UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
|
|
|
þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended May 30, 2009
OR
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|
o
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|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from
to
Commission File Number 1-11024
CLARCOR Inc.
(Exact name of registrant as specified in its charter)
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DELAWARE
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36-0922490
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|
(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
|
840 Crescent Centre Drive, Suite 600, Franklin, Tennessee 37067
(Address of principal executive offices)
Registrants telephone number, including area code
615-771-3100
(Former name, former address and former fiscal year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes
þ
No
o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes
o
No
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer or a smaller reporting company. See definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act:
Large accelerated filer
þ
|
Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
|
Smaller reporting company
o
|
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule
12b-2) Yes
o
No
þ
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
the latest practicable date.
As of May 30, 2009, 50,932,941 common shares with a par value of $1 per share were
outstanding.
TABLE OF CONTENTS
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*
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Item omitted because no answer is called for or item is not applicable.
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Page 2
Part I
Item 1. Financial Statements
CLARCOR Inc.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
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May 30,
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November 29,
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2009
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2008
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(Unaudited)
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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46,803
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$
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40,715
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Restricted cash
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2,020
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|
473
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Short-term investments
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23,334
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7,269
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Accounts receivable, less allowance for losses
of $15,973 for 2009 and $13,267 for 2008
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170,853
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194,864
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Inventories:
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Raw materials
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65,332
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60,575
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Work in process
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26,077
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27,318
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Finished products
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76,692
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70,308
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Total inventories
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168,101
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158,201
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Deferred income taxes
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22,975
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23,121
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Prepaid expenses and other current assets
|
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|
7,947
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7,928
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Total current assets
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442,033
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432,571
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Plant assets at cost,
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443,122
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439,423
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less accumulated depreciation
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(252,608
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)
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(246,824
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)
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|
|
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190,514
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192,599
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Goodwill
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229,788
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223,964
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Acquired intangibles, less accumulated amortization
|
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95,839
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95,089
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Deferred income taxes
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224
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224
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Other noncurrent assets
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13,151
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13,435
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Total assets
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$
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971,549
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$
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957,882
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LIABILITIES
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Current liabilities:
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Current portion of long-term debt
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$
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154
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$
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128
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Accounts payable
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59,557
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65,398
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Accrued salaries, wages and commissions
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8,392
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|
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14,292
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Compensated absences
|
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7,545
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8,004
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Accrued insurance liabilities
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|
10,907
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9,668
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Customer deposits
|
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11,110
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11,777
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Income taxes
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|
3,845
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5,083
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Other accrued liabilities
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30,996
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29,153
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|
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Total current liabilities
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132,506
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143,503
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Long-term debt, less current portion
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82,393
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83,822
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Postretirement healthcare benefits
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652
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|
642
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Long-term pension liabilities
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29,327
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27,307
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Deferred income taxes
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37,878
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39,317
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Other long-term liabilities
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4,340
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7,360
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Minority interests
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2,417
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4,172
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Total liabilities
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289,513
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306,123
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Contingencies
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SHAREHOLDERS EQUITY
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Capital stock
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50,933
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50,794
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Capital in excess of par value
|
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|
53,132
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|
48,025
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|
Accumulated other comprehensive loss
|
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|
(17,997
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)
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|
(26,562
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)
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Retained earnings
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|
595,968
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579,502
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Total shareholders equity
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682,036
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651,759
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Total liabilities and shareholders equity
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|
$
|
971,549
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|
$
|
957,882
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See Notes to Consolidated Condensed Financial Statements
Page 3
CLARCOR Inc.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Dollars in thousands, except per share data)
(Unaudited)
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Quarter Ended
|
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Six Months Ended
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May 30,
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May 31,
|
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May 30,
|
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May 31,
|
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2009
|
|
|
2008
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2009
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2008
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|
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|
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Net sales
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|
$
|
229,395
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$
|
267,137
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$
|
443,085
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$
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517,318
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Cost of sales
|
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|
159,797
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|
181,526
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|
312,504
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|
|
355,152
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|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
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|
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|
|
|
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|
Gross profit
|
|
|
69,598
|
|
|
|
85,611
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|
|
|
130,581
|
|
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|
162,166
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|
|
|
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|
|
|
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|
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Selling and administrative expenses
|
|
|
44,368
|
|
|
|
48,153
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|
|
|
91,664
|
|
|
|
96,969
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
Operating profit
|
|
|
25,230
|
|
|
|
37,458
|
|
|
|
38,917
|
|
|
|
65,197
|
|
|
|
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|
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|
|
|
|
|
|
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|
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|
|
|
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Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Interest expense
|
|
|
(604
|
)
|
|
|
(72
|
)
|
|
|
(1,532
|
)
|
|
|
(3,638
|
)
|
Interest income
|
|
|
88
|
|
|
|
432
|
|
|
|
230
|
|
|
|
701
|
|
Other, net
|
|
|
464
|
|
|
|
(177
|
)
|
|
|
444
|
|
|
|
(389
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(52
|
)
|
|
|
183
|
|
|
|
(858
|
)
|
|
|
(3,326
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income taxes and
minority interests
|
|
|
25,178
|
|
|
|
37,641
|
|
|
|
38,059
|
|
|
|
61,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
8,121
|
|
|
|
12,903
|
|
|
|
12,217
|
|
|
|
20,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before minority interests
|
|
|
17,057
|
|
|
|
24,738
|
|
|
|
25,842
|
|
|
|
41,027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests in earnings
of subsidiaries
|
|
|
(266
|
)
|
|
|
(104
|
)
|
|
|
(260
|
)
|
|
|
(244
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
16,791
|
|
|
$
|
24,634
|
|
|
$
|
25,582
|
|
|
$
|
40,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Basic
|
|
$
|
0.33
|
|
|
$
|
0.49
|
|
|
$
|
0.50
|
|
|
$
|
0.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.33
|
|
|
$
|
0.48
|
|
|
$
|
0.50
|
|
|
$
|
0.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average number of common
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
51,042,665
|
|
|
|
50,752,765
|
|
|
|
51,014,126
|
|
|
|
50,682,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
51,330,567
|
|
|
|
51,272,388
|
|
|
|
51,392,809
|
|
|
|
51,125,712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid per share
|
|
$
|
0.09
|
|
|
$
|
0.08
|
|
|
$
|
0.18
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Condensed Financial Statements
Page 4
CLARCOR Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
May 30,
|
|
|
May 31,
|
|
|
|
2009
|
|
|
2008
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
25,582
|
|
|
$
|
40,783
|
|
Depreciation
|
|
|
13,851
|
|
|
|
13,259
|
|
Amortization
|
|
|
2,436
|
|
|
|
2,779
|
|
Loss on interest rate agreement
|
|
|
348
|
|
|
|
1,337
|
|
Stock-based compensation expense
|
|
|
3,142
|
|
|
|
3,713
|
|
Excess tax benefit from stock-based compensation
|
|
|
(432
|
)
|
|
|
(2,289
|
)
|
Changes in short-term investments
|
|
|
(16,065
|
)
|
|
|
(8,980
|
)
|
Changes in assets and liabilities, excluding short-term
investments
|
|
|
7,394
|
|
|
|
(3,776
|
)
|
Other, net
|
|
|
205
|
|
|
|
297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
36,461
|
|
|
|
47,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Business acquisitions, net of cash acquired
|
|
|
(12,192
|
)
|
|
|
(75,073
|
)
|
Additions to plant assets
|
|
|
(10,784
|
)
|
|
|
(17,412
|
)
|
Investment in affiliate
|
|
|
(1,000
|
)
|
|
|
(2,000
|
)
|
Other, net
|
|
|
394
|
|
|
|
56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(23,582
|
)
|
|
|
(94,429
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Net proceeds (payments) under line of credit
|
|
|
(10,000
|
)
|
|
|
100,000
|
|
Borrowings under long-term debt
|
|
|
8,410
|
|
|
|
|
|
Payments on long-term debt
|
|
|
(559
|
)
|
|
|
(7,327
|
)
|
Sale of capital stock under stock option
and employee purchase plans
|
|
|
2,106
|
|
|
|
7,825
|
|
Purchase of treasury stock
|
|
|
|
|
|
|
(37,260
|
)
|
Excess tax benefits from stock-based compensation
|
|
|
432
|
|
|
|
2,289
|
|
Cash dividends paid
|
|
|
(9,196
|
)
|
|
|
(8,183
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(8,807
|
)
|
|
|
57,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of exchange rate changes on cash
|
|
|
2,016
|
|
|
|
1,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
6,088
|
|
|
|
11,100
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
40,715
|
|
|
|
36,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
46,803
|
|
|
$
|
47,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
1,140
|
|
|
$
|
1,642
|
|
|
|
|
|
|
|
|
Income taxes
|
|
$
|
14,200
|
|
|
$
|
17,821
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Condensed Financial Statements
Page 5
CLARCOR Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(Unaudited)
1.
|
|
CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
The consolidated condensed balance sheet as of May 30, 2009, the consolidated condensed
statements of earnings and the consolidated condensed statements of cash flows for the periods
ended May 30, 2009, and May 31, 2008, have been prepared by the Company without audit. The
financial statements have been prepared on the same basis as those in the Companys Annual
Report on Form 10-K for the fiscal year ended November 29, 2008 (2008 Form 10-K). The November
29, 2008 consolidated balance sheet data was derived from the Companys year-end audited
financial statements as presented in the 2008 Form 10-K but does not include all disclosures
required by accounting principles generally accepted in the United States of America. In the
opinion of management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and cash flows have
been made. The results of operations for the period ended May 30, 2009, are not necessarily
indicative of the operating results for the full year.
|
|
2.
|
|
BUSINESS ACQUISITIONS
|
|
|
|
On April 20, 2009, the Company purchased the remaining 20% minority interest in its consolidated
subsidiary based in Weifang, China for $4,583, including acquisition costs. This subsidiary is
part of the Companys Engine/Mobile Filtration segment and manufactures heavy-duty engine
filters, certain lines of environmental filters and filter systems and filters used in off-shore
oil drilling. The allocation of the purchase price will be made to major categories of assets
and liabilities when the Company completes its assessment of assets acquired and liabilities
assumed during fiscal 2009. The $2,195 excess of the initial purchase price over the preliminary
estimated fair value of the assets acquired and liabilities assumed was recorded as goodwill.
|
|
|
|
On April 6, 2009, the Company purchased Weifang Yuhua Filters Ltd. (Yuhua), based in Weifang,
China for approximately $706. Yuhua manufactures heavy-duty engine filters. The business is
included in the Companys Engine/Mobile Filtration segment. The acquisition is not material to
the results of the Company. The allocation of the purchase price will be made to major
categories of assets and liabilities when the Company completes its assessment of the assets
acquired and liabilities assumed during fiscal 2009.
|
|
|
|
On February 1, 2009, the Company purchased 85% ownership interests in Pujiang Novaeastern
International Mesh Co., Ltd. (Pujiang) and Quzhou Chinagrace Filter Co., Ltd. (Quzhou). Both
companies are based in China and were under common ownership. Pujiang and Quzhou are
manufacturers of wire mesh filtration products sold primarily to the fibers, resin and aerospace
industries. The combined purchase price for the ownership interests in both companies was
approximately $1,535, excluding cash acquired and including acquisition costs. The Company has
the right, but not the obligation, to purchase the remaining 15% ownership interests using a
formula based on the combined companies future operating results. The businesses are included
in the Companys Industrial/Environmental Filtration segment. The acquisition is not material to
the results of the Company. A preliminary allocation of the purchase price for the acquisition
has been made to major categories of assets and liabilities, based on available information, and
is currently subject to change. Other acquired intangibles included patents valued at $189 which
will be amortized over an estimated useful life of 10 years. The $717 excess of the initial purchase price over the preliminary estimated fair value of the assets
acquired and the liabilities assumed was recorded as goodwill.
|
Page 6
CLARCOR Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(Unaudited)
|
|
On January 16, 2009, the Company purchased certain assets of Meggitt (UK) Limited (Meggitt), for
$578. This business was acquired to expand the Companys product range of aerospace filters sold
primarily to European aircraft manufacturers and aerospace parts distributors. The purchased
assets were combined into an existing Company subsidiary which is part of the Companys
Industrial/Environmental Filtration segment. The Company expects to make an additional payment
in 2010 of approximately $146 to the former owner of the Meggitt assets contingent upon the
renewal of a contract with a customer. The acquisition is not material to the results of the
Company. A preliminary allocation of the purchase price for the acquisition has been made to
major categories of assets based on available information, and is currently subject to change.
Other acquired intangibles included customer relationships valued at $201 which will be
amortized over their estimated useful life of 13 years. The $231 excess of the initial purchase
price over the preliminary estimated fair value of the net assets acquired was recorded as
goodwill.
|
|
|
|
On December 29, 2008, the Company purchased the Keddeg Company (Keddeg), a manufacturer of
aerospace filtration products based in Lenexa, Kansas. The purchase price was $5,495, excluding
cash acquired and including acquisition costs. Keddegs results are included as part of the
Companys Industrial/Environmental Filtration segment from the date of acquisition. The
acquisition is not material to the results of the Company. A preliminary allocation of the
purchase price has been made to major categories of assets and liabilities assumed, based on
available information, and is subject to change. The $1,753 excess of the purchase price over
the preliminary estimated fair value of the net tangible and intangible assets acquired was
recorded as goodwill. Acquired intangible assets, other than trade names and goodwill, are
amortized on a straight-line basis according to the useful lives of the acquired assets. The
fair value of the identifiable intangible assets and their respective lives are shown in the
following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
Identifiable Intangible Asset
|
|
Value
|
|
|
Useful Life
|
|
Trade names
|
|
$
|
553
|
|
|
Indefinite
|
Non-compete agreements
|
|
|
86
|
|
|
5 years
|
Customer relationships
|
|
|
875
|
|
|
12 years
|
Developed technology
|
|
|
1,256
|
|
|
10 years
|
|
|
|
|
|
|
|
|
Total fair value
|
|
$
|
2,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective May 1, 2008, the Company acquired a 30% share in BioProcessH
2
O LLC (BPH), a
Rhode Island based manufacturer of industrial waste water and water reuse filtration systems,
for $4,000, payable $2,000 in cash at the acquisition date with the remaining $2,000 to be paid
by December 31, 2009. On February 6, 2009, the Company paid $1,000 of the remaining amount.
