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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(Mark one)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended January 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
Commission file number 2-23666
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CASCADE CORPORATION
AN OREGON CORPORATION
I.R.S. Employer Identification Number 93-0136592
2020 S.W. 4th Avenue
Portland, Oregon 97201
503-227-0024
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Not applicable
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common stock: New York Stock Exchange
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
State the aggregate market value of the voting stock held by non-affiliates
of the registrant as of March 31, 1997: $179,375,574. As of this date there were
413 shareholders, including blocks of shares held by various depositories. It is
the Company's belief that when the shares held by the depositories are
attributed to the beneficial owners the total number of shareholders exceeds
2,500.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the close of the latest practicable date: Common
shares outstanding -11,666,704, net of treasury shares.
DOCUMENTS INCORPORATED BY REFERENCE
Definitive Proxy Statement dated April 14, 1997-Parts I and III
1996 Annual Report to Shareholders-Part II
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TABLE OF CONTENTS
PAGE
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PART I
ITEM 1. BUSINESS 1
Products and Marketing 1
Competition 2
Customers and Suppliers 2
Patents and Licenses 3
Research and Development 3
Foreign Operations 3
ITEM 2. PROPERTIES 4
ITEM 3. LEGAL PROCEEDINGS 5
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS 5
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS 5
ITEM 6. SELECTED FINANCIAL DATA 5
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 5
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 7
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE 7
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 7
ITEM 11. EXECUTIVE COMPENSATION 8
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 8
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 8
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K 8
SIGNATURES 9
NOTE: All references to the fiscal year (i.e. Fiscal 1994, 1995 and 1996) refer
to the period ended January 31 of the year subsequent to the fiscal year (i.e.
January 31, 1995, January 31, 1996, and January 31, 1997).
<PAGE>
PART I
ITEM 1. BUSINESS
PRODUCTS AND MARKETING
Cascade Corporation and its subsidiaries ("the Company") are engaged in the
business of designing, manufacturing and selling hydraulically actuated
equipment, forks for lift trucks and non-pneumatic (solid) tires used primarily
in materials handling applications. Products include lift truck attachments,
forks, masts, hose reels, hydraulic cylinders, replacement parts, and solid
tires for the aforementioned products. The Company's manufacturing activities
are conducted in its plants at Portland, Oregon; Springfield, Ohio; Warner
Robins, Georgia and Westminster, South Carolina. Subsidiaries also conduct
manufacturing activities in The Netherlands, the United Kingdom, Canada, China,
Korea, Italy, France, Sweden and Australia. Subsidiaries conduct sales,
engineering and warehousing operations in Canada, China, Korea, Germany, France,
Finland, Spain, Sweden, South Africa, The Netherlands, United Kingdom, Italy and
Japan. Executive offices are in Portland, Oregon. There are 1,989 people
employed by the Company and its subsidiaries.
The Company manufactures an extensive line of hydraulically actuated
attachments designed for mounting on industrial lift trucks. The primary
function of these products is to increase the scope and efficiency of materials
handling applications normally performed by lift trucks. The Company presently
offers a wide variety of functionally different attachments, each of which has
several models, capacities and optional combinations. These attachments have
been designed to clamp, lift, rotate, push, pull, tilt and sideshift a variety
of loads such as appliances, paper rolls, baled materials, textiles, beverage
containers, drums, canned goods, bricks, masonry blocks, lumber, plywood and
boxed, packaged, palletized and containerized products of virtually all types.
During the last five years, attachments, masts and hose reels have
accounted for 74% to 78% of the Company's consolidated sales. During this same
period, hydraulic cylinders accounted for approximately 8% to 17% of the
Company's consolidated sales. Replacement parts and other sales amounted to
approximately 9% to 14% of total sales between 1992 and 1996.
The Company's lift truck attachments, masts and hose reels are sold to
equipment dealers and manufacturers. Products are marketed throughout the United
States, Canada, Latin America, Europe, the Middle East, Australia, New Zealand,
South Africa and Asia.
Hydraulic cylinders are used primarily as components to transmit power in
lift trucks and other types of machinery and industrial equipment. A substantial
number of cylinders are utilized in the Company's proprietary lift truck
attachments and masts. In the United Kingdom, hydraulic cylinders are also sold
to manufacturers of various types of materials handling and other mobile
equipment, usually through negotiations with the customer's purchasing and
engineering departments.
With the addition of Industrial Tires Limited (ITL) in January 1997, the
Company has expanded its product line to include non-pneumatic (solid) tires.
ITL is a leading manufacturer of solid industrial tires in North America. While
its primary market continues to be fork truck tire business, product development
efforts in the past several years have allowed ITL to enter niche markets
including airport ground support equipment, aerial platform equipment and
off-the-road applications such as waste management and underground mining. ITL
manufactures tires at its facility in Mississauga, Canada and also has tires
produced under license in Sri Lanka, Mexico and China.
The Company purchased Kenhar Corporation in March 1997. Kenhar Corporation
is the world's leading manufacturer of forks for fork lift trucks and other
mobile material handling equipment. Kenhar also manufactures basebands for solid
rubber industrial tires, wheels and carriage bars used on fork lift trucks.
