-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ld/M7odN/XGPLR4Q55DEdHVxHLeA8siswV+qSJH1IXBYDDmx7BPKMbKlJMDc/w8c itQPxKsay6IFLknUaGA1pQ== 0000912057-97-012916.txt : 19970415 0000912057-97-012916.hdr.sgml : 19970415 ACCESSION NUMBER: 0000912057-97-012916 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970131 FILED AS OF DATE: 19970414 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CASCADE CORP CENTRAL INDEX KEY: 0000018061 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL TRUCKS TRACTORS TRAILERS & STACKERS [3537] IRS NUMBER: 930136592 STATE OF INCORPORATION: OR FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-12557 FILM NUMBER: 97580140 BUSINESS ADDRESS: STREET 1: 2020 SW FOURTH AVE CITY: PORTLAND STATE: OR ZIP: 97201 BUSINESS PHONE: 5032270024 MAIL ADDRESS: STREET 1: 2020 SW FOURTH AVE CITY: PORTLAND STATE: OR ZIP: 97201 10-K405 1 FORM 10-K405 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM 10-K (Mark one) (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the fiscal year ended January 31, 1997 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 Commission file number 2-23666 --------------------- CASCADE CORPORATION AN OREGON CORPORATION I.R.S. Employer Identification Number 93-0136592 2020 S.W. 4th Avenue Portland, Oregon 97201 503-227-0024 - -------------------------------------------------------------------------------- SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Not applicable SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common stock: New York Stock Exchange - -------------------------------------------------------------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- State the aggregate market value of the voting stock held by non-affiliates of the registrant as of March 31, 1997: $179,375,574. As of this date there were 413 shareholders, including blocks of shares held by various depositories. It is the Company's belief that when the shares held by the depositories are attributed to the beneficial owners the total number of shareholders exceeds 2,500. Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the close of the latest practicable date: Common shares outstanding -11,666,704, net of treasury shares. DOCUMENTS INCORPORATED BY REFERENCE Definitive Proxy Statement dated April 14, 1997-Parts I and III 1996 Annual Report to Shareholders-Part II - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF CONTENTS PAGE ---- PART I ITEM 1. BUSINESS 1 Products and Marketing 1 Competition 2 Customers and Suppliers 2 Patents and Licenses 3 Research and Development 3 Foreign Operations 3 ITEM 2. PROPERTIES 4 ITEM 3. LEGAL PROCEEDINGS 5 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 5 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 5 ITEM 6. SELECTED FINANCIAL DATA 5 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 5 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 7 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 7 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 7 ITEM 11. EXECUTIVE COMPENSATION 8 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 8 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 8 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K 8 SIGNATURES 9 NOTE: All references to the fiscal year (i.e. Fiscal 1994, 1995 and 1996) refer to the period ended January 31 of the year subsequent to the fiscal year (i.e. January 31, 1995, January 31, 1996, and January 31, 1997). PART I ITEM 1. BUSINESS PRODUCTS AND MARKETING Cascade Corporation and its subsidiaries ("the Company") are engaged in the business of designing, manufacturing and selling hydraulically actuated equipment, forks for lift trucks and non-pneumatic (solid) tires used primarily in materials handling applications. Products include lift truck attachments, forks, masts, hose reels, hydraulic cylinders, replacement parts, and solid tires for the aforementioned products. The Company's manufacturing activities are conducted in its plants at Portland, Oregon; Springfield, Ohio; Warner Robins, Georgia and Westminster, South Carolina. Subsidiaries also conduct manufacturing activities in The Netherlands, the United Kingdom, Canada, China, Korea, Italy, France, Sweden and Australia. Subsidiaries conduct sales, engineering and warehousing operations in Canada, China, Korea, Germany, France, Finland, Spain, Sweden, South Africa, The Netherlands, United Kingdom, Italy and Japan. Executive offices are in Portland, Oregon. There are 1,989 people employed by the Company and its subsidiaries. The Company manufactures an extensive line of hydraulically actuated attachments designed for mounting on industrial lift trucks. The primary function of these products is to increase the scope and efficiency of materials handling applications normally performed by lift trucks. The Company presently offers a wide variety of functionally different attachments, each of which has several models, capacities and optional combinations. These attachments have been designed to clamp, lift, rotate, push, pull, tilt and sideshift a variety of loads such as appliances, paper rolls, baled materials, textiles, beverage containers, drums, canned goods, bricks, masonry blocks, lumber, plywood and boxed, packaged, palletized and containerized products of virtually all types. During the last five years, attachments, masts and hose reels have accounted for 74% to 78% of the Company's consolidated sales. During this same period, hydraulic cylinders accounted for approximately 8% to 17% of the Company's consolidated sales. Replacement parts and other sales amounted to approximately 9% to 14% of total sales between 1992 and 1996. The Company's lift truck attachments, masts and hose reels are sold to equipment dealers and manufacturers. Products are marketed throughout the United States, Canada, Latin America, Europe, the Middle East, Australia, New Zealand, South Africa and Asia. Hydraulic cylinders are used primarily as components to transmit power in lift trucks and other types of machinery and industrial equipment. A substantial number of cylinders are utilized in the Company's proprietary lift truck attachments and masts. In the United Kingdom, hydraulic cylinders are also sold to manufacturers of various types of materials handling and other mobile equipment, usually through negotiations with the customer's purchasing and engineering departments. With the addition of Industrial Tires Limited (ITL) in January 1997, the Company has expanded its product line to include non-pneumatic (solid) tires. ITL is a leading manufacturer of solid industrial tires in North America. While its primary market continues to be fork truck tire business, product development efforts in the past several years have allowed ITL to enter niche markets including airport ground support equipment, aerial platform equipment and off-the-road applications such as waste management and underground mining. ITL manufactures tires at its facility in Mississauga, Canada and also has tires produced under license in Sri Lanka, Mexico and China. The Company purchased Kenhar Corporation in March 1997. Kenhar Corporation is the world's leading manufacturer of forks for fork lift trucks and other mobile material handling equipment. Kenhar also manufactures basebands for solid rubber industrial tires, wheels and carriage bars used on fork lift trucks. Kenhar Corporation has manufacturing plants in North America, England, France, Italy and Korea. Products are sold to original equipment manufacturers (OEM) of mobile material handling equipment and to the aftermarket consisting of company-owned and independent distributors, equipment dealers and OEM parts departments. Kenhar's market segments: sales to lift truck OEM, sales to OEM of other mobile equipment and to the aftermarket have different market cycles. Lift truck sales are correlated to general industrial 1 capital spending while other mobile equipment sales are more closely related to construction activity and housing starts. The cycles of the segments tend not to coincide. In addition, the cycles of the Kenhar's global markets; North America, Europe and Asia, tend not to coincide. As a result, the Company believes that Kenhar's operations are insulated, to some degree, from significant changes in the general level of economic activity. The majority of ITL sales of solid tires comes from the secondary market and therefore, is still