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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURTIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 1, 2008
 OR
 o
    
    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.
  DELAWARE
    
    36-0922490(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 
  615-771-3100
 
  þ o
  Large accelerated filer þ

    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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TABLE OF CONTENTS  Part I  Item 1Part I  Item 2Part I  Item 3. Quantitative and Qualitative Disclosure About Market Risk.Part I  Item 4. Controls and Procedures.Part II  Other InformationItem 1A. Risk FactorsPart II  Other Information (Continued)Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.SIGNATURESSection 302 CertificationSection 302 CertificationSection 906 Certification    Table of Contents  
 Part I  Item 1
 
 
 March 1,
    
    
    December 1,2008
    
    
    2007(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    43,170
    
    
    $
    36,059Restricted cash
    
    
    2,698
    
    
    
    1,055Short-term investments
    
    
    5,454
    
    
    
    4,884Accounts receivable, less allowance for losses
of $12,380 for 2008 and $11,143 for 2007
    
    
    187,800
    
    
    
    166,912Inventories:Raw materials
    
    
    56,950
    
    
    
    49,722Work in process
    
    
    30,226
    
    
    
    18,973Finished products
    
    
    69,897
    
    
    
    67,151Total inventories
    
    
    157,073
    
    
    
    135,846Prepaid expenses and other current assets
    
    
    10,027
    
    
    
    6,968Deferred income taxes
    
    
    20,441
    
    
    
    20,196Total current assets
    
    
    426,663
    
    
    
    371,920Plant assets at cost,
    
    
    427,016
    
    
    
    398,350less accumulated depreciation
    
    
    (235,574
    )
    
    
    (229,138
    )191,442
    
    
    
    169,212Goodwill
    
    
    222,155
    
    
    
    124,718Acquired intangibles, less accumulated amortization
    
    
    99,127
    
    
    
    53,209Pension assets
    
    
    8,722
    
    
    
    8,341Deferred income taxes
    
    
    294
    
    
    
    294Other noncurrent assets
    
    
    10,670
    
    
    
    11,441Total assets
    
    $
    959,073
    
    
    $
    739,135LIABILITIESCurrent liabilities:Current portion of long-term debt
    
    $
    264
    
    
    $
    94Accounts payable
    
    
    75,677
    
    
    
    53,523Accrued salaries, wages and commissions
    
    
    10,345
    
    
    
    11,945Compensated absences
    
    
    7,144
    
    
    
    7,484Accrued insurance liabilities
    
    
    12,422
    
    
    
    11,412Other accrued liabilities
    
    
    30,992
    
    
    
    25,255Income taxes
    
    
    7,659
    
    
    
    4,458Total current liabilities
    
    
    144,503
    
    
    
    114,171Long-term debt, less current portion
    
    
    127,418
    
    
    
    17,329Postretirement health care benefits
    
    
    887
    
    
    
    947Long-term pension liabilities
    
    
    16,962
    
    
    
    15,104Deferred income taxes
    
    
    41,766
    
    
    
    25,485Other long-term liabilities
    
    
    15,603
    
    
    
    5,792Minority interests
    
    
    3,604
    
    
    
    4,577Total liabilities
    
    
    350,743
    
    
    
    183,405ContingenciesSHAREHOLDERS EQUITYCapital stock
    
    
    50,491
    
    
    
    49,219Capital in excess of par value
    
    
    37,930
    
    
    
    Accumulated other comprehensive earnings
    
    
    7,352
    
    
    
    5,912Retained earnings
    
    
    512,557
    
    
    
    500,599Total shareholders equity
    
    
    608,330
    
    
    
    555,730Total liabilities and shareholders equity
    
    $
    959,073
    
    
    $
    739,135
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Three Months EndedMarch 1,
    
    
    March 3,2008
    
    
    2007Net sales
    
    $
    250,181
    
    
    $
    209,530Cost of sales
    
    
    173,626
    
    
    
    148,550Gross profit
    
    
    76,555
    
    
    
    60,980Selling and administrative expenses
    
    
    48,816
    
    
    
    37,399Operating profit
    
    
    27,739
    
    
    
    23,581Other income (expense):Interest expense
    
    
    (3,567
    )
    
    
    (236
    )Interest income
    
    
    270
    
    
    
    674Other, net
    
    
    (212
    )
    
    
    (177
    )(3,509
    )
    
    
    261Earnings before income taxes and minority interests
    
    
    24,230
    
    
    
    23,842Provision for income taxes
    
    
    7,941
    
    
    
    7,418Earnings before minority interests
    
    
    16,289
    
    
    
    16,424Minority interests in earnings of subsidiaries
    
    
    (140
    )
    
    
    (51
    )Net earnings
    
    $
    16,149
    
    
    $
    16,373Net earnings per common share:Basic
    
    $
    0.32
    
    
    $
    0.32Diluted
    
    $
    0.32
    
    
    $
    0.32Average number of common shares outstanding:Basic
    
    
    50,595,412
    
    
    
