EXHIBIT 13(A)(II)
CLARCOR INC.
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 1993 AND 1992
(DOLLARS IN THOUSANDS)
ASSETS
1993 1992
----------- -----------
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
----------- -----------
----------- -----------
The accompanying notes are an integral part of the consolidated financial
statements.
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)
1993 1992 1991
----------- ----------- -----------
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
----------- ----------- -----------
----------- ----------- -----------
The accompanying notes are an integral part of the consolidated financial
statements.
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)
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
---------- --------- ---------- --------- ----------- ------------- ---------
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
---------- --------- ---------- --------- ----------- ------------- ---------
---------- --------- ---------- --------- ----------- ------------- ---------
The accompanying notes are an integral part of the consolidated financial
statements.
EXHIBIT 13(A)(V)
CLARCOR INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED NOVEMBER 30, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS)
1993 1992 1991
---------- ---------- ----------
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
---------- ---------- ----------
---------- ---------- ----------
The accompanying notes are an integral part of the consolidated financial
statements.
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
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:
1993 1992
---------- ----------
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
---------- ----------
---------- ----------
The net pension expense (credit) includes the following components for the
three years ended November 30:
1993 1992 1991
--------- --------- ---------
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)
--------- --------- ---------
--------- --------- ---------
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
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:
1993 1992
--------- ---------
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
--------- ---------
--------- ---------
The net periodic postretirement benefit cost for the years ended November
30, 1993 and 1992 includes the following components:
1993 1992
--------- ---------
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
--------- ---------
--------- ---------
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
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
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:
1993 1992
--------- ---------
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
--------- ---------
--------- ---------
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:
1993 1992
----------- ---------
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
----------- ---------
----------- ---------
E. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities at November 30, 1993 and 1992 were
as follows:
1993 1992
--------- ---------
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
--------- ---------
--------- ---------
5
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:
1993 1992
--------- ---------
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
--------- ---------
--------- ---------
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:
1993 1992 1991
--------- --------- ---------
Current:
Federal............................................................... $ 7,632 $ 7,032 $ 8,660
State................................................................. 1,342 1,454 849
Deferred................................................................ 853 310 559
--------- --------- ---------
$ 9,827 $ 8,796 $ 10,068
--------- --------- ---------
--------- --------- ---------
Total income taxes paid, net of refunds, totaled $9,860, $10,982 and $9,474
during 1993, 1992 and 1991, respectively.
6
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:
Percent of
Pretax Earnings
-------------------------------
1993 1992 1991
--------- --------- ---------
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
--- --- ---
--- --- ---
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
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
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:
STOCK
NONQUALIFIED APPRECIATION
STOCK OPTIONS RIGHTS
------------- ------------
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
------------- ------------
------------- ------------
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
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:
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTALS
--------- --------- --------- --------- -----------
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
--------- --------- --------- --------- -----------
--------- --------- --------- --------- -----------
10
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:
1993 1992 1991
----------- ----------- -----------
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
----------- ----------- -----------
----------- ----------- -----------
11
CLARCOR INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
N. SEGMENT INFORMATION (CONTINUED)
1993 1992 1991
----------- ----------- -----------
Additions to plant assets:
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
----------- ----------- -----------
----------- ----------- -----------
12
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
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.
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
January 7, 1994
EXHIBIT 13(A)(IX)
13-YEAR FINANCIAL SUMMARY
1993 1992 1991 1990 1989
------------ ------------ ------------ ------------ ------------
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.
1988 1987 1986 1985 1984 1983 1982 1981
- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 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
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
1992 VS.
1993 VS. 1992 1991
CHANGE CHANGE
--------------------- ---------
$ 1993 % SALES $ % $ 1992 % SALES $
--------- ----------- --------- ---------- --------- ----------- ---------
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)
%
----------
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 %
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
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.
1993 vs. 1992 1992 vs. 1991
----------------------------------- -----------------------------------
Net Sales $ % Total Change $ % Total Change
- --------------------------------------- --------- ----------- ----------- --------- ----------- -----------
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%
--------- ----- ----------- --------- ----- ---
--------- ----- ----------- --------- ----- ---
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.
1993 VS. 1992 1992 VS. 1991
------------------------------------ -----------------------------------
OPERATING PROFIT $ % TOTAL CHANGE $ % TOTAL CHANGE
- ------------------------------------------ --------- ----------- ------------ --------- ----------- -----------
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%
--
--
--------- ----- --------- ----- -----------
--------- ----- --------- ----- -----------
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%.
OPERATING PROFIT AS A PERCENT OF NET SALES 1993 1992 1991
- --------------------------------------------------------------------------- ----------- ----------- -----------
Filtration Products........................................................ 12.6% 15.8% 19.1%
Consumer Products.......................................................... 13.6% 12.7% 14.2%
--- --- ---
Total.................................................................... 12.9% 14.6% 17.2%
--- --- ---
--- --- ---
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
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
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.
1993 1992
----------------------------------------------
----------------------
SUMMARY OF CASH FLOWS $ % CHANGE $ % CHANGE
- ----------------------------------------------------------- --------- ----------- --------- -----------
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%
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
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.
1993 1992
----------------------- -----------------------
SUMMARY BALANCE SHEET $ % CHANGE $ % CHANGE
- ------------------------------------------------------------ --------- ------------ --------- ------------
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%
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.
1993 1992
----------- -----------
Current Ratio...................................................... 2.6:1 3.7:1
Quick Ratio........................................................ 1.6:1 2.5:1
Debt/Equity........................................................ 23.5% 29.5 %
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
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