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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 NOVEMBER 27, 1993
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.
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(Exact name of registrant as specified in its charter)
DELAWARE 36-0922490
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2323 Sixth Street, P.O. Box 7007, Rockford, Illinois 61125
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 815-962-8867
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Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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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
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(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, 1994 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, 1994 is $307,443,549.
The number of outstanding shares of common stock, as of February 1, 1994 is
14,828,169 shares.
Certain portions of the registrant's 1993 Annual Report to Shareholders are
incorporated by reference in Parts I, II and IV. Certain portions of the
registrant's Proxy Statement dated February 24, 1994 for the Annual Meeting of
Shareholders to be held on March 31, 1994 are incorporated by reference in Part
III.
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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
1993, the year ended on November 27, 1993 and for fiscal year 1992 the year
ended on November 28, 1992. In this Form 10-K, all references to fiscal year
ends will be stated as November 30 for consistency of presentation.
(I) CERTAIN SIGNIFICANT EVENTS.
On December 31, 1992, CLARCOR completed the sale of its Precision
Products Group to a privately held company. The sale was deemed to be
effective as of November 30, 1992. The Precision Products Group manufactured
and sold springs and tubular products for original equipment markets.
On April 30, 1993 the Company purchased all of the outstanding shares of
Airguard Industries, Inc. for cash. Airguard is a leading international
producer and distributor of air filtration products. With five manufacturing
plants, Airguard makes a broad line of air filters and markets them through
a network of more than 500 distributors throughout the world.
Airguard primarily serves the commercial, industrial and institutional
markets by providing air filters for heating, ventilation and environmental
control systems. Airguard's principal manufacturing facility is in New
Albany, Indiana, with other manufacturing and assembly plants located in
Louisville, Kentucky; Corona, California; Garland, Texas; and Tijuana,
Mexico. Airguard also has seven factory-owned distribution centers located
in key major markets. Annual sales approximate $40 million.
On June 25, 1993, the Company purchased substantially all of the assets
and business of Guardian Filter Company, a manufacturer of filters for
liquids based in Louisville, Kentucky, for cash. The purchase was deemed to
be effective as of June 1, 1993. Guardian Filter's filtration products serve
the automotive, railroad and industrial markets. Annual sales approximate $8
million.
Effective January 31, 1994, the Company sold the assets and ongoing
business of OilpureSystems for cash. OilpureSystems is engaged in
manufacturing and purification of industrial process oils. The transaction
will have no material effect on the Company's results of operations for
fiscal 1994.
(II) SUMMARY OF BUSINESS OPERATIONS.
During 1993, the Company conducted business in two principal industry
groups: (1) Filtration Products and (2) Consumer Products.
FILTRATION PRODUCTS. Filtration Products include filters used primarily in
the replacement market in the trucking, construction, industrial, farm
equipment, diesel locomotive, automotive and environmental industries. It also
includes filters used in clean room applications in the medical, pharmaceutical
and food and beverage processing industries. The Company's Filtration Products
include filters for oil, air, fuel, coolants and hydraulic fluids for trucks,
automobiles, construction and industrial equipment, locomotives, marine and farm
equipment.
The Company distributes filters and filtration products throughout Europe
through its Baldwin Filters N.V. and Baldwin Filters Limited subsidiaries. The
Company also owns 20% of the outstanding
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Common Stock of G.U.D. Holdings Limited ("GUD") and has a 50-50 joint venture
with GUD named Baldwin Filters (Aust.) Pty. Ltd. to market heavy duty liquid and
air filters in Australia and New Zealand.
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 Company's Consumer
Products consist of lithographed metal containers, flat sheet decorating,
combination metal and plastic containers, plastic closures, collapsible metal
tubes, composite containers and various specialties, such as spools for wire and
cable, dispensers for razor blades and outer shells for dry cell batteries.
(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Business segment information for the fiscal years 1991 through 1993 is
included on page 45 of the Company's 1993 Annual Report to Shareholders (the
"Annual Report"), is incorporated herein by reference and is filed as part of
Exhibit 13(a)(vi) to this 1993 Annual Report on Form 10-K ("1993 Form 10-K").
(C) NARRATIVE DESCRIPTION OF THE BUSINESS
FILTRATION PRODUCTS
The Company's filtration products business is conducted by the Filtration
Products Group which includes the following wholly-owned subsidiaries: Baldwin
Filters, Inc.; Airguard Industries, Inc.; Clark Filter, Inc.; CLARCOR Air
Filtration, Inc.; Guardian Filter Company; MicroPure Filtration, Inc.; Baldwin
Filters N.V.; and Baldwin Filters Limited. In addition, the Company owns (i) 20%
of GUD, and (ii) 50% of Baldwin Filters (Aust.) Pty. Ltd., and (iii) 60% of
PleaTech Co. PleaTech is a technology and manufacturing joint venture for
extended life, high-efficiency filters.
The Company markets a line of over 4,000 types of oil, air, fuel, coolant
and hydraulic fluid filters. The Company's filters are used in a wide variety of
applications including engines, equipment, environmentally controlled areas and
processes where effectiveness, reliability and durability are essential. Impure
air or fluid impinge upon a paper, cotton, synthetic, chemical or membrane
filter media which collects the impurities which are disposed of when the filter
is changed. Paper filters have pleated paper elements held in specially treated
paper or metal containers and the cotton and synthetic filters use wound or
compressed fibers with high absorption characteristics. The Company's filters
are sold throughout the United States and Canada and world-wide, primarily in
the replacement market for truck, automobile, marine, construction, industrial
and farm equipment and food and beverage processing. In addition, some filters
are sold to the original equipment market.
CONSUMER PRODUCTS
The Company's consumer products business is conducted by the Consumer
Products Group which includes the Company's wholly-owned subsidiary, J. L.
Clark, Inc. ("J. L. Clark").
In fiscal 1993 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.
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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.
DISTRIBUTION
Filtration Products are sold primarily through a combination of independent
distributors and dealers for original equipment manufacturers. The Australian
joint venture markets heavy duty filtration products through the distributors of
GUD, the Company's joint venture partner. Baldwin filters are distributed in
Canada by the largest Canadian distributor of heavy duty filters.
Consumer Products Group salespersons call directly on customers and
prospective customers for containers and packaging specialties. Each salesperson
is trained in all aspects of the Company's manufacturing processes with respect
to the products sold and as a result is qualified to consult with customers and
prospective customers concerning the details of their particular requirements.
CLASS OF PRODUCTS
The percentage of the Company's sales volume contributed by each class of
similar products within the Company's Consumer Products Group which contributed
10% or more of sales is as follows:
<TABLE>
<CAPTION>
1993 1992 1991
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<S> <C> <C> <C>
Containers.................... 24% 24% 26%
</TABLE>
No class of products within the Company's Filtration Products Group accounted
for as much as 10% of the total sales of the Company.
RAW MATERIAL
Steel (black plate and tin plate), filter media, aluminum sheet and coil,
stainless steel, MB hard drawn and oil tempered wire, chrome vanadium, chrome
silicon, resins and aluminum slugs for tubes, roll paper, bulk and roll plastic
materials and cotton, wood and synthetic fibers are the most important raw
materials used in the manufacture of the Company's products. All of these are
purchased or are available from a variety of sources. The Company has no
long-term purchase commitments. The Company did not experience shortages in the
supply of raw materials during 1993.
PATENTS
Certain features of some of the Company's Filtration and Consumer products
are covered by domestic and, in some cases, foreign patents or patent
applications. While these patents are valuable and important for certain
products, the Company does not believe that its competitive position is
dependent upon patent protection.
CUSTOMERS
The largest 10 customers of the Filtration Products Group accounted for
14.9% of the $156,165,000 of fiscal year 1993 sales of such Group.
The largest 10 customers of the Consumer Products Group accounted for 42.7%
of the $69,154,000 of fiscal year 1993 sales of such Group.
No single customer accounted for 10% or more of the Company's consolidated
1993 sales.
BACKLOG
At November 30, 1993, the Company had a backlog of firm orders for products
amounting to approximately $25,100,000. The comparable backlog figure for 1992
was approximately $20,100,000. All of the orders on hand at November 30, 1993
are expected to be filled during fiscal 1994. 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.
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In the Filtration Products Group, the Company competes in a number of
markets against a variety of competitors. The Company is unable to state its
relative competitive position in all of these markets due to a lack of available
industry-wide data. However in the replacement market for heavy duty liquid and
air filters used in internal combustion engines the Company believes that it is
among the top five measured by annual sales with a market share of approximately
13%. In addition, the Company believes that it is the largest manufacturer of
liquid and air filters for diesel locomotives.
In the Consumer Products Group, its principal competitors are approximately
10 manufacturers whose sales and product lines are smaller than the Company's
and who often compete on a regional basis only. In the Consumer Products market,
strong competition is also presented by manufacturers of paper, plastic and
glass containers. The Company's competitors generally manufacture and sell a
wide variety of products in addition to packaging products of the type produced
by the Company and do not publish separate sales figures relative to these
competitive products. Consequently, the Company is unable to state its relative
competitive position in those markets.
The Company believes that it is able to maintain its competitive position
because of the quality of its products and services.
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 1993, construction
was completed on a new 25,000 square foot technical center in Kearney, Nebraska
to enhance the technology in the heavy duty filter industry.
In fiscal 1993, the Company employed 45 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 $2,824,000 on such activities as compared
with $2,248,000 for 1992 and $2,159,000 for 1991.
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.
EMPLOYEES
As of November 30, 1993, the Company had approximately 2,062 employees.
(D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES
Foreign sales were not material in any of the fiscal years ended November
30, 1993, 1992 or 1991.
Export sales for the fiscal years ended November 30, 1993, 1992 and 1991
were $18,008,000, $10,882,000 and $10,175,000, respectively.
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ITEM 2. PROPERTIES.
(I) LOCATION
The corporate office building located in Rockford, Illinois, houses the
Corporate offices and the Group offices for the Filtration and Consumer Products
headquarters in 32,000 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.
Airguard Industries has five manufacturing locations. It leases 167,000
square feet in New Albany, Indiana on a 8.5 acre tract of land, 20,000 square
feet in Louisville, Kentucky on a 2.5 acre tract of land, 15,000 square feet in
Garland, Texas on a .7 acre tract of land, and 15,000 square feet in Tijuana,
Mexico on a .7 tract of land. Airguard owns a 38,000 square foot manufacturing
facility on a 1.8 acre tract of land in Corona, California.
Airguard sales outlets with warehousing are located in Louisville, Kentucky;
Cincinnati, Ohio; Nashville, Tennessee; Atlanta, Georgia; Birmingham, Alabama;
Dallas, Texas; and Corona, California.
The Company also manufactures Clark and HEFCO brand filters at the Hempfield
Division plant located in Lancaster, Pennsylvania on an 11.4-acre tract of land.
The building, constructed about 1968, contains 168,000 square feet of
manufacturing and office space.
The Guardian Filter plant, located in Louisville, Kentucky on a 7.5 acre
tract of land, contains 73,000 square feet of manufacturing and office
facilities.
The Company assembles MicroPure products in 5,000 square feet of
manufacturing and laboratory space in its Rockford, Illinois facilities.
The Company has a capital lease for a 100,000 square foot manufacturing
facility on a site of 20 acres in Gothenburg, Nebraska.
CONSUMER PRODUCTS. The following is a description of the principal
properties owned and utilized by the Company in conducting its Consumer Products
business: The Company's J. L. Clark, Rockford, Illinois plant, located on 34
acres, consists of one-story manufacturing buildings, the first of which was
constructed in 1910. Since then a number of major additions have been
constructed and an injection molding plant was constructed in 1972.
Approximately 429,000 square feet of floor area are devoted to manufacturing,
warehouse and office use. Of the 34 acres, approximately 12 are vacant.
A J. L. Clark plant is located in Lancaster, Pennsylvania on approximately
11 acres. It consists of a two-story office building containing approximately
7,500 square feet of floor space and a manufacturing plant and warehouse
containing 236,000 square feet of floor space, most of which is on one level.
These buildings were constructed between 1924 and 1964.
The J. L. Clark Tube Division's manufacturing plant is located in Downers
Grove, Illinois on a 5-acre tract of land. The one-story building, constructed
in 1963, currently contains 58,000 square feet of floor space and can be
expanded by an additional 100,000 square feet under present zoning ordinances.
The various properties owned by the Company are considered by it to be in
good repair and well maintained. All of the manufacturing facilities are
adequate for the current sales volume of the Company's products and can
accommodate significant expansion of production levels before plant additions
are required.
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(II) FUNCTION
FILTRATION PRODUCTS. Oil, air, fuel, hydraulic fluid and coolant filters
are produced at Baldwin in Kearney, and Gothenburg, Nebraska. Much of the
Baldwin plant equipment has been built or modified by Baldwin. The various
processes of pleating paper, winding cotton and synthetic fibers, placing the
filter element in a metal or fiber container and painting the containers are
mechanized but require manual assistance. The plant also maintains an inventory
of special dies and molds for filter manufacture.
Air filters for the environmental market are produced in the Airguard and
Guardian facilities.
Oil, air and fuel filters primarily for use in the railroad industry are
produced at Clark Filter in Lancaster, Pennsylvania. This facility also produces
ASHRAE rated and HEPA filters for HEFCO which are used in medical,
pharmaceutical and clean room applications. This plant supplies some of the
Company's filter customers in the United States as well as foreign markets. The
Company serves the food and beverage markets through its MicroPure brand.
CONSUMER PRODUCTS. The Company's metal, combination metal and plastic
packaging products are produced in J. L. Clark plants located in Rockford,
Illinois, and Lancaster, Pennsylvania. The Rockford and Lancaster metal
container plants are completely integrated facilities which include creative and
mechanical art departments and photographic facilities for color separation,
preparation of multiple-design negatives and lithographing plates. Metal sheets
are decorated on high speed coating machines and lithographing presses connected
with conveyor ovens. Decorated sheets are then cut to working sizes on shearing
equipment, following which fabrication is completed by punch presses,
can-forming and can-closing equipment and other specialized machinery for
supplementary operations. Most tooling for fabricating equipment is designed and
engineered by the Company's engineering staffs, and much of it is produced in
the Company's tool rooms.
Plastic packaging capabilities include printing and molding of irregular
shaped plastic containers and customized plastic closures. J. L. Clark is the
only company in the packaging industry to mold and offset lithograph a one-piece
irregular shaped semi-rigid plastic container with a living hinge cover. A
growing area of specialty is custom-designed plastic closures for products which
have tamper-evidency as well as convenience features.
Collapsible metal tubes are produced at the J. L. Clark Tube Division plant
in Downers Grove, Illinois from aluminum slugs on fully-automated production
lines which consist of extrusion presses, trimming machines, annealing ovens,
coating machines, printing presses and capping machines. When necessary for
customer specifications, tubes can be internally waxed or lined in order to
achieve chemical compatibility with products to be packed.