    51,289,477Diluted
    
    
    51,211,190
    
    
    
    51,955,610Dividends paid per share
    
    $
    0.0800
    
    
    $
    0.0725
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Three Months EndedMarch 1,
    
    
    March 3,2008
    
    
    2007Cash flows from operating activities:Net earnings
    
    $
    16,149
    
    
    $
    16,373Depreciation
    
    
    6,636
    
    
    
    5,503Amortization
    
    
    1,195
    
    
    
    784Stock-based compensation expense
    
    
    2,009
    
    
    
    910Excess tax benefit from stock-based compensation
    
    
    (966
    )
    
    
    (1,823
    )Changes in short-term investments
    
    
    (570
    )
    
    
    745Changes in assets and liabilities, excluding short-term
investments
    
    
    1,590
    
    
    
    991Other, net
    
    
    159
    
    
    
    470Net cash provided by operating activities
    
    
    26,202
    
    
    
    23,953Cash flows from investing activities:Business acquisitions, net of cash acquired
    
    
    (75,073
    )
    
    
    (6,577
    )Additions to plant assets
    
    
    (8,137
    )
    
    
    (7,832
    )Other, net
    
    
    (702
    )
    
    
    (79
    )Net cash used in investing activities
    
    
    (83,912
    )
    
    
    (14,488
    )Cash flows from financing activities:Net proceeds under line of credit
    
    
    110,000
    
    
    
    Payments on long-term debt
    
    
    (7,240
    )
    
    
    (17
    )Sale of capital stock under stock option and employee
purchase plans
    
    
    2,307
    
    
    
    2,416Purchase of treasury stock
    
    
    (37,260
    )
    
    
    Excess tax benefits from stock-based compensation
    
    
    966
    
    
    
    1,823Cash dividends paid
    
    
    (4,125
    )
    
    
    (3,718
    )Net cash provided by financing activities
    
    
    64,648
    
    
    
    504Net effect of exchange rate changes on cash
    
    
    173
    
    
    
    18Net change in cash and cash equivalents
    
    
    7,111
    
    
    
    9,987Cash and cash equivalents, beginning of period
    
    
    36,059
    
    
    
    29,051Cash and cash equivalents, end of period
    
    $
    43,170
    
    
    $
    39,038Cash paid during the period for:Interest
    
    $
    1,095
    
    
    $
    231Income taxes
    
    $
    3,536
    
    
    $
    4,621
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1.
    
    CONSOLIDATED FINANCIAL STATEMENTSThe consolidated condensed balance sheet as of March 1, 2008, the consolidated condensed
statements of earnings and the consolidated condensed statements of cash flows for the periods
ended March 1, 2008, and March 3, 2007, have been prepared by the Company without audit. The
financial statements have been prepared on the same basis as those in the Companys Annual
Report on Form 10-K for the fiscal year ended December 1, 2007 (2007 Form 10-K). The December
1, 2007 consolidated balance sheet data was derived from the Companys year-end audited
financial statements as presented in the 2007 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 March 1, 2008, are not necessarily
indicative of the operating results for the full year.2.
    
    ADOPTION OF NEW ACCOUNTING STANDARDSIn June 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48,
Accounting for Uncertainty in Income Taxes (FIN 48). The interpretation provides guidance on
the financial statement recognition, measurement, reporting and disclosure of uncertain tax
positions taken or expected to be taken in a tax return. FIN 48 addresses the determination of
whether tax benefits, either permanent or temporary, should be recorded in the financial
statements. For those tax benefits to be recognized, a tax position must be
more-likely-than-not to be sustained upon examination by the taxing authorities. The amount
recognized is measured as the largest amount of benefit that is greater than 50% likely of being
realized upon ultimate settlement. FIN 48 was adopted on December 2, 2007, and as a result, the
Company recognized a $67 increase in the net liability for unrecognized tax benefits, which was
accounted for as a decrease to retained earnings at December 1, 2007.As of December 2, 2007, the Company had $1,650 of gross unrecognized tax benefits. Of this
amount, $1,206 represents the portion that, if recognized, would impact the effective tax rate.
The Company recognizes interest and penalties related to unrecognized tax benefits in income tax
expense. As of December 2, 2007, the Company had $141 accrued for the payment of interest. The
Company does not expect a significant increase or decrease in its unrecognized tax benefits over
the next 12 months.The Company is regularly audited by federal, state and foreign tax authorities. The IRS has
completed its audits of the Companys U.S. income tax returns through fiscal 2005. With few
exceptions, the company is no longer subject to income tax examinations by state or foreign tax
jurisdictions for years prior to fiscal 2002.In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which defines fair
value, establishes a framework for measuring fair value in generally accepted accounting
principles (GAAP), and expands disclosures about fair value measurements. On February 12, 2008,
the FASB issued FASB Staff Position (FSP) No. 157-2, which deferred the effective date for
certain portions of SFAS No. 157 related to nonrecurring measurements of nonfinancial assets and
liabilities. That provision of SFAS No. 157 will be effective for the Companys fiscal year
2009.
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2.
    
