EXHIBIT 13(a)(vi)
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Dollars in thousands except per share data)

A. ACCOUNTING POLICIES
Principles of Consolidation

The consolidated financial statements include all domestic and foreign
subsidiaries that are more than 50% owned and controlled. CLARCOR Inc. and its
subsidiaries are hereinafter collectively referred to as the "Company" or
CLARCOR.

Minority interests represent an outside shareholder's 10% ownership of the
common stock of Filtros Baldwin de Mexico (FIBAMEX) and outside shareholders'
20% ownership of Baldwin-Unifil S.A.

Foreign Currency Translation
Financial statements of foreign subsidiaries are translated into U.S. dollars at
current rates, except that revenues, costs and expenses are translated at
average current rates during each reporting period. Net exchange gains or losses
resulting from the translation of foreign financial statements and the effect of
exchange rate changes on intercompany transactions of a long-term investment
nature are accumulated with other comprehensive earnings as a separate component
of shareholders' equity and are presented, net of tax, in the Consolidated
Statements of Shareholders' Equity.

Plant Assets
Depreciation is provided by the straight-line and accelerated methods for
financial statement purposes and by the accelerated method for tax purposes.
The provision for depreciation is based on the estimated useful lives of the
assets (15 to 40 years for buildings and improvements and 3 to 15 years for
machinery and equipment). It is the policy of the Company to capitalize renewals
and betterments and to charge to expense the cost of current maintenance and
repairs. When property or equipment is retired or otherwise disposed of, the net
book value of the asset is removed from the Company's books and the resulting
gain or loss is reflected in earnings.

Excess of Cost Over Fair Value of Assets Acquired and Other Intangible Assets
The excess of cost over fair value of assets acquired is being amortized over a
forty-year period using the straight-line method. Other acquired intangible
assets are being amortized over the estimated periods to be benefited using the
straight-line method. These intangibles include trademarks (40 year life),
patents (average 14 year life), and other identifiable intangible assets with
lives ranging from one to thirty years.

In June 2001,the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 142 (SFAS 142), "Goodwill and Other
Intangible Assets," which discontinues amortization of the excess of cost over
fair value of assets acquired and of intangible assets with indefinite lives. It
also requires goodwill and intangible assets with indefinite lives to be tested
for impairment annually or whenever there is an impairment indicator. Although
not required to adopt the provisions of SFAS 142 until fiscal 2003, the Company
expects to adopt SFAS 142 in the first quarter of fiscal 2002. The Company has
not completed an assessment of the impact of this statement, including the
impairment tests. However, as a result of adopting SFAS 142, the Company expects
amortization expense will be reduced by approximately $2,500 in fiscal 2002.

In accordance with Statement of Financial Accounting Standards No. 121 (SFAS
121), "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets
to Be Disposed Of," the Company determines any impairment losses based on
underlying cash flows related to specific groups of acquired plant assets and
identifiable intangibles and excess of cost over fair value of assets
acquired, and would first apply any such impairment losses to related goodwill.

Statements of Cash Flows
All highly liquid investments with a maturity of three months or less when
purchased or that are readily saleable are considered to be short-term cash
equivalents. The carrying amount of the investments approximates fair value.

Income Taxes
The Company provides for income taxes in accordance with Statement of Financial
Accounting Standards No. 109 (SFAS 109),"Accounting for Income Taxes." SFAS 109
requires the recognition of deferred tax liabilities and assets for the expected
future tax consequences of temporary differences between the financial statement
carrying amounts and the tax basis of assets and liabilities.

Revenue Recognition
Revenue is recognized when product ownership and risk of loss has transferred to
the customer or performance of services is complete and the Company has no
remaining obligations regarding the transaction. In December 1999, the
Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 (SAB
101), "Revenue Recognition in Financial Statements," relating to revenue
recognition under generally accepted accounting principles in financial
statements. No significant changes to the Company's revenue recognition policies
were necessary to comply with SAB 101.

Product Warranties
The Company provides for estimated warranty costs when the related products are
recorded as sales or for specific items at the time their existence is known and
the amounts are reasonably determinable.

Comprehensive Earnings
Foreign currency translation adjustments and unrealized losses on derivative
instruments are included in other comprehensive earnings, net of tax, in
accordance with Statement of Financial Accounting Standards No. 130 (SFAS
130), "Reporting Comprehensive Income."

Use of Management's Estimates
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Dollars in thousands except per share data)

Accounting Period
The Company's fiscal year ends on the Saturday closest to November 30. The
fiscal year ended December 1,2001 included fifty-two weeks. The fiscal years
ended December 2, 2000 and November 27, 1999 were comprised of fifty-three and
fifty-two weeks, respectively. In the consolidated financial statements, all
fiscal years are shown to begin as of December 1 and end as of November 30 for
clarity of presentation.

Reclassifications
Certain reclassifications have been made to conform prior years' data to the
current presentation. These reclassifications had no effect on reported
earnings.

B. ACCOUNTING CHANGE AND DERIVATIVE INSTRUMENTS

The Company makes limited use of derivative financial instruments to manage
certain interest rate and foreign currency risks. Interest rate swap agreements
are utilized to convert certain floating rate debt into fixed rate debt. Cash
flows related to interest rate swap agreements are included in interest
expense over the terms of the agreements.

Effective December 1, 2000,the Company adopted Statement of Financial Accounting
Standards No. 133 (SFAS 133), "Accounting for Derivative Instruments and Hedging
Activities." SFAS 133 requires the recognition of all derivatives in the balance
sheet as either an asset or a liability measured at fair value and requires a
company to recognize changes in the derivative's fair value currently in
earnings unless it meets specific hedge accounting criteria. If the derivative
is designated as a cash flow hedge, the effective portions of changes in the
fair value of the derivative are recorded in other comprehensive earnings and
are recognized in the income statement when the hedged item affects earnings.