Under the terms of the agreement with BPH, the Company has the right, but not the obligation, to
acquire additional ownership shares and eventually complete ownership of the company over
several years at a price based on, among other factors, BPHs operating income. The investment,
with a carrying amount of $3,802 and $4,011 at May 30, 2009 and November 29, 2008, respectively,
is being accounted for under the equity method of accounting in accordance with Accounting
Principles Board Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock. The investment was initially recorded at cost. The carrying
amount is adjusted each period to recognize the Companys share of the earnings or losses of the
investee based on the percentage of ownership, as well as the receipt of any dividend income.
The equity investment is periodically reviewed for indicators of impairment. The Companys share
of undistributed earnings was not material at May 30, 2009.
|
Page 7
CLARCOR Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(Unaudited)
|
|
On December 3, 2007, the Company acquired Perry Equipment Corporation (Peco), a privately-owned
manufacturer of engineered filtration products and technologies used in a wide array of
industries, including oil and natural gas, refining, power generation, petrochemical, food and
beverage, electronics, polymers and pulp and paper. Peco is based in Mineral Wells, Texas with
operations in Mexico, Canada, the United Kingdom, Italy, Romania, Malaysia and China. Peco was
merged with the Companys Facet operations with the combined headquarters based in Mineral
Wells. Peco was acquired to expand the Companys product offerings, technology, filtration
solutions and customer base in the oil and natural gas industries. Its results are included as
part of the Companys Industrial/Environmental Filtration segment since the date of acquisition.
The purchase price was $145,807 excluding cash acquired and including acquisition costs. The
Company issued 2,137,797 shares of CLARCOR common stock with a value of approximately $71,954
and paid the remaining purchase price with available cash of $5,301 and $80,000 of cash borrowed
under the Companys multicurrency revolving credit agreement. An allocation of the purchase
price for the acquisition has been made to major categories of assets and liabilities based on
available information. The $101,987 excess of the purchase price over the fair value of the net
tangible and identifiable intangible assets acquired was recorded as goodwill. Other acquired
intangibles are amortized over a straight-line basis according to their useful lives. During the
quarter ended May 30, 2009, the Company resolved a tax accrual issue resulting in a decrease to
goodwill of $108.
|
|
|
|
Also in December 2007, the Company purchased a distributor of engineered filtration products in
Canada for approximately $1,402 including acquisition costs. Of the purchase price, $811 was
paid during fiscal year 2008, $198 was paid during fiscal year 2009 and the remaining amount
will be paid over the next three years. An allocation of the purchase price for the acquisition
has been made to major categories of assets and liabilities. The $698 excess of the purchase
price over the fair value of the net tangible and identifiable intangible assets acquired was
recorded as goodwill. The business was included in the Industrial/Environmental Filtration
segment from the date of acquisition and was not material to the results of the Company.
|
|
3.
|
|
STOCK-BASED COMPENSATION
|
|
|
|
The Company applies the provisions of Statement of Financial Accounting Standards (SFAS) No.
123R, Share-Based Payment, which establishes the accounting for stock-based awards. Under this
method, stock-based employee compensation cost is recognized using the fair-value based method
for all awards granted on or after the date of adoption. The Company issues stock option awards
and restricted share unit awards to employees and issues stock option awards and restricted
stock to non-employee directors under its stock-based incentive plans. The fair value of each
option grant is estimated on the date of grant using the Black-Scholes option pricing model.
Compensation cost related to restricted share units is recorded based on the market price of the
Companys common stock on the grant date. Options granted vest 25% per year beginning at the end
of the first year; therefore, they become fully exercisable at the end of four years. Vesting
may be accelerated in the event of retirement, disability or death of a participant or change in
control of the Company. For those who are already retirement eligible on the date of grant,
compensation expense is recognized immediately. The key provisions of the Companys stock-based
incentive plans are described in Note N of the Companys consolidated financial statements
included in the 2008 Form 10-K.
|
Page 8
CLARCOR Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(Unaudited)
|
|
The Company recorded pretax compensation expense related to stock options of $620 and $2,277,
respectively, and related tax benefits of $197 and $724, respectively, for the quarter and six
months ended May 30, 2009. For the quarter and six months ended May 31, 2008, the Company
recorded pretax compensation expense related to stock options of $1,293 and $2,775,
respectively, and related tax benefits of $445 and $955, respectively. Pretax compensation
expense related to restricted share unit awards totaled $107 and $865, respectively, for the
quarter and six months ended May 30, 2009, and $412 and $938, respectively, for the quarter and
six months ended May 31, 2008. The tax benefits associated with tax deductions that exceed the
amount of compensation expense recognized in the financial statements related to stock-based
compensation were $10 and $432, respectively, for the quarter and six months ended May 30, 2009,
and $1,323 and $2,289, respectively, for the quarter and six months ended May 31, 2008.
|
|
|
|
Stock Options
|
|
|
|
The following table summarizes the activity for the six months ended May 30, 2009, with respect
to non-qualified stock options granted under the Companys incentive plans.
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
|
Granted
|
|
Weighted
|
|
|
under
|
|
Average
|
|
|
Incentive
|
|
Exercise
|
|
|
Plans
|
|
Price
|
|
|
|
Outstanding at beginning of year
|
|
|
3,132,111
|
|
|
$
|
25.75
|
|
Granted
|
|
|
466,025
|
|
|
$
|
35.22
|
|
Exercised
|
|
|
(76,322
|
)
|
|
$
|
10.91
|
|
Surrendered
|
|
|
(13,200
|
)
|
|
$
|
34.26
|
|
|
|
|
|
|
|
|
|
|
Outstanding at May 30, 2009
|
|
|
3,508,614
|
|
|
$
|
26.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at May 30, 2009
|
|
|
2,622,897
|
|
|
$
|
24.39
|
|
|
|
|
|
|
|
|
|
|
|
|
The fair value of stock options granted during the six months ended May 30, 2009 and May 31,
2008 were based on the following assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
May 30,
|
|
|
May 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
Risk-free interest rate
|
|
|
1.91
|
%
|
|
|
3.76
|
%
|
Expected dividend yield
|
|
|
0.96
|
%
|
|
|
0.85
|
%
|
Expected volatility factor
|
|
|
24.16
|
%
|
|
|
20.24
|
%
|
Expected option term in years
|
|
|
6.1
|
|
|
|
6.1
|
|
|
|
The weighted average fair value per option at the date of grant for options granted during the
six months ended May 30, 2009 and May 31, 2008, was $7.62 and $9.37, respectively. The total
intrinsic value of options exercised during the six months ended May 30, 2009 and May 31, 2008,
was $1,527 and $7,001, respectively.
|
Page 9
CLARCOR Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(Unaudited)
|
|
The following table summarizes information about the Companys outstanding and exercisable
options at May 30, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
Range of
|
|
|
|
|
|
Exercise
|
|
Intrinsic
|
|
Remaining
|
|
|
|
|
|
Exercise
|
|
Intrinsic
|
|
Remaining
|
Exercise Prices
|
|
Number
|
|
Price
|
|
Value
|
|
Life in Years
|
|
Number
|
|
Price
|
|
Value
|
|
Life in Years
|
$8.97 $9.75
|
|
|
150,948
|
|
|
$
|
9.10
|
|
|
$
|
2,953
|
|
|
|
0.85
|
|
|
|
150,948
|
|
|
$
|
9.10
|
|
|
$
|
2,953
|
|
|
|
0.85
|
|
$11.50 $13.75
|
|
|
163,400
|
|
|
$
|
13.13
|
|
|
|
2,537
|
|
|
|
2.33
|
|
|
|
163,400
|
|
|
$
|
13.13
|
|
|
|
2,537
|
|
|
|
2.33
|
|
$16.01 $22.80
|
|
|
887,148
|
|
|
$
|
20.54
|
|
|
|
7,208
|
|
|
|
3.35
|
|
|
|
887,148
|
|
|
$
|
20.54
|
|
|
|
7,208
|
|
|
|
3.35
|
|
$25.31 $28.13
|
|
|
467,000
|
|
|
$
|
25.98
|
|
|
|
1,249
|
|
|
|
6.03
|
|
|
|
466,000
|
|
|
$
|
25.98
|
|
|
|
1,248
|
|
|
|
6.02
|
|
$28.79 $38.23
|
|
|
1,840,118
|
|
|
$
|
32.81
|
|
|
|
|
|
|
|
7.23
|
|
|
|
955,401
|
|
|
$
|
31.53
|
|
|
|
|
|
|
|
5.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,508,614
|
|
|
$
|
26.86
|
|
|
$
|
13,947
|
|
|
|
5.59
|
|
|
|
2,622,897
|
|
|
$
|
24.39
|
|
|
$
|
13,946
|
|
|
|
4.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At May 30, 2009, total unrecognized compensation cost of $3,689 related to non-vested stock
option awards is expected to be recognized over a weighted-average period of 2.6 years.
|
|
|
|
Restricted Share Unit Awards
|
|
|
|
During the six months ended May 30, 2009 and May 31, 2008, the Company granted 36,368 and 25,989
restricted units of Company common stock with a fair value of $32.78 and $36.48, respectively,
per unit. During the six months ended May 30, 2009, 1,481 restricted units of Company common
stock with a weighted average grant date fair value of $34.19 were forfeited.
|
|
4.
|
|
COMPREHENSIVE EARNINGS
|
|
|
|
The Companys total comprehensive earnings and its components are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Six Months Ended
|
|
|
|
May 30,
|
|
|
May 31,
|
|
|
May 30,
|
|
|
May 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
Net earnings
|
|
$
|
16,791
|
|
|
$
|
24,634
|
|
|
$
|
25,582
|
|
|
$
|
40,783
|
|
Other comprehensive earnings, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
11,446
|
|
|
|
2,412
|
|
|
|
8,132
|
|
|
|
3,852
|
|
Pension liability adjustments
|
|
|
216
|
|
|
|
|
|
|
|
433
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive earnings
|
|
$
|
28,453
|
|
|
$
|
27,046
|
|
|
$
|
34,147
|
|
|
$
|
44,635
|
|
|
|
|
|
|
|
|
The components of the ending balances of accumulated other comprehensive loss are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
May 30,
|
|
|
November 29,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
Pension liability, net of tax of $10,532 and $10,790
|
|
$
|
(17,745
|
)
|
|
$
|
(18,178
|
)
|
Translation adjustments, net of tax of $155 and $155
|
|
|
(252
|
)
|
|
|
(8,384
|
)
|
|
|
|
Accumulated other comprehensive loss
|
|
$
|
(17,997
|
)
|
|
$
|
(26,562
|
)
|
|
|
|
Page 10
CLARCOR Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(Unaudited)
5.
|
|
ACQUIRED INTANGIBLES
|
|
|
|
The following table reconciles the activity for goodwill by reporting unit for the six months
ended May 30, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial/
|
|
|
|
|
|
|
|
|
|
Engine/Mobile
|
|
|
Environmental
|
|
|
|
|
|
|
|
|
|
Filtration
|
|
|
Filtration
|
|
|
Packaging
|
|
|
Total
|
|
Balance at November 29, 2008
|
|
$
|
21,143
|
|
|
$
|
202,821
|
|
|
$
|
|
|
|
$
|
223,964
|
|
Acquisitions
|
|
|
2,195
|
|
|
|
2,593
|
|
|
|
|
|
|
|
4,788
|
|
Currency translation adjustments
|
|
|
654
|
|
|
|
382
|
|
|
|
|
|
|
|
1,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at May 30, 2009
|
|
$
|
23,992
|
|
|
$
|
205,796
|
|
|
$
|
|
|
|
$
|
229,788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes acquired intangibles by reporting unit. Other acquired
intangibles includes parts manufacturer regulatory approvals, proprietary technology, patents
and non-compete agreements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial/
|
|
|
|
|
|
|
|
|
|
Engine/Mobile
|
|
|
Environmental
|
|
|
|
|
|
|
|
|
|
Filtration
|
|
|
Filtration
|
|
|
Packaging
|
|
|
Total
|
|
Balance at May 30, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks, gross
|
|
$
|
919
|
|
|
$
|
41,510
|
|
|
$
|
|
|
|
$
|
42,429
|
|
Less accumulated amortization
|
|
|
36
|
|
|
|
269
|
|
|
|
|
|
|
|
305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks, net
|
|
$
|
883
|
|
|
$
|
41,241
|
|
|
$
|
|
|
|
$
|
42,124
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships, gross
|
|
$
|
2,169
|
|
|
$
|
34,048
|
|
|
$
|
|
|
|
$
|
36,217
|
|
Less accumulated amortization
|
|
|
1,124
|
|
|
|
7,017
|
|
|
|
|
|
|
|
8,141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships, net
|
|
$
|
1,045
|
|
|
$
|
27,031
|
|
|
$
|
|
|
|
$
|
28,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other acquired intangibles, gross
|
|
$
|
243
|
|
|
$
|
35,400
|
|
|
$
|
|
|
|
$
|
35,643
|
|
Less accumulated amortization
|
|
|
243
|
|
|
|
9,761
|
|
|
|
|
|
|
|
10,004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other acquired intangibles, net
|
|
$
|
|
|
|
$
|
25,639
|
|
|
$
|
|
|
|
$
|
25,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense is estimated to be $4,877 in 2009, $4,470 in 2010, $4,410 in 2011, $4,395
in 2012 and $4,325 in 2013.