Composite containers of both spiral and convolute construction, as well as
some specialty items, are produced at J. L. Clark divisions in Rockford,
Illinois and Lancaster, Pennsylvania.
ITEM 3. LEGAL PROCEEDINGS.
In December, 1992, a jury trial resulted in a judgment against the Company
in the amount of $4,900,000. GERALD D. FLOWERS MFG. REP., INC. AND GERALD D.
FLOWERS v. J.A. BALDWIN MFG. CO., BALDWIN FILTERS, INC., CLARCOR FILTRATION
PRODUCTS INC. AND CLARCOR INC., Case No. 30,323, District Court of Harden County
Texas, 88th Judicial District. In November 1993, the district court in Texas
ordered that a joint motion filed by the two parties to dismiss the judgment be
granted, that the judgment of the trial court be vacated, and that the cause be
remanded to the trial court for entry of a take-nothing judgment pursuant to a
settlement agreement by the two parties.
Two additional lawsuits have been filed by former distributors of Baldwin
filters. F.W. MORRIS AGENCY, INC. AND F.W. MORRIS v. BALDWIN FILTERS, INC.,
Civil Action No. 93-108-ATH(DF) United States District Court for the Middle
District of Georgia, Athens Division; JOHN NIEMEYER v. J.A. BALDWIN MFG. CO., ET
AL., Case No. CV 93-21818, Circuit Court of Jackson County, Missouri. Generally,
the plaintiffs in these actions seek damages for alleged breach of oral
contracts pursuant to which they acted as
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independent sales representatives for Baldwin filters. The Company intends to
vigorously defend each of these actions and believes that it has fully
discharged any and all obligations to these plaintiffs. In management's opinion
these cases, when concluded, will not have any material adverse effect on the
consolidated financial position of the Company.
There are no other material pending legal proceedings (other than ordinary
routine litigation incidental to the Company's business) to which the Company is
a party or of which any of its property is the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ADDITIONAL ITEM: EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
AGE AT YEAR ELECTED
NAME 11/30/93 TO OFFICE
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<S> <C> <C>
Lawrence E. Gloyd.......................................................................... 61 1991
Chairman, President and Chief Executive Officer. Mr. Gloyd was elected President and
Chief Operating Officer in 1986, President and Chief Executive Officer in 1988 and
Chairman, President and Chief Executive Officer in 1991.
L. Paul Harnois............................................................................ 62 1991
Senior Vice President and Chief Financial Officer. Mr. Harnois was elected Vice President
and Chief Financial Officer in 1987 and Senior Vice President and Chief Financial Officer
in 1991.
Ronald A. Moreau........................................................................... 46 1989
Group Vice President-CLARCOR Consumer Products Group and President of J. L. Clark, Inc.
Mr. Moreau has been employed by the Company since 1986. He was Vice President of Operations
for the J. L. Clark subsidiary from 1986 to 1989. He was elected Group Vice
President-Consumer Products Group and President of J. L. Clark, Inc. in 1989.
Norman E. Johnson.......................................................................... 45 1992
Group Vice President-CLARCOR Filtration Products Group and President-Baldwin Filters,
Inc. Mr. Johnson has been employed by the Company since 1990. He was elected
President-Baldwin Filters, Inc. in 1990, Vice President-CLARCOR in 1992, and Group Vice
President-Filtration Products Group in 1993.
William F. Knese........................................................................... 45 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.
Marshall C. Arne........................................................................... 63 1991
Vice President-Secretary. Mr. Arne has been employed by the Company in various
administrative positions since 1955. He was elected Vice President-Secretary in 1991.
David J. Lindsay........................................................................... 38 1991
Vice President-Group Services. Mr. Lindsay has been employed by the Company in various
administrative positions since 1987. He was elected Vice President-Group Services in 1991.
David J. Anderson.......................................................................... 53 1993
Vice President-Corporate Development. Mr. Anderson has been employed by the Company since
1990. He was elected Vice President Marketing & Business Development for the CLARCOR
Filtration Products subsidiary in 1991 and Vice President-Corporate Development in 1993.
</TABLE>
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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 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
successor.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
MATTERS.
On March 18, 1992, the Company's Common Stock was listed on the New York
Stock Exchange; it is traded under the symbol CLC. Prior to that date the stock
was traded on the NASDAQ National Market System. The following table sets forth
the high and low market prices as quoted during the relevant periods by NASDAQ
and the New York Stock Exchange and dividends paid for each quarter of the last
two fiscal years.
<TABLE>
<CAPTION>
MARKET PRICE
------------------
QUARTER ENDED HIGH LOW DIVIDEND
- ----------------------------------- ------- ------- --------
<S> <C> <C> <C>
February 27, 1993.................. $19 1/4 $16 1/2 $ .150
May 29, 1993....................... 19 1/2 16 .150
August 28, 1993.................... 19 3/4 17 .155
November 27, 1993.................. 20 16 1/2 .155
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Total Dividend..................... $ .610
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--------
<CAPTION>
MARKET PRICE
------------------
QUARTER ENDED HIGH LOW DIVIDEND
- ----------------------------------- ------- ------- --------
<S> <C> <C> <C>
February 29, 1992.................. $22 1/2 $17 $ .150
May 30, 1992....................... 21 3/4 15 .150
August 29, 1992.................... 20 16 3/4 .150
November 28, 1992.................. 19 1/8 15 5/8 .150
--------
Total Dividend..................... $ .600
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--------
</TABLE>
The approximate number of holders of common stock of the Company as at
February 1, 1994 is 1,960.
ITEM 6. SELECTED FINANCIAL DATA.
The information required hereunder is set forth on pages 28 and 29 of the
Annual Report under the caption "13-Year Financial Summary", is incorporated
herein by reference and is filed as Exhibit 13a(ix) to this 1993 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 18, 20, 22, 24, 25
and 26 of the Annual Report under the caption "Market-Focused Strategy:
1991-Present", is incorporated herein by reference and is filed as Exhibit
13a(x) to this 1993 Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Consolidated Financial Statements, the Notes thereto and the report
thereon of Coopers & Lybrand, independent accountants, required hereunder with
respect to the Company and its consolidated subsidiaries are set forth on pages
30 through 46, inclusive, of the Annual Report, are incorporated herein by
reference and is filed as Exhibits 13(a)(ii) through 13(a)(vii) to this 1993
Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
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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 24, 1994 (the "Proxy Statement") for
the Annual Meeting of Shareholders to be held on March 31, 1994 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 through 6 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, 1993:
*Consolidated Balance Sheets at November 30, 1993 and 1992
*Consolidated Statements of Earnings for the years ended November 30, 1993,
1992 and 1991
*Consolidated Statements of Shareholders' Equity for the years ended
November 30, 1993, 1992 and 1991
*Consolidated Statements of Cash Flows for the years ended November 30,
1993, 1992 and 1991
*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 1993 Form 10-K
The following items are set forth herein on the pages indicated:
<TABLE>
<S> <C> <C> <C>
Report of Independent Accountants................................................................. F-1
Financial Statement Schedules:
V. Property, Plant and Equipment............................................... F-2
VI. Accumulated Depreciation and Amortization of Property, Plant and Equipment.. F-3
VIII. Valuation and Qualifying Accounts and Reserve............................... F-4
X. Supplementary Income Statement Information.................................. F-5
</TABLE>
10
<PAGE>
Financial statements and schedules other than those listed above are omitted for
the reason that they are not applicable, are not required, or the information is
included in the financial statements or the footnotes therein.
(B) There were no Reports on Form 8-K filed during the fourth quarter of the
fiscal year ended November 30, 1993.
(C) EXHIBITS
<TABLE>
<C> <S>
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 (the "1990 10-K").
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
Registrant's Current Report on Form 8-K dated April 20, 1986.
4.1 Amendment to Rights Agreement dated as of June 27, 1989. Incorporated by reference
to Exhibit 4 to the Company's Current Report on Form 8-K filed on August 14, 1989.
10.1* The registrant's Deferred Compensation Plan for Directors.
10.2* The registrant's Supplemental Retirement Plan.
10.3 The registrant's 1984 Stock Option Plan. Incorporated by reference to Exhibit A of
the Company's Proxy Statement dated March 2, 1984 for the Annual Meeting of
Stockholders 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 Directors' Restricted Stock Compensation Plan. Incorporated by
reference to Exhibit 10.5 to the 1990 10-K.
10.6 The registrant's Monthly Investment Plan. Incorporated by reference to Exhibit 10.6
to the 1990 10-K.
10.7 The registrant's Amended and Restated 1988 Long Range Performance Share Plan.
Incorporated by reference to Exhibit 10.7 to the 1990 10-K.
11 Computation of Per Share Earnings.
</TABLE>
11
<PAGE>
<TABLE>
<C> <S>
13 (a) The following items incorporated by reference herein from the Company's 1993 Annual
Report to Shareholder ("1993 Annual Report"), are filed as Exhibits to this 1993
Form 10-K:
(i) Business segment information for the fiscal years 1991 through 1993 set
forth on page 45 of the 1993 Annual Report (included in Exhibit 13(a)(vi)-Note N
to Notes to Consolidated Financial Statements);
(ii) Consolidated Balance Sheets of the Company and its Subsidiaries at November
30, 1993 and 1992 set forth on page 30 of the 1993 Annual Report;
(iii) Consolidated Statements of Earnings of the Company and its Subsidiaries for
the years ended November 30, 1993, 1992 and 1991 set forth on page 31 of the 1993
Annual Report;
(iv) Consolidated Statement of Shareholders' Equity for the Company and its
Subsidiaries for the years ended November 30, 1993, 1992 and 1991 set forth
on page 32 of the 1993 Annual Report;
(v) Consolidated Statements of Cash Flows of the Company and its Subsidiaries for
the years ended November 30, 1993, 1992 and 1991 set forth on page 33 of the 1993
Annual Report;
(vi) Notes to Consolidated Financial Statements set forth on pages 34 through 45
of the 1993 Annual Report;
(vii) Report of Independent Accountants set forth on page 46 of the 1993 Annual
Report;
(viii) Management's Report on Responsibility for Financial Reporting set forth on
page 47 of the 1993 Annual Report;
(ix) Information under the caption "13-Year Financial Summary" set forth on pages
28 and 29 of the 1993 Annual Report; and
(x) Management's Discussion and Analysis of Financial Condition and Results of
Operation set forth under the caption "Market-Focused Strategy: 1991-Present"
on pages 18, 20, 22, 24, 25 and 26 of the 1993 Annual Report.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
<FN>
- ------------------------
* 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.
</TABLE>
12
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CLARCOR Inc.
(Registrant)
By: LAWRENCE E. GLOYD
--------------------------------
Lawrence E. Gloyd
CHAIRMAN, PRESIDENT &
CHIEF EXECUTIVE OFFICER
Date: February 23, 1994
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.
<TABLE>
<S> <C>
Date: February 23, 1994 By: LAWRENCE E. GLOYD
---------------------------------------
Lawrence E. Gloyd
CHAIRMAN, PRESIDENT & CHIEF EXECUTIVE OFFICER
AND DIRECTOR
Date: February 23, 1994 By: L. PAUL HARNOIS
---------------------------------------
L. Paul Harnois
SENIOR VICE PRESIDENT & CHIEF FINANCIAL
OFFICER
Date: February 23, 1994 By: WILLIAM F. KNESE
---------------------------------------
William F. Knese
VICE PRESIDENT, TREASURER, CONTROLLER & CHIEF
ACCOUNTING OFFICER
Date: February 23, 1994 By: J. MARC ADAM
---------------------------------------
J. Marc Adam
DIRECTOR
Date: February 23, 1994 By: MILTON R. BROWN
---------------------------------------
Milton R. Brown
DIRECTOR
Date: February 23, 1994 By: CARL J. DARGENE
---------------------------------------
Carl J. Dargene
DIRECTOR
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
Date: February 23, 1994 By: FRANK A. FIORENZA
---------------------------------------
Frank A. Fiorenza
DIRECTOR
Date: February 23, 1994 By: DUDLEY J. GODFREY, JR.
---------------------------------------
Dudley J. Godfrey, Jr.
DIRECTOR
Date: February 23, 1994 By: STANTON K. SMITH, JR.
---------------------------------------
Stanton K. Smith, Jr.
DIRECTOR
Date: February 23, 1994 By: RICHARD A. SNELL
---------------------------------------
Richard A. Snell
DIRECTOR
Date: February 23, 1994 By: DON A. WOLF
---------------------------------------
Don A. Wolf
DIRECTOR
</TABLE>
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Shareholders
CLARCOR Inc.
Rockford, Illinois
Our report on the consolidated financial statements of CLARCOR Inc. has been
incorporated by reference in this Form 10-K from page 46 of the 1993 Annual
Report to Shareholders of CLARCOR Inc. In connection with our audits of such
financial statements, we have also audited the related financial statement
schedules listed on pages F-2 through F-5 of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND
Rockford, Illinois
January 7, 1994
F-1
<PAGE>
CLARCOR INC.
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED NOVEMBER 30, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN E
-----------
COLUMN B OTHER COLUMN F
----------- COLUMN C CHANGES -----------
COLUMN A BALANCE AT ------------- COLUMN D ADD BALANCE AT
- ---------------------------------------------- BEGINNING ADDITIONS ----------- (DEDUCT) END OF
CLASSIFICATION OF PERIOD AT COST RETIREMENTS DESCRIBE PERIOD
- ---------------------------------------------- ----------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
1993:
Land.......................................... $ 1,113 $ 818 $ -- $ -- $ 1,931
Buildings and building fixtures............... 33,545 4,436 17 -- 37,964
Machinery and equipment....................... 56,590 11,875 799 -- 67,666
Assets in process............................. 3,934 759 -- -- 4,693
----------- ------------- ----------- ----------- -----------
$ 95,182 $ 17,888 (A) $ 816 -- $ 112,254
----------- ------------- ----------- ----------- -----------
----------- ------------- ----------- ----------- -----------
1992:
Land.......................................... $ 1,458 $ -- $ 345 $ -- $ 1,113
Buildings and building fixtures............... 37,616 1,754 5,825 -- 33,545
Machinery and equipment....................... 69,664 6,602 19,676 -- 56,590
Assets in process............................. 5,185 (906 ) 345 -- 3,934
----------- ------------- ----------- ----------- -----------
$ 113,923 $ 7,450 $ 26,191 (B) -- $ 95,182
----------- ------------- ----------- ----------- -----------
----------- ------------- ----------- ----------- -----------
1991:
Land.......................................... $ 1,458 $ -- $ -- $ -- $ 1,458
Buildings and building fixtures............... 35,661 2,011 56 -- 37,616
Machinery and equipment....................... 64,217 6,026 579 -- 69,664
Assets in process............................. 3,378 1,807 -- -- 5,185
----------- ------------- ----------- ----------- -----------
$ 104,714 $ 9,844 (C) $ 635 -- $ 113,923
----------- ------------- ----------- ----------- -----------
----------- ------------- ----------- ----------- -----------
<FN>
NOTES:
(A) Includes additions of $7,670 relating to the acquisitions of Airguard
Industries and Guardian Filter in 1993.