Kenhar Corporation has manufacturing plants in North America, England, France,
Italy and Korea. Products are sold to original equipment manufacturers (OEM) of
mobile material handling equipment and to the aftermarket consisting of
company-owned and independent distributors, equipment dealers and OEM parts
departments.
Kenhar's market segments: sales to lift truck OEM, sales to OEM of other
mobile equipment and to the aftermarket have different market cycles. Lift truck
sales are correlated to general industrial
1
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capital spending while other mobile equipment sales are more closely related to
construction activity and housing starts. The cycles of the segments tend not to
coincide. In addition, the cycles of the Kenhar's global markets; North America,
Europe and Asia, tend not to coincide. As a result, the Company believes that
Kenhar's operations are insulated, to some degree, from significant changes in
the general level of economic activity.
The majority of ITL sales of solid tires comes from the secondary market
and therefore, is still growing based upon the strong fork lift truck sales of
several years ago. ITL is continuing to see a strong increase in the aerial lift
and airport transportation markets. It is also seeing greater acceptance of
solid tires in the waste management application, a market with strong growth
potential.
Statistical information in this report for the fiscal year ended January
31, 1997, and prior years does not reflect the ITL and Kenhar acquisitions or
the acquisition of Hyco-Cascade Pty. Ltd. completed in March 1997.
COMPETITION
The Company believes that in all marketing areas, it is one of the
leading independent suppliers of hydraulically actuated materials handling
equipment designed for mounting on industrial lift trucks. Several of the
lift truck manufacturers, who are customers of the Company, are also
competitors in varying degrees to the extent that they manufacture a portion
of their attachment requirements. Since the Company offers a broad line of
attachments capable of supplying a significant part of the total requirements
for the entire lift truck industry, it believes that its relatively high unit
volume results in lower costs which would be difficult for any individual
lift truck manufacturer to achieve.
The Company's order backlog for all products at January 31, 1997, 1996 and
1995 was approximately $19,520,000, $24,560,000 and $27,010,000 respectively. At
January 31, 1997 approximately 90% (88% and 84% at January 31, 1996 and 1995) of
the order backlog was due for delivery within 60 days and substantially all
within six months.
Through its subsidiary, Industrial Tires Limited, the Company has become
one of the largest manufacturers and suppliers to both OEM and the aftermarket
in North America. ITL offers the widest range of product offerings in the
industry. The company believes that the combination of its strong customer base,
extensive product offerings, established distribution systems and state-of
- -the-art manufacturing capabilities in North America, Canada, Mexico, China and
Sri Lanka give it significant competitive advantages over other manufacturers in
the industry.
Kenhar's knowledge of the mobile material handling industry, combined with
commitment to customer service, quality and excellence of products have made it
the world's leading and largest manufacturer of forks. Since manufacturing
facilities are located in most of the major world markets, Kenhar is capable of
supplying its global customers with a full range of products of similar design
and quality, with the added convenience of local service. With this capability,
the Company believes it will continue to maintain its preeminent position.
CUSTOMERS AND SUPPLIERS
Since the Company deals with lift truck manufacturers and their dealers, a
substantial portion of its sales are made to the approximately ten major
companies in the industry. NACCO Industries Inc., is the company's single
largest customer. Sales to it and its subsidiaries, Hyster Company and Yale
Materials Handling Inc., were 9.2%, 9.7% and 10.8% of consolidated sales during
the years ended January 31, 1997, 1996 and 1995, respectively.
The Company purchases materials and components necessary to produce its
products from many different suppliers. The principal items purchased are rolled
products from steel mills, unfinished castings and forgings, hydraulic motors,
compounded rubber and hardware items such as fasteners, rollers, hydraulic seals
and hose assemblies. With few exceptions, all raw materials are available from
several domestic and foreign suppliers.
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PATENTS AND LICENSES
Patents have been a relatively unimportant factor in the development of the
Company's business. While the Company holds rights under numerous patents, it
believes that the business is not, to any significant degree, dependent on any
patent or group of patents.
RESEARCH AND DEVELOPMENT
Most of the Company's research and product development activities are
performed in a 28,000 square-foot product development center in Portland,
Oregon. The corporate engineering staff develops and designs almost all the
products sold by the Company. This staff numbers approximately 68 engineers and
is continually involved in developing new products and applications in the
materials handling field and improving existing product lines. Consolidated
expenditures for engineering research and development activities in fiscal years
ended January 31, 1997, 1996 and 1995 were approximately $4,900,000, $4,700,000
and $4,500,000 respectively. Substantially all such activities were sponsored by
the Company and its subsidiaries.
FOREIGN OPERATIONS
Cascade N.V. was organized in The Netherlands in 1958 and is engaged in the
business of manufacturing and marketing hydraulically actuated lift truck
attachments. This subsidiary presently has warehouse, sales and service
facilities in Dusseldorf, Germany; Paris, France; Vantaa, Finland; Barcelona,
Spain and Vaggeryd, Sweden; Sheffield, United Kingdom; Cascade N.V. and its
subsidiaries have 207 employees.
Cascade (U.K.) Ltd. was incorporated in the United Kingdom in 1967 and
manufactures and markets hydraulic cylinders and lift truck attachments. This
subsidiary employs 174 people.