|
Page 11
CLARCOR Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(Unaudited)
6.
|
|
FAIR VALUE MEASUREMENT
|
|
|
|
The Company measures assets and liabilities at fair value as discussed throughout the footnotes
to its quarterly and annual financial statements. Assets or liabilities that have recurring
measurements are shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
|
|
|
|
|
|
|
Quoted Prices
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
|
in Active Markets
|
|
|
Other
|
|
|
Significant
|
|
|
|
|
|
|
|
for Identical
|
|
|
Observable
|
|
|
Unobservable
|
|
|
|
|
|
|
|
Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
Total
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
|
|
May 30, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments
|
|
$
|
23,334
|
|
|
$
|
23,334
|
|
|
$
|
|
|
|
$
|
|
|
Restricted trust (part of noncurrent assets)
|
|
|
1,321
|
|
|
|
1,321
|
|
|
|
|
|
|
|
|
|
Interest rate agreement (part of current liabilities)
|
|
|
(2,355
|
)
|
|
|
|
|
|
|
(2,355
|
)
|
|
|
|
|
|
|
|
|
|
$
|
22,300
|
|
|
$
|
24,655
|
|
|
$
|
(2,355
|
)
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 29, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments
|
|
$
|
7,269
|
|
|
$
|
7,269
|
|
|
$
|
|
|
|
$
|
|
|
Restricted trust (part of noncurrent assets)
|
|
|
1,428
|
|
|
|
1,428
|
|
|
|
|
|
|
|
|
|
Interest rate agreement (part of long-term liabilities)
|
|
|
(2,007
|
)
|
|
|
|
|
|
|
(2,007
|
)
|
|
|
|
|
|
|
|
|
|
$
|
6,690
|
|
|
$
|
8,697
|
|
|
$
|
(2,007
|
)
|
|
$
|
|
|
|
|
|
|
|
The Companys short-term investments consist of tax-exempt municipal money market funds, which
are actively traded. The restricted trust, which is used to fund certain payments for the
Companys nonqualified U.S. pension plan, consists of actively traded equity and bond funds. The
interest rate agreements fair value was determined based on the present value of expected
future cash flows using discount rates appropriate to the risks involved.
|
|
7.
|
|
GUARANTEES AND WARRANTIES
|
|
|
|
The Company has provided letters of credit totaling approximately $23,575 and $24,003 as of May
30, 2009 and November 29, 2008, respectively, to various government agencies, primarily related
to industrial revenue bonds, and to insurance companies and other entities in support of its
obligations. The Company believes that no payments will be required resulting from these
obligations.
|
|
|
|
In the ordinary course of business, the Company also provides routine indemnifications and other
guarantees whose terms range in duration and are often not explicitly defined. The Company does not believe these will have a material impact on the results of operations or
financial condition of the Company.
|
Page 12
CLARCOR Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(Unaudited)
|
|
Warranties are recorded as a liability on the balance sheet and as charges to current expense
for estimated normal warranty costs and, if applicable, for specific performance issues known to
exist on products already sold. The expenses estimated to be incurred are provided at the time
of sale and adjusted as needed, based primarily upon experience.
|
|
|
|
Changes in the Companys warranty accrual during the six months ended May 30, 2009, are as
follows:
|
|
|
|
|
|
Balance at November 29, 2008
|
|
$
|
2,494
|
|
Accruals for warranties issued during the period
|
|
|
502
|
|
Accruals related to pre-existing warranties
|
|
|
345
|
|
Settlements made during the period
|
|
|
(366
|
)
|
Other adjustments, including currency translation
|
|
|
48
|
|
|
|
|
|
Balance at May 30, 2009, included in other accrued liabilities
|
|
$
|
3,023
|
|
|
|
|
|
8.
|
|
LONG-TERM DEBT AND INTEREST RATE AGREEMENT
|
|
|
|
During the second fiscal quarter of 2009, the Company re-issued an $8,410 industrial revenue
bond issued in cooperation with the South Dakota Economic Development Finance Authority which is
due February 1, 2016. The interest rate on this bond was 0.57%
at May 30, 2009 and is reset weekly.
|
|
|
|
On December 18, 2007, the Company entered into a five-year multicurrency revolving credit
agreement (Credit Facility) with a group of financial institutions under which it may borrow up
to $250,000 under a selection of currencies and rate formulas. The Credit Facility interest rate
is based upon, at the Companys election, either a defined Base Rate or the London Interbank
Offered Rate (LIBOR) plus or minus applicable margins. Commitment fees, letter of credit fees
and other fees are also payable as provided in the credit agreement. At May 30, 2009, long-term
debt included $65,000 outstanding on the Credit Facility.
|
|
|
|
The Companys significant accounting policies for derivative instruments are described in Note A
of the 2008 Form 10-K. On January 2, 2008, the Company entered into a fixed rate interest swap
agreement to manage its interest rate exposure on certain amounts outstanding under the Credit
Facility. The interest rate agreement provides for the Company to receive interest at floating
rates based on LIBOR and pay a 3.93% fixed interest rate plus an applicable margin on a notional
amount of $100,000. Payments pursuant to the interest rate agreement are settled on a net basis
quarterly. The agreement expires January 1, 2010. The swap agreement has not been designated as
a hedge pursuant to SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities. Unrealized gains or losses and periodic settlement payments are recorded in
interest expense in the Consolidated Condensed Statements of Earnings and as a component of cash
flows from operations in the Consolidated Condensed Statements of Cash Flows.
|
|
|
|
The Companys swap agreement incorporates by reference the non-financial and financial debt
covenants included in the Credit Facility. The swap agreement also includes other events which
would qualify as a default or termination event, whereby the counterparty could request payment
on the derivative instrument. Should the counterparty to the Companys derivative contract fail
to meet its obligations, the Company would be exposed to greater interest rate fluctuations along
with the cost, if any, to extinguish the contract. The Company manages exposure to counterparty
credit risk by entering into derivative financial instruments with institutions that can be
expected to perform fully under the terms of the agreements.
|
Page 13
CLARCOR Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(Unaudited)
|
|
At May 30, 2009 and November 29, 2008, the Company had the following derivative in a liability
position. The Company did not have any derivatives in an asset position at either reporting
date.
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives In Liability Position
|
|
|
|
Consolidated
|
|
|
|
|
Derivatives Not Designated as Hedging
|
|
Balance Sheet
|
|
|
Fair
|
|
Instruments Under SFAS No. 133
|
|
Location
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
May 30, 2009
|
|
|
|
|
|
|
|
|
Fixed rate interest swap agreement
|
|
Current liabilities
|
|
$
|
2,355
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
2,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 29, 2008
|
|
|
|
|
|
|
|
|
Fixed rate interest swap agreement
|
|
Other long-term liabilities
|
|
$
|
2,007
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
2,007
|
|
|
|
|
|
|
|
|
|
|
|
The following table reflects the gain (loss) on interest rate agreement for the quarter and six
months ended May 30, 2009 and May 31, 2008, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location of Gain
|
|
|
|
|
Derivatives Not Designated as Hedging
|
|
(Loss) on Interest
|
|
|
Amount of Gain (Loss) on
|
|
Instruments Under SFAS No. 133
|
|
Rate Agreement
|
|
|
Interest Rate Agreement
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
|
|
|
|
May 30,
|
|
|
May 31,
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Fixed rate interest swap agreement
|
|
Interest expense
|
|
$
|
257
|
|
|
$
|
1,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
|
May 30,
|
|
|
May 31,
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Fixed rate interest swap agreement
|
|
Interest expense
|
|
$
|
(348
|
)
|
|
$
|
(1,337
|
)
|
|
|
|
|
|
|
|
Page 14
CLARCOR Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(Unaudited)
9.
|
|
PENSION AND OTHER POSTRETIREMENT PLANS
|
|
|
|
The Company provides various retirement benefits, including defined benefit plans and
postretirement healthcare plans covering certain current and retired employees in the U.S. and
abroad. Components of net periodic benefit cost and Company contributions for these plans were
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Six Months Ended
|
|
|
|
May 30,
|
|
|
May 31,
|
|
|
May 30,
|
|
|
May 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
Pension Benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of net periodic benefit cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
451
|
|
|
$
|
650
|
|
|
$
|
901
|
|
|
$
|
1,300
|
|
Interest cost
|
|
|
2,298
|
|
|
|
2,129
|
|
|
|
4,595
|
|
|
|
4,258
|
|
Expected return on plan assets
|
|
|
(1,715
|
)
|
|
|
(2,604
|
)
|
|
|
(3,428
|
)
|
|
|
(5,207
|
)
|
Amortization of unrecognized:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost
|
|
|
32
|
|
|
|
41
|
|
|
|
65
|
|
|
|
82
|
|
Net actuarial loss
|
|
|
390
|
|
|
|
42
|
|
|
|
779
|
|
|
|
84
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
1,456
|
|
|
$
|
258
|
|
|
$
|
2,912
|
|
|
$
|
517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash contributions
|
|
$
|
417
|
|
|
$
|
319
|
|
|
$
|
807
|
|
|
$
|
645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Postretirement Healthcare Benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of net periodic benefit income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest cost
|
|
$
|
15
|
|
|
$
|
15
|
|
|
$
|
30
|
|
|
$
|
30
|
|
Amortization of unrecognized:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior service cost
|
|
|
(31
|
)
|
|
|
(31
|
)
|
|
|
(62
|
)
|
|
|
(62
|
)
|
Net actuarial gain
|
|
|
(46
|
)
|
|
|
(33
|
)
|
|
|
(92
|
)
|
|
|
(66
|
)
|
|
|
|
|
|
Net periodic benefit income
|
|
$
|
(62
|
)
|
|
$
|
(49
|
)
|
|
$
|
(124
|
)
|
|
$
|
(98
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash contributions
|
|
$
|
50
|
|
|
$
|
53
|
|
|
$
|
100
|
|
|
$
|
106
|
|
|
|
|
|
|
|
|
The Companys policy is to contribute to its qualified U.S. and non-U.S. pension plans at least
the minimum amount required by applicable laws and regulations, to contribute to the
nonqualified plan when required for benefit payments and to contribute to the postretirement
healthcare benefit plan an amount equal to the benefit payments. The minimum required
contribution to one of the Companys qualified U.S. pension plans for fiscal 2009 is
approximately $400. The Company, from time to time, makes contributions in excess of the minimum
amount required as economic conditions warrant. The Company has determined it will make a
voluntary contribution to its U.S. qualified plans of $360 in 2009. The Company has not
determined if it will make further contributions to its U.S. qualified plans in 2009. The
Company
also expects to contribute $295 to its U.S. nonqualified plan, $363 to its non-U.S. plan and
$198 to its postretirement healthcare benefit plan to pay benefits during 2009.
|
Page 15
CLARCOR Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(Unaudited)
|
|
In addition to the plan assets related to its qualified plans, the Company has also funded
$1,321 and $1,428 at May 30, 2009 and November 29, 2008, respectively, in a restricted trust for
its nonqualified plan. This trust is included in other noncurrent assets in the Consolidated
Condensed Balance Sheets.
|
|
|
|
Recent declines in the fair value of the plans assets may result in significant charges to
other comprehensive loss and a potential increase in the fiscal year 2010 pension expense to the
extent the effects are not offset by a change in the discount rate at the time of the Companys
annual pension measurement on November 30, 2009. The Companys required contributions to its
plans may also be affected.
|
|
10.
|
|
INCOME TAXES
|
|
|
|
The liability for gross unrecognized tax benefits was $2,207 at May 30, 2009 and $1,970 at
November 29, 2008. The net increase in the liability for the quarter and six months ended May
30, 2009 of $95 and $237, respectively, resulted from additions of current and prior period tax
positions and changes in interest and penalties of $125 and $112, respectively.
|
|
|
|
At May 30, 2009, the amount of unrecognized tax benefit for permanent tax adjustments that, if
recognized, would impact the effective tax rate was $1,763. The Company recognizes interest and
penalties related to unrecognized tax benefits in income tax expense. As of May 30, 2009, the
Company had $498 accrued for the payment of interest and penalties. The Company believes it is
reasonably possible that the total amount of unrecognized tax benefits as of May 30, 2009 will
decrease by $657 over the next twelve months as a result of expected settlements with taxing
authorities. Due to the various jurisdictions in which the Company files tax returns and the
uncertainty regarding the timing of settlements, it is possible that there could be other
significant changes in the amount of unrecognized tax benefits in fiscal 2009; however, the
amount cannot be estimated.
|
|
|
|
The Company is regularly audited by federal, state and foreign tax authorities. The Internal
Revenue Service has completed its audits of the Companys U.S. income tax returns through fiscal
2003 and has started audits of the Companys U.S. income tax returns for fiscal years 2004
through 2007. With few exceptions, the Company is no longer subject to income tax examinations
by state or foreign tax jurisdictions for years prior to fiscal 2003.
