Cascade Corporation Announces Financial Results for the First Quarter Ended April...

Cascade Corporation Announces Financial Results for the First Quarter Ended April 30, 2008

PORTLAND, Ore.--(Business Wire)--
Cascade Corporation (NYSE: CAE) today reported its financial
results for the first quarter ended April 30, 2008.

Overview

-- Net sales of $149.9 million for the first quarter of fiscal
2009 were 11% higher than net sales of $135.5 million for the
prior year first quarter.

-- During the first quarter of the prior year we settled an
insurance litigation matter which resulted in a $16 million
increase in operating income and a $10 million increase in net
income ($0.80 per diluted share).

-- Net income of $10.9 million ($0.98 per diluted share) for the
first quarter of fiscal 2009 was 54% lower than net income of
$23.8 million ($1.90 per diluted share) for the first quarter
of fiscal 2008. Excluding the insurance litigation recovery,
net income for the first quarter of fiscal 2009 was 21% lower
than net income for the first quarter of fiscal 2008.

First Quarter Fiscal 2009 Summary

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

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Quarter ended April 30, 2008 2007 % Change
----------------------------------------------------------------------
Net sales $149,867 $135,500 11%
Gross profit 42,348 43,229 (2%)
Gross profit % 28% 32%
SG&A 23,806 21,132 13%
Insurance litigation recovery, net - 15,977
Operating income 17,752 37,311 (52%)
Interest expense, net 1,024 838 22%
Other expense, net 121 78 55%
Income before taxes 16,607 36,395 (54%)
Provision for income taxes 5,749 12,599 (54%)
Effective tax rate 35% 35%
Net income $ 10,858 $ 23,796 (54%)
Diluted earnings per share $ 0.98 $ 1.90 (48%)
Net of insurance settlement $ 0.98 $ 1.10 (11%)
*T

-- Consolidated net sales increased 4% during the first quarter
of fiscal 2009, excluding an acquisition and the impact of
foreign currency changes. This increase was primarily the
result of the strength of lift truck markets in China, Asia
Pacific and Europe. Details of the net sales increase over the
prior year first quarter follow (in millions):

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Revenue growth $ 4.9 4%
Acquisition 0.8 1%
Foreign currency changes 8.7 6%
----------- -----------
Total $ 14.4 11%
*T

-- The consolidated gross profit percentage decreased 4% due
primarily to material price increases in all geographic
segments.

-- Selling and administrative expenses increased 5%, excluding
foreign currency changes and an acquisition, due to costs to
support our expanded Chinese operations and higher selling and
personnel costs.

-- The effective tax rate was consistent at 35% for the first
quarter of fiscal 2009 and 2008.

Market Conditions

-- Percentage changes in lift truck industry shipments, by
region, as compared to the prior year 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.

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First Quarter
-----------------------
North America (6%)
Europe 16%
Asia Pacific 19%
China 30%
*T

-- The lift truck market outlook is for shipments to follow
current trends through the remainder of the year.

North America Summary

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

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Quarter ended April 30, 2008 2007 % Change
----------------------------------------------------------------------
Net sales $ 69,320 $ 71,382 (3%)
Transfers between areas 7,719 8,309 (7%)
--------- ---------
Net sales and transfers 77,039 79,691 (3%)
Gross profit 24,251 28,156 (14%)
Gross profit % 31% 35%
SG&A 12,749 12,319 3%
Loss (gain) on disposition of assets,net 120 (74)
Amortization 597 588
Insurance litigation recovery, net - (15,977)
--------- ---------
Operating income $ 10,785 $ 31,300 (66%)
*T

-- Net sales decreased 5%, excluding the impact of currency
changes and an acquisition, primarily due to the general
downtown in the United States economy, which is reflected in
both the lift truck and construction markets. Details of the
decrease over the prior year quarter follow (in millions):

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Revenue decline $ (3.7) (5%)
Acquisition 0.8 1%
Foreign currency changes 0.9 1%
---------- ----------
Total $ (2.0) (3%)
*T

-- The gross profit percentage was 4% lower than the prior year
first quarter due to higher material costs, lower sales
volumes, changes in product mix and other cost increases.

-- The increase in selling and administrative costs was due to an
acquisition and currency changes.

-- In the prior year we settled an insurance litigation matter
which resulted in a $16 million increase in operating income.