The Company documents all relationships between hedging instruments and hedged
items, as well as its risk-management objective and strategy for undertaking
various hedge transactions. In addition, the Company assesses (both at the
hedge's inception and on an ongoing basis) the effectiveness of the derivatives
that are used in hedging transactions. If it is determined that a derivative is
not (or has ceased to be) effective as a hedge, the Company would discontinue
accounting for it as a hedge prospectively. Ineffective portions of changes in
the fair value of cash flow hedges are recognized in earnings.

During 2000,the Company entered into interest rate agreements to manage its
interest exposure related to the multicurrency credit revolver. The agreement
in place at November 30, 2001 provides for the Company to pay a 7.34% fixed
interest rate on a notional amount of $60,000. The agreement expires September
11, 2002. Under the agreement the Company will receive interest at floating
rates based on LIBOR.

The adoption of SFAS 133 resulted in a cumulative effect of an accounting change
to accumulated other comprehensive earnings of a negative $769 ($1,183 pretax)
and the recognition of a liability. The Company's derivative instrument is
designated as a cashflow hedge and determined to be effective. Therefore, there
was no adjustment to net earnings. At November 30, 2001, the fair value of the
agreement was a negative $2,932 and is included in other current liabilities.
The net loss included in other comprehensive earnings for the fiscal year ended
November 30,2001 was $1,137 ($1,750 pretax). Derivative gains and losses will be
reclassified into earnings as payments are made on its variable rate interest
debt. Approximately $711 ($1,094 pretax) was reclassified into earnings during
the fiscal year ended November 30, 2001. The amount of net derivative losses
included in other comprehensive income at November 30,2001 will be reclassified
into earnings in fiscal year 2002.

C. BUSINESS COMBINATIONS AND INVESTMENTS IN AFFILIATES

On June 4, 2001,the Company acquired the stock of several filtration management
companies for approximately $33,258, net of cash received, including acquisition
expenses. The purchase price was paid in cash with available funds and proceeds
from long-term borrowings from a revolving credit facility. As a result of the
acquisition, the companies were combined into one company, Total Filtration
Services, Inc. (TFS), and became a subsidiary of the Company. TFS is included in
the Industrial/Environmental Filtration segment. The transaction was accounted
for under the purchase method of accounting with the excess of the initial
purchase price over the estimated fair value of the net tangible and
identifiable intangible assets acquired recorded as goodwill and amortized over
40 years by the straight-line method. The initial purchase price was based on
the net assets of the businesses acquired as shown on a June 4, 2001 balance
sheet and is subject to a final adjustment. A preliminary allocation of the
initial purchase price has been made to major categories of assets and
liabilities. The allocation will be completed when the Company finalizes a
closing balance sheet in accordance with the purchase agreement with the seller.
The results are included in the Company's consolidated results of operations
from the date of acquisition.

The following unaudited pro forma information summarizes the results of
operations for the periods indicated as if the acquisition had been completed as
of the beginning of the periods presented. The pro forma information gives
effect to the actual operating results prior to the acquisition, adjusted to
include the pro forma effect of interest expense, depreciation, amortization of
intangibles and income taxes. These pro forma amounts do not purport to be
indicative of the results that would have actually been obtained if the
acquisition had occurred as of the beginning of the periods presented or that
may be obtained in the future. Unaudited pro forma net sales for the Company
would have been $695,729 and $707,460 for the years ended November 30, 2001 and
2000. Net earnings and earnings per share for each of these periods would not
have been significantly affected.

During 2000, the Company purchased Filter Products, Inc., a Sacramento,
California liquid process filtration manufacturer, and two air filtration
distributors. All three of these acquisitions were accounted for under the
purchase method of accounting and are included in the Industrial/Environmental
Filtration segment. Two of the acquisitions were paid for in cash. The purchase
price of the other was paid in cash and stock. For these acquisitions, the
Company

paid $12,730 in cash, net of cash received, and issued 160,704 shares of its
common stock (valued at $2,895). The final allocation of the purchase price to
the assets and liabilities acquired with the purchase of Filter Products, Inc.
resulted in an increase to goodwill of $615 in the second quarter of 2001. These
acquisitions did not have a significant impact on the results of the Company.

On September 10, 1999, the Company completed its acquisitions of Purolator Air
Filtration (Purolator), Facet International (Facet), and Purolator Facet, Inc.
(PFI), manufacturers of air and liquid filtration products, for approximately
$140,985, net of cash received, including acquisition expenses. The purchase
price was paid in cash with available funds and proceeds from long-term
borrowings of approximately $115,000 from a revolving credit facility. (See Note
H.) As a result of the acquisitions, Purolator, Facet, and PFI became
subsidiaries of the Company and are included in the Company's
Industrial/Environmental Filtration segment. The Company's non-cash investing
and financing activities related to this acquisition included assumed
liabilities of $25,910. The transaction was accounted for under the purchase
method of accounting with the excess of the purchase price over the estimated
fair value of the net tangible and identifiable intangible assets acquired
recorded as goodwill and amortized over 40 years by the straight-line method.
Other acquired intangible assets are being amortized as discussed in Note A.
During fiscal year 2000,the Company finalized the purchase price according to
the terms of the purchase agreement and completed the estimates of assets
acquired and liabilities assumed, including those associated with exit and other
costs of the acquisition. The finalized allocation to major categories of assets
and liabilities resulted in a reduction to goodwill of $34. As part of the final
allocation of purchase price, the Company had accrued and paid $1,012 for
severance and exit costs as of November 30, 2001. The operating results are
included in the Company's consolidated results of operations from September 1,
1999, the effective date of the acquisitions.

D. INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined by the
last-in, first-out (LIFO) method for approximately 40% and 43% of the Company's
inventories at November 30, 2001 and 2000, respectively, and by the first-in,
first-out (FIFO) method for all other inventories. The FIFO method approximates
current cost. Inventories are summarized as follows:

2001 2000
- --------------------------------------------------------------------------------
Raw materials ........................................... $ 37,455 $ 38,444
Work-in-process ......................................... 12,120 14,253
Finished products ....................................... 55,078 48,316
-------------------
Total at FIFO ........................................... 104,653 101,013
Less excess of FIFO over LIFO ........................... 362 452
-------------------
$104,291 $100,561
===================

During 2001 and 2000, certain LIFO inventory quantities were reduced resulting
in a partial liquidation of the LIFO bases. The effect on net earnings was not
material.

E. PLANT ASSETS AND IMPAIRMENT LOSS
Plant assets at November 30, 2001 and 2000 were as follows:

2001 2000
- --------------------------------------------------------------------------------
Land .................................................... $ 4,736 $ 3,911
Buildings and building fixtures ......................... 73,497 67,986
Machinery and equipment ................................. 191,984 182,689
Construction-in-process ................................. 7,092 17,666
-------------------
277,309 272,252
Less accumulated depreciation ........................... 139,993 132,131
-------------------
$137,316 $140,121
===================

During the first quarter of 2001, the Company recognized an impairment loss in
its Packaging segment of $2,422 related to certain plant assets used
exclusively in the manufacture of plastic closures for a customer who
terminated a manufacturing contract. The loss is included in the cost of sales
and was calculated under the guidelines of Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of."

F. ACQUIRED INTANGIBLES
Acquired intangibles, net of accumulated amortization, at November 30, 2001 and
2000 consisted of the following:

2001 2000
- --------------------------------------------------------------------------------
Excess of cost over fair value
of assets acquired .................................. $ 78,620 $ 62,333
Trademarks .............................................. 28,358 29,090
Other acquired intangibles .............................. 9,768 10,454
-------------------
$116,746 $101,877
===================

Accumulated amortization was $17,392 and $13,812 at November 30, 2001 and
2000, respectively.

G. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities at November 30, 2001 and 2000 were as
follows:

2001 2000
- --------------------------------------------------------------------------------
Accounts payable ....................................... $42,657 $40,826
Accrued salaries, wages and commissions ................. 8,733 12,678
Compensated absences ................................... 6,366 6,192
Accrued pension liabilities ............................ 263 262
Other accrued liabilities .............................. 26,807 24,229
-------------------
$84,826 $84,187
===================

H. LONG-TERM DEBT
Long-term debt at November 30, 2001 and 2000 consisted of the following:

2001 2000
- --------------------------------------------------------------------------------
Multicurrency revolving credit agreement,
interest payable at the end of each
funding period at an adjusted LIBOR ................ $107,000 $ 116,000
Promissory note, interest payable
semi-annually at 6.69% ............................. 15,000 20,000
Industrial Revenue Bonds, at 1.6%
to 5.85% interest rates ............................ 17,815 10,063
Other .................................................. 967 905
--------------------
140,782 146,968
Less current portion ................................... 5,579 5,482
--------------------
$135,203 $141,486
===================

A fair value estimate of $140,023 and $145,990 for long-term debt in 2001 and
2000, respectively, is based on the current interest rates available to the
Company for debt with similar remaining maturities.

On May 1, 2001, the Company, in cooperation with the Campbellsville-Taylor
County Industrial Development Authority (Kentucky), issued $8,000 of Industrial
Revenue Bonds. The bonds are due May 1, 2031, with a variable rate of interest
that is reset weekly. In conjunction with the issuance of the Industrial Revenue
Bonds, the Company holds in trust certain restricted investments committed for
the acquisition of plant equipment. At November 30, 2001, the restricted asset
balance was $2,343 and is included in other noncurrent assets. The Company has
other industrial revenue bonds, including $8,410 issued in cooperation with the
South Dakota Economic Development Finance Authority due February 1, 2016 with a
variable rate of interest that is reset weekly and additional bonds of $1,405
and $1,653 outstanding as of November 30, 2001 and 2000, respectively, which
mature in 2005.

In September 1999, the Company entered into a three-year, multicurrency
revolving credit agreement with a group of participating financial institutions
under which it may borrow up to $185,000. The agreement, which was extended for
one additional year in 2000, provides that loans may be made under a selection
of currencies and rate formulas. The interest rate is based upon either a
defined Base Rate or the London Interbank Offered Rate (LIBOR) plus a variable
spread of .55% to 1.25%. The variable spread is based on the ratio of the
Company's outstanding borrowings compared with its shareholders' equity. The
spread was .65% and .80% at November 30, 2001 and 2000, respectively. Facility
fees and other fees on the entire loan commitment are payable for the duration
of this facility. At November 30, 2001 and 2000, $107,000 and $116,000 were
outstanding under this agreement and the related LIBOR, including the spread,
was 4.17% and 7.46%, respectively.

Borrowings under the credit facility are unsecured but are guaranteed by certain
of the Company's subsidiaries. The agreement related to this borrowing includes
certain restrictive covenants that include maintaining minimum consolidated net
worth, limiting new borrowings, maintaining a minimum interest coverage, and
restricting certain changes in ownership as stipulated in the agreement. The
Company was in compliance with these covenants as of November 30, 2001 and 2000.
This agreement also includes a letter of credit facility, against which $11,182
and $10,841 in letters of credit had been issued as of November 30, 2001 and
2000, respectively.

