-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KGsj/Cvh05QvCSruuwDCQ+0Tj9FmKj6VVWPQznjokGSmW6mKnuKAG9Kz6sMEog3y bylHNpd5G7FOHMPf3RWLGg== 0000912057-96-002995.txt : 19960227 0000912057-96-002995.hdr.sgml : 19960227 ACCESSION NUMBER: 0000912057-96-002995 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19951202 FILED AS OF DATE: 19960223 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-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-11024 FILM NUMBER: 96524878 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-K405 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 2, 1995 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, 1996 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, 1996 is $318,899,853. The number of outstanding shares of Common Stock, as of February 1, 1996 is 14,832,845 shares. Certain portions of the registrant's 1995 Annual Report to Shareholders are incorporated by reference in Parts I, II and IV. Certain portions of the registrant's Proxy Statement dated February 22, 1996 for the Annual Meeting of Shareholders to be held on March 28, 1996 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 1995, the year ended on December 2, 1995 and for fiscal year 1994, the year ended on December 3, 1994. In this Form 10-K, all references to fiscal year ends are shown to begin on December 1 and end on November 30 for clarity of presentation. (I) CERTAIN SIGNIFICANT EVENTS. Effective May 6, 1995, the Company sold the assets and ongoing business of MicroPure Filtration, Inc. for cash. MicroPure Filtration is engaged in marketing sterile air and gas filtration products for the food and beverage processing industry. The transaction had no material effect on the Company's results of operations for fiscal 1995. On June 21, 1995, the Company announced the promotion of Norman E. Johnson to President and Chief Operating Officer. Lawrence E. Gloyd, who had been President since 1986, will retain the position of Chairman of the Board and Chief Executive Officer. In June 1995, the Company announced the expansion of the J. L. Clark plastics manufacturing facility. The expansion provides the capacity needed to meet increased requirements for combiTop-Registered Trademark- plastic closures. The 25,000 square foot addition to the facility was completed in January 1996 and additional equipment purchases will be completed during fiscal 1996. Effective September 5, 1995, the Company acquired certain filtration assets of Hastings Manufacturing Company, a diversified, publicly held company based in Hastings, Michigan for cash. The sales of filtration products by Hastings Filters, Inc., the Company's wholly-owned subsidiary, are expected to increase the sales of the Filtration Products segment by approximately $40 million in 1996. The Hastings' automotive and light truck filter product lines are highly complementary lines for the Company's Baldwin Filters unit. The Hastings Filters, Inc. acquisition was financed through a new long-term credit arrangement. In September 1995 the Company announced that a Gas Turbine Systems Business Unit was established as part of the Company's Airguard Industries, Inc. subsidiary. This unit will service the OEM inlet air filtration systems market. Subsequent to the fiscal year-end, CLARCOR announced on December 13, 1995 that a joint venture agreement had been signed with Weifang Power Machine Fittings Ltd. ("Weifang") located in China. The joint venture, called Baldwin-Weifang Filters Ltd., will be 60% owned by CLARCOR and 40% owned by Weifang. The Company expects that the manufacture of heavy duty spin-on oil filters for trucks, construction equipment and agricultural equipment will begin in late 1996. Also subsequent to the fiscal year-end, the Company announced on February 13, 1996, the acquisition, in partnership with local management, of Unifil (Pty.) Ltd, a South African manufacturer of air filtration products for heavy-duty transportation, construction and agricultural equipment and automobiles. Unifil was acquired by Baldwin-Unifil South Africa, a South African partnership that is 70% owned by the Company's Baldwin Filters, Inc. subsidiary, and 30% owned by a three-member group from Unifil's current management team. (II) SUMMARY OF BUSINESS OPERATIONS. During 1995, the Company conducted business in two principal industry segments: (1) Filtration Products and (2) Consumer Products. 2 FILTRATION PRODUCTS. Filtration Products include filters used primarily in the replacement market in the trucking, construction, industrial, agricultural equipment, diesel locomotive, automotive and environmental industries. The segment's engine and mobile products include filters for oil, air, fuel, coolants and hydraulic fluids for trucks, automobiles, construction and industrial equipment, locomotives, marine and farm equipment. The segment's industrial and environmental products include air and antimicrobial treated filters for commercial buildings, factories, paint spray booths, gas turbine systems, medical facilities, automotive cabins, clean rooms and dust collector systems. 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 industries. The segment's products include 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 1993 through 1995 is included on page 38 of the Company's 1995 Annual Report to Shareholders (the "Annual Report"), is incorporated herein by reference and is filed as part of Exhibit 13(a)(vi) to this 1995 Annual Report on Form 10-K ("1995 Form 10-K"). (C) NARRATIVE DESCRIPTION OF THE BUSINESS FILTRATION PRODUCTS The Company's filtration products business is conducted by the CLARCOR Filtration Products segment which includes the following wholly-owned subsidiaries: Baldwin Filters, Inc.; Airguard Industries, Inc.; Clark Filter, Inc.; Hastings Filters, Inc.; Baldwin Filters N.V.; and Baldwin Filters Limited. In addition, the Company owns (i) 5% of G.U.D. Holdings Limited ("GUD") (ii) 50% of Baldwin Filters (Aust.) Pty. Ltd., (iii) 90% of Filtros Baldwin de Mexico ("FIBAMEX"), (iv) 60% of Baldwin-Weifang Filters Ltd., and (v) 70% of Baldwin-Unifil S.A. The companies market a line of over 18,000 oil, air, fuel, coolant and hydraulic fluid filters and industrial and environmental 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 while cotton and synthetic filters use wound or compressed fibers with high absorption characteristics. The Company's filters are sold throughout the United States, Canada and worldwide, primarily in the replacement market for trucks, automobiles, marine, construction, industrial and farm equipment. In addition, some filters are sold to the original equipment market. The segment distributes filtration products worldwide through each of its subsidiaries. The Baldwin Filters N.V. and Baldwin Filters Limited subsidiaries primarily serve the European markets. The Company's joint venture with GUD, Baldwin Filters (Aust.) Pty. Ltd., markets heavy duty liquid and air filters in Australia and New Zealand. FIBAMEX manufactures filters in Mexico with distribution in Mexico and Central and South America. The Company expects that through the fiscal 1996 investment in Baldwin-Weifang Filters Ltd., heavy duty filters will be manufactured in China for distribution in China and Southeast Asia. Additionally, through the Baldwin-Unifil S.A. acquisition, air filtration products will be manufactured in South Africa with distribution throughout South Africa, Great Britain, Europe and the Middle East. CONSUMER PRODUCTS The Company's consumer products business is conducted by the Consumer Products segment which includes the Company's wholly-owned subsidiary, J. L. Clark, Inc. ("J. L. Clark"). 3 In fiscal 1995 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. During 1995 the Tube Division entered into an agreement with Kunststoffwerk Kutterer ("Kutterer") of Germany to distribute Kutterer's plastic tube closures in North America. In addition, the Tube Division entered into an agreement with Extral of Mexico City, Mexico, which provides J. L. Clark with exclusive rights to sell Extral's aluminum tube products in North America. DISTRIBUTION Filtration Products are sold primarily through a combination of over 3,300 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 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 segment which contributed 10% or more of sales is as follows:
1995 1994 1993 ----- ----- ----- Containers............................................................. 18% 20% 24%
No class of products within the Company's Filtration Products segment 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 and adhesives 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 1995. 4 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 segment accounted for 15.9% of the $221,034,000 of fiscal year 1995 sales of such segment. The largest 10 customers of the Consumer Products segment accounted for 47.5% of the $69,160,000 of fiscal year 1995 sales of such segment. No single customer accounted for 10% or more of the Company's consolidated 1995 sales. BACKLOG At November 30, 1995, the Company had a backlog of firm orders for products amounting to approximately $33,700,000. The comparable backlog figure for 1994 was approximately $31,200,000. All of the orders on hand at November 30, 1995 are expected to be filled during fiscal 1996. 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. In the Filtration Products segment, 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 reliable 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. In addition, the Company believes that it is the largest manufacturer of liquid filters for diesel locomotives. In the Consumer Products segment, its principal competitors are approximately 10 manufacturers whose specialty packaging segments 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 and breadth of its products and services. 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 1995, 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 $3,013,000 on such activities as compared with $3,354,000 for 1994 and $2,824,000 for 1993. 5 In addition, during the fourth quarter of 1995, the Company added the Gas Turbine Systems Business Unit for the development of inlet air filtration systems. 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 requirement to install such equipment at any of its facilities. EMPLOYEES As of November 30, 1995, the Company had approximately 2,379 employees. (D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES Financial information relating to export sales and the Company's operations in the United States and other countries is set forth on Page 23 of the Annual Report under the caption "Financial Summary -- Segment Information -- Geographic Segments," and is incorporated herein by reference and filed as Exhibit 13a(x) to this 1995 Form 10-K. The Company is not aware of any unusual risks attendant to the conduct of its operations in other countries. ITEM 2. PROPERTIES. (I) LOCATION The corporate office building located in Rockford, Illinois, houses the Corporate offices and the Filtration and Consumer Products headquarters offices 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 four manufacturing locations. It leases 167,000 square feet in New Albany, Indiana on a 8.5 acre tract of land and 44,500 square feet in Dallas, Texas. 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 Jeffersontown, 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. During 1995 Airguard added distribution centers in Wallingford, Connecticut and New Albany, Indiana. The Company also manufactures filters in Lancaster, Pennsylvania at its Clark Filter plant. The building, constructed about 1968 on an 11.4 acre tract of land, contains 168,000 square feet of manufacturing and office space and is owned by the Company. Hastings Filters' manufacturing and distribution facilities are located in Yankton, South Dakota and Knoxville, Tennessee. The Yankton facility has approximately 100,000 square feet of floor space 6 on a 21 acre tract and the Knoxville facility has approximately 168,000 square feet of floor space on a 22 acre tract. An addition of 70,000 square feet to the Yankton facility will be completed in 1996. Both facilities are owned by the Company. The Company leases various facilities in other countries 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 25,000 square foot addition to the injection molding facility was completed in January 1996. 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 expansion of production levels before significant plant additions are required. (II) FUNCTION FILTRATION PRODUCTS. Oil, air, fuel, hydraulic fluid and coolant filters are produced at the Baldwin and Hastings facilities in Kearney, and Gothenburg, Nebraska, Yankton, South Dakota and Knoxville, Tennessee. 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 plants also maintain 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 and combination metal and plastic packaging products are produced at J. L. Clark plants located in Rockford, Illinois, and Lancaster, Pennsylvania. The Rockford and Lancaster 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 7 growing area of specialty is custom-designed plastic closures for products which have tamper-evidence as well as convenience features. J. L. Clark's distinctive plastic closures include the combiTop-Registered Trademark- and the SST-TM- products. 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 11/30/95 TO OFFICE - ----------------------------------------------------------------------- ----------- ------------- Lawrence E. Gloyd...................................................... 63 1995 Chairman of the Board and Chief Executive Officer. Mr. Gloyd was elected President and Chief Operating Officer in 1986, President and Chief Executive Officer in 1988, Chairman, President and Chief Executive Officer in 1991, and Chairman of the Board and Chief Exective Officer in 1995. Norman E. Johnson...................................................... 47 1995 President and Chief Operating Officer. Mr. Johnson has been employed by the Company since 1990. He was elected President-Baldwin Filters, Inc. in 1990, Vice President-CLARCOR in 1992, Group Vice President-Filtration Products Group in 1993, and President and Chief Operating Officer in 1995. Bruce A. Klein......................................................... 48 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. Ronald A. Moreau....................................................... 48 1989 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...................................................... 57 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, Vice President-Corporate Development in 1993 and Vice President-International/Corporate Development in 1994.
8
AGE AT YEAR ELECTED NAME 11/30/95 TO OFFICE - ----------------------------------------------------------------------- ----------- ------------- David J. Lindsay....................................................... 40 1995 Vice President-Administration and Chief Administrative Officer. Mr. Lindsay has been employed by the Company in various administrative positions since 1987. He was elected Vice President-Group Services in 1991, Vice President-Administration in 1994 and Vice President-Administration and Chief Administrative Officer in 1995. William F. Knese....................................................... 47 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. Peter F. Nangle........................................................ 34 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..................................................... 39 1996 Vice President and Corporate Secretary. Ms. Blaylock has been an employee of the Company since 1974. She was elected Assistant Secretary in 1994, Corporate Secretary in 1995 and Vice President and Corporate Secretary in 1996.
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. 9 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 on the New York Stock Exchange and dividends paid for each quarter of the last two fiscal years.
