UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)    OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended November 28, 2009

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.

(Exact name of registrant as specified in its charter)

DELAWARE		36-0922490
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

840 Crescent Centre Drive, Suite 600, Franklin, TN		37067
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code:		615-771-3100

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange   on which registered
Common Stock, par value $1.00 per share		New York Stock Exchange
Preferred Stock Purchase Rights		New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes 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. Yes o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		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

The aggregate market value of the Common Stock held by non-affiliates computed by reference to the price at which the Common Stock was last sold as of the last business day of registrant’s most recently completed second fiscal quarter was $1,247,744,167.

There were 50,415,958 shares of Common Stock outstanding as of January 15, 2010.

DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of the registrant’s Proxy Statement for the 2010 Annual Meeting of Shareholders (“Proxy Statement”), currently anticipated to be held on March 23, 2010, are incorporated by reference in Part III of this Annual Report on Form 10-K. Such Proxy Statement will be filed with the Securities and Exchange Commission not later than 120 days after the conclusion of the registrant’s fiscal year ended November 28, 2009.

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		Page
PART I
Item 1. Business			1
Item 1A. Risk Factors			7
Item 1B. Unresolved Staff Comments			11
Item 2. Properties			11
Item 3. Legal Proceedings			14
Item 4. Submission of Matters to a Vote of Security Holders			15
Additional Item Executive Officers of the Registrant			15
PART II
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters, Issuer Purchase of Equity Securities and Five Year Performance of the Company			16
Item 6. Selected Financial Data			18
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			18
Item 7A. Quantitative and Qualitative Disclosures About Market Risk			31
Item 8. Financial Statements and Supplementary Data			32
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			32
Item 9A. Controls and Procedures			32
Item 9B. Other Information			32
PART III
Item 10. Directors, Executive Officers and Corporate Governance			33
Item 11. Executive Compensation			33
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			33
Item 13. Certain Relationships and Related Transactions, and Director Independence			33
Item 14. Principal Accounting Fees and Services			33
PART IV
Item 15. Exhibits and Financial Statement Schedules			34
SIGNATURES			37

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PART I

(a) General Development of Business

CLARCOR Inc. (“CLARCOR”) was organized in 1904 as an Illinois corporation and in 1969 was reincorporated in the State of Delaware. As used herein, the “Company” and terms such as “we” or “our” refers to CLARCOR and its subsidiaries unless the context otherwise requires.

The Company’s fiscal year ends on the Saturday closest to November 30. For fiscal year 2009, the year ended on November 28, 2009 and included 52 weeks. For fiscal year 2008, the year ended on November 29, 2008 and included 52 weeks. For fiscal year 2007, the year ended December 1, 2007 and included 52 weeks. In this 2009 Annual Report on Form 10-K (“2009 Form 10-K”), all references to fiscal years are shown to begin on December 1 and end on November 30 for clarity of presentation.

Certain Significant Developments

Acquisitions

As reported in our previous SEC filings, the Company completed the following six acquisitions during fiscal year 2009.

On December 29, 2008 (which is part of fiscal year 2009), the Company purchased the Keddeg Company, a manufacturer of aerospace filtration products based in Lenexa, Kansas. The purchase price was approximately $5,570,000 excluding cash acquired and including acquisition costs. The business is included in the Industrial/Environmental Filtration segment from the date of acquisition.

On January 16, 2009, the Company purchased certain assets of Meggitt (UK) Limited (“Meggitt”), for approximately $578,000. The Company expects to make an additional payment in 2010 of approximately $146,000 to the former owner of the Meggitt assets contingent upon the renewal of a contract with a customer. This business was acquired to expand the Company’s product range of aerospace filters sold primarily to European aircraft manufacturers and aerospace parts distributors. The business is included in the Industrial/Environmental Filtration segment from the date of acquisition.

On February 1, 2009, the Company purchased an 85% ownership interest 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 $618,000. The Company has the right, but not the obligation, to purchase the remaining 15% ownership interest using a formula based on the combined companies’ future operating results. The businesses are included in the Industrial/Environmental Filtration segment from the date of acquisition.

On April 6, 2009, the Company purchased Weifang Yuhua Filters Ltd. (“Yuhua”), based in Weifang, China for approximately $643,000. Yuhua manufactures heavy-duty engine filters. The business is included in the Engine/Mobile Filtration segment from the date of acquisition.

On April 20, 2009, the Company purchased the remaining 20% minority interest in its consolidated subsidiary based in Weifang, China for approximately $4,592,000. This subsidiary is part of the Company’s 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.

HVAC Production Restructuring (CLC Air)

In July 2006, the Company announced a major restructuring of its heating, ventilating and air conditioning (“HVAC”) production at CLARCOR Air Filtration Products, Inc. (“CLC Air”) within its Industrial/Environmental Filtration segment. This restructuring was substantially completed in fiscal year 2009. This restructuring is anticipated to cost approximately $26 million in capital investment and expense over four years, (substantially all of which had been incurred by the end of fiscal year 2009) and result in a $14 million annual increase in operating profits of the Company’s Industrial/Environmental Filtration segment by the end of fiscal year 2010. The Company hopes to achieve these profit increases by the end of 2010 by more fully

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automating its HVAC filter production processes and more rationally locating its production facilities throughout the United States. As part of this restructuring, the Company closed one CLC Air plant in North Carolina and one plant in Iowa during fiscal year 2008 and in fiscal year 2009 closed a small plant in Clover, South Carolina and consolidated four Louisville, Kentucky area facilities into one location in Jeffersonville, Indiana. The Company expects continued progress in executing the restructuring program as the CLC Air facilities receive and install new equipment, improve production processes and train their employees.

Residential HVAC

As disclosed in our quarterly report on Form 10-Q filed on September 18, 2009, we ceased supplying residential HVAC filters to 3M Company (“3M”) during fiscal year 2009 and launched our own retail initiative for residential HVAC filters under our Purolator® brand. In early 2009, a large national retailer agreed to offer our products in approximately 120 of its stores in the Southeastern United States on a trial basis. Although we believe the test went well and that we exceeded all applicable targets for price, delivery and quality, we were ultimately unable to displace the incumbent supplier. Nonetheless, we are continuing to develop our retail HVAC business and are optimistic about our prospects in this area.

(b) Financial Information About Industry Segments

During fiscal year 2009, the Company conducted business in three principal industry segments: (1) Engine/Mobile Filtration, (2) Industrial/Environmental Filtration and (3) Packaging. These segments are discussed in greater detail below. Financial information for each of the Company’s business segments for the fiscal years 2007 through 2009 is included in Note P to Notes to Consolidated Financial Statements. See pages F-34 through F-36 in this 2009 Form 10-K.

(c) Narrative Description of the Business

Engine/Mobile Filtration

The Company’s Engine/Mobile Filtration segment sells filtration products used on engines and in mobile equipment applications, including trucks, automobiles, buses and locomotives, and marine, construction, industrial, mining and agricultural equipment. The segment’s filters are sold throughout the world, primarily in the replacement market. In addition, some “first-fit” filters are sold to original equipment manufacturers. At one of the Engine/Mobile Filtration segment plants, the Company also manufactures dust collection cartridges, including cartridges incorporating the Company’s Protura® nanofiber filtration media. These cartridges are used in environmental filtration applications.

The products in the Engine/Mobile Filtration segment include a full line of oil, air, fuel, coolant, transmission and hydraulic fluid filters which are used in a wide variety of applications and in processes where filter efficiency, reliability and durability are essential. Most of these applications involve a process where impure air or fluid flows through semi-porous paper, corrugated paper, cotton, synthetic, chemical or membrane filter media with varying filtration efficiency characteristics. The impurities contained on the media are disposed of when the filter is changed.

The Company’s sale of filtration products for use in automobiles occurs exclusively in the replacement market (i.e., the Company does not sell “first-fit” automotive filters to automobile manufacturers). The Company does provide filtration products and services directly to automobile manufacturers for use in their manufacturing facilities but not for use in the vehicles that are manufactured in these facilities. A decrease or complete loss of the Company’s sales directly to automobile manufacturers for use in their manufacturing facilities would not be expected to have a material effect on the Company’s financial performance.

Industrial/Environmental Filtration

The Company’s Industrial/Environmental Filtration segment centers around the manufacturing and marketing of filtration products used in industrial and commercial processes, and in buildings and infrastructures of various types. The segment’s products are sold throughout the world, and include liquid process filtration products and air filtration products and systems used to maintain high interior air quality and to control exterior pollution.

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The segment’s liquid process filtration products include specialty industrial process liquid filters; filters for pharmaceutical processes and beverages; filtration systems, filters and coalescers for the oil and natural gas industry; filtration systems for aircraft refueling, anti-pollution, sewage treatment and water recycling; bilge water separators; sand control filters for oil and gas drilling; and woven wire and metallic products for filtration of plastics and polymer fibers. These filters use a variety of string wound, meltblown, and porous and sintered and non-sintered metal media, woven wire, and absorbent media.

The segment’s air filtration products represent a complete line of air filters and cleaners, including antimicrobial treated filters and high efficiency electronic air cleaners. These products are used in commercial buildings, hospitals, factories, residential buildings, paint spray booths, gas turbine systems, medical facilities, motor vehicle cabins, aircraft cabins, clean rooms, compressors and dust collector systems.

Packaging

The Company’s consumer and industrial packaging products business is conducted by a wholly-owned subsidiary, J.L. Clark, Inc. (“J.L. Clark”).

J.L. Clark manufactures a wide variety of different types and sizes of containers and packaging specialties. Metal, plastic and combination metal/plastic containers and closures manufactured by the Company are used in packaging a wide variety of dry and paste form products, such as food specialties (e.g., tea, coffee, spices, cookies, candy, mints and other confections); tobacco products; toiletries; playing cards; cosmetics and pharmaceuticals. Other packaging products include shells for dry batteries, canisters for film and candles, spools for insulated and fine wire, and custom decorated flat metal sheets.

Containers and packaging specialties are manufactured only upon orders received from customers, and individualized containers and packaging specialties are designed and manufactured, usually with distinctive decoration, to meet each customer’s marketing and packaging requirements and specifications.

Distribution

Products in both the Engine/Mobile Filtration and Industrial/Environmental Filtration segments are sold primarily through a combination of independent distributors, dealers for original equipment manufacturers, retail stores and directly to end-use customers such as truck and equipment fleet users, manufacturing companies and contractors. In addition, both segments distribute products worldwide through their respective foreign subsidiaries and through export sales from the United States to end-use customers.

In the Packaging segment, J.L. Clark uses an internal sales force and sells its products directly to customers for containers and packaging specialties. Each salesperson is trained in J.L. Clark’s manufacturing processes with respect to the products sold and to consult with customers and prospective customers concerning the details of their particular requirements. In addition, salespersons with expertise in specific areas, such as flat-sheet decorating, are focused on specific customers and markets.

Financial information related to the geographic areas in which the Company operates and sells its products is included in Note P to Notes to Consolidated Financial Statements. See pages F-34 through F-36 in this 2009 Form 10-K.

Class of Products

No class of similar products accounted for 10% or more of the total sales of the Company in any of the Company’s last three fiscal years.

Raw Materials

The primary raw materials the Company uses to manufacture its products include various types of steel, adhesives, plastic and paper products and filter medias made from materials such as wood pulps, metals, polyester and other synthetic fibers, fiberglass and cotton. All of these are purchased and are available from a variety of sources. The Company experienced price volatility again in fiscal year 2009, although the volatility was not as severe as fiscal year 2008. During the first quarter of fiscal year 2009, many raw material prices were lower than at any time in fiscal year 2008. However, raw material prices increased significantly beginning in the third and fourth quarter of fiscal year 2009. The Company was able to procure adequate supplies of raw materials throughout fiscal year 2009 and does not anticipate procurement problems in 2010.

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Patents, Trademarks and Trade names

Certain features of some of the Company’s products are covered by domestic and, in some cases, foreign patents or patent applications. While these patents are valuable and important for certain products, the Company does not believe that its competitive position is dependent upon patent protection, although as discussed under the heading of “Risk Factors”, the Company believes that patent-related litigation may become more commonplace across all of its business segments, particularly with respect to its engine aftermarket business.

With respect to trademarks and trade names, the Company believes that the trademarks and trade names it uses in connection with certain products (such as “Baldwin”, “Purolator,” “Peco” and “Facet”) are valuable and significant to its business.

Seasonality

In general, the Company’s products and service offerings are not seasonal in nature, although certain of our operating companies in all our segments experience modest seasonal increases and decreases with respect to products and services supplied to particular end-use customers or industries. These shifts are normally not material to the Company on a consolidated basis.

Customers

The largest 10 customers of the Engine/Mobile Filtration segment accounted for 25% of the approximately $373,295,000 of fiscal year 2009 sales of such segment.

The largest 10 customers of the Industrial/Environmental Filtration segment accounted for 10% of the approximately $461,000,000 of fiscal year 2009 sales of such segment.

The largest 10 customers of the Packaging segment accounted for 73% of the approximately $73,453,000 of fiscal year 2009 sales of such segment.

No single customer accounted for 10% or more of the Company’s consolidated fiscal year 2009 sales.