The 6.69% promissory note matures July 25, 2004, but the Company is required to
prepay, without premium, certain principal amounts as stated in the agreement.
Under the note agreement, the Company must meet certain restrictive covenants.
The covenants were amended during 1999 to be similar to those contained in the
multicurrency revolving credit facility.

Exclusive of the multicurrency revolving credit facility, principal maturities
of long-term debt for the next five fiscal years ending November 30
approximates: $5,579 in 2002, $5,624 in 2003, $5,629 in 2004, $381 in 2005, $166
in 2006 and $16,403 thereafter. The borrowings under the revolving credit
facility that matures in 2003 have been classified as long-term as the Company
has both the intent and ability to refinance this amount on a long-term basis.

Interest paid totaled $10,666, $10,714 and $2,228 during 2001, 2000 and
1999, respectively.

I. LEASES
The Company has various lease agreements for offices, warehouses, manufacturing
plants, and equipment that expire on various dates through June 2007 and contain
renewal options. Some of these leases provide for payment of property taxes,
utilities and certain other expenses. Commitments for minimum rentals under
noncancellable leases at November 30, 2001 for the next five years are: $7,278
in 2002, $4,881 in 2003, $3,641 in 2004, $1,997 in 2005, and $936 in 2006. Rent
expense totaled $8,869, $8,367 and $6,063 for the years ended November 30, 2001,
2000 and 1999, respectively.

J. PENSION AND OTHER POSTRETIREMENT PLANS
The Company has defined benefit pension plans and postretirement health care
plans covering certain employees and retired employees. In addition to the plan
assets related to qualified plans, the Company has funded approximately $2,281
and $2,580 at November 30, 2001 and 2000, respectively, in restricted trusts for
its nonqualified plans. These trusts are included in other noncurrent assets in
the Company's Consolidated Balance Sheets.

During 2001, the Company received approval from the Internal Revenue Service to
terminate one of its plans related to a business that was previously sold and
distribute all the plan's assets. The Company terminated the plan and settled
all of its obligations by making lump-sum distributions or purchasing annuity
contracts for its participants.

The following table shows reconciliations of the pension plans and other
postretirement plan benefits as of November 30, 2001 and 2000. The accrued
pension benefit liability includes an unfunded benefit obligation of $6,974 and
$5,231

as of November 30, 2001 and 2000, respectively. The obligations have been
determined with a weighted average discount rate of 7.25% and 7.75% in 2001 and
2000, respectively,and a rate of increase in future compensation of primarily
5.0% in both years. The expected weighted average long-term rate of return was
9.0% in both 2001 and 2000.

Pension Postretirement
Benefits Benefits
- --------------------------------------------------------------------------------
2001 2000 2001 2000
- --------------------------------------------------------------------------------

Change in benefit obligation:
Benefit obligation at beginning
of year ...................... $ 68,980 $ 73,356 $ 4,082 $ 3,866
Service cost .................... 3,142 3,122 107 92
Interest cost ................... 5,114 5,021 305 280
Amendments ...................... 1,154 -- -- --
Actuarial losses / (gains) ...... 3,750 (2,038) (808) (6)
Benefits paid ................... (5,717) (10,481) (151) (150)
-------------------------------------------
Benefit obligation at end of year 76,423 68,980 3,535 4,082
-------------------------------------------
Change in plan assets:
Fair value of plan assets at
beginning of year ............ 86,686 87,214 -- --
Actual return on plan assets .... (10,726) 3,012 -- --
Benefits paid ................... (5,455) (3,540) -- --
-------------------------------------------
Fair value of plan assets at end
of year ...................... 70,505 86,686 -- --
-------------------------------------------
Funded status ................... (5,918) 17,706 (3,535) (4,082)
Unrecognized prior
service cost ................. 1,320 188 -- --
Unrecognized net actuarial
loss / (gain) ................ 18,319 (3,011) (570) 238
-------------------------------------------
Net amount recognized ........... $ 13,721 $ 14,883 $ (4,105) $ (3,844)
============================================
Amounts recognized in the
Consolidated Balance
Sheets include:
Prepaid benefit cost ..... $ 18,939 $ 19,519 $ -- $ --
Accrued benefit liability (5,218) (4,636) (4,105) (3,844)
-------------------------------------------
Net amount recognized ........... $ 13,721 $ 14,883 $ (4,105) $ (3,844)
============================================

The components of net periodic benefit cost for pensions are shown below.

Pension Benefits
- --------------------------------------------------------------------------------
2001 2000 1999
- --------------------------------------------------------------------------------
Components of net periodic benefit cost:
Service cost ........................ $ 3,142 $ 3,122 $ 2,364
Interest cost ....................... 5,114 5,021 5,251
Expected return on plan assets ...... (7,527) (7,695) (7,041)
Additional recognition amount ....... -- -- 196
Amortization of unrecognized:
Net transition asset ............. -- (1,056) (1,056)
Prior service cost ............... 22 21 62
Net actuarial loss ............... 5 7 54
Settlement cost for a
terminated plan ................ 669 -- --
------------------------------------
Net periodic benefit
cost / (income) .................. $ 1,425 $ (580) $ (170)
====================================

The postretirement obligations represent a fixed dollar amount per retiree. The
Company has the right to modify or terminate these benefits. The participants
will assume substantially all future health care benefit cost increases, and
therefore, future increases in health care costs will not increase the
postretirement benefit obligation or cost to the Company. Therefore, the Company
has not assumed any annual rate of increase in the per capita cost of covered
health care benefits for future years. The components of net periodic benefit
cost for postretirement health care benefits are shown below.