Cascade (Canada) Inc. was incorporated in Canada in 1970 and presently
conducts marketing, limited engineering and manufacturing activities for the
hydraulically actuated equipment product line from Toronto, Ontario. In addition
ITL, a division of Cascade (Canada) Inc., is devoted to the marketing,
engineering and manufacturing of the solid tire product line. This subsidiary
presently employs 243 people.
Cascade (Africa) Pty. Limited, employing 8 people, was organized in 1967 in
South Africa and its activities consist of sales, engineering and warehousing.
Cascade (Japan) Ltd. was incorporated under the laws of Oregon in 1967, and
carries on engineering, sales and distribution activities in the Japanese
domestic market. A portion of this subsidiary's sales are produced by local
subcontractors. This subsidiary employs 22 people.
Cascade Korea Limited was incorporated under the laws of the Republic of
Korea in 1990. Its activities are limited to sales and service. Cascade Korea
Limited employs 3 people.
Cascade Xiamen was incorporated in 1995 as a wholly owned foreign
enterprise under the laws in the People's Republic of China. This subsidiary
carries on sales, service and manufacturing activities and employs 36 people
Cascade Material Handling (Australia) Pty Limited was organized in 1972 and
is engaged in the business manufacturing and marketing hydraulically actuated
lift truck attachments. This subsidiary employs 14 people.
Kenhar Corporation (Kenhar) was purchased in March 1997. Kenhar was
established in 1961 and is engaged in the business of manufacturing and
marketing forks for fork lift trucks. Kenhar has manufacturing facilities in
Guelph, Ontario, Canada; Findlay, Ohio, USA; Vancouver, Washington, USA;
Piscataway, New Jersey, USA; Manchester, United Kingdom; La Machine, France;
Brescia, Italy and Inchon, South Korea. Kenhar conducts sales and warehousing
operations from these locations as well as from other facilities in Vancouver,
British Columbia, Canada; Milton, Ontario, Canada; Decatur, Georgia, USA;
Chicago, Illinois, USA; Buffalo, New York, USA; Charlotte, North Carolina, USA;
Dallas, Texas, USA; Los Angeles, California, USA; San Francisco, California,
USA; Rayleigh, Essex, United Kingdom; Varnamo, Sweden; Shanghai, China; Bad
Urach, Germany; and Toyko, Japan. This subsidiary employes 610 people.
Hyco-Cascade Pty Ltd. was acquired in March 1997. Hyco-Cascade manufactures
and markets lift truck attachments in Australia and has a sales branch in New
Zealand. This subsidiary
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was incorporated in 1981 and employs 92 people.
There are no material risks attendant to the Company's foreign operations
other than those incidental to the regular course of business. For further
information about foreign operations, see Note 10 on page 15 of the 1996 Annual
Report to Shareholders.
ITEM 2. PROPERTIES
The Company owns and leases various types of properties located throughout
the continental United States, Europe, Canada, Australia, South Africa, China
and Japan. Of the above mentioned properties, the following are considered
principal facilities which include principal facilities of Kenhar Corporation
and Hyco-Cascade Pty Ltd. which were acquired after January 31, 1997.
<TABLE>
<CAPTION>
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Location Type of Activity
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<S> <C> <C>
United States
Portland, Oregon Owned/Leased Manufacturing, Office, Engineering, Research
Springfield, Painesville & Findlay, Ohio Owned Manufacturing, Warehouse, Office
Warner Robins & Decatur, Georgia Owned/Leased Manufacturing, Warehouse, Office
Westminster, South Carolina Owned Manufacturing, Office
Birmingham, Alabama Leased Warehouse, Office
Cheektowaga & Buffalo, New York Leased Warehouse, Office
Santa Fe Springs, Los Angeles & Leased Warehouse, Office
San Francisco, California
Chicago, Illinois Leased Warehouse, Office
Memphis, Tennessee Leased Warehouse, Office
Houston & Dallas, Texas Leased Warehouse, Office
Vancouver, Washington Leased Manufacturing, Office
Europe
Almere & Hoorn, The Netherlands Owned Manufacturing, Office
Almere & Diemen, The Netherlands Owned *
Dusseldorf & Bad Urach, Germany Owned/Leased Warehouse, Office
Paris & La Machine, France Owned Manufacturing, Warehouse, Office
Newcastle, Sheffield, Manchester, & Owned/Leased Manufacturing, Office
Rayleigh, United Kingdom
Brescia, Italy Leased Manufacturing, Office
Linkoping, Sweden Leased Manufacturing, Warehouse, Office
Other Foreign
Toronto, Mississauga, Melton, Owned/Leased Manufacturing, Warehouse, Office,
Coquitlam & Guelph, Canada Engineering, Research
Melbourne, Brisbane & Sydney, Australia Owned Manufacturing, Office
Auckland, New Zealand Leased Warehouse, Office
Johannesburg, South Africa Leased Warehouse, Office
Osaka & Toyko, Japan Leased Warehouse, Office
Inchon & Seoul Korea Leased Manufacturing, Warehouse, Office
Xiamen & Shanghai, China Leased Manufacturing, Warehouse, Office
</TABLE>
*The former European headquarters in Almere and the former manufacturing
facility in Diemen are currently held for investment purposes.
Several subsidiary companies are parties to various leases of office and
computer equipment, storage space and automobiles which are of minor
consequence.