Backlog

At November 30, 2009, the Company had a backlog of firm orders for products of approximately $109,653,000. The backlog figure for November 30, 2008 was approximately $116,972,000. Substantially all of the orders on hand at November 30, 2009 are expected to be filled during fiscal year 2010. The Company does not view its backlog as being insufficient, excessive or problematic, or a significant indication of fiscal year 2010 sales.

Competition

The Company encounters strong competition in the sale of all of its products. The Company competes in a number of filtration markets against a variety of competitors. The Company is unable to state its relative competitive position in all of these markets due to a lack of reliable industry-wide data. However, in the replacement market for heavy-duty liquid and air filters used in internal combustion engines, the Company believes that it is among the top five companies worldwide measured by annual sales. In addition, the Company believes that it is a leading manufacturer of liquid and air filters for diesel locomotives. The Company believes that for industrial and environmental filtration products, it is among the top ten companies worldwide measured by annual sales, and is a market leader with respect to filtration products used in the oil and gas industries.

In the Packaging segment, the Company’s principal competitors include several manufacturers that often compete on a regional basis only and whose specialty packaging segments are smaller than the Company’s. Strong competition is also presented by manufacturers of paper, plastic and glass containers. The Company’s competitors generally manufacture and sell a wide variety of products in addition to packaging products of the type produced by the Company and do not publish separate sales figures relative to these competitive products. Consequently, the Company is unable to state its relative competitive position in those markets.

The Company believes that it is able to maintain its competitive position because of the quality and breadth of its products and services and the broad geographic scope of its operations. The Company’s products primarily compete on the basis of price, performance, speed of delivery, quality and customer support.

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Product Development

The Company develops products on its own and in consultation or partnership with its customers. In addition to product testing and development that occurs at the Company’s various subsidiaries, the Company maintains the CLARCOR Filtration Research Center, a standalone research and development center in Forrest Park, Ohio (“CFRC”). The Company’s laboratories, including the CFRC, test product components and completed products to insure high-quality manufacturing results, evaluate competitive products, aid suppliers in the development of product components, and conduct controlled tests of newly designed filters, filtration systems and packaging products for particular uses. Product development is concerned with the improvement and creation of new filters and filtration media, filtration systems, containers and packaging products in order to increase their performance characteristics, broaden their respective uses and counteract obsolescence.

In fiscal year 2009, the Company employed approximately 89 professional employees, including 4 at the CFRC, on either a full-time or part-time basis on research activities relating to the development of new products or the improvement or redesign of its existing products. During this period the Company spent approximately $9,595,000 on such activities as compared with $9,343,000 for fiscal year 2008 and $8,996,000 for fiscal year 2007.

Environmental Factors

The Company is not aware of any facts which would cause it to believe that it is in material violation of existing applicable standards with respect to emissions to the atmosphere, discharges to waters, or treatment, storage and disposal of solid or hazardous wastes.

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.

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 $50,000. 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, the length of time remediation may require, the complexity of environmental regulation and the continuing advancement of remediation technology. Applicable federal law may impose joint and several liability on each PRP for the cleanup of a contaminated site.

The Company does anticipate, however, that it may be required to install additional pollution control equipment to augment or replace existing equipment in the future in order to meet applicable environmental standards. The Company is presently unable to predict the timing or the cost of any project of this nature and cannot give any assurance that the cost of such projects may not have a material adverse effect on earnings. However, the Company is not aware, at this time, of any other additional significant current or pending requirements to install such equipment at any of its facilities.

Employees

As of November 30, 2009, the Company had approximately 4,958 employees.

(d) Financial Information About Foreign and Domestic Operations and Export Sales

Financial information relating to export sales and the Company’s operations in the United States and other countries is included in Note P to Notes to Consolidated Financial Statements. As noted therein, total international sales for the Company in fiscal year 2009 were $273,691,000. See page F-36 in this 2009 Form 10-K. In addition, see “Item 1A — Risk Factors” below for a discussion of certain risks of foreign operations.

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(e) Available Information

The Company’s Internet address is www.clarcor.com. The Company makes available, free of charge, on this website, its annual report on Form 10-K, its quarterly reports on Form 10-Q, its current reports on Form 8-K and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after such forms are electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”). In addition, the following corporate governance documents can be found on this website: (a) charters for the Audit Committee, the Director Affairs/Corporate Governance Committee and the Compensation Committee of the Board of Directors; (b) Corporate Conduct Guidelines; (c) Code of Ethics for Senior Financial Officers, which includes the Chief Executive Officer; (d) Corporate Governance Guidelines; (e) Disclosure Controls and Procedures; (f) Procedures Regarding Reports of Misconduct or Alleged Misconduct; (g) the Company’s By-Laws; (h) Instructions for Communication with Directors, and (i) Insider Trading Policy. Copies of all of these documents can also be obtained, free of charge, upon written request to the Corporate Secretary, CLARCOR Inc., 840 Crescent Centre Drive, Suite 600, Franklin, TN 37067. The information contained on the Company’s website is not incorporated herein or otherwise considered to be a part of this 2009 Form 10-K.

The public may read and copy any materials that the Company files with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, N.E., Washington D.C. 20549. Information regarding the SEC’s Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy, information statements and other information and can be found at www.sec.gov.

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Our business faces a variety of risks. These risks include those described below and may include additional risks and uncertainties not presently known to us or that we currently deem immaterial. If any of the events or circumstances described in the following risk factors occur, our business, financial condition or results of operations may suffer, and the trading price of our common stock could decline. These risk factors should be read in conjunction with the other information in this 2009 Form 10-K.

  Our business is affected by the health of the markets we serve.

Our financial performance depends, in large part, on varying conditions in the markets that we serve, particularly the general industrial and trucking markets. Demand in these markets fluctuates in response to overall economic conditions and is particularly sensitive to changes in fuel costs, although the replacement nature of our products helps mitigate the effects of these changes. In addition, a continued general economic downturn may have an adverse effect on sales of more expensive filtration systems and products, such as capital equipment sold by Perry Equipment Corporation (which may be affected by a decrease in the cost of oil and natural gas), United Air Specialists and our Facet companies. A continued economic downturn in the markets we serve may result in reductions in sales and pricing of our products, which could reduce future earnings and cash flow.

  Adverse macroeconomic and business conditions may significantly and negatively affect our revenues,   profitability and results of operations.

Economic conditions in the United States and in foreign markets in which we operate could substantially affect our sales and profitability. Economic activity in the United States and throughout much of the world remains depressed following the recent housing downturn and subprime lending collapse. Global credit and capital markets have experienced unprecedented volatility and disruption. Business credit and liquidity continues to be tight in much of the world. Some of our suppliers and customers are facing credit issues and could experience cash flow problems and other financial hardships. Consumer confidence and spending are down significantly.

Recent changes in governmental banking, monetary and fiscal policies to restore liquidity and increase credit availability may not be effective. It is difficult to determine the breadth and duration of the economic and financial market problems and the many ways in which such problems may continue to affect our suppliers, customers and our business in general. Nonetheless, continuation or worsening of these difficult financial and macroeconomic conditions could have a significant adverse effect on our sales, profitability and results of operations.

  Our access to borrowing capacity could be affected by the uncertainty impacting credit markets generally.

As a result of current economic conditions, credit markets continue to be tight such that the ability to obtain new capital has become more challenging and more expensive in comparison to recent years. In addition, several large financial institutions have either recently failed or been dependent on the assistance of the U.S. federal government to continue to operate as a going concern. Although we believe that the banks under our credit facility have adequate capital and resources, we can provide no assurance that all of these banks will continue to operate as a going concern in the future. If any of the banks in the lending group of our credit facility were to fail, it is possible that the borrowing capacity under our credit facility would be reduced. In the event that the availability under our credit facility were reduced significantly, we could be required to obtain capital from alternate sources in order to finance our capital needs. Our options for addressing such capital constraints would include, but not be limited to (i) obtaining commitments from the remaining banks in the lending group or from new banks to fund increased amounts under the terms of our credit facility, (ii) accessing the public capital markets, or (iii) delaying certain of our existing development projects. If it became necessary to access additional capital, it is likely that any such alternatives in the current market would be on terms less favorable than under our existing credit facility terms, which could have a material effect on our consolidated financial position, results of operations, or cash flows.

  Our manufacturing operations are dependent upon third-party suppliers.

We obtain materials and manufactured components from third-party suppliers. Although the majority of these materials and components can be obtained from multiple sources, and while we historically have not suffered any significant limitations on our ability to procure them, any delay in our suppliers’ abilities to provide

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us with necessary materials and components may affect our capabilities at a number of our manufacturing locations. Delays in obtaining supplies may result from a number of factors affecting our suppliers, including capacity constraints, labor disputes, the impaired financial condition of a particular supplier, suppliers’ allocations to other purchasers, weather emergencies or acts of war or terrorism. Any delay in receiving supplies could impair our ability to deliver products to our customers and, accordingly, could have a material adverse effect on our business, results of operations and financial condition.

  We could be adversely impacted by environmental laws and regulations.

Our operations are subject to U.S. and non-U.S. environmental laws and regulations governing emissions to air; discharges to water; the generation, handling, storage, transportation, treatment and disposal of waste materials; and the cleanup of contaminated properties. Currently, we believe that environmental costs with respect to our former or existing operations are not material, but there is no assurance that we will not be adversely impacted by such costs, liabilities or claims in the future, either under present laws and regulations or those that may be adopted or imposed in the future.

  Our operations outside of the United States are subject to political, investment and local business risks.

Approximately 30% of our sales result from exports to countries outside of the United States and from sales of our foreign business units. As part of our business strategy, we expect to expand our international operations through internal growth and acquisitions. Sales and operations outside of the United States, particularly in emerging markets, are subject to a variety of risks which are different from or additional to the risks the Company faces within the United States. Among others, these risks include:

The occurrence of one or more of the foregoing factors could have a material adverse effect on our international operations or on our financial condition and results of operations.

  We face significant competition in the markets we serve.

The markets in which we operate are highly competitive and highly fragmented. We compete worldwide with a number of other manufacturers and distributors that produce and sell similar products. Our products primarily compete on the basis of price, performance, speed of delivery, quality and customer support. Some of

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our competitors are companies, or divisions or operating units of companies, that have greater financial and other resources than we do. Any failure by us to compete effectively in the markets we serve could have a material adverse effect on our business, results of operations and financial condition.

  Increasing costs for manufactured components, raw materials, transportation, health care and energy prices may adversely affect our profitability.

We use a broad range of manufactured components and raw materials in our products, including raw steel, steel-related components, filtration media, resins, plastics, paper and packaging materials. Materials comprise the largest component of our costs, representing over 40% of the costs of our net sales in fiscal year 2009. Increases in the price of these items could further materially increase our operating costs and materially adversely affect our profit margins. Similarly, transportation, energy and health care costs have risen steadily over the past few years and represent an increasingly important burden for the Company. Although we try to contain these costs wherever possible, and although we try to pass along increased costs in the form of price increases to our customers, we may be unsuccessful in doing so for competitive reasons, and even when successful, the timing of such price increases may lag significantly behind our incurrence of higher costs.

  We face heightened legal challenges from our competitors with respect to intellectual property, particularly with respect to patents relevant to our Engine/Mobile Filtration segment.

We face increasing exposure to claims by others for infringement of intellectual property rights, particularly with respect to patents that are alleged to apply to our aftermarket products, which claims could result in significant costs or losses. This is especially important with respect to our Engine/Mobile Filtration segment, where many of our competitors are suppliers of “first-fit” products to original equipment manufacturers (OEMs) and seek to control or at least gain an advantage in the aftermarket through aggressive and comprehensive patent strategies, sometimes in conjunction with the OEMs. These strategies may involve attempting to obtain as many patents as possible, including particularly with respect to the systems for attaching or sealing filters to their respective housings, deliberately delaying the final issuance of patents so as to be able to modify them in response to competitive product designs, and seeking multiple “continuations” of their patents in an attempt to have their patents more clearly apply to competitive product designs. While we spend (and will continue to spend) significant resources to combat these strategies, including by creating alternative designs that fall outside of our competitors’ patents, challenging patents which we believe to be invalid and attempting to build our own patent portfolio, there can be no guaranty that we will be successful. Any such failure could have a material adverse effect on the financial condition or prospects of the Company.

  We face heightened legal challenges with respect to protecting our own intellectual property, particularly overseas.

We have developed and actively pursue developing proprietary technology in the industries in which we operate, and rely on intellectual property laws and a number of patents to protect such technology. In doing so, we incur ongoing costs to enforce and defend our intellectual property. Despite our efforts in this regard, we may face situations where our own intellectual property rights are invalidated or circumvented, to our material detriment. This is of particular concern in China, where we anticipate the market for our products to develop substantially, and, with it, the incentive of third parties to infringe or challenge our intellectual property rights.

  Our success depends in part on our development of improved products, and we may fail to meet the needs of customers on a timely or cost-effective basis.