MARKET PRICE -------------------- QUARTER ENDED HIGH LOW DIVIDEND - -------------------------------------------------------------------------------------- --------- --------- ----------- March 4, 1995......................................................................... $ 21 1/4 $ 18 1/8 $ .1575 June 3, 1995.......................................................................... 21 5/8 19 .1575 September 2, 1995..................................................................... 23 3/4 21 1/2 .1575 December 2, 1995...................................................................... 27 21 3/8 .1600 ----------- Total Dividend........................................................................ $ .6325 ----------- ----------- 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 ----------- -----------
The approximate number of holders of record of Common Stock of the Company as at February 1, 1996 is 1,800. In addition, the Company believes that there are approximately 6,000 beneficial owners whose shares are held in street names. ITEM 6. SELECTED FINANCIAL DATA. The information required hereunder is set forth on pages 24 and 25 of the Annual Report under the caption "11-Year Financial Summary", is incorporated herein by reference and is filed as Exhibit 13a(ix) to this 1995 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 17 through 23 of the Annual Report under the caption "Financial Review", is incorporated herein by reference and is filed as Exhibit 13a(x) to this 1995 Form 10-K. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The Consolidated Financial Statements, the Notes thereto and the report thereon of Coopers & Lybrand L.L.P., independent accountants, required hereunder with respect to the Company and its consolidated subsidiaries are set forth on pages 26 through 39, inclusive, of the Annual Report, are incorporated herein by reference and is filed as Exhibits 13(a)(ii) through 13(a)(vii) to this 1995 Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. 10 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 22, 1996 (the "Proxy Statement") for the Annual Meeting of Shareholders to be held on March 28, 1996 under the caption "Election of Directors -- Nominees for Election to the Board" and is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION. The information required hereunder is set forth on pages 6 through 14 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. None. 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, 1995: *Consolidated Balance Sheets at November 30, 1995 and 1994 *Consolidated Statements of Earnings for the years ended November 30, 1995, 1994 and 1993 *Consolidated Statements of Shareholders' Equity for the years ended November 30, 1995, 1994 and 1993 *Consolidated Statements of Cash Flows for the years ended November 30, 1995, 1994 and 1993 *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 1995 Form 10-K 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) The Company filed a Current Report on Form 8-K dated September 5, 1995 to report the purchase of certain assets from Hastings Manufacturing Company. 11 (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. 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 Company'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. Incorporated by reference to Exhibit 10.2(a) to the Company's Annual Report on Form 10-K for the fiscal year ended December 3, 1994 ("1994 10-K"). 10.2(b) The registrant's 1994 Supplemental Pension Plan. Incorporated by reference to Exhibit 10.2(b) to the 1994 10-K. 10.2(c) The registrant's Supplemental Retirement Plan (as amended and restated effective December 1, 1994). Incorporated by reference to Exhibit 10.2(c) to the 1994 10-K. 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. 13 (a) The following items incorporated by reference herein from the Company's 1995 Annual Report to Shareholders ("1995 Annual Report"), are filed as Exhibits to this Annual Report Form 10-K:
(i) Business segment information for the fiscal years 1993 through 1995 set forth on page 38 of the 1995 Annual Report (included in Exhibit 13(a)(vi) -- Note N of Notes to Consolidated Financial Statements); (ii) Consolidated Balance Sheets of the Company and its Subsidiaries at November 30, 1995 and 1994 set forth on page 26 of the 1995 Annual Report;
12 (iii) Consolidated Statements of Earnings of the Company and its Subsidiaries for the years ended November 30, 1995, 1994 and 1993 set forth on page 27 of the 1995 Annual Report; (iv) Consolidated Statement of Shareholders' Equity for the Company and its Subsidiaries for the years ended November 30, 1995, 1994 and 1993 set forth on page 28 of the 1995 Annual Report; (v) Consolidated Statements of Cash Flows of the Company and its Subsidiaries for the years ended November 30, 1995, 1994 and 1993 set forth on page 29 of the 1995 Annual Report; (vi) Notes to Consolidated Financial Statements set forth on pages 30 through 38 of the 1995 Annual Report; (vii) Report of Independent Accountants set forth on page 39 of the 1995 Annual Report; (viii) Management's Report on Responsibility for Financial Reporting set forth on page 40 of the 1995 Annual Report; (ix) Information under the caption "11-Year Financial Summary" set forth on pages 24 and 25 of the 1995 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 17 through 23 of the 1995 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. 13 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: /s/ LAWRENCE E. GLOYD ------------------------------ Lawrence E. Gloyd CHAIRMAN OF THE BOARD & CHIEF EXECUTIVE OFFICER Date: February 23, 1996 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 23, 1996 By: LAWRENCE E. GLOYD ------------------------------------------- Lawrence E. Gloyd CHAIRMAN OF THE BOARD & CHIEF EXECUTIVE OFFICER AND DIRECTOR Date: February 23, 1996 By: BRUCE A. KLEIN ------------------------------------------- Bruce A. Klein VICE PRESIDENT-FINANCE & CHIEF FINANCIAL OFFICER Date: February 23, 1996 By WILLIAM F. KNESE ------------------------------------------- William F. Knese VICE PRESIDENT, TREASURER, CONTROLLER & CHIEF ACCOUNTING OFFICER Date: February 23, 1996 By J. MARC ADAM ------------------------------------------- J. Marc Adam DIRECTOR Date: February 23, 1996 By MILTON R. BROWN ------------------------------------------- Milton R. Brown DIRECTOR Date: February 23, 1996 By CARL J. DARGENE ------------------------------------------- Carl J. Dargene DIRECTOR
14 Date: February 23, 1996 By FRANK A. FIORENZA ------------------------------------------- Frank A. Fiorenza DIRECTOR Date: February 23, 1996 By DUDLEY J. GODFREY, JR. ------------------------------------------- Dudley J. Godfrey, Jr. DIRECTOR Date: February 23, 1996 By STANTON K. SMITH, JR. ------------------------------------------- Stanton K. Smith, Jr. DIRECTOR Date: February 23, 1996 By RICHARD A. SNELL ------------------------------------------- Richard A. Snell DIRECTOR Date: February 23, 1996 By DON A. WOLF ------------------------------------------- Don A. Wolf DIRECTOR
15 REPORT OF INDEPENDENT ACCOUNTANTS The Board of Directors and Shareholders CLARCOR Inc. Rockford, Illinois Our report on the consolidated financial statements of CLARCOR Inc. and Subsidiaries has been incorporated by reference in this Form 10-K from page 39 of the 1995 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 11 (index of exhibits) 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 8, 1996 F-1 CLARCOR INC. SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993 (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 - ----------------------------------------------------- ----------- ------------- ------------- ------------- ----------- 1995: Allowance for losses on accounts receivable $ 1,580 $ 386 $ 0 $ 409(A) $ 1,557 ----------- ----- ----- ----- ----------- ----------- ----- ----- ----- ----------- 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 ----------- ----- ----- ----- ----------- ----------- ----- ----- ----- ----------- 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.
F-2 EX-3.2 2 EXHIBIT 3.2 BY-LAWS OF CLARCOR Inc. ------------ ARTICLE I OFFICES SECTION 1.1. REGISTERED OFFICE. The registered office of the corporation in the State of Delaware shall be in the City of Wilmington, County of New Castle, and the name of the resident agent in charge thereof is The Corporation Trust Company. SECTION 1.2. OTHER OFFICES. The corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF SHAREHOLDERS SECTION 2.1. ANNUAL MEETING. The annual meeting of the shareholders shall be held in March each year on such day during that month as shall be determined by the Board of Directors, which day and the time of such meeting shall be stated in the Notice of such meeting. Subject to Sections 2.12 and 2.13 of these By-Laws, the purpose of the annual meeting shall be to elect directors and to transact such other business as may come before the meeting. If the election of directors shall not be held on the day designated for the annual meeting, or at any adjournment thereof, the Board of Directors shall cause such election to be held at a special meeting of the shareholders as soon thereafter as convenient. 1 SECTION 2.2. SPECIAL MEETINGS. Any action required or permitted to be taken by the shareholders of the corporation must be effected at a duly called annual or special meeting of shareholders of the corporation and may not be effected by any consent in writing by such shareholders. Special meetings of shareholders of the corporation may be called only by the Board of Directors pursuant to a resolution approved by a majority of the entire Board of Directors, upon not less than 10 nor more than 50 days' written notice. Notwithstanding anything contained in these By-Laws to the contrary, the affirmative vote of the holders of at least 75% of the shares of the corporation entitled to vote for the election of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this Section 2.2. SECTION 2.3. PLACE OF MEETINGS. The Board of Directors may designate any place, either within or without the State of Delaware, as a place of meeting for any annual or special meeting of shareholders. If no designation is made, the place of meeting shall be the principal office of the corporation in Illinois. SECTION 2.4. NOTICE OF MEETINGS. Written or printed Notice stating the place, date and hour of each annual or special meeting of the shareholders and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given not less than 10 or more than 50 days before the date of the meeting. (See also Article IV). SECTION 2.5. FIXING DATE OF DETERMINATION OF SHAREHOLDERS OF RECORD. (a) In order that the corporation may determine the shareholders entitled (i) to notice of or to vote at any meeting of shareholders or any adjournment thereof, (ii) to receive payment of any dividend or other distribution or allotment of any rights, (iii) to exercise any rights in respect of any change, conversion or exchange of stock or (iv) to take, receive or participate in any other action, the Board of Directors may fix a record date, which shall not be earlier than the date upon which the resolution fixing the record date is adopted by the Board of Directors and which (1) in the case of a determination of shareholders entitled to notice of or to vote at any meeting of shareholders or adjournment thereof, shall, unless otherwise required by law, be not more than 60 nor less than ten days before the date of such meeting; and (2) in the case of any other action, shall be not more than 60 days before such action. (b) If no record date is fixed, (i) the record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; and (ii) the record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. 2 (c) A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting, but the Board of Directors may fix a new record date for the adjourned meeting. SECTION 2.6. SHAREHOLDER LIST. The officer or agent having charge of the transfer books for shares of the corporation shall make, at least ten days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting, arranged in alphabetical order, with the address of and number of shares registered in the name of each shareholder. Such list shall be open to examination by any shareholder of the corporation during ordinary business hours, for any purpose germane to the meeting, for a period of at least ten days prior to the meeting, at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall be produced and kept at the time and place of meeting during the whole time thereof, and subject to the inspection of any such shareholder who may be present. The stock ledger shall be the only evidence as to who are the shareholders entitled to examine the stock ledger, the list of shareholders or the books of the corporation, or to vote in person or by proxy at any meeting of shareholders. SECTION 2.7. QUORUM. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall be requisite for, and shall constitute, a quorum at all meetings of the shareholders of the corporation for the transaction of business, except as otherwise provided by statute or these By-Laws. If a quorum shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote thereat present in person or represented by proxy may, by the affirmative vote of the holders of stock having a majority of the votes which could be cast by all such holders, adjourn the meeting from time to time, without notice other than announcement at the meeting if the adjournment is for thirty days or less or unless after the adjournment a new record date is fixed, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If a quorum is present when a meeting is convened, the subsequent withdrawal of shareholders, even though less than a quorum remains, shall not affect the ability of the remaining shareholders lawfully to transact business. SECTION 2.8. PROXIES. (a) Each shareholder entitled to vote at a meeting of shareholders may authorize another person or persons to act for such shareholder by proxy filed with the Secretary before or at the time of the meeting. No such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A shareholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing with 3 the Secretary an instrument in writing revoking the proxy or another duly executed proxy bearing a later date. (b) A shareholder may authorize another person or persons to act for such shareholder as proxy (i) by executing a writing authorizing such person or persons to act as such, which execution may be accomplished by such shareholder or such shareholder's authorized officer, director, partner, employee or agent (or, if the stock is held in a trust or estate, by a trustee, executor or administrator thereof) signing such writing or causing his or her signature to be affixed to such writing by any reasonable means, including, but not limited to, facsimile signature, or (ii) by transmitting or authorizing the transmission of a telegram, cablegram or other means of electronic transmission (a "Transmission") to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such Transmission; provided that any such Transmission must either set forth or be submitted with information from which it can be determined that such Transmission was authorized by such shareholder. (c) Any inspector or inspectors appointed pursuant to Section 2.14 of these By-Laws shall examine Transmissions to determine if they are valid. If no inspector or inspectors are so appointed, the Secretary or such other person or persons as shall be appointed from time to time by the Board of Directors shall examine Transmissions to determine if they are valid. If it is determined a Transmission is valid, the person or persons making that determination shall specify the information upon which such person or persons relied. Any copy, facsimile telecommunication or other reliable reproduction of such a writing or Transmission may be substituted or used in lieu of the original writing or Transmission for any and all purposes for which the original writing or Transmission could be used; provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or Transmission. SECTION 2.9. VOTING. At every meeting of the shareholders, each shareholder shall be entitled to one vote for each share of stock entitled to vote thereat which is registered in the name of such shareholder on the books of the corporation. When a quorum is present at any meeting of the shareholders, the vote of the holders of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be sufficient for the transaction of any business, unless otherwise provided by statute, the Certificate of Incorporation or these By-Laws. Voting on any question or in any election may be viva voce unless the presiding officer shall order or any shareholder shall demand that voting be by ballot. SECTION 2.10. VOTING OF CERTAIN SHARES. Shares standing in the name of another corporation, domestic or foreign, and entitled to vote may be voted by such officer, agent, or proxy as the By-Laws of such corporation may prescribe or, in the absence of such provision, as the Board of Directors of such corporation may determine. Shares standing in the name of a deceased person, a minor or an 4 incompetent and entitled to vote may be voted by his administrator, executor, guardian or conservator as the case may be, either in person or by proxy. Shares standing in the name of a trustee and entitled to vote may be voted by such trustee, either in person or by proxy to the full extent provided by Delaware law. Shares standing in the name of a receiver and entitled to vote may be voted by such receiver. A shareholder some or all of whose shares, otherwise entitled to vote, are pledged shall be entitled