CLC Clarcor Inc. (delisted)

CLARCOR Inc. (NYSE: CLC): -0- *T Unaudited Fiscal Third Quarter and Nine Months 2006 Highlights (Amounts in thousands, except per share data and percentages) Quarter Ended Nine Months Ended 9/2/06 8/27/05 %Change 9/2/06 8/27/05 %Change ---------------------------------------------------------------------- Net Sales $231,510 $216,403 7.0 $671,769 $632,450 6.2 Operating Profit $35,079 $31,052 13.0 $87,173 $79,685 9.4 Net Earnings $22,963 $20,855 10.1 $55,969 $51,355 9.0 Diluted Earnings Per Share $0.44 $0.40 10.0 $1.07 $0.98 9.2 ---------------------------------------------------------------------- *T Third Quarter and Nine Months 2006 Operating Review CLARCOR Inc. (NYSE: CLC) reported today that third quarter 2006 sales increased by 7%, and net earnings and diluted earnings per share increased by 10% compared to the same quarter in 2005. Third quarter operating profit increased by 13%, and operating margins improved to 15.2% in 2006 from 14.3% in 2005. For the nine-month 2006 period, sales increased by 6%, and net earnings and diluted earnings per share rose by 9% compared to 2005. Nine-month operating profit increased by 9%, and operating margins improved to 13.0% in 2006 from 12.6% in 2005. Third quarter 2006 and 2005 results were impacted by the following items: -- In the third quarter 2006, CLARCOR recorded a pre-tax gain of $790,000 or $0.01 per share from insurance proceeds received due to a tornado at one of its warehouses and a $800,000 pre-tax gain or $0.01 per share from the elimination of a reserve that was no longer necessary related to an overseas subsidiary. -- In the third quarter 2005, CLARCOR realized a $1.2 million or $0.02 per share benefit arising from a settlement of a tax issue involving a deduction for costs incurred at a subsidiary. Nine months 2006 results were adversely impacted by a provision of approximately $3.0 million in the second quarter arising from a customer's refusal to pay amounts owing to the company and approximately $600,000 in the second and third quarters in severance charges from the restructuring of two of the company's operating facilities. Norm Johnson, CLARCOR's Chairman and Chief Executive Officer, said, "Overall, we had a good third quarter driven by continuing growth and increasing profitability in our Engine/Mobile segment. Our Industrial/Environmental segment is in a period of transition as we work through a restructuring program designed to realize a $14 million improvement in operating profit by the end of three years. Our Packaging business sales grew nicely, but profitability was impacted as the sales increase was largely in lower margin product lines. "Our Engine/Mobile Filtration segment sales grew by 14% this quarter with increases in most product categories, particularly heavy-duty and locomotive filtration. We recorded increases in both aftermarket and OEM markets. Our international engine filter businesses also grew strongly, led by over 20% sales increases in China, Europe and Mexico. Operating margins for the segment improved to 24.3% in the third quarter 2006 from 22.6% in last year's third quarter. The strengthened margins stem largely from improved operating efficiencies and leverage gained from the increase in sales. We expect operating margins to continue to exceed 2005 margins in this segment, though we do not believe that we will be able to sustain operating margins in excess of 24%. "Our Industrial/Environmental Filtration segment sales this quarter increased by 1% from third quarter sales last year. However, this segment has had to absorb the loss of $10 million in annual business with AT Kearney, which we announced last quarter, as well as the loss of approximately $11 million in annual sales from a customer who decided to begin in-house manufacturing of a product we previously sold to them. Segment sales grew strongly in such areas as aviation fuel filtration systems, aerospace filtration, dust collector cartridges, increased shipments of oil and gas filters, and from the acquisition of Martin Kurz & Co., Inc. in the fourth quarter last year which added approximately $3 million in sales to this year's third quarter. Lower sales were recorded in our HVAC product lines and filter sales for plastic and polymer applications. "Our restructuring plans for our HVAC operations in our Industrial/Environmental segment are proceeding well. In July we announced a plan to spend $22 million in capital and incur up to $4 million in restructuring charges over a three-year period to significantly improve operating efficiencies and profitability in environmental air filter markets. Our goal was to reach approximately $14 million in annualized savings by the end of three years. We recently announced the closing of one plant and are on schedule to achieve our planned savings. By the end of our restructuring program, we expect operating margins exceeding 