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ITEM 3. LEGAL PROCEEDINGS
Neither the Company nor any of its subsidiaries are involved in any
material pending legal proceedings other than litigation related to
environmental matters discussed on page 15 and 16 or matters arising in the
regular course of business. The Company and its subsidiaries are adequately
insured against product liability, personal injury and property damage claims
which may occasionally arise.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The definitive Proxy Statement dated April 14, 1997 is incorporated by
reference. No Matters were submitted to a vote of security holders during the
fourth quarter ended January 31, 1997.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Page 17 of the 1996 Annual Report to Shareholders is incorporated by
reference.
ITEM 6. SELECTED FINANCIAL DATA
Page 1 of the 1996 Annual Report to Shareholders is incorporated by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
GENERAL OVERVIEW
Consolidated net sales for 1996 (the fiscal year ended January 31, 1997)
totaled $218,485,000, a 6.6% decrease from record sales of $234,030,000 for
1995 and a 19% increase when compared to 1994. Earnings for 1996 were 5% lower
when compared to 1995 earnings before the special charge for environmental
expenses. When compared to prior years, 1996 net income increased 65% from 1995
and was 42% greater than the amount recorded in 1994.
Sales in North America in 1996 were 4.8% lower than in 1995 reflecting
softer lift truck shipments following 1995's record levels. Industry booking
figures experienced an improvement during the 1996 fourth quarter and this
favorable trend has continued during the first quarter of 1997. Although 1996
sales in Europe were down 10.2% from 1995, we believe a slow recovery is
underway in the underlying economics of the Continent and we have established
aggressive targets for our important European markets in 1997. Other Cascade
subsidiaries recorded sales increases of 6.7% when compared to 1995, with
particularly strong growth in China and Korea more than offsetting a
disappointing performance in Japan.
Revenue for 1995 was substantially greater than 1994 due to a 22% increase
in North American sales and a 40% increase in sales in Europe with strong gains
being recorded in nearly all market
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areas. Sales in Japan experienced solid improvement, while sales in Korea and
South Africa were significantly greater than 1994.
RESULTS OF OPERATIONS
Net income for the year ended January 31,1997 was $17,420,000 or $1.48
per share. This compares to $10,550,000 ($.88 per share) for the year ended
January 31, 1996, after the special $7,800,000 net of tax ($.65 per share),
provision for environmental expenses. This represents a very healthy return
on sales of 8.0% and a return on shareholders' equity of 18.9%. Despite lower
sales volumes, operating costs were generally held in check, which resulted
in fairly level margins as compared with prior years.
Earnings for fiscal 1995 of $10,550,000 decreased by 13.8% when compared to
1994 net income of $12,250,000. Net income for 1995 was adversely affected by
the special charge mentioned previously. In 1995, the Company recorded a special
charge of $12,000,000 ($7,800,000 net of tax) in anticipation of future
expenses associated with environmental investigation and remediation activities
which may be incurred over a period of up to 30 years. Although these costs are
associated with manufacturing processes which were discontinued over twenty
years ago, this charge is reflected as an operating expense in the Consolidated
Statement of Income and Retained Earnings.
Over the three year period from fiscal year 1994 to fiscal year 1996,
both cost of goods sold and selling and administrative expenses, as indicated
in the Consolidated Statement of Income and Retained Earnings on page 5 of
the 1996 Annual Report remained relatively steady when expressed as a
percentage of revenues. Cost of goods sold was 65.5% of net sales in 1996 and
1995 slightly higher than the 64.6% recorded in 1994. Selling and
administrative expenses as a percent of net sales increased to 18.4% for 1996
compared to 17.1% in 1995 but decreased from 19.1% in 1994. As part of our
growth strategy, we will continue to exercise prudent expense controls to
ensure favorable bottom line results. Inflation and changing prices have not
had a material impact on the Company's income in fiscal 1994 through 1996.
During fiscal 1996, we introduced PLAN 2001 which will position the Company
for further growth. The plan consists of three parts: aggressive pursuit of
market share in existing markets, with focused expansion into smaller, regional
markets; enhanced introduction of new product offerings; and a targeted
acquisition program. The acquisitions announced over the past several months
will enable the Company to serve its customers better with a broader range of
products, and will add some $150 million in revenues based on recent
performance. Please see notes 9 and 13 of the Consolidated Financial Statements
on page 14 and 20 of the 1996 Annual Report for an outline of these
acquisitions.
The U.S. dollar weakened 9.3% compared to the Dutch guilder and 12.2%
against the Japanese yen during 1996. As a result, foreign currency translation
adjustments decreased shareholders' equity by $2,095,000 ($.18 per share) in
1996. Translation adjustments resulted in a decrease in shareholders' equity of
$120,000 ($.01 per share) for fiscal 1995 and an increase of $3,041,000 ($.25
per share) for fiscal 1994.
LIQUIDITY AND CAPITAL RESOURCES
For the year ended January 31, 1997 capital expenditures totaled
$16,624,000 compared to $11,825,000 for 1995 and $21,921,000 for 1994.