Postretirement Benefits
- --------------------------------------------------------------------------------
2001 2000 1999
- --------------------------------------------------------------------------------
Components of net periodic benefit cost:
Service cost ........................... $107 $ 92 $ 13
Interest cost .......................... 305 280 149
------------------------------------
Net periodic benefit cost .............. $412 $372 $162
====================================

The Company also sponsors various defined contribution plans that provide
employees with an opportunity to accumulate funds for their retirement. The
Company matches the contributions of participating employees based on the
percentages specified in the respective plans. The Company recognized expense
related to these plans of $1,395, $1,408 and $1,211 in 2001, 2000 and 1999,
respectively.

K. INCOME TAXES
The provision for income taxes consisted of:

2001 2000 1999
- --------------------------------------------------------------------------------
Current:
Federal .............................. $21,644 $17,693 $18,398
State ................................ 2,751 2,574 2,177
Foreign .............................. 1,460 1,063 547
Deferred ................................ (2,051) 1,871 (985)
------------------------------------
$23,804 $23,201 $20,137
====================================

Income taxes paid,net of refunds, totaled $26,858, $16,458 and $22,234 during
2001, 2000 and 1999, respectively.

Earnings before income taxes and minority interests included the following
components:

2001 2000 1999
- --------------------------------------------------------------------------------

Domestic income ........................ $62,664 $60,471 $53,467
Foreign income ......................... 3,070 3,016 2,148
------------------------------------
$65,734 $63,487 $55,615
====================================

The provision for income taxes resulted in effective tax rates that differ from
the statutory United States federal income tax rate. The reasons for these
differences are as follows:

Percent of Pretax Earnings
- --------------------------------------------------------------------------------
2001 2000 1999
- --------------------------------------------------------------------------------

Statutory U.S. tax rate ................. 35.0% 35.0% 35.0%
State income taxes, net of
federal benefit ...................... 2.6 2.6 2.6
Foreign sales ........................... (1.1) (0.8) (0.8)
Other, net .............................. (0.3) (0.3) (0.6)
------------------------------------
Consolidated effective
income tax rate ...................... 36.2% 36.5% 36.2%
====================================

The components of the net deferred tax liability as of November 30, 2001 and
2000 were as follows:

2001 2000
- --------------------------------------------------------------------------------
Deferred tax assets:
Deferred compensation ................................. $ 4,304 $ 3,930
Other postretirement benefits ......................... 931 783
Foreign net operating loss carryforwards .............. 406 377
Accounts receivable ................................... 3,385 2,177
Inventories ........................................... 3,113 1,774
Other comprehensive income items ...................... 1,026 --
Accrued liabilities and other ......................... 2,915 2,071
--------------------
Total gross deferred tax assets ........................... 16,080 11,112
--------------------
Deferred tax liabilities:
Pensions .............................................. (5,069) (5,209)
Plant assets .......................................... (12,081) (11,189)
Intangibles ........................................... (526) 36
Other ................................................. -- (82)
--------------------
Total gross deferred tax liabilities ...................... (17,676) (16,444)
--------------------
Net deferred tax liability ................................ $ (1,596) $(5,332)
====================

The Company expects to realize the deferred tax assets, including foreign net
operating loss carryforwards, through the reversal of taxable temporary
differences and future earnings.

As of November 30, 2001, the Company has not provided taxes on accumulated
unremitted foreign earnings of approximately $6,000 that are intended to be
indefinitely reinvested to finance operations and expansion outside the United
States. If such earnings were distributed beyond the amount for which taxes have
been provided, foreign tax credits would substantially offset any incremental
U.S. tax liability.

L. CONTINGENCIES
The Company is involved in legal actions arising in the normal course of
business. Additionally, the Company is party to various proceedings relating to
environmental issues. The U.S. Environmental Protection Agency (EPA) and/or
other responsible state agencies have designated the Company as a potentially
responsible party (PRP), along with other companies, in remedial activities for
the cleanup of waste sites under the federal Superfund statute.

Environmental and related remediation costs are difficult to quantify for a
number of reasons, including the number of parties involved, the difficulty in
determining the extent of the contamination, the length of time remediation may
require, the complexity of the environmental regulation and the continuing
advancement of remediation technology. Applicable federal law may impose joint
and several liability on each PRP for the cleanup.

It is the opinion of management that additional liabilities, if any, resulting
from these legal or environmental issues, are not expected to have a material
adverse effect on the Company's financial condition or consolidated results of
operations.

M. PREFERRED STOCK PURCHASE RIGHTS
In March 1996, the Board of Directors of CLARCOR adopted a Shareholder Rights
Plan to replace an existing plan that expired on April 25, 1996. Under the terms
of the Plan, each shareholder received rights to purchase shares of CLARCOR
Series B Junior Participating Preferred Stock. The rights become exercisable
only after the earlier to occur of (i) 10 business days after the first public
announcement that a person or group (other than a CLARCOR-related entity) has
become the beneficial owner of 15% or more of the outstanding shares of CLARCOR
Common Stock; or (ii) 10 business days (unless extended by the CLARCOR Board in
accordance with the Rights Agreement) after the commencement of, or the
intention to make, a tender or exchange offer, the consummation of which would
result in any person or group (other than a CLARCOR related entity) becoming
such a 15% beneficial owner. Each right entitles the holder to buy one-
hundredth of a share of such preferred stock at an exercise price of $80 subject
to certain adjustments.

