expenditures................ 8,334 6,137 5,086 9,720 4,187 2,574 3,387 3,239 Depreciation........................ 6,321 6,287 6,008 4,384 3,676 4,231 4,347 4,079 Dividends Paid...................... 8,290 8,121 7,814 7,560 7,069 6,583 6,098 6,088 Interest (Income)/Expense........... 53 (946) (911) (1,876) (1,819) (1,214) (49) 1,261 Taxes Paid.......................... 11,234 13,313 14,502 13,117 16,871 14,751 15,238 12,877 - ------------------------------------------------------------------------------------------------------------------------------------ CASH FLOW ANALYSIS ($000) Operating Cash Flow (1)............. $ 29,078 $ 30,912 $ 35,606 $ 27,571 $ 37,804 $ 35,960 $ 29,060 $ 38,161 Net Cash Flow (2)................... 20,744 24,775 30,520 17,851 33,617 33,386 25,673 34,922 Elective Cash Flow (3).............. 1,167 4,287 9,115 (950) 11,496 13,266 4,386 14,696
EXHIBIT 13(a)(x) CLARCOR FINANCIAL REVIEW (DOLLARS IN MILLIONS EXCEPT PER SHARE DATA) ================================================================================ In 1994, CLARCOR generated new records in sales, operating profit, net earnings and earnings per share. Operating profit improved as a result of strong Filtration Products Group gains. Net earnings and earnings per share benefited from a nonrecurring gain recorded in non-operating income. This 1994 financial review should be read in conjunction with other financial information presented in this report. The Company's Group Information is shown herein under the caption "Group Information", and this review should be read in conjunction with that information. Comparative operating results are shown in the table below.
OPERATING RESULTS 1994 vs. 1993 1993 vs. 1992 Change Change --------------- --------------- $ 1994 % Sales $ % $ 1993 % Sales $ % ------------------------------------ ------------------------------------ Continuing Operations: Net Sales................................... $270.1 100.0% $44.8 19.9% $225.3 100.0% $36.7 19.5% Cost of Sales............................... 192.4 71.2% 36.8 23.7% 155.6 69.1% 26.3 20.4% Selling & Administrative Expenses........... 45.3 16.8% 4.7 11.5% 40.6 18.0% 8.9 28.2% Operating Profit............................ 32.4 12.0% 3.3 11.3% 29.1 12.9% 1.5 5.2% Other Income (Expense)...................... 0.2 0.1% 2.2 -- (2.0) (0.9%) 0.3 14.5% Earnings Before Taxes....................... 32.6 12.1% 5.5 20.2% 27.1 12.0% 1.8 7.0% Income Taxes................................ 11.9 4.5% 2.1 21.5% 9.8 4.3% 1.0 11.7% Earnings.................................... 20.7 7.6% 3.4 19.6% 17.3 7.7% 0.8 4.5% Cumulative Effect of Accounting Changes....... 0.6 0.3% 0.6 -- -- -- 2.4 -- Net Earnings.................................. $ 21.3 7.9% $ 4.0 23.2% $ 17.3 7.7% $ 3.2 22.0% ------------------------------------ ------------------------------------ ------------------------------------ ------------------------------------ Earnings Per Share: Continuing Operations......................... $1.39 $0.23 19.8% $1.16 $0.06 5.5% Cumulative Effect of Accounting Changes....... $0.04 $0.04 -- -- $0.16 -- Total....................................... $1.43 $0.27 23.3% $1.16 $0.22 23.4% Average Shares Outstanding.................... 14.8 14.8 ==================================================================================================================================
SALES CLARCOR's net sales for 1994 reached a new high. Record net sales of $270.1 were 19.9% higher than sales of $225.3 reported for 1993. Increased sales were recorded in both the Filtration Products and Consumer Products Groups. A total of $188.6 was reported for 1992. Consolidated 1993 net sales were 19.5% higher than the 1992 sales. Comparative information related to the net sales of CLARCOR's operating groups is shown in the tables below. Filtration Products Group 1994 net sales of $199.8 increased 27.9% over sales of $156.2 in the previous year. The increase was principally the result of the inclusion in the current year of a full year of sales from the 1993 Airguard Industries and Guardian/UEL acquisitions, and strong sales increases in the group's Baldwin heavy duty and Clark Filter railroad locomotive units. Airguard Industries also reported strong sales growth on a full year basis from 1993 to 1994. The group's 1993 sales were 32.1% higher than sales in fiscal 1992 due principally to the mid-year acquisitions of Airguard and Guardian.