(B) Includes $23,673 due to the sale of the Precision Products Group in 1992.
(C) Includes $1,716 relating to capitalized leases.
</TABLE>
F-2
<PAGE>
CLARCOR INC.
SCHEDULE VI - ACCUMULATED DEPRECIATION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED NOVEMBER 30, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN E
COLUMN C -----------
COLUMN B ----------- OTHER COLUMN F
----------- ADDITIONS COLUMN D CHANGES -----------
COLUMN A BALANCE AT CHARGED TO ----------- ADD BALANCE AT
- ---------------------------------------------------- BEGINNING COSTS AND RETIRE- (DEDUCT) END OF
DESCRIPTION OF PERIOD EXPENSES MENTS DESCRIBE PERIOD
- ---------------------------------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
1993:
Buildings and building fixtures $ 19,490 $ 1,479 $ 11 $ -- $ 20,958
Machinery and Equipment 40,108 4,337 785 -- 43,660
----------- ----------- ----------- ----------- -----------
$ 59,598 $ 5,816 796 -- $ 64,618
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
1992:
Buildings and building fixtures $ 20,302 $ 1,501 $ 2,313 -- $ 19,490
Machinery and Equipment 47,909 5,543 13,344 -- 40,108
----------- ----------- ----------- ----------- -----------
$ 68,211 $ 7,044 $ 15,657 (A) -- $ 59,598
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
1991:
Buildings and building fixtures $ 18,743 $ 1,602 43 -- $ 20,302
Machinery and Equipment 43,223 5,105 419 -- 47,909
----------- ----------- ----------- ----------- -----------
$ 61,966 $ 6,707 462 -- $ 68,211
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
<FN>
NOTES:
(A) Includes $13,380 due to the sale of the Precision Products Group in 1992.
</TABLE>
F-3
<PAGE>
CLARCOR INC.
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED NOVEMBER 30, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN C
----------------------------
ADDITIONS
----------------------------
COLUMN B COLUMN E
----------- (1) (2) -----------
COLUMN A BALANCE AT CHARGED TO CHARGED TO COLUMN D BALANCE AT
- ---------------------------------------------------- BEGINNING COSTS AND OTHER ------------- END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- ---------------------------------------------------- ----------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
1993:
Allowance for losses on accounts receivable $ 788 $ 610 $ 650(B) $ 504(A) $ 1,544
1992:
Allowance for losses on accounts receivable $ 838 $ 647 $ (283)(C) $ 414(A) $ 788
1991:
Allowance for losses on accounts receivable $ 650 $ 403 $ -- $ 215(A) $ 838
<FN>
NOTES:
(A) Bad debts written off during year, net of recoveries.
(B) Due to the acquisitions of Airguard Industries and Guardian Filter in 1993.
(C) Due to the sale of Precision Products Group in 1992.
</TABLE>
F-4
<PAGE>
CLARCOR INC.
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED NOVEMBER 30, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COLUMN B
CHARGED TO COSTS AND EXPENSES
-------------------------------------
COLUMN A 1993 1991
- --------------------------------------------------------------------------------------- ----------- -----------
1992
-----------
<S> <C> <C> <C> <C> <C>
1. Maintenance and repairs..................................................... $ 4,035 $ 3,834 $ 4,154
2. a. Depreciation..................................................... $ 5,816 $ 7,044 $ 6,707
b. Amortization of intangible asset................................. $ 479 $ 643 $ 645
</TABLE>
NOTE: Includes amounts in 1992 and 1991 related to Precision Products Group
which was sold effective November 30, 1992.
Items 3, 4 and 5 omitted as the amounts did not exceed one percent of
total sales and revenues in the related consolidated statements of
earnings.
F-5
<PAGE>
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. 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.
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. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
purpose, the Board of Directors may provide that the stock transfer books shall
be closed for at least ten days, or in the case of any meeting of shareholders,
at least thirty days, and for not more than sixty days immediately preceding
such meeting. In lieu of closing the stock transfer books, the Board of
Directors may fix in advance, a date as the record date for any such
determination of shareholders, such date in any case to be not more than sixty
days and, in the case of a meeting of shareholders, not less than thirty days,
prior to the date on which the particular action requiring such determination of
shareholders is to be taken. If the stock transfer books are not closed and no
record
<PAGE>
date is fixed for the determination of shareholders entitled to notice or to
vote at a meeting of shareholders, or shareholders entitled to receive payment
of a dividend, the close of business on the day next preceding the day on which
notice is given, or the close of business on the day on which the Board of
Directors adopts the resolution declaring such dividend, as the case may be,
shall be the record date for the determination of shareholders.
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 day 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 held by each. 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.
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 shall have power to
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.
Section 2.8. PROXIES. At every meeting of the shareholders, each
shareholder having the right to vote thereat shall be entitled to vote in person
or by proxy. Such proxy shall be appointed by an instrument in writing
subscribed by such shareholder and bearing a date not more than three years
prior to such meeting, unless such proxy provides for a longer period, and shall
be filed with the Secretary of the corporation before, or at the time of the
meeting.
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. At any
meeting of shareholders, the Chairman of the meeting may, or upon the request of
any shareholder, shall appoint one or more persons as inspectors for such
meeting to ascertain and report the number of shares represented at the meeting
based upon their determination of validity and effect of proxies, count all
votes and report the results and do such other acts as are proper to conduct the
election and voting with impartiality and fairness to all shareholders. Each
report of an inspector shall be in writing and signed by him or by a majority of
them, if there be more than one inspector acting at such meeting, such majority
report being the report of the inspectors in such case. The report of the
inspector or inspectors on the number of shares represented at the meeting and
the results of the voting shall be a prima facie evidence thereof and shall be
accepted by the Chairman of the meeting for the conduct thereof unless he shall
be otherwise advised by counsel for the corporation.
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
2
<PAGE>
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 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 pledgor has expressly
empowered the pledgee to vote thereon, in which case only the pledgee, or the
pledgee's proxy, may represent such stock and bote thereon. Shares standing in
the name of two or more persons 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
corporaton 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 at any meeting of shareholders. 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 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
3
<PAGE>
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.
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. REGISTRATION AND VACANCIES.
(a) RESIGNATIONS. Any Director may resign at any time by giving written
notice to the Board of Directors or to the President. 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,
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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.
(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 property and
business of the corporation shall be managed by 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. In
case the corporation shall transact any business or enter into any contract with
a director, or with any firm of which one or more of its directors are members,
or with any trust, firm, corporation or association in which any director is a
shareholder, director or officer or otherwise interested, such directors shall
be severally under the duty of disclosing all material facts as to their
interest to the remaining directors promptly if and when such interested
directors shall become advised of the circumstances; and no such contract or
transaction shall be void or voidable solely by reason of such disclosed
interest or solely because such interested director was present at or
participated in the meeting of the board or committee thereof which authorized
the contract or transaction, or solely because his or their votes are counted
for such purpose, if the board or committee thereof in good faith authorizes
such contract or transaction by a vote sufficient for such purpose without
counting the vote of such interested director or directors. In the case of
continuing relationships in the normal course of business, such disclosure shall
be deemed effective, when once given, as to all transactions and contracts
subsequently entered into.
Section 3.4. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held without other notice than this By-Law immediately after the Annual
Meeting of Shareholders, and on the last Tuesday of June, September, and
December at the principal office of the corporation in the State of Illinois or
at such other place within or without the State of Delaware as the Chairman of
the Board or the President may designate and which shall be set forth in a
notice of said meeting. In the event the date of any regular meeting is a
holiday, such meeting shall be held the next succeeding business day.
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 President
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 one day 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.)
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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 act of the Board of Directors, except as may be
otherwise specifically provided by statute. If a quorum shall not be present at
any meeting of Directors, the Directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present. 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. 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.
Section 3.10. PRESIDING OFFICER. The presiding officer of any meeting of
the Board of Directors shall be the Chairman of the Board, or in his absence,
the President.
Section 3.11. COMMITTEE OF DIRECTORS. The Board of Directors may, by
resolution adopted by a majority of the whole Board, designate three or more
Directors to constitute an Executive Committee, which committee, when the Board
of Directors is not in session shall have and exercise all of the authority of
the Board of Directors in the management of the corporation except to the
extent, if any, that such authority shall be limited by resolution appointing
the Executive Committee and except also that the Executive Committee shall not
have the authority of the Board of Directors which cannot be delegated under the
law, or:
a. to amend the Certificate of Incorporation;
b. to adopt a plan of merger or consolidation with another corporation
or corporations;
c. to recommend to shareholders the sale, lease, exchange, mortgage,
pledge or other disposition of all or substantially all of the
property and assets of the corporation if not made in the ordinary
course of its business;
d. to recommend to shareholders a voluntary dissolution of the
corporation or a revocation thereof;
e. to amend, alter or repeal the By-Laws of the corporation;
f. to elect or remove officers of the corporation or members of the
Executive Committee;
g. to fix the compensation of any member of the Executive Committee;
h. to declare dividends; or
i. to amend, alter or repeal any resolution of the Board of Directors
which by its terms provides that it shall not be amended, altered or
repealed by the Executive Committee.
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The Chairman of the Executive Committee shall be appointed by the Board of
Directors at the time its members are designated. Regular meetings of the
Executive Committee may be held without notice at such times and places as the
Executive Committee may from time to time by resolution fix. Special meetings of
the Executive Committee may be called by any member thereof upon not less than
one day's notice stating the place, date and hour of the meeting which notice
may be written or oral, and if mailed, shall be deemed to be delivered when
deposited in the United States mail addressed to the member of the Executive
Committee at his business address. Any member of the Executive Committee may
waive notice of any meeting and no notice of any meeting need be given to any
member thereof who attends in person. The notice of a meeting of the Executive
Committee need not state the business proposed to be transacted at the meeting.
A majority of the members of the Executive Committee shall constitute a
quorum for the transaction of business at any meeting thereof, and action of the
Executive Committee must be authorized by the affirmative vote of a majority of
the members present at a meeting at which a quorum is present. Any vacancy in
the Executive Committee may be filled by a resolution adopted by a majority of
the whole Board of Directors. Any member of the Executive Committee may be
removed at any time with or without cause by resolution adopted by a majority of
the whole Board of Directors. Any member of the Executive Committee may resign
from the Executive Committee at any time by giving written notice to the
President or Secretary of the corporation, and unless otherwise specified,
therein, the acceptance of such resignation shall not be necessary to make it
effective. The Executive Committee may fix its own rules of procedure which
shall not be inconsistent with these By-Laws. It shall keep regular minutes of
its proceedings and report the same to the Board of Directors for its
information only at the meeting thereof held next after the proceedings shall
have been taken.
The Board of Directors may, by resolution passed by a majority of the whole
Board, designate one or more additional committees, each committee to consist of
two or more Directors of the corporation, to perform specific functions on
behalf of the Board of Directors. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors. The Board of Directors may designate one or more
Directors as alternate members of any such committee, who may replace any absent
or disqualified member thereof.
Section 3.12. FEES AND COMPENSATION OF DIRECTORS. The Board of Directors,
by the affirmative vote of a majority of directors then in office, and
irrespective of any personal interest of any of its members, shall have
authority to establish reasonable compensation of all directors for services to
the corporation as directors, officers, or otherwise. The Board of Directors may
allow by resolution a fixed monthly or annual sum payable to such director or
directors as are not officers or employees of the corporation as compensation to
such director or directors for extended consideration of corporation matters
implicit in the office of such director. By resolution of the Board of
Directors, the directors may be paid their expenses, if any, of attendance at
each meeting of the Board, and may be paid a fixed sum for attendance at
meetings or a stated salary as directors. Nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 3.13. RELIANCE UPON RECORDS. Every director of the corporation, or
member of any committee designated by the Board of Directors pursuant to
authority conferred by Section 3.11. of these By-Laws, shall, in the performance
of his duties, be fully protected in relying in good faith upon the books of
account or reports made to the corporation by any of its officials, or by an
independent certified public accountant, or by an appraiser selected with
reasonable care by the Board of Directors or by any such committee, or in
relying in good faith upon other records of the corporation including, without
limiting the generality of the foregoing, those as to the value and amount of
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 the
corporation's stock might properly be purchased or redeemed.
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ARTICLE IV
NOTICES
Section 4.1. MANNER OF NOTICE. Whenever under the provisions of the
statutes of these By-Laws notice is required to be given to any director, member
of any committee designated by the Board of Directors pursuant to authority
conferred by Section 3.11. of these By-Laws or shareholder, it shall not be
construed to require personal delivery, and such notice may be given in writing
by depositing it, in a sealed envelope, in the United States mails, air mail or
first class, postage prepaid, addressed to (or by delivering it to a telegraph
company, charges prepaid, for transmission to) such director, member or
shareholder either at the address of such director, member or shareholder as it
appears on the books of the corporation or, in the case of such a director or
member, at his business address; and such notice shall be deemed to be given at
the time when it is thus deposited in the United States mails (or delivered to
the telegraph company).
Section 4.2. WAIVER OF NOTICE. Whenever any notice is required to be given
under the provisions of the statutes, the Certificate of Incorporation, or these
By-Laws, a waiver thereof in writing signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 5.1. OFFICES AND OFFICIAL POSITIONS. The officers of the
corporation shall be a Chairman of the Board, a President, a Chief Executive
Officer, and Executive Vice President, A 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. Any two or more offices may be held by the same person, except
the offices of President and Secretary. 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 President 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.
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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.
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. 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 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 5.7. 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.
His actions shall be executed through the office of the President.
Section 5.8. EXECUTIVE VICE PRESIDENT. The Executive Vice President shall
be vested with all of the powers and shall perform all of the duties of the
President in the absence of the President. He shall familiarize himself with the
overall operations of the business under the direction of the President and
shall do and perform such duties as from time to time may be assigned to him by
the President and the Board of Directors.
Section 5.9. VICE PRESIDENT -- FINANCE. The Vice President-Finance, as the
chief financial officer of the corporation, shall: (a) be responsible to the
President, the Executive Vice 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 President or as required
in the ordinary conduct of the business of the corporation; (d) render to the
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 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 5.10. VICE PRESIDENTS. In the absence or inability to act of the
President, the Executive Vice 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, 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
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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 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 5.11. 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 President, the Executive Vice 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 by
the President, the Executive Vice President or by the Board of Directors. 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 5.12. 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 performance of his
office as may be appropriate in the exercise of reasonable care to one or more
persons in his stead.