Once the rights become exercisable, each right will entitle the holder, other
than the acquiring person or group, to purchase a number of CLARCOR common
shares at a 50% discount to the then-market price of CLARCOR Common Stock. In
addition, under certain circumstances, if the rights become exercisable, the
holder will be entitled to purchase the stock of the acquiring individual or
group at a 50% discount. The Board may also elect to redeem the rights at $.01
per right. The rights expire on April 25, 2006.

The authorized preferred stock includes 300,000 shares designated as Series B
Junior Participating Preferred Stock.

N. INCENTIVE PLAN
In 1994, the shareholders of CLARCOR adopted the 1994 Incentive Plan, which
allows the Company to grant stock options, restricted stock and performance
awards to officers, directors and key employees. The 1994 Incentive Plan
incorporates the various incentive plans in existence prior to March 1994. In
addition, the Company has, in connection with the 1997 acquisition of United Air
Specialists, Inc. (UAS), assumed the stock option plans of UAS and has reserved
6,949 shares of the Company's common stock for issuance under the assumed UAS
stock option plans.

The amended 1994 Incentive Plan allows grants and awards of up to 1.5% of the
outstanding common stock as of January 1 of each calendar year. In addition, the
Compensation and Stock Option Committee of the Company's Board of Directors may
approve an additional 1% of outstanding common stock to be awarded during any
calendar year. Any portion that is not granted in a given year is available for
future grants. After the close of fiscal year 2001, 314,761 shares were granted,
including the restricted stock units discussed hereafter.

The following is a description and a summary of key provisions related to this
Plan.

Stock Options
In accordance with Statement of Financial Accounting Standards No. 123 (SFAS
123), "Accounting for Stock-Based Compensation," the Company accounts for
stock-based compensation using the intrinsic value method as prescribed under
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees", and related Interpretations and provides the disclosure-only
provisions of SFAS 123.

Nonqualified stock options may, at the discretion of the Board of Directors, be
granted at the fair market value at the date of grant or at an exercise price
less than the fair market value at the date of grant. All options granted in
2001, 2000, and 1999 were at the fair market value at the dates of the grants.
Options granted to key employees prior to the end of fiscal year 2000 vest 25%
per year beginning at the end of the third year; therefore,they become fully
exercisable at the end of six years. Options granted to key employees after the
close of fiscal year 2000 vest 25% per year beginning at the end of the first
year; therefore, they become fully exercisable at the end of four years. Options
granted to non-employee directors vest immediately. All options expire ten years
from the date of grant unless otherwise terminated.

The following table summarizes the activity under the non-qualified stock
option plans.

2001 2000 1999
- ---------------------------------------------------------------------------------------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
- ---------------------------------------------------------------------------------------------------------

Outstanding at
beginning of year ................ 2,286,026 $14.53 2,239,162 $14.83 2,116,182 $14.18
Granted ............................ 449,366 19.93 412,404 17.80 287,982 18.00
Exercised/
surrendered ...................... (411,262) 14.15 (365,540) 12.75 (165,002) 12.93
-----------------------------------------------------------------
Outstanding at
end of year ...................... 2,324,130 $16.83 2,286,026 $14.53 2,239,162 $14.83
-----------------------------------------------------------------
Options exercisable
at end of year ................... 1,531,152 $16.06 1,508,859 $14.68 1,159,462 $12.62
=================================================================

The following table summarizes information about the options at November 30,
2001.

Options Outstanding Options Exercisable
- --------------------------------------------------------------------------------
Weighted Weighted Weighted
Range of Average Average Average
Exercise Exercise Remaining Exercise
Prices Number Price Life in Years Number Price
- --------------------------------------------------------------------------------
$12.17 - $17.94 1,247,757 $14.49 4.57 935,988 $13.49
$18.38 - $26.00 1,076,373 $19.55 7.49 595,164 $20.10

In addition, stock options outstanding and exercisable at November 30, 2001 and
2000 assumed as part of the UAS acquisition were 6,949 and 20,669, respectively.
These substitute options have an exercisable price range per share of $2.40 to
$5.94 at November 30, 2001 and expire between 2002 and 2005.

Long Range Performance and Restricted Stock Awards
Officers and key employees may be granted target awards of Company shares of
common stock and performance units, which represent the right to a cash payment.
The awards are earned and shares are issued only to the extent that the Company
achieves performance goals determined by the Board of Directors during a
three-year performance period. The Company granted 28,383 performance shares on
December 1, 1999. The shares vest at the end of three years. As of November 30,
2001, the Company has cancelled 14,609 and 4,860 shares of the 2000 and 1999
grants, respectively. Subsequent to the end of the fiscal year, the Company
cancelled an additional 4,475 shares of the 1999 grant.

During the performance period, officers and key employees are permitted to vote
the performance shares and receive compensation equal to dividends declared on
common shares. The Company accrues compensation expense assuming attainment of
the performance goals ratably during the performance cycle. Distributions of
Company common stock and cash for the performance periods ended November 30,
2001, 2000 and 1999 were $437, $488 and $485, respectively.

During 2001,the Company granted 35,222 restricted units of Company common stock
with a fair value of $18.50 per share, the market price of the stock at the date
granted. In connection therewith, the Company cancelled 12,113 performance
shares and 8,074 performance units from the December 1, 1999 grant and replaced
them with 9,182 units of restricted stock and with additional stock option
awards. The restricted share units require no payment from the employee and
compensation cost is recorded based on the market price on the grant date and is
recorded over the vesting period of four years. During the vesting period,
officers and key employees receive compensation equal to dividends declared on
common shares. Upon vesting, the employee may elect to defer receipt of their
shares. Subsequent to the end of fiscal year 2001, 2,464 shares (net of 1,157
shares withheld for taxes) of the December 2000 restricted unit grant were
issued and 6,855 units were deferred. In addition, the Company granted 25,436
restricted stock units in December 2001 at the market price on the date granted
of $27.50.