1994 vs. 1993 NET SALES $ % Total Change - ------------------------------------------------------------------------ Filtration Products................ $199.8 74.0% 27.9% Consumer Products.................. 70.3 26.0% 1.7% --------------------------------- Total............................ $270.1 100.0% 19.9% --------------------------------- --------------------------------- 1993 vs. 1992 NET SALES $ % Total Change - ------------------------------------------------------------------------ Filtration Products................ $156.2 69.3% 32.1% Consumer Products.................. 69.1 30.7% (1.8%) --------------------------------- Total............................ $225.3 100.0% 19.5% --------------------------------- ---------------------------------
FINANCIAL REVIEW (DOLLARS IN MILLIONS EXCEPT PER SHARE DATA) ================================================================================ Sales recorded in the Consumer Products Group increased to $70.3 in 1994 from $69.1 in 1993, an increase of 1.7%. This increase was due principally to higher shipment levels of plastic parts and flat sheet decorating business. Sales in 1993 declined 1.8% from the year-earlier level of $70.4, due chiefly to greater reductions in promotional business than increases in plastic closure sales. EARNINGS CLARCOR operating units earned record consolidated operating profit of $32.4 in 1994. The 1994 operating profit increased 11.3% over the level recorded the year before. Operating profit increased in the Filtration Products Group, but declined in the Consumer Products Group. Prior year operating profit increased 5.2% over the level of $27.6 in 1992. Tables which reflect comparative operating profit information related to the Company's groups are shown below.
1994 vs. 1993 OPERATING PROFIT $ % Total Change - ------------------------------------------------------------------------ Filtration Products................ $26.6 82.2% 35.3% Consumer Products.................. 5.8 17.8% (38.7%) --------------------------------- Total............................ $32.4 100.0% 11.3% --------------------------------- --------------------------------- 1993 vs. 1992 OPERATING PROFIT $ % Total Change - ------------------------------------------------------------------------ Filtration Products................ $19.7 67.6% 5.3% Consumer Products.................. 9.4 32.4% 4.9% --------------------------------- Total............................ $29.1 100.0% 5.2% --------------------------------- --------------------------------- OPERATING PROFIT AS A PERCENT OF NET SALES 1994 1993 1992 - ------------------------------------------------------------------------ Filtration Products................ 13.3% 12.6% 15.8% Consumer Products.................. 8.2% 13.6% 12.7% --------------------------------- Total............................ 12.0% 12.9% 14.6% --------------------------------- ---------------------------------
Operating profit recorded in the Filtration Products Group totaled $26.6 in 1994. This was 35.3% higher than $19.7 reported in the prior year. The increased operating profit principally reflected strong market share gains in all of the group's businesses. In addition, the 1994 profits include a full year of profits from the 1993 acquisitions of Airguard and Guardian/UEL. The 1993 operating profit was negatively impacted by $1.5 of charges related to the Baldwin N.V. operation and the settlement of a litigation contingency. The 1994 profit as a percent of sales was 13.3%, and compares to 12.6% in 1993. The 1993 operating profit of $19.7 was 5.3% higher than profit of $18.7 reported in 1992, due chiefly to profits from acquisitions and gains recorded in the Baldwin heavy duty and Clark Filter railroad locomotive business. Current year Filtration operating profit represented 82.2% of total consolidated profit, compared to 67.6% for both 1993 and 1992. Consumer Products Group operating profit declined by 38.7% in the current year, to $5.8. Operating profit declined from the 1993 level due to the sale in 1993 of high margin engineering services which did not repeat in the current year and current year consulting expenses which will improve productivity in future years. The 1993 operating profit was 4.9% higher than that of the previous year, reflecting the benefit of the sale of the high margin engineering services. Operating profit as a percent of sales declined in 1994 to 8.2% from the level of 13.6% in 1993. The 1994 profit was 17.8% of the consolidated total, compared to 32.4% in both the prior year and 1992. Net other income totaled $.2 in 1994. Of this total, income items included a $4.2 gain from the sale of the Company's investment in stock of G.U.D. Holdings Limited. Expense items included interest of $2.8, chiefly related to CLARCOR's long-term debt. In the prior year, nonoperating items netted to $2.0 of expense, and included $3.5 of interest expense related to the Company's debt. Nonoperating items in 1992 totaled a net of $2.3, principally the result of $3.8 of interest expense. Earnings from continuing operations before income taxes and the cumulative effect of a change in accounting method in 1994 totaled $32.6. This is an increase of 20.2% over earnings in 