Expenditures in 1996 were primarily targeted at investments in enhanced
manufacturing, engineering and information systems equipment, along with tooling
for new product introductions. Included in the 1996 amount are expenditures
associated
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with expansion and consolidation at our Portland, Oregon manufacturing facility,
which will be completed in 1997. This project will allow the Company's Executive
Team to relocate from Parkside Center in downtown Portland to join the balance
of the corporate staff, which will facilitate our team management style.
Dividends were $.45 for both 1996 and 1995. In addition to the regular
$.09 quarterly dividend, the Board of Directors also declared a $.09 special
dividend both years which was paid with the fourth quarter dividend. In 1994
dividends totaled $.375 including the regular $.075 quarterly dividend and a
special year-end dividend of $.075.
The Company increased short and long-term borrowings by $27,434,000
during 1996 primarily in connection with the acquisitions discussed earlier.
Combined short and long-term debt amounts to 45.5% of shareholders' equity. Cash
and cash equivalents were $15,642,000 at January 31, 1997 compared to
$23,326,000 at the prior year end. Current assets at January 31, 1997 were 1.5
times current liabilities. The Company's strong cash position, together with
available borrowing capacity, is more than sufficient to meet our short-term
requirements. In order to finance the acquisition of Kenhar Corporation and
Hyco-Cascade Pty Ltd. subsequent to January 31, 1997, the Company entered into
an agreement which increased the Company's available borrowing capacities from
$81,816,000 to $111,816,000.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Pages 5 through 16 to the 1996 Annual Report to Shareholders are
incorporated by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The definitive Proxy Statement dated April 14, 1997 is incorporated by
reference.
The term of office of all officers is one year. Names, ages and position of
all executive officers of Cascade Corporation follow.
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Year First
Elected
Name Age Officer Present Position
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Joseph J. Barclay 64 1968 Chairman and Director
Robert C. Warren, Jr. 48 1984 President, Chief Executive Officer and
Director
James P. Miller 49 1992 Executive Vice President, Secretary and
Treasurer
William J. Harrison 58 1997 Executive Vice President
Gregory S. Anderson 48 1991 Vice President-Human Resources
Richard S. Anderson 49 1996 Vice President-Material Handling Product
Group
Terry H. Cathey 49 1993 Vice President-Material Handling
Operations
Zouhdi M. Derhalli 64 1993 Vice President-Material Handling Product
Development
Robert L. Mott 55 1996 Vice President-OEM Product Group
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ITEM 11. EXECUTIVE COMPENSATION
The definitive Proxy Statement dated April 14, 1997 is incorporated by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The definitive Proxy Statement dated April 14, 1997 is incorporated by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
INDEX TO FINANCIAL STATEMENTS
(a) 1. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements, together with the report thereon of
Price Waterhouse LLP dated March 18, 1997, appearing on pages 5 to 16 of the
accompanying 1996 Annual Report are incorporated by reference in this Form 10-K
Annual Report. With the exception of the aforementioned information and
information incorporated in Items 5, 6 and 8, the 1996 Annual Report is not to
be deemed filed as part of this report.
2. FINANCIAL STATEMENT SCHEDULES-1996, 1995 AND 1994
Financial statement schedules not included in this Form 10-K Annual Report
have been omitted because they are not applicable or not required.
The individual financial statements of the registrant and its
subsidiaries have been omitted since the registrant is primarily an operating
company and all subsidiaries included in the consolidated financial
statements, in the aggregate, do not have minority equity interests and/or
indebtedness to any person other than the registrant or its consolidated
subsidiaries in amounts which together exceed 5% of the total consolidated
assets at January 31, 1997, except indebtedness incurred in the ordinary course
of business which is not overdue.
3. EXHIBITS
1. Copy of Notice of Annual Meeting dated April 14, 1997.
2. Copy of Form of Proxy for Annual Meeting.
3. Basic documents incorporated by reference:
Articles of Incorporation filed with the Commission May 28, 1965.
Amendment to Articles of Incorporation filed in Proxy Statement
for annual meeting of shareholders May 12, 1987, filed with the
Commission April 14,1988.
Amendment to Articles of Incorporation filed in Proxy Statement
for annual meeting of shareholders May 9, 1989, filed with the
Commission April 27, 1990.
By-Laws, as amended to February 8, 1989, filed with the
Commission April 27,1990.
Specimen copy of stock certificate, filed as Exhibit 4-1 to Form
S-1, filed with the Commission May 28, 1965.
(b) REPORTS ON FORM 8-K
During the quarter ended January 31, 1997, the Company filed a current
report on Form 8-K with the Commission dated January 13, 1997 reporting the
acquisition of Industrial Tires Limited (ITL).
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SIGNATURES
Pursuant to the requirements of Section 13 and 15(d) of the Securities
Exchange Act of 1934, the registrant, CASCADE CORPORATION has duly caused this
annual report to be signed on its behalf by the undersigned thereunto duly
authorized.
CASCADE CORPORATION
-----------------------------------
By: James P. Miller
EXECUTIVE VICE PRESIDENT, SECRETARY
& TREASURER
Pursuant to the requirements of the Securities Exchange Act of 1934 this
report has been signed below by the following persons on behalf of the
registrant and in the capacities on the dates indicated.