    ADOPTION OF NEW ACCOUNTING STANDARDS (Continued)On December 2, 2007, the Company adopted the provisions of SFAS No. 157 related to its financial
assets and liabilities. The Company measures certain 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 UsingQuoted Prices
    
    Significantin Active
    
    Other
    
    SignificantMarkets for
    
    Observable
    
    UnobservableIdentical Assets
    
    Inputs
    
    InputsDescription
    
    March 1, 2008
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Short-term investments
    
    $
    5,454
    
    
    $
    5,454
    
    
    $
    
    
    
    $
    Restricted trust
(part of noncurrent
assets)
    
    
    940
    
    
    
    940
    
    
    
    
    
    
    
    Interest rate
agreement (part of
long-term
liabilities)
    
    
    (2,453
    )
    
    
    
    
    
    
    (2,453
    )
    
    
    Net
    
    $
    3,941
    
    
    $
    6,394
    
    
    $
    (2,453
    )
    
    $
    
 The Companys short-term investments consist of money market funds which are actively traded.
The restricted trust, which is used to fund certain payments under its nonqualified U.S. pension
plan, consists of actively traded equity and bond funds. The interest rate agreements fair
value was determined based on the present value of expected future cash flows using discount
rates appropriate with the risks involved.
 3.
    
    BUSINESS ACQUISITIONSOn 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 Companys Facet operations with the combined headquarters based in
Mineral Wells. Peco was acquired to expand the Companys product offerings, technology,
filtration solutions and customer base in the growing oil and natural gas industries. Its
results are included as part of the Companys Industrial/Environmental Filtration segment since
the date of acquisition. The purchase price was approximately $146,216 excluding cash acquired
and including acquisition costs. The Company issued 2,137,797 shares of CLARCOR common stock
with a value of approximately $71,958 and paid the remaining purchase price with cash on hand
and approximately $80,000 of cash borrowed under the Companys revolving credit agreement.A preliminary allocation of the initial 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. The $96,836 excess of the initial purchase price over the preliminary
estimated fair value of the net tangible and identifiable intangible assets acquired was
recorded as goodwill. Other acquired intangibles will be amortized over a straight-line basis
according to their useful
lives. The estimated amounts recognized and their respective lives are shown in the following
table.
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3.
    
    BUSINESS ACQUISITIONS (Continued)
 EstimatedIdentifiable Intangible Asset
    
    Value
    
    
    Useful LifeTrade names
    
    $
    11,800
    
    
    IndefiniteNon-compete agreements
    
    
    800
    
    
    2 yearsCustomer relationships
    
    
    14,200
    
    
    15 yearsDeveloped technology
    
    
    20,300
    
    
    16 yearsTotal fair value
    
    $
    47,100
 The Company expects to finalize the purchase price allocation during fiscal 2008. The
allocation will be completed when the Company finishes its appraisal of the assets acquired
(which includes completing an assessment of the liabilities assumed) and finalizes the estimates
associated with deferred taxes and other costs related to the acquisition. The actual allocation
of the final purchase price and the resulting effect on income from operations may differ from
the unaudited pro forma amounts included herein.Following is a condensed balance sheet based on the fair values of the assets acquired and
liabilities assumed.
 Cash
    
    $
    11,448Accounts receivable, less allowance for losses
    
    
    18,593Inventory, net
    
    
    15,398Prepaid expenses and current assets
    
    
    3,006Current deferred tax assets
    
    
    875Plant assets
    
    
    20,011Goodwill
    
    
    96,836Trademarks and trade names
    
    
    11,800Other acquired intangibles
    
    
    35,300Other noncurrent assets
    
    
    625Total assets acquired
    
    
    213,892Current notes payable
    
    
    (7,411
    )Accounts payable and accrued liabilities
    
    
    (30,306
    )Long-term deferred tax liabilities
    
    
    (17,031
    )Long-term liabilities
    
    
    (1,480
    )Net assets acquired
    
    
    157,664Less cash acquired
    
    
    (11,448
    )Assets acquired, net of cash
    
    $
    146,216
 For its fiscal year ended May 2007, Peco had sales of approximately $102,000 and operating
profit of approximately $12,500.The following unaudited pro forma information summarizes the results of operations and the
condensed consolidated balance sheet for the period indicated as if the Peco acquisition had
been completed as of the beginning of fiscal 2007. The pro forma information gives effect to
actual operating results prior to the acquisition, adjusted to include the estimated pro forma
effect of interest expense, depreciation, amortization of intangibles, income taxes and the
additional Company shares issued. These pro forma amounts are based on a preliminary allocation
of the purchase price to estimates of the fair values of the assets acquired and
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3.
    
