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CASCADE CORPORATION ANNOUNCES FINANCIAL RESULTS FOR THE SECOND QUARTER ENDED JULY 31, 2009
Cascade Corporation (NYSE: CASC) today reported its financial results for the second quarter ended July 31, 2009.
Overview
·
Net sales of $76.6 million for the second quarter of fiscal 2010 were 49% lower than net sales of $150.1 million for the prior year second quarter.
·
Our net loss for the second quarter of fiscal 2010 was $12.3 million ($1.14 loss per diluted share) compared to net income of $10.5 million ($0.94 per diluted share) for the second quarter of fiscal 2009.
·
Fiscal 2010 second quarter results include $11.6 million of restructuring costs, primarily as a result of steps initiated to cease production activities at our attachment facility in The Netherlands.
·
Using cash flows from operations we were able to pay down outstanding debt by $15.4 million during the quarter ended July 31, 2009 and $37.4 million during the six months ended July 31, 2009.
·
The provision for income taxes in the second quarter of fiscal 2010 is primarily a result of taxes due in countries where we are generating income and taxes on foreign dividends related to the repatriation of cash to the U.S. We are currently unable to realize a tax benefit in several European countries where we have incurred losses.
Second Quarter Fiscal 2010 Summary
·
Summary financial results are outlined below (in thousands, except earnings per share):
·
Consolidated net sales decreased 46% during the second quarter of fiscal 2010, excluding the impact of foreign currency changes, as a result of the decline in global economic conditions and a weak global lift truck market. Global lift truck shipments were down 50% compared to the prior year. Details of the change in net sales compared to the prior year second quarter follow (in thousands):
·
The consolidated gross profit percentage decreased primarily as a result of unabsorbed fixed and variable costs due to lower sales volumes.
·
During the second quarter of fiscal 2010, we incurred restructuring costs of $11.6 million, primarily as a result of our plan to cease production activities at our facility in The Netherlands.
·
Selling and administrative expenses decreased 22%, excluding foreign currency changes, due to a reduction in personnel, marketing and other general costs.
Market Conditions
·
Percentage changes in lift truck industry shipments, by region, as compared to the prior year and prior quarter 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
Q2 FY10 vs Q2 FY09
Shipments
Q2 FY10 vs Q1 FY10
North America
(44%)
(14%)
Europe
(64%)
(17%)
Asia Pacific
(53%)
(11%)
China
(20%)
37%
Global
(50%)
(4%)
·
Percentage changes in second quarter fiscal 2010 lift truck industry orders, by region, as compared to the previous quarter, are outlined below:
Orders
Q2 FY10 vs Q1 FY10
North America
7%
Europe
4%
Asia Pacific
30%
China
12%
Global
14%
·
Global lift truck shipments are at their lowest levels since the early 1980's. The uncertain depth and duration of this recession makes it very difficult to estimate when the global lift truck market will begin to recover. However we are planning for the fact that global demand for lift trucks will continue to be at low levels through the remainder of fiscal 2010 and into 2011.
North America Summary
·
Summary financial results are outlined below (in thousands):
·
Net sales decreased 46%, excluding the impact of currency changes, primarily due to lower sales volumes as a result of the general economic downturn and a weak lift truck market. Details of the change in net sales over the prior year quarter follow (in thousands):
·
The gross profit percentage was lower than the prior year second quarter due to lower sales volumes which resulted in unabsorbed fixed and variable costs. Most of our facilities in North America operated at reduced work schedules during the current year.
·
The decrease in selling and administrative costs was due to a reduction in personnel, advertising and other general costs.
Europe Summary
·
Summary financial results are outlined below (in thousands):
·
Net sales decreased 51%, excluding the impact of currency changes, due to lower sales volumes as a result of general economic conditions and a weak lift truck market. Details of the change in net sales over the prior year quarter follow (in thousands):
·
The decreased gross margin of 1% is the result of unabsorbed fixed and variable costs. This is due to significantly lower sales volumes. Most facilities in Europe had reduced work schedules during the second quarter of fiscal 2010.
·
Excluding the impact of currency changes, selling and administrative expenses decreased 36% in Europe due to lower personnel costs as result of headcount reductions made during our European restructuring activities and lower marketing costs.
·
Restructuring costs incurred during fiscal 2010 were primarily a result of our plan to cease production activities at our facility in The Netherlands. These costs included severance expense of $7.3 million, fixed asset write downs of $4.0 million and legal and other restructuring costs of $0.3 million.
Asia Pacific Summary
·
Summary financial results are outlined below (in thousands):
·
Net sales decreased 36%, excluding the impact of currency changes, due to lower sales volumes as a result of the general economic downturn and a weak lift truck market. Details of the change in net sales over the prior year quarter follow (in thousands):
·
The gross profit percentage in Asia Pacific was higher than the prior year due to product mix and fluctuations in foreign currency rates.
·
Selling and administrative costs decreased 15% in the current year, excluding the impact of currency changes, due to lower personnel, sales and other general costs.
China Summary
·
Summary financial results are outlined below (in thousands):
·
Net sales decreased 40%, excluding currency changes, due to lower sales volumes as a result of the general economic downturn and a weak lift truck market. Details of the change in net sales over the prior year quarter follow (in thousands):
·
Gross margin percentages in China increased due to changes in product mix, price increases implemented in the prior year and lower intercompany transfers, which carry lower gross margins.
·
Selling and administrative costs decreased 34%, excluding currency changes, due to lower personnel and other general costs.
Other Matters:
·
On September 2, 2009, our Board of Directors declared a quarterly dividend of $0.01 per share, payable on November 2, 2009 to shareholders of record as of October 2, 2009.
·
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 three and six months ended July 31, 2009 and 2008.
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 Thursday, September 3, 2009 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) 629-9692. 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 4136947, or internationally, by dialing (303) 590-3030 and entering passcode 4136947.
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
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