Our continued success depends on our ability to maintain technological capabilities, machinery and knowledge necessary to adapt to changing market demands as well as to develop and commercialize innovative products, such as innovative filtration media and higher efficiency filtration systems. We may not be able to develop new products as successfully as in the past or be able to keep pace with technological developments by our competitors and the industry generally. In addition, we may develop specific technologies and capabilities in anticipation of customers’ demands for new innovations and technologies. If such demand does not materialize, we may be unable to recover the costs incurred in such programs. If we are unable to recover these costs or if any such programs do not progress as expected, our business, financial condition or results of operations could be materially adversely affected.

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  The introduction of new and improved products and services could reduce our future sales.

Substantial changes or technological developments in the industries in which our products are used could reduce sales if these changes negatively impact the need for our products. For example, improvements in engine technology may reduce the need to make periodic filter changes and thus negatively impact our aftermarket filter sales for such engines.

  Our ability to operate effectively could be impaired if we fail to attract and retain key personnel.

Our ability to operate our business and implement our strategies depends, in part, on the efforts of our executive officers and other key employees. Our management philosophy of cost-control means that we operate what we consider to be a very lean company with respect to personnel, and our commitment to a less centralized organization (discussed further below) also places greater emphasis on the strength of local management. Our future success will depend on, among other factors, our ability to attract and retain other qualified personnel, particularly management, research and development engineers and technical sales professionals. The loss of the services of any of our key employees or the failure to attract or retain other qualified personnel, domestically or abroad, could have a material adverse effect on our business or business prospects.

  Our acquisition strategy may be unsuccessful.

As part of our growth strategy, we plan to pursue the acquisition of other companies, assets and product lines that either complement or expand our existing business. We may be unable to find or consummate future acquisitions at acceptable prices and terms. We continually evaluate potential acquisition opportunities in the ordinary course of business, including those that could be material in size and scope. Acquisitions involve a number of special risks and factors, including:

Although we conduct what we believe to be a prudent level of investigation regarding the operating and financial condition of the businesses we purchase, an unavoidable level of risk remains regarding the actual operating condition of these businesses. Until we actually assume operating control of these business assets and their operations, we may not be able to ascertain the actual value or understand the potential liabilities of the acquired entities and their operations. This is particularly true with respect to non-U.S. acquisitions.

We compete for potential acquisitions based on a number of factors, including price, terms and conditions, size and ability to offer cash, stock or other forms of consideration. In pursuing acquisitions, we compete against other strategic and financial buyers, some of which are larger than we are and have greater financial and other resources than we have. Increased competition for acquisition candidates could result in fewer acquisition opportunities for us and higher acquisition prices. In addition, the negotiation of potential acquisitions may require members of management to divert their time and resources away from our operations.

  We are a decentralized company, which presents certain risks.

The Company is relatively decentralized in comparison with its peers. While we believe this practice has catalyzed our growth and enabled us to remain responsive to opportunities and to our customers’ needs, it necessarily places significant control and decision-making powers in the hands of local management. This

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presents various risks, including the risk that we may be slower or less able to identify or react to problems affecting a key business than we would in a more centralized environment. In addition, it means that “company-wide” business initiatives, such as the integration of disparate information technology systems, are often more challenging and costly to implement, and their risk of failure higher, than they would be in a more centralized environment. Depending on the nature of the initiative in question, such failure could materially adversely affect our business, financial condition or results of operations.

Item 1B. Unresolved Staff Comments.

The Company has no unresolved SEC comments.

Item 2. Properties.

The various properties owned and leased by the Company and its operating units are considered by it to be in generally good repair and well maintained. Plant asset additions in fiscal year 2010 are estimated at $40 million for land, buildings, furniture, production equipment and machinery, and computer and communications equipment.

The following is a description of the real property owned or leased by the Company or its affiliated entities, broken down by business segment. All acreage and square foot measurements are approximate.

Corporate Headquarters

The Company’s corporate headquarters are located in Franklin, Tennessee, and housed in 23,000 sq ft of office space under lease to the Company. The Company also owns a parcel of undeveloped land in Rockford, Illinois totaling 6 acres. The Company also leases approximately 14,400 square feet of space in Forrest Park, Ohio, which is occupied by the CFRC.

Engine/Mobile Filtration Segment

United States Facilities

Location		Approximate Size		Owned or Leased
Gothenburg, NE		19 acre site with 100,000 sq ft of manufacturing space.		Owned
Kearney, NE		42 acre site with 516,000 sq ft of manufacturing and warehousing space, 25,000 sq ft of research and development space and 40,000 sq ft of office space.		Owned
Lancaster, PA		11.4 acre site with 160,000 sq ft of manufacturing and office space.		Owned
Yankton, SD		20 acre site with 170,000 sq ft of manufacturing space.		Owned

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International Facilities

Location		Approximate Size		Owned or Leased
Warrington, Cheshire, England		4 acre site with two facilities totaling 71,000 sq feet for manufacturing, warehousing and office space.		Leased
Weifang, People’s Republic of China*		14 buildings, constituting 300,000 sq ft of manufacturing, warehousing and office space.		Leased
Queretaro, Mexico		3 acre site with 76,000 sq ft of manufacturing, warehousing and office space.		Owned
Casablanca, Morocco		4 acre site with 95,000 sq ft of manufacturing, warehousing and office space.		Owned
Weifang, People’s Republic of China**		105,000 sq ft of manufacturing, warehousing and office space.		Leased

In addition to the above properties, the Engine/Mobile Filtration segment leases and operates smaller facilities in Australia, Belgium, South Africa and the United Kingdom in order to manufacture and/or distribute applicable filtration products.

Industrial/Environmental Filtration Segment

United States Facilities

Location		Approximate Size		Owned or Leased
Auburn Hills, MI		44,222 sq ft of warehousing and office space.		Leased
Blue Ash, OH		17 acre site with 157,000 sq ft of manufacturing and office space.		Owned
Campbellsville, KY		100 acre site with 242,000 sq ft of manufacturing and office space.		Owned
Corona, CA		84,000 sq feet of manufacturing, warehousing and office space.		Leased
Dallas, TX		83,500 sq feet of manufacturing, warehousing and office space.		Leased
Greensboro, NC		21 acre site with 88,000 sq ft of manufacturing, warehousing and office space.		Owned
		97,000 sq ft of manufacturing, warehousing and office space.		Owned
Goodlettsville, TN		35,000 sq ft of warehouse space.		Owned
Houston, TX		88,000 sq ft of manufacturing, warehousing and office space.		Leased
Houston, TX		14,000 sq ft of warehousing and office space.		Leased
Jeffersonville, IN		450,000 sq feet of manufacturing, warehousing and office space.		Leased
Lenexa, KS		18,000 sq feet of warehousing and office space.		Leased
Mineola, NY		5 buildings totaling approx 31,000 sq ft of manufacturing and office space.		Leased
Mineral Wells, TX		46 acre site with 351,000 sq feet of manufacturing, warehousing and office space.		Owned
		35,000 sq ft of warehousing space.		Leased
Ottawa, KS		41,000 sq ft of manufacturing and office space.		Owned

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Location		Approximate Size		Owned or Leased
Pittston, PA		250,000 sq feet of manufacturing, warehousing and office space.		Leased
Sacramento, CA		108,000 sq feet of manufacturing, warehousing and office space.		Leased
		40,000 sq feet of manufacturing, warehousing and office space.		Owned
Shelby, NC		48,000 sq ft of manufacturing, warehousing and office space.		Owned
Tulsa, OK		16 acre site with 142,000 sq ft of manufacturing and office space.		Owned

International Facilities

Location		Approximate Size		Owned or Leased
Calgary, Alberta, Canada		25,000 sq feet of manufacturing, warehousing and office space.		Owned
St. Catharines, Ontario, Canada		25,000 sq ft of warehouse space. Right to occupy 40,000 sq ft total (15,000 sq ft currently being sublet).		Leased
La Coruña, Spain		4 acre site with 61,000 sq ft of manufacturing and office space.		Owned
Pujiang City, People’s Republic of China		53,819 sq ft of manufacturing, warehousing and office space.		Leased
Queretaro, Mexico		5 acre site with 108,000 sq ft of manufacturing, warehousing and office space.		Owned
Quzhou, People’s Republic of China		215,278 sq ft of manufacturing, warehousing and office space		Leased

In addition to the above properties, the Industrial/Environmental Filtration segment leases and operates smaller facilities in the following locations in order to manufacture, distribute and/or service applicable filtration products: United States: Atlanta, GA; Auburn, WA; Birmingham, AL; Evansville, WY; Chantilly, VA; Hamilton, OH; Clover, SC; Columbus, OH; Commerce City, CO; Dallas, TX; Farmington, NM; Fresno, CA; Hayward, CA; Houston, TX; Jackson, MS; Kansas City, MO; Louisville, KY; Butler, WI; Shakopee, MN; Phoenix, AZ; Portland, OR; Sacramento, CA; Stillwell, OK; Tulsa, OK; Vernal, UT; Wichita, KS. International: Canada; China; France; Germany; Italy; Malaysia; Netherlands; Singapore; United Kingdom.

Packaging Segment.

Location		Approximate Size		Owned or Leased
Rockford, IL		34 acre site with buildings totaling 405,000 sq ft of manufacturing, warehousing and office space.		Owned
Lancaster, PA		11 acre site with 243,500 sq ft of manufacturing and office space.		Owned

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From time to time, the Company is subject to lawsuits, investigations and disputes (some of which involve substantial amounts claimed) arising out of the conduct of its business, including matters relating to commercial transactions, product liability, intellectual property, and other matters. The Company recognizes a liability for any contingency that is probable of occurrence and reasonably estimable. The Company continually assesses the likelihood of adverse judgments of outcomes in these matters, as well as potential ranges of possible losses (taking into consideration any insurance recoveries), based on a careful analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts. Included in these other matters are the following:

Anti-Trust.  On March 31, 2008, S&E Quick Lube, a filter distributor, filed suit in U.S. District Court for the District of Connecticut alleging that virtually every major North American filter manufacturer, including Baldwin Filters, Inc., engaged in a conspiracy to fix prices, rig bids and allocate U.S. customers for aftermarket filters. This suit seeks various remedies, including injunctive relief and monetary damages of an unspecified amount, and is a purported class action on behalf of direct purchasers of filters from the defendants. Parallel purported class actions, including on behalf of indirect purchasers of filters, have been filed by other plaintiffs in a variety of jurisdictions in the United States and Canada. The U.S cases have been consolidated into a single multi-district litigation in the Northern District of Illinois. The Company intends to vigorously defend the claims raised in these actions. In this regard, the Company filed a motion to be dismissed from these cases due to the lack of any factual allegations against the Company specifically and the fact that the allegations center predominantly on the automotive filtration market rather than on the heavy duty filtration market. On November 9, 2009, the presiding court denied the Company’s motion, a decision that the Company is seeking to overturn. The Antitrust Division of the Department of Justice (“DOJ”) is also investigating the allegations raised in these suits. Management does not believe that the Company is the subject of the DOJ investigation and the Company has not been contacted by the DOJ in connection with this matter.

Donaldson.  On May 15, 2009, Donaldson Company, Inc. (“Donaldson”) filed a lawsuit in the U.S. Federal District Court for the District of Minnesota alleging that certain “ChannelFlow” engine/mobile filters manufactured and sold by a subsidiary of the Company infringe one or more patents held by Donaldson. Donaldson served this lawsuit on August 26, 2009, and through the suit seeks various remedies, including injunctive relief and monetary damages of an unspecified amount. Management believes that the products in question do not infringe the asserted patents and that such patents are invalid, and the Company is vigorously defending the action.

3M.  On August 14, 2009, 3M filed a lawsuit in the U.S. Federal District Court for the Eastern District of Virginia, alleging that various statements and imagery on the packaging of certain retail residential filters being sold by a subsidiary of the Company are untrue or misleading to consumers, and thus violate various aspects of the Lanham Act and Virginia consumer protection law. 3M is a former customer of the Company, and the products in question compete with those offered by 3M in the retail marketplace. The Company filed counterclaims against 3M in respect of its own packaging. This lawsuit was concluded on November 17, 2009, at which time the Company and 3M entered into a confidential settlement agreement pursuant to which each party dropped all of its claims and counterclaims.

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, along with other companies, in remedial activities for the cleanup of waste sites under the federal Superfund statute. The Company is not certain what future environmental claims, if any, may be asserted.

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None.

