CLC Clarcor Inc. (delisted)

CLARCOR Inc. (NYSE: CLC): -0- *T Unaudited Fiscal Third Quarter and Nine Months 2005 Highlights (Amounts in thousands, except per share data and percentages) ---------------------------------------------------------------------- Quarter Ended % Nine Months Ended % 8/27/05 8/28/04 Change 8/27/05 8/28/04 Change ---------------------------------------------------------------------- Net Sales $216,403 $206,209 4.9 $632,450 $580,193 9.0 Operating Profit $31,052 $25,500 21.8 $79,685 $67,106 18.7 Net Earnings $20,855 $15,875 31.4 $51,355 $42,450 21.0 Diluted Earnings Per Share $0.40 $0.31 29.0 $0.98 $0.82 19.5 ---------------------------------------------------------------------- *T Third Quarter and Nine Months 2005 Operating Review CLARCOR Inc. (NYSE: CLC) reported today that third quarter 2005 sales increased by 5%, and net earnings and diluted earnings per share increased by 31% and 29%, respectively, compared to the same quarter in 2004. Third quarter operating profit increased by 22%, and operating margins improved to 14.3% in 2005 from 12.4% in 2004. For the nine-month 2005 period, sales increased by 9%, and net earnings and diluted earnings per share rose by 21% and 20%, respectively, compared to 2004. Nine-month operating profit increased by 19%, and operating margins improved to 12.6% in 2005 from 11.6% in 2004. Third quarter 2005 and 2004 results were impacted by two items: -- In the third quarter 2005, CLARCOR recorded a $1.2 million or $0.02 per share benefit arising from a settlement with the Internal Revenue Service of a tax issue involving a deduction for costs incurred at a subsidiary. -- In the third quarter 2004, CLARCOR incurred $1.5 million or $0.02 per share after-tax, in headquarters relocation costs. There were no costs incurred in the third quarter 2005. Excluding the tax benefit and relocation costs from third quarter 2005 and 2004 results, third quarter 2005 operating profit increased by 15%, net earnings by 17% and diluted earnings per share by 15%. Operating margins improved to 14.3% from 13.1%. Norm Johnson, CLARCOR's Chairman and Chief Executive Officer, said, "We had an excellent third quarter driven by continuing growth and increasing profitability in our Engine/Mobile segment and the steady improvement in our Packaging business. Several of the businesses in our Industrial/Environmental segment did not meet our expectations and we have made significant changes to address these issues. "Our Engine/Mobile Filtration segment sales grew by over 8% this quarter with increases in most product categories, particularly heavy-duty and locomotive filtration, and also included increases in both aftermarket and OEM sales. Our international engine businesses also grew strongly led by over a 50% sales increase in China. Operating margins improved to 22.6% in the third quarter 2005 from 20.2% in last year's third quarter. The improved margins stem largely from increased operating efficiencies as sales grew, improvement in our operations in the U.K. and price increases in the quarter to offset raw material cost increases incurred earlier this year. "Our Industrial/Environmental Filtration segment sales this quarter increased by 2% from third quarter sales last year. The acquisition of Purolator EFP, acquired in September 2004, added approximately $7 million in sales to our third quarter 2005 results. Sales of HVAC filter products, primarily for industrial and commercial markets, declined in the third quarter of 2005 compared to 2004. The movement of manufacturing off-shore has resulted in the closure of manufacturing plants in North America which historically has been a solid market for us. Retail sales of our HVAC filters and sales of environmental and liquid filtration equipment and dust collection cartridges grew strongly during the quarter compared to last year. We continued to see strong potential in our waste water equipment products and sales continue to be solid. Sales declined for certain oil drilling, aerospace and specialty filter products, but we believe this is largely due to the timing of orders. We expect to see a rebound in sales for these products later this year and in 2006. "Operating margins in our Industrial/Environmental segment were comparable to last year's third quarter at slightly over 8%, but we will not meet our goal of a 1% point improvement for 2005. Improving margins by 1% point per year to at least a 10% operating margin remains our objective and in certain liquid process markets we already exceed a 10% operating margin. While operating margins in our HVAC manufacturing businesses are still below 10%, they are improving. We combined the administrative functions of our HVAC businesses last year and, due to a systems conversion project, shipments during the quarter were slower than usual. Based on current order rates, we expect sales to improve in the 4th quarter. We also incurred integration costs, both this year and last year, in combining our HVAC branch network with our HVAC distribution business, but we believe these are now largely behind us. "Packaging segment sales