1993 of $27.1. The increase in current year earnings reflects strong Filtration operations and an increase in current year other income to $.2 from an expense of ================================================================================ $2.0 in 1993. Continuing operations generated earnings of $25.3 before taxes and the accounting change in 1992 for the adoption of the postretirement benefits accounting standard. CLARCOR's provision for income taxes in the current year totaled $11.9. This was an increase from the level of $9.8 recorded in 1993. This increase over the prior year was attributable to higher earnings from operations. The effective tax rate in the current year was 36.7%, a slight increase from 1993's 36.3% rate. Income taxes in 1992 were $8.8, and the effective rate was 34.8%. More information related to income taxes can be found in Footnote I. in the consolidated financial statements. Earnings from continuing operations before the cumulative effect of a change in accounting method in the current year were $20.7, compared to $17.3 in 1993 and $16.5 in 1992. In 1994, CLARCOR adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". The adoption of this new standard contributed $.6 to earnings in the first quarter of 1994. During 1992, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions". The adoption of this accounting standard resulted in a $2.4 after-tax charge against earnings that year. Total net earnings in 1994 were $21.3, 23.2% higher than net earnings of $17.3 in 1993. Total 1993 net earnings increased 22.0% over 1992 net earnings which totaled $14.1. Earnings per share from continuing operations increased to $1.39 in 1994, a 19.8% increase over per share earnings of $1.16 in 1993. The cumulative effect of the income tax accounting change contributed an additional $.04 per share, resulting in 1994 total earnings per share of $1.43. In the prior year, earnings were increased by $.06 per share from the 1992 earnings. Earnings per share from continuing operations in 1992 were $1.10, and were reduced $.16 by the cumulative effect of adopting the postretirement benefits accounting standard. FINANCIAL CONDITION CORPORATE LIQUIDITY The discussion of corporate liquidity should be read in conjunction with information presented in the Consolidated Statements of Cash Flows included in Exhibit 13(a)(v).
SUMMARY OF CASH FLOWS 1994 1993 1992 - ------------------------------------------------------------------------ From Operations......................... $24.6 $20.0 $22.8 Interest Payments..................... 2.9 3.6 3.9 For Investing........................... 0.5 1.2 7.2 Capital Expenditures.................. 11.4 10.2 6.5 For Financing........................... 18.4 20.0 10.2 Dividends............................. 9.2 9.0 8.9 Change in Cash & Equivalents............ 5.7 (1.2) 5.4
CLARCOR generated strong cash flows in the current year. Cash flows from 1994 operating activities totaled $24.6, a 23.1% increase over cash flows of $20.0 from operating activities in 1993. Current year operating cash flow included a total of $27.9 from higher operating earnings and increased noncash charges, compared to a total of $23.5 from these items in 1993. Changes in the assets and liabilities in the current year were a mix of increases and decreases which mostly offset each other. Changes in assets and liabilities in 1993 resulted in a $3.0 use of cash. Operating cash flows from continuing operations generated $19.7 of cash in 1992. Discontinued operations generated cash of $3.1, providing a total of $22.8 from operating activities in that year. Cash flows used in investing activities in the current year decreased to $.5 from $1.2 in 1993. Cash of $10.7 was collected from the sale of G.U.D. shares, and cash of $1.7 was received from other sources. Cash used included $11.4 for plant additions, and $1.5 for the acquisition of a business. Of the 1993 total, $20.7 of cash proceeds originated from the sale of the Precision Products Group, and other investing activities generated a net $1.1. In 1993, cash of $12.8, net of cash acquired, was invested in business acquisitions and $10.2 was spent on asset additions. Investing activities in 1992 used net cash of $7.2, representing mostly additions to plant assets. FINANCIAL REVIEW (DOLLARS IN MILLIONS EXCEPT PER SHARE DATA) ================================================================================ Cash used in financing activities totaled $18.4 in the current year. This compares to a total of $20.0 used in fiscal 1993. The decrease is principally due to treasury share purchases of $1.3 in the current year compared to $3.4 in 1993. In 1992, the total of $10.2 used in financing activities was principally composed of $1.4 of long-term debt reductions and $8.9 of dividend payments. The Company's operations continue to generate the cash levels required to maintain planned operating levels, to provide for capital replacement, and to service and liquidate the long-term debt. Additionally, CLARCOR has access to lines of credit sufficient for its current operations. CAPITAL RESOURCES CLARCOR continued to maintain a strong and liquid balance sheet in support of its operations throughout 1994.
