EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

Portland, Oregon

March 31, 2010

FOR IMMEDIATE RELEASE

CASCADE CORPORATION ANNOUNCES FINANCIAL RESULTS FOR THE FOURTH QUARTER ENDED JANUARY 31, 2010

Cascade Corporation (NYSE: CASC) today reported its financial results for the fourth quarter ended January 31, 2010.

Overview

 

•  

Net sales of $80.6 million for the fourth quarter of fiscal 2010 were 19% lower than net sales of $95.1 million for the prior year fourth quarter, excluding the impact of foreign currencies.

 

•  

Net loss was $14.4 million ($1.33 loss per diluted share) for the fourth quarter of fiscal 2010 compared to net loss of $30.5 million ($2.82 loss per diluted share) for the fourth quarter of fiscal 2009.

 

•  

The fourth quarter of fiscal 2010 results include $12.1 million of restructuring costs primarily related to shutting down production at our fork facility in Hagen, Germany.

 

•  

Cost of goods sold was negatively impacted during the fourth quarter of fiscal 2010 by inventory write offs in Europe of $2.5 million primarily related to our restructuring activities.

 

•  

Fourth quarter of fiscal 2010 included $1.3 million of environmental costs related to remediation activities at our facility in Springfield, Ohio.

 

•  

The fourth quarter of fiscal 2009 results include a $46.4 million asset impairment charge for goodwill and intangible assets associated with our North American construction attachment business.

 

•  

The provision for income taxes in the fourth quarter of fiscal 2010 is primarily a result of taxes due in countries where we are generating income. We are currently unable to realize a tax benefit in several European countries where we have incurred losses.

Cascade Corporation

March 31, 2010

Page 2

Q4 vs. Q3 Comparison (Fiscal 2010)

 

•  

Net sales decreased slightly during the fourth quarter of fiscal 2010 compared to the third quarter of fiscal 2010. Higher sales volumes in Europe were offset by lower sales volumes in all other regions. Historically, fourth quarter sales are negatively impacted due to fewer shipping days during the quarter, as a result of holiday shutdowns.

 

•  

The consolidated gross profit percentage decreased 1% during the fourth quarter of fiscal 2010 compared to the previous quarter. Increased margins in Europe and China were offset by lower margins in North America and Asia Pacific.

 

•  

Fourth quarter of fiscal 2010 included $1.3 million of environmental costs related to remediation activities at our facility in Springfield, Ohio.

 

•  

Operating income, excluding the impact of restructuring costs in Europe and an environmental charge in North America, was $2.0 million lower during the fourth quarter of fiscal 2010 compared to the previous quarter.

Fourth Quarter Fiscal 2010 Summary

 

•  

Summary financial results are outlined below (in thousands, except earnings per share):

 

Quarter ended January 31,

    2010     2009     % Change  

Net sales

    $ 80,572      $ 95,068      (15 )% 

Gross profit

      18,393        22,946      (20 )% 

Gross profit %

      23 %      24 %   

SG&A

      17,836        17,614      1 % 

Environmental

      1,255        —       

Asset impairment charge

      —          46,376     

European restructuring costs

      12,121        806     

Operating loss

      (12,874 )      (42,604 )    (70 )% 

Interest expense, net

      421        399      6 % 

Foreign currency losses, net

      159        1,239      (87 )% 

Loss before taxes

      (13,454 )      (44,242 )    (70 )% 

Provision for (benefit from) income taxes

      976        (13,741 )    (107 )% 

Effective tax rate

      (7 )%      31 %   

Net loss

    $ (14,430 )    $ (30,501 )    (53 )% 

Diluted loss per share

    $ (1.33 )    $ (2.82 )    (53 )% 

Cascade Corporation

March 31, 2010

Page 3

 

•  

Consolidated net sales decreased 19%, excluding the impact of currency changes, due primarily to lower sales volumes in North America, Europe and Asia Pacific. Global lift truck shipments were down 25% compared to the prior year. Details of the net sales decrease over the prior year fourth quarter follow (in thousands):

 

Revenue decrease

    $ (18,525 )    (19 )% 

Foreign currency changes

      4,029      4 % 
              

Total

    $ (14,496 )    (15 )% 

 

•  

Our consolidated gross profit percentage decreased 1% primarily as a result of operational costs associated with our European restructuring, including disruption costs and inventory charges. These factors were offset by a favorable product mix in the current year and lower overhead costs as a result of headcount reductions and other cost saving initiatives implemented during fiscal 2010.