Section 5.13. 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 5.14. 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 President, the Executive Vice 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 President or Board of Directors.
Section 5.15. 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 5.16. COMPENSATION. The salaries of the officers shall be fixed
from time to time by the Board of Directors or a Committee of the Board of
Directors designated by the Board with the
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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 5.17. 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.
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
CONTRACT, LOANS, CHECKS AND DEPOSITS
Section 7.1. CONTRACTS AND OTHER INSTRUMENTS. The Board of Directors may
authorize any officer of 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 or
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 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 President, the Executive Vice President, or
a Vice President and the Secretary or an Assistant Secretary. If any stock
certificate is signed (a) by a transfer agent or an assistant transfer agent or
(b) by a transfer clerk acting on behalf of the corporation and a registrar, the
signature of any such officer may be facsimile. In case any such officer whose
facsimile signature has thus been used on any such certificate shall cease to be
such officer, whether because of death, resignation or otherwise, before such
certificate has been delivered by the corporation, such certificate may
nevertheless be delivered by the corporation, as though the person whose
facsimile signature has
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been used thereon had not ceased to be such officer. 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 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 or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost 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 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 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, 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.
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.
12
<PAGE>
ARTICLE IX
GENERAL PROVISIONS
Section 9.1. FISCAL YEAR. The fiscal year of the corporation shall begin
on December 1 of each year and end on November 30 of the next succeeding
calendar year.
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.
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
13
<PAGE>
CLARCOR INC.
EXHIBIT 11 -- COMPUTATIONS OF PER SHARE EARNINGS (A)
FOR THE FIVE YEARS ENDED NOVEMBER 30, 1993
<TABLE>
<CAPTION>
FISCAL YEARS ENDED NOVEMBER 30,
-------------------------------------------------------------------------
AVERAGE SHARES OUTSTANDING 1993 1992 1991 1990 1989
- ---------------------------------------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1. Average number of shares
outstanding....................... 14,837,741 14,972,639 14,873,282 14,843,279 17,040,024
2. Net additional shares resulting
from assumed exercise of stock
options*.......................... 213,725 230,202 253,518 123,549 109,173
------------- ------------- ------------- ------------- -------------
3. Adjusted average shares outstanding
for fully diluted computation (1
plus 2)........................... 15,051,466 15,202,841 15,126,800 14,966,828 17,149,197
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
Earnings per share of common
stock:
Primary............................
$1.16 $.94 $1.26 $1.37 $.42
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
Assuming full dilution.............
$1.15 $.93 $1.24 $1.36 $.41
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
<FN>
- ------------------------
* 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.
(A) Adjusted to reflect 3-for-2 stock split payable February 14, 1992.
</TABLE>
<PAGE>
EXHIBIT 13(A)(II)
CLARCOR INC.
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 1993 AND 1992
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
1993 1992
----------- -----------
<S> <C> <C>
Current assets:
Cash and short-term cash investments.................................................. $ 13,838 $ 15,051
Due on sale of Precision Products Group............................................... -- 20,700
Accounts receivable, less allowance for losses of $1,544 for 1993 and $788 for 1992... 40,911 27,892
Inventories........................................................................... 26,996 25,007
Prepaid expenses...................................................................... 1,175 1,550
Deferred income taxes................................................................. 3,241 3,427
----------- -----------
Total current assets................................................................ 86,161 93,627
Investment in affiliates................................................................ 8,002 7,281
Plant assets, at cost less accumulated depreciation..................................... 47,636 35,584
Excess of cost over fair value of assets acquired, less accumulated amortization........ 15,701 12,768
Pension assets.......................................................................... 5,385 4,729
Other assets............................................................................ 7,011 7,266
----------- -----------
$ 169,896 $ 161,255
----------- -----------
----------- -----------
LIABILITIES
Current liabilities:
Current portion of long-term debt..................................................... $ 7,921 $ 6,825
Accounts payable and accrued liabilities.............................................. 23,775 15,969
Income taxes.......................................................................... 1,592 2,478
----------- -----------
Total current liabilities........................................................... 33,288 25,272
Long-term debt, less current portion.................................................... 24,617 29,325
Postretirement healthcare benefits...................................................... 3,111 3,535
Deferred income taxes................................................................... 4,239 3,572
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 14,819,199 in 1993 and
14,985,831 in 1992................................................................... 14,819 14,986
Capital in excess of par value.......................................................... 328 272
Foreign currency translation adjustments................................................ (1,465) (1,534)
Retained earnings....................................................................... 90,959 85,827
----------- -----------
104,641 99,551
----------- -----------
$ 169,896 $ 161,255
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
EXHIBIT 13(A)(III)
CLARCOR INC.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE YEARS ENDED NOVEMBER 30, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Net sales.................................................................. $ 225,319 $ 188,625 $ 179,538
Cost of sales.............................................................. 155,615 129,287 120,370
----------- ----------- -----------
Gross profit........................................................... 69,704 59,338 59,168
Selling and administrative expenses........................................ 40,637 31,708 28,315
----------- ----------- -----------
Operating profit....................................................... 29,067 27,630 30,853
----------- ----------- -----------
Other income (deductions):
Interest expense......................................................... (3,525) (3,803) (3,682)
Interest income.......................................................... 875 298 1,122
Equity in net earnings of affiliates..................................... 745 873 332
Other.................................................................... (84) 307 (82)
----------- ----------- -----------
(1,989) (2,325) (2,310)
----------- ----------- -----------
Earnings from continuing operations before income taxes and cumulative
effect of change in accounting method................................. 27,078 25,305 28,543
Provision for income taxes................................................. 9,827 8,796 10,068
----------- ----------- -----------
Earnings from continuing operations before cumulative effect of change
in accounting method.................................................. 17,251 16,509 18,475
Discontinued operations:
Earnings from operations, net of income taxes of $925 in 1991............ -- -- 297
Gain on disposition, net of income taxes of $1,342 in 1992............... -- -- --
----------- ----------- -----------
Earnings before cumulative effect of change in accounting method....... 17,251 16,509 18,772
Cumulative effect of change in accounting method, net of income tax benefit
of $1,477................................................................. -- (2,370) --
----------- ----------- -----------
Net earnings............................................................... $ 17,251 $ 14,139 $ 18,772
----------- ----------- -----------
----------- ----------- -----------
Net earnings (loss) per common share:
Continuing operations.................................................... $ 1.16 $ 1.10 $ 1.24
Discontinued operations.................................................. -- -- .02
Cumulative effect of accounting change................................... -- (.16) --
----------- ----------- -----------
$ 1.16 $ .94 $ 1.26
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
EXHIBIT 13(A)(IV)
CLARCOR INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED NOVEMBER 30, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK
--------------------------------------------
ISSUED IN TREASURY FOREIGN
--------------------- --------------------- CAPITAL IN CURRENCY
NUMBER OF NUMBER OF EXCESS OF TRANSLATION RETAINED
SHARES AMOUNT SHARES AMOUNT PAR VALUE ADJUSTMENTS EARNINGS
---------- --------- ---------- --------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, November 30, 1990..... 22,379,030 $ 14,920 7,533,842 $ 71,480 $ 3,102 $ -- $ 136,147
Net earnings................... -- -- -- -- -- -- 18,772
Stock options exercised........ -- -- (50,881) 800 978 -- --
Issuance of stock under award
plans......................... -- -- (11,213) (20) 243 -- --
Cash dividends -- $.42 per
common share.................. -- -- -- -- -- -- (6,240)
---------- --------- ---------- --------- ----------- ------------- ---------
Balance, November 30, 1991..... 22,379,030 14,920 7,471,748 72,260 4,323 -- 148,679
Net earnings................... -- -- -- -- -- -- 14,139
Retirement of treasury stock... (7,413,671) (7,414) (7,413,671) (72,974) (4,986) -- (60,574)
Stock split.................... -- 7,459 -- -- -- -- (7,459)
Stock options exercised........ 25,678 26 (18,145) 785 635 -- --
Issuance of stock under award
plans......................... (5,206) (5) (39,932) (71) 300 -- --
Cash dividends -- $.60 per
common share.................. -- -- -- -- -- -- (8,958)
Translation adjustments........ -- -- -- -- -- (1,534) --
---------- --------- ---------- --------- ----------- ------------- ---------
Balance, November 30, 1992..... 14,985,831 14,986 -- -- 272 (1,534) 85,827
Net earnings................... -- -- -- -- -- -- 17,251
Purchase of treasury stock..... -- -- 202,359 3,369 -- -- --
Retirement of treasury stock... (202,359) (202) (202,359) (3,369) (84) -- (3,083)
Stock options exercised........ 27,223 27 -- -- 66 -- --
Issuance of stock under award
plans......................... 8,504 8 -- -- 74 -- --
Cash dividends -- $.61 per
common share.................. -- -- -- -- -- -- (9,036)
Translation adjustments........ -- -- -- -- -- 69 --
---------- --------- ---------- --------- ----------- ------------- ---------
Balance, November 30, 1993..... 14,819,199 $ 14,819 -- $ -- $ 328 ($ 1,465) $ 90,959
---------- --------- ---------- --------- ----------- ------------- ---------
---------- --------- ---------- --------- ----------- ------------- ---------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
EXHIBIT 13(A)(V)
CLARCOR INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED NOVEMBER 30, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Cash flows from continuing operations:
Net earnings and cumulative effect of accounting change................... $ 17,251 $ 14,139 $ 18,475
Adjustments to reconcile net earnings to net cash provided by continuing
operations:
Depreciation............................................................ 5,816 4,952 4,569
Amortization............................................................ 479 428 429
Equity in net earnings of affiliates.................................... (745) (873) (332)
Net loss (gain) on disposition of manufacturing operations and plant
assets................................................................. 168 (1) 16
Cumulative effect of accounting change, net............................. -- 2,370 --
Changes in assets and liabilities:
Accounts receivable................................................... (3,357) (513) (5,373)
Inventories........................................................... 2,992 (694) (5,180)
Prepaid expenses...................................................... 707 (718) 508
Accounts payable and accrued liabilities.............................. (2,319) 2,032 528
Pension assets........................................................ (1,248) (822) (1,702)
Income taxes.......................................................... (605) 23 781
Deferred income taxes................................................. 853 (590) 559
---------- ---------- ----------
Cash provided by continuing operations.............................. 19,992 19,733 13,278
Cash provided by discontinued operations............................ -- 3,074 5,065
---------- ---------- ----------
Net cash provided by operating activities........................... 19,992 22,807 18,343
---------- ---------- ----------
Cash flows from investing activities:
Business acquisitions, net of cash acquired............................... (12,824) -- --
Investment in affiliates, net of dividends received....................... 439 92 (6,766)
Additions to plant assets................................................. (10,218) (6,557) (6,646)
Proceeds from sale of Precision Products Group............................ 20,700 -- --
Disposition of manufacturing operations and plant assets.................. 2 232 28
Other, net................................................................ 708 (118) (343)
Cash used by discontinued operations, principally for plant assets........ -- (834) (992)
---------- ---------- ----------
Net cash used in investing activities............................... (1,193) (7,185) (14,719)
---------- ---------- ----------
Cash flows from financing activities:
Reduction of long-term debt............................................... (7,614) (1,357) (810)
Sale of capital stock, stock option plan.................................. 7 115 178
Purchase of treasury stock................................................ (3,369) -- --
Cash dividends paid....................................................... (9,036) (8,958) (8,165)
Cash used by discontinued operations...................................... -- -- (8)
---------- ---------- ----------
Net cash used in financing activities............................... (20,012) (10,200) (8,805)
---------- ---------- ----------
Net change in cash and short-term cash investments.......................... (1,213) 5,422 (5,181)
Cash and short-term cash investments, beginning of year..................... 15,051 9,629 14,810
---------- ---------- ----------
Cash and short-term cash investments, end of year........................... $ 13,838 $ 15,051 $ 9,629
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
EXHIBIT 13(A)(VI)
CLARCOR INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
At November 30, 1993, the Company has two principal product segments:
Filtration Products and Consumer Products. During 1993, the Company acquired
Airguard Industries and Guardian/U.E.L. to be part of Filtration Products.
Effective November 30, 1992, the Company sold its Precision Products Group,
which had been previously reported as Discontinued Operations. These
transactions have resulted in significant changes in the Consolidated Financial
Statements and the related footnotes.
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.
FOREIGN CURRENCY TRANSLATION
Foreign financial statements 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. The amounts related to foreign subsidiaries are not
significant.
PLANT ASSETS
Depreciation is provided by the straight-line and accelerated methods for
financial statement purposes and by the accelerated method for tax purposes.
Provision for depreciation is made over the estimated useful lives of the
assets. It is the policy of the Company to capitalize renewals and betterments,
and to charge to expense the cost of current maintenance and repairs.
EXCESS OF COST OVER FAIR VALUE OF ASSETS ACQUIRED
Excess of cost over fair value of assets acquired is being amortized over a
forty-year period, using the straight-line method. Accumulated amortization was
$4,891 and $4,412 at November 30, 1993 and 1992, 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 Company has
certain noncash transactions related to a capital lease, stock option and award
plans, and the disposition of certain assets and businesses, which are described
in Footnotes F, K and L.
CONCENTRATIONS OF CREDIT
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of temporary cash investments
and trade receivables. The Company places its temporary cash investments with
high credit quality financial institutions and in high grade municipal
securities. At November 30, 1993 and 1992, the Company held short-term
securities of municipal government agencies with a total cost of $7,680 and
$10,250, respectively. Also, at November 30, 1992, the Company had a repurchase
agreement with a financial institution for $2,500. 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.
