CASCADE CORP - FORM 8-K - EX-99.1 - PRESS RELEASE

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EX-99.2 - TRANSCRIPT OF CONFERENCE CALL HELD ON SEPTEMBER 1, 2011. - CASCADE CORP	dex992.htm
8-K - FORM 8-K - CASCADE CORP	d8k.htm

Exhibit 99.1

Portland, Oregon

September 1, 2011

FOR IMMEDIATE RELEASE

CASCADE CORPORATION ANNOUNCES FINANCIAL RESULTS FOR THE SECOND QUARTER ENDED JULY 31, 2011

Cascade Corporation (NYSE: CASC) today reported its financial results for the second quarter ended July 31, 2011.

Second Quarter Overview

•

Net sales of $135.6 million for the second quarter of fiscal 2012 were 31% higher than net sales of $97.7 million for the second quarter of fiscal 2011, excluding the impact of changes in foreign currency exchange rates.

•

Our net income for the second quarter of fiscal 2012 was $13.9 million ($1.23 per diluted share) compared to $3.2 million ($.29 per diluted share) for the second quarter of fiscal 2011.

•

During January 2011, our operations in Australia were significantly damaged due to flooding. During the second quarter of fiscal 2012, we received insurance proceeds and incurred additional flood related costs, which had a net after-tax impact of increasing net income by $0.7 million ($.06 per diluted share).

Second Quarter Fiscal 2012 Summary

•

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


*Three Months Ended July 31*	*2011*			*2010*			*% Change*
Net sales	$	135,642		$	97,741			39	%
Gross profit		43,311			29,520			47	%
Gross profit %		32	%		30	%
SG&A		22,334			19,107			17	%
Operating income		20,977			10,413			101	%
Interest expense, net		206			536			(62	%)
Foreign currency loss, net		463			215			115	%
Income before taxes		20,308			9,662			110	%
Provision for income taxes		6,457			6,430			—
Effective tax rate		32	%		67	%
Net income	$	13,851		$	3,232			329	%
Diluted earnings per share	$	1.23		$	0.29			324	%

Cascade Corporation

September 1, 2011

Page 2

•

Consolidated net sales during the second quarter of fiscal 2012 increased 31% over the second quarter of fiscal 2011, excluding the impact of foreign currency changes. The increase in net sales was due to higher sales volumes as a result of improved economic conditions and a strong global lift truck market. Details of the change in net sales compared to the prior year second quarter follow (in thousands):


	Amount		Change %
Net sales change	$	30,073		31	%
Foreign currency change		7,828		8	%

Total	$	37,901		39	%

•

The consolidated gross profit percentage during the second quarter of fiscal 2012 increased to 32% from 30% in the prior period, primarily as a result of improved cost absorption due to increased sales volumes and net insurance proceeds related to the flood in Australia. Our consolidated gross profit percentage was 33% during the first quarter of fiscal 2012.

•

The effective tax rate for the second quarter of fiscal 2012 was 32% compared to 67% for the second quarter of fiscal 2011. The decrease in the effective tax rate is primarily a result of second quarter 2012 income in Europe, which was offset by historical losses, compared to second quarter 2011 losses in Europe for which a tax benefit could not be recorded. Additionally, the fiscal 2011 income tax rate included a $3.4 million charge as a result of recording valuation allowances against deferred tax assets in Italy and the United Kingdom.

Market Conditions

•

Percentage changes in lift truck industry shipments and orders, by region, as compared to the prior year are outlined below. Although lift truck unit data provides an indicator of the general health of the industry and our business over a six to twelve-month period, it does not necessarily correlate directly with the demand for our products on a quarterly basis.


	Shipments Q2 Fiscal 2012 vs 2011	Orders Q2 Fiscal 2012 vs 2011
Americas	53%	26%
Europe	35%	31%
Asia Pacific	21%	24%
China	26%	27%
Global	32%	27%

•

We expect lift truck demand to remain at the existing level through the end of the fiscal year. However, we do expect fourth quarter business levels to be impacted by regular holiday shutdowns.

Cascade Corporation

September 1, 2011

Page 3

Americas Summary

•

Summary financial results are outlined below (in thousands):


*Three Months Ended July 31*	*2011*			*2010*			*% Change*
Net sales	$	67,025		$	48,177			39	%
Transfers between areas		7,952			6,227			28	%

Net sales and transfers		74,977			54,404			38	%
Gross profit		21,783			16,119			35	%
Gross profit %		29	%		30	%
SG&A		12,686			11,324			12	%

Operating income	$	9,097		$	4,795			90	%

•

Net sales increased 38%, excluding the impact of currency changes, primarily due to higher sales volumes as a result of a strong lift truck market in the Americas. Details of the change in net sales over the prior year quarter follow (in thousands):


	Amount		Change %
Net sales change	$	18,302		38	%
Foreign currency change		546		1	%

Total	$	18,848		39	%

•

Transfers to other Cascade locations increased due to higher customer demand in China and fulfillment of orders in Europe.

