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):

Quarter ended July 31,		2009			2008		% Change
Net sales	$	76,643		$	150,103		(49	%)
Gross profit		18,533			42,717		(57	%)
Gross profit %		24	%		28	%
SG&A		17,450			23,378		(25	%)
European restructuring costs		11,589			128		-
Operating income (loss)		(10,638	)		18,514		(157	%)
Interest expense, net		314			950		(67	%)
Foreign currency loss, net		151			506		(70	%)
Income (loss) before taxes		(11,103	)		17,058		(165	%)
Provision for income taxes		1,200			6,563		(82	%)
Effective tax rate		(11	%)		38	%
Net income (loss)	$	(12,303	)	$	10,495		(217	%)
Diluted earnings (loss) per share	$	(1.14	)	$	0.94		(221	%)

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):

Revenue decrease	$	(69,179	)	(46	%)
Foreign currency changes		(4,281	)	(3	%)
Total	$	(73,460	)	(49	%)

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	Shipments
	Q2 FY10 vs Q2 FY09	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 1980s. 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):

Quarter ended July 31,		2009			2008		% Change
Net sales	$	37,085		$	69,841		(47	%)
Transfers between areas		4,444			9,467		(53	%)
Net sales and transfers		41,529			79,308		(48	%)
Gross profit		11,781			24,542		(52	%)
Gross profit %		28	%		31	%
SG&A		10,044			11,646		(14	%)
Loss on disposition of assets, net		-			19		-
Amortization		48			587		(92	%)
Operating income	$	1,689		$	12,290		(86	%)

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):

Revenue growth (including acquisitions)	$	(32,389	)	(46	%)
Foreign currency changes		(367	)	(1	%)
Total	$	(32,756	)	(47	%)

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):

Quarter ended July 31,		2009			2008		% Change
Net sales	$	20,740		$	48,424		(57	%)
Transfers between areas		773			443		74	%
Net sales and transfers		21,513			48,867		(56	%)
Gross profit		308			7,630		(96	%)
Gross profit %		1	%		16	%
SG&A		4,538			7,882		(42	%)
Gain on disposition of assets, net		(1	)		(14	)	-
Amortization		71			80		(11	%)
Restructuring costs		11,589			128		-
Operating loss	$	(15,889	)	$	(446	)	-

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):

Revenue change	$	(24,812	)	(51	%)
Foreign currency changes		(2,872	)	(6	%)
Total	$	(27,684	)	(57	%)

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):

Quarter ended July 31,		2009			2008		% Change
Net sales	$	10,946		$	18,860		(42	%)
Transfers between areas		14			63		(78	%)
Net sales and transfers		10,960			18,923		(42	%)
Gross profit		2,804			4,491		(38	%)
Gross profit %		26	%		24	%
SG&A		1,936			2,459		(21	%)
Loss (gain) on disposition of assets, net		2			(11	)	-
Operating income	$	866		$	2,043		(58	%)

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):

Revenue change	$	(6,783	)	(36	%)
Foreign currency changes		(1,131	)	(6	%)
Total	$	(7,914	)	(42	%)

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):

Quarter ended July 31,		2009			2008		% Change
Net sales	$	7,872		$	12,978		(39	%)
Transfers between areas		2,576			6,681		(61	%)
Net sales and transfers		10,448			19,659		(47	%)
Gross profit		3,640			6,054		(40	%)
Gross profit %		35	%		31	%
SG&A		932			1,391		(33	%)
Loss on disposition of assets, net		12			36		-
Operating income	$	2,696		$	4,627		(42	%)

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):

Revenue change	$	(5,195	)	(40	%)
Foreign currency changes		89		1	%
Total	$	(5,106	)	(39	%)

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.

	Three Months Ended July 31						Six Months Ended July 31
		2009			2008			2009			2008
	(In thousands)						(In thousands)
Cash flow from operating activities		16,378			1,521			31,449			17,006
Capital expenditures		(1,047	)		(6,136	)		(1,831	)		(10,039	)
Free cash flow	$	15,331		$	(4,615	)	$	29,618		$	6,967

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 p.m. 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.