1
<PAGE>
CLARCOR INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
A. ACCOUNTING POLICIES (CONTINUED)
RETIREMENT PLANS AND POSTRETIREMENT HEALTHCARE BENEFITS
The Company has defined benefit pension plans covering most of its
employees. 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 following table sets forth the plans' funded status and amounts
recognized in the Company's consolidated balance sheet at November 30:
<TABLE>
<CAPTION>
1993 1992
---------- ----------
<S> <C> <C>
Accumulated benefit obligation, including vested benefits of ($48,020) and
($40,778), respectively....................................................... $ (50,543) $ (43,974)
---------- ----------
---------- ----------
Plan assets at fair value...................................................... $ 59,237 $ 55,543
Projected benefit obligation for service rendered to date...................... (55,672) (47,445)
---------- ----------
Plan assets in excess of projected benefit obligation.......................... 3,565 8,098
Unrecognized net loss from past experience different from that assumed......... 8,117 4,555
Unrecognized net asset being recognized over approximately 15 years............ (7,615) (8,705)
---------- ----------
Accrued pension asset for defined benefit plans, net........................... $ 4,067 $ 3,948
---------- ----------
---------- ----------
</TABLE>
The net pension expense (credit) includes the following components for the
three years ended November 30:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Service cost -- benefits earned during the period..................... $ 2,127 $ 2,379 $ 1,774
Interest cost on projected benefit obligation......................... 3,644 3,760 3,742
Actual return on assets............................................... (6,581) (4,506) (3,158)
Net amortization and deferral......................................... 918 (1,382) (3,155)
--------- --------- ---------
Net pension expense (credit).......................................... $ 108 $ 251 $ (797)
--------- --------- ---------
--------- --------- ---------
</TABLE>
The projected benefit obligation has been determined with a weighted average
discount rate of 7.0% and 8.0% in 1993 and 1992, 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 8.5 % in 1993 and 1992. The increases in
the accumulated and projected benefit obligations in 1993 are related
principally to the decrease in the weighted average discount rate. 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's
contributions to these plans totaled $400, $322 and $400 in 1993, 1992 and 1991,
respectively. No accrued liability exists at November 30, 1993 and 1992 for
these plans.
In addition to providing pension and other supplemental benefits, certain
healthcare benefits are provided for certain of the Company's retired employees.
Certain employees become eligible for these benefits if they meet minimum age
and service requirements, are eligible for retirement benefits and contribute a
portion of the cost. The Company has the right to modify or terminate these
benefits.
2
<PAGE>
CLARCOR INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
A. ACCOUNTING POLICIES (CONTINUED)
During 1992, the provisions of Statement of Financial Accounting Standards
(SFAS) No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" were adopted. The Statement requires companies to accrue the expected
cost of providing postretirement benefits other than pensions over the years
that employees render service rather than the cash basis previously used. The
projected benefit obligation of $2,370, net of income taxes of $1,477, relating
to prior service cost was a noncash transaction recognized as a cumulative
effect of a change in accounting method, effective December 1, 1991.
The following table sets forth the plan's obligation and cost at November
30, 1993 and 1992:
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees......................................................................... $ 3,184 $ 3,371
Fully eligible active plan participants.......................................... -- 11
Other active plan participants................................................... 545 465
--------- ---------
Accumulated postretirement benefit obligation...................................... 3,729 3,847
Unrecognized loss.................................................................. (320) --
--------- ---------
Accrued postretirement benefit liability........................................... 3,409 3,847
Less current portion, included in accrued liabilities............................ 298 312
--------- ---------
$ 3,111 $ 3,535
--------- ---------
--------- ---------
</TABLE>
The net periodic postretirement benefit cost for the years ended November
30, 1993 and 1992 includes the following components:
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Service cost-benefits attributed to service during the period........................... $ 23 $ 26
Interest cost on accumulated postretirement benefit obligations......................... 275 286
--------- ---------
Net periodic postretirement benefit cost................................................ $ 298 $ 312
--------- ---------
--------- ---------
</TABLE>
Substantially all healthcare benefit cost increases will be assumed by the
participants, and therefore future increases in the healthcare 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% in 1993 and 8% in 1992.
The expense, recognized on the cash basis, for postretirement healthcare
benefits was approximately $589 in 1991.
INCOME TAXES
Provision is made for income taxes currently payable and for deferred income
taxes resulting from timing differences between financial and taxable income.
NET EARNINGS PER COMMON SHARE AND STOCK SPLIT
Net earnings per common share is based on the weighted average number of
common shares outstanding during the respective years.
On January 20, 1992, the Company declared a three-for-two stock split
effected in the form of a 50% stock dividend. All per common share amounts and
number of common shares, option shares, stock appreciation rights, treasury
shares and shares under the long range performance share plan have been adjusted
to reflect the stock split.
3
<PAGE>
CLARCOR INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
A. ACCOUNTING POLICIES (CONTINUED)
ACCOUNTING PERIOD
In fiscal 1991, the Company converted from a fiscal year ending on November
30 to a fiscal year ending on the Saturday closest to November 30. For fiscal
years 1993, 1992 and 1991, the year ended on November 27, 28 and 30,
respectively. In the consolidated financial statements, all fiscal year ends
will be shown as November 30 for clarity of presentation.
RECLASSIFICATION
The 1992 and 1991 consolidated statements of earnings include a
reclassification of certain product distribution costs from selling and
administrative expenses to cost of sales in order to be consistent with the 1993
statement of earnings.
B. ACQUISITIONS AND INVESTMENT IN AFFILIATES
ACQUISITIONS
The Company purchased all of the shares of Airguard Industries, Inc. on
April 30, 1993 and the assets of Guardian/U.E.L. effective June 1, 1993, for
$13,504 in cash, including acquisition expenses. Airguard is a manufacturer of
environmental air filtration products. Guardian/U.E.L. manufactures air and
liquid filtration products. The acquisitions have been accounted for by the
purchase method of accounting and the operating results of Airguard and
Guardian/U.E.L. are included in the Company's consolidated results of operations
from the date of the acquisitions. The excess of cost over fair value of assets
acquired is being amortized over a forty year period, using the straight-line
method.
The following unaudited pro forma amounts are presented as if the
acquisitions had occurred at the beginning of the periods presented and does not
purport to be indicative of what would have occurred had the acquisitions been
made as of those dates or of results which may occur in the future. Unaudited
pro forma net sales for the Company would have been $248,171 and $237,575 for
the years ended November 30, 1993 and 1992, respectively. Net earnings and
earnings per share for each of these periods would not have been significantly
affected.
INVESTMENTS IN AFFILIATES
In July 1991, the Company acquired for cash a 20% interest in the
outstanding common stock of G.U.D. Holdings Limited, an Australian filter
manufacturer. The acquisition cost exceeded the underlying equity in net assets
by $2,107 which is amortized over a period of 40 years. The Company also has a
standstill agreement which limits the Company's ability to own greater than a
20% interest and governs the manner in which the stock can be disposed. The
carrying value of this investment was $7,716 and $7,048 at November 30, 1993 and
1992, respectively. The quoted market value of the Company's investment in
G.U.D. was $15,300 and $11,000 at November 30, 1993 and 1992, respectively. Cash
dividends totaling $439 and $670 were received in fiscal years 1993 and 1992,
respectively.
The Company also has a 50/50 joint venture interest with G.U.D. in Baldwin
Filters (Aust.) Pty. Ltd., an Australian distributor of heavy duty filters, and
a 60% interest in PleaTech, a technology and manufacturing joint venture for
extended life, high-efficiency filters based in Michigan. The carrying value of
these investments at November 30, 1993 and 1992 was $286 and $233, respectively.
4
<PAGE>
CLARCOR INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
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 59% and 53% of the
Company's inventories at November 30, 1993 and 1992, 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:
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Raw materials.................................................................... $ 10,471 $ 8,694
Work-in-process.................................................................. 4,947 5,157
Finished products................................................................ 14,977 15,625
--------- ---------
Total at FIFO................................................................ 30,395 29,476
Less excess of FIFO cost over LIFO values...................................... 3,399 4,469
--------- ---------
$ 26,996 $ 25,007
--------- ---------
--------- ---------
</TABLE>
During 1993, 1992 and 1991, inventory quantities were reduced resulting in a
partial liquidation of the LIFO bases, the effect of which increased net
earnings by approximately $650, $400 and $450, respectively.
D. PLANT ASSETS
Plant assets at November 30, 1993 and 1992 were as follows:
<TABLE>
<CAPTION>
1993 1992
----------- ---------
<S> <C> <C>
Land........................................................................... $ 1,931 $ 1,113
Buildings and building fixtures................................................ 37,964 33,545
Machinery and equipment........................................................ 67,666 56,590
Construction-in-process........................................................ 4,693 3,934
----------- ---------
112,254 95,182
Less accumulated depreciation................................................ 64,618 59,598
----------- ---------
$ 47,636 $ 35,584
----------- ---------
----------- ---------
</TABLE>
E. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities at November 30, 1993 and 1992 were
as follows:
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Accounts payable................................................................. $ 9,777 $ 7,378
Accrued salaries, wages and commissions.......................................... 3,575 1,390
Compensated absences............................................................. 2,433 2,145
Accrued pension liabilities...................................................... 1,318 781
Other accrued liabilities........................................................ 6,672 4,275
--------- ---------
$ 23,775 $ 15,969
--------- ---------
--------- ---------
</TABLE>
5
<PAGE>
CLARCOR INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
F. LONG-TERM DEBT
Long-term debt at November 30, 1993 and 1992 consists of the following:
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Promissory note.................................................................. $ 27,416 $ 33,833
Other obligations, at 6%-10% interest............................................ 5,122 2,317
--------- ---------
32,538 36,150
Less current portion........................................................... 7,921 6,825
--------- ---------
$ 24,617 $ 29,325
--------- ---------
--------- ---------
</TABLE>
The promissory note matures March 31, 1997, but the Company is required to
prepay, without premium, certain principal amounts as stated in the agreement.
Interest at 9.71% per annum is payable quarterly. Under the note agreement, the
Company must meet certain restrictive covenants. The primary covenants include
maintaining minimum consolidated working capital at $25,000, a minimum
consolidated current ratio of 1.5 to 1, and limiting dividends and new
borrowings as stipulated in the agreement. The dividend limitation includes a
base amount, reductions for treasury stock acquisitions, and increases for
one-half of net earnings. As of November 30, 1993, $4,081 of retained earnings
was available to the Company under this covenant for future cash dividends and
future treasury stock acquisitions.
Other obligations include a 15 year capital lease for a manufacturing
facility acquired in 1991 from the Community Development Authority of the City
of Gothenburg, Nebraska, and debt acquired in the acquisitions of Airguard
Industries and Guardian Filters, including an industrial revenue bond due in
2003.
Additionally, the Company had unused bank lines of credit at November 30,
1993 which permitted borrowings of $10,500. The agreements related to these
obligations include certain restrictive covenants for the Company or certain
subsidiaries that are similar to the promissory note.
Principal maturities of long-term debt for the next five fiscal years ending
November 30 approximates: $7,921 in 1994, $7,583 in 1995, $7,597 in 1996, $7,021
in 1997, $452 in 1998 and $1,964 thereafter.
Interest paid totaled $3,560, $3,878 and $3,673 during 1993, 1992 and 1991,
respectively.
G. INCOME TAXES
The provision for income taxes for continuing operations consists of:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Current:
Federal............................................................... $ 7,632 $ 7,032 $ 8,660
State................................................................. 1,342 1,454 849
Deferred................................................................ 853 310 559
--------- --------- ---------
$ 9,827 $ 8,796 $ 10,068
--------- --------- ---------
--------- --------- ---------
</TABLE>
Total income taxes paid, net of refunds, totaled $9,860, $10,982 and $9,474
during 1993, 1992 and 1991, respectively.
6
<PAGE>
CLARCOR INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
G. INCOME TAXES (CONTINUED)
The provision for income taxes for continuing operations resulted in
effective tax rates which differ from the statutory federal income tax rates.
The reasons for these differences are as follows:
<TABLE>
<CAPTION>
Percent of
Pretax Earnings
-------------------------------
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Statutory rates.................................................................. 34.9 34.0 34.0
State income taxes, net of federal benefit....................................... 3.2 3.8 2.0
Reduction of previously established accruals..................................... (2.6) -- --
Foreign tax credit utilization................................................... (1.7) (1.5) (.6)
Foreign net operating losses..................................................... 2.6 -- --
Other............................................................................ (.1) (1.5) (.1)
--- --- ---
Effective rates.................................................................. 36.3 34.8 35.3
--- --- ---
--- --- ---
</TABLE>
Deferred income taxes for continuing operations resulted principally from
timing differences in the recognition of depreciation, accrued pension
liabilities and compensation expenses. The deferred income tax provisions for
continuing operations in 1993, 1992 and 1991 include $487, $315 and $313,
respectively, resulting from the excess of tax over book depreciation; $2, $93
and $428, respectively, resulting from differences in the recognition of accrued
pension liabilities; and $305, ($107) and ($133), respectively, resulting from
differences in recognizing compensation expenses.
Included in the income taxes on the 1992 gain on disposition were taxes
currently payable of $2,444, and deferred income taxes of ($1,102) which
resulted principally from timing differences related to accrued liabilities. The
income taxes provided exceeded the normal statutory tax rate due principally to
nontax deductible costs. The disposition included the transfer of $924 of
deferred income tax liabilities to the buyer.
Included in the 1992 cumulative effect of change in accounting method is
$1,477 of deferred income tax benefit. The income tax benefit has been provided
at a rate higher than the federal statutory rate to provide for state income
taxes.
In February of 1992, the Financial Accounting Standards Board adopted
Statement No. 109, "Accounting for Income Taxes". This statement establishes
financial accounting and reporting standards for the effects of income taxes
that result from an enterprise's activities during the current and preceding
years. Adoption of the new standard in the first quarter of fiscal 1994 will not
have a material effect on the Company's financial position and results of
operations.
H. FINANCIAL INSTRUMENTS
In 1993, the Company adopted the provisions of Financial Accounting
Standards Board Statement No. 107, "Disclosures About Fair Value of Financial
Instruments".
Based on the short-term maturity of cash and short-term cash investments,
the carrying amount approximates fair value. A fair value estimate of $34,500
for the long-term debt is based on the current interest rates offered to the
Company for debt with similar remaining maturities.
I. CONTINGENCIES
In December 1992, a trial jury in Texas entered a judgment against Baldwin
Filters, Inc., a subsidiary of the Company, in the amount of $4,900 that
resulted from the termination of a sales representative. In November 1993, the
district court in Texas ordered that a joint motion filed by the
7
<PAGE>
CLARCOR INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
I. CONTINGENCIES (CONTINUED)
two parties to dismiss the judgment be granted, that the judgment of the trial
court be vacated, and that the cause be remanded to the trial court for entry of
a take-nothing judgment pursuant to a settlement agreement by the two parties.
The Company is involved in other legal actions arising in the normal course
of business. After taking into consideration legal counsel's evaluation of such
actions, management is of the opinion that their outcome will not have a
material adverse effect on the Company's consolidated financial position.
J. 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.
K. STOCK OPTION AND AWARD PLANS
STOCK OPTION PLAN
The 1984 Stock Option Plan includes incentive stock options under the
provisions of the Internal Revenue Code and nonqualified stock options.
Incentive stock options are granted at the fair market value at the date of
grant. There are no incentive stock options outstanding. Nonqualified stock
options may, at the discretion of the Board of Directors, be granted at an
exercise price less than the fair market value at the date of grant.