1994 1993 SUMMARY BALANCE ------------------------------------ SHEET $ % Change $ % Change - ------------------------------------------------------------------------ Current Assets.................. $ 98.5 14.3% $ 86.2 (8.0%) Plant Assets, net............... 52.6 10.5% 47.6 33.9% Excess Cost over Fair Value, net............... 15.2 (3.2%) 15.7 23.0% Pension & Other Assets.......... 22.1 (7.8%) 24.1 24.9% Total Assets.................... 188.4 8.6% 173.6 7.6% Current Liabilities............. 39.5 18.5% 33.3 31.7% Long-Term Debt.................. 17.0 (30.9%) 24.6 (16.1%) Pension & Other Liabilities..... 14.4 31.7% 11.1 55.1% Shareholders' Equity............ 117.5 12.3% 104.6 5.1% Total Liabilities & Shareholders' Equity.......... 188.4 8.6% 173.6 7.6%
Total assets at year-end 1994 were $188.4, an increase of 8.6% over total assets of $173.6 at the end of 1993. Working capital reached $59.0 at year-end 1994, compared to $52.9 in 1993. The 1994 current ratio was 2.5:1, compared to 2.6:1 in 1993. The Company continued to generate the cash needed to support a higher level of business and increased investment in plant and equipment. Cash and short-term investments totaled $19.6 in the current year, compared to $13.8 in 1993. Due to increased business, net accounts receivable reached $42.5 at the end of the current year. This compares to $40.9 at the end of the prior year. In 1994
1994 1993 -------------------- Current Ratio..................................... 2.5:1 2.6:1 Quick Ratio....................................... 1.6:1 1.6:1 Debt/Equity....................................... 14.5% 23.5%
inventories, to support a higher level of sales, increased to $30.3 from $27.0 in 1993. Year-end net plant assets rose to $52.6 from $47.6 in 1993, reflecting a higher level of asset additions. In 1994, marketable equity securities of $3.7 reflected the Company's remaining 5% interest in G.U.D. Holdings Limited, classified as available-for-sale under the provisions of Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities," at year-end. In 1993, the investment in affiliates of $8.0 represented CLARCOR's 20% investment in G.U.D. Holdings Limited, and the related joint venture. Current liabilities of $39.5 at year-end increased over the 1993 level of $33.3. This was principally the result of increased accounts payable and accrued liabilities, in line with the increase in the Company's business in 1994. Long- term debt, reflecting continued principal payments, decreased to $17.0 from $24.6 last year. At November 30, 1994, long-term debt represented 12.7% of total capitalization, compared to a level of 19.0% in 1993. Net 1994 shareholders' equity was increased $12.9 to $117.5 from $104.6 in 1993. The 1994 shareholders' equity represented 87.3% of total capitalization. Last year, shareholders' equity represented 81.0% of total capitalization. At year-end 1994, the Company had outstanding 14,760,888 shares of common stock at $1.00 par value. This compares to 14,819,199 shares outstanding at the prior year-end. ================================================================================ THE FUTURE In 1994, CLARCOR continued its upward trend in operating results. Sales, profits and earnings increased and future operations are expected to continue this trend. The Company plans to continue the expansion of the Filtration Products Group while maintaining a positive presence in the Consumer Products markets. The expansion of the Filtration Products Group is expected to continue with growth from existing businesses through the introduction of new filtration products, the broadening of existing businesses, and the expansion of international sales. In addition, the group plans to grow through the acquisition of other filtration companies. In the Consumer Products Group, future revenue growth is anticipated to come from increased plastic closure sales, increased international sales, and the development and introduction of new products. The Company's plan for internal growth, coupled with anticipated future acquisitions and expected strategic alliances, will further the realization of CLARCOR's sales, profits, and earnings objectives. The realization of these objectives will provide the liquidity and financial strength necessary for growth and, the Company believes, an increase in shareholder value. GROUP INFORMATION Financial data relating to the principal groups of the business are shown in the following table for the years ended November 30, 1994 through 1992. Net sales represent sales to unaffiliated customers as reported in the Consolidated Statements of Earnings. Intergroup sales were not material. Assets are those assets used in each business group.