rose by 4% and operating profit improved by over 20%, with operating margins rising to 9.8% from 8.4%. Sales of both metal and plastic products increased from last year's third quarter. We are benefiting from major changes to improve productivity and reduce costs that have been implemented over the last two to three years. We expect sales to continue to grow in the 4% to 7% range and operating profit to continue to improve. "Fluctuations in currencies did not have a material impact this quarter on either sales or profitability. Our effective tax rate this quarter was 32.9% which includes the $1.2 million tax benefit discussed earlier. We expect a 36.5% rate in the fourth quarter. Capital expenditures increased to $17 million in the third quarter compared to $15 million last year. For 2005, capital expenditures should be in the $22 million to $25 million range. "Cash flow from operations continues to be solid at over $68 million for the year-to-date compared to $45 million for the same period last year. With relatively little debt and cash balances of over $46 million, we have the ability to fund all of our growth programs, continue to pay a dividend, repurchase stock and explore acquisition opportunities. During the quarter, we repurchased approximately 68,000 shares of our common stock. It has been our policy over the years to maintain a strong and liquid balance sheet and we expect that this will continue. "We recognize that some of our customers, shareholders and employees and their families live and work in Louisiana, Mississippi and Alabama, where Hurricane Katrina caused such a loss for so many. Our thoughts and prayers are with all of them. "Our second quarter 2005 estimate of diluted EPS for fiscal 2005 was in the $1.32 to $1.38 range. Based upon our results for the three quarters of this year, we now expect earnings per share to be in the $1.38 to $1.42 range, excluding any impact from Katrina. We are not able to determine how the hurricane will impact CLARCOR for the rest of this year or next. Our long-term goal is to average a compound annual growth rate in earnings of 10% to 15%, a target we have maintained since 1992." CLARCOR will be holding a conference call to discuss third quarter results at 9:00 a.m. CDT on September 15, 2005. Interested parties can listen to the conference call through the Internet at www.clarcor.com or www.viavid.net. A replay will be available on these websites and also at 888-203-1112 by providing confirmation code 5909749. The replay will be available through September 22nd by telephone and for 30 days on the Internet. CLARCOR is based in Franklin, Tennessee, and is a diversified marketer and manufacturer of mobile, industrial and environmental filtration products and consumer and industrial packaging products sold in domestic and international markets. Common shares of the Company are traded on the New York Stock Exchange under the symbol CLC. The statements in this release concerning the Company's sales, earnings, business performance and prospects are forward-looking statements that involve significant risks and uncertainties, including the effect of changes in product demand, availability of labor, price and product competition, raw material costs, health care costs, energy prices, productivity improvement and plant consolidation programs, distribution channels, acquisitions and divestitures, general economic conditions in both domestic and foreign markets, interest rates, currency fluctuations, the success of our Total Filtration Program, the success of sales and marketing programs, the cost of compliance with recently enacted regulatory requirements, the effect of changes in accounting rules, the economic impact from natural disasters such as hurricanes, tornados and flooding and other factors discussed in filings made with the Securities and Exchange Commission. -0- *T TABLES FOLLOW CONSOLIDATED STATEMENTS OF EARNINGS (Dollars in thousands except per share data) Per Share Data Restated for 2-for-1 Stock Split Effective April 29, 2005 For periods ended August 27, 2005 Third Quarter Nine Months and ------------------------ ----------------------- August 28, 2004 2005 2004 2005 2004 ---------------------------------------------------------------------- Net sales $ 216,403 $ 206,209 $ 632,450 $ 580,193 Cost of sales 149,003 142,975 441,945 404,376 ----------- ----------- ----------- ----------- Gross profit 67,400 63,234 190,505 175,817 Selling and administrative expenses 36,348 37,734 110,820 108,711 ----------- ----------- ----------- ----------- Operating profit 31,052 25,500 79,685 67,106 Other income (expense) 278 (278) (129) 90 ----------- ----------- ----------- ----------- Earnings before income taxes and minority interests 31,330 25,222 79,556 67,196 Income taxes 10,292 9,257 27,801 24,527 ----------- ----------- ----------- ----------- Earnings before minority interests 21,038 15,965 51,755 42,669 Minority interests in earnings of subsidiaries (183) (90) (400) (219) ----------- ----------- ----------- ----------- Net earnings $ 20,855 $ 15,875 $ 51,355 $ 42,450 =========== =========== =========== =========== Net earnings per common share: Basic $ 0.40 $ 0.31 $ 0.99 $ 0.83 =========== =========== =========== =========== Diluted $ 0.40 $ 0.31 $ 0.98 $ 0.82 =========== =========== =========== =========== Average shares outstanding: Basic 51,866,491 51,089,976 51,650,585 50,908,360 Diluted 52,678,124 51,739,014 52,328,384 51,560,852 CONSOLIDATED BALANCE SHEETS (Dollars in thousands) August 27, November 27, 2005 2004 ---------------------------------------------------------------------- Assets Current assets: Cash and cash investments $ 46,290 $ 22,520 Accounts receivable, net 145,961 143,719 Inventories 122,244 115,571 Other 23,957 22,180 ------------ ------------ Total current assets 338,452 303,990 Plant assets, net 143,872 142,242 Acquired intangibles, net 149,426 147,789 Pension assets 24,339 24,574 Other assets 9,372 9,202 ------------ ------------ $ 665,461 $ 627,797 ============ ============ Liabilities Current liabilities: Current portion of long-term debt $ 186 $ 420 Accounts payable and accrued liabilities 109,080 117,859 Income taxes 14,456 7,993 ------------ ------------ Total current liabilities 123,722 126,272 Long-term debt 16,057 24,130 Long-term pension liabilities 14,185 11,256 Other liabilities 38,287 37,677 ------------ ------------ 192,251 199,335 Shareholders' Equity 473,210 428,462 ------------ ------------ $ 665,461 $ 627,797 ============ ============ SUMMARY CASH FLOWS (Dollars in thousands) Nine Months ---------------------------- 2005 2004 ---------------------------------------------------------------------- From Operating Activities Net earnings $ 51,355 $ 42,450 Depreciation 15,038 13,822 Amortization 944 595 Changes in assets and liabilities 491 (11,703) Other, net 279 (489) ------------ ------------ Total provided (used) by operating activities 68,107 44,675 ------------ ------------ From Investing Activities Plant asset additions (16,847) (15,089) Business acquisitions (3,512) (4,871) Other, net 561 1,969 ------------ ------------ Total provided (used) by investing activities (19,798) (17,991) ------------ ------------ From Financing Activities Net payments under line of credit (7,500) - Payments on long-term debt (860) (292) Cash dividends paid (9,893) (9,563) Purchase of treasury stock (1,986) - Other, net (3,677) 1,101 ------------ ------------ Total provided (used) by financing activities (23,916) (8,754) ------------ ------------ Effect of exchange rate changes on cash (623) 3 ------------ ------------ Change in Cash and Cash Investments $ 23,770 $ 17,933 ============ ============ QUARTERLY INCOME STATEMENT DATA BY SEGMENT (Dollars in thousands) 2005 --------------------------------------------------- Quarter Quarter Quarter Ended Ended Six Ended Nine February 26 May 28 Months August 27 Months ----------- --------- --------- --------- --------- Net sales by segment: Engine/Mobile Filtration $ 83,129 $ 93,722 $176,851 $ 90,686 $267,537 Industrial/ Environmental Filtration 97,198 106,668 203,866 105,153 309,019 Packaging 15,934 19,396 35,330 20,564 55,894 --------- --------- --------- --------- --------- $196,261 $219,786 $416,047 $216,403 $632,450 ========= ========= ========= ========= ========= Operating profit by segment: Engine/Mobile Filtration $ 16,778 $ 19,629 $ 36,407 $ 20,500 $ 56,907 Industrial/ Environmental Filtration 3,969 6,234 10,203 8,544 18,747 Packaging 333 1,690 2,023 2,008 4,031 --------- --------- --------- --------- --------- $ 21,080 $ 27,553 $ 48,633 $ 31,052 $ 79,685 ========= ========= ========= ========= ========= Operating margin by segment: Engine/Mobile Filtration 20.2% 20.9% 20.6% 22.6% 21.3% Industrial/ Environmental Filtration 4.1% 5.8% 5.0% 8.1% 6.1% Packaging 2.1% 8.7% 5.7% 9.8% 7.2% --------- --------- --------- --------- --------- 10.7% 12.5% 11.7% 14.3% 12.6% ========= ========= ========= ========= ========= 2004 -------------------------------------------------- Quarter Quarter Quarter Ended Ended Six Ended Nine February 28 May 29 Months August 28 Months ----------- --------- --------- --------- --------- Net sales by segment: Engine/Mobile Filtration $ 70,800 $ 82,992 $153,792 $ 83,771 $237,563 Industrial/ Environmental Filtration 88,962 98,249 187,211 102,646 289,857 Packaging 15,510 17,471 32,981 19,792 52,773 --------- --------- --------- --------- --------- $175,272 $198,712 $373,984 $206,209 $580,193 ========= ========= ========= ========= ========= Operating profit by segment: Engine/Mobile Filtration $ 14,425 $ 16,989 $ 31,414 $ 16,892 $ 48,306 Industrial/ Environmental Filtration 3,252 6,076 9,328 8,457 17,785 Packaging 136 1,153 1,289 1,665 2,954 Relocation Costs - (425) (425) (1,514) (1,939) --------- --------- --------- --------- --------- $ 17,813 $ 23,793 $ 41,606 $ 25,500 $ 67,106 ========= ========= ========= ========= ========= Operating margin by segment: Engine/Mobile Filtration 20.4% 20.5% 20.4% 20.2% 20.3% Industrial/ Environmental Filtration 3.7% 6.2% 5.0% 8.2% 6.1% Packaging 0.9% 6.6% 3.9% 8.4% 5.6% --------- --------- --------- --------- --------- 10.2% 12.0% 11.1% 12.4% 11.6% ========= ========= ========= ========= ========= *T