to vote such shares unless, in the transfer of such pledged shares on the books of the corporation, such shareholder as pledged has expressly empowered the pledge to vote thereon, in which case only the pledgee, or the pledgee's proxy, may represent such stock and vote thereon. Shares standing in the name of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety or otherwise, and shares with two or more persons having the same fiduciary relationship respecting such shares shall be voted in accordance with the provisions of Section 217(b) of the Delaware General Corporation Law. SECTION 2.11. TREASURY STOCK. Shares of its own stock belonging to this corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such corporation is held by this corporation, shall not be voted at any meeting and shall not be counted in determining the total number of outstanding shares. Nothing in this section shall be construed as limiting the right of this corporation to vote shares of its own stock held by it in a fiduciary capacity. SECTION 2.12. NOMINATION OF DIRECTORS. Only persons who are nominated in accordance with the procedures set forth in this Section 2.12 shall be eligible for election as Directors. Nominations of persons for election to the Board of Directors of the corporation may be made at a meeting of shareholders by or at the direction of the Board of Directors or by any shareholder of the corporation entitled to vote for the election of Directors at the meeting who complies with the notice procedures set forth in this Section 2.12. Such nominations, other than those made by or at the direction of the Board of Directors shall be made pursuant to timely notice in proper written form to the Secretary of the corporation. To be timely, a shareholder's notice shall be delivered to or mailed and received at the principal executive offices of the corporation not less than 60 days nor more than 90 days prior to the meeting; PROVIDED, HOWEVER, that in the event that less than 70 days' notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. To be in proper written form, shareholder's notice shall set forth in writing (a) as to each person whom the shareholder proposes to nominate for election or re-election as a director (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of stock of the corporation which are beneficially owned by such person and (iv) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or as otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including, without limitation, such person's written 5 consent to being nominated as a Director and to serving as a Director if elected); and (b) as to the shareholder giving the notice (i) the name and address, as they appear on the corporation's books, of such shareholder and (ii) the class and number of shares of stock of the corporation which are beneficially owned by such shareholder. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a Director shall furnish to the Secretary of the corporation that information required to be set forth in a shareholder's notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth in this Section 2.12. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by the By-Laws; and in that event the defective nomination shall be disregarded. SECTION 2.13. NOTICE OF SHAREHOLDER PROPOSALS. At any meeting of the shareholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before a meeting, business must be (a) specified in the notice of the meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a shareholder. For business to be properly brought before a meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of the corporation. To be timely, a shareholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation, not less than 60 days nor more than 90 days prior to the meeting; provided, however, that in the event that less than 70 days' notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. A shareholder's notice to the Secretary shall set forth as to each matter the shareholder proposes to bring before the meeting (a) brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (b) the name and address, as they appear on the corporation's books of the shareholder proposing such business, (c) the class and number of shares of the corporation which are beneficially owned by the shareholder, and (d) any material interest of the shareholder in such business. Notwithstanding anything in the By-Laws to the contrary, no business shall be conducted at any meeting of shareholders except in accordance with the procedures set forth in this Section 2.13. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 2.13, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. SECTION 2.14. VOTING PROCEDURES AND INSPECTORS OF ELECTIONS. (a) If the corporation has a class of voting stock that is (i) listed on a national securities exchange, (ii) authorized for quotation on an interdealer quotation system of a 6 registered national securities association or (iii) held of record by more than 2,000 shareholders, the Board of Directors shall, in advance of any meeting of shareholders, appoint one or more inspectors (individually an "Inspector," and collectively the "Inspectors") to act at such meeting and make a written report thereof. The Board of Directors may designate one or more persons as alternate Inspectors to replace any Inspector who shall fail to act. If no Inspector or alternate is able to act at such meeting, the chairman of the meeting shall appoint one or more other persons to act as Inspectors. Each Inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of Inspector with strict impartiality and according to the best of his or her ability. (b) The Inspectors shall (i) ascertain the number of shares of stock of the corporation outstanding and the voting power of each, (ii) determine the number of shares of stock of the corporation present in person or by proxy at such meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the Inspectors and (v) certify their determination of the number of such shares present in person or by proxy at such meeting and their count of all votes and ballots. The Inspectors may appoint or retain other persons or entities to assist them in the performance of their duties. (c) The date and time of the opening and the closing of the polls for each matter upon which the shareholders will vote at a meeting shall be announced at such meeting. No ballots, proxies, or votes, nor any revocations thereof or changes thereto, shall be accepted by the Inspectors after the closing of the polls unless the Court of Chancery of the State of Delaware upon application by any shareholder shall determine otherwise. (d) In determining the validity and counting of proxies and ballots, the Inspectors shall be limited to an examination of the proxies, any envelopes submitted with such proxies, any information referred to in paragraphs (b) and (c) of Section 2.8 of these By-Laws, ballots and the regular books and records of the corporation, except that the Inspectors may consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by a shareholder of record to cast or more votes than such shareholder holds of record. If the Inspectors consider other reliable information for the limited purpose permitted herein, the Inspectors, at the time they make their certification pursuant to paragraph (b) of this Section 2.14, shall specify the precise information considered by them, including the person or persons from whom such information was obtained, when and the means by which such information was obtained and the basis for the Inspectors' belief that such information is accurate and reliable. 7 ARTICLE III DIRECTORS SECTION 3.1. NUMBER AND ELECTION. The number of directors which shall constitute the whole Board shall be not less than nine. The exact number of directors shall be fixed from time to time by the Board of Directors pursuant to a resolution adopted by a majority of the entire Board of Directors. The Directors shall be divided into three classes, as nearly equal in number as possible, with respect to the time for which they shall severally hold office. Directors of the First Class first chosen shall hold office for one year or until the first annual election; Directors of the Second Class first chosen shall hold office until the second annual election; and Directors of the Third Class shall hold office until the third annual election. In each annual election or adjournment thereof, the successors to the Class of Directors whose terms shall expire at that time shall be elected to hold office for terms of three years so that the term of office of one class of Directors shall expire in each year. Each Director elected shall hold office until his successor shall be elected and shall qualify. Notwithstanding anything contained in these By-Laws to the contrary, the affirmative vote of the holders of at least 75% of the shares of this corporation entitled to vote for the election of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this Section 3.1. SECTION 3.2. RESIGNATIONS AND VACANCIES. (a) RESIGNATIONS. Any Director may resign at any time by giving written notice to the Board of Directors or to the Chief Executive Officer. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. (b) NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled by a majority vote of the Directors then in office, and Directors so chosen shall hold office for a term expiring at the Annual Meeting of Shareholders at which the term of the class to which they have been elected expires. (c) REMOVAL. Subject to the rights of the holders of any series of Preferred Stock then outstanding, any Director, or the entire Board of Directors, may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least 75% of the shares of this corporation entitled to vote for the election of directors. 8 (d) AMENDMENT, REPEAL, ETC. Notwithstanding anything contained in these By-Laws to the contrary, the affirmative vote of the holders of at least 75% of all of the shares of this corporation entitled to vote for the election of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this Section 3.2. SECTION 3.3. MANAGEMENT OF AFFAIRS OF CORPORATION. The business and affairs of the corporation shall be managed by or under the direction of its Board of Directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws directed or required to be exercised or done by the shareholders. SECTION 3.4. REGULAR MEETINGS. Regular meetings of the Board of Directors shall be held without other notice than this By-Law immediately after, and at the same place as, the Annual Meeting of Shareholders for the purpose of organizing the Board of Directors, electing officers and transacting any other business that may properly come before such meeting. Additional regular meetings of the Board of Directors may be held without call or notice at such times as shall be fixed by resolution of the Board of Directors. Section 3.5. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board, the Chief Executive Officer or by a majority of the Directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place, either within or without the State of Delaware, as the place for holding any special meeting of the Board of Directors called by them. SECTION 3.6. NOTICE OF SPECIAL MEETINGS. Except as otherwise prescribed by statute, written notice of the time and place of each special meeting of the Board of Directors shall be given at least 24 hours prior to the time of holding the meetings. Any director may waive notice of any meeting. The attendance of a director at any meeting shall constitute a waiver of notice of such meeting, except when a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Unless otherwise provided by statute neither the business to be transacted at, nor the purpose of, any special meeting of the Board of Directors need be specified in any notice, or waiver of notice of such meeting. (See also Articles IV and X.) SECTION 3.7. QUORUM. At each meeting of the Board of Directors, the presence of not less than a majority of the Directors then in office shall be necessary and sufficient to constitute a quorum for the transaction of business, and the act of a majority of the Directors present at any meeting at which there is a quorum shall be the 9 act of the Board of Directors, except as may be otherwise specifically provided by statute. In determining the presence of a quorum at a meeting of the Directors or a committee thereof for the purpose of authorizing a contract or transaction between the corporation and one or more of its Directors, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of its Directors are directors or officers, or have a financial interest, such interested Directors may be counted in determining a quorum. SECTION 3.8. PRESUMPTION OF ASSENT. Unless otherwise provided by statute, a director of the corporation who is present at a meeting of the Board of Directors at which action is taken on any corporate matter shall be conclusively presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. SECTION 3.9. ORGANIZATION. Meetings of the Board of Directors shall be presided over by the Chairman of the Board, if any, or if there is none or in his or her absence, by the President, or in his or her absence by a chairman chosen at the meeting. The Secretary shall act as secretary of the meeting, but in his or her absence the chairman of the meeting may appoint any person to act as secretary of the meeting. A majority of the directors present at a meeting, whether or not they constitute a quorum, may adjourn such meeting to any other date, time or place without notice other than announcement at the meeting. SECTION 3.10. ACTION WITHOUT MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting, if all members of the Board or of such committee, as the case may be, consent thereto in writing and such writing or writings are filed with the minutes of proceedings of the Board or such committee. Directors, or any committee of directors designated by the Board of Directors, may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 3.10 shall constitute presence in person at such meeting. SECTION 3.11. COMMITTEES. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate one or more committees, each committee to consist of one or more directors of the corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of the committee, the 10 member or members present at any meeting and not disqualified from voting, whether or not a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent permitted by law and provided in the resolution of the Board of Directors designating such committee, or an amendment to such resolution, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it. SECTION 3.12. FEES AND COMPENSATION OF DIRECTORS. Unless otherwise restricted by the Certificate of Incorporation, the Board of Directors shall have the authority to fix the compensation of directors. The directors shall be paid their reasonable expenses, if any, of attendance at each meeting of the Board of Directors or a committee thereof and may be paid a fixed sum for attendance at each such meeting and an annual retainer or salary for services as a director or committee member. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation thereof. SECTION 3.13. RELIANCE UPON RECORDS. Every director, and every member of any committee of the Board of Directors, shall, in the performance of his or her duties, be fully protected in relying in good faith upon the records of the corporation and upon such information, opinions, reports or statements presented to the corporation by any of its officers or employees, or committees of the Board of Directors, or by any other person as to matters the director or member reasonably believes are within such other person's professional or expert competence and who has been selected with reasonable care by or on behalf of the corporation, including, but not limited to, such records, information, opinions, reports or statements as to the value and amount of the assets, liabilities and/or net profits of the corporation, or any other facts pertinent to the existence and amount of surplus or other funds from which dividends might properly be declared and paid, or with which the corporation's capital stock might properly be purchased or redeemed. ARTICLE IV NOTICES SECTION 4.1. MANNER OF NOTICE. Except as otherwise provided by law, the Certificate of Incorporation or these By-Laws, whenever notice is required to be given to any shareholder, director or member of any committee of the Board of Directors, such notice may be given by personal delivery or by depositing it, in a sealed envelope, in the United States mails, first class, postage prepaid, addressed, or by delivering it to a telegraph company, charges prepaid, for transmission, or by transmitting it via telecopier, to such shareholder, director or member, either at the address of such shareholder, director or member as it appears on the records of the corporation or, in the case of such a director or member, at his or her business 11 address; and such notice shall be deemed to be given at the time when it is thus personally delivered, deposited, delivered or transmitted, as the case may be. Such requirement for notice shall also be deemed satisfied, except in the case of shareholder meetings, if actual notice is received orally or by other writing by the person entitled thereto as far in advance of the event with respect to which notice is being given as the minimum notice period required by law or these By-Laws. SECTION 4.2. DISPENSATION WITH NOTICE. (a) Whenever notice is required to be given by law, the Certificate of Incorporation or these By-laws to any shareholder to whom (i) notice of two consecutive annual meetings of shareholders, and all notices of meetings of shareholders during the period between such two consecutive annual meetings, or (ii) all, and at least two, payments (if sent by first class mail) of dividends or interest on securities of the corporation during a 12-month period, have been mailed addressed to such shareholder at the address of such shareholder as shown on the records of the corporation and have been returned undeliverable, the giving of such notice to such shareholder shall not be required. Any action or meeting which shall be taken or held without notice to such shareholder shall have the same force and effect as if such notice had been duly given. If any such shareholder shall deliver to the corporation a written notice setting forth the then current address of such shareholder, the requirement that notice be given to such shareholder shall be reinstated. (b) Whenever notice is required to be given by law, the Certificate of Incorporation or these By-Laws to any person with whom communication is unlawful, the giving of such notice to such person shall not be required, and there shall be not duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. SECTION 4.3 WAIVER OF NOTICE. Any written waiver of notice, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of any regular special meeting of the shareholders, directors, or members of a committee of directors need to be specified in any written waiver of notice. 