•

Our gross profit percentage decreased as the benefit of additional fixed costs absorption due to higher sales volumes was offset by increases in material and other costs. We anticipate recovering these costs through increases in selling prices and cost reductions by the end of fiscal 2012. Our gross profit percentage was 31% during the first quarter of fiscal 2012.

•

Selling and administrative costs increased primarily due to marketing and warranty costs.

Europe Summary

•

Summary financial results are outlined below (in thousands):


*Three Months Ended July 31*	*2011*			*2010*			*% Change*
Net sales	$	29,344		$	21,887			34	%
Transfers between areas		187			96			95	%

Net sales and transfers		29,531			21,983			34	%
Gross profit		6,671			2,953			126	%
Gross profit %		23	%		13	%
SG&A		4,864			4,267			14	%

Operating income (loss)	$	1,807		$	(1,314	)		—

Cascade Corporation

September 1, 2011

Page 4

•

Net sales increased 18%, excluding the impact of currency changes, due to higher sales volumes as a result of a stronger lift truck market and price increases. Details of the change in net sales over the prior year quarter follow (in thousands):


	Amount		Change %
Net sales change	$	3,974		18	%
Foreign currency change		3,483		16	%

Total	$	7,457		34	%

•

The improvement in our gross profit percentage is the result of our restructuring efforts in recent years to reduce our overall cost structure, increased cost absorption as a result of higher sales volumes, a shift in sourcing more products from China and sales price increases for certain products. Our gross profit percentage was 21% during the first quarter of fiscal 2012.

•

Selling and administrative costs increased due to changes in foreign currency rates.

Asia Pacific Summary

•

Summary financial results are outlined below (in thousands):


*Three Months Ended July 31*	*2011*			*2010*			*% Change*
Net sales	$	21,167		$	14,243			49	%
Transfers between areas		8			61			(87	%)

Net sales and transfers		21,175			14,304			48	%
Gross profit		7,272			3,746			94	%
Gross profit %		34	%		26	%
SG&A		3,293			2,337			41	%

Operating income	$	3,979		$	1,409			182	%

•

Net sales increased 28%, excluding the impact of currency changes, due to higher sales volumes as a result of a strong lift truck market throughout the region. Details of the change in net sales over the prior year quarter follow (in thousands):


	Amount		Change %
Net sales change	$	4,012		28	%
Foreign currency change		2,912		21	%

Total	$	6,924		49	%

•

Our gross profit percentage increased compared to the prior year primarily due to insurance proceeds related to the Australia flood and fluctuations in foreign currency rates.

•

Selling and administrative costs increased primarily due to flood related costs incurred and changes in foreign currency rates.

Cascade Corporation

September 1, 2011

Page 5

•

During the second quarter of fiscal 2012, operating income increased $0.9 million from flood insurance proceeds we received less additional costs we incurred related to the Australia flood. We may receive up to an additional $6 million of flood insurance proceeds, of which $4 million would be used to purchase replacement fixed assets.

China Summary

•

Summary financial results are outlined below (in thousands):


*Three Months Ended July 31*	*2011*			*2010*			*% Change*
Net sales	$	18,106		$	13,434			35	%
Transfers between areas		8,771			6,598			33	%

Net sales and transfers		26,877			20,032			34	%
Gross profit		7,585			6,702			13	%
Gross profit %		28	%		33	%
SG&A		1,491			1,179			26	%

Operating income	$	6,094		$	5,523			10	%

•

Net sales increased 28%, excluding currency changes, primarily due to higher sales volumes as a result of the growth of the Chinese economy and a strong lift truck market. Details of the change in net sales over the prior year quarter follow (in thousands):


	Amount		Change %
Net sales change	$	3,785		28	%
Foreign currency change		887		7	%

Total	$	4,672		35	%

•

Transfers to other Cascade locations increased due to higher customer demand in North America, Europe and Asia Pacific.

•

The gross profit percentage decreased due to changes in product mix and strategic pricing adjustments. Our gross profit percentage was 30% during the first quarter of fiscal 2012.

•

Selling and administrative costs increased 20%, excluding currency changes, primarily due to higher personnel and marketing costs.

Other Matters:

•

On August 29, 2011, our Board of Directors declared a quarterly dividend of $0.25 per share, payable on October 12, 2011 to shareholders of record as of September 27, 2011.

Cascade Corporation

September 1, 2011

Page 6

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 September 1 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 (800) 762-8779, International callers can access the call by dialing (480) 629-9818. 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 4464932, or internationally, by dialing (303) 590-3030 and entering passcode 4464932.