 

•  

We incurred restructuring costs of $12.1 million, primarily related to shutting down production at our fork facility in Hagen, Germany. These costs include $6.1 million of severance costs, $4.2 million of fixed asset write downs and $1.8 million of other restructuring costs.

 

•  

During the fourth quarter of fiscal 2010, we recorded a $1.3 million environmental charge primarily related to remediation activities at our Springfield, Ohio location.

 

•  

During the fourth quarter of fiscal 2009, we recognized a $46.4 million asset impairment charge for goodwill and intangible assets associated with our construction attachment business.

 

•  

The income tax expense in fiscal 2010 is a result of taxes due in countries where we are generating income. We are currently unable to realize a tax benefit in several European countries where we have incurred losses.

Market Conditions

 

•  

Percentage changes in lift truck industry shipments, by region, as compared to the prior year are outlined below. Although lift truck unit shipments are an indicator of the general health of the industry, they do not necessarily correlate directly with the demand for our products.

 

     Shipments
Q4 FY10 vs Q4 FY09 		 

North America

    (44 )% 

Europe

    (46 )% 

Asia Pacific

    (24 )% 

China

    76 % 

Global

    (25 )% 

Cascade Corporation

March 31, 2010

Page 4

 

•  

Percentage changes in fourth quarter fiscal 2010 lift truck industry orders, by region, as compared to the previous quarter are outlined below.

 

     Orders
Q4 FY10 vs Q3 FY10 		 

North America

    16 % 

Europe

    18 % 

Asia Pacific

    6 % 

China

    7 % 

Global

    12 % 

 

•  

Towards the end of fiscal 2010, we started to see some positive regional trends in the lift truck market which we believe could continue into 2011. Based on these trends, we believe the following:

 

  •  

North America has begun to recover, however it will be at a slow, gradual pace over the upcoming year.

 

  •  

Europe seems to have bottomed out and will see a gradual recovery during the next 18 months.

 

  •  

The Asia Pacific market will experience slow growth during fiscal 2011.

 

  •  

China will continue to grow at a rate that is comparable to the Chinese gross domestic product growth rate.

North America Summary

 

•  

Summary financial results are outlined below (in thousands):

 

Quarter ended January 31,

    2010     2009     % Change  

Net sales

    $ 39,472      $ 48,224      (18 )% 

Transfers between areas

      4,228        4,201      1 % 
                  

Net sales and transfers

      43,700        52,425      (17 )% 

Gross profit

      12,408        14,776      (16 )% 

Gross profit %

      28 %      28 %   

SG&A

      9,697        9,752      (1 )% 

Environmental

      1,255        —       

Loss on disposition of assets,net

      6        24      (75 )% 

Amortization

      47        451      (90 )% 

Asset impairment

      —          46,376      —     
                  

Operating income (loss)

    $ 1,403      $ (41,827 )    (103 )% 

 

•  

Net sales decreased 19%, excluding the impact of currency changes, primarily due to the economic slowdown in North America. Details of the change in net sales over the prior year quarter follow (in thousands):

 

Revenue decrease

    $ (9,244 )    (19 )% 

Foreign currency changes

      492      1 % 
              

Total

    $ (8,752 )    (18 )% 

Cascade Corporation

March 31, 2010

Page 5

 

•  

The gross profit percentage was consistent at 28% due to benefits from price increases at the end of fiscal 2009, a favorable product mix during the current year and a lower overall cost structure which offset significantly lower sales volumes.

 

•  

During the fourth quarter of fiscal 2010, we recorded a $1.3 million environmental charge primarily related to our Springfield, Ohio location. This expense is a result of formalizing a revised remediation plan with the Ohio Environmental Protection Agency.