|
|
11.
|
|
RESTRUCTURING CHARGES
|
|
|
|
As discussed more fully in the 2008 Form 10-K, in July 2006, the Company began a restructuring
program focused on the heating, ventilating and air conditioning (HVAC) filter manufacturing
operations within its Industrial/Environmental Filtration segment. The Company anticipates that
the HVAC restructuring program will be completed in fiscal year 2009, and that realization of
the full benefits of the program will be achieved in fiscal year 2010. The majority of these
expenses have been paid as of May 30, 2009.
|
|
|
|
As an ongoing part of this program, during the six months ended May 30, 2009, the Company
consolidated four Louisville, Kentucky area facilities into one location in Jeffersonville,
Indiana in order to realize cost savings and efficiency benefits. Severance costs of $107 and
$133, respectively, were accrued during the quarter and six months ended May 30, 2009 and were
included in cost of sales in the Condensed Consolidated Statements of Earnings. At May 30,
2009, severance costs of $66 were accrued in other accrued liabilities in the accompanying
consolidated condensed balance sheet.
|
Page 16
CLARCOR Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(Unaudited)
|
|
During May 2009, the Company also closed a small facility in Clover, South Carolina. The
Company did not incur any material expenses related to this closure.
|
|
|
|
During the third quarter of fiscal year 2008, the Company discontinued production at an HVAC
filter manufacturing plant in Henderson, North Carolina. The Company expensed $1,081 in fiscal
year 2008, which was included in cost of sales in the Condensed Consolidated Statements of
Earnings, mainly for employee termination costs and a pension curtailment expense of $516. The
Company expensed $20 and $47, respectively, related to the Henderson, North Carolina location
during the quarter and six months ended May 30, 2009, mainly for facility consolidation and
employee termination costs. Minimal additional charges related to facility consolidation costs
will be recognized when the Company exits that facility. The Company has classified land of
$230 and building and building fixtures of $2,962, which are included in plant assets, as
assets held for sale related to the North Carolina plant.
|
|
|
|
During the second quarter of fiscal year 2008, the Company discontinued production at an HVAC
filter manufacturing plant in Davenport, Iowa. The Company expensed and paid $154 in fiscal
year 2008, which was included in cost of sales in the Condensed Consolidated Statements of
Earnings, mainly for employee termination costs. The Company did not incur any expenses related
to the Davenport, Iowa location during the quarter and six months ended May 30, 2009. Minimal
additional charges related to contract termination costs and facility consolidation costs will
be recognized when the Company exits a lease related to that facility.
|
|
|
|
The Company discontinued production at an HVAC filter manufacturing plant in Kenly, North
Carolina in November 2006. Severance costs of $164 were accrued and paid during fiscal 2006 and
were included in cost of sales in the Condensed Consolidated Statements of Earnings.
|
|
12.
|
|
INSURANCE CLAIMS
|
|
|
|
In the second quarter of fiscal 2008, four of the Companys facilities in three states were
damaged in weather-related events. In accordance with FASB Interpretation No. 30 (FIN 30),
Accounting for Involuntary Conversions of Non-Monetary Assets to Monetary Assets, the
Companys Industrial/Environmental Filtration segment recognized a gain for fiscal year 2008,
resulting from the excess of insurance proceeds received over the net book value of the
property, of $1,963 (net of the $500 deductible paid by the Company) as a reduction of cost of
sales. The Companys Engine/Mobile Filtration segment recognized a loss for fiscal year 2008,
resulting from costs incurred below the Companys deductible limit, of $178 in cost of sales.
For the quarter ended May 31, 2008, expenses of $750 were recorded in cost of sales. As of May
30, 2009, the Company has a receivable of approximately $292 from the insurance company and the
repairs to the buildings were complete.
|
|
13.
|
|
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 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.
|
Page 17
CLARCOR Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(Unaudited)
|
|
Although it is not certain what future environmental claims, if any, may be asserted, the
Company currently believes that its potential liability for known environmental matters does not
exceed its present accrual of $50. However, 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 nature and extent of the contamination at issue, 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 Companys
financial condition or consolidated results of operations.
|
|
|
|
In the event of a change in control of the Company, termination benefits are likely to be
required for certain executive officers and other employees.
|
|
14.
|
|
EARNINGS PER SHARE AND TREASURY STOCK TRANSACTIONS
|
|
|
|
Diluted earnings per share reflect the impact of outstanding stock options and restricted share
units as 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Six Months Ended
|
|
|
|
May 30,
|
|
|
May 31,
|
|
|
May 30,
|
|
|
May 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
Weighted average number of
common shares outstanding
|
|
|
51,042,665
|
|
|
|
50,752,765
|
|
|
|
51,014,126
|
|
|
|
50,682,871
|
|
Dilutive effect of stock-based
arrangements
|
|
|
287,902
|
|
|
|
519,623
|
|
|
|
378,683
|
|
|
|
442,841
|
|
|
|
|
|
|
Weighted average number of
diluted common shares
outstanding
|
|
|
51,330,567
|
|
|
|
51,272,388
|
|
|
|
51,392,809
|
|
|
|
51,125,712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
16,791
|
|
|
$
|
24,634
|
|
|
$
|
25,582
|
|
|
$
|
40,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share amount
|
|
$
|
0.33
|
|
|
$
|
0.49
|
|
|
$
|
0.50
|
|
|
$
|
0.80
|
|
|
|
|
|
|
Diluted earnings per share amount
|
|
$
|
0.33
|
|
|
$
|
0.48
|
|
|
$
|
0.50
|
|
|
$
|
0.80
|
|
|
|
|
|
|
|
|
Options with exercise prices greater than the average market price of the common shares during
the respective periods are not included in the computation of diluted earnings per share.
For the quarter and six months ended May 30, 2009, 1,840,118 and 1,330,663 options with a
weighted average exercise price of $32.81 and $34.32, respectively, were excluded from the
computation. For the quarter ended May 31, 2008, no options were excluded from the computation.
For the six months ended May 31, 2008, 5,325 options with a weighted average exercise price of
$38.23 were excluded from the computation.
|
Page 18
CLARCOR Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(Unaudited)
|
|
For the six months ended May 30, 2009, exercises of stock options added $1,903 to capital in
excess of par value. For the six months ended May 31, 2008, exercises of stock options added
$8,911 to capital in excess of par value.
|
|
|
|
During the quarter and six months ended May 30, 2009, the Company did not repurchase any shares
of its common stock under its $250,000 stock repurchase program. As of May 30, 2009, there was
approximately $187,210 available for future purchases under this program. During the quarter
ended May 31, 2008, the Company did not repurchase any shares of its common stock. For the six
months ended May 31, 2008, the Company repurchased and retired 1,000,000 shares of common stock
for $37,260.
|
|
15.
|
|
SEGMENT DATA
|
|
|
|
The Company operates in three principal product segments: Engine/Mobile Filtration,
Industrial/Environmental Filtration and Packaging. The segment data for the quarter and six
months ended May 30, 2009 and May 31, 2008, respectively, are shown below. Net sales represent
sales to unaffiliated customers as reported in the Consolidated Condensed Statements of
Earnings. Intersegment sales were not material.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Six Months Ended
|
|
|
|
May 30,
|
|
|
May 31,
|
|
|
May 30,
|
|
|
May 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engine/Mobile Filtration
|
|
$
|
92,277
|
|
|
$
|
108,658
|
|
|
$
|
177,657
|
|
|
$
|
213,767
|
|
Industrial/Environmental Filtration
|
|
|
119,889
|
|
|
|
139,326
|
|
|
|
233,347
|
|
|
|
265,748
|
|
Packaging
|
|
|
17,229
|
|
|
|
19,153
|
|
|
|
32,081
|
|
|
|
37,803
|
|
|
|
|
|
|
|
|
$
|
229,395
|
|
|
$
|
267,137
|
|
|
$
|
443,085
|
|
|
$
|
517,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engine/Mobile Filtration
|
|
$
|
18,457
|
|
|
$
|
24,450
|
|
|
$
|
31,758
|
|
|
$
|
46,792
|
|
Industrial/Environmental Filtration
|
|
|
5,864
|
|
|
|
11,444
|
|
|
|
6,527
|
|
|
|
15,729
|
|
Packaging
|
|
|
909
|
|
|
|
1,564
|
|
|
|
632
|
|
|
|
2,676
|
|
|
|
|
|
|
|
|
|
25,230
|
|
|
|
37,458
|
|
|
|
38,917
|
|
|
|
65,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (expense) income
|
|
|
(52
|
)
|
|
|
183
|
|
|
|
(858
|
)
|
|
|
(3,326
|
)
|
|
|
|
|
|
Earnings before income taxes and
minority earnings
|
|
$
|
25,178
|
|
|
$
|
37,641
|
|
|
$
|
38,059
|
|
|
$
|
61,871
|
|
|
|
|
|
|
Page 19
CLARCOR Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
May 30,
|
|
November 29,
|
|
|
2009
|
|
2008
|
|
|
|
Identifiable assets:
|
|
|
|
|
|
|
|
|
Engine/Mobile Filtration
|
|
$
|
251,104
|
|
|
$
|
252,380
|
|
Industrial/Environmental Filtration
|
|
|
648,775
|
|
|
|
638,915
|
|
Packaging
|
|
|
37,706
|
|
|
|
37,949
|
|
Corporate
|
|
|
33,964
|
|
|
|
28,638
|
|
|
|
|
|
|
$
|
971,549
|
|
|
$
|
957,882
|
|
|
|
|
16.
|
|
RECENT ACCOUNTING PRONOUNCEMENTS
|
|
|
|
In December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 141R,
Business Combinations and SFAS No. 160, Noncontrolling Interests in Consolidated Financial
Statements. These standards will affect the Companys accounting for businesses acquired after
November 28, 2009 and presentation of noncontrolling interests, previously called minority
interests, in its consolidated financial statements in fiscal year 2010. In April 2009, the FASB
issued FSP SFAS 141R-1, Accounting for Assets Acquired and Liabilities Assumed in a Business
Combination That Arise from Contingencies. This FSP requires that assets acquired or
liabilities assumed in a business combination and arising from a contingency be recognized at
fair value at the acquisition date if the acquisition date fair value can be determined during
the measurement period. The Company will adopt this FSP in connection with its adoption of SFAS
No. 141R in fiscal year 2010.
|
|
|
|
In September 2006, the FASB issued SFAS No. 158, Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and
132(R). This statement requires recognition of the overfunded or underfunded status of defined
benefit postretirement plans as an asset or liability in the statement of financial position and
to recognize changes in the funded status in other comprehensive earnings in the year in which
the changes occur. SFAS No. 158 also requires measurement of the funded status of a plan as of
the date of the statement of financial position. See Note I of the 2008 Form 10-K for further
discussion of the impact of this change on the Companys consolidated financial statements. SFAS
No. 158s provisions regarding the change in the measurement date are effective for the
Companys fiscal year ending November 28, 2009. As permitted by SFAS No. 158, the Company will
use the measurements performed in fiscal year 2008 to estimate the effects of the changes to the
2009 fiscal year-end measurement dates. The impact of the transition to fiscal year-end
measurement dates, which will be recorded as an adjustment to retained earnings in the fourth
quarter of fiscal year 2009, is expected to be immaterial to the consolidated financial
statements.
|
|
|
|
In March 2008, the FASB issued SFAS No. 161, Disclosures About Derivative Instruments and
Hedging Activities. This standard requires enhanced disclosures to enable investors to better
understand their effects on an entitys financial position, financial performance and cash
flows. These requirements include the disclosure of the fair values of derivative instruments
and their
gains and losses in a tabular format. The Company adopted SFAS No. 161 effective as of the
beginning of the first quarter of fiscal year 2009.
|
Page 20
CLARCOR Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(Unaudited)
|
|
In June 2008, the FASB issued FASB Staff Position (FSP) EITF 03-6-1, Determining Whether
Instruments Granted in Share Based Payment Transactions Are Participating Securities. FSP EITF
03-6-1 requires that unvested share-based payment awards that contain nonforfeitable rights to
dividends or dividend equivalents (whether paid or unpaid) be considered participating
securities and be included in the computation of earnings per share pursuant to the two-class
method discussed in SFAS No. 128, Earnings per Share. FSP EITF 03-6-1 is effective for the
Companys fiscal year 2010 and requires the restatement of all previously reported earnings per
share data. The Company does not expect the adoption of FSP EITF 03-6-1 to have a material
impact on the consolidated financial statements.
|
|
|
|
In December 2008, the FASB issued FSP SFAS 132R-1, Employers Disclosures about Postretirement
Benefit Plan Assets. FSP SFAS 132R-1 expands the disclosure set forth in SFAS No. 132R by
adding required disclosures about how investment allocation decisions are made by management,
major categories of plan assets and significant concentration of risk. Additionally, FSP SFAS
132R-1 requires an employer to disclose information about the valuation of plan assets similar
to that required under SFAS No. 157. This FSP will be effective for the Companys fiscal year
2010 and will affect the disclosures in the consolidated financial statements.
|
|
|
|
In April 2009, the FASB issued FSP SFAS 157-4, Determining Fair Value When the Volume and Level
of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly. FSP SFAS 157-4 provides additional guidance for estimating fair value in
accordance with SFAS No. 157 when the volume and level of activity for the asset or liability
have significantly decreased and re-emphasizes that regardless of market conditions the fair
value measurement is an exit price concept as defined in SFAS No. 157. The scope of this FSP
does not include assets and liabilities measured under level 1 inputs (quoted prices in active
markets for identical assets). FSP SFAS 157-4 is applied prospectively to all fair value
measurements where appropriate and will be effective for the Companys interim and annual
periods beginning in the third quarter of fiscal year 2009. The Company does not anticipate
adoption to have a material impact on the Condensed Consolidated Financial Statements.