growing based upon the strong fork lift truck sales of several years ago. ITL is continuing to see a strong increase in the aerial lift and airport transportation markets. It is also seeing greater acceptance of solid tires in the waste management application, a market with strong growth potential. Statistical information in this report for the fiscal year ended January 31, 1997, and prior years does not reflect the ITL and Kenhar acquisitions or the acquisition of Hyco-Cascade Pty. Ltd. completed in March 1997. COMPETITION The Company believes that in all marketing areas, it is one of the leading independent suppliers of hydraulically actuated materials handling equipment designed for mounting on industrial lift trucks. Several of the lift truck manufacturers, who are customers of the Company, are also competitors in varying degrees to the extent that they manufacture a portion of their attachment requirements. Since the Company offers a broad line of attachments capable of supplying a significant part of the total requirements for the entire lift truck industry, it believes that its relatively high unit volume results in lower costs which would be difficult for any individual lift truck manufacturer to achieve. The Company's order backlog for all products at January 31, 1997, 1996 and 1995 was approximately $19,520,000, $24,560,000 and $27,010,000 respectively. At January 31, 1997 approximately 90% (88% and 84% at January 31, 1996 and 1995) of the order backlog was due for delivery within 60 days and substantially all within six months. Through its subsidiary, Industrial Tires Limited, the Company has become one of the largest manufacturers and suppliers to both OEM and the aftermarket in North America. ITL offers the widest range of product offerings in the industry. The company believes that the combination of its strong customer base, extensive product offerings, established distribution systems and state-of - -the-art manufacturing capabilities in North America, Canada, Mexico, China and Sri Lanka give it significant competitive advantages over other manufacturers in the industry. Kenhar's knowledge of the mobile material handling industry, combined with commitment to customer service, quality and excellence of products have made it the world's leading and largest manufacturer of forks. Since manufacturing facilities are located in most of the major world markets, Kenhar is capable of supplying its global customers with a full range of products of similar design and quality, with the added convenience of local service. With this capability, the Company believes it will continue to maintain its preeminent position. CUSTOMERS AND SUPPLIERS Since the Company deals with lift truck manufacturers and their dealers, a substantial portion of its sales are made to the approximately ten major companies in the industry. NACCO Industries Inc., is the company's single largest customer. Sales to it and its subsidiaries, Hyster Company and Yale Materials Handling Inc., were 9.2%, 9.7% and 10.8% of consolidated sales during the years ended January 31, 1997, 1996 and 1995, respectively. The Company purchases materials and components necessary to produce its products from many different suppliers. The principal items purchased are rolled products from steel mills, unfinished castings and forgings, hydraulic motors, compounded rubber and hardware items such as fasteners, rollers, hydraulic seals and hose assemblies. With few exceptions, all raw materials are available from several domestic and foreign suppliers. 2 PATENTS AND LICENSES Patents have been a relatively unimportant factor in the development of the Company's business. While the Company holds rights under numerous patents, it believes that the business is not, to any significant degree, dependent on any patent or group of patents. RESEARCH AND DEVELOPMENT Most of the Company's research and product development activities are performed in a 28,000 square-foot product development center in Portland, Oregon. The corporate engineering staff develops and designs almost all the products sold by the Company. This staff numbers approximately 68 engineers and is continually involved in developing new products and applications in the materials handling field and improving existing product lines. Consolidated expenditures for engineering research and development activities in fiscal years ended January 31, 1997, 1996 and 1995 were approximately $4,900,000, $4,700,000 and $4,500,000 respectively. Substantially all such activities were sponsored by the Company and its subsidiaries. FOREIGN OPERATIONS Cascade N.V. was organized in The Netherlands in 1958 and is engaged in the business of manufacturing and marketing hydraulically actuated lift truck attachments. This subsidiary presently has warehouse, sales and service facilities in Dusseldorf, Germany; Paris, France; Vantaa, Finland; Barcelona, Spain and Vaggeryd, Sweden; Sheffield, United Kingdom; Cascade N.V. and its subsidiaries have 207 employees. Cascade (U.K.) Ltd. was incorporated in the United Kingdom in 1967 and manufactures and markets hydraulic cylinders and lift truck attachments. This subsidiary employs 174 people. Cascade (Canada) Inc. was incorporated in Canada in 1970 and presently conducts marketing, limited engineering and manufacturing activities for the hydraulically actuated equipment product line from Toronto, Ontario. In addition ITL, a division of Cascade (Canada) Inc., is devoted to the marketing, engineering and manufacturing of the solid tire product line. This subsidiary presently employs 243 people. Cascade (Africa) Pty. Limited, employing 8 people, was organized in 1967 in South Africa and its activities consist of sales, engineering and warehousing. Cascade (Japan) Ltd. was incorporated under the laws of Oregon in 1967, and carries on engineering, sales and distribution activities in the Japanese domestic market. A portion of this subsidiary's sales are produced by local subcontractors. This subsidiary employs 22 people. Cascade Korea Limited was incorporated under the laws of the Republic of Korea in 1990. Its activities are limited to sales and service. Cascade Korea Limited employs 3 people. Cascade Xiamen was incorporated in 1995 as a wholly owned foreign enterprise under the laws in the People's Republic of China. This subsidiary carries on sales, service and manufacturing activities and employs 36 people Cascade Material Handling (Australia) Pty Limited was organized in 1972 and is engaged in the business manufacturing and marketing hydraulically actuated lift truck attachments. This subsidiary employs 14 people. Kenhar Corporation (Kenhar) was purchased in March 1997. Kenhar was established in 1961 and is engaged in the business of manufacturing and marketing forks for fork lift trucks. Kenhar has manufacturing facilities in Guelph, Ontario, Canada; Findlay, Ohio, USA; Vancouver, Washington, USA; Piscataway, New Jersey, USA; Manchester, United Kingdom; La Machine, France; Brescia, Italy and Inchon, South Korea. Kenhar conducts sales and warehousing operations from these locations as well as from other facilities in Vancouver, British Columbia, Canada; Milton, Ontario, Canada; Decatur, Georgia, USA; Chicago, Illinois, USA; Buffalo, New York, USA; Charlotte, North Carolina, USA; Dallas, Texas, USA; Los Angeles, California, USA; San Francisco, California, USA; Rayleigh, Essex, United Kingdom; Varnamo, Sweden; Shanghai, China; Bad Urach, Germany; and Toyko, Japan. This subsidiary employes 610 people. Hyco-Cascade Pty Ltd. was acquired in March 1997. Hyco-Cascade manufactures and markets lift truck attachments in Australia and has a sales branch in New Zealand. This subsidiary 3 was incorporated in 1981 and employs 92 people. There are no material risks attendant to the Company's foreign operations other than those incidental to the regular course of business. For further information about foreign operations, see Note 10 on page 15 of the 1996 Annual Report to Shareholders. ITEM 2. PROPERTIES The Company owns and leases various types of properties located throughout the continental United States, Europe, Canada, Australia, South Africa, China and Japan. Of the above mentioned properties, the following are considered principal facilities which include principal facilities of Kenhar Corporation and Hyco-Cascade Pty Ltd. which were acquired after January 31, 1997.