10%. "Packaging segment sales rose by 6% though operating profit was approximately the same as last year's third quarter. Sales of both metal and plastic products increased from last year's third quarter, though increased sales of lower margin products this quarter affected operating profit. However, sales are up 13% and operating profit up 35% through the nine-month period compared to 2005, and we remain very pleased with the performance of our Packaging segment in 2006. "Fluctuations in currencies did not have a material impact this quarter on either sales or profitability. Our effective tax rate this quarter was 34.4%. We expect a comparable rate in the fourth quarter. Year-to-date capital expenditures in 2006 amount to $11.4 million compared to $16.8 million last year. For 2006, we expect capital expenditures to be in the $23 million to $25 million range. "Cash flow from operations continues to be solid at over $52 million for the first nine months of 2006 compared to $49 million for the same period last year. During the third quarter, we repurchased one million shares of our common stock and will continue to look at opportunities to repurchase additional shares under our current authorization in light of internal growth requirements, acquisition opportunities and our stock price. "Based upon our results for the first three quarters of this year, we now expect 2006 earnings per share to be in the $1.50 to $1.55 range. I want to point out that the 2005 fourth quarter included 14 weeks while our 2006 fourth quarter will include only 13 weeks making the comparison to last year's results difficult. Similarly, fiscal year 2006 will include one less week than in 2005. Nevertheless, we are very optimistic about the remainder of 2006 and believe we will end 2006 with record sales and profits, our 14th consecutive year of record results." CLARCOR will be holding a conference call to discuss third quarter results at 10:00 a.m. Central time on September 22, 2006. 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 or 719-457-0820 by providing confirmation code 4009100. The replay will be available through September 29 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. Forward-Looking Statements This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements made in this press release, other than statements of historical fact, are forward-looking statements. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include, among other things: statements and assumptions relating to future growth, earnings, earnings per share and other financial performance measures, as well as management's short-term and long-term performance goals; statements relating to the anticipated affects on results of operations or financial condition from recent and expected developments or events; statements relating to the Company's business and growth strategies; statements related to litigation in which the Company is presently or may become engaged; statements regarding anticipated results of the Company's intended restructuring of certain operations and rationalization of facilities; and any other statements or assumptions that are not historical facts. The Company believes that its expectations are based on reasonable assumptions. However, these forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the Company's actual results, performance or achievements, or industry results, to differ materially from the Company's expectations of future results, performance or achievements expressed or implied by these forward-looking statements. In addition, the Company's past results of operations do not necessarily indicate its future results. These and other uncertainties are discussed in the "Risk Factors'' section of the Company's 2005 Form 10-K. The future results of the Company may fluctuate as a result of these and other risk factors detailed from time to time in the Company's filings with the Securities and Exchange Commission. You should not place undue reliance on any forward-looking statements. These statements speak only as of the date of this press release. Except as otherwise required by applicable laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements or the risk factors described in this press release, whether as a result of new information, future events, changed circumstances or any other reason after the date of this press release. TABLES FOLLOW -0- *T CONSOLIDATED STATEMENTS OF EARNINGS (Dollars in thousands except per share data) Third Quarter Nine Months ----------------------- ----------------------- For periods ended September 2, 2006 and August 27, 2005 2006 2005 2006 2005 ---------------------------------------------------------------------- Net sales $ 231,510 $ 216,403 $ 671,769 $ 632,450 Cost of sales 159,689 149,003 469,057 441,945 ----------- ----------- ----------- ----------- Gross profit 71,821 67,400 202,712 190,505 Selling and administrative