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Joseph J. Barclay Date
CHAIRMAN, DIRECTOR
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Robert C. Warren, Jr. Date
PRESIDENT AND CHIEF EXECUTIVE OFFICER, DIRECTOR
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Richard C. Hire, DIRECTOR Date
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Eric Hoffman, DIRECTOR Date
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C. Calvert Knudsen, DIRECTOR Date
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Nicholas R. Lardy, DIRECTOR Date
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Lawrence S. Maunder, DIRECTOR Date
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James S. Osterman, DIRECTOR Date
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Jack B. Schwartz, DIRECTOR Date
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Rob Spaans, DIRECTOR Date
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FINANCIAL SUMMARY
(IN MILLIONS)
[CHART]
[CHART]
[CHART]
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(IN THOUSANDS EXCEPT WHERE NOTED*)
January 31
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net sales $218,485 $234,030 $183,365 $141,325 $148,435
Operating income $ 24,850 $ 16,415 $ 19,350 $ 9,735 $ 14,155
Net income $ 17,420 $ 10,550(1) $ 12,250 $ 3,885(2) $ 7,695
Per common share
Net income* $ 1.48 $ .88(1) $ 1.02 $ .32(2) $ .64
Book value* $ 8.46 $ 7.74 $ 7.37 $ 6.47 $ 6.55
Working capital $ 32,750 $ 49,829 $ 40,821 $ 37,337 $ 38,175
Expenditures for property,
plant and equipment $ 16,624 $ 11,825 $ 21,921 $ 8,126 $ 7,772
Total assets $199,493 $153,190 $137,109 $106,571 $104,987
Long-term debt $ 12,810 $ 9,531 $ 7,809 $ 682 $ 1,228
Shareholders' equity $ 98,757 $ 92,057 $ 88,538 $ 77,751 $ 78,650
Number of employees* 1,293 1,103 993 838 863
</TABLE>
(1) After $12,000 ($7,800 or $.65 per share, net of taxes) charge for
environmental expenses.
See note 12 to consolidated financial statements.
(2) After $1,980 or $.17 per share charge related to cumulative effect of
accounting change.
See note 8 to consolidated financial statements.
1 ------------------------------------------------------------------------------
<PAGE>
CONSOLIDATED STATEMENT OF INCOME & RETAINED EARNINGS
<TABLE>
<CAPTION>
CASCADE CORPORATION & SUBSIDIARY COMPANIES
- ------------------------------------------------------------------------------------------
Year Ended January 31
1997 1996 1995
(Dollars in Thousands)
<S> <C> <C> <C>
Net Sales $ 218,485 $ 234,030 $ 183,365
----------- ----------- -----------
Operating expenses:
Cost of goods sold 143,080 153,345 118,430
Depreciation 10,280 9,540 8,100
Selling and administrative expenses 40,275 39,935 35,085
Environmental expenses (Note 12) 14,795 2,400
----------- ----------- -----------
193,635 217,615 164,015
----------- ----------- -----------
Operating income 24,850 16,415 19,350
Interest expense 876 1,085 335
Interest income (1,076) (1,045) (535)
Other expense, net 65 315 915
----------- ----------- -----------
Income before income taxes 24,985 16,060 18,635
Income taxes (Note 3) 7,565 5,510 6,385
----------- ----------- -----------
Net Income 17,420 10,550 12,250
Retained earnings, beginning of year 85,083 79,910 75,262
Dividends ($.45, $.45 and $.375 per share) (5,340) (5,377) (4,504)
Repurchase of common stock (2,602)
Stock distribution (3,098)
----------- ----------- -----------
Retained earnings, end of year $ 94,561 $ 85,083 $ 79,910
----------- ----------- -----------
----------- ----------- -----------
Net income per share $ 1.48 $ .88 $ 1.02
----------- ----------- -----------
----------- ----------- -----------
Weighted average shares outstanding 11,796,677 11,990,447 12,009,904
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this statement.
5 ------------------------------------------------------------------------------
<PAGE>
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
CASCADE CORPORATION & SUBSIDIARY COMPANIES
- ------------------------------------------------------------------------------------------
January 31
ASSETS 1997 1996
(Dollars in Thousands)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 15,642 $ 23,326
Accounts receivable, less allowance for doubtful accounts
of $227 and $967 43,469 38,574
Inventories, at average cost which is lower than market:
Finished goods and components 26,701 16,142
Goods in process 4,634 4,083
Raw materials 4,667 4,990
-------- --------
36,002 25,215
Deferred income taxes (Note 3) 1,496 2,000
Prepaid expenses 2,020 849
-------- --------
Total current assets 98,629 89,964
Property, plant and equipment,
at cost less accumulated depreciation (Notes 2 and 4) 81,393 63,214
Deferred income taxes (Note 3) 1,139 1,796
GoodwiN (Note 9) 18,332 1,954
-------- --------
Total assets $199,493 $156,928
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks (Note 4) $ 29,846 $5,015
Current portion of long-term debt (Note 4) 2,264 2,940
Accounts payable 21,373 17,126
Accrued payroll and payroll taxes 4,222 5,654
Other accrued expenses 8,174 9,400
-------- --------
Total current liabilities 65,879 40,135
Long-term debt (Note 4) 12,810 9,531
Deferred income taxes (Note 3) 5,151 1,738
Accrued environmental expenditures (Note 12) 8,913 10,500
Other liabilities (Note 8) 3,033 2,967
-------- --------
Total liabilities 95,786 64,871
-------- --------
Mandatorily redeemable convertible preferred stock,
no par value, 330,000 shares issued (Note 9): 4,950
-------- --------
Shareholders' equity (Note 6):
Common stock, $.50 par value, authorized
20,000,000 shares; 12,048,208 and 12,278,208
shares issued 6,024 6,139
Additional paid-in capital 568
Retained earnings 94,561 85,083
Cumulative foreign currency translation adjustments (1,142) 953
Treasury stock, at cost, 381,504 shares (686) (686)
-------- --------
Total shareholders' equity 98,757 92,057
-------- --------
Total liabilities, mandatorily redeemable convertible
preferred stock and shareholders' equity $199,493 $156,928
-------- --------
-------- --------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this statement.