Compensation expense related to long range performance and restricted stock
awards totaled $618, $901 and $534 in 2001, 2000 and 1999, respectively. No
future awards of long range performance shares or units are expected to be
granted.

Directors' Restricted Stock Compensation
The 1994 Incentive Plan, as amended on March 25,2000, provides for grants of
shares of common stock to all non-employee directors equal to a one-year annual
retainer in lieu of cash. The directors' rights to the shares vest immediately
on the date of grant. In 2001 and 2000, respectively, 10,618 and 7,076 shares of
Company common stock were issued under the amended plan. During 1999, 16,002
shares of Company common stock were issued under the plan of which 15,488 were
cancelled in 2000 due to the plan amendment. During 1999, 1,321 shares from a
prior year grant were forfeited. Compensation expense for the plan totaled $252,
$184 and $191 in 2001, 2000 and 1999, respectively.

Fair Value Accounting (SFAS 123)
Had compensation expense for the Company's stock-based compensation plans been
determined based on the fair value at the grant dates consistent with the method
of SFAS 123, the Company's pro forma net earnings and diluted earnings per share
would have been $40,760, $39,520 and $34,848 and $1.64, $1.61 and $1.43 for
2001, 2000 and 1999, respectively.

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions for 2001, 2000,and 1999. Adjustments for forfeitures are made as
they occur.

2001 2000 1999
- --------------------------------------------------------------------------------
Risk-free interest rate ....................... 5.53% 6.34% 4.87%
Expected dividend yield ....................... 2.50% 2.47% 2.35%
Expected volatility factor .................... 25.50% 25.00% 24.50%
Expected option term (in years)................ 7.0 7.0 7.0

The weighted average fair value per option at the date of grant for options
granted in 2001, 2000 and 1999 was $5.12, $5.28 and $4.88, respectively.

The above pro forma disclosures may not be representative of the effects on
reported net income and earnings per share for future years because compensation
cost under SFAS 123 is amortized over the options' vesting period and
compensation cost for options granted prior to fiscal year 1996 is not
considered.

O. TREASURY STOCK TRANSACTIONS AND
EARNINGS PER SHARE
During 1999, the Company purchased and retired 50,000 shares of common stock.
The number of issued shares was reduced as a result of the retirement of these
shares.

The Company calculates and presents basic and diluted earnings per share in
accordance with Statement of Financial Accounting Standards No. 128 (SFAS
128), "Earnings per Share." Diluted earnings per share reflects the impact of
outstanding stock options if exercised during the periods presented using the
treasury stock method. The following table provides a reconciliation of the
numerators and denominators utilized in the calculation of basic and diluted
earnings per share:

2001 2000 1999
- ----------------------------------------------------------------------------------------------

Net Earnings (numerator) ............................. $ 41,893 $ 40,237 $ 35,412
Basic EPS:
Weighted average number of
common shares outstanding
(denominator) ................................... 24,535,199 24,269,675 23,970,011
Basic per share amount .......................... $ 1.71 $ 1.66 $ 1.48
--------------------------------------
Diluted EPS:
Weighted average number
of common shares
outstanding ..................................... 24,535,199 24,269,675 23,970,011
Dilutive effect of stock options .................. 356,863 236,496 343,596
--------------------------------------
Diluted weighted average
number of common
shares outstanding
(denominator) ................................ 24,892,062 24,506,171 24,313,607
Diluted per share amount ........................ $ 1.68 $ 1.64 $ 1.46
=====================================

For fiscal years ended November 30, 2001, 2000 and 1999, respectively,
28,491, 682,866 and 525,156 stock options with a weighted average exercise price
of $25.97, $19.34 and $19.81 were not included in the computation of diluted
earnings per share as the exercise prices of the options were greater than the
average market price of the common shares during the respective periods.

P. UNAUDITED QUARTERLY FINANCIAL DATA
The unaudited quarterly data for 2001 and 2000 were as follows:

First Second Third Fourth
Quarter Quarter Quarter Quarter Total
- --------------------------------------------------------------------------------
2001:
Net sales ...... $156,197 $159,505 $175,645 $175,617 $666,964
Gross profit ... 46,286 45,344 50,306 53,551 195,487
Net earnings ... 9,804 8,936 10,257 12,896 41,893
Net earnings per
common share:
Basic ........ $ 0.40 $ 0.36 $ 0.42 $ 0.52 $ 1.71
Diluted ...... $ 0.40 $ 0.36 $ 0.41 $ 0.51 $ 1.68

2000:
Net sales ...... $150,697 $162,205 $160,830 $178,416 $652,148
Gross profit ... 44,283 49,985 47,778 56,299 198,345
Net earnings ... 7,063 10,090 10,078 13,006 40,237
Net earnings per
common share:
Basic ........ $ 0.29 $ 0.42 $ 0.41 $ 0.53 $ 1.66
Diluted ...... $ 0.29 $ 0.41 $ 0.41 $ 0.53 $ 1.64

Fiscal year 2001 was a fifty-two week year, whereas fiscal year 2000 was a
fifty-three week year. Likewise, fourth quarter 2001 was a thirteen week quarter
while fourth quarter 2000 was a fourteen week quarter. During the first quarter
of 2001, the Company received a settlement payment of $7,000 for the early
termination of a supply and license agreement and in connection therewith
recognized an impairment loss in its Packaging segment of $2,422 related to
certain plant assets as discussed in Note E.