12 ARTICLE V OFFICERS SECTION 5.1. OFFICES AND OFFICIAL POSITIONS. The officers of the corporation shall be a Chairman of the Board, a Chief Executive Officer, a President, Vice President - Finance, one or more additional Vice Presidents, the number thereof to be determined by the Board of Directors, a Treasurer, a Controller, a Secretary, and such Assistant Secretaries, Assistant Treasurers, and other officers as the Board of Directors may determine. None of the officers need be a director, a shareholder of the corporation or a resident of the State of Delaware. The Board of Directors may from time to time establish, and abolish official positions within such divisions into which the business and operations of the corporation may be divided pursuant to Section 6.1. of these By-Laws, and assign titles and duties to such positions. Those appointed to official positions within divisions may, but need not, be officers of the corporation. The Board of Directors shall appoint officers to official positions within a division and may with or without cause remove from such a position any person appointed to it. In any event, the authority incident to an official position within a division shall be limited to acts and transactions within the scope of the business and operations of such division. SECTION 5.2. ELECTION AND TERM OF OFFICE. The officers of the corporation shall be elected annually by the Board of Directors at their first meeting held after each regular annual meeting of the shareholders. If the election of officers shall not be held at such meeting of the Board, such election shall be held at a regular or special meeting of the Board of Directors as soon thereafter as may be convenient. Each officer shall hold office for such term as the Board of Directors shall specify, or until his death, or until he shall resign or shall have been removed in the manner hereinafter provided. Election or appointment of an officer or agent shall not in itself create contract rights. SECTION 5.3. REMOVAL AND RESIGNATION. Any officer may be removed, either with or without cause, by a majority of the directors at the time in office at any regular or special meeting of the Board; but such removal shall be without prejudice to the contract rights, if any, of such person so removed. Any officer may resign at any time by giving written notice to the Board of Directors, to the Chief Executive Officer, or to the Secretary of the corporation. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 5.4. VACANCIES. A vacancy in any office because of death, resignation, removal, or any other cause may be filled for the unexpired portion of the term by the Board of Directors. 13 SECTION 5.5. CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside at all meetings of the shareholders and the Board of Directors and shall consult and advise with the other officers of the corporation in connection with its operation. SECTION 5.6 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the corporation shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and affairs of the corporation. He shall have authority to designate the duties and powers of officers and delegate special powers and duties to specified officers, so long as such designation shall not be inconsistent with the statutes, these By-Laws, or action of the Board of Directors. He shall do and perform such other duties as from time to time may be assigned to him by the Board of Directors. The authority and responsibilities of the Chief Executive Officer shall be assigned by the Board of Directors to either the Chairman of the Board or the President. SECTION 5.7 PRESIDENT. The President shall preside at all meetings of the shareholders and of the Board of Directors in the absence of the Chairman of the Board, and of committees of directors of the corporation of which he is a member. He shall direct the activities of the corporation in accordance with policies and objectives established by the Board of Directors. He shall execute any deeds, mortgages, bonds, contracts or other instruments of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors, the Chief Executive Officer, or the President to some other officer or agent of the corporation. He may sign, with the Secretary or any Assistant Secretary, certificates for shares of stock of the corporation the issuance of which shall have been authorized by the Board of Directors, shall vote, or give a proxy to any other person to vote, all shares of the stock of any other corporation standing in the name of the corporation, shall have the general powers and duties of management usually vested in the office of a President of a corporation and shall have such other powers and duties as may be prescribed by the Board of Directors or these By-Laws. SECTION 5.8. VICE PRESIDENT - FINANCE. The Vice President-Finance, as the chief financial officer of the corporation, shall: (a) be responsible to the Chief Executive Officer, President, and the Board of Directors for all the property of the corporation, tangible and intangible, and for the receipt, custody and disbursement of all funds and securities of the corporation; (b) receive and give receipts for moneys due and payable to the corporation from any source whatsoever and deposit all such moneys in the name of the corporation in such banks, trust companies or other depositories as shall from time to time be selected in accordance with the provisions of Section 7.4 of these By-Laws; (c) disburse the funds of the corporation as ordered by the Chief Executive Officer, President or as required in the ordinary conduct of the business of the corporation; (d) render to the Chief Executive Officer, President or Board of Directors, upon request, an account of all his transactions as Vice President- Finance and such other duties as from time to time may be assigned to him by the 14 Chief Executive Officer, the President, by the Board of Directors or these By- Laws. He may delegate such details of the performance of duties of his office as may be appropriate in the exercise of reasonable care to one or more persons in his stead. SECTION 5.9. VICE PRESIDENTS. In the absence or inability to act of the President, the Vice Presidents in order of their ranking by the Board of Directors or, if not ranked, the Vice President designated by the Board of Directors, the Chief Executive Officer, or the President, shall perform all duties of the President and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the President. The Vice Presidents shall have such other powers and perform such other duties, not inconsistent with the statutes, these By-Laws, or action of the Board of Directors, as from time to time may be prescribed for them, respectively, by the Chief Executive Officer, or by the President. Any Vice President may sign, with the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, certificates for shares of stock of the corporation the issuance of which shall have been authorized by the Board of Directors. SECTION 5.10. SECRETARY. The Secretary shall: (a) keep the minutes of the meetings of the shareholders and the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these By-Laws or as required by law; (c) have charge of the corporate records and of the seal of the corporation; (d) affix the seal of the corporation, or cause it to be affixed, to all certificates for shares prior to the issue thereof and to all documents the execution of which on behalf of the corporation under its seal is duly authorized by the Board of Directors or otherwise in accordance with the provisions of the By-Laws; (e) keep a register of the post office address of each shareholder, director and committee member, which shall from time to time be furnished to the Secretary by such shareholder, director or member; (f) sign with the Chairman of the Board, President, or a Vice President, certificates for shares of stock of the corporation, the issuance of which shall have been authorized by resolution of the Board of Directors; (g) have general charge of the stock transfer books of the corporation; and (h) in general, perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her by the Chief Executive Officer, President, or by the Board of Directors. He or she may delegate such details of the performance of duties of his or her office as may be appropriate in the exercise of reasonable care to one or more persons in his or her stead. SECTION 5.11. TREASURER. In the absence or inability to act of the Vice President - Finance, the Treasurer shall perform all duties of the Vice President - Finance and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Vice President - Finance. The Treasurer shall have such other powers and perform such other duties, not inconsistent with the statutes, these By-Laws, or action of the Board of Directors, as from time to time may be prescribed for him by the Vice President - - Finance. The Treasurer may delegate such details of the 15 performance of his office as may be appropriate in the exercise of reasonable care to one or more persons in his stead. SECTION 5.12. CONTROLLER. The Controller shall be the Chief Accounting Officer of the corporation and shall have the responsibility for the accounts and accounting practices of the corporation; maintain records of assets, liabilities, and transactions thereof, and provide for regular audits; initiate and execute measures calculated to provide the maximum safety, clarity and efficiency in the recording and reporting of transactions; prepare and direct all budgets; and verify all authorizations. He shall do and perform such duties as from time to time may be assigned to him by the Vice President - Finance or the Board of Directors. SECTION 5.13. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. The Assistant Treasurers and Assistant Secretaries shall, in the absence of the Treasurer or Secretary, respectively, perform all functions and duties which such absent officer may delegate; but such delegation shall in nowise relieve the absent officer from the responsibilities and liabilities of his office. In addition, an Assistant Secretary, as thereto authorized by the Board of Directors, may sign with the Chairman of the Board, President, or a Vice President, certificates for shares of the corporation, the issuance of which shall have been authorized by a resolution of the Board of Directors; and the Assistant Secretaries and Assistant Treasurers shall, in general, perform such duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or by the Chief Executive Officer, the President or Board of Directors. SECTION 5.14. DELEGATION OF DUTIES. In case of the absence of an officer of the corporation or for any other reason that may seem sufficient to the Board of Directors, said Board may delegate for the time being the powers and duties of such officer to any other officer or to any Director except where otherwise provided by law. SECTION 5.15. COMPENSATION. The salaries of the officers shall be fixed from time to time by a Committee of the Board of Directors designated by the Board with the exception of the salaries of such Committee, which shall be established by the Board of Directors, and no officer shall be prevented from receiving such salary by reason of the fact that he is also a Director of the corporation. SECTION 5.16. PERFORMANCE BOND. The Board of Directors may request any officer, agent or employee of the corporation to furnish a bond of such sum and with such sureties as it may deem advisable for the faithful performance of the duties of such officer, agent or employee. 16 ARTICLE VI DIVISIONS SECTION 6.1. DIVISIONS OF THE CORPORATION. The Board of Directors shall have the power to create and establish such operating divisions of the corporation as they may from time to time deem advisable. SECTION 6.2. OFFICIAL POSITIONS WITHIN A DIVISION. The President may appoint individuals who are not officers of the corporation to, and may, with or without cause, remove them from, official positions established with a division, but not filled by the Board of Directors. (See also Section 5.1 of these By- Laws.) ARTICLE VII CONTRACTS, LOANS, CHECKS AND DEPOSITS SECTION 7.1. CONTRACTS AND OTHER INSTRUMENTS. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, or of any division thereof, and such authority may be general of confined to specific instances. SECTION 7.2. LOANS. No loans shall be contracted on behalf of the corporation or any division thereof, and no evidence of indebtedness shall be issued in the name of the corporation, or any division thereof, unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances. SECTION 7.3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, or any division thereof, shall be signed by such officer or officers, agent or agents of the corporation, and in such manner as shall from time to time be determined by resolution of the Board of Directors. SECTION 7.4. DEPOSITS. All funds of the corporation, or any divisions thereof, not otherwise employed shall be deposited from time to time to the credit of the 17 corporation in such banks, trust companies or other depositories as the Board of Directors may select. ARTICLE VIII CERTIFICATES OF STOCK AND THEIR TRANSFER SECTION 8.1. CERTIFICATES OF STOCK. The certificates of stock of the corporation shall be in such form as may be determined by the Board of Directors, shall be numbered and shall be entered in the books of the corporation as they are issued. They shall exhibit the holder's name and number of shares and shall be signed by the Chairman of the Board, President, or a Vice President and the Secretary or an Assistant Secretary. The signature of any such officer may be facsimile. In case any such officer, transfer agent or registrar whose facsimile signature has been used on any such certificate shall cease to be such officer, transfer agent or registrar before such certificate has been delivered by the corporation, such certificate may nevertheless be delivered by the corporation, as if such officer, transfer agent or registrar continued to be such at the date of delivery. All certificates properly surrendered to the corporation for transfer shall be canceled and no new certificate shall be issued to evidence transferred shares until the former certificate for at least a like number of shares shall have been surrendered and canceled and the corporation reimbursed for any applicable taxes on the transfer, except that in the case of a lost, destroyed or mutilated certificate a new one may be issued therefor upon such terms, and with such indemnity (if any) to the corporation, as the Board of Directors may prescribe specifically or in general terms or by delegation to the transfer agent. (See Section 8.2.) SECTION 8.2. LOST, STOLEN OR DESTROYED CERTIFICATES. The Board of Directors in individual cases, or by general resolution or by delegation to the transfer agent, may direct a new certificate or certificates to be issued by the corporation in place of the certificate or certificates alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. SECTION 8.3. TRANSFER OF STOCK. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, 18 and upon payment of applicable taxes with respect to such transfer, it shall be the duty of the corporation, subject to such rules and regulations as the Board of Directors may from time to time deem advisable concerning the transfer and registration of certificates for shares of capital stock of the corporation, to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Transfers of shares shall be made only on the books of the corporation by the registered holder thereof or by his attorney or successor duly authorized as evidenced by documents filed with the Secretary or transfer agent of the corporation. Whenever any transfer of stock shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of transfer if, when the certificate or certificates representing such stock are presented to the corporation for transfer, both the transferor and transferee request the corporation to do so. SECTION 8.4. RESTRICTIONS ON TRANSFER. Any shareholder may enter into an agreement with other shareholders or with the corporation providing any reasonable limitation or restriction on the right of such shareholder to transfer shares of common stock of the corporation held by him, including, without limiting the generality of the foregoing, agreements granting to such other shareholders or to the corporation the right to purchase for a given period of time any of such shares on terms equal to terms offered such shareholders by any third party. Any such limitation or restriction on the transfer of shares of this corporation may be set forth on certificates representing shares of common stock or notice thereof may be otherwise given to the corporation or the transfer agent, in which case the corporation or the transfer agent shall not transfer such shares upon the books of the corporation without receipt of satisfactory evidence of compliance with the terms of such limitation or restriction; provided, however, no such restriction, unless noted conspicuously on the security, shall be effective against anyone found by a court of competent jurisdiction to be other than a person with actual knowledge of the restriction. SECTION 8.5. NO FRACTIONAL SHARE CERTIFICATES. Certificates shall not be issued representing fractional shares of stock. SECTION 8.6. SHAREHOLDERS OF RECORD. The corporation shall be entitled to treat the holder of record of any shares or shares of stock as the holder in fact thereof, and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. 19 ARTICLE IX GENERAL PROVISIONS SECTION 9.1. FISCAL YEAR. The fiscal year of the corporation shall be determined by resolution of the Board of Directors. SECTION 9.2. SEAL. The corporate seal shall have inscribed thereon the name of the corporation and the words "CORPORATE SEAL" and "DELAWARE"; and it shall otherwise be in the form approved by the Board of Directors. Such seal may be used by causing it, or a facsimile thereof, to be impressed or affixed or reproduced, or otherwise. SECTION 9.3. FORM OF RECORDS. Any records maintained by the corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs, or any other information storage device, provided that the records so kept can be converted into clearly legible form within a reasonable time. The corporation shall so convert any records so kept upon the request of any person entitled to inspect the same. 20 ARTICLE X AMENDMENTS SECTION 10.1. Except as provided in Sections 2.2, 3.1, and 3.2 of these By-Laws, any provision of these By-Laws may be altered, amended or repealed from time to time by the affirmative vote of a majority of the directors then qualified and acting at any regular meeting of the Board at which a quorum is present, or at any special meeting of the Board at which a quorum is present if notice of the proposed alteration, amendment or repeal be contained in the notice of such special meeting; provided, however, that no reduction in the number of directors shall have the effect of removing any director prior to the expiration of his term in office. March 29, 1969 Amended and Restated June 30, 1969 Amended January 3, 1980 Amended January 31, 1981 Amended February 11, 1983 Amended March 26, 1983 Amended June 25, 1985 Amended October 8, 1985 Amended December 1, 1988 Amended January 20, 1992 Amended January 27, 1994 Amended January 24, 1996 21 EX-11 3 EXHIBIT 11 CLARCOR INC. EXHIBIT 11 -- COMPUTATIONS OF PER SHARE EARNINGS FOR THE FIVE YEARS ENDED NOVEMBER 30, 1995 (DOLLARS IN THOUSANDS)
FISCAL YEARS ENDED NOVEMBER 30, ------------------------------------------------------------------------- AVERAGE SHARES OUTSTANDING 1995 1994 1993 1992 1991 - ------------------------------------------------ ------------- ------------- ------------- ------------- ------------- 1. Average number of shares outstanding......................... 14,800,872 14,813,925 14,837,741 14,972,639 14,873,282 2. Net additional shares resulting from assumed exercise of stock options*............................ 316,630 225,599 213,725 230,202 253,518 ------------- ------------- ------------- ------------- ------------- 3. Adjusted average shares outstanding for fully diluted computation (1 plus 2)............................. 15,117,502 15,039,524 15,051,466 15,202,841 15,126,800 ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- Earnings per share of common stock: Primary.............................. $1.48 $1.43 $1.16 $0.94 $1.26 ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- Assuming full dilution............... $1.45 $1.41 $1.15 $0.93 $1.24 ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- - ------------------------ * 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.(A) 4 EXHIBIT 13(A) CONSOLIDATED BALANCE SHEETS EXHIBIT 13(a)(ii) ................................................................................ NOVEMBER 30, 1995 AND 1994 (DOLLARS IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------- ASSETS 1995 1994 - ---------------------------------------------------------------------------------------------------- Current assets: Cash and short-term cash investments. . . . . . . . . . . . . . . $ 18,769 $ 19,567 Accounts receivable, less allowance for losses of $1,557 for 1995 and $1,580 for 1994 . . . . . . . . . . 50,034 42,545 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,972 30,258 Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . 2,018 2,926 Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . 3,777 3,154 ----------------------- Total current assets . . . . . . . . . . . . . . 117,570 98,450 ----------------------- Marketable equity securities, at fair value . . . . . . . . . . . 4,696 3,655 Investment in affiliates. . . . . . . . . . . . . . . . . . . . . -- 248 Plant assets, at cost less accumulated depreciation . . . . . . . 67,036 52,615 Excess of cost over fair value of assets acquired, less accumulated amortization. . . . . . . . . . . . . . . 14,893 15,191 Pension assets. . . . . . . . . . . . . . . . . . . . . . . . . . 11,218 10,237 Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 7,849 8,052 ----------------------- Total assets . . . . . . . . . . . . . . . . . . $223,262 $188,448 ----------------------- ----------------------- LIABILITIES - ---------------------------------------------------------------------------------------------------- Current liabilities: Current portion of long-term debt . . . . . . . . . . . . . . . . $ 7,596 $ 7,579 Accounts payable and accrued liabilities. . . . . . . . . . . . . 32,851 29,831 Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 2,013 2,051 ----------------------- Total current liabilities. . . . . . . . . . . . 42,460 39,461 ----------------------- Long-term debt, less current portion . . . . . . . . . . . . . . . . . 34,417 17,013 Postretirement health care benefits. . . . . . . . . . . . . . . . . . 2,908 3,039 Long-term pension liabilities. . . . . . . . . . . . . . . . . . . . . 5,226 5,616 Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . . 6,228 5,686 Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . 867 -- Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . 341 171 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 14,825,296 in 1995 and 14,803,788 in 1994 . . . . . . . . . . . . . . . . . . . . 14,825 14,804 Capital in excess of par value. . . . . . . . . . . . . . . . . . 1,121 183 Foreign currency translation adjustments. . . . . . . . . . . . . (1,607) (609) Unrealized holding gain on marketable equity securities, net of taxes . . . . . . . . . . . . . . . . . 1,285 911 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . 115,191 103,013 ----------------------- 130,815 118,302 Common stock in treasury at cost; 42,900 shares . . . . . . . . . -- (840) ----------------------- Total shareholders' equity . . . . . . . . . . . 130,815 117,462 ----------------------- Total liabilities and shareholders' equity . . . $223,262 $188,448 ----------------------- -----------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS. 26 CONSOLIDATED STATEMENTS OF EARNINGS EXHIBIT 13(a)(iii) ................................................................................ FOR THE YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993 (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------------------------- 1995 1994 1993 - --------------------------------------------------------------------------------------------------- Net sales. . . . . . . . . . . . . . . . . . . . . . . $290,194 $270,123 $225,319 Cost of sales. . . . . . . . . . . . . . . . . . . . . 209,653 192,456 155,615 ------------------------------------- Gross profit. . . . . . . . . . . . . . . . . . 80,541 77,667 69,704 Selling and administrative expenses. . . . . . . . . . 45,176 45,301 40,637 ------------------------------------- Operating profit. . . . . . . . . . . . . . . . 35,365 32,366 29,067 ------------------------------------- Other income (expense): Interest expense. . . . . . . . . . . . . . . . . (2,693) (2,788) (3,525) Interest income . . . . . . . . . . . . . . . . . 830 548 875 Equity in net earnings of affiliate . . . . . . . 246 959 745 Gain on sale of investment in affiliate . . . . . -- 4,166 -- Minority interests in earnings of subsidiaries. . (71) (2) -- Other, net. . . . . . . . . . . . . . . . . . . . 459 (2,689) (84) ------------------------------------- (1,229) 194 (1,989) ------------------------------------- Earnings before income taxes and cumulative effect of change in accounting method. . . . . . . . . . . . 34,136 32,560 27,078 Provision for income taxes . . . . . . . . . . . . . . 12,182 11,935 9,827 ------------------------------------- Earnings before cumulative effect of change in accounting method. . . . . . 21,954 20,625 17,251 Cumulative effect of change in accounting method. . . . . . . . . . -- 630 -- ------------------------------------- Net earnings . . . . . . . . . . . . . . . . . . . . . $21,954 $21,255 $17,251 ------------------------------------- ------------------------------------- Net earnings per common share: Earnings before cumulative effect of change in accounting method . . . . . . . . $1.48 $1.39 $1.16 Cumulative effect of accounting change. . . . . . . -- 0.04 -- ------------------------------------- $1.48 $1.43 $1.16 ------------------------------------- -------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS. 27 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY EXHIBIT 13(a)(iv) ................................................................................ FOR THE YEARS ENDED NOVEMBER 30, 1995, 1994 AND 1993 (DOLLARS IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------------------------------------ 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, 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 Net earnings . . . . . . . . . . . -- -- -- -- -- -- -- 21,954 Retirement of treasury stock . . . (42,900) (43) (42,900) (840) (351) -- -- (446) Stock options exercised. . . . . . 28,849 29 -- -- 547 -- -- -- Issuance of stock under award plans . . . . . . . . . . 35,559 35 -- -- 742 -- -- -- Cash dividends -- $.6325 per common share. . . . . . . . -- -- -- -- -- -- -- (9,330) Unrealized holding gain on marketable equity securities. . -- -- -- -- -- -- 374 -- Translation adjustments. . . . . . -- -- -- -- -- (998) -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Balance, November 30, 1995 . . . . 14,825,296 $14,825 -- $ -- $1,121 $(1,607) $1,285 $115,191 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS. 28 CONSOLIDATED STATEMENTS OF CASH FLOWS EXHIBIT 13(a)(v) .............................................................................. FOR THE YEARS ENDED NOVEMBER 30, 1995, 1994 and 1993 (DOLLARS IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------------------- 1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net earnings and cumulative effect of accounting change . . . . . $21,954 $21,255 $17,251 Adjustments to reconcile net earnings to net cash provided by operations: Depreciation . . . . . . . . . . . . . . . . . . . . . . . . 7,736 6,778 5,816 Amortization . . . . . . . . . . . . . . . . . . . . . . . . 508 514 479 Equity in net earnings of affiliate. . . . . . . . . . . . . (246) (959) (745) Gain on sale of investment in affiliate. . . . . . . . . . . -- (4,166) -- Minority interests in earnings of subsidiaries . . . . . . . 71 2 -- Net (gain) loss on dispositions of plant assets. . . . . . . (177) 1,862 168 Cumulative effect of accounting change . . . . . . . . . . . -- (630) -- Changes in assets and liabilities: Accounts receivable. . . . . . . . . . . . . . . . . . . . . (8,030) (1,981) (3,357) Inventories . . . . . . . . . . . . . . . . . . . . . . (6,316) (2,863) 2,992 Prepaid expenses. . . . . . . . . . . . . . . . . . . . 899 (1,786) 707 Accounts payable and accrued liabilities. . . . . . . . 4,522 4,021 (2,319) Pension assets and liabilities, net . . . . . . . . . . (1,713) 681 (1,248) Income taxes. . . . . . . . . . . . . . . . . . . . . . 87 (137) (605) Deferred income taxes . . . . . . . . . . . . . . . . . (81) 2,012 853 --------------------------------------- Net cash provided by operating activities . . . . . 19,214 24,603 19,992 --------------------------------------- Cash flows from investing activities: Proceeds from sale of investment in affiliate . . . . . . . . . . -- 10,731 -- Business acquisitions, net of cash acquired . . . . . . . . . . . (14,125) (1,512) (12,824) Dividends from affiliate, net of reinvestments. . . . . . . . . . (327) 363 439 Additions to plant assets . . . . . . . . . . . . . . . . . . . . (13,910) (11,416) (10,218) Proceeds from sale of Precision Products Group. . . . . . . . . . -- -- 20,700 Dispositions of plant assets. . . . . . . . . . . . . . . . . . . 72 331 2 Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . (63) 1,034 708 --------------------------------------- Net cash used in investing activities . . . . . . . (28,353) (469) (1,193) --------------------------------------- Cash flows from financing activities: Borrowing under long-term debt. . . . . . . . . . . . . . . . . . 25,000 -- -- Reduction of long-term debt . . . . . . . . . . . . . . . . . . . (7,579) (7,946) (7,614) Sales of capital stock, stock option plan . . . . . . . . . . . . 278 69 7 Purchases of treasury stock . . . . . . . . . . . . . . . . . . . -- (1,327) (3,369) Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . (9,330) (9,201) (9,036) --------------------------------------- Net cash provided (used) in financing activities. . 8,369 (18,405) (20,012) --------------------------------------- Net effect of exchange rate changes on cash. . . . . . . . . . . . . . (28) -- -- --------------------------------------- Net change in cash and short-term cash investments . . . . . . . . . . (798) 5,729 (1,213) Cash and short-term cash investments, beginning of year. . . . . . . . 19,567 13,838 15,051 --------------------------------------- Cash and short-term cash investments, end of year. . . . . . . . . . . $18,769 $19,567 $13,838 --------------------------------------- ---------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS. 29 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS EXHIBIT 13(a)(vi) ................................................................................ (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) At November 30, 1995, the Company has two principal product segments: Filtration Products and Consumer Products. The Company acquired the filtration business of Hastings Manufacturing Company during 1995 and Airguard Industries and Guardian/U.E.L. in 1993, all to be part of Filtration Products. 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 interests represent a minority shareholder's 10% ownership of the common stock of Filtros Baldwin de Mexico (FIBAMEX) and a minority shareholder's 48% ownership of Baldwin Filters (Aust.) Pty. Limited. 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 On November 30, 1994, the Company adopted Statement of Financial Accounting Standards No. 115, (SFAS 115) "Accounting for Certain Investments in Debt and Equity Securities." 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. The provision for depreciation is based on 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 The excess of cost over fair value of assets acquired is being amortized over a forty-year period, using the straight-line method subject to impairment write-offs determined by underlying cash flows. Accumulated amortization was $5,913 and $5,405 at November 30, 1995 and 1994, 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 which are described in Footnote L. CONCENTRATIONS OF CREDIT Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of short-term cash investments and trade receivables. The Company places its short-term cash investments with high credit quality financial institutions 30 and in high grade municipal securities. At November 30, 1995 and 1994, the Company held short-term, tax exempt securities with a total cost of $17,225 and $13,471, 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." 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 2, 1995, December 3, 1994, and November 27, 1993, were comprised of fifty-two, fifty-three, 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 Certain reclassifications have been made to conform prior year's data to the current presentation. B. ACQUISITIONS AND INVESTMENT IN AFFILIATE ACQUISITIONS The Company purchased certain assets comprising the filtration business of Hastings Manufacturing Company on September 4, 1995 for $14,125 in cash, including acquisition expenses. The business is a manufacturer of automotive and light truck filter products. The acquisition has been accounted for by the purchase method of accounting and the operating results of the business are included in the Company's consolidated statement of earnings from the date of acquisition. During 1994, FIBAMEX, in which the Company owns a 90% equity interest, was incorporated in Mexico. 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. 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 dates 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 acquisitions had occurred at the beginning of the period presented immediately preceding the acquisitions 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. 31 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ................................................................................ (Continued) Unaudited pro forma net sales for the Company would have been $320,194, $310,493, and $248,171 for the years ended November 30, 1995, 1994, and 1993, respectively. Net earnings and earnings per share for these periods would not have been significantly affected. INVESTMENT IN AFFILIATE 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 $4,696 and $3,655 as of November 30, 1995 and 1994, respectively. The 1995 and 1994 quoted market values include an unrealized holding gain of $1,285 and $911, net of deferred income taxes, which has been included as a component of shareholders' equity at November 30, 1995 and 1994, respectively. The Company has a standstill agreement which limits the Company's ability to own greater than a 20% interest in G.U.D. Holdings Limited 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 62% and 65% of the Company's inventories at November 30, 1995 and 1994, 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:
1995 1994 ------------------ Raw materials. . . . . . . . . . . $14,285 $12,836 Work-in-process. . . . . . . . . . 8,392 4,624 Finished products. . . . . . . . . 23,051 15,552 ------------------ Total at FIFO . . . . . . . 45,728 33,012 Less excess of FIFO cost over LIFO values . . . 2,756 2,754 ------------------ $42,972 $30,258 ------------------ ------------------
During 1994 and 1993, LIFO inventory quantities were reduced resulting in a partial liquidation of the LIFO bases, the effect of which increased net earnings by approximately $480 and $650, respectively. D. PLANT ASSETS Plant assets at November 30, 1995 and 1994 were as follows:
1995 1994 ------------------ Land . . . . . . . . . . . . . . . $ 2,483 $ 2,015 Buildings and building fixtures. . 42,670 39,095 Machinery and equipment. . . . . . 90,034 74,364 Construction-in-process. . . . . . 8,176 6,185 ------------------ 143,363 121,659 Less accumulated depreciation. . . 76,327 69,044 ------------------ $67,036 $52,615 ------------------ ------------------
E. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities at November 30, 1995 and 1994 were as follows:
1995 1994 ------------------ Accounts payable . . . . . . . . . $20,378 $13,769 Accrued salaries, wages and commissions . . . . . . . . 3,537 3,874 Compensated absences . . . . . . . 2,726 2,628 Accrued pension liabilities. . . . 996 2,414 Other accrued liabilities. . . . . 5,214 7,146 ------------------ $32,851 $29,831 ------------------ ------------------
32 F. LONG-TERM DEBT Long-term debt at November 30, 1995 and 1994 consists of the following:
1995 1994 ------------------ Promissory note, interest payable quarterly at 9.71%. . . . . . . $13,416 $20,416 Promissory note, interest payable semi-annually at 6.69%. . . . . 25,000 - Other obligations, at 6% - 10% interest. . . . . . 3,597 4,176 ------------------ 42,013 24,592 Less current portion . . . . . . . 7,596 7,579 ------------------ $34,417 $17,013 ------------------ ------------------
The promissory notes mature March 31, 1997 and July 25, 2004, respectively, but the Company is required to prepay, without premium, certain principal amounts as stated in the agreement. A fair value estimate of $41,389 and $24,400 for the long-term debt, in 1995 and 1994, respectively, is based on the current interest rates available to the Company for debt with similar remaining maturities. Under the note agreements, the Company must meet certain restrictive covenants. The primary covenants include maintaining minimum consolidated net worth at $100,000 and limiting new borrowings as stipulated in the agreement. 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. On December 6, 1995, the Company entered into a $25,000 revolving credit facility with a financial institution. The agreement related to this obligation includes certain restrictive covenants that are similar to the promissory notes. The agreement expires in 2000. Principal maturities of long-term debt for the next five fiscal years ending November 30, approximates: $7,596 in 1996, $6,986 in 1997, $448 in 1998, $256 in 1999, $5,280 in 2000 and $21,447 thereafter. Interest paid totaled $2,226, $2,916 and $3,560 during 1995, 1994 and 1993, 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. The table on the following page sets forth the plans' funded status and amounts recognized in the Company's consolidated balance sheet at November 30: 33 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ................................................................................ (Continued)
1995 1994 ------------------------------------------------ Assets Accumulated Assets Accumulated Exceed Benefits Exceed Benefits Accumulated Exceed Accumulated Exceed Benefits Assets Benefits Assets ------------------------------------------------ Accumulated benefit obligation including vested benefits of $49,294 and $47,080 in 1995 and 1994, respectively. . . . . . . . $46,120 $ 6,222 $41,841 $ 8,051 ------------------------------------------------ ------------------------------------------------ Plan assets at fair value . . . . . . . $62,647 $ - $56,848 $ - Less projected benefit obligation for service rendered to date. . . . . . 51,374 7,011 46,380 9,137 ------------------------------------------------ Plan assets in excess of (less than) projected benefit obligation. . . . . 11,273 (7,011) 10,468 (9,137) Unrecognized net loss from past experience different from that assumed . . . . . 5,385 1,398 6,297 2,286 Unrecognized net asset being recognized over approximately 15 years. . . (5,440) - (6,528) - Recognition of additional minimum liability . . . . . - (609) - (1,179) ------------------------------------------------ Accrued pension asset (liability) for defined benefit plans . . . $11,218 $(6,222) $10,237 $(8,030) ------------------------------------------------ ------------------------------------------------
In addition to the plan assets related to qualified plans, the Company has funded approximately $2,800 and $2,900 at November 30, 1995 and 1994, respectively, 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:
1995 1994 1993 ---------------------------------- Service cost - benefits earned during the period . . . . . . . . $1,789 $1,979 $2,127 Interest cost on projected benefit obligation . . . . . . . . 4,139 4,046 3,644 Actual return on assets. . . . (8,791) (298) (6,581) Net amortization and deferral. . . . . . . . 3,208 (4,646) 918 ---------------------------------- Net pension expense. . . . . . $ 345 $1,081 $ 108 ---------------------------------- ----------------------------------
The projected benefit obligation has been determined with a weighted average discount rate of 7.5% and 8.0% in 1995 and 1994, 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% in 1995 and 1994. 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 $476, $499 and $400 in 1995, 1994 and 1993, 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 benefits if they meet minimum age and service requirements and are eligible for retirement benefits. The Company has the right to modify or terminate these benefits. The following table sets forth the plan's obligation and cost at November 30, 1995 and 1994:
1995 1994 ----------------- Accumulated postretirement benefit obligation: Retirees . . . . . . . . . . . . . . . . $2,260 $2,398 Fully eligible active plan participants . . 12 13 Other active plan participants. . . . . . . 606 506 ----------------- Accumulated postretirement benefit obligation. . . . . . . . . . . . . 2,878 2,917 Unrecognized gain. . . . . . . . . . . . . . . 327 419 ----------------- Accrued postretirement benefit liability . . . 3,205 3,336 Less current portion, included in accrued liabilities . . . 297 297 ----------------- $2,908 $3,039 ----------------- -----------------
34 The net periodic postretirement benefit cost includes the following components for the three years ended November 30:
1995 1994 1993 --------------------------- Service cost-benefits attributed to service during the period. . . . . . . . $ 25 $ 28 $ 23 Interest cost on accumulated postretirement benefit obligations. . . . . 218 216 275 --------------------------- Net periodic postretirement benefit cost . . . $243 $244 $298 --------------------------- ---------------------------
Substantially all future health care benefit cost increases will be assumed by the participants, and therefore future increases in 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 7.5% in 1995 and 8.0% in 1994. I. INCOME TAXES The provision for income taxes consists of:
1995 1994 1993 ------------------------------ Current: Federal . . . . . . . . . . . . . . . . $11,000 $ 8,886 $ 7,573 State . . . . . . . . . . . . . . . . . 1,372 1,577 1,342 Foreign . . . . . . . . . . . . . . . . 135 84 59 Deferred . . . . . . . . . . . . . . . . . (325) 1,388 853 ------------------------------ $12,182 $11,935 $ 9,827 ------------------------------ ------------------------------
Income taxes paid, net of refunds, totaled $11,868, $10,087 and $9,860 during 1995, 1994 and 1993 respectively. The components of the net deferred tax liability as of November 30, 1995 and 1994 were as follows:
1995 1994 ----------------- Deferred tax assets: Deferred compensation . . . . . . . . . $1,352 $1,591 Other postretirement benefits . . . . . 1,191 1,335 Foreign net operating loss carryforward. . . . . . . . . . 1,132 1,111 Other items . . . . . . . . . . . . . . 2,617 2,117 Valuation allowance . . . . . . . . . . - (1,111) ----------------- Total gross deferred tax assets. . . . . . 6,292 5,043 Deferred tax liabilities: Pensions. . . . . . . . . . . . . . . . (2,216) (2,026) Plant assets. . . . . . . . . . . . . . (5,210) (4,645) Other items . . . . . . . . . . . . . . (1,317) (904) ----------------- Total gross deferred tax liabilities . . . . . . . . . . . . (8,743) (7,575) ----------------- Net deferred tax liability . . . . . . . . $(2,451) $(2,532) ----------------- -----------------
Deferred tax assets, including foreign net operating loss carryforwards, are expected to be realized through reversal of taxable temporary differences and future earnings. The cumulative effect of adopting SFAS 109 in the first quarter of 1994 was $630. In 1993, deferred income taxes resulted principally from timing differences in the recognition of depreciation, accrued pension liabilities and compensation expenses. The deferred income tax provision in 1993 includes $487 resulting from the excess of tax over book depreciation; $2 resulting from differences in the recognition of accrued pension liabilities; and $305 resulting from differences in recognizing compensation expenses. 35 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ................................................................................ (Continued) Earnings before income taxes and cumulative effect of change in accounting method included the following components:
1995 1994 1993 ------------------------------ Domestic income. . . . . . . . . . . . . . $33,612 $33,511 $28,950 Foreign income (loss). . . . . . . . . . . 524 (951) (1,872) ------------------------------ Total. . . . . . . . . . . . . . . . . . . $34,136 $32,560 $27,078 ------------------------------ ------------------------------
The provision for income taxes 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 ---------------------------- 1995 1994 1993 ---------------------------- Statutory U.S. tax rates . . . . . . . . . 35.0% 35.0% 34.9% State income taxes, net of federal benefit. . . . . . . . . 2.6 3.2 3.2 Reduction of previously established accruals. . . . . . . . . . - (1.4) (2.6) Capital loss utilization . . . . . . . . . - (1.3) - Foreign tax credit (utilization) . . . . . (0.1) - (1.7) Foreign net operating loss (utilization). . . . . . . . . . . (3.3) 1.3 2.6 Other, net . . . . . . . . . . . . . . . . 1.5 (0.1) (0.1) ---------------------------- Consolidated effective income tax rate . . . . . . . . . . . . 35.7% 36.7% 36.3% ---------------------------- ----------------------------
J. CONTINGENCIES 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. 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 36 1984 Stock Option Plan, the 1987 Long Range Performance Share Plan, and the 1990 Director's Restricted Stock Compensation Plan. 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:
1995 1994 1993 -------------------------------- Outstanding at beginning of year . . . . . . . . . . . . . . . . 1,112,269 862,206 852,609 Granted (prices ranging from $16.50 to $19.875 per share). . . . . . 195,250 261,500 158,000 Exercised/surrendered. . . . . . . . . . . (54,613) (11,437) (148,403) -------------------------------- Outstanding at end of year (prices ranging from $9.33 to $19.875 per share) . . . . . . . . . 1,252,906 1,112,269 862,206 -------------------------------- -------------------------------- Exercisable at end of year . . . . . . . . 726,000 572,033 431,891 -------------------------------- --------------------------------
On October 23, 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock Based Compensation" (SFAS 123). SFAS 123 encourages, but does not require, companies to adopt a fair value based method for determining expenses related to stock based compensation. Companies who do not adopt the provisions of SFAS 123 for recognition purposes must disclose pro forma effects as if the fair value based method of accounting had been applied. The Company does not intend to adopt the new recognition aspects of SFAS 123 but will provide required disclosure of pro forma information beginning in 1997. The pro forma impact has not yet been determined. 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 $446, $284 and $364 in 1995, 1994 and 1993, respectively. Distribution of Company common stock and cash for the performance periods ended November 30, 1995, 1994 and 1993 were $312, $237 and $432, respectively. 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 $104, $125 and $131 in 1995, 1994 and 1993, respectively. During 1995, $26 of Company common stock were issued under the plan. 37 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ................................................................................ (Continued) M. UNAUDITED QUARTERLY FINANCIAL DATA The unaudited quarterly data for 1995 and 1994 are as follows:
First Second Third Fourth Quarter Quarter Quarter Quarter Total - -------------------------------------------------------------------------------- 1995: Net sales. . . . . . . $62,137 $70,478 $71,829 $85,750 $290,194 Gross profit . . . . . 17,692 20,099 20,480 22,270 80,541 Net earnings . . . . . 3,972 4,906 5,886 7,190 21,954 Net earnings per common share . . . . . . . $ 0.27 $ 0.33 $ 0.40 $ 0.48 $ 1.48 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: Earnings before accounting change. . . . . . . $ 0.23 $ 0.28 $ 0.40 $ 0.48 $ 1.39 Cumulative effect of accounting change. . . . . . . 0.04 - - - 0.04 ------------------------------------------------------- $ 0.27 $ 0.28 $ 0.40 $ 0.48 $ 1.43 ------------------------------------------------------- -------------------------------------------------------
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 quarter of 1994, LIFO inventory reductions increased net earnings by approximately $480. N. SEGMENT INFORMATION The Company operates in two principal product segments: Filtration Products and Consumer Products. Filtration Products manufactures and markets a complete line of filters used in the filtration of internal combustion engines, clean rooms, and lubrication oils, air, fuel, coolant, hydraulic and transmission fluids. Consumer Products manufactures and markets plastic closures, custom designed lithographed metal and metal-plastic 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, 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, 1995, 1994 and 1993 are as follows:
1995 1994 1993 - -------------------------------------------------------------------------------- Net sales: Filtration Products . . . . $221,034 $199,793 $156,165 Consumer Products . . . . . 69,160 70,330 69,154 --------------------------------------- Total. . . . . . . . . . $290,194 $270,123 $225,319 --------------------------------------- --------------------------------------- - -------------------------------------------------------------------------------- Operating profit: Filtration Products . . . . $ 28,698 $ 26,597 $ 19,661 Consumer Products . . . . . 6,667 5,769 9,406 --------------------------------------- Total. . . . . . . . . . $ 35,365 $ 32,366 $ 29,067 --------------------------------------- --------------------------------------- - -------------------------------------------------------------------------------- Assets: Filtration Products . . . . $138,706 $114,501 $105,278 Consumer Products . . . . . 39,853 32,386 30,377 Corporate . . . . . . . . . 44,703 41,561 37,912 --------------------------------------- Total. . . . . . . . . . $223,262 $188,448 $173,567 --------------------------------------- --------------------------------------- - -------------------------------------------------------------------------------- Additions to plant assets: Filtration Products . . . . $ 8,142 $ 6,715 $ 6,339 Consumer Products . . . . . 5,591 4,157 3,816 Corporate . . . . . . . . . 177 544 63 --------------------------------------- Total. . . . . . . . . . $ 13,910 $ 11,416 $ 10,218 --------------------------------------- --------------------------------------- - -------------------------------------------------------------------------------- Depreciation: Filtration Products . . . . $ 4,742 $ 3,840 $ 2,758 Consumer Products . . . . . 2,787 2,763 2,912 Corporate . . . . . . . . . 207 175 146 --------------------------------------- Total. . . . . . . . . . $ 7,736 $ 6,778 $ 5,816 --------------------------------------- ---------------------------------------
