Cascade Corporation : Announces Financial Results for the Second Quarter Ended July 31, 2012

Cascade Corporation (NYSE:CASC) today reported its financial results for the second quarter ended July 31, 2012.

Second Quarter Overview

• Net sales of $136 million for the second quarter of fiscal 2013 were 4% higher than the second quarter of fiscal 2012, excluding the impact of changes in foreign currency exchange rates.
• Our net income for the second quarter of fiscal 2013 was $12.6 million ($1.11 per diluted share) compared to $13.9 million ($1.23 per diluted share) for the second quarter of fiscal 2012. The prior year results include net insurance proceeds and flood related costs due to a flood in Australia. The net after-tax impact of the flood increased net income by $0.7 million ($.06 per diluted share).

Second Quarter Fiscal 2013 Summary

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

			Three Months Ended July 31			2012				2011		% Change
			Net sales		$	136,410			$	135,642		1	%
			Gross profit			42,060				43,311		(3	%)
			Gross profit %			31	%			32	%
			SG&A			21,997				22,334		(2	%)
			Operating income			20,063				20,977		(4	%)
			Operating income %			15	%			15	%
			Interest expense, net			127				206		(38	%)
			Foreign currency loss			225				463		(51	%)
			Income before taxes			19,711				20,308		(3	%)
			Provision for income taxes			7,072				6,457		10	%
			Effective tax rate			36	%			32	%
			Net income		$	12,639			$	13,851		(9	%)
			Diluted earnings per share		$	1.11			$	1.23		(10	%)

• Consolidated net sales during the second quarter of fiscal 2013 increased 4% over the second quarter of fiscal 2012, excluding the impact of foreign currency changes. The increase in net sales was due to higher sales volumes of products related to the construction industry and strong lift truck markets in the Asia Pacific region. Details of the change in net sales compared to the prior year are as follows (in thousands):

					Amount				Change %
			Net sales change		$	5,273			4	%
			Foreign currency change			(4,505	)		(3	%)
			Total		$	768			1	%

• Our consolidated gross profit percentage decreased slightly during the second quarter of fiscal 2013. The prior year gross profit includes net flood insurance proceeds of $1.3 million. Without these insurance proceeds, the gross profit percentage would have been 31% for both periods.
• The effective tax rate of 36% in the second quarter of fiscal 2013 was higher than the effective tax rate in the second quarter of fiscal 2012 primarily due to a $0.7 million increase in our accrual for state tax matters during the current quarter.

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			Orders
					Q2 Fiscal 2013 vs 2012			Q2 Fiscal 2013 vs 2012
			Americas		2	%		3	%
			Europe		4	%		(7	%)
			Asia Pacific		14	%		7	%
			China		(19	%)		(17	%)
			Global		(2	%)		(5	%)

• Volatility in the global lift truck market is continuing. The Americas, Europe and Asia Pacific markets experienced flat to moderate growth. China's shipments were well below prior year shipments, which were at record levels.

Americas Summary

• Summary financial results are outlined below (in thousands):

			Three Months Ended July 31			2012				2011		% Change
			Net sales		$	76,042			$	67,025		13	%
			Transfers between areas			6,447				7,952		(19	%)
			Net sales and transfers			82,489				74,977		10	%
			Gross profit			24,201				21,783		11	%
			Gross profit %			29	%			29	%
			SG&A			13,315				12,686		5	%
			Operating income		$	10,886			$	9,097		20	%
			Operating income %			13	%			12	%

• Net sales increased 14%, excluding the impact of currency changes, primarily due to higher sales volumes of products to the construction industry. Details of the change in net sales over the prior year quarter follow (in thousands):

					Amount				Change %
			Net sales change		$	9,568			14	%
			Foreign currency change			(551	)		(1	%)
			Total		$	9,017			13	%

• Our gross profit percentage remained consistent with the prior year as the benefit of higher sales volumes was offset by increased sales of lower margin products to the construction industry.
• Selling and administrative costs increased primarily due to consulting, personnel, product liability and other general costs.