The plan also provides for the grant of stock appreciation rights to
accompany the options. The Company accrues as compensation expense the excess of
the fair market value over the related options' exercise price. Compensation
expense for stock appreciation rights totaled $-0-in 1993 and 1992 and $76 in
1991. Stock appreciation rights are only exercisable to the extent the related
options are exercisable for all grants except those granted after 1988, in which
case the optionee may surrender for cash all or any portion independent of the
exercise of related options. Exercise of stock appreciation rights causes
surrender of an equal number of related options. All stock appreciation rights
outstanding are held by former employees.
8
<PAGE>
CLARCOR INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
K. STOCK OPTION AND AWARD PLANS (CONTINUED)
Shares under option are as follows:
<TABLE>
<CAPTION>
STOCK
NONQUALIFIED APPRECIATION
STOCK OPTIONS RIGHTS
------------- ------------
<S> <C> <C>
Outstanding at November 30, 1990........................................... 877,067 57,780
Granted.................................................................. -- --
Exercised/surrendered.................................................... (121,958) (33,479)
------------- ------------
Outstanding at November 30, 1991........................................... 755,109 24,301
Granted.................................................................. 219,000 --
Exercised/surrendered.................................................... (121,500) (5,625)
------------- ------------
Outstanding at November 30, 1992........................................... 852,609 18,676
Granted.................................................................. 158,000 --
Exercised/surrendered.................................................... (148,403) (6,750)
------------- ------------
Outstanding at November 30, 1993........................................... 862,206 11,926
------------- ------------
------------- ------------
Exercisable at November 30, 1993........................................... 431,891 11,926
------------- ------------
------------- ------------
</TABLE>
The outstanding nonqualified stock options at November 30, 1993 are
exercisable at an average of $14.67 per share or $12,645 in total. There were
also 241,528 shares reserved for future grants at November 30, 1993 (376,350
shares at November 30, 1992), of which 191,500 shares were granted in December
1993. The remaining ungranted shares expired on December 31, 1993.
LONG RANGE PERFORMANCE SHARE PLAN
The Long Range Performance Share Plan became effective December 1, 1987.
Under this plan, 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. As of November 30, 1993,
680,355 of authorized shares have been reserved for the plan.
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 $364, $196 and $541 in 1993, 1992 and 1991, respectively.
Distribution of Company shares of common stock and cash for the performance
periods ended November 30, 1993, 1992 and 1991 were $432, $268 and $332,
respectively.
DIRECTORS' RESTRICTED STOCK COMPENSATION PLAN
During 1990, the Company adopted a plan to grant 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
$131, $135 and $120 in 1993, 1992 and 1991, respectively. During 1992 and 1991,
$43 and $15, respectively, in Company shares of common stock were issued, net of
forfeitures, under the plan.
9
<PAGE>
CLARCOR INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
L. DISCONTINUED OPERATIONS
In June 1991, the Company adopted a plan to dispose of its Precision
Products Group (Group). Effective November 30, 1992, the Company sold the Group
for $20,700 in cash, with settlement on December 31, 1992, and a $2,500 note
receivable, included in other assets. The 8% note receivable, due December 30,
1997, has certain collateral pledged from the buyer, a highly leveraged entity.
The sale was recorded as of November 30, 1992 and resulted in a pretax gain of
$1,342 after considering estimated costs to be incurred in connection with the
sale, operating results through the date of disposition, and including a $686
curtailment gain of certain pension benefits related to the Group. The income
tax effects, net of $1,342, which offsets the gain, exceeds the normal statutory
tax rate due principally to nontax deductible costs.
Revenues applicable to the Group were $40,698 and $38,563 for the years
ended November 30, 1992 and 1991, respectively.
This Group has been reported as Discontinued Operations in the Consolidated
Statements of Earnings and Cash Flows. Certain other disclosures and amounts in
the footnotes for 1991 include amounts related to the Precision Products Group.
M. UNAUDITED QUARTERLY FINANCIAL DATA
The unaudited quarterly data for 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTALS
--------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
1993:
Net sales................................. $ 41,913 $ 49,732 $ 64,634 $ 69,040 $ 225,319
Gross profit.............................. 13,075 15,085 19,384 22,160 69,704
Net earnings.............................. 3,091 2,781 5,060 6,319 17,251
Net earnings per common share............. $ .21 $ .19 $ .34 $ .42 $ 1.16
1992:
Net sales................................. $ 40,780 $ 45,353 $ 50,655 $ 51,837 $ 188,625
Gross profit.............................. 12,784 14,751 16,010 15,793 59,338
Earnings from continuing operations....... 2,932 4,376 5,054 4,147 16,509
Earnings from discontinued operations..... -- -- -- -- --
Cumulative effect of accounting change.... (2,370) -- -- -- (2,370)
Net earnings.............................. 562 4,376 5,054 4,147 14,139
Net earnings (loss) per common share:
Continuing operations................... $ .20 $ .29 $ .34 $ .27 $ 1.10
Discontinued operations................. -- -- -- -- --
Cumulative effect of accounting
change................................. (.16) -- -- -- (.16)
--------- --------- --------- --------- -----------
$ .04 $ .29 $ .34 $ .27 $ .94
--------- --------- --------- --------- -----------
--------- --------- --------- --------- -----------
</TABLE>
10
<PAGE>
CLARCOR INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
M. UNAUDITED QUARTERLY FINANCIAL DATA (CONTINUED)
NOTES TO QUARTERLY FINANCIAL DATA
Net earnings and net earnings per share for the first quarter of 1992 have
been restated to reflect the adoption in the fourth quarter of 1992 of SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other than Pensions",
retroactively effective December 1, 1991.
The 1992 quarterly gross profit disclosures include a reclassification of
certain product distribution costs from selling and administrative expenses to
cost of sales in order to be consistent with the 1993 presentation.
The second quarter of 1993 includes a charge to net earnings of
approximately $1,200 related to the Company's subsidiary in Belgium. During the
fourth quarters of 1993 and 1992, LIFO inventory reductions increased net
earnings by approximately $650 and $400, respectively.
N. SEGMENT INFORMATION
At November 30, 1993, the Company has two principal product segments:
Filtration Products and Consumer Products. The Filtration Products Group
manufactures and markets a complete line of filters used in the filtration of
internal combustion engines, clean rooms, sterile air and gases, and lubrication
oils, air, fuel, coolant, hydraulic and transmission fluids. The Consumer
Products Group manufactures and markets plastic closures, custom designed
lithographed metal and metal-plastic containers, spiral and convolute-wound
composite containers and collapsible metal tubes.
Net sales represent sales to unaffiliated customers, as reported in the
consolidated statements of earnings. Intersegment sales were not material.
Assets are those assets used in each business segment. Corporate assets consist
of cash and short-term cash investments, receivable from sale of Precision
Products Group in 1992, deferred income taxes, world headquarters facility,
pension assets and various other assets which are not specific to an industry
segment.
The segment data for the years ended November 30, 1993, 1992 and 1991 are as
follows:
<TABLE>
<CAPTION>
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Net sales:
Filtration Products............................................ $ 156,165 $ 118,215 $ 109,360
Consumer Products.............................................. 69,154 70,410 70,178
----------- ----------- -----------
Total........................................................ $ 225,319 $ 188,625 $ 179,538
----------- ----------- -----------
----------- ----------- -----------
Operating profit:
Filtration Products............................................ $ 19,661 $ 18,666 $ 20,909
Consumer Products.............................................. 9,406 8,964 9,944
----------- ----------- -----------
Total........................................................ $ 29,067 $ 27,630 $ 30,853
----------- ----------- -----------
----------- ----------- -----------
Assets:
Filtration Products............................................ $ 105,278 $ 74,364 $ 71,691
Consumer Products.............................................. 30,377 28,588 29,161
Corporate...................................................... 34,241 58,303 26,175
Discontinued operations........................................ -- -- 30,972
----------- ----------- -----------
Total........................................................ $ 169,896 $ 161,255 $ 157,999
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
11
<PAGE>
CLARCOR INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
N. SEGMENT INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
1993 1992 1991
----------- ----------- -----------
Additions to plant assets:
<S> <C> <C> <C>
Filtration Products (including capitalized leases in 1991)..... $ 6,339 $ 3,861 $ 5,537
Consumer Products.............................................. 3,816 2,652 2,677
Corporate...................................................... 63 44 148
Discontinued operations........................................ -- 893 1,482
----------- ----------- -----------
Total........................................................ $ 10,218 $ 7,450 $ 9,844
----------- ----------- -----------
----------- ----------- -----------
Depreciation:
Filtration Products............................................ $ 2,758 $ 2,063 $ 1,745
Consumer Products.............................................. 2,912 2,738 2,466
Corporate...................................................... 146 151 358
Discontinued operations........................................ -- 2,092 2,138
----------- ----------- -----------
Total........................................................ $ 5,816 $ 7,044 $ 6,707
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
12
<PAGE>
EXHIBIT 13(A)(VII)
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Shareholders
CLARCOR Inc.
Rockford, Illinois
We have audited the accompanying consolidated balance sheets of CLARCOR Inc.
as of November 30, 1993 and 1992, and the related consolidated statements of
earnings, shareholders' equity, and cash flows for each of the three years in
the period ended November 30, 1993. 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. as
of November 30, 1993 and 1992, and the consolidated results of its operations
and its cash flows for each of the three years in the period ended November 30,
1993, 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 postretirement benefits other than
pensions, effective December 1, 1991.
COOPERS & LYBRAND
Rockford, Illinois
January 7, 1994
<PAGE>
EXHIBIT 13(A)(VIII)
MANAGEMENT'S REPORT ON RESPONSIBILITY FOR FINANCIAL REPORTING
The management of CLARCOR is responsible for the preparation, integrity and
objectivity of the Company's financial statements and the other financial
information in this report. The financial statements were prepared in conformity
with generally accepted accounting principles and reflect in all material
respects the results of operations and the Company's financial position for the
periods shown. The financial statements are presented on the accrual basis of
accounting and, where appropriate, reflect estimates based upon judgments of
management.
In addition, management maintains a system of internal controls designed to
assure that Company assets are safeguarded from loss or unauthorized use or
disposition. Also, the controls system provides assurance that transactions are
authorized according to the intent of management and are accurately recorded to
permit the preparation of financial statements in accordance with generally
accepted accounting principles. For the periods covered by the financial
statements in this report, management believes this system of internal controls
was effective concerning all material matters. The effectiveness of the controls
system is supported by the selection and training of qualified personnel, an
organizational structure that provides an appropriate division of
responsibility, a strong budgetary system of control and a comprehensive
internal audit program.
The Audit Committee of the Board of Directors, which is composed of four
outside directors, serves in an oversight role to assure the integrity and
objectivity of the Company's financial reporting process. The Committee meets
periodically with representatives of management and the independent and internal
auditors to review matters of a material nature related to financial reporting
and the planning, results and recommendations of audits. The independent and
internal auditors have free access to the Audit Committee. The Committee is also
responsible for making recommendations to the Board of Directors concerning the
selection of the independent auditors.
<TABLE>
<S> <C> <C>
Lawrence E. Gloyd L. Paul Harnois William F. Knese
Chairman, President and Senior Vice President Vice President,
Chief Executive Officer and Chief Financial Officer Treasurer and Controller
</TABLE>
January 7, 1994
<PAGE>
EXHIBIT 13(A)(IX)
13-YEAR FINANCIAL SUMMARY
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
PER SHARE
Equity....................................... $ 7.06 $ 6.64 $ 6.42 $ 5.57 $ 4.83
Earnings from Continuing Operations.......... 1.16 1.10 1.24 1.29 0.69
Net Earnings................................. 1.16 0.94 1.26 1.37 0.42
Dividends.................................... 0.610 0.600 0.550 0.520 0.480
Price: High.................................. 20.00 22.50 22.67 17.83 18.92
Low.................................... 16.00 15.00 13.00 11.83 11.75
EARNINGS DATA ($000)
Net Sales.................................... $ 225,319 $ 188,625 $ 179,538 $ 170,279 $ 156,530
Operating Profit............................. 29,067 27,630 30,853 30,832 22,128
Interest Expense............................. 3,525 3,803 3,682 3,675 1,327
Pretax Income................................ 27,078 25,305 28,543 30,204 22,084
Income Taxes................................. 9,827 8,796 10,068 10,999 10,474
Earnings from Continuing Operations.......... 17,251 16,509 18,475 19,205 11,610
Earnings from Discontinued Operations........ 0 0 297 1,200 (4,493 )
Net Earnings................................. 17,251 14,139 18,772 20,405 7,117
Average Shares Outstanding................... 14,838 14,973 14,873 14,843 17,040
EARNINGS ANALYSIS
Operating Margin............................. 12.9 % 14.6 % 17.2 % 18.1 % 14.1 %
Pretax Margin................................ 12.0 % 13.4 % 15.9 % 17.7 % 14.1 %
Effective Tax Rate........................... 36.3 % 34.8 % 35.3 % 36.4 % 47.4 %
Net Margin -- Continuing Operations.......... 7.7 % 8.8 % 10.3 % 11.3 % 7.4 %
Net Margin................................... 7.7 % 7.5 % 10.5 % 12.0 % 4.5 %
Asset Turnover............................... 1.40 x 1.19 x 1.25 x 1.30 x 1.09 x
Return on Assets............................. 10.7 % 8.9 % 13.0 % 15.6 % 4.9 %
Financial Leverage........................... 1.62 x 1.66 x 1.74 x 1.80 x 1.16 x
Return on Equity............................. 17.3 % 14.8 % 22.7 % 28.1 % 5.7 %
Reinvestment Rate............................ 47.6 % 36.6 % 56.5 % 62.2 % -16.5 %
BALANCE SHEET ($000)
Current Assets............................... $ 86,161 $ 93,627 $ 75,207 $ 72,623 $ 58,019
Plant Assets, net............................ 47,636 35,584 45,712 42,748 44,223
Total Assets................................. 169,896 161,255 157,999 144,127 131,009
Current Liabilities.......................... 33,288 25,272 20,570 20,758 21,405
Long-Term Debt............................... 24,617 29,325 35,834 35,810 32,634
Shareholders' Equity......................... 104,641 99,551 95,662 82,689 72,662
BALANCE SHEET ANALYSIS ($000)
Debt to Capitalization....................... 19.0 % 22.8 % 27.3 % 30.2 % 31.0 %
Working Capital.............................. 52,873 68,355 54,637 51,865 36,614
Quick Ratio.................................. 1.6:1 2.5:1 2.1:1 2.1:1 1.4:1
CASH FLOW DATA ($000)
From Operations.............................. $ 19,992 $ 22,807 $ 18,343 $ 25,284 $ 17,791
Used for Investment.......................... (1,193 ) (7,185 ) (14,719 ) (4,973 ) (8,251 )
Used for Financing........................... (20,012 ) (10,200 ) (8,805 ) (10,316 ) (23,915 )
Change in Cash & Equivalents................. (1,213 ) 5,422 (5,181 ) 9,995 (14,375 )
Capital Expenditures......................... 10,218 7,450 8,128 8,638 8,334
Depreciation................................. 5,816 7,044 6,707 6,619 6,321
Dividends Paid............................... 9,036 8,958 8,165 7,708 8,290
Interest (Income)/Expense.................... 2,650 3,505 2,560 3,143 53
Taxes Paid................................... 9,860 10,982 9,474 10,068 11,234
CASH FLOW ANALYSIS ($000)
Operating Cash Flow(1)....................... $ 32,502 $ 37,294 $ 30,377 $ 38,495 $ 29,078
Net Cash Flow(2)............................. 22,284 29,844 22,249 29,857 20,744
Elective Cash Flow(3)........................ 738 6,399 2,050 8,938 1,167
<FN>
- --------------------------
(1) From operations before interest income/expense and taxes paid.