 

•  

During the fourth quarter of fiscal 2009, we recorded a $46.4 million asset impairment charge for goodwill and intangible assets associated with our North American construction attachment business.

Europe Summary

 

•  

Summary financial results are outlined below (in thousands):

 

Quarter ended January 31,

    2010     2009     % Change  

Net sales

    $ 20,896      $ 28,051      (26 )% 

Transfers between areas

      1,804        202      793 % 
                  

Net sales and transfers

      22,700        28,253      (20 )% 

Gross profit (loss)

      (1,472 )      2,500      (159 )% 

Gross profit (loss) %

      (6 )%      9 %   

SG&A

      5,158        4,882      6 % 

Loss (gain) on disposition of assets, net

      (1 )      184      —     

Amortization

      —          67      (100 )% 

Restructuring costs

      12,121        806      —     
                  

Operating loss

    $ (18,750 )    $ (3,439 )    445 % 

 

•  

Net sales decreased 33%, excluding the impact of currency changes, due to weakened economic conditions in Europe. Details of the net sales decrease over the prior year quarter follow (in thousands):

 

Revenue decrease

    $ (9,130 )    (33 )% 

Foreign currency changes

      1,975      7 % 
              

Total

    $ (7,155 )    (26 )% 

 

•  

The gross profit percentage in Europe was significantly lower compared to the prior year. The lower gross profit was a result of unabsorbed overhead costs and operating costs associated with restructuring activities which caused considerable disruption and inventory write offs. In addition, we are continuing to experience a very competitive market for certain OEM products.

 

•  

The fourth quarter of fiscal 2010 results reflect $12.1 million of restructuring costs primarily related to shutting down production at our fork facility in Hagen, Germany.

 

•  

Excluding the impact of currency changes, selling and administrative expenses decreased 4% in Europe due to lower personnel, selling and other general costs. This is due to spending controls and lower costs after the effects of our restructuring efforts over the past year.

Cascade Corporation

March 31, 2010

Page 6

Asia Pacific Summary

 

•  

Summary financial results are outlined below (in thousands):

 

Quarter ended January 31,

    2010     2009     % Change  

Net sales

    $ 10,550      $ 13,135      (20 )% 

Transfers between areas

      20        10      100 % 
                  

Net sales and transfers

      10,570        13,145      (20 )% 

Gross profit

      2,600        3,118      (17 )% 

Gross profit %

      25 %      24 %   

SG&A

      1,899        2,036      (7 )% 

Loss on disposition of assets, net

      —          17      —     
                  

Operating income

    $ 701      $ 1,065      (34 )% 

 

•  

Net sales decreased 32%, excluding the impact of currency changes. The decrease is due to lower demand as a result of the economic downturn and a weak lift truck market. Details of the net sales decrease over the prior year quarter follow (in thousands):

 

Revenue decrease

    $ (4,140 )    (32 )% 

Foreign currency changes

      1,555      12 % 
              

Total

    $ (2,585 )    (20 )% 

 

•  

The gross profit percentage in Asia Pacific increased 1% due to product mix and fluctuations in foreign currency rates.

 

•  

Selling and administrative costs decreased 21% in the current year, excluding the impact of currency changes, due to lower personnel and other general costs.

China Summary

 

•  

Summary financial results are outlined below (in thousands):

 

Quarter ended January 31,

    2010     2009     % Change  

Net sales

    $ 9,654      $ 5,658      71 % 

Transfers between areas

      3,086        3,687      (16 )% 
                  

Net sales and transfers

      12,740        9,345      36 % 

Gross profit

      4,857        2,552      90 % 

Gross profit %

      38 %      27 %   

SG&A

      1,082        944      15 % 

Loss on disposition of assets, net

      3        11      —     
                  

Operating income

    $ 3,772      $ 1,597      136 % 

Cascade Corporation

March 31, 2010

Page 7

 

•  

Net sales increased 71%, excluding the impact of currency changes, due to an increase in sales volumes as a result of the recovery of the Chinese economy and lift truck market. Details of the net sales increase over the prior year quarter follow (in thousands):

 

Revenue change

    $ 3,989    71 % 

Foreign currency changes

      7    —     
         

Total

    $ 3,996    71 % 

 

•  

Transfers between areas decreased due to weakened economic conditions in Europe and Asia Pacific.