|
|
|
|
In April 2009, the FASB issued FSP SFAS 107-1 and APB 28-1, Interim Disclosures about Fair
Value of Financial Instruments. This FSP amends SFAS No. 107, Disclosures about Fair Value of
Financial Instruments, to require publicly-traded companies to provide disclosures on the fair
value of financial instruments in interim financial statements. FSP SFAS 107-1 and APB 28-1 will
be effective for the Companys third quarter of fiscal year 2009. The Company does not
anticipate adoption to have a material impact on the Condensed Consolidated Financial
Statements.
|
|
|
|
In May 2009, the FASB issued SFAS No. 165, Subsequent Events. This standard establishes
general standards for accounting for and disclosure of events that occur after the balance sheet
date but before financial statements are issued or are available to be issued and shall be
applied to subsequent events not addressed in other applicable generally accepted accounting
principles. SFAS No. 165, among other things, sets forth the period after the balance sheet date
during which management should evaluate events or transactions that may occur for potential
recognition or disclosure in the financial statements, the circumstances under which an entity
should recognize events or transactions occurring after the balance sheet date in its financial
statements and the disclosures an entity should make about events or transactions that occurred
after the balance sheet date. SFAS No. 165 is effective for the Companys interim and annual
periods beginning in the third quarter of fiscal year 2009. The Company does not expect the
adoption of SFAS No. 165 to have a material impact on the interim or annual financial statements
or the disclosures in those financial statements.
|
Page 21
Part I
Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
The information presented in this discussion should be read in conjunction with other financial
information provided in the Consolidated Condensed Financial Statements and Notes thereto. Except
as otherwise set forth herein, references to particular years refer to the applicable fiscal year
of the Company. The analysis of operating results focuses on the Companys three reportable
business segments: Engine/Mobile Filtration, Industrial/Environmental Filtration and Packaging. The
Engine/Mobile Filtration segment sells filtration products used on engines and in mobile equipment
applications generally, including trucks, automobiles, buses, locomotives, and marine,
construction, industrial, mining and agricultural equipment. The Companys Industrial/Environmental
Filtration segment focuses on the manufacture and marketing of filtration products used in
industrial and commercial processes and in buildings and infrastructures of various types. The
segments products include liquid process filtration products, engineered filtration products and
technologies and air filtration products and systems used to maintain high interior air quality and
to control exterior pollution. The Packaging segment manufactures and markets consumer and
industrial packaging products. The Companys products are manufactured and sold throughout the
world.
EXECUTIVE SUMMARY
Management Discussion Snapshot
(Dollars in thousands except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter Ended
|
|
Six Months Ended
|
|
|
May 30, 2009
|
|
May 31, 2008
|
|
Change
|
|
May 30, 2009
|
|
May 31, 2008
|
|
Change
|
|
|
|
Net sales
|
|
$
|
229,395
|
|
|
$
|
267,137
|
|
|
|
-14.1
|
%
|
|
$
|
443,085
|
|
|
$
|
517,318
|
|
|
|
-14.3
|
%
|
Operating profit
|
|
|
25,230
|
|
|
|
37,458
|
|
|
|
-32.6
|
%
|
|
|
38,917
|
|
|
|
65,197
|
|
|
|
-40.3
|
%
|
Operating margin
|
|
|
11.0
|
%
|
|
|
14.0
|
%
|
|
-3.0 pts.
|
|
|
8.8
|
%
|
|
|
12.6
|
%
|
|
-3.8 pts.
|
Other income (expense)
|
|
|
(52
|
)
|
|
|
183
|
|
|
|
-128.4
|
%
|
|
|
(858
|
)
|
|
|
(3,326
|
)
|
|
|
-74.2
|
%
|
Provision for income taxes
|
|
|
8,121
|
|
|
|
12,903
|
|
|
|
-37.1
|
%
|
|
|
12,217
|
|
|
|
20,844
|
|
|
|
-41.4
|
%
|
Effective tax rate
|
|
|
32.3
|
%
|
|
|
34.3
|
%
|
|
-2.0 pts.
|
|
|
32.1
|
%
|
|
|
33.7
|
%
|
|
-1.6 pts.
|
Net earnings
|
|
|
16,791
|
|
|
|
24,634
|
|
|
|
-31.8
|
%
|
|
|
25,582
|
|
|
|
40,783
|
|
|
|
-37.3
|
%
|
Net earnings margin
|
|
|
7.3
|
%
|
|
|
9.2
|
%
|
|
-1.9 pts.
|
|
|
5.8
|
%
|
|
|
7.9
|
%
|
|
-2.1 pts.
|
Diluted earnings per share
|
|
$
|
0.33
|
|
|
$
|
0.48
|
|
|
|
-31.3
|
%
|
|
$
|
0.50
|
|
|
$
|
0.80
|
|
|
|
-37.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average diluted shares
outstanding
|
|
|
51,330,567
|
|
|
|
51,272,388
|
|
|
|
0.1
|
%
|
|
|
51,392,809
|
|
|
|
51,125,712
|
|
|
|
0.5
|
%
|
The global recession continued to impact the Company in the second quarter of 2009. The Companys
reported 2009 second quarter net sales of $229,395,000 and operating profit of $25,230,000 were
14.1% and 32.6% lower than the second quarter of 2008, respectively. For the second quarter of
2009, net earnings of $16,791,000 and diluted earnings per share of $0.33 were also lower than net
earnings of $24,634,000 and diluted earnings per share of $0.48 in the second quarter of 2008.
Within the U.S., sales declined by 11%; outside the U.S., sales declined by 19%. Although each of
the Companys operating segments reported lower sales and profits in 2009, some markets were
stronger than others. For the second quarter this year compared to last years second quarter,
natural gas and aviation fuel filter sales declined slightly. Sales of HVAC filters were
significantly better by the end of the second quarter of 2009 after a slow start at the beginning
of that quarter. Sales were slower for filters sold to the over-the-road trucking, railroad, fibers
and resins, aerospace and oil drilling markets. As expected, sales of replacement maintenance
filters to the automobile industry and sales of dust collector systems were weak compared to the
comparable period of 2008.
Page 22
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTINUED
The reduced demand throughout the quarter affected production volumes at the Companys plants
causing underabsorption of fixed manufacturing and operating expenses and lower operating margin.
Throughout the first six months of fiscal 2009, the Company continued to implement many cost
reduction programs throughout CLARCOR, including headcount reductions, wage freezes for all
domestic units, consolidation of manufacturing plants and controls over discretionary spending. As
cost controls take hold, the Company expects to see an increasing drop in discretionary spending as
2009 unfolds compared to 2008. Selling and administrative costs declined by 3% in the first fiscal
quarter of 2009 compared to the prior year first quarter and by 8% in the second quarter of 2009
compared to the prior year second quarter. The Company expects selling and administrative costs to
continue to be lower in 2009 than they were in 2008.
In the second quarter of 2009, the strengthening of the U.S. dollar compared to other currencies
reduced net sales and operating profit by approximately $12 million and $2 million, respectively.
Fluctuations in foreign currencies contributed approximately $6 million to net sales and
approximately $1 million to operating profit for the second quarter of 2008.
For the 2009 six-month period, the Company reported sales of $443,085,000, a decrease of 14.3% from
sales of $517,318,000 in the 2008 six-month period. Operating profit decreased 40.3% to $38,917,000
from $65,197,000 in the 2008 period and operating margin was 8.8% in 2009s first half compared to
12.6% in 2008s first half. Net earnings decreased 37.3% and diluted earnings per share decreased
37.5% in the 2009 six-month period compared to the comparable 2008 period. Fluctuations in foreign
currencies reduced sales and profits in the 2009 six-month period by approximately $21 million and
$2 million, respectively. For the 2008 six-month period, fluctuations in foreign currencies
increased sales and profits by approximately $11 million and $2 million, respectively.
CLARCORs financial position remains strong with adequate cash resources and sufficient borrowing
capacity under its current line of credit. As of May 30, 2009, it had over $70 million of cash and
short-term investments and approximately $176.5 million of availability under its line of credit.
During the first six months of 2009, the Company acquired several businesses. Although none of
these acquisitions were large, each added to the Companys product offerings, expanded its reach in
certain geographies and markets, and, for certain acquisitions in China, will allow the Company to
lower the cost of products previously purchased from other third-parties. The acquisitions,
individually or in total, are not expected to be material to the results of the Company.
On December 29, 2008, the Company purchased the Keddeg Company (Keddeg), a manufacturer of
aerospace filtration products based in Lenexa, Kansas. The purchase price was $5,495,000, including
acquisition costs and net of cash acquired. Keddegs results are included as part of the Companys
Industrial/Environmental Filtration segment from the date of acquisition.
On January 16, 2009, the Company purchased certain assets of Meggitt (UK) Limited, a manufacturer
of aerospace filters based in the United Kingdom for approximately $600,000. This business was
acquired to expand the Companys product range of aerospace filters sold primarily to European
aircraft manufacturers and aerospace parts distributors. The purchased assets were combined into an
existing Company subsidiary which is part of the Companys Industrial/Environmental Filtration
segment.
Page 23
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTINUED
|
|
On February 1, 2009, the Company purchased 85% ownership interests in Pujiang Novaeastern
International Mesh Co., Ltd. (Pujiang) and Quzhou Chinagrace Filter Co., Ltd. (Quzhou). Both
companies are based in China and were under common ownership. Pujiang and Quzhou are manufacturers
of wire mesh filtration products sold primarily to the fibers, resin and aerospace industries. The
combined purchase price for both companies was approximately $1.5 million. In addition, the Company
is committed to invest an additional $2.8 million within two years to fund growth initiatives. The
Company has the right, but not the obligation, to purchase the remaining 15% ownership interests
using a formula based on the combined companies future operating results.
|
|
|
|
On April 6, 2009, the Company purchased Weifang Yuhua Filters Ltd. (Yuhua), a manufacturer of
heavy-duty engine filters, based in Weifang, China for approximately $706,000. Yuhua is included in
the Companys Engine/Mobile Filtration segment.
|
|
|
|
On April 20, 2009, the Company purchased the remaining 20% minority interest in its consolidated
subsidiary based in Weifang, China, for approximately $4.6 million. This subsidiary is part of the
Companys Engine/Mobile Filtration segment and manufactures heavy-duty engine filters and certain
lines of environmental filters and filter systems and also filters used in off-shore oil drilling.
|
RESULTS OF OPERATIONS
SALES
Net Sales by Segment (Dollars in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter Ended
|
|
|
Six Months Ended
|
|
|
|
May 30,
|
|
|
May 31,
|
|
|
|
|
|
|
May 30,
|
|
|
May 31,
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Change
|
|
|
2009
|
|
|
2008
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
Engine/Mobile Filtration
|
|
$
|
92,277
|
|
|
$
|
108,658
|
|
|
|
-15.1
|
%
|
|
$
|
177,657
|
|
|
$
|
213,767
|
|
|
|
-16.9
|
%
|
Industrial/Environmental
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Filtration
|
|
|
119,889
|
|
|
|
139,326
|
|
|
|
-14.0
|
%
|
|
|
233,347
|
|
|
|
265,748
|
|
|
|
-12.2
|
%
|
Packaging
|
|
|
17,229
|
|
|
|
19,153
|
|
|
|
-10.0
|
%
|
|
|
32,081
|
|
|
|
37,803
|
|
|
|
-15.1
|
%
|
|
|
|
|
|
CLARCOR
|
|
$
|
229,395
|
|
|
$
|
267,137
|
|
|
|
-14.1
|
%
|
|
$
|
443,085
|
|
|
$
|
517,318
|
|
|
|
-14.3
|
%
|
|
|
|
|
|
Engine/Mobile Filtration
The Engine/Mobile Filtration segments 2009 second quarter sales decreased $16,381,000, or 15.1%,
to $92,277,000 from the prior years second quarter. Fluctuations in foreign currencies reduced
sales by approximately $4.9 million, or 4.5% for this segment in the second quarter of 2009
compared to sales in the second quarter of 2008 as the dollar strengthened against most currencies.
Sales in international markets for this segment, in dollar terms, were 18% lower in the second
quarter of 2009 than in 2008s second quarter while domestic sales declined 13% for the same
periods. Specifically, sales in Asian markets increased by 8% in the 2009 quarter from last years
second quarter while sales in Europe, Morocco and South Africa decreased by 25%. Sales declined in
the second quarter of 2009 across all major market segments, including over-the-road trucking,
agriculture, mining, construction and particularly in the railroad market.
Page 24
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTINUED
Although 2009s second quarter sales were below 2008s second quarter, they were slightly better
than in the first quarter of 2009. Except for the railroad market, this segment sells relatively
few products into original equipment markets, and the aftermarket has held up better than the new
equipment market during the current difficult economic period. Order rates for heavy-duty engine
filters had improved by about 5% by the end of the second quarter from earlier in the quarter. In
addition to signing many new customers over the last six months, the Company also believes that its
current customers will need to restock their inventories sometime in the latter part of 2009, which
is expected to improve its results in the second half of 2009 compared to the first half. However,
the Company expects the commercial rail industry to remain soft through the rest of 2009 as
economic pressures continue in the coal, housing, manufacturing and automotive sectors. Therefore,
the Company expects sales to be lower in fiscal 2009 compared to fiscal 2008s reported sales for
this segment overall although it does expect operating margins to be higher in the remaining two
quarters of 2009 than they were in the first half of 2009. Specifically, the Company expects the
Engine/Mobile Filtration segment sales to decline by 9% to 11% in the second half of 2009 compared
to the same period in 2008.