ADDITIONAL ITEM: Executive Officers of the Registrant

The following individuals are the executive officers of the Company as of January 22, 2010:

Name		Age at 11/28/09				Year Elected to Office
Sam Ferrise			53				2003
President, Baldwin Filters, Inc. Mr. Ferrise was appointed President of Baldwin Filters, Inc. in 2000. He became an executive officer of the Company in 2003 while retaining the same title with Baldwin Filters, Inc.
Norman E. Johnson			61				2000
Chairman of the Board, President and Chief Executive Officer. Mr. Johnson has been employed by the Company since 1990. He was elected President — Baldwin Filters, Inc. in 1990, Vice President — CLARCOR in 1992, Group Vice President — Filtration Products Group in 1993, President and Chief Operating Officer in 1995 and Chairman, President and Chief Executive Officer in 2000. Mr. Johnson has been a Director of the Company since June 1996.
Bruce A. Klein			62				1995
Vice President — Finance and Chief Financial Officer. Mr. Klein was employed by the Company and elected Vice President — Finance and Chief Financial Officer in 1995. Mr. Klein also assumed the role of the Company’s “principal accounting officer” when the Company’s former Controller retired in March of 2006.
David J. Lindsay			54				1995
Vice President — Administration and Chief Administrative Officer. Mr. Lindsay has been employed by the Company in various administrative positions since 1987. He was elected Vice President — Group Services in 1991, Vice President — Administration in 1994 and Vice President — Administration and Chief Administrative Officer in 1995.
Richard M. Wolfson			43				2006
Vice President — General Counsel and Secretary. Mr. Wolfson was employed by the Company and elected Vice President, General Counsel and Secretary in 2006. Prior to joining the Company, he was a principal of the InterAmerican Group, an advisory services and private equity firm, from 2001 until 2006.

Each executive officer of the Company is elected by the Board of Directors for a term of one year which begins at the Board of Directors Meeting at which he or she is elected, typically held at the time of the Annual Meeting of Shareholders, and ends on the date of the next Annual Meeting of Shareholders or upon their earlier death, resignation or removal in accordance with the Company’s By-Laws.

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PART II

The Company’s Common Stock is listed on the New York Stock Exchange; it is traded under the symbol CLC.

The following table sets forth the high and low market prices as quoted during the relevant periods on the New York Stock Exchange and dividends per share paid for each quarter of the last two fiscal years.

		Market Price
Quarter Ended		High				Low				Dividends
February 28, 2009		$	34.64			$	25.73			$	0.0900
May 30, 2009			33.04				23.05				0.0900
August 29, 2009			34.50				27.47				0.0900
November 28, 2009			33.78				28.77				0.0975
Total Dividends										$	0.3675

		Market Price
Quarter Ended		High				Low				Dividends
March 1, 2008		$	40.62			$	34.03			$	0.0800
May 31, 2008			44.20				33.25				0.0800
August 30, 2008			44.25				32.68				0.0800
November 29, 2008			43.17				25.03				0.0900
Total Dividends										$	0.3300

As set forth above, the quarterly dividend rate was increased in fiscal year 2009, and the Company currently expects to continue making dividend payments to shareholders. The Company’s right to make dividend payments is subject to restrictions contained in the credit agreement to which the Company is a party. The Company has never been prevented from making dividend payments under its past credit agreements or its current credit agreement and does not anticipate being so restricted in the foreseeable future.

The approximate number of holders of record of the Company’s Common Stock at January 15, 2010 was 1,904.

On June 25, 2007, the Company’s Board of Directors approved a three-year, $250 million stock repurchase program. Pursuant to the authorization, the Company may purchase shares from time to time in the open market or through privately negotiated transactions over the next three years. The Company has no obligation to repurchase shares under the authorization, and the timing, actual number and value of shares to be purchased will depend on the Company’s stock price and market conditions.

During fiscal year 2009, the Company repurchased 688,200 shares of its Common Stock, at a median price of $28.72 per share, and an aggregate cost of approximately $20 million. As set forth in the table below, the Company did not repurchase any shares during the fourth quarter of fiscal year 2009. The Company had a balance of $167,442,663 available to repurchase shares as of November 28, 2009.

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ISSUER PURCHASES OF EQUITY SECURITIES⁽¹⁾

		(a)				(b)				(c)				(d)
Period		Total Number of Shares Purchased				Average Price Paid per Share				Total Number of Shares Purchased as Part of the Company’s Publicly Announced Plan				Maximum Approximate Dollar Value of Shares that may yet be Purchased under the Plan
Aug. 30 – Sep. 30, 2009			—			$	—				—			$	167,442,663
Oct. 1 – Oct. 31, 2009			—			$	—				—			$	167,442,663
Nov. 1 – Nov. 28, 2009			—			$	—				—			$	167,442,663
TOTAL			—								—			$	167,442,663

5-Year Performance of the Company

PERFORMANCE GRAPH

The following Performance Graph compares the Company’s cumulative total return on its Common Stock for a five-year period (November 27, 2004 to November 28, 2009) with the cumulative total return of the S&P SmallCap 600 Index and the S&P 500 Industrial Machinery Index.

TOTAL RETURN TO SHAREHOLDERS

Comparison of Five-Year Cumulative Total Return
Among the Company, S&P SmallCap 600 Index and
S&P 500 Industrial Machinery Index

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
ASSUMES INITIAL INVESTMENT OF $100 AND REINVESTMENT OF ALL DIVIDENDS

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		November 27, 2004				December 3, 2005				December 2, 2006				December 1, 2007				November 29, 2008				November 28, 2009
CLARCOR Inc.			100.00				116.57				128.76				140.56				127.93				128.96
S&P SmallCap 600 Index			100.00				112.43				124.27				124.29				79.09				95.18
S&P 500 Industrial Machinery Index			100.00				99.40				109.73				133.06				73.72				103.74

The information required hereunder is included as Exhibit 13 to this 2009 Form 10-K.

The information presented in this discussion should be read in conjunction with other financial information provided in the Consolidated Financial Statements and Notes thereto. The analysis of operating results focuses on the Company’s three reportable business segments: Engine/Mobile Filtration, Industrial/Environmental Filtration and Packaging. Except as otherwise set forth herein, references to particular years refer to the applicable fiscal year of the Company.

EXECUTIVE SUMMARY

Management Discussion Snapshot
(Dollars in millions except per share data)

														2009 vs. 2008
		2009				2008				2007				$ Change				% Change
Net sales		$	907.7			$	1,059.6			$	921.2			$	(151.9	)			-14	%
Cost of sales			628.5				719.7				641.5				(91.2	)			-13	%
Gross profit			279.3				339.9				279.7				(60.6	)			-18	%
Selling and administrative expenses			173.6				188.0				149.9				(14.4	)			-8	%
Operating profit			105.7				151.9				129.8				(46.2	)			-30	%
Other income (expense)			(0.1	)			(6.6	)			0.7				6.5
Provision for income taxes			33.8				49.3				39.7				(15.5	)			-31	%
Net earnings			71.5				95.7				90.7				(24.2	)			-25	%
Average diluted shares (millions)			51.0				51.4				50.9				(0.4	)			-1	%
Diluted earnings per share		$	1.40			$	1.86			$	1.78			$	(0.46	)			-25	%
Percentages:
Gross margin			30.8	%			32.1	%			30.4	%							-1.3 pt
Selling and administrative percentage			19.1	%			17.7	%			16.3	%							1.4 pt
Operating margin			11.6	%			14.3	%			14.1	%							-2.7 pt
Effective tax rate			32.0	%			33.9	%			30.4	%							-1.9 pt
Net earnings margin			7.9	%			9.0	%			9.8	%							-1.1 pt

Fiscal year 2009 was a challenging year as we were significantly impacted by the global economic recession. Our net sales declined 14% or $151.9 million from $1,059.6 million in 2008 to $907.7 million in 2009. This sales reduction and the resulting under-absorption of fixed manufacturing costs was the primary reason for our reduced operating profit which declined 30% or $46.2 million from $151.9 million in 2008 to $105.7 million in 2009. The negative impact of lower sales was offset in part by three significant cost items:

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We realized a $10 to $12 million benefit from the reduction of material costs in 2009 compared to 2008. This reduction was driven by lower commodity pricing primarily in steel, filter media and adhesives. In addition, we initiated several projects in 2009 which removed material cost from our products without compromising the quality of the product to the end customer.

Due to the challenging economic environment in 2009, we established several cost initiatives including headcount reductions, wage freezes and significant cuts in discretionary spending including travel and outside professional services. As a result of these cost initiatives, we were able to reduce our selling and administrative expenses by $14.4 million from $188.0 million in 2008 to $173.6 million in 2009. Despite this focus on lower costs, we did not sacrifice spending on future growth initiatives including our sales force, customer service or product development.

We largely completed our restructuring program at our HVAC filter operations in 2009. At the beginning of fiscal year 2009, we completed the consolidation of two manufacturing operations, one distribution facility and one office location facility into one facility in Indiana. As a result of this consolidation and the full year benefits of facilities closed in 2008, we recognized approximately $4.0 million in fixed cost savings in 2009 compared to 2008. These fixed cost savings were offset in part by a $1.2 million impairment charge recognized on a HVAC facility in North Carolina which we closed in 2008.

Despite the negative comparisons to fiscal 2008, we generated sequentially improving operating performance for each quarter in 2009 as follows:

(Dollars in millions except per share data)		First Quarter				Second Quarter				Third Quarter				Fourth Quarter
Net sales		$	213.7			$	229.4			$	230.3			$	234.3
Operating profit			13.7				25.2				32.1				34.7
Operating margin			6.4	%			11.0	%			13.9	%			14.8	%
Diluted earnings per share		$	0.17			$	0.33			$	0.42			$	0.49

Other significant items impacting the comparison between the years presented are as follows:

During fiscal year 2009 we completed six small acquisitions and paid an earn-out amount and recieved a refund related to two acquisitions completed prior to fiscal year 2009, all for aggregate consideration of approximately $11.9 million. Four of these fiscal year 2009 acquisitions (approximately $6.0 million) were related to companies located in China, including $4.6 million to purchase the remaining 20% minority interest in our subsidiary in Weifang. The majority of the remaining $5.9 million of the $11.9 million was for the purchase of the Keddeg Company, a U.S. based manufacturer of aerospace filtration products. These combined acquisitions increased 2009 net sales by approximately $5.5 million and 2009 operating profit by approximately $0.4 million.

At the beginning of fiscal 2008 we completed the acquisition of Perry Equipment Corporation (“Peco”), a manufacturer of engineered filtration products and technologies primarily used in the natural gas industry. The purchase price was $145.8 million, excluding cash acquired. The Peco acquisition increased 2008 net sales by approximately $116.0 million and 2008 operating profit by approximately $15.0 million.

Although most foreign currencies strengthened against the U.S. dollar throughout 2009, the average exchange rate for most foreign currencies versus the U.S. dollar was weaker for 2009 compared to 2008. For example, the average exchange rate for the Euro was $1.38 in 2009 and $1.47 in 2008. Weaker foreign currencies negatively impacted our translated 2009 U.S. dollar value of net sales by $24.8 million and operating profit by $2.7 million compared to 2008.

The average exchange rate for most foreign currencies versus the U.S. dollar was stronger in 2008 compared to 2007. As a result, stronger foreign currencies positively impacted our translated U.S. dollar value of net sales by $9.5 million and operating profit by $1.4 million in 2008 compared to 2007.

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Interest expense

Interest expense declined $4.4 million in 2009 compared to 2008. $2.8 million of this decrease was driven by lower interest expense on our line of credit driven by both lower average interest rates (0.8% in 2009 and 3.7% in 2008) and lower average outstanding balances ($61.3 million in 2009 and $90.4 million in 2008). In addition, the $1.1 million impact of the mark-to-market adjustment on the interest rate swap was $1.3 million lower in 2009 compared to 2008.

Interest expense increased $5.5 million in 2008 compared to 2007. $3.4 million of this increase was driven by higher interest expense on our line of credit primarily as a result of amounts borrowed to fund the acquisition of Peco. There was no balance on our line of credit in 2007. The remainder of the higher interest expense was related to a $2.4 million mark-to-market adjustment on the interest swap in 2008.

Foreign currency gains and losses

Changes in foreign currency transaction gains and losses contributed a positive $2.7 million change in other income (expense) in 2009 compared to 2008. As most foreign currencies strengthened against the U.S. dollar throughout 2009, we recognized approximately $1.2 million of foreign currency gains in 2009 mostly related to the translation of U.S. dollar intercompany debt at our non-U.S. subsidiaries. The weakening of foreign currencies against the U.S. dollar generated $1.5 million of foreign currency losses in 2008. Changes in foreign currency transaction gains and losses contributed an additional loss of $1.6 million in other income (expense) in 2008 compared to 2007.

The effective tax rate in 2009 was 32.0% compared to 33.9% in 2008. This reduction was driven by a higher mix of taxable income in foreign operations with lower tax rates than in the U.S. In addition, several favorable provision-to-return state tax return adjustments lowered the effective rate. The relatively low effective tax rate of 30.4% in 2007 was driven by a 3.2% benefit from the completion of various income tax audits, the finalization of certain income tax liabilities and the cumulative tax benefit from the research and experimentation tax credit extension in 2007.

Average diluted shares outstanding declined 0.4 million in 2009 compared to 2008. This reduction was driven almost entirely by the lower dilution from our outstanding stock options and restricted share units as average basic shares outstanding remained consistent from 2008 to 2009. The full year benefit of our 0.7 million share repurchase executed in the third quarter of 2009 will not be fully realized until 2010.

Average diluted shares outstanding increased 0.5 million in 2008 compared to 2007. This increase was driven by a 0.4 million increase in basic shares outstanding. Average basic shares outstanding increased in 2008 due to the issuance of 2.1 million shares pursuant to the Peco acquisition and 0.4 million shares issued pursuant to stock incentive programs offset by the repurchase of 1.0 million shares at the beginning of 2008 and the full year impact of 2.3 million shares repurchased throughout 2007.