CASCADE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited -- in thousands, except per share amounts)


	Three Months Ended						Six Months Ended
	July 31						July 31
		2009			2008			2009			2008
Net sales	$	76,643		$	150,103		$	152,959		$	299,970
Cost of goods sold		58,110			107,386			119,957			214,905
Gross profit		18,533			42,717			33,002			85,065

Selling and administrative expenses		17,450			23,378			36,006			46,864
Loss on disposition of assets, net		13			30			34			145
Amortization		119			667			233			1,342
European restructuring costs		11,589			128			16,366			448

Operating income (loss)		(10,638	)		18,514			(19,637	)		36,266
Interest expense		371			1,110			797			2,241
Interest income		(57	)		(160	)		(170	)		(267	)
Foreign currency loss, net		151			506			151			627

Income (loss) before provision for income taxes		(11,103	)		17,058			(20,415	)		33,665
Provision for income taxes		1,200			6,563			3,961			12,312

Net income (loss)	$	(12,303	)	$	10,495		$	(24,376	)	$	21,353

Basic earnings (loss) per share	$	(1.14	)	$	0.97		$	(2.26	)	$	1.98
Diluted earnings (loss) per share	$	(1.14	)	$	0.94		$	(2.26	)	$	1.92

Basic weighted average shares outstanding		10,814			10,793			10,807			10,788
Diluted weighted average shares outstanding		10,814			11,109			10,807			11,109


CASCADE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands, except per share amounts)


	July 31		January 31
		2009		2009

ASSETS
Current assets:
Cash and cash equivalents	$	17,827	$	31,185
Accounts receivable, less allowance for doubtful accounts of $1,388 and $1,441		50,537		64,568
Inventories		75,018		90,806
Deferred income taxes		4,722		4,712
Prepaid expenses and other		9,666		13,603
Total current assets		157,770		204,874
Property, plant and equipment, net		88,744		93,826
Goodwill		83,931		74,387
Deferred income taxes		22,674		21,347
Intangible assets, net		933		1,151
Other assets		2,205		1,998
Total assets	$	356,257	$	397,583

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks	$	1,057	$	2,255
Current portion of long-term debt		476		501
Accounts payable		13,556		19,704
Accrued payroll and payroll taxes		9,086		7,992
Accrued restructuring costs		8,506		699
Other accrued expenses		11,988		12,005
Total current liabilities		44,669		43,156
Long-term debt, net of current portion		63,567		100,007
Accrued environmental expenses		3,430		3,748
Deferred income taxes		2,186		2,337
Employee benefit obligations		7,400		7,413
Other liabilities		3,901		3,955
Total liabilities		125,153		160,616

Commitments and contingencies

Shareholders' equity:
Common stock, $.50 par value, 40,000 authorized shares;
10,883 and 10,852 shares issued and outstanding		5,442		5,426
Additional paid-in capital		5,701		3,574
Retained earnings		194,237		219,700
Accumulated other comprehensive income		25,724		8,267

Total shareholders' equity		231,104		236,967
Total liabilities and shareholders' equity	$	356,257	$	397,583


CASCADE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)

	Six Months Ended
	July 31
		2009			2008
Cash flows from operating activities:
Net income (loss)	$	(24,376	)	$	21,353
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Fixed asset write off due to restructuring		4,885			-
Depreciation		6,091			7,209
Amortization		233			1,342
Share-based compensation		2,143			2,122
Deferred income taxes		(1,688	)		1,096
Loss on disposition of assets, net		34			145
Changes in operating assets and liabilities:
Accounts receivable		17,955			(2,924	)
Inventories		22,520			(13,386	)
Prepaid expenses and other		2,333			(1,168	)
Accounts payable and accrued expenses		(225	)		1,648
Income taxes payable and receivable		2,539			(673	)
Other assets and liabilities		(995	)		242
Net cash provided by operating activities		31,449			17,006

Cash flows from investing activities:
Capital expenditures		(1,831	)		(10,039	)
Proceeds from disposition of assets		130			388
Net cash used in investing activities		(1,701	)		(9,651	)

Cash flows from financing activities:
Cash dividends paid		(1,087	)		(4,119	)
Payments on long-term debt		(55,735	)		(27,708	)
Proceeds from long-term debt		19,500			37,000
Notes payable to banks, net		(1,172	)		(451	)
Common stock issued under share-based compensation plans		-			130
Common stock repurchased		-			(3,220	)
Tax effect from share-based compensation awards		-			(73	)
Net cash provided by (used in) financing activities		(38,494	)		1,559

Effect of exchange rate changes		(4,612	)		(2,226	)

Change in cash and cash equivalents		(13,358	)		6,688
Cash and cash equivalents at beginning of period		31,185			21,223
Cash and cash equivalents at end of period	$	17,827		$	27,911

Cascade Corporation (CAE)

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