    BUSINESS ACQUISITIONS (Continued)liabilities assumed. The pro forma amounts include the Companys preliminary determination of
purchase accounting adjustments based upon available information and certain assumptions that
the Company believes are reasonable. The unaudited pro forma results do not include the impact
of any revenues, costs or other operating synergies and non-recurring charges expected to result
from the acquisition. The pro forma amounts do not purport to be indicative of the results that
would have actually been obtained if the acquisition had occurred as of the beginning of the
period presented or that may be obtained in the future.
 Three months
ended March 3, 2007Net sales
    
    $
    237,035Operating profit
    
    
    25,391Net earnings
    
    
    17,010Diluted earnings per share
    
    $
    0.32As of November 30, 2007Current assets
    
    $
    413,976Plant assets
    
    
    189,813Goodwill
    
    
    221,554Other acquired intangibles
    
    
    100,309Other noncurrent assets
    
    
    21,145Total assets
    
    $
    946,797Current liabilities
    
    $
    145,095Long-term debt
    
    
    97,373Other long-term liabilities
    
    
    70,335Shareholders equity
    
    
    633,994Total liabilities and shareholders equity
    
    $
    946,797
 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 at closing and the remaining $591 will be paid over the next four years. A preliminary
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 preliminary estimated fair
value of the net tangible and identifiable intangible assets acquired was recorded as goodwill.
The business is included in the Industrial/Environmental Filtration segment from the date of
acquisition and is not material to the results of the Company.On March 5, 2007, the Company acquired an 80% ownership share in Sinfa SA, a manufacturer of
automotive and heavy-duty engine filters based in Casablanca, Morocco, for approximately $5,556
in cash including acquisition expenses, net of cash received, plus debt of approximately $6
million which the Company paid after the acquisition date. The business is included in the
Engine/Mobile Filtration segment from the date of acquisition. The acquisition is not material
to the results of the Company.As part of the purchase agreement, the Company and the minority owners each have an option to
require the purchase of the remaining 20% ownership share by the Company after December 31,
2012. As of March 1, 2008, the purchase price for such 20% ownership share is estimated to be
$1 million based on the formula in the purchase agreement. Any change in the estimated purchase
price for the remaining ownership share will be adjusted through net earnings.
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3.
    
    BUSINESS ACQUISITIONS (Continued)During February 2007, the Company acquired a synthetic fibers filtration business from Newton
Tool & Mfg. Company, Inc., a privately-owned engineering and machining company based in
Swedesboro, New Jersey, for $6,603 in cash, including acquisition expenses. The synthetic
fibers filtration business, including all of the related production equipment, was moved into
the Companys operations in Houston, Texas, and Shelby, North Carolina. The business is
included in the Industrial/Environmental Filtration segment from the date of acquisition.An allocation of the purchase price for the acquisition was made to major categories of assets
and liabilities. The $715 excess of the purchase price over the estimated fair value of the net
tangible and identifiable intangible assets acquired was recorded as goodwill. Other acquired
intangibles included non-compete agreements valued at $100 and customer relationships valued at
$2,100, which are being amortized on a straight-line basis over three years and thirteen years,
respectively. The acquisition is not material to the results of the Company.
 4.
    
    STOCK-BASED COMPENSATIONThe Company applies the provisions of Statement of Financial Accounting Standards (SFAS) No.
123R, Share-Based Payment (SFAS 123R), 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 Companys common stock on the grant date. The key provisions of the
Companys stock-based incentive plans are described in Note O of the Companys consolidated
financial statements included in the 2007 Form 10-K.The Company recorded pretax compensation expense related to stock options of $1,482 and $638 and
related tax benefits of $510 and $212 for the three months ended March 1, 2008 and March 3,
2007, respectively. The Company also recorded $527 and $272 in pretax compensation expense
related to its restricted share units for the three months ended March 1, 2008 and March 3,
2007, respectively. 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 $966 and $1,823 for the three months ended March 1, 2008 and March 3, 2007, respectively.
 Stock Options
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4.
    