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SEGMENT ANALYSIS

(Dollars in millions)		2009				% Total				2008				% Total				2007				% Total
Net sales:
Engine/Mobile Filtration		$	373.3				41	%		$	439.0				42	%		$	430.0				47	%
Industrial/Environmental Filtration			461.0				51	%			543.1				51	%			414.5				45	%
Packaging			73.4				8	%			77.5				7	%			76.7				8	%
		$	907.7				100	%		$	1,059.6				100	%		$	921.2				100	%
Operating profit:
Engine/Mobile Filtration		$	75.2				71	%		$	99.4				65	%		$	98.8				76	%
Industrial/Environmental Filtration			24.7				23	%			45.8				30	%			25.5				20	%
Packaging			5.8				6	%			6.7				5	%			5.5				4	%
		$	105.7				100	%		$	151.9				100	%		$	129.8				100	%
Operating margin:
Engine/Mobile Filtration			20.1	%							22.6	%							23.0	%
Industrial/Environmental Filtration			5.4	%							8.4	%							6.1	%
Packaging			7.9	%							8.6	%							7.2	%
			11.6	%							14.3	%							14.1	%

Net sales, operating profit and operating margin declined for each of our segments in 2009 compared to 2008. Net sales were down approximately 15% at both our Engine/Mobile Filtration and Industrial/Environmental Filtration segments and 5% at our Packaging segment. In general, this decline in net sales was the primary reason for the reduction in operating profit at each of our segments.

Net sales and operating profit increased for each of our segments in 2008 compared to 2007. Of the $138.4 million increase in consolidated net sales from 2007 to 2008, approximately $116.0 million was related to our acquisition of Peco, whose results are included in our Industrial/Environmental Filtration segment. Similarly, of the $22.1 million increase in consolidated operating profit from 2007 to 2008, approximately $15.0 million was related to the acquisition of Peco.

Engine/Mobile Filtration Segment

(Dollars in millions)		2009				2008				2007				2009 v 2008								2008 v 2007
														$ Change				% Change				$ Change				% Change
Net sales		$	373.3			$	439.0			$	430.0			$	(65.7	)			-15	%		$	9.0				2	%
Operating profit			75.2				99.4				98.8				(24.2	)			-24	%			0.6				1	%
Operating margin			20.1	%			22.6	%			23.0	%							-2.5 pt								-0.4 pt

Our Engine/Mobile Filtration segment sells after-market filters for heavy-duty trucks, heavy-duty off-highway vehicles, locomotives and automobiles. The largest market included in this segment is engine filters for heavy-duty trucks produced at our Baldwin business unit.

Net sales for our Engine/Mobile Filtration segment declined $65.7 million or 15% from 2008 to 2009 as detailed in the following table:

(Dollars in millions)		Net Sales
2008		$	439.0
U.S. sales			(39.2	)
Foreign sales			(14.2	)
Foreign exchange			(12.3	)
Net decrease			(65.7	)
2009		$	373.3

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The $39.2 million decline in U.S. sales was the result of lower demand from our heavy-duty truck and locomotive customers. Truck tonnage in the U.S. declined approximately 10-12% from 2008 to 2009, and locomotive car loadings in North America declined approximately 20%. The $14.2 million reduction in sales to customers outside the U.S. was driven by an approximate $7.0 million decline at our subsidiary in the United Kingdom. This subsidiary lost a major customer at the end of 2008 and was also significantly impacted by the downturn in the power generation market. The remainder of the decrease in non-U.S. sales was spread throughout our remaining foreign subsidiaries. Each of our major foreign locations had lower net sales in 2009 compared to 2008 with the exception of our South Africa subsidiary which was flat year-over-year.

Operating profit for our Engine/Mobile Filtration segment declined $24.2 million or 24% from 2008 to 2009. In general, the $24.2 million reduction in operating profit was primarily driven by the $65.7 million reduction in net sales and the resulting under-absorption of fixed manufacturing costs world-wide. The negative impact of this net sales reduction was offset in part by reduced material cost and a $10.0 million reduction in selling and administrative expenses driven by headcount reductions and limits on discretionary spending such as travel and outside professional services. The change in average foreign exchange rates from 2008 to 2009 negatively impacted the translated U.S. dollar value of operating profit by approximately $1.4 million.

Net sales for our Engine/Mobile Filtration segment increased $9.0 million or 2% from 2007 to 2008 as detailed in the following table:

(Dollars in millions)		Net Sales
2007		$	430.0
U.S. sales			(6.3	)
Foreign sales (including export)			12.1
Foreign exchange			3.2
Net increase			9.0
2008		$	439.0

The $6.3 million decline in U.S. sales was the result of lower heavy-duty truck and automotive filter sales in 2008 compared to 2007 offset by higher sales to our locomotive customers. The $12.1 million increase in sales to customers outside the U.S. was driven by a $3.4 million increase in sales at our China subsidiary and a $2.3 million increase at our 80%-owned Morocco subsidiary which we acquired in 2007. Sales at all of our other foreign subsidiaries increased in 2008 compared to 2007 with the exception of our U.K. subsidiary which declined approximately $1.9 million.

Operating profit for our Engine/Mobile Filtration segment increased $0.6 million or 1% from 2007 to 2008. Operating profit on U.S. sales declined due to lower net sales and an approximate $2.0 million increase in selling and administrative expenses including an insurance deductible due to a weather related incident and increased legal costs related to certain patent disputes. Operating profit on foreign sales increased primarily due to the $12.1 million increase in foreign sales. This foreign operating profit increase was offset in part by a $2.0 million increase in selling and administrative expenses to support this international growth. The change in average foreign exchange rates from 2007 to 2008 positively impacted the translated U.S. dollar value of operating profit by approximately $0.8 million.

Industrial/Environmental Filtration Segment

														2009 v 2008								2008 v 2007
(Dollars in millions)		2009				2008				2007				$ Change				% Change				$ Change				% Change
Net sales		$	461.0			$	543.1			$	414.5			$	(82.1	)			-15	%		$	128.6				31	%
Operating profit			24.7				45.8				25.5				(21.1	)			-46	%			20.3				80	%
Operating margin			5.4	%			8.4	%			6.1	%							-3.0 pt								2.3 pt

Our Industrial/Environmental Filtration segment sells a large variety of filtration products to various end-markets. Included in this market are HVAC filters, natural gas vessels and replacement filters, aviation fuel filters and filter systems, and other markets including oil drilling, aerospace, fibers and resins and dust collector systems and replacement cartridges.

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Net sales for our Industrial/Environmental Filtration segment declined $82.1 million or 15% from 2008 to 2009 as detailed in the following table:

(Dollars in millions)		Net Sales
2008		$	543.1
U.S. sales			(47.3	)
Foreign sales (including export)			(22.3	)
Foreign exchange			(12.5	)
Net decrease			(82.1	)
2009		$	461.0

The $47.3 million decrease in net sales to customers within the U.S. was driven by the following:

The $22.3 million reduction in foreign sales from 2008 to 2009 was driven by a $10.0 million decrease in foreign export sales of our natural gas original equipment vessels produced at our North American manufacturing facilities. Approximately $8.0 million of this $10.0 million decline was related to 2008 shipments to India, Africa and the Middle East which did not recur in 2009. The remainder of the decline in foreign sales was due to an approximate $5.7 million reduction in dust collector sales in Europe.

Operating profit for our Industrial/Environmental Filtration segment declined $21.1 million or 46% from 2008 to 2009. In general, the reduction in operating profit was driven by the aforementioned $82.1 million reduction in net sales and the resulting under-absorption of fixed manufacturing costs world-wide, including a $10.1 million operating profit decline at our oil filtration business which was significantly impacted by reduced offshore drilling activity. The negative impact of the significant sales decline was offset in part by a $9.5 million reduction in selling and administrative expenses. In addition, the near completion of our restructuring program at our HVAC operations reduced fixed manufacturing costs by approximately $4.0 million in 2009. However, these savings were offset in part by a $1.2 million impairment charge recognized in 2009 for a HVAC facility in North Carolina. The change in average foreign exchange rates from 2008 to 2009 negatively impacted the translated U.S. dollar value of operating profit by approximately $1.3 million.

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Despite the negative 2009 comparisons to 2008, the operating profit and margin at our Industrial/Environmental Filtration segment improved sequentially each fiscal quarter in 2009 as follows:

(Dollars in millions)		First Quarter				Second Quarter				Third Quarter				Fourth Quarter
Net sales		$	113.5			$	119.9			$	114.6			$	113.0
Operating profit			0.7				5.9				7.9				10.2
Operating margin			0.6	%			4.9	%			6.9	%			9.1	%

This sequential quarter-to-quarter improvement in operating profit and margin on relatively flat sales was the direct result of the restructuring activities at our HVAC operations, cost reduction initiatives at our Total Filtration Services business unit, reduced discretionary selling and administrative expenses and improved margins at our natural gas original equipment vessel business.

Net sales for our Industrial/Environmental Filtration segment increased $128.6 million or 31% from 2007 to 2008 as detailed in the following table:

(Dollars in millions)		Net Sales
2007		$	414.5
U.S. sales			53.4
Foreign sales (including export)			69.0
Foreign exchange			6.2
Net increase			128.6
2008		$	543.1

Approximately $116.0 million of the $128.6 million increase in net sales was due to our acquisition of Peco in December 2007. The remaining $12.6 million increase in sales from 2007 to 2008 was driven by a combined $29.0 million increase in sales from the oil and gas, aviation, dust collector and fiber and mesh markets offset in part by approximately $17.0 million in lower sales of air filters at our combined HVAC operations and our Total Filtration Services business unit.

Operating profit for our Industrial/Environmental Filtration segment increased $20.3 million or 80% from 2007 to 2008. Approximately $15.0 million of this increase was related to our acquisition of Peco. The remaining $5.3 million increase in operating profit was driven by increased sales in our oil and gas and aviation markets offset by significantly lower operating profit at our Total Filtration Services business unit which was severely impacted by lower demand from automotive companies purchasing filters for their manufacturing facilities. The change in average foreign exchange rates from 2007 to 2008 positively impacted the translated U.S. dollar value of operating profit by approximately $0.6 million.

Packaging Segment

														2009 v 2008								2008 v 2007
(Dollars in millions)		2009				2008				2007				$ Change				% Change				$ Change				% Change
Net sales		$	73.4			$	77.5			$	76.7			$	(4.1	)			-5	%		$	0.8				1	%
Operating profit			5.8				6.7				5.5				(0.9	)			-13	%			1.2				22	%
Operating margin			7.9	%			8.6	%			7.2	%							-0.7	pt							1.4	pt

Net sales for our Packaging segment decreased $4.1 million or 5% from 2008 to 2009. This decrease was driven by $10.7 million lower sales due to the downturn in the confectionary, film, health and beauty and pharmaceutical markets offset in part by $7.0 million of additional sales from smokeless tobacco packaging and decorated flat sheet metal. Operating profit declined $0.9 million or 13% from 2008 to 2009. This reduction in operating profit was driven by the reduction in sales but was offset in part by savings resulting from cost initiatives to reduce direct labor and manufacturing overhead. Virtually all sales in this segment are denominated in U.S. dollars with about 6% exported outside the U.S.

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Net sales for our Packaging segment increased $0.8 million or 1% from 2007 to 2008. The additional $1.2 million of operating profit from 2007 to 2008 was driven by several initiatives which lowered costs including selling and administrative expenses, direct labor as a percentage of sales and manufacturing overhead.

FINANCIAL CONDITION
 
LIQUIDITY AND CAPITAL RESOURCES

Our financial position remains strong with adequate cash resources and sufficient borrowing capacity under our line of credit. In the first quarter of 2008, we entered into a five-year multicurrency revolving credit agreement (“Credit Facility”) with a group of financial institutions under which we may borrow up to $250.0 million under a selection of currencies and rate formulas. This Credit Facility replaced the $165.0 million credit agreement that was scheduled to expire in April 2008. We believe the financial institutions that are party to this arrangement have adequate capital resources and will be able to fund future borrowings under the Credit Facility. At our election the interest rate is based upon either a defined base rate or the LIBOR interest rate plus or minus applicable margins. At year-end 2009, the LIBOR interest rate including margin was 0.6%. At November 30, 2009 there was $35.0 million outstanding on the Credit Facility with an additional $8.4 million outstanding on a $75.0 million letter of credit sub-line. Accordingly, we had approximately $206.6 million available for further borrowing at year-end 2009. In December 2009, we paid down an additional $10.0 million on the Credit Facility.

In the first quarter of 2008, we entered into an interest rate swap agreement (“Swap Agreement”) with a bank to manage our interest rate exposure on certain amounts outstanding under our Credit Facility. The Swap Agreement provided for us 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 $100.0 million. The Swap Agreement was not designated as a hedge for financial reporting purposes. Accordingly, unrealized gains and losses were recorded as interest expense in the Consolidated Statements of Earnings. Periodic settlement payments or receipts were recorded as a component of cash flows from operating activities in the Consolidated Statements of Cash Flows. The fair value of the Swap Agreement at November 30, 2009 was approximately $1.0 million and was recorded as part of current accrued liabilities. The Swap Agreement expired January 1, 2010.