(Dollars in Thousands) 1994 1993 1992 - ------------------------------------------------------------------------ FILTRATION Net Sales........................... $199,793 $156,165 $118,215 Operating Profit.................... 26,597 19,661 18,666 Assets.............................. 114,501 105,278 74,364 Invested Capital.................... 87,009 79,865 61,231 Operating Margin.................... 13.3% 12.6% 15.8% Capital Turnover.................... 2.5x 2.6x 2.1x Operating Profit ROA................ 25.3% 26.4% 26.0% Operating Profit ROIC............... 33.3% 32.1% 32.5% Operating Cash Flow*................ $ 27,186 $ 22,038 $ 19,710 Capital Expenditures................ 6,715 6,339 3,861 Net Cash Flow....................... 20,471 15,699 15,849 Percent of Sales.................. 10.2% 10.1% 13.4% Percent of Capital................ 25.6% 25.6% 27.6% Total Employees..................... 1,614 1,419 878 CONSUMER Net Sales........................... $ 70,330 $ 69,154 $ 70,410 Operating Profit.................... 5,769 9,406 8,964 Assets.............................. 32,386 30,377 28,588 Invested Capital.................... 26,711 26,068 23,901 Operating Margin.................... 8.2% 13.6% 12.7% Capital Turnover.................... 2.7x 2.9x 2.8x Operating Profit ROA................ 19.0% 32.9% 30.7% Operating Profit ROIC............... 22.1% 39.4% 35.2% Operating Cash Flow*................ $ 8,120 $ 11,120 $ 12,286 Capital Expenditures................ 4,157 3,816 2,652 Net Cash Flow....................... 3,963 7,304 9,634 Percent of Sales.................. 5.6% 10.6% 13.7% Percent of Capital................ 15.2% 30.6% 37.8% Total Employees..................... 565 612 642 *Before interest income/expense and taxes paid. ========================================================================
Sales volume by class of product for Consumer Products Group*
1994 1993 1992 ----------------------------- Containers.......................... 20% 24% 24% *Includes only those classes of products which contributed 10% or more to Corporate revenue, including discontinued operations. No class of products within the Company's Filtration Products Group accounted for as much as 10% of the total sales of the Company.
EX-21 7 EXHIBIT 21 - SUBSIDIARIES EXHIBIT 21 CLARCOR INC. SUBSIDIARIES
JURISDICTION OF INCORPORATION OR PERCENT OF NAME ORGANIZATION OWNERSHIP - --------------------------------------------- -------------------- ------------- CLARCOR Consumer Products, Inc. Delaware 100% J.L. Clark, Inc. Delaware 100% Clark Europe, Inc. Delaware 100% CLARCOR Filtration Products, Inc. Delaware 100% Baldwin Filters, Inc. Delaware 100% Baldwin Filters N.V. Belgium 100%* Baldwin Filers Limited United Kingdom 100%* Clark Filter, Inc. Delaware 100% Dahl Manufacturing, Inc. California 100% CLARCOR Air Filtration, Inc. Delaware 100% MicroPure Filtration, Inc. Delaware 100% Baldwin Filters (Aust.) Pty. Limited Australia 50% Airguard Industries, Inc. Kentucky 100% Guardian Filter Company Kentucky 100% Filtros Baldwin de Mexico Mexico 90% CLARCOR Precision Products, Inc. Delaware 100% EPC Industries Inc. Michigan 100% CLARCOR Services, Inc. Delaware 100% CLARCOR Foreign Sales Corporation Virgin Islands 100% CLARCOR Trading Company Delaware 100%* - ------------------------ * Direct or indirect
EX-23 8 EXHIBIT 23 - CONSENT EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in each Registration Statement of CLARCOR Inc. on Form S-8 (file numbers 33-5456, 33-38590, 33-39374, 33-53763 and 33-53899) of our reports dated January 6, 1995, on our audits of the consolidated financial statements of CLARCOR Inc. as of November 30, 1994 and 1993 and for the years ended November 30, 1994, 1993 and 1992, and the financial statements schedule for the years ended November 30, 1994, 1993, and 1992, which reports are included or incorporated by reference in this Annual Report on Form 10-K. COOPERS & LYBRAND L.L.P. Rockford, Illinois February 24, 1995 EX-27 9 EXHIBIT 27 - FDS
5 1,000 12-MOS DEC-03-1994 NOV-28-1993 DEC-03-1994 19567 0 44125 1580 30258 98450 121659 69044 188448 39461 17013 14804 0 0 102658 188448 270123 270123 192456 192456 0 474 2788 32560 11935 20625 0 0 630 21255 1.43 1.41
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