38 REPORT OF INDEPENDENT ACCOUNTANTS EXHIBIT 13(a)(vii) ............................................................................... 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, 1995 and 1994, and the related consolidated statements of earnings, shareholders' equity, and cash flows for each of the three years in the period ended November 30, 1995. 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, 1995 and 1994, and the consolidated results of their operations and their cash flows for each of the three years in the period ended November 30, 1995, in conformity with generally accepted accounting principles. As discussed in Note A to the consolidated financial statements, the Company 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 8, 1996 39 MANAGEMENT'S REPORT ON RESPONSIBILITY EXHIBIT 13(a)(viii) ................................................................................ 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/ Bruce A. Klein /s/ William F. Knese Lawrence E. Gloyd Bruce A. Klein William F. Knese Chairman of the Board & Vice President-Finance & Vice President, Chief Executive Officer Chief Financial Officer Treasurer & Controller January 8, 1996 40 11 - YEAR FINANCIAL SUMMARY EXHIBIT 13(a)(ix) ................................................................................ [LOGO]
- ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- 1995 1994 1993 1992 1991 1990 - ---------------------------------------------------------------------------------------------------------------------------------- PER SHARE Equity . . . . . . . . . . . . . . . . . . $ 8.82 $ 7.96 $ 7.06 $ 6.64 $ 6.42 $ 5.57 Earnings from Continuing Operations. . . . 1.48 1.39 1.16 1.10 1.24 1.29 Net Earnings . . . . . . . . . . . . . . . 1.48 1.43 1.16 0.94 1.26 1.37 Dividends. . . . . . . . . . . . . . . . . 0.6325 0.6225 0.610 0.600 0.550 0.521 Price: High. . . . . . . . . . . . . . . . 27.00 22.38 20.00 22.50 22.67 17.83 Low . . . . . . . . . . . . . . . . 18.13 15.88 16.00 15.00 13.00 11.83 - ---------------------------------------------------------------------------------------------------------------------------------- EARNINGS DATA ($000) Net Sales. . . . . . . . . . . . . . . . . $290,194 $270,123 $225,319 $188,625 $179,538 $170,279 Operating Profit . . . . . . . . . . . . . 35,365 32,366 29,067 27,630 30,853 30,832 Interest Expense . . . . . . . . . . . . . 2,693 2,788 3,525 3,803 3,682 3,675 Pretax Income. . . . . . . . . . . . . . . 34,136 32,560 27,078 25,305 28,543 30,204 Income Taxes . . . . . . . . . . . . . . . 12,182 11,935 9,827 8,796 10,068 10,999 Earnings from Continuing Operations. . . . 21,954 20,625 17,251 16,509 18,475 19,205 Earnings from Discontinued Operations. . . -- -- -- -- 297 1,250 Net Earnings . . . . . . . . . . . . . . . 21,954 21,255 17,251 14,139 18,772 20,405 Average Shares Outstanding . . . . . . . . 14,801 14,814 14,838 14,973 14,873 14,843 - ---------------------------------------------------------------------------------------------------------------------------------- EARNINGS ANALYSIS Operating Margin . . . . . . . . . . . . . 12.2% 12.0% 12.9% 14.6% 17.2% 18.1% Pretax Margin. . . . . . . . . . . . . . . 11.8% 12.1% 12.0% 13.4% 15.9% 17.7% Effective Tax Rate . . . . . . . . . . . . 35.7% 36.7% 36.3% 34.8% 35.3% 36.4% Net Margin-Continuing Operations . . . . . 7.6% 7.6% 7.7% 8.8% 10.3% 11.3% Net Margin . . . . . . . . . . . . . . . . 7.6% 7.9% 7.7% 7.5% 10.5% 12.0% Asset Turnover . . . . . . . . . . . . . . 1.54x 1.56x 1.40x 1.19x 1.25x 1.30x Return on Assets . . . . . . . . . . . . . 11.6% 12.2% 10.7% 8.9% 13.0% 15.6% Financial Leverage . . . . . . . . . . . . 1.61x 1.66x 1.62x 1.66x 1.74x 1.80x Return on Equity . . . . . . . . . . . . . 18.7% 20.3% 17.3% 14.8% 22.7% 28.1% Dividend Payout to Net Earnings. . . . . . 42.5% 43.3% 52.4% 63.4% 43.5% 37.8% - ---------------------------------------------------------------------------------------------------------------------------------- BALANCE SHEET ($000) Current Assets . . . . . . . . . . . . . . $117,570 $ 98,450 $ 86,161 $ 93,627 $ 75,207 $ 72,623 Plant Assets, net. . . . . . . . . . . . . 67,036 052,615 47,636 35,584 45,712 42,748 Total Assets . . . . . . . . . . . . . . . 223,262 188,448 173,567 161,255 157,999 144,127 Current Liabilities. . . . . . . . . . . . 42,460 39,461 33,288 25,272 20,570 20,758 Long-Term Debt . . . . . . . . . . . . . . 34,417 17,013 24,617 29,325 35,834 35,810 Shareholders' Equity . . . . . . . . . . . 130,815 117,462 104,641 99,551 95,662 82,689 - ---------------------------------------------------------------------------------------------------------------------------------- BALANCE SHEET ANALYSIS ($000) Debt to Capitalization . . . . . . . . . . 20.8% 12.7% 19.0% 22.8% 27.3% 30.2% Working Capital. . . . . . . . . . . . . . $ 75,110 $ 58,989 $ 52,873 $ 68,355 $ 54,637 $ 51,865 Quick Ratio. . . . . . . . . . . . . . . . 1.6:1 1.6:1 1.6:1 2.5:1 2.1:1 2.1:1 - ---------------------------------------------------------------------------------------------------------------------------------- CASH FLOW DATA ($000) From Operations. . . . . . . . . . . . . . $ 19,214 $ 24,603 $ 19,992 $ 22,807 $ 18,343 $ 25,284 For Investment . . . . . . . . . . . . . . (28,353) (469) (1,193) (7,185) (14,719) (4,973) From/(for) Financing . . . . . . . . . . . 8,369 (18,405) (20,012) (10,200) (8,805) (10,316) Change in Cash & Equivalents . . . . . . . (798) 5,729 (1,213) 5,422 (5,181) 9,995 Capital Expenditures . . . . . . . . . . . 13,910 11,416 10,218 7,450 8,128 8,638 Depreciation . . . . . . . . . . . . . . . 7,736 6,778 5,816 7,044 6,707 6,619 Dividends Paid . . . . . . . . . . . . . . 9,330 9,201 9,036 8,958 8,165 7,708 Interest (Income)/Expense. . . . . . . . . 1,863 2,240 2,650 3,505 2,560 3,143 Income Taxes Paid. . . . . . . . . . . . . 11,868 10,087 9,860 10,982 9,474 10,068 - ---------------------------------------------------------------------------------------------------------------------------------- CASH FLOW ANALYSIS ($000) Operating Cash Flow (1). . . . . . . . . . $ 32,945 $ 36,930 $ 32,502 $ 37,294 $ 30,377 $ 38,495 Net Cash Flow (2). . . . . . . . . . . . . 19,035 25,514 22,284 29,844 22,249 29,857 Elective Cash Flow (3) . . . . . . . . . . (4,026) 3,986 738 6,399 2,050 8,938 - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- 1989 1988 1987 1986 1985 - ---------------------------------------------------------------------------------------------------------------------------------- PER SHARE Equity . . . . . . . . . . . . . . . . . . $ 4.83 $ 6.99 $ 6.36 $ 5.76 $ 5.22 Earnings from Continuing Operations. . . . 0.69 1.02 0.95 0.90 0.86 Net Earnings . . . . . . . . . . . . . . . 0.42 1.15 1.04 0.96 0.93 Dividends. . . . . . . . . . . . . . . . . 0.480 0.453 0.431 0.418 0.391 Price: High. . . . . . . . . . . . . . . . 18.92 14.59 16.89 14.17 12.78 Low . . . . . . . . . . . . . . . . 11.75 9.75 9.25 10.09 10.00 - ---------------------------------------------------------------------------------------------------------------------------------- EARNINGS DATA ($000) Net Sales. . . . . . . . . . . . . . . . . $156,530 $149,468 $146,225 $135,319 $143,716 Operating Profit . . . . . . . . . . . . . 2,128 27,287 29,045 25,032 27,222 Interest Expense . . . . . . . . . . . . . 1,327 151 176 192 216 Pretax Income. . . . . . . . . . . . . . . 2,084 28,833 30,378 29,769 30,139 Income Taxes . . . . . . . . . . . . . . . 0,474 10,647 13,270 13,566 14,492 Earnings from Continuing Operations. . . . 11,610 18,186 17,108 16,203 15,647 Earnings from Discontinued Operations. . . (4,493) 2,412 1,672 1,165 1,250 Net Earnings . . . . . . . . . . . . . . . 7,117 20,598 18,780 17,368 16,897 Average Shares Outstanding . . . . . . . . 17,040 17,926 18,121 18,094 18,074 - ---------------------------------------------------------------------------------------------------------------------------------- EARNINGS ANALYSIS Operating Margin . . . . . . . . . . . . . 14.1% 18.3% 19.9% 18.5% 18.9% Pretax Margin. . . . . . . . . . . . . . . 14.1% 19.3% 20.8% 22.0% 21.0% Effective Tax Rate . . . . . . . . . . . . 47.4% 36.9% 43.7% 45.6% 48.1% Net Margin-Continuing Operations . . . . . 7.4% 12.2% 11.7% 12.0% 10.9% Net Margin . . . . . . . . . . . . . . . . 4.5% 13.8% 12.8% 12.8% 11.8% Asset Turnover . . . . . . . . . . . . . . 1.09x 1.11x 1.19x 1.16x 1.34x Return on Assets . . . . . . . . . . . . . 4.9% 15.3% 15.3% 14.9% 15.7% Financial Leverage . . . . . . . . . . . . 1.16x 1.17x 1.18x 1.23x 1.27x Return on Equity . . . . . . . . . . . . . 5.7% 17.9% 18.0% 18.4% 20.0% Dividend Payout to Net Earnings. . . . . . 116.5% 39.4% 41.6% 43.5% 41.8% - ---------------------------------------------------------------------------------------------------------------------------------- BALANCE SHEET ($000) Current Assets . . . . . . . . . . . . . . $ 58,019 $ 70,028 $ 67,523 $ 75,457 $ 72,837 Plant Assets, net. . . . . . . . . . . . . 44,223 42,063 39,828 32,431 27,934 Total Assets . . . . . . . . . . . . . . . 131,009 143,842 134,877 122,779 116,184 Current Liabilities. . . . . . . . . . . . 21,405 14,244 15,899 13,153 15,815 Long-Term Debt . . . . . . . . . . . . . . 32,634 1,116 1,507 1,634 1,875 Shareholders' Equity . . . . . . . . . . . 72,662 125,012 115,015 104,186 94,372 - ---------------------------------------------------------------------------------------------------------------------------------- BALANCE SHEET ANALYSIS ($000) Debt to Capitalization . . . . . . . . . . 31.0% 0.9% 1.3% 1.5% 1.9% Working Capital. . . . . . . . . . . . . . $ 36,614 $ 55,784 $ 51,624 $ 62,304 $ 57,022 Quick Ratio. . . . . . . . . . . . . . . . 1.4:1 3.3:1 2.9:1 4.2:1 3.4:1 - ---------------------------------------------------------------------------------------------------------------------------------- CASH FLOW DATA ($000) From Operations. . . . . . . . . . . . . . $ 17,791 $ 18,545 $ 22,015 $ 16,330 $ 22,752 For Investment . . . . . . . . . . . . . . (8,251) (1,374) (16,231) (7,923) (22,511) From/(for) Financing . . . . . . . . . . . (23,915) (11,105) (8,374) (7,767) (7,306) Change in Cash & Equivalents . . . . . . . (14,375) 6,066 (2,590) 640 (7,065) Capital Expenditures . . . . . . . . . . . 8,334 6,137 5,086 9,720 4,187 Depreciation . . . . . . . . . . . . . . . 6,321 6,287 6,008 4,384 3,676 Dividends Paid . . . . . . . . . . . . . . 8,290 8,121 7,814 7,560 7,069 Interest (Income)/Expense. . . . . . . . . 53 (946) (911) (1,876) (1,819) Income Taxes Paid. . . . . . . . . . . . . 11,234 13,313 14,502 13,117 16,871 - ---------------------------------------------------------------------------------------------------------------------------------- CASH FLOW ANALYSIS ($000) Operating Cash Flow (1). . . . . . . . . . $ 29,078 $ 30,912 $ 35,606 $ 27,571 $ 37,804 Net Cash Flow (2). . . . . . . . . . . . . 20,744 24,775 30,520 17,851 33,617 Elective Cash Flow (3) . . . . . . . . . . 1,167 4,287 9,115 (950) 11,496 - ----------------------------------------------------------------------------------------------------------------------------------
(1) From operations before interest income/expense and taxes paid. (2) Operating Cash Flow less capital expenditures. (3) Net Cash Flow less dividends +(-) interest income/expense and less taxes paid. 24 25 FINANCIAL REVIEW EXHIBIT 13(a)(x) ............................................................................... (SHARES AND DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) [LOGO] CLARCOR's 1995 operations produced another year of record sales, operating profit, net earnings and earnings per share. Both the Filtration Products and Consumer Products segments generated gains in operating profit. This financial review should be read in conjunction with other financial information presented in this report. Information related to CLARCOR business segments is shown on page 23, and this financial review should be read in conjunction with the segment information. Operating results are shown in comparative form in the table below.
OPERATING RESULTS 1995 vs. 1994 1994 vs. 1993 Change Change ---------------------------------- ------------------------------------ $ 1995 % Sales $ % $ 1994 % Sales $ % ---------------------------------- ------------------------------------ Net Sales. . . . . . . . . . . . . . . . $290.2 100.0% $20.1 7.4% $270.1 100.0% $44.8 19.9% Cost of Sales. . . . . . . . . . . . . . 209.6 72.2% 17.2 8.9% 192.4 71.2% 36.8 23.7% Selling & Administrative Expenses . . . 45.2 15.6% (0.1) (0.3)% 45.3 16.8% 4.7 11.5% Operating Profit . . . . . . . . . . . . 35.4 12.2% 3.0 9.3% 32.4 12.0% 3.3 11.3% Other Income (Deductions). . . . . . . . (1.3) (0.4%) (1.5) -- 0.2 0.1% 2.2 -- Earnings Before Taxes. . . . . . . . . . 34.1 11.8% 1.5 4.8% 32.6 12.1% 5.5 20.2% Income Taxes . . . . . . . . . . . . . . 12.1 4.2% 0.2 2.1% 11.9 4.5% 2.1 21.5% Earnings . . . . . . . . . . . . . . . . 22.0 7.6% 1.3 6.4% 20.7 7.6% 3.4 19.6% Cumulative Effect of Accounting Change . -- -- (0.6) -- 0.6 0.3% 0.6 -- Net Earnings . . . . . . . . . . . . . . $22.0 7.6% $0.7 3.3% $21.3 7.9% $4.0 23.2% ---------------------------------- ------------------------------------ ---------------------------------- ------------------------------------ Earnings Per Share . . . . . . . . . . . $1.48 $0.09 6.5% $1.39 $0.23 19.8% Cumulative Effect of Accounting Change . -- ($0.04) -- $0.04 $0.04 -- Total . . . . . . . . . . . . . . . . $1.48 $0.05 3.5% $1.43 $0.27 23.3% Average Shares Outstanding . . . . . . . 14.8 14.8 - ----------------------------------------------------------------------------------------------------------------------------------
SALES CLARCOR's 1995 net sales set a new Company record. Net sales of $290.2 were 7.4% higher than sales of $270.1 recorded in fiscal year 1994. The current year's increased sales were fueled by internal growth and an acquisition in the Filtration Products segment. Net sales of $225.3 were reported for the 1993 fiscal year. Consolidated 1994 net sales were 19.9% higher than sales in 1993 and reflected increased sales in both of the Company's operating segments. Comparative net sales information related to CLARCOR's operating segments is shown in the tables to the right.
Change vs. 1994 NET SALES 1995 % Total $ % - --------------------------------------------------------------------------------------- Filtration Products. . . . . . . $221.0 76.2% $21.2 10.6% Consumer Products. . . . . . . . 69.2 23.8% (1.1) (1.7%) ----------------------------------------- Total . . . . . . . . . . . . $290.2 100.0% $20.1 7.4% ----------------------------------------- ----------------------------------------- Change vs. 1993 NET SALES 1994 % Total $ % - -------------------------------------------------------------------------------------- Filtration Products. . . . . . . $199.8 74.0% $43.6 27.9% Consumer Products. . . . . . . . 70.3 26.0% 1.2 1.7% ----------------------------------------- Total. . . . . . . . . . $270.1 100.0% $44.8 19.9% ----------------------------------------- -----------------------------------------
17 FINANCIAL REVIEW ................................................................................ (SHARES AND DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) Net sales of $221.0 in the Filtration Products segment increased 10.6% in 1995 over sales of $199.8 in 1994. The increase was principally the result of increased sales of heavy duty filter products at Baldwin Filters, and the inclusion of three months of sales in the current year from the acquisition of Hastings Filters, Inc. Excluding the Hastings sales, Filtration segment sales would have increased 5.9% over the 1994 level. Sales of the Company's Airguard Industries industrial and environmental filter lines declined 7.0% from prior year levels, the result of the transfer of a product line to Baldwin, and a decline in the sales of certain product lines transferred in 1994 from Baldwin and Clark Filter. On a comparable products basis, Airguard sales increased 2.9% over the prior year. Sales of Clark Filter's railroad locomotive line products increased 8.3% over 1994 levels. Filtration Products segment 1994 net sales increased 27.9% over sales of $156.2 in 1993, a year which contained a partial year's sales from the mid-year acquisitions of Airguard Industries and Guardian Filters/UEL. Net sales in the Consumer Products segment declined 1.7% to $69.2 in 1995 from $70.3 in 1994. This decline was due principally to lower spice can sales and flat sheet and promotional decorating business in the current year, offset by an increase in plastic sales. Sales in 1994 increased 1.7% from the year- earlier level of $69.1, due chiefly to higher shipment levels of plastic closures and increased flat sheet decorating. EARNINGS CLARCOR achieved record consolidated operating profit of $35.4 in 1995. Current year operating profit increased 9.3% over operating profit of $32.4 recorded in 1994. Gains were recorded in both the Filtration Products and Consumer Products segments. The 1994 operating profit increased 11.3% over the $29.1 produced in 1993. Comparative operating profit information related to the Company's business segments is shown below.