From time to time, we use derivative financial instruments such as the Swap Agreement to mitigate our exposure to certain market risks. However, by using derivative financial instruments, we are exposed to credit 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 us, which creates credit risk. We minimize this credit risk by entering into transactions with counterparties which we believe have the financial resources to meet their obligations.

Cash and cash equivalents, restricted cash and short-term investments increased $43.7 million to $92.2 million at year-end 2009 from $48.5 million at year-end 2008. Short-term investments primarily include tax-exempt municipal money market funds. Cash and cash equivalents are held by financial institutions throughout the world. We regularly review the credit worthiness of these institutions and believe our funds at these institutions are not at significant risk. The current ratio of 3.4 at year-end 2009 was higher than the current ratio of 3.0 at year-end 2008.

Long-term debt of $52.1 million at year-end 2009 included $35.0 million outstanding on our Credit Facility, $15.8 million outstanding on industrial revenue bonds and $1.3 million of other long-term debt. At November 30, 2008 and 2009 we were in compliance with all financial covenants as included in our Credit Facility. We expect to be 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 7.1% at the end of 2009 compared to 11.4% at the end of 2008.

We had 50.4 million shares of common stock outstanding at November 30, 2009 compared to 50.8 million outstanding at November 30, 2008. The 0.4 million decrease in outstanding shares was driven by our repurchase of 0.7 million shares in the third quarter of 2009 offset in part by 0.3 million shares issued in conjunction with incentive plans. Shareholders’ equity increased to $686.6 million at year-end 2009 compared to $651.8 million at year-end 2008. This $34.8 million increase was driven by additional net earnings of $71.5 million, currency translation adjustments of $14.7 million and stock and stock compensation expense pursuant to incentive plans of

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$8.2 million offset by pension and other postretirement benefits adjustments of $21.3 million, dividend payments of $18.7 million and our repurchase of common stock of $19.8 million.

Net cash provided by operating activities increased $6.3 million to $113.4 million in 2009 from $107.1 million in 2008. This $6.3 million increase was driven by $28.6 million of additional cash generated from changes in working capital offset by lower earnings adjusted for non-cash items of $22.3 million. The $28.6 million of additional cash generated from changes in working capital was significantly impacted by the $45.8 million of cash generated from a reduction in accounts receivable which declined as a result of lower net sales. This cash generated was offset in part by $22.5 million of additional cash invested in short-term investments. Our 2009 inventory levels did not decline significantly with lower net sales based upon our strategic decision to maintain high customer fill rates. Net cash provided by operating activities decreased $30.2 million to $107.1 million in 2008 from $137.3 million in 2007. This $30.2 million decrease was driven by a $41.9 million decline in cash generated from changes in working capital offset by higher earnings adjusted for non-cash items of $11.7 million. The $41.9 million decline in cash generated from changes in working capital was driven by a $29.7 million swing in our short-term investments as we generated $27.3 million of net cash in 2007 from the sale of short-term investments while we invested $2.4 million of net cash in 2008.

Net cash used in investing activities decreased $74.7 million to $34.2 million in 2009 compared to $108.9 million in 2008. This decrease was driven by a $63.0 million reduction in cash used for business acquisitions. The $74.9 million invested in business acquisitions in 2008 was primarily related to our acquisition of Peco. The $11.9 million invested in business acquisitions in 2009 was driven by several smaller acquisitions. In addition to reduced investment for business acquisitions, we used $13.2 million less cash for additions to plant assets in 2009 compared to 2008. This reduction was primarily related to lower spending for the restructuring of our HVAC operations of approximately $7.0 million. Net cash used in investing activities increased $61.0 million to $108.9 million in 2009 from $47.9 million in 2007. This increase was driven by an additional $62.6 million invested in business acquisitions in 2008 primarily related to the Peco acquisition.

Net cash used in financing activities increased $81.6 million in 2009 compared to 2008. The $65.4 million cash used in financing activities in 2009 was driven by payments of $40.0 million on our Credit Facility, $19.8 million for our repurchase of stock and $18.7 million for dividends. These cash outflows were offset by proceeds of $8.4 million from the re-issuance of an industrial revenue bond and $3.6 million from the issuance of stock pursuant to incentive plans. The $16.2 million cash provided by financing activities in 2008 was driven by proceeds of $80.0 million from our Credit Facility primarily to finance the Peco acquisition and $8.9 million from the issuance of stock pursuant to incentive plans. These cash proceeds were offset by payments of $5.0 million on our Credit Facility, payments of $37.3 million for the repurchase of stock, $16.8 million for dividends and $16.1 million for payments on an industrial revenue bond. Net cash provided by financing activities increased $101.7 million in 2008 compared to 2007. This increase in cash generated from 2007 to 2008 was driven by $75.0 million of net proceeds under our Credit Facility and $37.6 million less cash paid for the repurchase of stock in 2008 compared to 2007.

In June 2007, our Board of Directors authorized a $250.0 million stock repurchase program of our common stock in the open market and through private transactions over a three-year period. This authorization replaced our previous $150.0 million share repurchase program that expired in June 2007. During 2009, we repurchased and retired 0.7 million shares of our common stock for $19.8 million. During 2008, we repurchased and retired 1.0 million shares of our common stock for $37.3 million. At November 30, 2009, there was approximately $167.4 million available for repurchase under the current authorization. Future repurchases of our common stock may be made after considering cash flow requirements for internal growth including working capital, capital expenditures, acquisitions, interest rates and the current market price of our common stock.

We believe that our 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, provide for interest payments and required principal payments related to debt agreements, fund pension plan contributions and repurchase common stock. We also continue to assess acquisition opportunities in related filtration businesses that would expand our market base, distribution coverage or product offerings. Any such acquisitions may affect operating cash flows

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and may require changes in our debt and capitalization. In addition, capital market disruptions may affect the cost or availability of future borrowings. We have no material long-term purchase commitments.

The following table summarizes our current fixed cash obligations as of November 30, 2009 for the years indicated:

		Payments Due by Period
(Dollars in millions)		Total				Less than 1 Year				1 – 3 Years				3 – 5 Years				More than 5 Years
Operating leases		$	59.8			$	10.6			$	16.3			$	12.0			$	20.9
Credit Facility			35.0				—				—				35.0				—
Pension plan and other post-retirement contributions			74.0				6.3				30.1				18.1				19.5
Long-term debt (excluding line of credit)			17.2				0.1				1.3				—				15.8
Payments for acquisitions			3.3				0.1				3.1				0.1				—
Interest on Credit Facility			1.1				0.4				0.7				—				—
Payment on Swap Agreement			1.0				1.0				—				—				—
Interest on long-term debt (excluding line of credit)			0.9				0.2				0.3				0.2				0.2
Total		$	192.3			$	18.7			$	51.8			$	65.4			$	56.4

Interest payments on our variable rate debt in the table above are determined based upon current interest rates as of year-end 2009 and assume that no additional borrowings or payments will be made on our Credit Facility during the periods presented. The $35.0 million outstanding on our Credit Facility at November 30, 2009 will be due at the maturity of the Credit Facility in December 2012. The $1.0 million payment for our Swap Agreement is due in January 2010.

We do not have a minimum required contribution under the Pension Benefit Guarantee Corporation requirements for our U.S. qualified pension plans for 2010. However, we anticipate contributing $0.1 million in a voluntary contribution to our U.S. qualified pension plans in 2010. In addition, we anticipate contributing $0.4 million to our non-U.S. qualified plan and $0.1 million to our post-retirement health care benefit plan during 2010. We anticipate contributing $5.7 million and $14.2 million in 2010 and 2011, respectively, to our U.S. combined non-qualified pension plans covering certain management employees. Future estimates of our pension plan contributions may change significantly depending upon the actual rate of return on plan assets, discount rates and regulatory requirements.

At November 30, 2009, our liability for uncertain income tax provisions was $2.2 million including interest and penalties. Due to the high degree of uncertainty regarding the timing of potential future cash outflows associated with these liabilities, we were unable to make a reasonably reliable estimate of the amount and period in which these remaining liabilities might be paid.

Off-Balance Sheet Arrangements

Our off-balance sheet arrangements relate to various operating leases as discussed in Note H to the Consolidated Financial Statements. We had no variable interest entity or special purpose entity agreements during 2009 or 2008.

OTHER MATTERS
 
CRITICAL ACCOUNTING ESTIMATES

Our critical accounting policies, including the assumptions and judgments underlying them, are disclosed in the Notes to the Consolidated Financial Statements. These policies have been consistently applied in all material respects and address such matters as revenue recognition, depreciation methods, inventory valuation, asset impairment recognition, business combination accounting and pension and postretirement benefits. These critical accounting policies may be affected by recent relevant accounting pronouncements discussed in the following section.

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While the estimates and judgments associated with the application of these critical accounting policies may be affected by different assumptions or conditions, we believe the estimates and judgments associated with the reported amounts are appropriate in the circumstances. The following lists the most critical accounting estimates used in preparing the consolidated financial statements which requires us to use significant judgment and estimates of amounts that are inherently uncertain:

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In 2010, a reduction in the expected return on plan assets of 0.25% would result in additional expense in fiscal 2010 of approximately $0.2 million, while a reduction in the discount rate of 0.25% would have resulted in additional expense of approximately $0.3 million for our qualified defined benefit pension plans for U.S. covered employees. Interest rates and pension plan valuations may vary significantly based on worldwide economic conditions and asset investment decisions. The unrecognized net actuarial loss of $63.9 million at year-end 2009 is due primarily to prior changes in assumptions related to discount rates and expected compared to actual asset returns. This actuarial loss will be recognized as pension expense in the future over the average remaining service period of the employees in the plans. See Note I to the Consolidated 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 companies outside the financial services sectors. We have 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. We do not believe that, based on our current investment policies and contractual relationships, we are subject to greater risk from such factors than other companies of similar size and market breadth.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2008, the Financial Accounting Standards Board (“FASB”) expanded the required disclosures for pension and other postretirement plans by requiring disclosures about how investment allocation decisions are made by management, major categories of plan assets and significant concentration of risk. Additionally, an employer is required to disclose information about the valuation of plan assets. This accounting guidance is effective for our fiscal year 2010 and will affect the disclosures in our financial statements.

In June 2008, the FASB issued guidance that 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. This guidance is effective for our fiscal year 2010 and requires the restatement of all previously reported earnings per share data. Our unvested restricted stock units qualify as participating securities under this guidance. Our preliminary assessment is the unvested restricted stock units will not materially affect the computation of earnings per share.

In December 2007, the FASB issued guidance that will affect our accounting for businesses acquired after November 30, 2009, the presentation of noncontrolling interests, previously called minority interests, in our Consolidated Financial Statements and will also require 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. We will adopt this guidance in fiscal year 2010 which will impact the way we account for future business acquisitions and present noncontrolling interests.

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OUTLOOK

Engine/Mobile Filtration Segment

We expect net sales for our Engine/Mobile Filtration segment to increase between 5.0% and 7.0% in 2010 compared to 2009 due to anticipated improving demand in the over-the-road trucking and locomotive markets. Based on these forecasted higher sales and continued cost reduction initiatives, we anticipate our Engine/Mobile Filtration segment’s 2010 operating margin to be between 20.0% and 22.0% compared to 20.1% in 2009.

Industrial/Environmental Filtration Segment

We expect net sales for our Industrial/Environmental Filtration segment to increase between 6.0% and 8.0% in 2010 compared to 2009. This forecasted growth includes the negative impact of the lost 3M business at our HVAC operations, which contributed sales of $13.7 million in 2009. However, we anticipate offsetting this lost business through additional retail air filter sales opportunities in 2010. We expect solid year-over-year growth in our oil drilling, natural gas and dust collector markets and slower growth in our aerospace and aviation fuel filtration markets. Based on forecasted higher sales in addition to the expected continued positive impact of our HVAC operations restructuring, we expect that our operating margin in our Industrial/Environmental Filtration segment will increase to the range of 8% to 10% in 2010 compared to 5.4% in 2009.

Packaging

We expect net sales for our Packaging segment to increase 8.0% to 11.0% in 2010 compared to 2009. This forecasted increase in sales is primarily driven by anticipated higher sales in the smokeless tobacco market and a one-time, low margin tooling sale offset by lower sales in decorated flat sheet including battery and film products. We anticipate the Packaging segment 2010 operating margin to be consistent with historical operating margins in the range of 7.0% to 8.0%.

Interest Expense and Income Taxes

Assuming no changes in average interest rates, we anticipate interest expense will decline in 2010 compared to 2009 due to the expiration of the interest rate swap agreement and the continued reduction of outstanding balances on our Credit Facility. We expect the 2010 effective tax rate to be in the range of 32.0% and 33.0%.

Cash Flow

We expect to generate from $80.0 million to $100.0 million in cash from operating activities in 2010. We anticipate using this cash to fund capital expenditures, potential acquisitions, dividend payments, share repurchases and the repayment of balances on our Credit Facility. We anticipate payments for the addition of plant assets in 2010 to be in the range of $35.0 million to $45.0 million including expanding our technical facilities in China for product development and testing.