    STOCK-BASED COMPENSATION (Continued)
 Shares Grantedunder Incentive
    
    Weighted AveragePlans
    
    Exercise PriceOutstanding at beginning of year
    
    
    3,191,598
    
    
    $
    23.79Granted
    
    
    425,400
    
    
    
    36.48Exercised
    
    
    (189,280
    )
    
    
    21.91Surrendered
    
    
    (14,437
    )
    
    
    34.32Outstanding at March 1, 2008
    
    
    3,413,281
    
    
    $
    25.43Options exercisable at March 1, 2008
    
    
    2,704,628
    
    
    $
    22.83
 The total intrinsic value of options exercised during the three months ended March 1, 2008, and
March 3, 2007, was $2,952 and $4,996, respectively. The weighted average fair value per option
at the date of grant for options granted during the three months ended March 1, 2008, and March
3, 2007, was $9.42 and $9.28, respectively.The following table summarizes information about the Companys outstanding and exercisable
options at March 1, 2008.
 Options Outstanding
    
    Options ExercisableWeighted
    
    
    
    
    
    
    
    
    
    WeightedWeighted
    
    Average
    
    
    
    
    
    Weighted
    
    AverageAverage
    
    Remaining
    
    
    
    
    
    Average
    
    RemainingRange of Exercise
    
    
    
    
    
    Exercise
    
    Life in
    
    
    
    
    
    Exercise
    
    Life inPrices
    
    Number
    
    Price
    
    Years
    
    Number
    
    Price
    
    Years$8.97
    
    $9.75
    
    
    
    230,200
    
    
    $
    9.14
    
    
    
    1.86
    
    
    
    230,200
    
    
    $
    9.14
    
    
    
    1.86$10.53
    
    $13.75
    
    
    
    200,050
    
    
    
    13.16
    
    
    
    3.52
    
    
    
    200,050
    
    
    
    13.16
    
    
    
    3.52$16.01
    
    $22.80
    
    
    
    999,168
    
    
    
    20.50
    
    
    
    4.68
    
    
    
    999,168
    
    
    
    20.50
    
    
    
    4.68$25.89
    
    $38.23
    
    
    
    1,983,863
    
    
    
    31.04
    
    
    
    7.68
    
    
    
    1,275,210
    
    
    
    28.64
    
    
    
    6.753,413,281
    
    
    $
    25.43
    
    
    
    6.16
    
    
    
    2,704,628
    
    
    $
    22.83
    
    
    
    5.33
 At March 1, 2008, the aggregate intrinsic value of options outstanding and exercisable was
$35,405 and $35,090, respectively.
 Restricted Share Unit Awards
 During the three months ended March 1, 2008 and March 3, 2007, the Company granted 25,989 and
26,200 restricted units of Company common stock with a fair value of $36.48 and $33.75,
respectively, per unit. Compensation expense related to restricted
stock awards totaled $527 and
$272 for the three months ended March 1, 2008 and March 3, 2007, respectively.
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5.
    
    EARNINGS PER SHARE AND TREASURY STOCK TRANSACTIONSDiluted earnings per share reflects 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.
 Three Months EndedMarch 1,
    
    
    March 3,2008
    
    
    2007Weighted
average number of common shares outstanding
    
    
    50,595,412
    
    
    
    51,289,477Dilutive effect of stock-based
arrangements
    
    
    615,778
    
    
    
    666,133Weighted average
number of diluted
common shares
outstanding
    
    
    51,211,190
    
    
    
    51,955,610Net earnings
    
    $
    16,149
    
    
    $
    16,373Basic earnings per share amount
    
    $
    0.32
    
    
    $
    0.32Diluted earnings per share amount
    
    $
    0.32
    
    
    $
    0.32
 Options with exercise prices greater than the average market price of the common shares during
the respective three-month periods were not included in the computation of diluted earnings per
share. For the three months ended March 1, 2008 and March 3, 2007, 419,275 and 453,250 options
with a weighted average exercise price of $36.50 and $33.98, respectively, were excluded from
the computation.For the three months ended March 1, 2008, exercises of stock options added $2,479 to capital in
excess of par value.During the three months ended March 1, 2008, the Company repurchased and retired 1,000,000
shares of its common stock for $37,260 under its $250 million stock repurchase program. As of
March 1, 2008, $187,210 remains available for purchase under this program. During the three
months ended March 3, 2007, the Company did not repurchase any shares of common stock.6.
    
    COMPREHENSIVE EARNINGSThe Companys total comprehensive earnings and its components are as follows:
 Three Months EndedMarch 1,
    
    
    March 3,2008
    
    
    2007Net earnings
    
    $
    16,149
    
    
    $
    16,373Other comprehensive earnings, net of tax:Foreign currency translation adjustments
    
    
    1,440
    
    
    
    275Total comprehensive earnings
    
    $
    17,589
    
    
    $
    16,648
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6.
    
    COMPREHENSIVE EARNINGS (Continued)The components of the ending balances of accumulated other comprehensive earnings are as
follows:
 March 1,
    
    
    December 1,2008
    
    
    2007Pension
liability, net of $3,656 tax
    
    $
    (6,994
    )
    
    $
    (6,994
    )Translation adjustments, net of $155 tax
    
    
    14,346
    
    
    
    12,906Accumulated other comprehensive earnings
    
    $
    7,352
    
    
    $
    5,912
 7.
    