Europe Summary

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

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Quarter ended April 30, 2008 2007 % Change
----------------------------------------------------------------------
Net sales $ 49,336 $ 41,604 19%
Transfers between areas 581 324 79%
--------- ---------
Net sales and transfers 49,917 41,928 19%
Gross profit 7,392 7,605 (3%)
Gross profit % 15% 18%
SG&A 7,631 6,113 25%
Loss (gain) on disposition of assets,
net (1) 8
Amortization 78 205 (62%)
--------- ---------
Operating income (loss) $ (316) $ 1,279 (125%)
*T

-- The increase in sales in Europe can be primarily attributed to
a strong European lift truck market. Details of the net sales
increase over the prior year quarter follow (in millions):

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Revenue growth $ 2.1 5%
Foreign currency changes 5.6 14%
----------- ----------
Total $ 7.7 19%
*T

-- The gross profit percentage was 3% lower than the prior year
first quarter. The decrease is primarily due to material price
increases and operational inefficiencies, which include costs
from new product introductions. The gross margin was also
negatively affected by delays in approval of Chinese-made
products by European OEMs. These delays required us to
continue supplying OEMs with European-made products at lower
margins.

-- Excluding the impact of currency changes, selling and
administrative expenses increased 11% in Europe due to higher
personnel and other general costs. First quarter costs include
$375,000 in initial costs related to our current
reorganization efforts.

Asia Pacific Summary

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

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Quarter ended April 30, 2008 2007 % Change
----------------------------------------------------------------------
Net sales $ 19,180 $ 13,795 39%
Transfers between areas 83 70 19%
---------- ----------
Net sales and transfers 19,263 13,865 39%
Gross profit 5,114 3,597 42%
Gross profit % 26% 26%
SG&A 2,339 1,903 23%
Gain on disposition of assets, net (3) -
---------- ----------
Operating income $ 2,778 $ 1,694 64%
*T

-- All locations throughout the Asia Pacific region contributed
to the sales increase. Details of the net sales increase over
the prior year quarter follow (in millions):

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Revenue growth $ 4.0 29%
Foreign currency changes 1.4 10%
--------------- --------------
Total $ 5.4 39%
*T

-- The gross profit percentage in Asia Pacific remained unchanged
at 26%. The benefits of sourcing lower cost product from China
were offset by increased sales of lower margin products.

-- Selling and administrative costs increased 11% in the current
year, excluding the impact of currency changes, due to
personnel and selling cost increases.

China Summary

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

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Quarter ended April 30, 2008 2007 % Change
----------------------------------------------------------------------
Net sales $ 12,031 $ 8,719 38%
Transfers between areas 6,150 2,669 130%
--------- ---------
Net sales and transfers 18,181 11,388 60%
Gross profit 5,591 3,871 44%
Gross profit % 31% 34%
SG&A 1,087 797 36%
Loss (gain) on disposition of assets, net (1) 31
Amortization - 5
-------------------
Operating income $ 4,505 $ 3,038 48%
*T

-- The net sales increase in China is due to a very strong
Chinese lift truck market and our recent expansion plan in
China which enabled us to produce a larger volume of products.
Details of the increase over the prior year first quarter
follow (in millions):

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Revenue growth $ 2.5 29%
Foreign currency changes 0.8 9%
------------ -------------
Total $ 3.3 38%
*T

-- Gross margin percentages in China decreased to 31% from 34% in
the prior year. This decrease is primarily the result of
material price increases, changes in product mix and higher
intercompany transfers.

-- Selling and administrative costs increased 27%, excluding
currency changes. This increase is due to additional costs to
support our expanded Chinese operations.

Other Matters:

-- On June 3, 2008, our Board of Directors declared a quarterly
dividend of $0.20 per share, payable on July 17, 2008 to
shareholders of record as of July 2, 2008.

Other Financial Information:

We believe the exclusion of the prior year insurance litigation
recovery provides a more appropriate comparison with current year
results. The prior year calculation of diluted earnings per share
excluding the insurance recovery is as follows (in thousands, except
per share amount):

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Three months ended
April 30, 2007
----------------------------

Net income as reported $ 23,796
Less: insurance litigation recovery, net
of income taxes of $5,951 (10,026)
----------------------------

Adjusted net income, excluding insurance
litigation recovery $ 13,770
============================

Diluted weighted average shares
outstanding 12,545
============================
Diluted earnings per share, excluding
insurance litigation recovery $ 1.10
============================
*T

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, June
5, 2008 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 (800) 366-3908,
International callers can access the call by dialing (303) 262-2141.
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) 405-2236 and
entering passcode 11114869#, or internationally, by dialing (303)
590-3000 and entering passcode 11114869#.

