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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.
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):
·
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):
·
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%)
·
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):
·
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):
·
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):
·
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):
·
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.
Asia Pacific Summary
·
Summary financial results are outlined below (in thousands):
·
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):
·
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):
·
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):
·
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):
·
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):
·
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):
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.
·
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.
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
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