Europe Summary

• Summary financial results are outlined below (in thousands):

			Three Months Ended July 31			2012				2011		% Change
			Net sales		$	23,119			$	29,344		(21	%)
			Transfers between areas			261				187		40	%
			Net sales and transfers			23,380				29,531		(21	%)
			Gross profit			4,732				6,671		(29	%)
			Gross profit %			20	%			23	%
			SG&A			4,090				4,864		(16	%)
			Operating income		$	642			$	1,807		(64	%)
			Operating income %			3	%			6	%

• Net sales decreased 10%, excluding the impact of currency changes, primarily as a result of a weakening lift truck market, due to economic conditions in Europe. Details of the change in net sales over the prior year quarter follow (in thousands):

					Amount				Change %
			Net sales change		$	(3,035	)		(10	%)
			Foreign currency change			(3,190	)		(11	%)
			Total		$	(6,225	)		(21	%)

• The decrease in our gross profit percentage is a result of lower cost absorption due to decreased sales volumes and higher product costs from changes in foreign currency rates.

Asia Pacific Summary

• Summary financial results are outlined below (in thousands):

			Three Months Ended July 31			2012				2011		% Change
			Net sales		$	21,717			$	21,167		3	%
			Transfers between areas			24				8		200	%
			Net sales and transfers			21,741				21,175		3	%
			Gross profit			6,156				7,272		(15	%)
			Gross profit %			28	%			34	%
			SG&A			2,915				3,293		(11	%)
			Operating income		$	3,241			$	3,979		(19	%)
			Operating income %			15	%			19	%

• Net sales increased 8%, excluding the impact of foreign currencies, primarily due to higher sales volumes as a result of strong lift truck markets. Details of the change in net sales over the prior year quarter follow (in thousands):

					Amount				Change %
			Net sales change		$	1,592			8	%
			Foreign currency change			(1,042	)		(5	%)
			Total		$	550			3	%

• Our prior year gross profit percentage included net insurance proceeds of $1.3 million related to the Australia flood. Without these insurance proceeds, the gross profit percentage would have been 28% for both periods.

• Operating income, during the second quarter of fiscal 2012, reflects $0.9 million from net flood insurance proceeds. We did not receive any insurance proceeds and did not incur any significant flood related costs during the second quarter of fiscal 2013.

China Summary

• Summary financial results are outlined below (in thousands):

			Three Months Ended July 31			2012				2011		% Change
			Net sales		$	15,532			$	18,106		(14	%)
			Transfers between areas			8,000				8,771		(9	%)
			Net sales and transfers			23,532				26,877		(12	%)
			Gross profit			6,971				7,585		(8	%)
			Gross profit %			30	%			28	%
			SG&A			1,677				1,491		12	%
			Operating income		$	5,294			$	6,094		(13	%)
			Operating income %			22	%			23	%

• Net sales decreased 16%, excluding currency changes, primarily due to a slowdown in the Chinese economy and lift truck industry. Details of the change in net sales over the prior year quarter follow (in thousands):

					Amount				Change %
			Net sales change		$	(2,852	)		(16	%)
			Foreign currency change			278			2	%
			Total		$	(2,574	)		(14	%)

• Our gross profit percentage increased primarily due to a higher percentage of higher margin product sales and to a lesser extent a reduction in the cost of steel.

Other Matters:

• On August 28, 2012, our Board of Directors declared a quarterly dividend of $0.35 per share, payable on October 11, 2012 to shareholders of record as of September 26, 2012.

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 which include, among others, statements relating to our expectations with respect to global lift truck demand and future levels of business activity. 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, the impact of the European debt crisis on our European market and the global economy, 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 August 30 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 [phone], International callers can access the call by dialing [phone]. 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 [phone] and entering passcode 4556780, or internationally, by dialing [phone] and entering passcode 4556780.

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 INCOME
(Unaudited -- in thousands, except per share amounts)
		Three Months Ended						Six Months Ended
		July 31						July 31
			2012			2011			2012			2011
Net sales		$	136,410		$	135,642		$	277,645		$	271,819
Cost of goods sold			94,350			92,331			192,291			184,135
Gross profit			42,060			43,311			85,354			87,684
Selling and administrative expenses			21,997			22,334			44,604			42,200
Operating income			20,063			20,977			40,750			45,484
Interest expense, net			127			206			211			457
Foreign currency loss			225			463			235			659
Income before provision for income taxes			19,711			20,308			40,304			44,368
Provision for income taxes			7,072			6,457			12,457			14,093
Net income		$	12,639		$	13,851		$	27,847		$	30,275
Basic earnings per share		$	1.14		$	1.26		$	2.51		$	2.76
Diluted earnings per share		$	1.11		$	1.23		$	2.45		$	2.68
Basic weighted average shares outstanding			11,112			10,994			11,073			10,960
Diluted weighted average shares outstanding			11,378			11,302			11,374			11,288
Cash dividends per share		$	0.35		$	0.20		$	0.70		$	0.40