- ------------------------------------------------------------------------------------------------------------------ Location Type of Activity - ------------------------------------------------------------------------------------------------------------------ United States Portland, Oregon Owned/Leased Manufacturing, Office, Engineering, Research Springfield, Painesville & Findlay, Ohio Owned Manufacturing, Warehouse, Office Warner Robins & Decatur, Georgia Owned/Leased Manufacturing, Warehouse, Office Westminster, South Carolina Owned Manufacturing, Office Birmingham, Alabama Leased Warehouse, Office Cheektowaga & Buffalo, New York Leased Warehouse, Office Santa Fe Springs, Los Angeles & Leased Warehouse, Office San Francisco, California Chicago, Illinois Leased Warehouse, Office Memphis, Tennessee Leased Warehouse, Office Houston & Dallas, Texas Leased Warehouse, Office Vancouver, Washington Leased Manufacturing, Office Europe Almere & Hoorn, The Netherlands Owned Manufacturing, Office Almere & Diemen, The Netherlands Owned * Dusseldorf & Bad Urach, Germany Owned/Leased Warehouse, Office Paris & La Machine, France Owned Manufacturing, Warehouse, Office Newcastle, Sheffield, Manchester, & Owned/Leased Manufacturing, Office Rayleigh, United Kingdom Brescia, Italy Leased Manufacturing, Office Linkoping, Sweden Leased Manufacturing, Warehouse, Office Other Foreign Toronto, Mississauga, Melton, Owned/Leased Manufacturing, Warehouse, Office, Coquitlam & Guelph, Canada Engineering, Research Melbourne, Brisbane & Sydney, Australia Owned Manufacturing, Office Auckland, New Zealand Leased Warehouse, Office Johannesburg, South Africa Leased Warehouse, Office Osaka & Toyko, Japan Leased Warehouse, Office Inchon & Seoul Korea Leased Manufacturing, Warehouse, Office Xiamen & Shanghai, China Leased Manufacturing, Warehouse, Office
*The former European headquarters in Almere and the former manufacturing facility in Diemen are currently held for investment purposes. Several subsidiary companies are parties to various leases of office and computer equipment, storage space and automobiles which are of minor consequence. 4 ITEM 3. LEGAL PROCEEDINGS Neither the Company nor any of its subsidiaries are involved in any material pending legal proceedings other than litigation related to environmental matters discussed on page 15 and 16 or matters arising in the regular course of business. The Company and its subsidiaries are adequately insured against product liability, personal injury and property damage claims which may occasionally arise. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The definitive Proxy Statement dated April 14, 1997 is incorporated by reference. No Matters were submitted to a vote of security holders during the fourth quarter ended January 31, 1997. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Page 17 of the 1996 Annual Report to Shareholders is incorporated by reference. ITEM 6. SELECTED FINANCIAL DATA Page 1 of the 1996 Annual Report to Shareholders is incorporated by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS GENERAL OVERVIEW Consolidated net sales for 1996 (the fiscal year ended January 31, 1997) totaled $218,485,000, a 6.6% decrease from record sales of $234,030,000 for 1995 and a 19% increase when compared to 1994. Earnings for 1996 were 5% lower when compared to 1995 earnings before the special charge for environmental expenses. When compared to prior years, 1996 net income increased 65% from 1995 and was 42% greater than the amount recorded in 1994. Sales in North America in 1996 were 4.8% lower than in 1995 reflecting softer lift truck shipments following 1995's record levels. Industry booking figures experienced an improvement during the 1996 fourth quarter and this favorable trend has continued during the first quarter of 1997. Although 1996 sales in Europe were down 10.2% from 1995, we believe a slow recovery is underway in the underlying economics of the Continent and we have established aggressive targets for our important European markets in 1997. Other Cascade subsidiaries recorded sales increases of 6.7% when compared to 1995, with particularly strong growth in China and Korea more than offsetting a disappointing performance in Japan. Revenue for 1995 was substantially greater than 1994 due to a 22% increase in North American sales and a 40% increase in sales in Europe with strong gains being recorded in nearly all market 5 areas. Sales in Japan experienced solid improvement, while sales in Korea and South Africa were significantly greater than 1994. RESULTS OF OPERATIONS Net income for the year ended January 31,1997 was $17,420,000 or $1.48 per share. This compares to $10,550,000 ($.88 per share) for the year ended January 31, 1996, after the special $7,800,000 net of tax ($.65 per share), provision for environmental expenses. This represents a very healthy return on sales of 8.0% and a return on shareholders' equity of 18.9%. Despite lower sales volumes, operating costs were generally held in check, which resulted in fairly level margins as compared with prior years. Earnings for fiscal 1995 of $10,550,000 decreased by 13.8% when compared to 1994 net income of $12,250,000. Net income for 1995 was adversely affected by the special charge mentioned previously. In 1995, the Company recorded a special charge of $12,000,000 ($7,800,000 net of tax) in anticipation of future expenses associated with environmental investigation and remediation activities which may be incurred over a period of up to 30 years. Although these costs are associated with manufacturing processes which were discontinued over twenty years ago, this charge is reflected as an operating expense in the Consolidated Statement of Income and Retained Earnings. Over the three year period from fiscal year 1994 to fiscal year 1996, both cost of goods sold and selling and administrative expenses, as indicated in the Consolidated Statement of Income and Retained Earnings on page 5 of the 1996 Annual Report remained relatively steady when expressed as a percentage of revenues. Cost of goods sold was 65.5% of net sales in 1996 and 1995 slightly higher than the 64.6% recorded in 1994. Selling and administrative expenses as a percent of net sales increased to 18.4% for 1996 compared to 17.1% in 1995 but decreased from 19.1% in 1994. As part of our growth strategy, we will continue to exercise prudent expense controls to ensure favorable bottom line results. Inflation and changing prices have not had a material impact on the Company's income in fiscal 1994 through 1996. During fiscal 1996, we introduced PLAN 2001 which will position the Company for further growth. The plan consists of three parts: aggressive pursuit of market share in existing markets, with focused expansion into smaller, regional markets; enhanced introduction of new product offerings; and a targeted acquisition program. The acquisitions announced over the past several months will enable the Company to serve its customers better with a broader range of products, and will add some $150 million in revenues based on recent performance. Please see notes 9 and 13 of the Consolidated Financial Statements on page 14 and 20 of the 1996 Annual Report for an outline of these acquisitions. The U.S. dollar weakened 9.3% compared to the Dutch guilder and 12.2% against the Japanese yen during 1996. As a result, foreign currency translation adjustments decreased shareholders' equity by $2,095,000 ($.18 per share) in 1996. Translation adjustments resulted in a decrease in shareholders' equity of $120,000 ($.01 