 

•  

Gross margin percentages in China increased to 38% from 27% in the prior year. This change is primarily due to changes in product mix, price increases implemented in the prior year and lower intercompany transfers, which carry lower margins.

 

•  

Selling and administrative costs increased 15%, excluding foreign currency changes, due to higher personnel, research and development and other general costs.

Fiscal Year Ended January 31, 2010 Summary

 

•  

Results and comments for the fiscal year ending January 31, 2010 are as follows (in thousands, except earnings per share):

 

Year ended January 31,

    2010     2009     % Change  

Net sales

    $ 314,353      $ 534,172      (41 )% 

Gross profit

      71,070        148,548      (52 )% 

Gross profit %

      23 %      28 %   

SG&A

      70,807        85,229      (17 )% 

Environmental

      1,255        —       

Loss on disposition of assets, net

      98        403      —     

Amortization

      403        2,519      (84 )% 

Asset impairment charge

      —          46,376      —     

European restructuring costs

      30,001        2,544      —     

Operating income (loss)

      (31,494 )      11,477      (374 )% 

Interest expense, net

      1,561        3,475      (55 )% 

Foreign currency losses, net

      443        3,611      (88 )% 

Income (loss) before taxes

      (33,498 )      4,391      (863 )% 

Provision for income taxes

      5,151        3,124      65 % 

Effective tax rate

      (15 )%      71 %   

Net income (loss)

    $ (38,649 )    $ 1,267      —     

Diluted earnings (loss) per share

    $ (3.57 )    $ 0.11      —     

Cascade Corporation

March 31, 2010

Page 8

 

•  

Consolidated revenue was 40% lower than the prior year, excluding the impact of currency changes, due to the global economic recession. Details of the revenue decrease follow (in millions):

 

North America

    $ (101.7 )    (19 )% 

Europe

      (82.2 )    (15 )% 

Asia Pacific

      (23.7 )    (5 )% 

China

      (6.6 )    (1 )% 

Foreign currency changes

      (5.6 )    (1 )% 
              

Total

      (219.8 )    (41 )% 

 

•  

SG&A expenses in fiscal 2010 were 16% lower, excluding the impact of currency changes, than the prior year due to cost reduction activities in light of significantly reduced sales volumes. Regional details of the decrease in SG&A expense follows (in millions):

 

North America

    $ (5.4 )    (6 )% 

Europe

      (5.7 )    (7 )% 

Asia Pacific

      (1.6 )    (2 )% 

China

      (0.5 )    (1 )% 

Foreign currency changes

      (1.2 )    (1 )% 
              

Total

      (14.4 )    (17 )% 

Other Matters:

 

  •  

On March 30, 2010, our Board of Directors declared a quarterly dividend of $0.02 per share, payable on May 13, 2010 to shareholders of record as of April 28, 2010.

 

  •  

Free cash flow, a non-GAAP measure, is defined as cash flow from operating activities less capital expenditures. The following table presents a summary of our free cash flow for the quarter and year ended January 31, 2010.

 

     Three Months Ended January 31     Year Ended January 31  
     2010     2009     2010     2009  
     (In thousands)     (In thousands)  

Cash flow from operating activities

      10,197        19,108        45,413        41,086   

Capital expenditures

      (2,677 )      (3,124 )      (5,934 )      (16,709 ) 
                                

Free cash flow

    $ 7,520      $ 15,984      $ 39,479      $ 24,377   
                                

 

•  

Our annual shareholder meeting will take place on Wednesday, June 2, 2010 at 10:00 a.m., Pacific time, at our corporate headquarters in Fairview, Oregon.