For the six-month period, Engine/Mobile Filtration segment sales of $177,657,000 declined 16.9%
from 2008 six-month sales of $213,767,000. Hauled freight tonnage in both over-the-road and railway
traffic remained low as the current recession continued to drive down customer demand throughout
the six-month period compared to that of 2008s first half. Fluctuations in foreign currencies
reduced sales by approximately $10 million for this segment in the first half of 2009 compared to
the first half of 2008. For the six-month period of 2008, the weakening of the U.S. dollar
contributed approximately $4 million to sales for this segment.
Industrial/Environmental Filtration
The Companys Industrial/Environmental Filtration segment recorded a $19,437,000, or 14.0%,
decrease in sales to $119,889,000 from $139,326,000 for the 2009 second quarter. The strengthening
of the U.S. dollar during the current quarter compared to the dollars value in the 2008 quarter
reduced sales by approximately $6.8 million, or 4.9%. For this segment, sales in international
markets, in dollar terms, were down 4% in the second quarter of 2009 compared to the second quarter
of 2008. International growth was seen for aviation fuel filter sales in Spain and the U.K. and
natural gas vessel and filter element sales in Southeast Asia. Sales declines were seen for air
filtration system sales in Germany, aerospace filter sales throughout Europe and aviation fuel
filter sales in Italy and France. Domestic sales were down approximately 17% in the second quarter
of 2009 compared to the second quarter of 2008.
Within the Industrial/Environmental Filtration segment, certain operations and markets are showing
improvement from declines in the latter part of 2008 although this is not the case for every
operation or market. Sales of filters to the oil drilling market, aerospace market, fibers and
resins market and for dust collector systems were much lower during the second quarter of 2009 than
in last years second quarter. The Company anticipates that sales of air filtration systems will
remain soft throughout fiscal 2009 as customers continue to reduce or delay their capital spending
plans, both in the U.S. and in Europe. Sales of replacement dust collector cartridges and filters
to aviation fuel markets were also slightly weaker during the second quarter of 2009 than in last
years second quarter. However, the Company expects that sales to the aviation fuel market will
improve by approximately 5% for the rest of 2009 compared to the second half of 2008.
Overall sales of heating, ventilating and air conditioning (HVAC) filters used in industrial,
commercial and residential applications were also weaker in the second quarter of 2009 than in the
second
quarter of 2008 primarily due to the continued widespread reduction in production at U.S.
manufacturing plants. Sales of replacement filters for automotive production and assembly
facilities, which are sold through the Companys Total Filtration Services operation, were
especially weak due to the continued drop in automobile sales in the United States. Sales to this
market dropped by over 20% in the second quarter of 2009 compared to last years second quarter.
The Company expects that HVAC filter sales to the automotive market will not improve for the rest
of this year and may not improve in 2010.
Page 25
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTINUED
During the second quarter of 2009, the Company began selling its high-end Purolator
®
brand HVAC
residential filters to a large retail store chain in one of its sales regions. So far, the program
has been successful with product reorders coming sooner than the Company had initially expected.
The customer is expected to evaluate the success of this program later this summer or in the early
fall. After this evaluation, the Company is hopeful that it will then begin to sell this product
into additional regions of the U.S. for this customer. In addition, the Companys restructure of
its HVAC filter manufacturing operations has improved customer service, fill rates and product
development, which has helped gain new and former customers. For the rest of 2009, the Company
expects sales for its HVAC filter manufacturing operation to increase by approximately 5% compared
to the second half of 2008.
Sales of original equipment and replacement filter elements to the natural gas market declined by
5% during the second quarter of 2009. The Company expects sales of vessels for the remainder of
2009 to be lower than in 2008, but it has begun to receive purchase orders for projects that were
previously delayed. In general, these projects are built over a six month to 24 month period, so
the impact of purchase orders in the current quarter will positively impact sales in fiscal 2010 and
2011. Recent discoveries of natural gas fields in the U.S. and expanded production in current
fields throughout the world will require new pipelines and transmission facilities which will
increase demand for the Companys natural gas filtration systems. The Company is actively quoting
many new development projects and is not experiencing any major order cancellations. In addition,
the Company is actively investing to grow its natural gas aftermarket filtration business with
increased new product development efforts and investments in customer service, product availability
and marketing programs. The Company expects to announce significant new products for this market
later this year.
For the Industrial/Environmental Filtration segment as a whole, the Company expects sales to
decrease by 6% to 8% in the second half of 2009 compared to the same period in 2008.
For the 2009 six-month period, the Industrial/Environmental Filtration segment sales of
$233,347,000 were 12.2% lower than $265,748,000 in the first half of 2008. Foreign currency
translation reduced sales by approximately $7 million to the six-month 2009 sales figures for this
segment when compared to the first half of 2008.
Packaging
The Packaging segments second quarter 2009 sales declined 10.0% or $1,924,000 to $17,229,000
compared to $19,153,000 in the second quarter of 2008. Six-month sales for 2009 were 15.1% lower at
$32,081,000 compared to $37,803,000 for the 2008 comparable period. Sales were impacted in 2009 by
lower demand for packaging used in the health and beauty, confection, tobacco, promotion and film
industries resulting in a slower second quarter and first half of 2009 compared to 2008s
comparable periods. There was modest growth in the second quarter of 2009 in flat sheet metal
decorating, particularly for the spice and battery markets, compared to the second quarter of 2008.
Although the second quarters results were less than what the Company expected, it believes that
the segment will have a solid 2009 with a stronger second half of the year compared to the first
half of 2009. The Company expects that this segments second half 2009 sales will increase 6% to 8%
compared to the same period in 2008. The segment recently signed a five-year agreement with a major
consumer products company which is expected to result in additional sales of $4 million to $5
million per year beginning in 2010.
Page 26
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTINUED
OPERATING PROFIT
Operating Profit and Margin by Segment (Dollars in Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter Ended
|
|
Six Months Ended
|
|
|
|
May 30,
|
|
|
May 31,
|
|
|
|
|
|
|
May 30,
|
|
|
May 31,
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Change
|
|
|
2009
|
|
|
2008
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engine/Mobile Filtration
|
|
$
|
18,457
|
|
|
$
|
24,450
|
|
|
|
-24.5
|
%
|
|
$
|
31,758
|
|
|
$
|
46,792
|
|
|
|
-32.1
|
%
|
Industrial/Environmental
Filtration
|
|
|
5,864
|
|
|
|
11,444
|
|
|
|
-48.8
|
%
|
|
|
6,527
|
|
|
|
15,729
|
|
|
|
-58.5
|
%
|
Packaging
|
|
|
909
|
|
|
|
1,564
|
|
|
|
-41.9
|
%
|
|
|
632
|
|
|
|
2,676
|
|
|
|
-76.4
|
%
|
|
|
|
|
|
CLARCOR
|
|
$
|
25,230
|
|
|
$
|
37,458
|
|
|
|
-32.6
|
%
|
|
$
|
38,917
|
|
|
$
|
65,197
|
|
|
|
-40.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engine/Mobile Filtration
|
|
|
20.0
|
%
|
|
|
22.5
|
%
|
|
-2.5 pts.
|
|
|
17.9
|
%
|
|
|
21.9
|
%
|
|
-4.0 pts.
|
Industrial/Environmental
Filtration
|
|
|
4.9
|
%
|
|
|
8.2
|
%
|
|
-3.3 pts.
|
|
|
2.8
|
%
|
|
|
5.9
|
%
|
|
-3.1 pts.
|
Packaging
|
|
|
5.3
|
%
|
|
|
8.2
|
%
|
|
-2.9 pts.
|
|
|
2.0
|
%
|
|
|
7.1
|
%
|
|
-5.1 pts.
|
|
|
|
|
|
CLARCOR
|
|
|
11.0
|
%
|
|
|
14.0
|
%
|
|
-3.0 pts.
|
|
|
8.8
|
%
|
|
|
12.6
|
%
|
|
-3.8 pts.
|
|
|
|
|
|
Operating profit for the second quarter of 2009 decreased 32.6% to $25,230,000 compared to
$37,458,000 in 2008. This decline was less than the Company experienced in the first quarter of
2009. Operating margin of 11.0% for the second quarter of 2009 compared to 14.0% for the 2008
second quarter and improved from 6.4% in the first quarter of 2009. In each segment, the lower
operating profit and margin compared to 2008 was driven primarily by underabsorption of fixed
manufacturing costs and operating expenses due to reduced sales volume driven by the downturn in
the economy. In addition, the Company recognized higher workers compensation costs, pension expense
and bad debt expense in the second quarter of 2009. Discretionary spending, particularly travel,
advertising and professional fees, incentive compensation, salaries and benefits, was lower in the
second quarter of fiscal 2009 as the Company continued cost containment actions throughout its
segments, including a salary and headcount freeze at its domestic locations that went into effect
at the beginning of the fiscal year. Since the beginning of fiscal 2009, the Company reduced its
U.S. workforce by approximately 300 employees. Selling and administrative costs declined by 3% in
the first fiscal quarter of 2009 compared to 2008 and by 8% in the
second quarter of 2009 compared to 2008. During the second quarter of 2009, the Companys principal
raw material costs were much lower than
they were in the same quarter in 2008 particularly for most grades of steel, but also for filter
media, packaging materials, aluminum, specialty metals, gaskets and resins. The Company is
beginning to see signs of increasing costs for certain raw materials, though not for steel which is
our largest single purchased commodity. The possible raw material cost increases are not expected
to materially impact the Company for 2009.
Engine/Mobile Filtration
The Engine/Mobile Filtration segment recorded operating profit of $18,457,000 in the second quarter
of 2009, a 24.5% decrease compared to the second quarter of 2008. This decrease resulted primarily
from the sales decline both domestically and abroad. The segments operating margin of 20.0% for
the second quarter of 2009 was lower than the 22.5% recorded in the second quarter of
2008. Fluctuations in foreign currencies impacted this segments operating profit less than
$1,000,000 during both the second quarter of 2009 or 2008.
Page 27
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTINUED
On a year-to-date basis, Engine/Mobile Filtration segments operating profit decreased 32.1% to
$31,758,000 from $46,792,000 in 2008. Year-to-date operating margin of 17.9% compares to 21.9% for
2008s first half. The strengthening of the U.S. dollar compared to the prior year period reduced
operating profit by approximately $1 million for the six months ended May 30, 2009. Foreign
currency translation contributed approximately $1 million to this segments operating profit for
the six months ended May 31, 2008. The Company expects lower operating profit for this segment in
fiscal 2009 than in fiscal 2008; however, it expects operating margins for the second half of
fiscal 2009 to be slightly higher than the first half of fiscal 2009.
Industrial/Environmental Filtration
The Industrial/Environmental Filtration segment reported operating profit of $5,864,000 in the
second quarter of 2009 compared to $11,444,000 in the second quarter of 2008. Overall operating
profit declined due to excess plant capacity and utilization, which resulted primarily from lower
production volumes for HVAC filters, environmental air filtration systems, dust collector
cartridges and filters for polymer, fiber and resin applications, for aerospace markets and for oil
drilling applications. The Company continues to focus on reducing costs at its facilities which
service the down markets. The segments operating margin was 4.9% in 2009s second quarter compared
to 8.2% in the same 2008 quarter although some markets were stronger than others. The Company
expects segment operating profit overall to be lower over the remaining half of 2009 compared to
the last half of 2008 although it believes that operating margins will improve from the first half
of 2009.
The Company continues to implement its restructuring program in its HVAC filter manufacturing
operations, which began in 2006, and believes it has turned the corner with significantly improved
results in the second quarter of 2009 compared to the first quarter of 2009 and the second quarter
of 2008. Sales for the quarter were higher than in last years second quarter, and operating
margins in the quarter have improved by nearly five percentage points compared to the second
quarter of 2008. During the first half of 2009, the Company spent approximately $3 million for new
equipment and expects to purchase an additional $3 million over the remainder of the year. The
Company believes the new equipment will further improve production efficiencies in its facilities.
Expenses related to the restructuring plan were approximately $127,000 during the second quarter of
2009, primarily due to the consolidation of four Louisville, Kentucky area HVAC plants into one
location in Jeffersonville, Indiana, and the closure of a small plant in Clover, South Carolina.
This is expected to be the last major plant consolidation effort in the restructuring plan. For the
rest of 2009, compared to 2008, the Company expects sales to increase by approximately 5% compared
to the second half of 2008, and operating margins to exceed 6% for its HVAC filter manufacturing
operations. This would constitute a significant improvement from the first half of 2009 when sales
dropped by 4% and the HVAC filter manufacturing operations incurred a loss. Sales growth and major
improvements in production efficiencies in its HVAC filter manufacturing plants are driving the
improved operating results that are expected for the second half of 2009. The Company continues to
expect to achieve a $14 million improvement in operating profit by the end of 2010 from the 2006
level and operating margins to reach an overall 10% for the Industrial/Environmental Filtration
segment, although continuing poor economic conditions could change these expectations.
Operating margins related to sales of original equipment and replacement filter elements to the
natural gas market dropped from over 14% in the second quarter of 2008 to approximately 11% for
the second quarter of 2009. Second quarter 2008s operating margins were unusually strong for these
products.