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

Email: investorrelations@cascorp.com

Cascade Corporation

September 1, 2011

Page 7

CASCADE CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited - in thousands, except per share amounts)


	Three Months Ended July 31				Six Months Ended July 31
	2011		2010		2011		2010
Net sales	$	135,642	$	97,741	$	271,819	$	192,133
Cost of goods sold		92,331		68,221		184,135		134,899

Gross profit		43,311		29,520		87,684		57,234
Selling and administrative expenses		22,334		19,107		42,200		37,331

Operating income		20,977		10,413		45,484		19,903
Interest expense, net		206		536		457		1,069
Foreign currency loss, net		463		215		659		520

Income before provision for income taxes		20,308		9,662		44,368		18,314
Provision for income taxes		6,457		6,430		14,093		9,416

Net income	$	13,851	$	3,232	$	30,275	$	8,898

Basic earnings per share	$	1.26	$	0.30	$	2.76	$	0.82

Diluted earnings per share	$	1.23	$	0.29	$	2.68	$	0.80

Basic weighted average shares outstanding		10,994		10,889		10,960		10,860
Diluted weighted average shares outstanding		11,302		11,089		11,288		11,059
Cash dividends per share	$	0.20	$	0.05	$	0.40	$	0.07

Cascade Corporation

September 1, 2011

Page 8

CASCADE CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited - in thousands, except per share amounts)


	July 31 2011		January 31 2011
ASSETS
Current assets:
Cash and cash equivalents	$	32,143	$	25,037
Accounts receivable, less allowance for doubtful accounts of $1,486 and $1,196		86,482		66,497
Inventories		82,100		67,041
Deferred income taxes		4,185		5,001
Assets available for sale		8,334		8,610
Prepaid expenses and other		18,368		11,170

Total current assets		231,612		183,356
Property, plant and equipment, net		69,567		66,978
Goodwill		92,778		88,708
Deferred income taxes		17,461		16,606
Other assets		3,655		3,531

Total assets	$	415,073	$	359,179

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	586	$	548
Accounts payable		31,855		23,905
Accrued payroll and payroll taxes		9,314		9,299
Accrued incentive pay		1,897		2,868
Other accrued expenses		13,639		11,612

Total current liabilities		57,291		48,232
Long-term debt, net of current portion		48,224		41,789
Accrued environmental expenses		2,838		3,198
Deferred income taxes		4,665		4,452
Employee benefit obligations		8,101		7,864
Other liabilities		6,971		5,088

Total liabilities		128,090		110,623

Commitments and contingencies
Shareholders’ equity:
Common stock, $.50 par value, 40,000 authorized shares; 11,078 and 10,972 shares issued and outstanding		5,539		5,486
Additional paid-in capital		12,055		9,254
Retained earnings		224,048		198,194
Accumulated other comprehensive income		45,341		35,622

Total shareholders’ equity		286,983		248,556

Total liabilities and shareholders’ equity	$	415,073	$	359,179

Cascade Corporation

September 1, 2011

Page 9

CASCADE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - in thousands)


	Three Months Ended July 31						Six Months Ended July 31
	2011			2010			2011			2010
Cash flows from operating activities:
Net income	$	13,851		$	3,232		$	30,275		$	8,898
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,493			2,476			4,886			5,057
Share-based compensation		746			945			1,345			1,639
Deferred income taxes		349			626			190			918
Loss (gain) on disposition of assets, net		(119	)		15			(136	)		6
Changes in operating assets and liabilities:
Accounts receivable		2,403			(4,125	)		(17,239	)		(13,600	)
Inventories		(8,194	)		(2,196	)		(12,281	)		(277	)
Prepaid expenses and other		(2,872	)		(1,663	)		(4,571	)		(3,731	)
Accounts payable and accrued expenses		5,305			2,645			7,773			2,337
Income taxes payable and receivable		(3,135	)		1,595			(2,373	)		2,494
Other assets and liabilities		50			(411	)		1,368			(370	)

Net cash provided by operating activities		10,877			3,139			9,237			3,371

Cash flows from investing activities:
Capital expenditures		(3,406	)		(1,150	)		(5,708	)		(1,905	)
Proceeds from disposition of assets		1,001			97			1,052			117

Net cash used in investing activities		(2,405	)		(1,053	)		(4,656	)		(1,788	)

Cash flows from financing activities:
Cash dividends paid		(4,421	)		(766	)		(4,421	)		(766	)
Tax effect on share-based compensation		700			—			700			—
Payments on long-term debt		(27,040	)		(22,876	)		(40,277	)		(32,999	)
Proceeds from long-term debt		28,500			21,000			46,500			31,500
Notes payable to banks, net		(2,966	)		(590	)		—			(906	)
Common stock issued under share-based compensation plans		210			—			809			14

Net cash provided by (used in) financing activities		(5,017	)		(3,232	)		3,311			(3,157	)

Effect of exchange rate changes		1,827			2,188			(786	)		3,736

Change in cash and cash equivalents		5,282			1,042			7,106			2,162
Cash and cash equivalents at beginning of period		26,861			21,321			25,037			20,201

Cash and cash equivalents at end of period	$	32,143		$	22,363		$	32,143		$	22,363

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