    LONG-TERM DEBT AND INTEREST RATE AGREEMENTOn 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 $250,000 under
a selection of currencies and rate formulas. The interest rate is based upon either a defined
Base Rate or the London Interbank offered Rate (LIBOR) plus or minus applicable margins.
Commitment fees, letter of credit fees and other fees are payable as provided in the new credit
agreement. At March 1, 2008, long-term debt included $110,000 outstanding on the line of
credit.In addition, 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 $250,000 revolving credit agreement. The interest rate agreement provides for the Company to pay a 3.93%
fixed interest rate plus applicable margin on a notional amount of $100,000 and expires January 1, 2010. The fair value of the interest rate agreement at March 1, 2008 was $2,453 and is
included in other long-term liabilities based on the classification
of the amounts outstanding on the underlying debt agreement. The Company has not adopted hedge accounting as of
March 1, 2008. The charge to interest expense of $2,453 related to this agreement is a
non-cash item and is reported as interest expense on the statement of
earnings for the three months ended March 1, 2008.8.
    
    ACQUIRED INTANGIBLESThe following table reconciles the activity for goodwill by reporting unit for the three months
ended March 1, 2008.
 Industrial/Engine/Mobile
    
    
    EnvironmentalFiltration
    
    
    Filtration
    
    
    Packaging
    
    
    TotalBalance at December 1, 2007
    
    $
    24,185
    
    
    $
    100,533
    
    
    $
    
    
    
    $
    124,718Acquisitions
    
    
    14
    
    
    
    97,534
    
    
    
    
    
    
    
    97,548Currency translation adjustments
    
    
    (200
    )
    
    
    89
    
    
    
    
    
    
    
    (111
    )Balance at March 1, 2008
    
    $
    23,999
    
    
    $
    198,156
    
    
    $
    
    
    
    $
    222,155
 The following table summarizes acquired intangibles by reporting unit. Other acquired
intangibles includes parts manufacturer regulatory approvals, proprietary technology, patents
and noncompete agreements.
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8.
    
    ACQUIRED INTANGIBLES (Continued)
 Industrial/Engine/Mobile
    
    
    EnvironmentalFiltration
    
    
    Filtration
    
    
    Packaging
    
    
    TotalBalance at March 1, 2008:Trademarks, gross
    
    $
    942
    
    
    $
    40,957
    
    
    $
    
    
    
    $
    41,899Less accumulated amortization
    
    
    16
    
    
    
    252
    
    
    
    
    
    
    
    268Trademarks, net
    
    $
    926
    
    
    $
    40,705
    
    
    $
    
    
    
    $
    41,631Customer relationships, gross
    
    $
    2,175
    
    
    $
    32,976
    
    
    $
    
    
    
    $
    35,151Less accumulated amortization
    
    
    599
    
    
    
    4,176
    
    
    
    
    
    
    
    4,775Customer relationships, net
    
    $
    1,576
    
    
    $
    28,800
    
    
    $
    
    
    
    $
    30,376Other acquired intangibles, gross
    
    $
    243
    
    
    $
    33,884
    
    
    $
    
    
    
    $
    34,127Less accumulated amortization
    
    
    230
    
    
    
    6,777
    
    
    
    
    
    
    
    7,007Other acquired intangibles, net
    
    $
    13
    
    
    $
    27,107
    
    
    $
    
    
    
    $
    27,120
 Amortization expense is estimated to be $4,781 in 2008, $4,789 in 2009, $4,335 in 2010, $4,274
in 2011 and $4,274 in 2012.9.
    
    GUARANTEES AND WARRANTIESThe Company has provided letters of credit totaling approximately $24,316 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 accommodation 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.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 Companys warranty accrual during the three months ended March 1, 2008, are as
follows:
 Balance at December 1, 2007
    
    $
    1,485Business acquisitions
    
    
    817Accruals for warranties issued during the period
    
    
    233Accruals related to pre-existing warranties
    
    
    76Settlements made during the period
    
    
    (405
    )Other adjustments, including currency translation
    
    
    29Balance at March 1, 2008, included in other accrued liabilities
    
    $
    2,235
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10.
    
    RETIREMENT BENEFITSThe Company provides various retirement benefits, including defined benefit plans and
postretirement health care 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:
 Three Months EndedMarch 1,
    
    
    March 3,2008
    
    
    2007Pension Benefits:Components of net periodic benefit cost:Service cost
    
    $
    650
    
    
    $
    724Interest cost
    
    
    2,129
    
    
    
    1,792Expected return on plan assets
    
    
    (2,603
    )
    
    
    (2,143
    )Amortization of unrecognized:Prior service cost
    
    
    41
    
    
    
    44Net actuarial loss
    
    
    42
    
    
    
    302Net periodic benefit cost
    
    $
    259
    
    
    $
    719Cash contributions
    
    $
    326
    
    
    $
    108Postretirement Healthcare Benefits:Components of net periodic benefit cost:Service cost
    
    $
    
    
    
    $
    Interest cost
    
    
    15
    
    
    