Diluted Earnings per Share

We expect 2010 diluted earnings per share to be in the range of $1.55 to $1.70.

FORWARD LOOKING STATEMENTS

This 2009 Form 10-K 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 2009 Form 10-K, 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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We believe that our expectations are based on reasonable assumptions. However, these forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from our expectations of future results, performance or achievements expressed or implied by these forward-looking statements. In addition, our past results of operations do not necessarily indicate our future results. These and other uncertainties are discussed in the “Risk Factors” section of this 2009 Form 10-K. Our future results may fluctuate as a result of these and other risk factors detailed from time to time in our filings with the SEC.

You should not place reliance on any forward-looking statements. These statements speak only as of the date of this 2009 Form 10-K. Except as otherwise required by applicable laws, we undertake no obligation to publicly update or revise any forward-looking statements or the risk factors described in this 2009 Form 10-K, whether as a result of new information, future events, changed circumstances or any other reason after the date of this 2009 Form 10-K.

Our market risk is primarily related to the potential loss arising from adverse changes in interest rates and foreign currency fluctuations. In the normal course of business, we may also be exposed to various market risks that arise from transactions entered into in the normal course of business related to items such as the cost of raw materials and changes in inflation. Certain contractual relationships with customers and vendors mitigate risks from changes in raw material costs and currency exchange rate changes that arise from normal purchasing and normal sales activities.

Interest Rates

We are exposed to changes in interest rates, primarily due to our financing and cash management activities, which include long and short-term debt as well as cash, cash equivalents and certain short-term, highly liquid investments. Interest rate fluctuations could affect earnings, cash flows or the fair value of our financial liabilities. Our debt obligations are primarily at variable rates and are denominated in U.S. dollars. To minimize the long-term costs of borrowing, we manage our interest rate risk by monitoring trends in rates as a basis for determining whether to enter into fixed rate or variable rate agreements and the duration of such agreements. We mitigated our interest rate risk on our borrowing under our revolving line of credit in 2008 and 2009 by entering into a fixed interest rate swap agreement at the beginning of 2008 which fixed our interest until January 2010. Interest rate risk is not expected to be significant to us in fiscal 2010 as amounts outstanding on our long-term debt agreements are more than offset by cash, cash equivalents and short-term investments. We anticipate paying all amounts outstanding on our revolving line of credit in 2010. As a result, the primary interest rate risk will be driven by our return on short-term investments. Based upon the $32.2 million in short-term investments at November 30, 2009, a 1% increase in interest rates could positively impact annual interest income by $0.3 million. This potential interest income benefit would increase or decrease as short-term investment balances increase or decrease.

Foreign Currency

Since we operate through subsidiaries in several countries around the world, our reported financial results of operations, including the reported value of assets and liabilities, are exposed to translation risk when the financial statements of our subsidiaries, as stated in their functional currencies, are translated into the U.S. Dollar. The assets and liabilities of subsidiaries outside the U.S. are translated at period end rates of exchange for each reporting period. Earnings and cash flow statements are translated at weighted-average rates of exchange. Although these translation changes have no immediate cash impact, the translation changes may impact the overall value of net assets.

We are also exposed to transaction risk from changes in foreign currency rates through sales and purchasing transactions when we sell products in functional currencies different from the currency in which product and manufacturing costs were incurred. The functional currencies of our worldwide facilities primarily include the U.S. Dollar, the Euro, the British Pound Sterling, the Canadian Dollar, the Chinese Yuan Renminbi and the

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Mexican Peso. As these currencies fluctuate against each other, and other currencies, we are exposed to foreign currency transaction risk on sales and purchasing transactions.

Currency exchange rates vary daily and often one currency strengthens against the U.S. Dollar while another currency weakens. Because of the complex interrelationship of the worldwide supply chains and distribution channels, it is difficult to quantify the impact of a particular change in exchange rates. However, we estimate that if the U.S. dollar strengthened or weakened 10% relative to the currencies where our foreign income and cash flows are derived the effect on the consolidated results of operations could be $0.03 to $0.05 per diluted share. We estimate that the effect of changes in the average foreign currency translation rates in 2009 compared to 2008 negatively impacted our operating profit by approximately $2.7 million in 2009.

As a result of continued foreign sales and business activities, we continue to evaluate derivative financial instruments, including forwards, swaps and purchased options, to manage foreign currency exchange rate changes in the future. We did not hold any such derivatives during 2009, 2008 or 2007 related to foreign currency exchange.

The Consolidated Financial Statements, the Notes thereto and the report thereon of PricewaterhouseCoopers LLP, an independent registered public accounting firm, required hereunder with respect to the Company and its consolidated subsidiaries are included in this 2009 Form 10-K on pages F-2 through F-36.

None.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of November 28, 2009, the end of the period covered by this annual report.

Management’s Report on Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f), for the Company. Under the supervision and with the participation of management, including the Company’s Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the Company’s internal control over financial reporting was conducted based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on that evaluation, the Company’s management concluded that the Company’s internal control over financial reporting was effective as of November 28, 2009.

The effectiveness of the Company’s internal control over financial reporting as of November 28, 2009, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears on page F-2 of this 2009 Form 10-K.

None.

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PART III

Certain information required hereunder is set forth in the Proxy Statement under the captions “Election of Directors — Nominees for Election to the Board of Directors”, and “Election of Directors — Information Concerning Nominees and Directors”, and “Corporate Governance — Committees of the Board of Directors”, and “Corporate Governance — Code of Ethics” and is incorporated herein by reference. Additional information required hereunder is set forth in the Proxy Statement under the caption “Beneficial Ownership of the Company’s Common Stock — Section 16(a) Beneficial Ownership Reporting Compliance” and is incorporated herein by reference.

The information required hereunder is set forth in the Proxy Statement under the captions “Compensation of Executive Officers and Other Information”, and “Corporate Governance — Compensation Committee Interlocks and Insider Participation”, and “Corporate Governance — Meetings and Fees”, and “Corporate Governance — Director Compensation for Fiscal Year 2009” and is incorporated herein by reference.

The information required hereunder is set forth in the Proxy Statement under the caption “Equity Compensation Plan Information” and under the caption “Beneficial Ownership of the Company’s Common Stock” and is incorporated herein by reference.

The information required hereunder is set forth in the Proxy Statement under the captions “Corporate Governance — Certain Transactions” and “Corporate Governance — Independence” and under the caption “Corporate Governance — Committees of the Board of Directors” and is incorporated herein by reference.

The information required herein is set forth in the Proxy Statement under the caption “Ratification of Appointment of Independent Registered Accounting Firm — Amounts Paid to PricewaterhouseCoopers LLP.”

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PART IV

  (a)(1) Financial Statements

		Page No.
Report of Independent Registered Public Accounting Firm			F-2
Consolidated Balance Sheets at November 30, 2009 and 2008			F-3
Consolidated Statements of Earnings for the years ended November 30, 2009, 2008 and 2007			F-4
Consolidated Statements of Shareholders’ Equity for the years ended November 30, 2009, 2008 and 2007			F-5
Consolidated Statements of Cash Flows for the years ended November 30, 2009, 2008 and 2007			F-6
Notes to Consolidated Financial Statements			F-7

  (a)(2) Financial Statement Schedule

II. Valuation and Qualifying Accounts			S-1

Financial statements and schedules other than those listed above are omitted for the reason that they are not applicable, are not required, or the information is included in the financial statements or the footnotes therein.

  (a)(3) Exhibits

2.1		Agreement and Plan of Merger, dated as of October 17, 2007, by and among the Company, PECO Acquisition Company, Perry Equipment Corp., and PECO Management LLC, as the Shareholder Representative. Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed October 18, 2007.
3.1		The registrant’s Second Restated Certificate of Incorporation. Incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 1, 2007.
3.2		The registrant’s By-Laws, as amended. Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed December 19, 2007.
3.3		Certificate of Designation of Series B Junior Participating Preferred Stock of CLARCOR as filed with the Secretary of State of the State of Delaware on April 2, 1996. Incorporated by reference to Exhibit 4.5 to the Registration Statement on Form 8-A filed April 3, 1996.
4.1		Certain instruments defining the rights of holders of long-term debt securities of CLARCOR and its subsidiaries are omitted pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. CLARCOR hereby agrees to furnish copies of these instruments to the SEC upon request.
*10.1		The registrant’s Amended and Restated Deferred Compensation Plan for Directors of CLARCOR dated January 1, 2008.+
*10.2		The registrant’s Amended and Restated CLARCOR Deferred Compensation Plan dated January 1, 2008.+
10.2(a)		The registrant’s Supplemental Retirement Plan. Incorporated by reference to Exhibit 10.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 1984.+
*10.2(b)		The registrant’s Amended and Restated Executive Retirement Plan dated December 20, 1999 (the “Grandfathered Plan”).+
*10.2(c)		The registrant’s Amended and Restated CLARCOR Executive Retirement Plan dated January 1, 2008 (the “Later ERP”).+
*10.2(d)		Amendment No. 1 to the Grandfathered Plan effective as of December 14, 2009.+

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10.2(e)		Amendment No.1 to the Later ERP dated and effective as of December 14, 2009. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report filed on Form 8-K on December 17, 2009.+
*10.2(f)		The registrant’s Amended and Restated CLARCOR Supplemental Pension Plan dated January 1, 2008.+
10.2(g)		The registrant’s Supplemental Retirement Plan (as amended and restated effective December 1, 1994). Incorporated by reference to Exhibit 10.2(c) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 3, 1994.+
10.4		Form of Change in Control Agreement with each of Norman E. Johnson, Sam Ferrise, Bruce A. Klein, David J. Lindsay, Richard M. Wolfson and other Company executives. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report filed on Form 8-K on December 30, 2008 (the “2008 8-K”).+
10.4(a)		Amended and Restated Employment Agreement with Norman E. Johnson dated as of December 17, 2000. Incorporated by reference to Exhibit 10.4(c)(1) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 2, 2000 (the “2000 10-K”).+
10.4(b)		First Amendment to Amended and Restated Employment Agreement with Norman E. Johnson dated as of January 19, 2008. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report filed on Form 8-K on January 23, 2008.+
10.4(c)		Second Amendment to Amended and Restated Employment Agreement with Norman E. Johnson dated as of December 29, 2008. Incorporated by reference to Exhibit 10.2 to the 2008 8-K.+
10.4(d)		Trust Agreement dated December 1, 1997. Incorporated by reference to Exhibit 10.4(d) to the Company’s Annual Report on Form 10-K for the fiscal year ended November 29, 1997 (the “1997 10-K”).+
10.4(e)		Executive Benefit Trust Agreement dated December 22, 1997. Incorporated by reference to Exhibit 10.4(e) to the 1997 10-K.+
10.5		The registrant’s 1994 Incentive Plan (the “1994 Plan”) as amended through June 30, 2000. Incorporated by reference to Exhibit 10.5 to the 2000 10-K.+
10.5		Amendment to the 1994 Plan adopted December 18, 2000. Incorporated by reference to Exhibit 10.5(a) to the 2000 10-K.+
10.5(a)		The registrant’s 2004 Incentive Plan (the “2004 Plan”). Incorporated by reference to Exhibit A to the Company’s Proxy Statement dated February 20, 2003 for the Annual Meeting of Shareholders held on March 24, 2003.+
10.5(b)		Amendment to the 1994 Plan and to the 2004 Plan. Incorporated by reference to Exhibit 10.5(c) to the Company’s Annual Report for the fiscal year ended November 29, 2003.+
10.6		Credit Agreement dated as of December 18, 2007, by and among the Company, the lenders party thereto, J.P. Morgan Chase Bank, National Association, as administrative agent, and certain other lenders or affiliates thereof acting in the capacity of agent, book runner or arranger. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed December 19, 2007.
10.7		Form of Stock Option Agreement used by Company for all employees receiving stock option awards, including grants to executive officers made in FY 2007. Incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 2, 2006 (the “2006 10-K”).+
10.7(a)		Form of Stock Option Agreement used by Company for executive officers and certain other senior members of Company management receiving stock option awards in FY 2009. Incorporated by reference to Exhibit 10.7(a) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 1, 2007.+

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*10.7(b)		Form of Restricted Stock Agreement used by Company for all employees receiving restricted stock units, including executive officers.+
10.8		CLARCOR Value Added Incentive Plan. Incorporated by reference to Exhibit A to the Company’s Proxy Statement dated February 9, 2007 for the Annual Meeting of Shareholders held on March 26, 2007.+
10.9		CLARCOR Inc. 2009 Incentive Plan. Incorporated by reference to Appendix A to the Company’s Proxy Statement dated February 13, 2009 for the Annual Meeting of Shareholders held on March 23, 2009.+
*10.10		Summary of Compensation Paid to Non-Employee Directors and Named Executive Officers.+
*12.1		Statement Re Computation of Certain Ratios.
*13		The “11-Year Financial Review.”
*21		Subsidiaries of the Registrant.
*23		Consent of Independent Registered Public Accounting Firm.
*31.1		Certification of Norman E. Johnson, Chairman, President and Chief Executive Officer of the Company, pursuant to Rule13a-14(a) of the Exchange Act.
*31.2		Certification of Bruce A. Klein, Vice President — Finance and Chief Financial Officer of the Company, pursuant to Rule 13a-14(a) of the Exchange Act.
*32.1		Certification of Norman E. Johnson, Chairman, President and Chief Executive Officer of the Company, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.
*32.2		Certification of Bruce A. Klein, Vice President — Finance and Chief Financial Officer of the Company, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: January 22, 2010

		CLARCOR Inc. (Registrant)
		By:		/s/ Norman E. Johnson Norman E. Johnson Chairman of the Board, President & Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Date: January 22, 2010		By:		/s/ Norman E. Johnson Norman E. Johnson Chairman of the Board, President & Chief Executive Officer and Director
Date: January 22, 2010		By:		/s/ Bruce A. Klein Bruce A. Klein Vice President — Finance & Chief Financial Officer & Chief Accounting Officer
Date: January 22, 2010		By:		/s/ J. Marc Adam J. Marc Adam Director
Date: January 22, 2010		By:		/s/ James W. Bradford, Jr. James W. Bradford, Jr. Director
Date: January 22, 2010		By:		/s/ Robert J. Burgstahler Robert J. Burgstahler Director
Date: January 22, 2010		By:		/s/ Paul Donovan Paul Donovan Director
Date: January 22, 2010		By:		/s/ Robert H. Jenkins Robert H. Jenkins Director
Date: January 22, 2010		By:		/s/ Philip R. Lochner, Jr. Philip R. Lochner, Jr. Director
Date: January 22, 2010		By:		/s/ James L. Packard James L. Packard Director

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CLARCOR Inc.