per share) for fiscal 1995 and an increase of $3,041,000 ($.25 per share) for fiscal 1994. LIQUIDITY AND CAPITAL RESOURCES For the year ended January 31, 1997 capital expenditures totaled $16,624,000 compared to $11,825,000 for 1995 and $21,921,000 for 1994. Expenditures in 1996 were primarily targeted at investments in enhanced manufacturing, engineering and information systems equipment, along with tooling for new product introductions. Included in the 1996 amount are expenditures associated 6 with expansion and consolidation at our Portland, Oregon manufacturing facility, which will be completed in 1997. This project will allow the Company's Executive Team to relocate from Parkside Center in downtown Portland to join the balance of the corporate staff, which will facilitate our team management style. Dividends were $.45 for both 1996 and 1995. In addition to the regular $.09 quarterly dividend, the Board of Directors also declared a $.09 special dividend both years which was paid with the fourth quarter dividend. In 1994 dividends totaled $.375 including the regular $.075 quarterly dividend and a special year-end dividend of $.075. The Company increased short and long-term borrowings by $27,434,000 during 1996 primarily in connection with the acquisitions discussed earlier. Combined short and long-term debt amounts to 45.5% of shareholders' equity. Cash and cash equivalents were $15,642,000 at January 31, 1997 compared to $23,326,000 at the prior year end. Current assets at January 31, 1997 were 1.5 times current liabilities. The Company's strong cash position, together with available borrowing capacity, is more than sufficient to meet our short-term requirements. In order to finance the acquisition of Kenhar Corporation and Hyco-Cascade Pty Ltd. subsequent to January 31, 1997, the Company entered into an agreement which increased the Company's available borrowing capacities from $81,816,000 to $111,816,000. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Pages 5 through 16 to the 1996 Annual Report to Shareholders are incorporated by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The definitive Proxy Statement dated April 14, 1997 is incorporated by reference. The term of office of all officers is one year. Names, ages and position of all executive officers of Cascade Corporation follow. - -------------------------------------------------------------------------------- Year First Elected Name Age Officer Present Position - -------------------------------------------------------------------------------- Joseph J. Barclay 64 1968 Chairman and Director Robert C. Warren, Jr. 48 1984 President, Chief Executive Officer and Director James P. Miller 49 1992 Executive Vice President, Secretary and Treasurer William J. Harrison 58 1997 Executive Vice President Gregory S. Anderson 48 1991 Vice President-Human Resources Richard S. Anderson 49 1996 Vice President-Material Handling Product Group Terry H. Cathey 49 1993 Vice President-Material Handling Operations Zouhdi M. Derhalli 64 1993 Vice President-Material Handling Product Development Robert L. Mott 55 1996 Vice President-OEM Product Group - -------------------------------------------------------------------------------- 7 ITEM 11. EXECUTIVE COMPENSATION The definitive Proxy Statement dated April 14, 1997 is incorporated by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The definitive Proxy Statement dated April 14, 1997 is incorporated by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS None. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K INDEX TO FINANCIAL STATEMENTS (a) 1. CONSOLIDATED FINANCIAL STATEMENTS The Consolidated Financial Statements, together with the report thereon of Price Waterhouse LLP dated March 18, 1997, appearing on pages 5 to 16 of the accompanying 1996 Annual Report are incorporated by reference in this Form 10-K Annual Report. With the exception of the aforementioned information and information incorporated in Items 5, 6 and 8, the 1996 Annual Report is not to be deemed filed as part of this report. 2. FINANCIAL STATEMENT SCHEDULES-1996, 1995 AND 1994 Financial statement schedules not included in this Form 10-K Annual Report have been omitted because they are not applicable or not required. The individual financial statements of the registrant and its subsidiaries have been omitted since the registrant is primarily an operating company and all subsidiaries included in the consolidated financial statements, in the aggregate, do not have minority equity interests and/or indebtedness to any person other than the registrant or its consolidated subsidiaries in amounts which together exceed 5% of the total consolidated assets at January 31, 1997, except indebtedness incurred in the ordinary course of business which is not overdue. 3. EXHIBITS 1. Copy of Notice of Annual Meeting dated April 14, 1997. 2. Copy of Form of Proxy for Annual Meeting. 3. Basic documents incorporated by reference: Articles of Incorporation filed with the Commission May 28, 1965. Amendment to Articles of Incorporation filed in Proxy Statement for annual meeting of shareholders May 12, 1987, filed with the Commission April 14,1988. Amendment to Articles of Incorporation filed in Proxy Statement for annual meeting of shareholders May 9, 1989, filed with the Commission April 27, 1990. By-Laws, as amended to February 8, 1989, filed with the Commission April 27,1990. Specimen copy of stock certificate, filed as Exhibit 4-1 to Form S-1, filed with the Commission May 28, 1965. (b) REPORTS ON FORM 8-K During the quarter ended January 31, 1997, the Company filed a current report on Form 8-K with the Commission dated January 13, 1997 reporting the acquisition of Industrial Tires Limited (ITL). 8 SIGNATURES Pursuant to the requirements of Section 13 and 15(d) of the Securities Exchange Act of 1934, the registrant, CASCADE CORPORATION has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. CASCADE CORPORATION ----------------------------------- By: James P. Miller EXECUTIVE VICE PRESIDENT, SECRETARY & TREASURER 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 on the dates indicated. - ------------------------------------------------------------------------------- Joseph J. Barclay Date CHAIRMAN, DIRECTOR - ------------------------------------------------------------------------------- Robert C. Warren, Jr. Date PRESIDENT AND CHIEF EXECUTIVE OFFICER, DIRECTOR - ------------------------------------------------------------------------------- Richard C. Hire, DIRECTOR Date - ------------------------------------------------------------------------------- Eric Hoffman, DIRECTOR Date - ------------------------------------------------------------------------------- C. Calvert Knudsen, DIRECTOR Date - ------------------------------------------------------------------------------- Nicholas R. Lardy, DIRECTOR Date - ------------------------------------------------------------------------------- Lawrence S. Maunder, DIRECTOR Date - ------------------------------------------------------------------------------- James S. Osterman, DIRECTOR Date - ------------------------------------------------------------------------------- Jack B. Schwartz, DIRECTOR Date - ------------------------------------------------------------------------------- Rob Spaans, DIRECTOR Date 9 EX-99.1 2 EXHIBIT 99.1 FINANCIAL SUMMARY (IN MILLIONS) [CHART] [CHART] [CHART]