Q. SEGMENT INFORMATION
The Company adopted Statement of Financial Accounting Standards No. 131 (SFAS
131), "Disclosures About Segments of an Enterprise and Related Information"
effective with year-end 1999. This standard requires that companies disclose
selected information by operating segment. SFAS 131 defines an operating segment
as a component of a company which engages in business activities from which it
may earn revenues and incur expenses; has its operating results regularly
reviewed by the entity's chief operating decision makers to make decisions about
the allocation of resources and the assessment of performance; and has discrete
financial information available. Based on the economic characteristics of the
Company's business activities,the nature of products, customers and markets
served, and the performance evaluation by management and the Company's Board of
Directors, the Company has identified three reportable segments: Engine/Mobile
Filtration, Industrial/Environmental Filtration and Packaging.

The Engine/Mobile Filtration segment manufactures and markets a complete line of
filters used in the filtration of oils, air, fuel, coolant, hydraulic and
transmission fluids in both domestic and international markets. The
Engine/Mobile Filtration segment provides filters for certain types of
transportation equipment including automobiles, heavy-duty and light trucks,
buses and locomotives, marine and mining equipment, industrial equipment and
heavy-duty construc-

tion and agricultural equipment. The products are sold to aftermarket
distributors, original equipment manufacturers and dealer networks, private
label accounts and directly to truck service centers and large national
accounts.

The Industrial/Environmental Filtration segment manufactures and markets a
complete line of filters, cartridges, dust collectors and filtration systems
used in the filtration of air and industrial fluid processes in both domestic
and international markets. The filters and filter systems are used in commercial
and industrial buildings, hospitals, manufacturing processes, pharmaceutical
processes, clean rooms, airports, shipyards, refineries, power generation plants
and residences. The products are sold to commercial and industrial distributors,
original equipment manufacturers and dealer networks, private label accounts,
retailers and directly to large national accounts.

The Packaging segment manufactures and markets consumer and industrial packaging
products including custom-designed plastic and metal containers and closures and
lithographed metal sheets in both domestic and international markets. The
products are sold directly to consumer and industrial packaging customers. As
discussed in Note P, the Company received a settlement payment of $7,000 for the
early termination of a supply and license agreement and in connection therewith
recognized an impairment loss in its Packaging segment of $2,422 related to
certain plant assets as discussed in Note E. The segment's sales of plastic
closures were reduced in 2001 as a result of the termination of the agreement.

Net sales represent sales to unaffiliated customers. No single customer or class
of product accounted for 10% or more of the Company's consolidated 2001 sales.
Intersegment sales are not material. Assets are those assets used in each
business segment. Corporate assets consist of cash and short-term cash
investments, deferred income taxes, headquarters facility and equipment, pension
assets and various other assets that are not specific to an operating segment.
Unallocated amounts include interest income and expense and other non-operating
income and expense items.

The segment data for the years ended November 30, 2001, 2000 and 1999 were as
follows:

2001 2000 1999
- --------------------------------------------------------------------------------
Net sales:
Engine/Mobile Filtration .......... $ 250,960 $ 259,791 $ 238,680
Industrial/Environmental Filtration 346,394 319,746 174,889
Packaging ......................... 69,610 72,611 64,300
-----------------------------------
$ 666,964 $ 652,148 $ 477,869
===================================
Operating profit:
Engine/Mobile Filtration .......... $ 51,785 $ 49,162 $ 43,591
Industrial/Environmental Filtration 16,761 18,433 5,120
Packaging ......................... 7,264 8,392 7,366
-----------------------------------
75,810 75,987 56,077
Other income (expense) ............ (10,076) (12,500) (462)
-----------------------------------
Earnings before income taxes and
minority interests ............. $ 65,734 $ 63,487 $ 55,615
===================================
Identifiable assets:
Engine/Mobile Filtration .......... $ 135,265 $ 144,563 $ 137,351
Industrial/Environmental Filtration 303,901 271,669 241,471
Packaging ......................... 41,652 41,891 36,173
Corporate ......................... 49,799 43,807 57,996
-----------------------------------
$ 530,617 $ 501,930 $ 472,991
===================================
Additions to plant assets:
Engine/Mobile Filtration .......... $ 3,852 $ 7,588 $ 13,115
Industrial/Environmental Filtration 8,746 10,842 4,824
Packaging ......................... 5,404 8,045 3,217
Corporate ......................... 202 2,530 666
-----------------------------------
$ 18,204 $ 29,005 $ 21,822
===================================
Depreciation and amortization:
Engine/Mobile Filtration .......... $ 7,725 $ 7,475 $ 6,944
Industrial/Environmental Filtration 10,711 10,145 5,132
Packaging ......................... 2,725 2,832 2,742
Corporate ......................... 689 627 554
-----------------------------------
$ 21,850 $ 21,079 $ 15,372
===================================

Financial data relating to the geographic areas in which the Company operates
are shown for the years ended November 30, 2001, 2000 and 1999. Net sales by
geographic area are based on sales to final customers within that region.

2001 2000 1999
- --------------------------------------------------------------------------------
Net sales:
United States .................. $549,210 $532,210 $399,717
Europe ......................... 58,490 60,250 35,984
Other international ............ 59,264 59,688 42,168
----------------------------------
$666,964 $652,148 $477,869
===================================
Plant assets, at cost
less accumulated depreciation:
United States .................. $131,171 $133,323 $119,196
Europe ......................... 5,144 5,695 5,650
Other international ............ 1,001 1,103 1,180
----------------------------------
$137,316 $140,121 $126,026
===================================