For the six months ended May 30, 2009, the Industrial/Environmental Filtration segments operating
profit decreased to $6,527,000 from $15,729,000 in the comparable six-month period of 2008. The
year-to-date margin of 2.8% was lower than the 5.9% recorded in the same period of 2008. Foreign
currency translation reduced operating profit for this segment by approximately $1.4 million for
the six-month 2009 period due to the strengthening of the U.S. Dollar.
Page 28
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTINUED
Packaging
The Packaging segments operating profit and margin in the 2009 quarter were $909,000 and 5.3%,
respectively, compared to $1,564,000 and 8.2%, respectively, in the second quarter of 2008.
Although this segment implemented cost reduction initiatives and cost controls over virtually all
discretionary spending, the lower 2009 sales volumes resulted in unused capacity during the 2009
quarter and six-month period and lower overall operating profit. Operating profit for the six
months ended May 31, 2008 was $632,000 compared to $2,676,000 for the first six months of 2008.
Although the Company expects lower operating margin for fiscal 2009 than in fiscal 2008, it expects
this segments operating margins to improve from the current year-to-date margin of 2.0% over the
remainder of fiscal 2009.
OTHER EXPENSE
Net other expense for the 2009 second quarter of $52,000 compared to net other income of $183,000
for the same quarter of 2008. The most significant changes during the second quarter of 2009 from
the 2008 quarter were due to lower earnings on investments, currency gains and a smaller gain for a
fair value adjustment related to a fixed interest rate swap agreement. The fair value adjustment
reduced interest expense in the 2009 second quarter by $257,000 compared to a reduction of
$1,116,000 in the second quarter of 2008. The $2,355,000 current fair value of the swap agreement
at May 30, 2009 will reverse over the next seven months and reduce interest expense over that
period although the amount recorded in any particular month or quarter will vary and largely depend
on interest rates. The two-year fixed interest rate swap agreement
will expire on January 1, 2010.
For the six-month period of 2009, net other expense of $858,000 compared to $3,326,000 in 2008
primarily due to $2,106,000 of lower interest expense that included a year-to-date charge of
$348,000 in 2009 compared to $1,337,000 related to the mark-to-market adjustment on the interest
rate swap in the six-month 2008 period and that reflected less outstanding debt at May 30, 2009
compared to May 31, 2008.
PROVISION FOR INCOME TAXES
The provision for income taxes for the quarter and six months ended May 30, 2009 was $8,121,000 and
$12,217,000, respectively, compared to $12,903,000 and $20,844,000, respectively, for the
comparable periods of 2008. The 32.3% effective tax rate for the second quarter of 2009 was
slightly lower than 34.3% for the second quarter of 2008. The six-month 2009 effective tax rate was
32.1% compared to 33.7% in the first half of 2008. Lower earnings before income taxes and minority
interests, discrete items and the mix of earnings from U.S. and international operations
contributed to a lower rate in 2009. The Company expects that its overall effective tax rate for
fiscal 2009 will be approximately 33.0% to 34.0%, slightly higher than the effective rate recorded
in the
first half of 2009, because of anticipated increased earnings before income taxes and minority
interests and a differing mix of earnings from international operations.
NET EARNINGS AND EARNINGS PER SHARE
Net earnings in the second quarter of 2009 were $16,791,000, or $0.33 on a diluted basis, compared
to the 2008 second quarter of $24,634,000, or $0.48 per share on a diluted basis. Diluted average
shares outstanding of 51,330,567 for the second quarter of 2009 were slightly higher than the
average of 51,272,388 for the second quarter of 2008 due to the issuance of shares under stock
award plans.
For the six months ended May 30, 2009 and May 31, 2008, net earnings were $25,582,000 and
$40,783,000, respectively, a decrease of 37.3%. Diluted earnings per share decreased 37.5% in the
2009 year-to-date period to $0.50 from $0.80 in the first half of 2008. Diluted average shares
outstanding were 51,392,809 for the first six months of 2009, a 0.5% increase from the average of
51,125,712 for the 2008 first six months.
Page 29
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTINUED
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
The Companys financial position remains strong with adequate cash resources and sufficient
borrowing capacity under its current line of credit. The global credit market experienced a
significant tightening of credit availability and interest rate volatility during fiscal 2008 that
is continuing into 2009. This resulted in reduced funding available from commercial banks and for
corporate debt issuers. As a result, capital became more expensive and less available; however, the
Company does not foresee any difficulties meeting its cash requirements or accessing credit over
the next twelve months. On December 18, 2007, the Company entered into a five-year multicurrency
revolving credit agreement with a group of financial institutions under which it may borrow up to
$250 million under a selection of currencies and rate formulas. Management believes the financial
institutions that are party to this arrangement have adequate capital and resources and will be
able to fund future borrowings under the Companys credit agreement. The interest rate is based
upon either, at the Companys election, a defined Base Rate or the London Interbank Offered Rate
(LIBOR) plus or minus applicable margins. At May 30, 2009, the interest rate plus margin was 0.61%.
Commitment fees, letter of credit fees and other fees are payable as provided in the credit
agreement. As of May 30, 2009, $65 million was outstanding on the $250 million facility and $8.5
million in letters of credit had been issued against the credit facilitys $75 million letter of
credit subline. The Company had approximately $176.5 million available for further borrowing at May
30, 2009.
On January 2, 2008, the Company entered into an interest rate agreement with a bank to manage its
interest rate exposure on certain amounts outstanding under its $250 million revolving credit
agreement. The interest rate agreement provides for the Company to pay a 3.93% fixed interest rate
plus applicable margins and receive interest based on a three-month LIBOR on a notional amount of
$100 million and expires January 1, 2010. This will mitigate the Companys economic interest rate
risk until January 2010. The swap agreement has not been designated as a hedge pursuant to SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. Unrealized gains and losses
and periodic settlement payments are recorded in interest expense in the statement of earnings and
as a component of cash flows from operations in the statement of
cash flows. The fair value of the interest rate agreement at May 30, 2009 was $2,355,000. This was
recorded as part of other current liabilities.
By using derivative instruments, the Company exposes itself, from time to time, to credit risk and
market risk. Credit risk is the failure of the counterparty to perform under the terms of the
derivative contract. When the fair value of a derivative contract is positive, the counterparty
owes the Company, which creates credit risk for the Company. The Company minimizes this credit risk
by entering into transactions with counterparties which it believes have the financial resources to
meet their obligations. The Company minimizes market risk by establishing and monitoring parameters
that limit the types and degree of market risk that may be undertaken. The Companys swap agreement
incorporates by reference the non-financial and financial debt covenants included in the Companys
credit facility. The swap agreement also includes other events which would qualify as a default or
termination event, whereby the counterparty could request payment on the derivative instrument.
Page 30
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTINUED
Cash and short-term investments at May 30, 2009 of $70,137,000 increased over $22 million from
$47,984,000 at fiscal year-end 2008. Short-term investments include tax-exempt municipal money
market funds. Cash and cash equivalents are held by financial institutions throughout the world.
Management regularly reviews the creditworthiness of these institutions and believes the Companys
funds at these institutions are not at significant risk. The current ratio of 3.3 at second
quarter-end 2009 is slightly higher than 3.0 at year-end 2008. Long-term debt of $82,393,000 at May
30, 2009 included $65 million of borrowings under the Companys revolving credit agreement and
industrial revenue bonds of $15,820,000. During the second quarter of 2009, the Company re-issued
an industrial revenue bond for approximately $8 million, which will be due in 2016. Required
principal payments on long-term debt will be approximately $154,000 over the next twelve months
based on scheduled payments in current debt agreements. The borrowings under the line of credit
facility will be due by the end of the five-year term although the Company expects to repay the
outstanding amounts earlier than that. The Company was in compliance with all covenants related to
its borrowings throughout the first half of fiscal 2009 and throughout fiscal 2008. The Company
expects to remain in compliance with these covenants in the foreseeable future despite the global
economic downturn. The ratio of total debt to total capitalization, defined as long-term debt plus
total shareholders equity, was 10.8% at May 30, 2009 compared to 11.4% at the end of 2008.
The Company had 50,932,941 shares of common stock outstanding as of May 30, 2009 compared to
50,794,422 shares outstanding at fiscal year-end 2008. The increase in shares outstanding was
primarily due to the issuance of shares under stock award and option programs during the first half
of 2009. Shareholders equity increased to $682,036,000 from $651,759,000 at year-end 2008
primarily as a result of net earnings, stock issuances related to stock option activity and stock
award programs offset by dividend payments of $9,196,000 and other comprehensive loss of $8,565,000
due to currency translation and pension liability adjustments.
Cash generated by operating activities decreased to $36,461,000 for the six-month 2009 period
compared to $47,123,000 for the same period in the prior year, mainly due to lower net earnings and
changes in working capital compared to the year ago six-month period. The working capital fluctuations
mainly resulted from the drop in sales, which lowered accounts receivable and slightly increased
inventory, and payments made to vendors. The working capital change also included $16,065,000 of
cash used to purchase short-term investments, compared to $8,980,000 in the first half of 2008.
For the six-month period of 2009, cash flows for investing activities of $23,582,000 were lower
than the 2008 amount of $94,429,000 for the same period, primarily due to lower spending on
business acquisitions. In the first half of 2009, $12,192,000 of cash was paid for business
acquisitions compared to $75,073,000 in the first half of 2008. Spending on plant asset additions
of $10,784,000 in the first half of 2009 was primarily for the HVAC filter manufacturing
restructuring program, new product and filter media development programs, facility improvements and
cost reduction programs.
Capital expenditures for normal facility maintenance and improvements, productivity improvements,
safety initiatives, the HVAC restructuring program, new products and filter media development are
expected to be $35 to $40 million in 2009 compared to $35 million spent in fiscal 2008. Capital
spending included in the fiscal 2009 amount and related to the HVAC restructuring program is
estimated to be approximately $6 million. In late 2008, the Company postponed certain capacity
expansion and information technology projects until the U.S. and world economies recover. The
Company does expect to continue to invest aggressively in new product and media development, cost
reduction projects and safety initiatives. It also intends to expand its technical facilities in
China for product development and testing. The Company has not stopped or reduced any spending or
investment in inventory availability, customer service and sales or marketing programs. The Company
believes that for it to be successful in the filtration aftermarket, having the right product at
the right time with the sales and marketing programs that customers need is critical.
Page 31
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTINUED
Cash flows used by financing activities in the six-month 2009 period were $8,807,000; whereas
$57,344,000 of net cash was provided for the same period in the prior year. In the first half of
2008, the Company borrowed a net $100,000,000 under its credit facility, paid $7,327,000 on its
long-term debt and spent $37,260,000 to purchase 1,000,000 shares of the Companys common stock.
The Company did not borrow under its credit facility or repurchase any of its stock in the first
half of 2009. It did repay $10,000,000 under its credit facility during the first half of 2009.
During the second quarter of 2009, the Company re-issued an industrial revenue bond for $8,410,000.
Dividend payments of $9,196,000 in the six-month period ended May 30, 2009 increased 12% from
payments of $8,183,000 during the first half of 2008. The current annual dividend rate is $0.36 per
share. For additional information regarding the Companys share repurchase program, see Part II,
Item 2, Unregistered Sales of Equity Securities and Use of Proceeds.
CLARCOR believes that its current operations will continue to generate cash and that sufficient
lines of credit remain available to fund current operating needs, pay dividends, invest in the
development of new products and filter media, fund planned capital expenditures and expansion of
current facilities, complete the HVAC filter restructuring plans, provide for interest payments and
required principal payments related to its debt agreements, fund pension plan contributions and
repurchase Company stock. It also continues to assess acquisition opportunities, primarily in
related filtration businesses. It is expected that these acquisitions, if completed, would expand
the Companys market base, distribution coverage or product offerings. Any such acquisitions may
also affect operating cash flows and may require changes in the Companys debt and capitalization.
In addition, capital market disruptions may affect the cost or availability of future borrowings.
The Company will also continue to assess repurchases of its stock. At May 30, 2009, there was
approximately $187,210,000 available for repurchase under the current authorization. Future
repurchases of Company stock may be made after considering cash flow requirements for internal
growth (including working capital requirements), capital expenditures, acquisitions, interest rates
and the current market price of the Companys stock.
The Company has no material long-term purchase commitments. It is committed to complete the
restructure of its HVAC filter manufacturing operations. Although no significant purchase
commitments were signed as of May 30, 2009, approximately $3 million of equipment related to the
restructuring was on order. The Company enters into purchase obligations with suppliers on a
short-term basis in the normal course of business.
Page 32
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTINUED
The following table summarizes the Companys fixed cash obligations as of May 30, 2009 for the
periods indicated:
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Payments Due by Period (Dollars in thousands)
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Less than
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More than
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Total
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1 Year
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1-3 Years
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3-5 Years
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5 Years
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Long-term debt (excluding line of credit)
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$
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17,547
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$
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154
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$
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167
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|
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$
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1,406
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|
|
$
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15,820
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Interest payable on long-term debt
(excluding line of credit)
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|
|
850
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|
|
|
169
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|
|
|
332
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|
|
|
148
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|
|
|
201
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|
Line of credit
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|
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65,000
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|
|
|
|
|
|
|
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|
|
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65,000
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|
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Interest payable on line of credit
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|
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6,200
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2,820
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1,690
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|
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1,690
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Unfunded nonqualified pension plan
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18,343
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295
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16,730
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479
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839
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Operating leases
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61,753
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9,896
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16,561
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11,965
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23,331
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Investment in affiliate
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794
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794
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Acquisitions
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3,264
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136
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3,037
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91
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Total
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$
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173,751
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$
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14,264
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$
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38,517
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$
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80,779
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$
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40,191
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Interest payments on the Companys variable rate debt are determined based on current interest
rates as of May 30, 2009. The $65 million outstanding as of May 30, 2009 under the Companys
five-year revolving line of credit will be due by the end of the five-year term. Annual interest
payments related to the $65 million will be approximately $4,230,000 for fiscal year 2009 based on
the swap agreement entered into at the beginning of 2008 that expires in January 2010. After that,
interest will be paid at a variable rate based on LIBOR plus or minus applicable margins. The
amounts in the table above related to the line of credit assume an annual interest rate plus margin
of 1.30%, which is slightly higher than LIBOR plus margin was as of May 30, 2009 for the remaining
term and that no additional borrowings or payments will be made on the line of credit during the
periods presented. At May 30, 2009, the interest rate plus margin was 0.61%.