FINANCIAL HIGHLIGHTS (IN THOUSANDS EXCEPT WHERE NOTED*) January 31 1997 1996 1995 1994 1993 Net sales $218,485 $234,030 $183,365 $141,325 $148,435 Operating income $ 24,850 $ 16,415 $ 19,350 $ 9,735 $ 14,155 Net income $ 17,420 $ 10,550(1) $ 12,250 $ 3,885(2) $ 7,695 Per common share Net income* $ 1.48 $ .88(1) $ 1.02 $ .32(2) $ .64 Book value* $ 8.46 $ 7.74 $ 7.37 $ 6.47 $ 6.55 Working capital $ 32,750 $ 49,829 $ 40,821 $ 37,337 $ 38,175 Expenditures for property, plant and equipment $ 16,624 $ 11,825 $ 21,921 $ 8,126 $ 7,772 Total assets $199,493 $153,190 $137,109 $106,571 $104,987 Long-term debt $ 12,810 $ 9,531 $ 7,809 $ 682 $ 1,228 Shareholders' equity $ 98,757 $ 92,057 $ 88,538 $ 77,751 $ 78,650 Number of employees* 1,293 1,103 993 838 863
(1) After $12,000 ($7,800 or $.65 per share, net of taxes) charge for environmental expenses. See note 12 to consolidated financial statements. (2) After $1,980 or $.17 per share charge related to cumulative effect of accounting change. See note 8 to consolidated financial statements. 1 ------------------------------------------------------------------------------ CONSOLIDATED STATEMENT OF INCOME & RETAINED EARNINGS
CASCADE CORPORATION & SUBSIDIARY COMPANIES - ------------------------------------------------------------------------------------------ Year Ended January 31 1997 1996 1995 (Dollars in Thousands) Net Sales $ 218,485 $ 234,030 $ 183,365 ----------- ----------- ----------- Operating expenses: Cost of goods sold 143,080 153,345 118,430 Depreciation 10,280 9,540 8,100 Selling and administrative expenses 40,275 39,935 35,085 Environmental expenses (Note 12) 14,795 2,400 ----------- ----------- ----------- 193,635 217,615 164,015 ----------- ----------- ----------- Operating income 24,850 16,415 19,350 Interest expense 876 1,085 335 Interest income (1,076) (1,045) (535) Other expense, net 65 315 915 ----------- ----------- ----------- Income before income taxes 24,985 16,060 18,635 Income taxes (Note 3) 7,565 5,510 6,385 ----------- ----------- ----------- Net Income 17,420 10,550 12,250 Retained earnings, beginning of year 85,083 79,910 75,262 Dividends ($.45, $.45 and $.375 per share) (5,340) (5,377) (4,504) Repurchase of common stock (2,602) Stock distribution (3,098) ----------- ----------- ----------- Retained earnings, end of year $ 94,561 $ 85,083 $ 79,910 ----------- ----------- ----------- ----------- ----------- ----------- Net income per share $ 1.48 $ .88 $ 1.02 ----------- ----------- ----------- ----------- ----------- ----------- Weighted average shares outstanding 11,796,677 11,990,447 12,009,904 ----------- ----------- ----------- ----------- ----------- -----------
The accompanying notes to consolidated financial statements are an integral part of this statement. 5 ------------------------------------------------------------------------------ CONSOLIDATED BALANCE SHEET
CASCADE CORPORATION & SUBSIDIARY COMPANIES - ------------------------------------------------------------------------------------------ January 31 ASSETS 1997 1996 (Dollars in Thousands) Current assets: Cash and cash equivalents $ 15,642 $ 23,326 Accounts receivable, less allowance for doubtful accounts of $227 and $967 43,469 38,574 Inventories, at average cost which is lower than market: Finished goods and components 26,701 16,142 Goods in process 4,634 4,083 Raw materials 4,667 4,990 -------- -------- 36,002 25,215 Deferred income taxes (Note 3) 1,496 2,000 Prepaid expenses 2,020 849 -------- -------- Total current assets 98,629 89,964 Property, plant and equipment, at cost less accumulated depreciation (Notes 2 and 4) 81,393 63,214 Deferred income taxes (Note 3) 1,139 1,796 GoodwiN (Note 9) 18,332 1,954 -------- -------- Total assets $199,493 $156,928 -------- -------- -------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable to banks (Note 4) $ 29,846 $5,015 Current portion of long-term debt (Note 4) 2,264 2,940 Accounts payable 21,373 17,126 Accrued payroll and payroll taxes 4,222 5,654 Other accrued expenses 8,174 9,400 -------- -------- Total current liabilities 65,879 40,135 Long-term debt (Note 4) 12,810 9,531 Deferred income taxes (Note 3) 5,151 1,738 Accrued environmental expenditures (Note 12) 8,913 10,500 Other liabilities (Note 8) 3,033 2,967 -------- -------- Total liabilities 95,786 64,871 -------- -------- Mandatorily redeemable convertible preferred stock, no par value, 330,000 shares issued (Note 9): 4,950 -------- -------- Shareholders' equity (Note 6): Common stock, $.50 par value, authorized 20,000,000 shares; 12,048,208 and 12,278,208 shares issued 6,024 6,139 Additional paid-in capital 568 Retained earnings 94,561 85,083 Cumulative foreign currency translation adjustments (1,142) 953 Treasury stock, at cost, 381,504 shares (686) (686) -------- -------- Total shareholders' equity 98,757 92,057 -------- -------- Total liabilities, mandatorily redeemable convertible preferred stock and shareholders' equity $199,493 $156,928 -------- -------- -------- --------
The accompanying notes to consolidated financial statements are an integral part of this statement. 6 ----------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF CASH FLOWS
CASCADE CORPORATION & SUBSIDIARY COMPANIES - ----------------------------------------------------------------------------------------------------- Year Ended January 31 1997 1996 1995 (Dollars in Thousands) Cash flows from operating activities: Net income $17,420 $10,550 $12,250 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 10,280 9,540 8,100 Gain on sale of property, plant and equipment (150) Deferred income taxes 613 (4,099) (9) Changes in operating assets and liabilities: Accounts receivable 535 (3,297) (10,424) Inventories (258) (4,148) (1,933) Income taxes (2,099) 1,133 753 Prepaid expenses (1,073) 70 257 Accounts payable and accrued expenses (1,523) 1,457 9,905 Accrued environmental expenditures (1,587) 10,500 Other liabilities 66 59 34 ------- ------- ------- Net cash provided by operating activities 22,374 21,765 18,783 ------- ------- ------- Cash flows from investing activities: Acquisition of property, plant and equipment (16,624) (11,825) (21,921) Business Acquisitions (22,849) Proceeds from sale of property, plant and equipment 1,849 Other assets 64 (69) (222) ------- ------- ------- Net cash used in investing activities (39,409) (11,894) (20,294) ------- ------- ------- Cash flows from financing activities: Long-term debt, including current portion (687) 4,259 6,318 Notes payable to banks 19,297 (797) 2,447 Repurchase of common stock (3,285) (1,534) Cash dividends paid (5,340) (5,377) (4,504) ------- ------- ------- Net cash provided (used) by financing activities 9,985 (3,449) 4,261 ------- ------- ------- Effect of exchange rate changes (634) (299) 1,836 ------- ------- ------- Increase (decrease) in cash and cash equivalents (7,684) 6,123 4,586 Cash and cash equivalents at beginning of year 23,326 17,203 12,617 ------- ------- ------- Cash and cash equivalents at end of year $15,642 $23,326 $17,203 ------- ------- ------- ------- ------- ------- Supplemental disclosure of cash flow information: Cash paid during the year for: Interest $ 804 $ 1,025 $ 307 Income taxes $ 8,864 $ 8,434 $ 5,676 Mandatorily redeemable convertible preferred stock issued for acquisition $ 4,950 $ - $ -