CASCADE CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands, except per share amounts)
		July 31			January 31
			2012			2012
ASSETS
Current assets:
Cash and cash equivalents		$	39,349		$	24,928
Accounts receivable, less allowance for doubtful accounts of $1,332 and $1,211			83,624			77,752
Inventories			88,740			86,660
Deferred income taxes			3,825			3,822
Assets available for sale			7,120			7,572
Prepaid expenses and other			12,243			11,353
Total current assets			234,901			212,087
Property, plant and equipment, net			71,394			71,439
Goodwill			87,574			88,174
Deferred income taxes			22,025			18,964
Other assets			4,279			3,895
Total assets		$	420,173		$	394,559
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks		$	-		$	99
Current portion of long-term debt			-			590
Accounts payable			26,016			28,280
Accrued payroll and payroll taxes			9,715			9,473
Accrued incentive pay			1,424			2,496
Other accrued expenses			13,047			15,580
Total current liabilities			50,202			56,518
Long-term debt, net of current portion			15,000			4,950
Accrued environmental expenses			1,669			2,279
Deferred income taxes and other tax liabilities			11,433			8,626
Employee benefit obligations			8,345			8,228
Other liabilities			3,001			3,231
Total liabilities			89,650			83,832
Commitments and contingencies
Shareholders' equity:
Common stock, $.50 par value, 40,000 authorized shares;
11,195 and 11,088 shares issued and outstanding			5,598			5,544
Additional paid-in capital			16,936			13,252
Retained earnings			271,328			251,280
Accumulated other comprehensive income			36,661			40,651
Total shareholders' equity			330,523			310,727
Total liabilities and shareholders' equity		$	420,173		$	394,559

CASCADE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
		Three Months Ended								Six Months Ended
		July 31								July 31
			2012				2011				2012				2011
Cash flows from operating activities:
Net income		$	12,639			$	13,851			$	27,847			$	30,275
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			2,664				2,493				5,206				4,886
Share-based compensation			735				746				1,356				1,345
Deferred income taxes			(1,419	)			349				(3,290	)			190
Tax effect on share-based compensation			(121	)			(700	)			(1,574	)			(700	)
Loss (gain) on disposition of assets, net			9				(119	)			(30	)			(136	)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable			2,900				2,403				(7,512	)			(17,239	)
Inventories			(2,851	)			(8,194	)			(3,019	)			(12,281	)
Prepaid expenses and other			563				(2,872	)			(1,088	)			(4,571	)
Accounts payable and accrued expenses			(3,230	)			5,305				(2,863	)			7,773
Income taxes payable and receivable			(1,117	)			(3,135	)			(99	)			(2,373	)
Other assets and liabilities			2,156				750				2,220				2,068
Net cash provided by operating activities			12,928				10,877				17,154				9,237
Cash flows from investing activities:
Capital expenditures			(2,654	)			(3,406	)			(5,757	)			(5,708	)
Proceeds from disposition of assets			16				1,001				111				1,052
Business acquisition			(18	)			-				(1,198	)			-
Net cash used in investing activities			(2,656	)			(2,405	)			(6,844	)			(4,656	)
Cash flows from financing activities:
Cash dividends paid			(7,799	)			(4,421	)			(7,799	)			(4,421	)
Payments on long-term debt			(19,234	)			(27,040	)			(96,073	)			(40,277	)
Proceeds from long-term debt			28,700				28,500				105,700				46,500
Notes payable to banks, net			(440	)			(2,966	)			(98	)			-
Common stock issued under share-based compensation plans			-				210				808				809
Tax effect on share-based compensation			121				700				1,574				700
Net cash provided by (used in) financing activities			1,348				(5,017	)			4,112				3,311
Effect of exchange rate changes			825				1,827				(1	)			(786	)
Change in cash and cash equivalents			12,445				5,282				14,421				7,106
Cash and cash equivalents at beginning of period			26,904				26,861				24,928				25,037
Cash and cash equivalents at end of period		$	39,349			$	32,143			$	39,349			$	32,143

Cascade Corporation
Joseph G. Pointer, 503-669-6300
Chief Financial Officer
[e-mail]