Cascade Corporation

March 31, 2010

Page 9

Forward Looking Statements:

This press release contains forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Readers are cautioned that a number of factors could cause our actual results to differ materially from any results indicated in this release or in any other forward-looking statements made by us, or on our behalf. These include among others, factors related to general economic conditions, interest rates, demand for materials handling products and construction equipment, performance of our manufacturing facilities and the cyclical nature of the materials handling and construction equipment industries. Further, historical information should not be considered an indicator of future performance. Additional considerations and important risk factors are described in our reports on Form 10-K and 10-Q and other filings with the Securities and Exchange Commission.

Earnings Call Information:

We will discuss our results in a conference call on Wednesday, March 31, 2010 at 2:00 pm PDT. Robert C. Warren, Jr., President and Chief Executive Officer will host the call. The conference call can be accessed in the U.S. and Canada by dialing 866-225-8754, International callers can access the call by dialing 480-629-9296. Participants are encouraged to dial-in 15 minutes prior to the beginning of the call. A replay will be available for 48 hours after the live broadcast and can be accessed by dialing 800-406-7325 and entering passcode 4240758, or internationally, by dialing 303-406-7325 and entering passcode 4240758.

The call will be simultaneously webcast and can be accessed on the Investor Relations page of the company’s website, www.cascorp.com. Listeners should go to the website at least 15 minutes early to register, download and install any necessary audio software.

About Cascade Corporation:

Cascade Corporation, headquartered in Fairview, Oregon, is a leading international manufacturer of materials handling products used primarily on lift trucks. Additional information on Cascade is available on its website, www.cascorp.com.

Contact

Joseph G. Pointer

Chief Financial Officer

Cascade Corporation

Phone (503) 669-6300

Cascade Corporation

March 31, 2010

Page 10

CASCADE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited — in thousands, except per share amounts)

 

     Three Months Ended
January 31		     Twelve Months Ended
January 31		  
     2010     2009     2010     2009  

Net sales

    $ 80,572      $ 95,068      $ 314,353      $ 534,172   

Cost of goods sold

      62,179        72,122        243,283        385,624   
                                

Gross profit

      18,393        22,946        71,070        148,548   

Selling and administrative expenses

      17,836        17,614        70,807        85,229   

Environmental

      1,255        —          1,255        —     

Loss on disposition of assets, net

      8        236        98        403   

Amortization

      47        518        403        2,519   

Asset impairment

      —          46,376        —          46,376   

Restructuring costs

      12,121        806        30,001        2,544   
                                

Operating income (loss)

      (12,874 )      (42,604 )      (31,494 )      11,477   

Interest expense

      506        608        1,889        4,083   

Interest income

      (85 )      (209 )      (328 )      (608 ) 

Foreign currency losses, net

      159        1,239        443        3,611   
                                

Income (loss) before provision for income taxes

      (13,454 )      (44,242 )      (33,498 )      4,391   

Provision for (benefit from) income taxes

      976        (13,741 )      5,151        3,124   
                                

Net income (loss)

    $ (14,430 )    $ (30,501 )    $ (38,649 )    $ 1,267   
                                

Basic earnings (loss) per share

    $ (1.33 )    $ (2.82 )    $ (3.57 )    $ 0.12   

Diluted earnings (loss) per share

    $ (1.33 )    $ (2.82 )    $ (3.57 )    $ 0.11   

Basic weighted average shares outstanding

      10,816        10,801        10,816        10,794   

Diluted weighted average shares outstanding

      10,816        10,998        10,816        11,077   

Cascade Corporation

March 31, 2010

Page 11

Cascade Corporation

Consolidated Balance Sheets

 

     As of January 31
     2010    2009
     (In thousands, except
per share amounts)
ASSETS      

Current assets:

      

Cash and cash equivalents

    $ 20,201    $ 31,185

Accounts receivable, less allowance for doubtful accounts of $1,328 and $1,441

      50,910      64,568

Inventories

      63,466      90,806

Deferred income taxes

      4,230      4,712

Assets available for sale

      9,125      —  

Prepaid expenses and other

      12,334      13,603
             

Total current assets

      160,266      204,874

Property, plant and equipment, net

      73,408      93,826

Goodwill

      84,122      74,387

Deferred income taxes

      21,022      21,347

Intangible assets, net

      763      1,151

Other assets

      2,350      1,998
             

Total assets

    $ 341,931    $ 397,583
             
LIABILITIES AND SHAREHOLDERS’ EQUITY      

Current liabilities:

      

Notes payable to banks

    $ 2,927    $ 2,255

Current portion of long-term debt

      499      501

Accounts payable

      20,542      19,704

Accrued payroll and payroll taxes

      7,683      7,992

Accrued restructuring costs

      5,260      699

Other accrued expenses

      10,977      12,005
             

Total current liabilities

      47,888      43,156

Long-term debt, net of current portion

      55,990      100,007

Accrued environmental expenses

      4,161      3,748

Deferred income taxes

      4,839      2,337

Employee benefit obligations

      9,120      7,413

Other liabilities

      4,171      3,955
             

Total liabilities

      126,169      160,616
             

Shareholders’ equity:

      

Common stock, $.50 par value, 40,000 authorized shares; 10,885 and 10,852 shares shares issued and outstanding

      5,443      5,426

Additional paid-in capital

      7,119      3,574

Retained earnings

      179,747      219,700

Accumulated other comprehensive income

      23,453      8,267
             

Total shareholders’ equity

      215,762      236,967
             

Total liabilities and shareholders’ equity

    $ 341,931    $ 397,583
             

Cascade Corporation

March 31, 2010

Page 12

CASCADE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - in thousands)

 

     Three Months Ended
January 31		     Twelve Months Ended
January 31		  
     2010     2009     2010     2009  

Cash flows from operating activities:

         

Net income (loss)

    $ (14,430 )    $ (30,501 )    $ (38,649 )    $ 1,267   

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

         

Fixed asset write off due to restructuring

      4,175        —          9,004        —     

Loss on asset impairment

      —          46,376        —          46,376   

Depreciation

      2,829        3,135        11,893        13,801   

Amortization

      47        518        403        2,519   

Share-based compensation

      710        1,150        3,562        4,421   

Deferred income taxes

      1,497        (15,108 )      3,233        (15,911 ) 

Loss on disposition of assets, net

      8        236        98        403   

Changes in operating assets and liabilities:

         

Accounts receivable

      2,695        26,521        18,172        21,386   

Inventories

      6,845        1,423        34,126        (16,065 ) 

Prepaid expenses and other

      1,626        (514 )      2,488        (2,734 ) 

Accounts payable and accrued expenses

      1,421        (11,000 )      1,348        (13,753 ) 

Income taxes payable and receivable

      1,305        (2,813 )      (833 )      (653 ) 

Other assets and liabilities

      1,469        (315 )      568        29   
                                

Net cash provided by operating activities

      10,197        19,108        45,413        41,086   
                                

Cash flows from investing activities:

         

Capital expenditures

      (2,677 )      (3,124 )      (5,934 )      (16,709 ) 

Proceeds from disposition of assets

      36        70        202        575   
                                

Net cash used in investing activities

      (2,641 )      (3,054 )      (5,732 )      (16,134 ) 
                                

Cash flows from financing activities:

         

Cash dividends paid

      (217 )      (2,170 )      (1,304 )      (8,460 ) 

Payments on long-term debt

      (16,124 )      (19,122 )      (92,983 )      (68,945 ) 

Proceeds from long-term debt

      13,000        9,000        49,000        60,500   

Notes payable to banks, net

      (210 )      (2,869 )      628        (326 ) 

Common stock issued under share-based compensation plans

      —          —          —          130   

Common stock repurchased

      —          —          —          (3,220 ) 

Tax effect from share-based compensation awards

      —          12        —          (61 ) 
                                

Net cash used in financing activities

      (3,551 )      (15,149 )      (44,659 )      (20,382 ) 
                                

Effect of exchange rate changes

      656        (2,983 )      (6,006 )      5,392   
                                

Change in cash and cash equivalents

      4,661        (2,078 )      (10,984 )      9,962   

Cash and cash equivalents at beginning of period

      15,540        33,263        31,185        21,223   
                                

Cash and cash equivalents at end of period

    $ 20,201      $ 31,185      $ 20,201      $ 31,185