The accompanying notes to consolidated financial statements are an integral part of this statement. 7 ------------------------------------------------------------------------------ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CASCADE CORPORATION & SUBSIDIARY COMPANIES - -------------------------------------------------------------------------------- NOTE 1 - SUMMARY OF PRINCIPAL ACCOUNTING POLICIES CONSOLIDATION The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. Intercompany balances and transactions have been eliminated. SHORT-TERM INVESTMENTS Cash and cash equivalents consist of cash on deposit and highly liquid investments, including investments classified as trading securities in accordance with Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities." DEPRECIATION AND AMORTIZATION Property, plant and equipment are stated at cost. Depreciation is provided on the straight-line basis over the estimated useful lives of the respective assets. Goodwill consists of the cost of acquired businesses (Note 9) in excess of the fair value of net identifiable assets acquired. Generally, goodwill is amortized on a straight-line basis over 20 years. The Company annually reviews the realizability of recorded goodwill based upon expectations of nondiscounted cash flows and operating income of the acquired businesses. As of January 31, 1997, the Company believes that there are no significantly impaired intangible assets. Accumulated amortization of goodwill was $75,000 at January 31, 1997. INCOME TAXES Income taxes are accounted for in accordance with SFAS 109, "Accounting for Income Taxes." Deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. STOCK-BASED COMPENSATION The Company adopted Statement of Financial Accounting Standards No. 123 (FAS 123) "Accounting for Stock-Based Compensation" in 1997. This statement allows companies to choose whether to account for stock-based compensation under the current method as prescribed by APB 25 or use a fair value method described in FAS 123. The Company continues to follow the provisions of APB 25. FOREIGN CURRENCY TRANSLATION The Company translated the balance sheets of its foreign subsidiaries using fiscal year-end exchange rates. The statements of income are translated using the average exchange rates for the fiscal year. The effects of such translations are included in the shareholders' equity account "cumulative foreign currency translation adjustments" as decreases of $2,095,000 and $120,000 for the years ended January 31, 1997 and 1996, and an increase of $3,041,000 for the year ended January 31, 1995. NOTE 2 - PROPERTY, PLANT AND EQUIPMENT January 31 1997 1996 (Dollars in Thousands) Land $ 4,229 $ 3,890 Construction in progress 4,493 - Buildings 31,437 31,308 Machinery and equipment 115,642 98,521 -------- -------- 155,801 133,719 Accumulated depreciation (74,408) (70,505) -------- -------- $ 81,393 $ 63,214 -------- -------- -------- -------- 8 ----------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CASCADE CORPORATION & SUBSIDIARY COMPANIES - --------------------------------------------------------------------------------------------------------------- NOTE 3 - INCOME TAXES Year Ended January 31 1997 1996 1995 (Dollars in Thousands) Income before taxes was as follows: United States $15,990 $ 5,295 $12,925 Foreign 8,995 10,765 5,710 ------- ------- ------- $24,985 $16,060 $18,635 ------- ------- ------- ------- ------- ------- Taxes charged (credited) against operations were as follows: Current Federal $ 2,572 $ 5,507 $ 3,824 State 819 889 623 Foreign 2,816 3,740 2,319 ------- ------- ------- Total 6,207 10,136 6,766 ------- ------- ------- Deferred Federal 932 (4,038) (274) State 296 (651) (44) Foreign 130 63 (63) ------- ------- ------- Total 1,358 (4,626) (381) ------- ------- ------- Total income taxes $ 7,565 $ 5,510 $ 6,385 ------- ------- ------- ------- ------- ------- The federal rate reconciles to the effective rate as follows: Federal statutory rate 35.0% 35.0% 35.0% State income taxes, net of federal tax benefits 2.9 1.0 2.0 Effect of foreign tax rates (.8) .2 1.6 IRS settlement (1) (5.7) - - Tax credits and other (1.1) (1.9) (4.3) ------- ------- ------- Effective income tax rate 30.3% 34.3% 34.3% ------- ------- ------- ------- ------- -------
The deferred tax liabilities (assets) recorded on the January 31 consolidated balance sheet are comprised of 1997 1996 the following: (Dollars in Thousands) Accruals not deductible until paid $(1,052) $(1,579) Other (197) (421) ------- ------- Current deferred income taxes $(1,249) $(2,000) ------- ------- ------- ------- Depreciation $ 7,181 $ 4,645 Employee benefits (902) (909) Accrued environmental expenditures (3,302) (3,885) Other 1,035 91 ------- ------- Noncurrent deferred income taxes $ 4,012 $ (58) ------- ------- ------- -------
(1) IRS settlement is the result of the resolution of prior years' deferred compensation deductions. 9 ----------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CASCADE CORPORATION & SUBSIDIARY COMPANIES - -------------------------------------------------------------------------------- NOTE 4 - BORROWINGS January 31 1997 1996 (Dollars in Thousands) 5.3% mortgage note, due annually through 2008 secured by plant and equipment $ 9,401 $ 9,292 9.0% mortgage note, due monthly through 2001 secured by equipment 2,421 - 5.25% mortage note, due monthly through 2002, secured by plant 903 - 10.0% mortgage notes, due annually through 1999 85 239 ------- ------- $12,810 $ 9,531 ------- ------- ------- ------- Maturities of long-term debt for the years January 31, 1998 through January 31, 2002, and thereafter, respectively, are $2,264,000, $2,174,000, $3,028,000, $1,444,000, $1,762,000 and $4,402,000. Borrowing arrangements with commercial banks provided short-term lines of credit at January 31, 1997 totalling $81,816,000, of which $51,970,000 was unused. Average interest rates on short-term borrowings were 5.4% and 2.4% at January 31, 1997 and 1996, respectively. Subsequent to year end, the Company increased its short-term borrowing availability by an additional $30,000,000. NOTE 5 - STOCK OPTION PLAN The Company has reserved 800,000 shares of common stock for the Cascade Corporation 1995 Senior Managers' Incentive Stock Option Plan (the Plan). The Plan permits the award of incentive stock options (ISOs) to officers and key employees. Under the terms of the Plan, the purchase price of shares subject to each ISO granted must not be less than the fair market value on the date of grant. Accordingly, no compensation cost has been recognized for the stock option plan. Outstanding options vest after three years and are exercisable for ten years from the date of grant. The Company has determined that the pro forma effects of applying FAS 123 would not have a material effect on the results of operations for 1997 and 1996. This determination was made using the following assumptions. January 31 1997 1996 Risk-free interest rate 6.7% 6.1% Expected Life 5 Years 5 Years Expected Volatility 26% 26% Expected Dividend Yield 3% 3% 10 ----------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CASCADE CORPORATION & SUBSIDIARY COMPANIES - -------------------------------------------------------------------------------- NOTE 5 - STOCK OPTION PLAN CONTINUED A summary of the Plan's status at January 31, 1997 and 1996 together with changes during the period then ended is presented in the following table:
Year Ended January 31 1997 1996 --------------------- ---------------------- WEIGHTED WEIGHTED AVERAGE AVERAGE PRICE PER PRICE PER SHARES SHARE SHARES SHARE ------ --------- ------ --------- Outstanding at beginning of year 75,253 $ 16.37 - - Granted 93,341 $ 16.00 77,355 $ 16.37 Forfeited (23,162) $ 16.17 (2,102) $ 16.37 ------- ------- Outstanding at end of year 145,432 $ 16.17 75,253 $ 16.37 ------- ------- ------- ------- ------- ------- ------- -------
The following table summarizes information about fixed options outstanding at January 31, 1997.