6 -----------------------------------------------------------------------------
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
CASCADE CORPORATION & SUBSIDIARY COMPANIES
- -----------------------------------------------------------------------------------------------------
Year Ended January 31
1997 1996 1995
(Dollars in Thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $17,420 $10,550 $12,250
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 10,280 9,540 8,100
Gain on sale of property, plant and equipment (150)
Deferred income taxes 613 (4,099) (9)
Changes in operating assets and liabilities:
Accounts receivable 535 (3,297) (10,424)
Inventories (258) (4,148) (1,933)
Income taxes (2,099) 1,133 753
Prepaid expenses (1,073) 70 257
Accounts payable and accrued expenses (1,523) 1,457 9,905
Accrued environmental expenditures (1,587) 10,500
Other liabilities 66 59 34
------- ------- -------
Net cash provided by operating activities 22,374 21,765 18,783
------- ------- -------
Cash flows from investing activities:
Acquisition of property, plant and equipment (16,624) (11,825) (21,921)
Business Acquisitions (22,849)
Proceeds from sale of property, plant and equipment 1,849
Other assets 64 (69) (222)
------- ------- -------
Net cash used in investing activities (39,409) (11,894) (20,294)
------- ------- -------
Cash flows from financing activities:
Long-term debt, including current portion (687) 4,259 6,318
Notes payable to banks 19,297 (797) 2,447
Repurchase of common stock (3,285) (1,534)
Cash dividends paid (5,340) (5,377) (4,504)
------- ------- -------
Net cash provided (used) by financing activities 9,985 (3,449) 4,261
------- ------- -------
Effect of exchange rate changes (634) (299) 1,836
------- ------- -------
Increase (decrease) in cash and cash equivalents (7,684) 6,123 4,586
Cash and cash equivalents at beginning of year 23,326 17,203 12,617
------- ------- -------
Cash and cash equivalents at end of year $15,642 $23,326 $17,203
------- ------- -------
------- ------- -------
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 804 $ 1,025 $ 307
Income taxes $ 8,864 $ 8,434 $ 5,676
Mandatorily redeemable convertible preferred
stock issued for acquisition $ 4,950 $ - $ -
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this statement.
7 ------------------------------------------------------------------------------
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CASCADE CORPORATION & SUBSIDIARY COMPANIES
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF PRINCIPAL ACCOUNTING POLICIES
CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its subsidiaries, all of which are wholly owned. Intercompany balances and
transactions have been eliminated.
SHORT-TERM INVESTMENTS
Cash and cash equivalents consist of cash on deposit and highly liquid
investments, including investments classified as trading securities in
accordance with Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities."
DEPRECIATION AND AMORTIZATION
Property, plant and equipment are stated at cost. Depreciation is provided on
the straight-line basis over the estimated useful lives of the respective
assets. Goodwill consists of the cost of acquired businesses (Note 9) in excess
of the fair value of net identifiable assets acquired. Generally, goodwill is
amortized on a straight-line basis over 20 years. The Company annually reviews
the realizability of recorded goodwill based upon expectations of nondiscounted
cash flows and operating income of the acquired businesses. As of January 31,
1997, the Company believes that there are no significantly impaired intangible
assets. Accumulated amortization of goodwill was $75,000 at January 31, 1997.
INCOME TAXES
Income taxes are accounted for in accordance with SFAS 109, "Accounting for
Income Taxes." Deferred income taxes are recognized for the tax consequences of
temporary differences by applying enacted statutory tax rates applicable to
future years to differences between the financial statement carrying amounts and
the tax bases of existing assets and liabilities.
STOCK-BASED COMPENSATION
The Company adopted Statement of Financial Accounting Standards No. 123 (FAS
123) "Accounting for Stock-Based Compensation" in 1997. This statement allows
companies to choose whether to account for stock-based compensation under the
current method as prescribed by APB 25 or use a fair value method described in
FAS 123. The Company continues to follow the provisions of APB 25.
FOREIGN CURRENCY TRANSLATION
The Company translated the balance sheets of its foreign subsidiaries using
fiscal year-end exchange rates. The statements of income are translated using
the average exchange rates for the fiscal year. The effects of such
translations are included in the shareholders' equity account "cumulative
foreign currency translation adjustments" as decreases of $2,095,000 and
$120,000 for the years ended January 31, 1997 and 1996, and an increase of
$3,041,000 for the year ended January 31, 1995.