Change vs. 1994 OPERATING PROFIT 1995 % Total $ % - -------------------------------------------------------------------------------------------- Filtration Products. . . . . . . . . $28.7 81.1% $2.1 7.9% Consumer Products. . . . . . . . . . 6.7 18.9% .9 15.6% ----------------------------------------- Total . . . . . . . . . . . . . $35.4 100.0% $3.0 9.3% ----------------------------------------- ----------------------------------------- Change vs. 1993 OPERATING PROFIT 1994 % Total $ % - -------------------------------------------------------------------------------------------- Filtration Products. . . . . . . . . $26.6 82.2% $6.9 35.3% Consumer Products. . . . . . . . . . 5.8 17.8% (3.6) (38.7%) ----------------------------------------- Total . . . . . . . . . . . . . $32.4 100.0% $3.3 11.3% ----------------------------------------- -----------------------------------------
OPERATING PROFIT AS A PERCENT OF NET SALES 1995 1994 1993 - ------------------------------------------------------------------------------- Filtration Products. . . . . . . . . 13.0% 13.3% 12.6% Consumer Products. . . . . . . . . . 9.6% 8.2% 13.6% ---------------------------- Total . . . . . . . . . . . . . 12.2% 12.0% 12.9% ---------------------------- ----------------------------
Filtration Products segment operating profit totaled $28.7 in 1995, 7.9% higher than operating profit of $26.6 reported in the prior year. The increased 1995 operating profit reflected gains in Baldwin heavy duty operations, both domestic and international. Profit at the segment's Airguard unit declined in the current year, the result of significant increases in raw material prices, a product failure caused by faulty media from an outside vendor, startup problems with a new distribution center and costs related to a new management information system. The September 4, 1995 acquisition of Hastings Filters, Inc. had no operating profit impact. Operating profit in 1994 increased 35.3% over fiscal 1993 operating profit and principally reflected strong gains in all of the segment's businesses. In addition, the 1994 profits included a full year of profits from the 1993 acquisitions of Airguard and Guardian/UEL. The 18 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. Operating profit as a percent of net sales was 13.0%, compared to 1994 profit at 13.3% of sales. In 1993, operating profit was 12.6% of sales. Current year Filtration segment operating profit represented 81.1% of consolidated operating profit, compared to 82.2% in 1994 and 67.6% in 1993. Consumer Products segment operating profit in 1995 totaled $6.7. This was an increase of 15.6% and reflected the impact of improved profitability in the plastics business. In 1994, Consumer Products segment operating profit declined by 38.7% 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 1994 and one-time 1994 consulting expenses. Operating profit as a percent of sales increased to 9.6% in 1995 from 8.2% in 1994. In 1993, operating profit was 13.6% of sales. The 1995 profit was 18.9% of consolidated operating profit. This compares to 17.8% of the total in 1994 and 32.4% in 1993. Other expense in 1995 totaled a net $1.3. Of this total, interest expense was $2.7. Income items included $.8 of interest on cash and short- term cash investments and other items of $.6, chiefly currency-related gains. The 1994 total was a net other income of $.2. Of this total, income items included a $4.2 gain from the sale of the Company's investment in the stock of G.U.D. Holdings Limited. Expense items included interest of $2.8, chiefly related to CLARCOR's long-term debt. In 1993, non-operating items netted to $2.0 of expense, principally related to $3.5 of interest expense on the long-term debt. Earnings before income taxes in 1995 totaled $34.1, up 4.8% from $32.6 in the prior year. This increase reflected higher operating profits reduced by a current year increase in net other expense. In 1994, earnings before income taxes and the cumulative effect of a change in accounting method increased 20.2% over pre-tax earnings of $27.1 in 1993. The increase in 1994 earnings reflected strong Filtration operations and an increase in other income to $.2 from an expense of $2.0 in other items in 1993. The 1995 provision for income taxes totaled $12.1 and was higher than the 1994 provision due principally to taxes on higher profits offset by favorable treatment of certain income tax items. Deferred tax assets, including foreign net operating loss carryforwards, are expected to be realized through reversal of taxable temporary differences and future earnings. CLARCOR's provision for income taxes in 1994 totaled $11.9. This was an increase from the level of $9.8 recorded in 1993. The increase over 1993 was attributable to higher earnings from operations. The current year effective tax rate was 35.7%, compared to 36.7% in 1994. The 1994 rate was a slight increase from 1993's 36.3% rate. Earnings from operations before the cumulative effect of a change in accounting method totaled $22.0. In 1994, these earnings were $20.7, compared to $17.3 in 1993. 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 the year of adoption. CLARCOR recorded total net earnings of $22.0 in 1995, 3.3% higher than net earnings in 1994 of $21.3. Total net earnings in 1994 were 23.2% higher than $17.3 in 1993. Earnings per share before the cumulative effect of accounting changes totaled $1.48, and increased 6.5% over comparable earnings of 19 FINANCIAL REVIEW ................................................................................ (SHARES AND DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) $1.39 in 1994. The 1994 figure was a 19.8% increase over per share earnings of $1.16 in 1993. In 1994, 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. On October 23, 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock Based Compensation" (SFAS 123). SFAS 123 encourages, but does not require, companies to adopt a fair value based method for determining expense related to stock based compensation. Companies which do not adopt the provisions of SFAS 123 for recognition purposes must disclose pro forma effects as if the fair value based method of accounting had been applied. The Company does not intend to adopt the new recognition aspects of SFAS 123, but will provide required disclosure of pro forma information beginning in 1997. The pro forma impact has not yet been determined. FINANCIAL CONDITION CORPORATE LIQUIDITY The discussion of corporate liquidity should be read in conjunction with information presented in the Consolidated Statements of Cash Flows on page 29. CLARCOR's cash flows in the year 1995 included an additional borrowing to finance the Hastings Filters, Inc. acquisition. Current year cash flows from operating activities totaled $19.2. This was down 21.9% from the 1994 cash flows which totaled $24.6. The 1994 cash flows were a 23.1% increase over a total of $20.0 from these activities in 1993. Current year operating activities included higher gross cash flow of $30.2 from net earnings and non-cash charges of depreciation and amortization. This was reduced by a net investment in assets and liabilities of $10.6, the result of increased business and asset additions from the Hastings acquisition. In 1994, operating activities included a total of $27.9 from higher operating earnings and increased non-cash charges, compared to a total of $23.5 from these items in 1993. Changes in assets and liabilities in 1994 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. Cash flows used in investing activities in 1995 totaled $28.4, compared to $.5 in 1994 and $1.2 in 1993. In the current year, the Hastings acquisition used $14.1, and $13.9 was used for investment in plant assets. In 1994, cash of $10.7 was collected from the sale of G.U.D. stock, 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. Cash of $12.8, net of cash acquired, was invested in business acquisitions, and $10.2 was spent on plant asset additions. Cash provided by 1995 financing activities totaled $8.4. This compares to $18.4 used in 1994. Cash used in 1993 totaled $20.0. The 1995 total reflects cash inflows of $25.0 from the new long-term borrowing. Cash used in financing activities included $7.6 of payments on the long-term debt and dividend payments of $9.3. In 1994, cash of $18.4 was used, principally for treasury share purchases of $1.3, debt payments of $7.9, and dividend payments of $9.2. In 1993, cash of $20.0 was used for $7.6 of long-term debt payments, $3.4 of treasury stock purchases, and $9.0 of dividend payments. 20 CLARCOR continues to generate sufficient cash necessary to maintain current operating levels, to provide for the replacement and addition of needed capital assets, and to service its long-term debt. CLARCOR maintains lines of credit sufficient to fund its current operations and to fund planned future growth. CAPITAL RESOURCES The Company's 1995 balance sheet continued to remain both strong and liquid.
SUMMARY BALANCE 1995 1994 ---------------------------------------------- SHEET $ % Change $ % Change - ------------------------------------------------------------------------------------- Current Assets . . . . . . . . $117.6 19.4% $ 98.5 14.3% Plant Assets, net. . . . . . . 67.0 27.4% 52.6 10.5% Excess Cost over Fair Value, net . . . . . . 14.9 (2.0%) 15.2 (3.2%) Pension & Other Assets . . . . 23.8 7.7% 22.1 (7.8%) Total Assets . . . . . . . . . $223.3 18.5% $188.4 8.6% Current Liabilities. . . . . . $042.5 7.6% $ 39.5 18.5% Long-Term Debt . . . . . . . . 34.4 102.3% 17.0 (30.9%) Pension & Other Liabilities. . 15.6 8.3% 14.4 31.7% Shareholders' Equity . . . . . 130.8 11.4% 117.5 12.3% Total Liabilities & Shareholders' Equity. . . . $223.3 18.5% $188.4 8.6%
Year-end total assets climbed to $223.3 in 1995 from $188.4 last year. This was an increase of 18.5%. The 1994 total was an increase of 8.6% over total assets of $173.6 at the end of 1993. Working capital reached $75.1, compared to $59.0 at year-end 1994. The current ratio was 2.8:1, compared to the 1994 ratio of 2.5:1. In addition to the cash borrowed for the acquisition of Hastings Filters, Inc., the Company continued to generate the cash needed for working capital investment and plant and equipment additions. Cash and short- term cash investments were $18.8 at year-end 1995, compared to a total of $19.6 in 1994. Due principally to the Hastings acquisition, 1995 net accounts receivable and inventories reached $50.0 and $43.0, respectively, compared to $42.5 and $30.3, respectively, at the end of 1994. Net plant assets in 1995 rose to $67.0 from $52.6 at the end of the year, reflecting both the Hastings acquisition and normal asset additions. In both 1995 and 1994, marketable equity securities reflected the Company's remaining 5% interest in G.U.D. Holdings Limited, classified as available-for-sale and valued at current market value under the provisions of Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." 1995 1994 ---------------- Current Ratio. . . 2.8:1 2.5:1 Quick Ratio. . . . 1.6:1 1.6:1 Debt/Equity. . . . 26.3% 14.5%
Current liabilities totaled $42.5 at year-end 1995, compared to a total of $39.5 in 1994. The increase was principally the result of higher accounts payable and accrued liabilities. The Company's long-term debt balance increased to $34.4 from $17.0, and reflected the new long-term borrowing, reduced by scheduled repayments on the old long-term loan. As a percent of total capitalization, 1995 long-term debt was 20.8%, and 1994 long-term debt was 12.7%. Shareholders' equity at year-end was $130.8, an increase of $13.3, or 11.4%, over equity of $117.5 at the prior year-end. Shareholders' equity represented 79.2% of total capitalization at year-end 1995, compared to 87.3% at the end of 1994. At year-end, the Company had outstanding 14,825,296 shares of common stock of $1.00 par value. This compares to 14,760,888 shares outstanding at the prior year-end. 21 FINANCIAL REVIEW ................................................................................ (SHARES AND DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) THE FUTURE The Company believes that sales, operating profit, and net earnings will increase, continuing the trend of past years. Baldwin Filters will continue to be the principal driving force for CLARCOR. The primary focus at Baldwin will continue to be supplying the highest quality mobile filtration products to its customers and distributors. The combination of Hastings Filters with Baldwin provides CLARCOR with the widest product range and the largest distribution network of any company in the mobile filtration industry. CLARCOR expects to see an increase in Baldwin's sales, when combined with Hastings Filters for a full year, of over 20% in 1996. Their combined margins will decline somewhat as Hastings Filters will not contribute to operating profitability until later in 1996. Hastings Filters will add to earnings per share in 1996 and will be a significant part of CLARCOR's growth and profits in the future. Both Airguard's sales and margins are expected to improve in 1996. Operating profit as a percent of sales is anticipated to grow toward a long-term goal of 8-10%. International filtration sales are expected to continue to grow from 13% of sales in 1995 and will show increased profitability in 1996. The Company is exploring other acquisitions and alliances outside the United States and expects to announce additional ventures in the future. J. L. Clark will continue to invest resources in the expansion of its plastics business and expects to continue growth in sales and operating margins. In early 1996, J. L. Clark completed a 25,000-square-foot addition to its plastics manufacturing facility, enabling it to continue meeting the increasing demand for its plastic products. CLARCOR's plans for internal growth, coupled with anticipated future acquisitions and expected strategic alliances, will further the realization of the Company's sales, operating profit, and net earnings objectives. The realization of these objectives will provide the liquidity and financial strength necessary for growth and for an increase in shareholder value. SEGMENT INFORMATION Financial data relating to the principal segments of the business and the geographic areas in which they operate are shown in the following tables for the years ended November 30, 1995 through 1993. Net sales represent sales to unaffiliated customers as reported in the Consolidated Statements of Earnings. Net sales by geographic area are based on sales to the final customer within that segment. Intersegment sales were not material. Assets are those assets used in each business segment. 22
INDUSTRY SEGMENTS (Dollars in Thousands) 1995 1994 1993 - ---------------------------------------------------------------------------------- FILTRATION Net Sales. . . . . . . . . . . . . $221,034 $199,793 $156,165 Operating Profit . . . . . . . . . 28,698 26,597 19,661 Assets . . . . . . . . . . . . . . 138,706 114,501 105,278 Invested Capital . . . . . . . . . 107,827 87,009 79,865 Operating Margin . . . . . . . . . 13.0% 13.3% 12.6% Number of Employees. . . . . . . . 1,788 1,614 1,419 CONSUMER Net Sales. . . . . . . . . . . . . $69,160 $70,330 $69,154 Operating Profit . . . . . . . . . 6,667 5,769 9,406 Assets . . . . . . . . . . . . . . 39,853 32,386 30,377 Invested Capital . . . . . . . . . 32,841 26,711 26,068 Operating Margin . . . . . . . . . 9.6% 8.2% 13.6% Number of Employees. . . . . . . . 559 565 612 - ---------------------------------------------------------------------------------- Sales volume by class of product for Consumer Products segment.* 1995 1994 1993 ---------------------------------- Containers 18% 20% 24%
* Includes only those classes of products which contributed 10% or more to total Corporate revenue. No class of products within the Company's Filtration Products segment accounted for as much as 10% of the total Sales of the Company.
GEOGRAPHIC SEGMENTS (Dollars in Thousands) 1995 1994 1993 - --------------------------------------------------------------------------------- Net Sales Sales Within the United States . . . . . . . . . $251,483 $242,830 $202,367 Export Sales to Other Countries . . . . . . . . 25,760 21,159 16,985 Sales Within Other Countries . . . . . . . . 12,951 6,134 5,967 -------------------------------------- $290,194 $270,123 $225,319 -------------------------------------- -------------------------------------- Operating Profit On Sales Within the United States . . . . . . . . . $ 32,381 $ 31,154 $ 29,285 On Export Sales to Other Countries . . . . . . . . 2,505 1,895 1,757 On Sales Within Other Countries . . . . . . . . 479 (683) (1,975) -------------------------------------- $ 35,365 $ 32,366 $ 29,067 -------------------------------------- -------------------------------------- Identifiable Assets United States. . . . . . . . . . . $211,315 $178,969 $167,263 Other Countries. . . . . . . . . . 11,947 9,479 6,304 -------------------------------------- $223,262 $188,448 $173,567 -------------------------------------- --------------------------------------
23 EX-21 5 EXHIBIT 21 EXHIBIT 21 CLARCOR INC. SUBSIDIARIES AS OF FEBRUARY 23, 1996
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% Airguard Industries, Inc. Kentucky 100% Baldwin Filters, Inc. Delaware 100% Baldwin Filters N.V. Belgium 100%* Baldwin Filters Limited United Kingdom 100%* Baldwin South Africa, Inc. Delaware 100% Baldwin-Unifil S.A. South Africa 70%(B) Hastings Filters, Inc. Delaware 100% Hastings Filters Ltd. Canada Canada 100% Baldwin Filters (Aust.) Pty. Limited Australia 50% Clark Filter, Inc. Delaware 100% Filtros Baldwin de Mexico Mexico 90% CLARCOR International, Inc. Delaware 100% Baldwin-Weifang Filters Ltd. China 60%(A) CLARCOR Foreign Sales Corporation Virgin Islands 100% CLARCOR Trading Company Delaware 100%*
- ------------------------ * Direct or indirect (A) Acquired in December 1995. (B) Acquired in February 1996. EX-23 6 EXHIBIT 23 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 8, 1996, on our audits of the consolidated financial statements of CLARCOR Inc. and Subsidiaries as of November 30, 1995 and 1994 and for the years ended November 30, 1995, 1994 and 1993, and the financial statement schedule for the years ended November 30, 1995, 1994, and 1993, which reports are included or incorporated by reference in this Annual Report on Form 10-K. COOPERS & LYBRAND L.L.P. Rockford, Illinois February 23, 1996 EX-27 7 EXHIBIT 27
5 1,000 YEAR DEC-02-1995 DEC-04-1994 DEC-02-1995 18,769 0 51,591 1,557 42,972 117,570 143,363 76,327 223,262 42,460 34,417 0 0 14,825 115,990 223,262 290,194 290,194 209,653 209,653 0 386 2,693 34,136 12,182 21,954 0 0 0 21,954 1.48 1.45
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