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.

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

Three Months Ended
April 30
----------------------------
2008 2007
------------- -------------
Net sales $ 149,867 $ 135,500
Cost of goods sold 107,519 92,271
------------- -------------
Gross profit 42,348 43,229

Selling and administrative expenses 23,806 21,132
Loss (gain) on disposition of assets, net 115 (35)
Amortization 675 798
Insurance litigation recovery, net - (15,977)
------------- -------------

Operating income 17,752 37,311
Interest expense 1,131 995
Interest income (107) (157)
Other expense (income), net 121 78
------------- -------------

Income before provision for income taxes 16,607 36,395
Provision for income taxes 5,749 12,599
------------- -------------

Net income $ 10,858 $ 23,796
============= =============

Basic earnings per share $ 1.01 $ 1.99
Diluted earnings per share $ 0.98 $ 1.90

Basic weighted average shares outstanding 10,782 11,966
Diluted weighted average shares
outstanding 11,098 12,545
*T

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

April 30 January 31
2008 2008
-------- ----------

ASSETS
Current assets:
Cash and cash equivalents $ 23,879 $ 21,223
Accounts receivable, less allowance for doubtful
accounts of $1,636 and $1,623 101,208 93,117
Inventories 90,445 85,049
Deferred income taxes 5,549 6,213
Prepaid expenses and other 8,720 10,887
-------- ----------
Total current assets 229,801 216,489
Property, plant and equipment, net 100,809 98,350
Goodwill 119,097 118,826
Deferred income taxes 6,594 5,948
Intangible assets, net 20,277 20,916
Other assets 1,963 1,971
-------- ----------
Total assets $478,541 $462,500
======== ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 6,001 $ 2,484
Current portion of long-term debt 433 423
Accounts payable 38,218 32,727
Accrued payroll and payroll taxes 11,061 10,148
Other accrued expenses 18,262 18,736
-------- ----------
Total current liabilities 73,975 64,518
Long-term debt, net of current portion 101,786 107,809
Accrued environmental expenses 4,072 4,314
Deferred income taxes 5,622 5,710
Employee benefit obligations 8,576 8,824
Other liabilities 4,195 3,300
-------- ----------
Total liabilities 198,226 194,475
-------- ----------

Commitments and contingencies

Shareholders' equity:
Common stock, $.50 par value, 20,000 authorized
shares; 10,826 and 10,840 shares issued and
outstanding 5,413 5,420
Additional paid-in capital 474 -
Retained earnings 235,841 226,932
Accumulated other comprehensive income 38,587 35,673
-------- ----------
Total shareholders' equity 280,315 268,025
-------- ----------
Total liabilities and shareholders' equity $478,541 $462,500
======== ==========
*T

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

Three Months Ended
April
-------------------
2008 2007
--------- ---------
Cash flows from operating activities:
Net income $ 10,858 $ 23,796
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 3,600 3,479
Amortization 675 798
Share-based compensation 1,315 984
Deferred income taxes 30 355
Loss (gain) on disposition of assets 115 (35)
Changes in operating assets and liabilities:
Accounts receivable (6,017) (12,713)
Inventories (3,215) (3,174)
Prepaid expenses and other (2) 1,066
Accounts payable and accrued expenses 4,751 2,582
Income taxes payable and receivable 3,029 6,787
Other assets and liabilities 346 (858)
--------- ---------
Net cash provided by operating activities 15,485 23,067
--------- ---------

Cash flows from investing activities:
Capital expenditures (3,903) (5,249)
Proceeds from disposition of assets 34 176
--------- ---------
Net cash used in investing activities (3,869) (5,073)
--------- ---------

Cash flows from financing activities:
Payments on long-term debt (16,608) (31,073)
Proceeds from long-term debt 10,500 37,000
Notes payable to banks, net 3,485 (2,413)
Common stock issued under share-based
compensation plans 62 1,404
Common stock repurchased (3,220) (24,496)
Excess tax benefit from exercise of share-based
compensation awards - 686
--------- ---------
Net cash used in financing activities (5,781) (18,892)
--------- ---------

Effect of exchange rate changes (3,179) (1,053)
--------- ---------

Change in cash and cash equivalents 2,656 (1,951)
Cash and cash equivalents at beginning of period 21,223 36,593
--------- ---------
Cash and cash equivalents at end of period $ 23,879 $ 34,642
========= =========
*T

Cascade Corporation
Joseph G. Pointer
Chief Financial Officer
503-669-6300

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