expenses 36,742 36,348 115,539 110,820 ----------- ----------- ----------- ----------- Operating profit 35,079 31,052 87,173 79,685 Other income (expense) 96 278 120 (129) ----------- ----------- ----------- ----------- Earnings before income taxes and minority interests 35,175 31,330 87,293 79,556 Income taxes 12,087 10,292 30,939 27,801 ----------- ----------- ----------- ----------- Earnings before minority interests 23,088 21,038 56,354 51,755 Minority interests in earnings of subsidiaries (125) (183) (385) (400) ----------- ----------- ----------- ----------- Net earnings $ 22,963 $ 20,855 $ 55,969 $ 51,355 =========== =========== =========== =========== Net earnings per common share: Basic $ 0.45 $ 0.40 $ 1.08 $ 0.99 =========== =========== =========== =========== Diluted $ 0.44 $ 0.40 $ 1.07 $ 0.98 =========== =========== =========== =========== Average shares outstanding: Basic 51,414,083 51,866,491 51,691,685 51,650,585 Diluted 51,981,546 52,678,124 52,390,283 52,328,384 CONSOLIDATED BALANCE SHEETS (Dollars in thousands) September 2, December 3, 2006 2005 --------------------------------------------------------------------- Assets Current assets: Cash and cash investments $ 25,026 $ 18,502 Short-term investments 19,500 10,400 Accounts receivable, net 153,643 152,755 Inventories 128,738 117,508 Other 25,308 25,768 ---------------- --------------- Total current assets 352,215 324,933 Plant assets, net 145,355 149,505 Acquired intangibles, net 169,244 168,176 Pension assets 22,567 22,069 Other assets 11,290 10,589 ---------------- --------------- $ 700,671 $ 675,272 ================ =============== Liabilities Current liabilities: Current portion of long-term debt $ 62 $ 233 Accounts payable and accrued liabilities 105,955 108,693 Income taxes 11,020 12,544 ---------------- --------------- Total current liabilities 117,037 121,470 Long-term debt 15,963 16,009 Long-term pension liabilities 19,998 16,287 Other liabilities 36,001 38,673 ---------------- --------------- 188,999 192,439 Shareholders' Equity 511,672 482,833 ---------------- --------------- $ 700,671 $ 675,272 ================ =============== SUMMARY CASH FLOWS (Dollars in thousands) Nine Months --------------------------- 2006 2005 --------------------------------------------------------------------- From Operating Activities Net earnings $ 55,969 $ 51,355 Depreciation 16,036 15,038 Amortization 1,636 944 Stock compensation expense 2,194 662 Excess tax benefits from stock compensation (3,312) - Changes in assets and liabilities (21,133) (19,521) Other, net 629 279 ------------- ------------ Total provided (used) by operating activities 52,019 48,757 ------------- ------------ From Investing Activities Plant asset additions (11,416) (16,847) Business acquisitions (4,627) (3,512) Other, net 1,130 561 ------------- ------------ Total provided (used) by investing activities (14,913) (19,798) ------------- ------------ From Financing Activities Net payments under line of credit - (7,500) Payments on long-term debt (555) (860) Cash dividends paid (10,490) (9,893) Excess tax benefits from stock compensation 3,312 - Purchase of treasury stock (28,909) (1,986) Other, net 5,362 (3,677) ------------- ------------ Total provided (used) by financing activities (31,280) (23,916) ------------- ------------ Effect of exchange rate changes on cash 698 (623) ------------- ------------ Change in Cash and Cash Investments $ 6,524 $ 4,420 ============= ============ QUARTERLY INCOME STATEMENT DATA BY SEGMENT (Dollars in thousands) 2006 ------------------------------------------------ Quarter Quarter Quarter Ended Ended Six Ended Nine March 4 June 3 Months Sept. 2 Months --------- --------- --------- ------------------- Net sales by segment: Engine/Mobile Filtration $ 91,032 $101,429 $192,461 $103,358 $295,819 Industrial/ Environmental Filtration 102,656 103,866 206,522 106,263 312,785 Packaging 19,495 21,781 41,276 21,889 63,165 -------- -------- -------- -------- -------- $213,183 $227,076 $440,259 $231,510 $671,769 ======== ======== ======== ======== ======== Operating profit by segment: Engine/Mobile Filtration $ 19,073 $ 22,446 $ 41,519 $ 25,147 $ 66,666 Industrial/ Environmental Filtration 5,485 1,594 7,079 7,965 15,044 Packaging 1,315 2,181 3,496 1,967 5,463 -------- -------- -------- -------- -------- $ 25,873 $ 26,221 $ 52,094 $ 35,079 $ 87,173 ======== ======== ======== ======== ======== Operating margin by segment: Engine/Mobile Filtration 21.0% 22.1% 21.6% 24.3% 22.5% Industrial/ Environmental Filtration 5.3% 1.5% 3.4% 7.5% 4.8% Packaging 6.7% 10.0% 8.5% 9.0% 8.6% -------- -------- -------- -------- -------- 12.1% 11.5% 11.8% 15.2% 13.0% ======== ======== ======== ======== ======== 2005 ------------------------------------------------ Quarter Quarter Quarter Ended Ended Six Ended Nine Feb. 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% ======== ======== ======== ======== ======== *T