WEIGHTED AVERAGE EXERCISE NUMBER OF WEIGHTED CONTRACTUAL PRICE RANGE SHARES AVERAGE PRICE LIFE ----------- --------- ------------- ----------- $ 16.37 64,455 $ 16.37 8 $ 16.00 80,977 $ 16.00 9
NOTE 6 - CAPITAL STOCK There are 200,000 shares authorized of no par value preferred stock; none are outstanding. 11 ---------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CASCADE CORPORATION & SUBSIDIARY COMPANIES - -------------------------------------------------------------------------------- NOTE 7- BENEFIT PLANS The Company has defined benefit plans covering certain U.S. and Canadian employees. The benefits are based on years of service and average earnings over a specified five-year period of prior service. The Company's funding policy is to make annual contributions that are between the minimum amount required by the Employee Retirement Income Security Act and the maximum amount deductible under the current tax regulations. Substantially all plan assets are invested in government or corporate bonds. Net pension cost, the plans' funded status and significant assumptions include the following:
Year Ended January 31 1997 1996 1995 (Dollars In Thousands) Interest cost on projected benefit obligation $ 248 $ 314 $ 271 Actual return on assets (257) (517) 65 Net amortization and deferral 268 432 (96) ------- ------- ------- Net periodic pension cost $ 259 $ 229 $ 240 ------- ------- ------- ------- ------- ------- Projected and accumulated vested benefit obligation $(6,106) $(4,261) $(3,893) Plan assets at fair value 6,147 3,866 3,053 ------- ------- ------- Plan assets in excess of (less than) projected benefit obligation 41 (395) (840) Unrecognized prior service cost 120 133 146 Unrecognized net loss 1,208 1,231 1,142 ------- ------- ------- Prepaid pension expense $ 1,369 $ 969 $ 448 ------- ------- ------- ------- ------- ------- Discount rate 7.25% 6.75% 8.50% Expected long-term rate of return 7.25% 8.00% 8.00%
In December 1988, the Company amended the plan covering U.S. employees to limit benefits to those accrued through December 31, 1988. Also effective January 1, 1989, the Company instituted a defined contribution plan and a limited matching contribution program, both pursuant to applicable provisions of the Internal Revenue Code, and contributed $1,488,000, $1,318,000 and $1,195,000 for 1996, 1995 and 1994, respectively. 12 ----------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CASCADE CORPORATION & SUBSIDIARY COMPANIES - -------------------------------------------------------------------------------- NOTE 8 - POSTRETIREIMENT BENEFITS OTHER THAN PENSIONS The Company provides health care benefits for eligible retirees. The Company accounts for such costs under FAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." Therefore, the Company is accruing the future costs of providing such benefits to eligible active employees during the years they render service. The following table sets forth the plan's status reconciled with the amount included in the Consolidated Balance Sheets:
January 31 1997 1996 1995 (Dollars in Thousands) Accumulated postretirement benefit obligation: Retirees $(2,342) $(2,551) $(2,557) Fully eligible active plan participants (416) (350) (210) Other active plan participants (1,249) (1,502) (849) ------- ------- ------- (4,007) (4,403) (3,616) Plan assets at fair value - - - ------- ------- ------- Accumulated postretirement benefit obligation in excess of plan assets (4,007) (4,403) (3,616) Unrecognized net loss 974 1,436 708 ------- ------- ------- $(3,033) $(2,967) $(2,908) ------- ------- ------- ------- ------- -------
The net periodic postretirement benefit costs are as follows: January 31 1997 1996 1995 (Dollars in Thousands) Service cost $ 83 $ 56 $ 42 Interest cost 288 295 230 Net amoritization and deferral 84 23 29 ------- ------- ------- Net periodic postretirement benefit cost $ 455 $ 374 $ 301 ------- ------- ------- ------- ------- -------
To estimate these costs, health care costs were assumed to increase at an annual rate of 9% after 1996 with the rate of increase declining ratably to 4% by 2001 and thereafter. The weighted average discount rate was assumed to be 7.25%, 6.75% and 8.5% for 1996, 1995 and 1994, respectively. If the cost trend rates were increased by one percentage point, the accumulated postretirement benefit obligation as of January 31, 1997 would increase by $416,000 and net periodic postretirement benefit cost would increase by $43,000. 13 ----------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CASCADE CORPORATION & SUBSIDIARY COMPANIES - -------------------------------------------------------------------------------- NOTE 9 - ACQUISITIONS INDUSTRIAL TIRES LIMITED In January 1997, the Company purchased all of the outstanding capital stock of Industrial Tire Limited (ITL), a Canadian corporation that manufactures solid rubber tires for the material handling industry. The aggregate purchase price, including direct costs of acquisition and 330,000 shares of Cascade (Canada), Inc. Preferred Stock (the Preferred Stock), was $23,660,000. This transaction has been accounted for using the purchase method of accounting. Each share of Preferred Stock is convertible into one share of the Company's common stock at the holder's option. In addition, the Preferred Stock gives the holder the ability to require the Company to repurchase the shares on or after January 13, 2002 at the original issuance price of approximately $15 per share, for a maximum repurchase obligation of approximately $4,950,000. Consequently, the Preferred Stock is classified as "Mandatorily Redeemable Convertible Preferred Stock" as of January 31, 1997. The provisions of the Preferred Stock also entitle the holder to cumulative dividends paid on the common shares of Cascade Corporation and to a liquidation preference equal to approximately $15 per share in priority to any payment on any shares ranking junior to the Preferred Stock. OTHER ACQUISITIONS In addition to the acquisition discussed above, during 1996, the Company acquired two other manufacturers in related businesses. The purchase price for the acquisitions was $4,063,000. These transactions have also been accounted for under the purchase method of accounting; therefore, the acquired businesses have been included in the Company's results of operations since each respective acquisition date. PRO FORMA INFORMATION In accordance with APB 16, the following unaudited pro forma information is provided. The total revenues include the consolidated revenues of the Company as reported and the net revenues of the acquired business as if they had been acquired as of the beginning of the respective periods. The revenues have not been adjusted to consider any benefit that may have occurred from the combination of the operations. The pro forma net income and net income per share have been adjusted to include the additional costs of depreciation, goodwill amortization and interest expense based on the actual purchase price and related borrowings. Expenses have not been reduced to reflect any operational efficiencies that may result from the combination of the entities. The unaudited pro forma information is not necessarily indicative of what actual results would have been had the acquisitions been completed by the Company at the beginning of the respective periods. Year ended January 31 1997 1996 UNAUDITED (Dollars in thousands except per share) Total revenue $259,548 $286,229 -------- -------- -------- -------- Net income $ 14,975 $ 7,955 -------- -------- -------- -------- Net income per share $ 1.24 $ .65 -------- -------- -------- -------- 14 --------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CASCADE CORPORATION & SUBSIDIARY COMPANIES - -------------------------------------------------------------------------------- NOTE 10 - INFORMATION ABOUT OPERATIONS The Company designs, manufactures and markets equipment used in materials handling applications. Sales to the largest single customer were 9.2%, 9.7% and 10.8% of consolidated sales during the years ended January 31, 1997, 1996 and 1995, respectively. Information about the Company's operations in different geographic areas is shown below:
Year ended January 31 (Dollars in Thousands) NORTH ELIMIN- CONSOLI- 1997 AMERICA EUROPE OTHER ATIONS DATED --------- --------- --------- --------- --------- Sales to unaffiliated customers $130,145 $ 67,925 $ 20,415 $ $218,485 Transfers between areas 16,971 305 334 (17,610) -------- -------- -------- -------- -------- Total revenue $147,116 $ 68,230 $ 20,749 $(17,610) $218,485 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Net income $ 12,845 $ 2,815 $ 1,760 $ 17,420 -------- -------- -------- -------- -------- -------- -------- -------- Identifiable assets $114,873 $ 65,932 $ 18,688 $199,493 -------- -------- -------- -------- -------- -------- -------- -------- 1996 Sales to unaffiliated customers $139,950 $ 75,375 $ 18,705 $ $234,030 Transfers between areas 14,607 587 747 (15,941) -------- -------- -------- -------- -------- Total revenue $154,557 $ 75,962 $ 19,452 $(15,941) $234,030 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Net income $ 5,809 $ 4,078 $ 663 $ 10,550 -------- -------- -------- -------- -------- -------- -------- -------- Identifiable assets $ 72,847 $ 64,367 $ 15,976 $153,190 -------- -------- -------- -------- -------- -------- -------- -------- 1995 Sales to unaffiliated customers $115,061 $ 53,737 $ 14,567 $ $185,365 Transfers between areas 11,016 119 721 (11,856) -------- -------- -------- -------- -------- Total revenue $126,077 $ 53,856 $ 15,288 $(11,856) $183,365 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Net income $ 9,598 $ 2,480 $ 172 $ 12,250 -------- -------- -------- -------- -------- -------- -------- -------- Identifiable assets $ 69,087 $ 53,210 $ 14,812 $137,109 -------- -------- -------- -------- -------- -------- -------- --------
NOTE 11 - COMMITMENTS AND CONTINGENCIES The Company leases certain of its facilities and equipment under noncancelable operating leases. The minimum rental commitments under these leases for the years ended January 31, 1998 through January 31, 2001, respectively, are $900,000, $509,000, $331,000 and $76,000. For the years ended January 31, 1997, 1996 and 1995, total rentals charged to expense amounted to $789,000, $705,000 and $591,000. NOTE 12 - ENVIRONMENTAL MATTERS The Company is engaged in environmental investigations and remediation efforts in its ordinary course of business. In the year ended January 31, 1996, the Company accrued a charge of $12,000,000 ($7,800,000 after tax) to provide for probable future costs related to its Portland, Oregon manufacturing facility. In accordance with management expectations, the Company incurred actual charges totaling $1,587,000 during 1997. The Company has reviewed the remaining accrued liability of $10,413,000 and determined that it fairly approximates the cost of future known remediation costs at this facility. However, since future remediation costs are subject to many uncertainties, actual expenses may vary from the amount recorded at January 31, 1997. 15 ----------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CASCADE CORPORATION & SUBSIDIARY COMPANIES - -------------------------------------------------------------------------------- NOTE 12 - ENVIRONMENTAL MATTERS CONTINUED The Company has made claims under various insurance policies. Based upon current Oregon court decisions and advice from legal counsel, the Company believes it will recover all or a substantial portion of the past and future costs of investigation and remediation. Litigation has been initiated to enforce terms of these policies. No adjustments have been made to the financial statements with respect to the potential outcome of this uncertainty. NOTE 13 - SUBSEQUENT EVENT In March 1997, the Company acquired all the outstanding capital stock of Kenhar Corporation, a Canadian corporation that manufactures forks for lift trucks. The aggregate purchase price was approximately $73,090,000 and includes $57,450,000 in cash and approximately $15,640,000 in stock. Additionally, the Company purchased all of the outstanding stock of Hyco-Cascade subsequent to year end. Hyco-Cascade is an Australian manufacturer and distributor of lift truck attachments and accessories. The amount paid in connection with this purchase was $12,244,000, which consisted of $7,538,000 in cash, $3,206,000 in stock and $1,500,000 in debt. QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (IN THOUSANDS EXCEPT PER SHARE FIGURES)
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER YEAR ENDED JANUARY 31, 1997 Net sales $57,010 $54,805 $54,870 $51,800 Gross profit before depreciation 19,665 19,040 19,160 17,540 Net income 4,390 4,335 4,365 4,330 Net income per share $ .37 $ .37 $ .37 $ .37 1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER YEAR ENDED JANUARY 31, 1996 Net sales $57,150 $58,650 $58,480 $59,750 Gross profit before depreciation 19,555 20,380 19,875 20,875 Net income (loss) 4,290 4,605 4,680 (3,025) Net income (loss) per share $ .36 $ .38 $ .39 $ (.25)
REPORT OF INDEPENDENT ACCOUNTANTS TO THE BOARD OF DIRECTORS & SHAREHOLDERS OF CASCADE CORPORATION In our opinion, the consolidated financial statements appearing on pages 5 through 16 of this annual report present fairly, in all material respects, the financial position of Cascade Corporation and its subsidiaries at January 31, 1997 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended January 31, 1997, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. /s/Price Waterhouse LLP Portland, Oregon March 18, 1997 16 ----------------------------------------------------------------------------- INVESTOR INFORMATION STOCKHOLDER INFORMATION Cascade's Form 10-K Report to the Securities and Exchange Commission for 1996 is available to stockholders and others who request it. To obtain copies, please write to Cascade Corporation, 2020 S.W. 4th Avenue, Suite 600, Portland, Oregon 97201. TRANSFER AGENT & REGISTRAR Chase Mellon Shareholder Services L.L.C. Shareholder Relations P.O. Box 3315 South Hackensack, N. J. 07606 (800) 522-6645 ANNUAL MEETING The Annual Meeting of the Stockholders of Cascade Corporation will be held at The Governor Hotel, 611 S.W. 10th Avenue, Portland, Oregon at 10:00 a.m. on Tuesday, May 13, 1997. A formal notice of the meeting, together with a proxy statement and proxy form, will be mailed to stockholders. STOCK EXCHANGE LISTING The Company's stock is traded on the New York Stock Exchange under the symbol CAE MARKET INFORMATION The high and low sales prices of the common stock of Cascade Corporation during 1996 and 1995 were as follows: INVESTOR RELATIONS COUNSEL Gerald A. Parsons (503) 228-2909 Year ended January 31 1997 1996 --------------------- ---------------------- HIGH LOW HIGH LOW --------------------- ---------------------- Market price range First quarter $ 14.50 $ 11.75 $ 17.00 $ 12.00 Second quarter 16.50 12.75 17.25 14.50 Third quarter 14.50 11.50 16.25 13.00 Fourth quarter 16.50 11.50 15.50 11.75 COMMON STOCK DIVIDENDS Year ended January 31 1997 1996 ------------------------ First quarter 9.0 cents 9.0 cents Second quarter 9.0 9.0 Third quarter 9.0 9.0 Fourth quarter 18.0 18.0 ---- ----- 45.0 cents 45.0 cents ---- ----- ---- ----- In February 1995 the Company declared a 100% stock dividend. 17 ----------------------------------------------------------------------------- EX-27 3 EXHIBIT 27
5 YEAR JAN-31-1997 FEB-01-1996 JAN-31-1997 15,642 0 43,696 227 36,002 98,629 155,801 74,408 199,493 65,879 0 4,950 0 6,024 92,733 199,493 218,485 218,485 143,080 143,080 65 0 (200) 24,985 7,565 0 0 0 0 17,420 1.48 1.48
-----END PRIVACY-ENHANCED MESSAGE-----