(2) Operating cash flow less capital expenditures before interest
income/expense and taxes paid.
(3) Net cash flow less dividends +(-) interest income/expense and less taxes
paid.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1988 1987 1986 1985 1984 1983 1982 1981
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 6.99 $ 6.36 $ 5.76 $ 5.22 $ 4.68 $ 4.13 $ 3.69 $ 3.29
1.02 0.95 0.90 0.86 0.82 0.73 0.69 0.65
1.15 1.04 0.96 0.93 0.91 0.79 0.73 0.73
0.453 0.431 0.418 0.391 0.365 0.338 0.338 0.318
14.59 16.89 14.17 12.78 12.89 15.33 8.00 8.00
9.75 9.25 10.09 10.00 9.56 7.61 5.28 5.00
$ 149,468 $ 146,225 $ 135,319 $ 143,716 $ 163,059 $ 150,840 $ 148,604 $ 113,699
27,287 29,045 25,032 27,222 27,816 25,551 25,177 20,108
151 176 192 216 766 1,503 3,503 1,042
28,833 30,378 29,769 30,139 29,167 25,730 24,411 22,951
10,647 13,270 13,566 14,492 14,439 12,600 11,983 11,248
18,186 17,108 16,203 15,647 14,728 13,130 12,428 11,703
2,412 1,672 1,165 1,250 1,634 1,039 728 1,448
20,598 18,780 17,368 16,897 16,362 14,169 13,156 13,151
17,926 18,121 18,094 18,074 18,062 18,050 18,025 18,037
18.3 % 19.9 % 18.5 % 18.9 % 17.1 % 16.9 % 16.9 % 17.7 %
19.3 % 20.8 % 22.0 % 21.0 % 17.9 % 17.1 % 16.4 % 20.2 %
36.9 % 43.7 % 45.6 % 48.1 % 49.5 % 49.0 % 49.1 % 49.0 %
12.2 % 11.7 % 12.0 % 10.9 % 9.0 % 8.7 % 8.4 % 10.3 %
13.8 % 12.8 % 12.8 % 11.8 % 10.0 % 9.4 % 8.9 % 11.6 %
1.11 x 1.19 x 1.16 x 1.34 x 1.58 x 1.45 x 1.38 x 1.77 x
15.3 % 15.3 % 14.9 % 15.7 % 15.8 % 13.7 % 12.2 % 20.4 %
1.17 x 1.18 x 1.23 x 1.27 x 1.38 x 1.56 x 1.81 x 1.23 x
17.9 % 18.0 % 18.4 % 20.0 % 21.9 % 21.3 % 22.2 % 25.2 %
60.6 % 58.4 % 56.5 % 58.2 % 59.8 % 57.0 % 53.7 % 56.4 %
$ 70,028 $ 67,523 $ 75,457 $ 72,837 $ 61,806 $ 56,345 $ 53,932 $ 56,120
42,063 39,828 32,431 27,934 27,482 30,742 31,818 33,916
143,842 134,877 122,779 116,184 107,423 103,381 103,707 107,448
14,244 15,899 13,153 15,815 16,805 17,424 18,455 19,239
1,116 1,507 1,634 1,875 2,197 8,508 16,902 27,315
125,012 115,015 104,186 94,372 84,466 74,663 66,412 59,344
0.9 % 1.3 % 1.5 % 1.9 % 2.5 % 10.2 % 20.3 % 31.5 %
55,784 51,624 62,304 57,022 45,001 38,921 35,477 36,881
3.3:1 2.9:1 4.2:1 3.4:1 2.4:1 2.0:1 1.9:1 1.6:1
$ 18,545 $ 22,015 $ 16,330 $ 22,752 $ 22,423 $ 13,871 $ 24,023 $ 22,192
(1,374 ) (16,231 ) (7,923 ) (22,511 ) (3,057 ) (2,499 ) (2,181 ) (49,277 )
(11,105 ) (8,374 ) (7,767 ) (7,306 ) (12,870 ) (14,312 ) (16,501 ) 17,768
6,066 (2,590 ) 640 (7,065 ) 6,496 (2,940 ) 5,341 (9,317 )
6,137 5,086 9,720 4,187 2,574 3,387 3,239 2,991
6,287 6,008 4,384 3,676 4,231 4,347 4,079 2,158
8,121 7,814 7,560 7,069 6,583 6,098 6,088 5,731
(946 ) (911 ) (1,876 ) (1,819 ) (1,214 ) (49 ) 1,261 (2,611 )
13,313 14,502 13,117 16,871 14,751 15,238 12,877 12,709
$ 30,912 $ 35,606 $ 27,571 $ 37,804 $ 35,960 $ 29,060 $ 38,161 $ 32,290
24,775 30,520 17,851 33,617 33,386 25,673 34,922 29,299
4,287 9,115 (950 ) 11,496 13,266 4,386 14,696 13,470
</TABLE>
<PAGE>
EXHIBIT 13(A)(X)
MARKET-FOCUSED STRATEGY: 1991-PRESENT
The Market-Focused strategy adopted in 1991 concentrates corporate
investment in the domestic and international filtration markets, focusing on
customer needs in the most dynamic markets. Positioning to execute that aim was
completed last year with the sale of the Precision Products Group.
CLARCOR's financial results for the year 1993 reflected the effects of
acquisitions and a one-time charge in the Filtration Group and reduced demand
for promotional containers in the Consumer Products Group.
Consolidated sales reached a record high, while operating profit, net
earnings, and earnings per share increased over the prior year. This financial
review should be read in conjunction with the other financial information
presented in this report.
OPERATING RESULTS
<TABLE>
<CAPTION>
1992 VS.
1993 VS. 1992 1991
CHANGE CHANGE
--------------------- ---------
$ 1993 % SALES $ % $ 1992 % SALES $
--------- ----------- --------- ---------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Continuing Operations:
Net Sales............................ $ 225.3 100.0 % $ 36.7 19.5 % $ 188.6 100.0 % $ 9.1
Cost of Sales........................ 155.6 69.1 % 26.3 20.4 % 129.3 68.6 % 9.0
Selling & Administrative Expenses.... 40.6 18.0 % 8.9 28.2 % 31.7 16.8 % 3.4
Operating Profit..................... 29.1 12.9 % 1.5 5.2 % 27.6 14.6 % (3.3)
Other Income (Deductions)............ (2.0) -0.9 % 0.3 14.5 % (2.3) -1.2 % --
Earnings Before Taxes................ 27.1 12.0 % 1.8 7.0 % 25.3 13.4 % (3.3)
Income Taxes......................... 9.8 4.3 % 1.0 11.7 % 8.8 4.6 % (1.3)
Earnings............................. 17.3 7.7 % 0.8 4.5 % 16.5 8.8 % (2.0)
Discontinued Operations -- Earnings.... -- -- -- -- -- -- (0.3)
Cumulative Effect -- SFAS 106.......... -- -- 2.4 -- (2.4) -1.3 % (2.4)
Net Earnings........................... $ 17.3 7.7 % $ 3.2 22.0 % $ 14.1 7.5 % $ (4.7)
--------- ----- --------- ----- --------- ----- ---------
Shares Outstanding -- Average.......... 14.8 15.0
Earnings Per Share:
Continuing Operations.................. $ 1.16 $ 0.06 5.5 % $ 1.10 $ (0.14)
Discontinued Operations................ -- -- -- -- $ (0.02)
Cumulative Effect -- SFAS 106.......... -- $ 0.16 -- $ (0.16) $ (0.16)
Total.............................. $ 1.16 $ 0.22 23.4 % $ 0.94 $ (0.32)
<CAPTION>
%
----------
<S> <C>
Continuing Operations:
Net Sales............................ 5.1 %
Cost of Sales........................ 7.4 %
Selling & Administrative Expenses.... 12.0 %
Operating Profit..................... -10.4 %
Other Income (Deductions)............ --
Earnings Before Taxes................ -11.3 %
Income Taxes......................... -12.6 %
Earnings............................. -10.6 %
Discontinued Operations -- Earnings.... --
Cumulative Effect -- SFAS 106.......... --
Net Earnings........................... -24.7 %
----------
Shares Outstanding -- Average..........
Earnings Per Share:
Continuing Operations.................. -11.3 %
Discontinued Operations................ --
Cumulative Effect -- SFAS 106.......... --
Total.............................. -25.4 %
</TABLE>
SALES
CLARCOR generated record net sales during fiscal 1993. Consolidated net
sales of $225.3 were 19.5% higher than sales reported for 1992. This increase
was the result of higher Filtration Products Group sales, due principally to
acquisitions in 1993, and also to increased sales in the heavy duty and railroad
locomotive markets. Consolidated sales of $188.6 in 1992 were 5.1% higher than
1991 sales of $179.5, again due to higher shipments in the Filtration Products
Group, principally in the Baldwin heavy duty lines.
Information comparing the net sales of CLARCOR's continuing operating groups
is presented in the table on page 20 [See Note N to Notes to Consolidated
Financial Statements included in Exhibit 13(a)(vi)].
Boosted by the acquisitions of Airguard Industries and Guardian/U.E.L.,
Filtration Group sales of $156.2 in 1993 were 32.1% higher than sales in 1992.
Without the sales contribution of Airguard and Guardian/U.E.L., net sales
increased 5.8%. Sales gains were recorded in the group's Baldwin heavy duty
markets and the railroad locomotive markets. Net sales recorded in the
Filtration Products Group in 1992 totaled $118.2, and were 8.1% higher than the
sales level of $109.4 recorded in 1991. Sales gains in 1992 were recorded in the
group's Baldwin heavy duty market, and, to a lesser extent, in the HEFCO clean
room markets.
1
<PAGE>
The Consumer Products Group experienced increased sales of plastic closures
during 1993. This increase was more than offset by a reduced level of sales to
the promotional container markets during the year. As a result of this net
reduction, 1993 sales were $69.1, down 1.8% from the 1992 sales. Sales in the
Consumer Products Group during 1992 were flat, totaling $70.4 compared to sales
of $70.1 in 1991.
<TABLE>
<CAPTION>
1993 vs. 1992 1992 vs. 1991
----------------------------------- -----------------------------------
Net Sales $ % Total Change $ % Total Change
- --------------------------------------- --------- ----------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Filtration Products.................... $ 156.2 69.3% 32.1% $ 118.2 62.7% 8.1%
Consumer Products...................... 69.1 30.7% -1.8% 70.4 37.3% 0.3%
--------- ----- ----------- --------- ----- ---
Total................................ $ 225.3 100.0% 19.5% $ 188.6 100.0% 5.1%
--------- ----- ----------- --------- ----- ---
--------- ----- ----------- --------- ----- ---
</TABLE>
EARNINGS
Operating profit recorded by CLARCOR in 1993 totaled $29.1, an increase of
$1.5, or 5.2%, over the 1992 operating profit. Profits in both of the Company's
operating groups increased. In the Filtration Products Group, profits increased
5.3%, while profits in the Consumer Products Group increased 4.9%. In 1992, the
consolidated operating profit earned by the Company's continuing operations
totaled $27.6, down $3.3, or 10.4% from the record level of 1991. Profits in
both the Filtration Products and Consumer Products groups were down compared to
the prior year. Operating profit of $30.9 was recorded in the year 1991.
<TABLE>
<CAPTION>
1993 VS. 1992 1992 VS. 1991
------------------------------------ -----------------------------------
OPERATING PROFIT $ % TOTAL CHANGE $ % TOTAL CHANGE
- ------------------------------------------ --------- ----------- ------------ --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Filtration Products....................... $ 19.7 67.6% 5.3% $ 18.7 67.6% -10.7%
Consumer Products......................... 9.4 32.4% 4.9% 8.9 32.4% -9.9%
--
--------- ----- --------- ----- -----------
Total................................... $ 29.1 100.0% 5.2% $ 27.6 100.0% -10.4%
--
--
--------- ----- --------- ----- -----------
--------- ----- --------- ----- -----------
</TABLE>
Operating profit as a percent of sales in 1993 was 12.9%. This is lower than
the 1992 operating profit percent because of the acquisitions and charges
recorded in the Filtration Products Group. In line with Company expectations,
the acquisitions contributed significant sales for CLARCOR, but did not
contribute operating profits consistent with either the sales contributed or the
profit level of the rest of the group. As a percent of net sales, the 1992
operating profit was 14.6%. In 1991, the operating profit return on sales was
17.2%.
<TABLE>
<CAPTION>
OPERATING PROFIT AS A PERCENT OF NET SALES 1993 1992 1991
- --------------------------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Filtration Products........................................................ 12.6% 15.8% 19.1%
Consumer Products.......................................................... 13.6% 12.7% 14.2%
--- --- ---
Total.................................................................... 12.9% 14.6% 17.2%
--- --- ---
--- --- ---
</TABLE>
The 1993 operating profit recorded by the Filtration Products Group totaled
$19.7, up $1.0, or 5.3% from the level recorded in 1992. This profit results
principally from the group's 1993 acquisitions, and gains recorded in the
group's Baldwin heavy duty markets and Clark Filter railroad locomotive
business. The 1993 operating profit was negatively impacted by a $1.5 one-time
charge related to Baldwin Filters' Belgian operations plus the cost of settling
the Baldwin lawsuit contingency. The group recorded operating profit of $18.7 in
1992. Compared to the 1991 profit, this was a decrease of $2.2, or 10.7%. The
1992 reduction in operating profit was chiefly the result of discounting due to
pricing pressures in the heavy duty markets and decreased volume in the railroad
filter and food and beverage markets. Operating profit in 1991 was $20.9.
The 1993 operating profit as a percent of net sales was 12.6%. While the
acquisitions of Airguard and Guardian/U.E.L. contributed earnings in 1993, their
contributions were not at the same level as
2
<PAGE>
the margin from the group's existing businesses. Charges related to the Baldwin
N.V. operation and settlement of the lawsuit contingency contributed to the
reduced margin. Operating margin was 15.8% in 1992, and compares to 19.1% in
1991.