    18Amortization of unrecognized:Prior service cost
    
    
    (31
    )
    
    
    (31
    )Net actuarial gain
    
    
    (33
    )
    
    
    (32
    )Net periodic benefit income
    
    $
    (49
    )
    
    $
    (45
    )Cash contributions
    
    $
    53
    
    
    $
    70
 The Companys 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 its
non-qualified plan when required for benefit payments and to contribute to its postretirement
benefit plan an amount equal to the benefit payments. The Company, from time to time, makes contributions in excess of the minimum amount required as
economic conditions warrant. The Company has not determined whether it will make any voluntary
contributions to its U.S. qualified plans in 2008; however, it does expect to fund $277 to the
U.S. non-qualified plan, $769 to the non-U.S. plan and $213 for the postretirement benefit plan
to pay benefits during 2008.11.
    
    CONTINGENCIESThe Company is involved in legal actions arising in the normal course of business.
Additionally, the Company is party to various proceedings relating to environmental issues. The
U.S. Environmental Protection Agency (EPA) and/or other responsible state agencies have
designated the Company as a
potentially responsible party (PRP), along with other companies, in remedial activities for the
cleanup of waste sites under the federal Superfund statute.
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11.
    
    CONTINGENCIES (Continued)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 extent of the contamination at issue, the difficulty in
determining the nature and extent of contamination, the length of time remediation may require,
the complexity of the environmental regulation and the continuing advancement of remediation
technology. Applicable federal law may impose joint and several liability on each PRP for the
cleanup.It is the opinion of management, after consultation with legal counsel, that additional
liabilities, if any, resulting from these legal or environmental issues, are not expected to
have a material adverse effect on the Companys financial condition or consolidated results of
operations.In the event of a change in control of the Company, termination benefits are likely to be
required for certain executive officers and other key employees.12.
    
    SEGMENT DATAThe Company operates in three principal product segments: Engine/Mobile Filtration,
Industrial/Environmental Filtration and Packaging. The segment data for the three months ended
March 1, 2008, and March 3, 2007, 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.
 Three Months EndedMarch 1,
    
    
    March 3,2008
    
    
    2007Net sales:Engine/Mobile Filtration
    
    $
    105,109
    
    
    $
    96,696Industrial/Environmental Filtration
    
    
    126,422
    
    
    
    96,239Packaging
    
    
    18,650
    
    
    
    16,595$
    250,181
    
    
    $
    209,530Operating profit:Engine/Mobile Filtration
    
    $
    22,342
    
    
    $
    20,277Industrial/Environmental Filtration
    
    
    4,285
    
    
    
    2,874Packaging
    
    
    1,112
    
    
    
    43027,739
    
    
    
    23,581Other income (expense)
    
    
    (3,509
    )
    
    
    261Earnings before income taxes and
minority earnings
    
    $
    24,230
    
    
    $
    23,842Identifiable assets:Engine/Mobile Filtration
    
    $
    253,377
    
    
    $
    234,783Industrial/Environmental Filtration
    
    
    626,816
    
    
    
    377,058Packaging
    
    
    43,614
    
    
    
    40,960Corporate
    
    
    35,266
    
    
    
    86,611$
    959,073
    
    
    $
    739,412
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13.
    
    RECENT ACCOUNTING PRONOUNCEMENTSIn December 2007, the FASB issued SFAS No. 141R, Business Combinations and SFAS No. 160,
Non-controlling Interests in Consolidated Financial Statements. The standards will affect the
Companys accounting for businesses acquired after December 1, 2009 and presentation of minority
interests in its consolidated financial statements 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
123(R). This statements requirement to recognize 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 comprehensive income was effective for
the Companys fiscal year 2007. SFAS No. 158 also requires measurement of the funded status of
a plan as of the date of the statement of financial position. The provisions regarding the
change in the measurement date are effective for the Companys fiscal year 2009.
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MANAGEMENTS DISCUSSION AND ANALYSIS  OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   Management Discussion Snapshot(Dollars in Thousands)Quarter to QuarterFirst Quarter and Three Months
    
    2008
    
    2007
    
    % ChangeNet Sales
    
    $
    250,181
    
    
    $
    209,530
    
    
    
    19.4
    %Operating Profit
    
    
    27,739
    
    
    
    23,581
    
    
    
    17.6
    %Operating Margin
    
    
    11.1
    %
    
    
    11.3
    %
    
    
    (0.2
    ) pts.Other Income/(Expense)
    
    
    (3,509
    )
    
    
    261
    
    
    
    (1,444.4
    )%Provision for Income Taxes
    
    
    7,941
    
    
    
    7,418
    
    
    
    7.1
    %Net Earnings
    
    
    16,149
    
    
    
    16,373
    
    
    
    (1.4
    )%Diluted Earnings per Share
    
    $
    0.32
    
    
    $
    0.32
    
    
    