CONSOLIDATED FINANCIAL STATEMENTS

For the years ended November 30,
2009, 2008 and 2007

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REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

To The Board of Directors and Shareholders
CLARCOR Inc.

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of CLARCOR Inc. and its subsidiaries (the “Company”) at November 28, 2009 and November 29, 2008, and the results of their operations and their cash flows for each of the three years in the period ended November 28, 2009 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2)presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of November 28, 2009, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, appearing on page 32 of the 2009 Form 10-K under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Note A to the consolidated financial statements, the Company changed the manner in which it accounts for uncertain tax positions in fiscal year 2008.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Nashville, Tennessee
January 22, 2010

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CLARCOR Inc.
  
CONSOLIDATED BALANCE SHEETS
November 30, 2009 and 2008
(Dollars in thousands except per share data)

		2009				2008
ASSETS
Current assets:
Cash and cash equivalents		$	59,277			$	40,715
Restricted cash			762				473
Short-term investments			32,171				7,269
Accounts receivable, less allowance for losses of $15,150 for 2009 and $13,267 for 2008			164,545				194,864
Inventories			157,416				158,201
Deferred income taxes			27,567				23,121
Prepaid expenses and other current assets			6,790				7,928
Total current assets			448,528				432,571
Plant assets, at cost, less accumulated depreciation			188,091				192,599
Goodwill			228,182				223,964
Acquired intangibles, less accumulated amortization			95,990				95,089
Deferred income taxes			630				224
Other noncurrent assets			12,469				13,435
Total assets		$	973,890			$	957,882
LIABILITIES
Current liabilities:
Current portion of long-term debt		$	99			$	128
Accounts payable and accrued liabilities			126,424				138,292
Income taxes			5,419				5,083
Total current liabilities			131,942				143,503
Long-term debt, less current portion			52,096				83,822
Postretirement healthcare benefits			689				642
Long-term pension liabilities			61,746				27,307
Deferred income taxes			32,136				39,317
Other long-term liabilities			5,394				7,360
Total liabilities			284,003				301,951
Contingencies
Minority interests			3,268				4,172
SHAREHOLDERS’ EQUITY
Capital stock:
Preferred, par value $1, authorized 5,000,000 shares, none issued			—				—
Common, par value $1, authorized 120,000,000 shares, issued 50,392,571 in 2009 and 50,794,422 in 2008			50,393				50,794
Capital in excess of par value			36,814				48,025
Accumulated other comprehensive loss			(32,879	)			(26,562	)
Retained earnings			632,291				579,502
Total shareholders’ equity			686,619				651,759
Total liabilities and shareholders’ equity		$	973,890			$	957,882

 
 
The accompanying notes are an integral part of the consolidated financial statements.

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CLARCOR Inc.
  
CONSOLIDATED STATEMENTS OF EARNINGS
for the years ended November 30, 2009, 2008 and 2007
(Dollars in thousands except per share data)

		2009				2008				2007
Net sales		$	907,748			$	1,059,601			$	921,191
Cost of sales			628,460				719,726				641,457
Gross profit			279,288				339,875				279,734
Selling and administrative expenses			173,555				187,952				149,920
Operating profit			105,733				151,923				129,814
Other income (expense):
Interest expense			(2,120	)			(6,532	)			(1,010	)
Interest income			278				1,373				1,619
Other, net			1,758				(1,393	)			86
			(84	)			(6,552	)			695
Earnings before income taxes and minority interests			105,649				145,371				130,509
Provision for income taxes			33,819				49,310				39,675
Earnings before minority interests			71,830				96,061				90,834
Minority interests in earnings of subsidiaries			(287	)			(407	)			(175	)
Net earnings		$	71,543			$	95,654			$	90,659
Net earnings per share:
Basic		$	1.41			$	1.88			$	1.80
Diluted		$	1.40			$	1.86			$	1.78
Average number of shares outstanding:
Basic			50,779,594				50,783,862				50,345,774
Diluted			51,045,131				51,410,436				50,885,314

 
 
The accompanying notes are an integral part of the consolidated financial statements.

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CLARCOR Inc.
  
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
for the years ended November 30, 2009, 2008 and 2007
(Dollars in thousands except per share data)

		Common Stock																				Accumulated Other Comprehensive Earnings (Loss)
		Issued								In Treasury								Capital in Excess of Par Value								Retained Earnings				Total
		Number of Shares				Amount				Number of Shares				Amount
Balance, November 30, 2006			51,082,083			$	51,082				—			$	—			$	3,400			$	103			$	482,924			$	537,509
Net earnings			—				—				—				—				—				—				90,659				90,659
Other comprehensive earnings, net of tax:
Minimum pension liability adjustment			—				—				—				—				—				1,679				—				1,679
Translation adjustments			—				—				—				—				—				9,025				—				9,025
Total comprehensive earnings																															101,363
Adoption of pension liability guidance, net of tax of $2,906			—				—				—				—				—				(4,895	)			—				(4,895	)
Stock options exercised			353,215				353				—				—				3,638				—				—				3,991
Tax benefit applicable to stock options			—				—				—				—				3,028				—				—				3,028
Issuance of stock under award plans			56,001				56				—				—				1,636				—				—				1,692
Purchase treasury stock			—				—				(2,272,477	)			(74,863	)			—				—				—				(74,863	)
Retire treasury stock			(2,272,477	)			(2,272	)			2,272,477				74,863				(14,631	)			—				(57,960	)			—
Stock option expense			—				—				—				—				2,929				—				—				2,929
Cash dividends — $0.2975 per common share			—				—				—				—				—				—				(15,024	)			(15,024	)
Balance, November 30, 2007			49,218,822				49,219				—				—				—				5,912				500,599				555,730
Net earnings			—				—				—				—				—				—				95,654				95,654
Other comprehensive earnings, net of tax:
Pension and other postretirement benefits liability adjustments			—				—				—				—				—				(4,706	)			—				(4,706	)
Pension curtailment			—				—				—				—				—				(6,478	)			—				(6,478	)
Translation adjustments			—				—				—				—				—				(21,290	)			—				(21,290	)
Total comprehensive earnings																															63,180
Adoption of new income tax guidance			—				—				—				—				—				—				(67	)			(67	)
Stock issued for business acquisition			2,137,797				2,138				—				—				69,816				—				—				71,954
Stock options exercised			389,459				389				—				—				6,796				—				—				7,185
Tax benefit applicable to stock options			—				—				—				—				2,752				—				—				2,752
Issuance of stock under award plans			48,344				48				—				—				1,553				—				—				1,601
Purchase treasury stock			—				—				(1,000,000	)			(37,260	)			—				—				—				(37,260	)
Retire treasury stock			(1,000,000	)			(1,000	)			1,000,000				37,260				(36,260	)			—				—				—
Stock option expense			—				—				—				—				3,368				—				—				3,368
Other			—				—				—				—				—				—				161				161
Cash dividends — $0.3300 per common share			—				—				—				—				—				—				(16,845	)			(16,845	)
Balance, November 30, 2008			50,794,422				50,794				—				—				48,025				(26,562	)			579,502				651,759
Adoption of pension and other postretirement plans measurement date guidance, net of tax			—				—				—				—				—				(268	)			(293	)			(561	)
Balance, December 1, 2008			50,794,422				50,794				—				—				48,025				(26,830	)			579,209				651,198
Net earnings			—				—				—				—				—				—				71,543				71,543
Other comprehensive earnings, net of tax:
Pension and other postretirement benefits liability adjustments			—				—				—				—				—				(20,766	)			—				(20,766	)
Translation adjustments			—				—				—				—				—				14,717				—				14,717
Total comprehensive earnings																															65,494
Stock options exercised			205,031				205				—				—				1,355				—				—				1,560
Tax benefit applicable to stock options			—				—				—				—				1,809				—				—				1,809
Issuance of stock under award plans			81,318				82				—				—				1,677				—				—				1,759
Purchase treasury stock			—				—				(688,200	)			(19,767	)			—				—				—				(19,767	)
Retire treasury stock			(688,200	)			(688	)			688,200				19,767				(19,079	)			—				—				—
Stock option expense			—				—				—				—				3,027				—				—				3,027
Other			—				—				—				—				—				—				221				221
Cash dividends — $0.3675 per common share			—				—				—				—				—				—				(18,682	)			(18,682	)
Balance, November 30, 2009			50,392,571			$	50,393				—			$	—			$	36,814			$	(32,879	)		$	632,291			$	686,619

 
 
The accompanying notes are an integral part of the consolidated financial statements.

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CLARCOR Inc.
  
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended November 30, 2009, 2008 and 2007
(Dollars in thousands)

		2009				2008				2007
Cash flows from operating activities:
Net earnings		$	71,543			$	95,654			$	90,659
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation			26,005				25,231				20,858
Amortization			4,957				5,157				2,531
Other noncash items			(332	)			—				—
Minority interests in earnings of subsidiaries			287				407				175
Net loss (gain) on disposition of plant assets			(47	)			(282	)			1,003
Impairment of plant assets			1,200				—				—
Stock-based compensation expense			4,088				4,474				4,014
Excess tax benefit from stock-based compensation			(1,854	)			(2,469	)			(2,759	)
Changes in assets and liabilities, net of business acquisitions:
Restricted cash, current portion			(289	)			582				564
Short-term investments			(24,902	)			(2,385	)			27,311
Accounts receivable			38,194				(7,611	)			(4,508	)
Inventories			6,057				(6,277	)			(2,929	)
Prepaid expenses and other current assets			1,426				1,995				1,338
Other noncurrent assets			1,060				858				104
Accounts payable, accrued liabilities and other liabilities			(23,499	)			(15,284	)			(555	)
Pension assets and liabilities, net			6,950				293				1,360
Income taxes			3,422				4,568				(3,755	)
Deferred income taxes			(862	)			2,225				1,913
Net cash provided by operating activities			113,404				107,136				137,324
Cash flows from investing activities:
Business acquisitions, net of cash acquired			(11,918	)			(74,921	)			(12,319	)
Additions to plant assets			(21,740	)			(34,908	)			(37,024	)
Disposition of plant assets			815				909				1,539
Investment in affiliate			(1,794	)			(2,000	)			—
Proceeds from insurance claims			500				2,025				—
Other, net			(65	)			(5	)			(63	)
Net cash used in investing activities			(34,202	)			(108,900	)			(47,867	)
Cash flows from financing activities:
Net (payments) proceeds under multicurrency revolving credit agreement			(40,000	)			75,000				—
Borrowings under long-term debt			8,410				—				—
Payments on long-term debt			(838	)			(16,092	)			(4,623	)
Sale of capital stock under stock option and employee purchase plans			3,616				8,883				6,229
Purchase of treasury stock			(19,767	)			(37,260	)			(74,863	)
Excess tax benefit from stock-based compensation			1,854				2,469				2,759
Cash dividends paid			(18,682	)			(16,845	)			(15,024	)
Net cash (used in) provided by financing activities			(65,407	)			16,155				(85,522	)
Net effect of exchange rate changes on cash			4,767				(9,735	)			3,073
Net change in cash and cash equivalents			18,562				4,656				7,008
Cash and cash equivalents, beginning of period			40,715				36,059				29,051
Cash and cash equivalents, end of period		$	59,277			$	40,715			$	36,059
Cash paid during the period for:
Interest		$	708			$	4,101			$	644
Income taxes, net of refunds		$	32,208			$	42,346			$	41,295

 
 
The accompanying notes are an integral part of the consolidated financial statements.