The minimum required contribution under the Pension Benefit Guarantee Corporation requirements for
one of its U.S. qualified pension plans for fiscal 2009 is expected to be approximately $400,000.
The Company, from time to time, makes contributions in excess of the minimum amount required as
economic conditions warrant. It will contribute at least $360,000 as a voluntary contribution to
one of its U.S. qualified plans in 2009. Also, it expects to contribute $363,000 to its non-U.S.
qualified plan and $295,000 to its postretirement health care benefit plan to pay benefits during
2009. Future estimates of the Companys pension plan contributions may change significantly
depending on the actual rate of return on plan assets, discount rates and regulatory requirements.
The Company also has a nonqualified pension plan covering certain employees in the Companys
management. The expected payments to be made under this plan are shown in the table above and are
largely not funded.
As of May 30, 2009, the Companys liability for uncertain income tax provisions reported in
accordance with FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, was
$2,207,000 including interest. Due to the high degree of uncertainty regarding the timing of
potential future cash outflows associated with these liabilities, the Company was unable to make a
reasonably reliable estimate of the amount and period in which these remaining liabilities might be
paid.
OFF-BALANCE SHEET ARRANGEMENTS
The Companys off-balance sheet arrangements relate to various operating leases as discussed in
Note H to the Consolidated Financial Statements in the Companys 2008 Form 10-K. There have been no
material changes to the disclosure regarding leases set forth in the 2008 Form 10-K. The Company
had no variable interest entity or special purpose entity agreements during the first half of 2009
or during fiscal 2008.
Page 33
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTINUED
OTHER MATTERS
CRITICAL ACCOUNTING POLICIES
The Companys critical accounting policies, including the assumptions and judgments underlying
them, are disclosed in the Companys 2008 Form 10-K in Managements Discussion and Analysis of
Financial Condition and Results of Operations. There have been no material changes in the Companys
critical accounting policies set forth in the 2008 Form 10-K. These policies have been consistently
applied in all material respects. While the estimates and judgments associated with the application
of these policies may be affected by different assumptions or conditions, the Company believes the
estimates and judgments associated with the reported amounts are appropriate in the circumstances.
RECENT RELEVANT ACCOUNTING PRONOUNCEMENTS
A discussion of recent relevant accounting pronouncements is included in Note 16 to the
Consolidated Condensed Financial Statements.
RECENT MARKET EVENTS
Current market conditions and economic events have significantly impacted the financial condition,
liquidity and outlook for a wide range of companies, including many manufacturing companies. The
Company has considered the potential impact of such conditions and events as it relates to
currently reported financial results of operations and liquidity, including consideration of the
possible impact of other than temporary impairment, counterparty credit risk and hedge accounting.
The Company does not believe that current market conditions and economic events have significantly
impacted its current liquidity. The Company believes that, its aftermarket focus, current
investment policies and contractual relationships, reduce the risks faced by the Company in this
economy. The Company continues to monitor accounts receivable collection activity and has not
experienced any significant issues. It believes it is adequately reserved for any potential bad
debts. Also, it does not expect any material loss of monies owed to the Company arising from the
bankruptcies of General Motors and Chrysler.
OUTLOOK
The global recession impacted the Companys first and second quarter 2009 results and it is unclear
how long the recession will continue or how severe it will be. The Company believes that its cost
reduction efforts and sales and marketing programs are having a positive impact on CLARCOR, and
although sales and profits overall will be less in fiscal 2009 than in fiscal 2008, the Company
expects each subsequent quarter of fiscal 2009 will be better than the previous 2009 quarter. Sales
and operating profit in the third quarter of 2009 are anticipated to be down from the corresponding
period of 2008. Based on its first half results and current backlog, the Company expects its 2009
full-year sales to decline by approximately 10% to 12% from 2008, but that second-half sales will
decline by 7% to 9% compared to the second half of 2008. Sales improvement in the latter half of
fiscal 2009 compared to that of the first half is expected as the Company anticipates that its
customers base replacement demand will resume as they deplete their inventory. In addition, the
Company has entered into certain sales contracts with new customers under which shipments should
start in the remaining quarters of 2009. The Company expects new product introductions to also
contribute to future long-term growth. If the current recession does not worsen, diluted earnings
per share are estimated to be in the range of $1.40 to $1.60 in 2009 based on the Companys current
forecast. In 2010, the Company expects the over-the-road trucking and
railroad markets to recover, its HVAC filter manufacturing operation
to reach an 8% operating margin on higher sales, and its natural gas
filtration business to have another good year. The Company also
expects to see a recovery in most other markets, particularly in oil
drilling, aerospace and fibers, and a strong year of growth for its
packaging operations.
Page 34
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTINUED
The Company believes it has a strong balance sheet, strong and consistent cash flows and available
access to cash resources and credit as needed. It believes its broad product, market and channel
diversification is an advantage to CLARCOR. Nevertheless, given the unpredictable severity and
length of the current recession, the Companys forecast for the remainder of fiscal 2009 is subject
to change.
FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY
This Second Quarter 2009 Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. All statements made in this Form 10-Q, other than statements of historical
fact, are forward-looking statements. You can identify these statements from use of the words
may, should, could, potential, continue, plan, forecast, estimate, project,
believe, intent, anticipate, expect, target, is likely, will, or the negative of
these terms, and similar expressions. These statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking
statements may include, among other things:
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statements and assumptions relating to future growth, earnings, earnings per share
and other financial performance measures, as well as managements short-term and
long-term performance goals;
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statements relating to the anticipated effects on results of operations or financial
condition from recent and expected developments or events, including acquisitions;
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statements relating to the Companys business and growth strategies; and
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any other statements or assumptions that are not historical facts.
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The Company believes that its expectations are based on reasonable assumptions. However, these
forward-looking statements involve known and unknown risks, uncertainties and other important
factors that could cause the Companys actual results, performance or achievements, or industry
results, to differ materially from the Companys expectations of future results, performance or
achievements expressed or implied by these forward-looking statements. In addition, the Companys
past results of operations do not necessarily indicate its future results. These and other
uncertainties are discussed in the Risk Factors section of the Companys 2008 Form 10-K. The
future results of the Company may fluctuate as a result of these and other risk factors detailed
from time to time in the Companys filings with the Securities and Exchange Commission.
You should not place undue reliance on any forward-looking statements. These statements speak only
as of the date of this Second Quarter 2009 Form 10-Q. Except as otherwise required by
applicable laws, the Company undertakes no obligation to publicly update or revise any
forward-looking statements or the risks described in this Form 10-Q, whether as a result of new
information, future events, changed circumstances or any other reason after the date of this Form
10-Q.
Page 35
Part I Item 3. Quantitative and Qualitative Disclosure About Market Risk
The Companys interest expense on long-term debt is sensitive to changes in interest
rates. In addition, changes in foreign currency exchange rates may affect assets,
liabilities and commitments that are to be settled in cash and are denominated in foreign
currencies. Market risks are also discussed in the Companys 2008 Form 10-K in Item 7A,
Quantitative and Qualitative Disclosures about Market Risk. There have been no material
changes to the disclosure regarding market risk set forth in the 2008 Form 10-K.
Part I Item 4. Controls and Procedures
The Company has established disclosure controls and procedures which are designed to
ensure that information required to be disclosed in reports filed or submitted under the
Securities Exchange Act of 1934 (Exchange Act) is recorded, processed, summarized, and
reported within the time periods specified in the Securities and Exchange Commissions
rules and forms. The Companys management, with the participation of Norman E. Johnson,
Chairman of the Board, President, and Chief Executive Officer and Bruce A. Klein, Vice
President Finance and Chief Financial Officer, evaluated the effectiveness of the
Companys disclosure controls and procedures as of May 30, 2009. Based on their
evaluation, such officers concluded that the Companys disclosure controls and procedures
pursuant to Rules 13a 15(e) of the Exchange Act were effective as of May 30, 2009, in
achieving the objectives for which they were designed. No change in the Companys internal
control over financial reporting occurred during the Companys most recent fiscal quarter
ended May 30, 2009, that has materially affected, or is reasonably likely to materially
affect, the Companys internal control over financial reporting.
Page 36
Part II Other Information
Part II Item 1. Legal Proceedings
The information required by this Item is incorporated by reference from Note 13 included in Part I,
Item 1 of this Form 10-Q.
Part II Item 1A. Risk Factors
There have been no material changes to the risk factors disclosed in Item 1A. Risk Factors in the
Companys Annual Report on Form 10-K for the year ended November 29, 2008.
Part II Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On June 25, 2007, the Companys Board of Directors approved a three-year, $250 million stock
repurchase program. Pursuant to the authorization, CLARCOR may purchase shares from time to time in
the open market or through privately negotiated transactions through June 25, 2010. CLARCOR has no
obligation to repurchase shares under the authorization, and the timing, actual number and values
of shares to be purchased will depend on CLARCORs stock price and market conditions. As set forth
in the table below, the Company did not repurchase any shares during the fiscal quarter ended May
30, 2009. The amount of $187,210,241 remained available for purchase under such program at the end
of the second quarter of 2009.
COMPANY PURCHASES OF EQUITY SECURITIES
(1)
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|
|
|
|
|
|
|
|
(c)
|
|
(d)
|
|
|
(a)
|
|
(b)
|
|
Total number of
|
|
Maximum approximate
|
|
|
Total
|
|
Average
|
|
shares purchased as
|
|
dollar value of shares
|
|
|
number of
|
|
price
|
|
part of the
|
|
that may yet be
|
|
|
shares
|
|
paid per
|
|
Companys publicly
|
|
purchased under the
|
Period
|
|
purchased
|
|
share
|
|
announced plan
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 1, 2009 through March 31, 2009
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
187,210,241
|
|
April 1, 2009 through April 30, 2009
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
187,210,241
|
|
May 1, 2009 through May 30, 2009
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
187,210,241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
187,210,241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The Purchase Plan announced June 25, 2007 provides for aggregate purchases up to $250 million. The program expires June 25, 2010.
|
Part II Item 4. Submission of Matters to a Vote of Security Holders
At the annual meeting of shareholders of CLARCOR Inc. held on March 23, 2009, all of the Companys
nominees for director, as listed in the proxy statement dated February 13, 2009, were elected. In
addition, shareholders approved the CLARCOR Inc. 2009 Incentive Plan and ratified the selection of
PricewaterhouseCoopers LLP as the Companys independent external auditors for fiscal year 2009.
The Company had 50,908,699 shares of common stock outstanding as of the close of business on the
February 6, 2009 record date, and the holders of 46,793,290 shares of common stock were present at
the meeting, in person or by proxy.
Page 37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broker
|
|
|
For
|
|
Withheld
|
|
Non-Votes
|
(A) Election of Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Marc Adam
|
|
|
44,996,354
|
|
|
|
1,796,933
|
|
|
|
N/A
|
|
James Bradford, Jr.
|
|
|
45,177,694
|
|
|
|
1,615,593
|
|
|
|
N/A
|
|
James Packard
|
|
|
38,282,193
|
|
|
|
8,511,094
|
|
|
|
N/A
|
|
Directors of the Company previously elected by its shareholders and whose terms in office continued
after the annual meeting are Messrs. Robert J. Burgstahler, Paul Donovan, Robert H. Jenkins, Norman
E. Johnson and Philip R. Lochner, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broker
|
|
|
For
|
|
Against
|
|
Abstain
|
|
Non-Votes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(B) Approval of CLARCOR Inc. 2009 Incentive
Plan
|
|
|
32,555,452
|
|
|
|
8,329,988
|
|
|
|
2,007,983
|
|
|
|
3,899,867
|
|
(C) Ratification of PricewaterhouseCoopers LLP
|
|
|
46,484,155
|
|
|
|
285,611
|
|
|
|
23,524
|
|
|
|
N/A
|
|
Part II Item 6. Exhibits
a. Exhibits:
|
|
|
10 (i)
|
|
CLARCOR Inc. 2009 Incentive Plan (incorporated by
reference to Appendix A to the Companys Definitive Proxy
Statement filed with the SEC on February 13, 2009)
|
31(i)
|
|
Certification of Norman E. Johnson pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
|
31(ii)
|
|
Certification of Bruce A. Klein pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
|
32(i)
|
|
Certification pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
|
Page 38
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
CLARCOR Inc.
(Registrant)
|
|
June 19, 2009
|
By
|
/s/ Norman E. Johnson
|
|
(Date)
|
|
Norman E. Johnson
|
|
|
|
Chairman of the Board, President and Chief
Executive Officer
|
|
|
|
|
|
June 19, 2009
|
By
|
/s/ Bruce A. Klein
|
|
(Date)
|
|
Bruce A. Klein
|
|
|
|
Vice President Finance and
Chief Financial Officer
|
|
|
Page 39
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