Operating profit in the Consumer Products Group was $9.4, an increase of
$.5, or 4.9%, over the 1992 operating profit. Despite a decline in promotional
sales from the prior year, the group realized profit gains from the sale of
engineering activities, productivity improvements and inventory management. In
1992, the Consumer Products Group posted a decrease of $1.1, or 9.9%, from
operating profit recorded in 1991. The group's 1992 profits were negatively
impacted by product mix changes within the flat volume. In 1991, group operating
profits were $10.0.
In 1993, Consumer profit as a percent of sales was 13.6%. Profit as a
percent of net sales was 12.7% in 1992, and 14.2% in 1991.
Net other expense in 1993 totaled $2.0. This net figure resulted from $3.5
of interest expense, chiefly resulting from the Company's long-term debt.
Offsetting income items included $.9 of interest on the higher 1993 cash and
investment balances, and $.7 of equity in affiliates. In 1992, net other expense
was $2.3. Interest expense totaled $3.8, and was mostly related to the Company's
long-term debt. Total income items of $1.5 included interest earnings on cash
and short-term investments of $.3 and other items of $1.2, $.9 of which was
equity in the earnings from CLARCOR's investment in the stock of G.U.D. Holdings
Limited. In 1991, net other expense totaled $2.3. Interest expense in 1991 was
$3.7, related to the outstanding long-term debt. Income items included $1.1 of
interest on cash and short-term cash investments, and other items of $.3, mostly
equity earnings on the G.U.D. stock investment.
CLARCOR's provision for income taxes in 1993 totaled $9.8, an increase of
$1.0 over 1992 income taxes. This increase results from increased pretax profit
in the current year. The 1993 provision includes higher statutory rates offset
by a $.7 reduction of previously established accruals for taxes and
non-deductible Baldwin N.V. operating losses. The 1993 effective tax rate is
36.3%. In 1992, income taxes related to continuing operations totaled $8.8. This
was $1.3 lower than expense of $10.1 recorded in 1991. The reduced 1992 tax
expense is related to the lower pretax profit in that year. The effective tax
rate was 34.8% in 1992. In 1991, income tax expense was $10.1, resulting in an
effective tax rate of 35.3%.
Net earnings in 1993 were $17.3, and reflect higher profit from operating
activities and lower non-operating expense. Net earnings as a percent of net
sales was 7.7%. The 1992 earnings from continuing operations before the
cumulative effect of adopting an accounting change totaled $16.5, a decline of
$2.0, or 10.6%, from earnings in the prior year. This earnings decline was the
result of the lower operating profit experienced in 1992. As a percent of net
sales, earnings from continuing operations in 1992 were 8.8%. Earnings from
continuing operations in 1991 were $18.5, or 10.3% of sales.
Earnings from discontinued operations were not reported in 1992, as amounts
equal to these earnings were provided as reserves for the Company's planned
divestiture of the Precision Products Group, which occurred at year-end 1992. In
1991, these discontinued operations contributed $.3.
During 1992, the Company adopted Statement of Financial Accounting Standards
No. 106, "Employers' Accounting For Postretirement Benefits Other Than
Pensions." This new accounting standard, required to be adopted by 1994,
resulted in a $2.4 after-tax charge against earnings that year.
Total net earnings for 1993 were $17.3, a 22.0% increase over the 1992 total
net earnings. Net earnings in 1992 were reduced by the adoption of the
postretirement benefits accounting standard. As a result of the adoption of this
standard, CLARCOR's total net earnings for the year 1992 were $14.1, a decline
of 24.7% from the level of $18.8 recorded in fiscal 1991. Net earnings as a
percent of beginning total assets increased to 10.7% in 1993. The return on
beginning assets was 8.9% in 1992, and 13.0% in 1991. Net earnings as a percent
of beginning shareholders' equity increased to 17.3% in 1993. In 1992, the
return on equity was 14.8%, and 22.7% in 1991.
3
<PAGE>
Earnings per share in 1993 were $1.16. These earnings represent a $.06, or
5.5% increase over 1992 earnings per share from continuing operations of $1.10.
The 1992 per share earnings are before the cumulative effect of adopting the
postretirement benefits accounting change and reflect earnings from continuing
operations only. In that year, amounts equal to the per share earnings from
discontinued operations were provided as reserves for the divestiture of the
Precision Products Group, completed at year-end. The cumulative effect of
adopting the postretirement benefits accounting change was $.16 per share,
resulting in 1992 total earnings per share of $.94. The total 1992 earnings were
down $.32 per share from the 1991 earnings of $1.26. Of the total $.32, per
share earnings from continuing operations were down $.14, per share earnings
from discontinued operations were down $.02, and per share earnings were reduced
$.16 due to the one-time postretirement benefits charge.
<TABLE>
<CAPTION>
1993 1992
----------------------------------------------
----------------------
SUMMARY OF CASH FLOWS $ % CHANGE $ % CHANGE
- ----------------------------------------------------------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C>
From Operations............................................ $ 20.0 -12.3% $ 22.8 24.3%
Interest Payments........................................ 3.6 -8.2% 3.9 5.6%
For Investing.............................................. 1.2 -83.4% 7.2 -51.2%
Capital Expenditures..................................... 10.2 55.8% 6.5 -1.3%
For Financing.............................................. 20.0 96.2% 10.2 15.8%
Dividends................................................ 9.0 .9% 8.9 9.7%
Change in Cash & Equivalents............................... (1.2) -122.4% 5.4 204.7%
</TABLE>
FINANCIAL CONDITION
CORPORATE LIQUIDITY
The discussion of corporate liquidity should be read in conjunction with the
information presented in the Consolidated Statements of Cash Flows on page 33
[See Exhibit 13(a)(v) hereto].
CLARCOR carried substantial cash balances in 1993, as the Company's business
continued to generate strong cash inflows. This is consistent with the results
from the years 1992 and 1991. In 1993, the net change in cash and short-term
cash investments was a decrease of $1.2. In 1992, the Company generated a net
cash increase of $5.4. The net cash used in 1991 was $5.2.
In 1993, the Company's operating activities provided $20.0 of cash,
investing activities used $1.2, and financing activities used $20.0. Operating
activities, including net earnings and adjustments of depreciation and
amortization, provided $23.5. Offsetting this total was $3.5 consumed for other
uses, principally the net of changes in assets and liabilities. The $20.0
provided by continuing operations in 1993 compares to $22.8 in 1992, which
included $19.7 of cash from continuing operations and $3.1 of cash from
discontinued operations. Cash generated in 1992 was $22.8, up substantially from
amounts generated by the 1991 operating activities. Net earnings contributed
$14.1 in that year, while adjustments, mainly depreciation and amortization,
totaled $8.7. Included in the net earnings is the $2.4 impact of adopting the
postretirement benefits standard. In 1991, earnings from continuing operations
provided $18.5, but investment in accounts receivable and inventory had been
significant, more than offsetting amounts for depreciation and amortization.
Operating activities of discontinued operations provided $5.1, bringing the
total operating activities to $18.3.
Investing activities in 1993 used a net $1.2. Of this 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. Investment in plant asset additions
totaled $10.2. Investing activities in 1992 used net cash of $7.2, representing
mostly additions to plant assets. In 1991, investing activities used $14.7, the
result of expenditures for additions to plant assets and the net investment in
G.U.D. Holdings Limited stock.
Cash outflows from financing activities in 1993 totaled $20.0. Included in
this total are debt reduction payments of $7.6, treasury stock purchases of $3.4
and dividends of $9.0. Cash outflows
4
<PAGE>
from 1992 financing activities were $10.2, and consisted chiefly of cash
dividend payments of $8.9 and $1.4 in long-term debt repayments. In 1991, the
cash used for financing activities totaled $8.8, principally for dividends and
debt repayment.
Cash generation by CLARCOR businesses remains strong, and is adequate for
the Company's current level of operations, including asset additions and debt
repayment.
In February of 1992, the Financial Accounting Standards Board adopted
Statement No. 109, "Accounting for Income Taxes." This statement establishes
financial accounting and reporting standards for the effects of income taxes
that result from an enterprise's activities during the current and preceding
years. The 1994 adoption of the new standard will not have a material effect on
the Company's financial position and results of operations.
CAPITAL RESOURCES
CLARCOR's 1993 balance sheet reflected the Company's strength, and its
redeployment of assets resulting from the sale of the Precision Products Group.
<TABLE>
<CAPTION>
1993 1992
----------------------- -----------------------
SUMMARY BALANCE SHEET $ % CHANGE $ % CHANGE
- ------------------------------------------------------------ --------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Current Assets.............................................. $ 86.2 (8.0)% $ 93.6 24.5%
Investment in Affiliates.................................... 8.0 9.9% 7.3 2.6%
Plant Assets, net........................................... 47.6 33.9% 35.6 (22.2)%
Excess Cost over Fair Value, net............................ 15.7 23.0% 12.8 (38.2)%
Pension & Other Assets...................................... 12.4 3.3% 12.0 28.8%
Total Assets................................................ 169.9 5.4% 161.3 2.1%
Current Liabilities......................................... 33.3 31.7% 25.3 22.9%
Long-term Debt.............................................. 24.6 (16.1)% 29.3 (18.2)%
Postretirement Healthcare Benefits.......................... 3.1 (12.0)% 3.5 100.0%
Deferred Income Taxes....................................... 4.3 18.7% 3.6 (39.8)%
Shareholders' Equity........................................ 104.6 5.1% 99.6 4.1%
</TABLE>
Total assets increased to $169.9, up from $161.3 last year. Working capital
at year-end totaled $52.9, down from $68.4 in the prior year, as liquid assets
at the prior year-end were converted during the year chiefly into productive
capacity. The 1993 current ratio was 2.6:1, down from the prior year-end which
reflected the receivable from the Precision Products Group sale. In 1992,
CLARCOR's consolidated balance sheet reflected significant changes from the 1991
level because of the sale of the Precision Products Group. Total assets reached
$161.3 at year-end 1992. The current ratio was 3.7:1 in 1992, due to the
Precision Products current receivable.
<TABLE>
<CAPTION>
1993 1992
----------- -----------
<S> <C> <C>
Current Ratio...................................................... 2.6:1 3.7:1
Quick Ratio........................................................ 1.6:1 2.5:1
Debt/Equity........................................................ 23.5% 29.5 %
</TABLE>
The 1993 balance sheet reflected the results of the Company's 1993
acquisitions. Total current assets declined to $86.2 from $93.6, principally
because the $20.7 Precision Products Group receivable was converted to cash and
invested in the assets and liabilities of the Airguard and Guardian/U.E.L.
acquisitions. Cash and short-term cash investments totaled a healthy $13.8, down
from $15.1 last year. Accounts receivable increased to $40.9 from $27.9, the
result of the addition of receivables from the acquisitions. In the long-term
assets, plant assets increased to $47.6 from $35.6, again reflecting the
inclusion of the Airguard and Guardian/U.E.L. net fixed assets.
The year-end 1993 current liabilities also reflected the effects of
CLARCOR's acquisitions during the year. The liabilities saw a reduction in the
long-term debt, as scheduled 1993 payments were made and amounts payable in 1994
were classified as current liabilities. In 1992, the liabilities were related to
the scheduled repayment of the debt. Both current liabilities and long-term debt
reflected the
5
<PAGE>
effects of this repayment schedule. At the end of 1992, current liabilities
increased over the level of the prior year-end to $25.3. This change resulted
from an increase in the current portion of the long-term debt, as amounts were
moved from the long-term classification to reflect their scheduled payment in
1993. The long-term debt at year-end 1992 totaled $29.3.
CLARCOR's 1993 operations resulted in shareholders' equity which totaled
$104.6 at year-end. This is an increase of $5.0, or 5.1%, over the prior year's
level. Total shareholders' equity at year-end 1992 had increased to $99.6. In
1992, the equity accounts reflected a 3-for-2 stock split paid in February, and
the retirement of the Company's treasury shares.
Year-end totals of 14,819,199 and 14,985,831 common shares were issued and
outstanding at November 30, 1993 and 1992, respectively.
THE FUTURE
The upward trend in CLARCOR's operating results for the year 1993 is
indicative of the Company's future plans. Sales and operating profit increased,
and this trend is expected to continue. It is the Company's plan to expand the
Filtration Products Group while maintaining a positive presence in the Consumer
Products markets.
The majority of future Filtration Products revenue growth is expected to
come from the introduction of new filtration products, expansion of
international sales and a growing contribution from new filtration businesses.
In Consumer Products, future revenue growth is anticipated to come from
engineered plastic closures for the aseptic container market and the new SST-TM-
closure. These are expected to play a significant role in the future development
of a European presence and allow for growth in a high volume market.
The Company's plan for internal development, coupled with expected future
acquisitions and strategic alliances, will provide the planned growth which will
further the realization of CLARCOR's sales and operating profit goals, and
provide the liquidity and financial strength needed to fund this growth.
6
<PAGE>
EXHIBIT 21
CLARCOR INC. SUBSIDIARIES
<TABLE>
<CAPTION>
JURISDICTION OF
INCORPORATION OR PERCENT OF
NAME ORGANIZATION OWNERSHIP
- --------------------------------------------- -------------------- -------------
<S> <C> <C>
CLARCOR Consumer Products, Inc. Delaware 100%
J. L. Clark, Inc. Delaware 100%
CLARCOR Filtration Products, Inc. Delaware 100%
Baldwin Filters, Inc. Delaware 100%
Baldwin Filters N.V. Belgium 100%*
Baldwin Filters Limited United Kingdom 100%*
Clark Filter, Inc. Delaware 100%
Dahl Manufacturing, Inc. California 100%
CLARCOR Air Filtration, Inc. Delaware 100%
MicroPure Filtration, Inc. Delaware 100%
Baldwin Filters (Aust.) Pty. Limited Australia 50%
Airguard Industries, Inc. Kentucky 100%
PleaTech Co. Michigan 60%
Guardian Filter Company Kentucky 100%
CLARCOR Precision Products, Inc. Delaware 100%
EPC Industries Inc. Michigan 100%
CLARCOR Services, Inc. Delaware 100%
CLARCOR Foreign Sales Corporation Virgin Islands 100%
G.U.D. Holdings Limited Australia 20%
CLARCOR Trading Company Delaware 100%
<FN>
- ------------------------
* Direct or indirect
</TABLE>
<PAGE>
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 and 33-39374) of our
reports dated January 7, 1994, on our audits of the consolidated financial
statements of CLARCOR Inc. as of November 30, 1993 and 1992 and for the years
ended November 30, 1993, 1992 and 1991, and the financial statement schedules
for the years ended November 30, 1993, 1992, and 1991, which reports are
included or incorporated by reference in this Annual Report on Form 10-K.
COOPERS & LYBRAND
Rockford, Illinois
February 23, 1994