    Average Diluted Shares Outstanding
    
    
    51,211,190
    
    
    
    51,955,610
    
    
    
    (1.4
    )%
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MANAGEMENTS DISCUSSION AND ANALYSIS  OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
  
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MANAGEMENTS DISCUSSION AND ANALYSIS  OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
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MANAGEMENTS DISCUSSION AND ANALYSIS  OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
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MANAGEMENTS DISCUSSION AND ANALYSIS  OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
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MANAGEMENTS DISCUSSION AND ANALYSIS  OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
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MANAGEMENTS DISCUSSION AND ANALYSIS  OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
   Payments Due by Period(Dollars in thousands)
    
    Total
    
    Less than 1 Year
    
    1-3 Years
    
    3-5 Years
    
    More than 5 YearsLong-Term Debt (excluding line of
credit)
    
    $
    17,682
    
    
    $
    264
    
    
    $
    211
    
    
    $
    1,387
    
    
    $
    15,820Interest Payable on Long-Term
Debt (excluding line of credit)
    
    
    9,600
    
    
    
    700
    
    
    
    1,400
    
    
    
    1,300
    
    
    
    6,200Line of Credit
    
    
    110,000
    
    
    
    
    
    
    
    
    
    
    
    110,000
    
    
    
    Interest Payable on Line of Credit
    
    
    21,500
    
    
    
    4,300
    
    
    
    8,600
    
    
    
    8,600
    
    
    
    Unfunded Pension Plan
    
    
    19,002
    
    
    
    277
    
    
    
    5,315
    
    
    
    12,569
    
    
    
    841Operating Leases
    
    
    39,669
    
    
    
    9,143
    
    
    
    14,737
    
    
    
    7,518
    
    
    
    8,271Total
    
    $
    217,453
    
    
    $
    14,684
    
    
    $
    30,263
    
    
    $
    141,374
    
    
    $
    31,132
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MANAGEMENTS DISCUSSION AND ANALYSIS  OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
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MANAGEMENTS DISCUSSION AND ANALYSIS  OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
 th
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MANAGEMENTS DISCUSSION AND ANALYSIS  OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Continued
 
    
    statements and assumptions relating to future growth, earnings, earnings per share
and other financial performance measures, as well as managements short-term and
long-term performance goals;
    
    statements relating to the anticipated effects on results of operations or financial
condition from recent and expected developments or events, including acquisitions;
    
    statements relating to the Companys business and growth strategies; and
    
    any other statements or assumptions that are not historical facts.
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We may not be able to successfully consolidate our operations with PECO.
  
    
    the loss of key employees and customers;
    
    the focus of managements attention on the assimilation of Peco and its employees
and on the management of the combined Peco and Facet operations;
    
    the incorporation of acquired products into our product line;
    
    possible inconsistencies in standards, control procedures and policies;
    
    the failure to realize expected synergies;
    
    the possibility that we have acquired substantial undisclosed liabilities; and/or
    
    problems from the assimilation of new operations, sites or personnel, which could
divert resources from regular operations.
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COMPANY PURCHASES OF EQUITY SECURITIES (1)(c)Totalnumber of
    
    (d)shares
    
    Approximatepurchased
    
    dollar value ofas part of
    
    shares that may(a)
    
    (b)
    
    publicly
    
    yet beTotal number
    
    Average
    
    announced
    
    purchasedof shares
    
    price paid
    
    plans or
    
    under the plansPeriod
    
    purchased
    
    per share
    
    programs
    
    or programsDecember 2, 2007 through December 31,
2007
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    224,470,578January 1,
2008 through January 31, 2008
    
    
    373,100
    
    
    $
    36.46
    
    
    
    373,100
    
    
    $
    210,866,467February 1, 2008 through March 1, 2008
    
    
    626,900
    
    
    $
    37.74
    
    
    
    626,900
    
    
    $
    187,210,241Total
    
    
    1,000,000
    
    
    
    
    
    
    
    1,000,000
 
 (1)
    
    Stock Repurchase Program announced June 25, 2007, for aggregate purchases up to $250 million. Program expires June 25, 2010.  a.
    
    Exhibits:
 31(i)
    
    Certification of Norman E. Johnson pursuant to Section
302 of the Sarbanes-Oxley Act of 200231(ii)
    
    Certification of Bruce A. Klein pursuant to Section 302
of the Sarbanes-Oxley Act of 200232(i)
    
    Certification pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
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SIGNATURES
  CLARCOR Inc.
(Registrant)March
25, 2008
    
    By
    /s/ Norman E. Johnson(Date)
    
    
    Norman E. JohnsonChairman of the Board, President and
Chief Executive OfficerMarch
25, 2008
    
    By
    /s/ Bruce A. Klein(Date)
    
    
    Bruce A. KleinVice President  Finance and
Chief Financial Officer Page 30