NOTE 2 - PROPERTY, PLANT AND EQUIPMENT
January 31
1997 1996
(Dollars in Thousands)
Land $ 4,229 $ 3,890
Construction in progress 4,493 -
Buildings 31,437 31,308
Machinery and equipment 115,642 98,521
-------- --------
155,801 133,719
Accumulated depreciation (74,408) (70,505)
-------- --------
$ 81,393 $ 63,214
-------- --------
-------- --------
8 -----------------------------------------------------------------------------
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CASCADE CORPORATION & SUBSIDIARY COMPANIES
- ---------------------------------------------------------------------------------------------------------------
NOTE 3 - INCOME TAXES
Year Ended January 31
1997 1996 1995
(Dollars in Thousands)
<S> <C> <C> <C>
Income before taxes was as follows:
United States $15,990 $ 5,295 $12,925
Foreign 8,995 10,765 5,710
------- ------- -------
$24,985 $16,060 $18,635
------- ------- -------
------- ------- -------
Taxes charged (credited) against operations were as
follows:
Current
Federal $ 2,572 $ 5,507 $ 3,824
State 819 889 623
Foreign 2,816 3,740 2,319
------- ------- -------
Total 6,207 10,136 6,766
------- ------- -------
Deferred
Federal 932 (4,038) (274)
State 296 (651) (44)
Foreign 130 63 (63)
------- ------- -------
Total 1,358 (4,626) (381)
------- ------- -------
Total income taxes $ 7,565 $ 5,510 $ 6,385
------- ------- -------
------- ------- -------
The federal rate reconciles to the effective rate as
follows:
Federal statutory rate 35.0% 35.0% 35.0%
State income taxes, net of federal tax benefits 2.9 1.0 2.0
Effect of foreign tax rates (.8) .2 1.6
IRS settlement (1) (5.7) - -
Tax credits and other (1.1) (1.9) (4.3)
------- ------- -------
Effective income tax rate 30.3% 34.3% 34.3%
------- ------- -------
------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
The deferred tax liabilities (assets) recorded on the January 31
consolidated balance sheet are comprised of 1997 1996
the following: (Dollars in Thousands)
<S> <C> <C>
Accruals not deductible until paid $(1,052) $(1,579)
Other (197) (421)
------- -------
Current deferred income taxes $(1,249) $(2,000)
------- -------
------- -------
Depreciation $ 7,181 $ 4,645
Employee benefits (902) (909)
Accrued environmental expenditures (3,302) (3,885)
Other 1,035 91
------- -------
Noncurrent deferred income taxes $ 4,012 $ (58)
------- -------
------- -------
</TABLE>
(1) IRS settlement is the result of the resolution of prior years' deferred
compensation deductions.
9 -----------------------------------------------------------------------------
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CASCADE CORPORATION & SUBSIDIARY COMPANIES
- --------------------------------------------------------------------------------
NOTE 4 - BORROWINGS
January 31
1997 1996
(Dollars in Thousands)
5.3% mortgage note, due annually through 2008
secured by plant and equipment $ 9,401 $ 9,292
9.0% mortgage note, due monthly through 2001
secured by equipment 2,421 -
5.25% mortage note, due monthly through 2002,
secured by plant 903 -
10.0% mortgage notes, due annually through 1999 85 239
------- -------
$12,810 $ 9,531
------- -------
------- -------
Maturities of long-term debt for the years January 31, 1998 through January 31,
2002, and thereafter, respectively, are $2,264,000, $2,174,000, $3,028,000,
$1,444,000, $1,762,000 and $4,402,000. Borrowing arrangements with commercial
banks provided short-term lines of credit at January 31, 1997 totalling
$81,816,000, of which $51,970,000 was unused. Average interest rates on
short-term borrowings were 5.4% and 2.4% at January 31, 1997 and 1996,
respectively. Subsequent to year end, the Company increased its short-term
borrowing availability by an additional $30,000,000.
NOTE 5 - STOCK OPTION PLAN
The Company has reserved 800,000 shares of common stock for the Cascade
Corporation 1995 Senior Managers' Incentive Stock Option Plan (the Plan). The
Plan permits the award of incentive stock options (ISOs) to officers and key
employees. Under the terms of the Plan, the purchase price of shares subject to
each ISO granted must not be less than the fair market value on the date of
grant. Accordingly, no compensation cost has been recognized for the stock
option plan. Outstanding options vest after three years and are exercisable for
ten years from the date of grant.
The Company has determined that the pro forma effects of applying FAS 123 would
not have a material effect on the results of operations for 1997 and 1996. This
determination was made using the following assumptions.
January 31
1997 1996
Risk-free interest rate 6.7% 6.1%
Expected Life 5 Years 5 Years
Expected Volatility 26% 26%
Expected Dividend Yield 3% 3%
10 -----------------------------------------------------------------------------
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CASCADE CORPORATION & SUBSIDIARY COMPANIES
- --------------------------------------------------------------------------------
NOTE 5 - STOCK OPTION PLAN CONTINUED
A summary of the Plan's status at January 31, 1997 and 1996 together with
changes during the period then ended is presented in the following table:
<TABLE>
<CAPTION>
Year Ended January 31
1997 1996
--------------------- ----------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
PRICE PER PRICE PER
SHARES SHARE SHARES SHARE
------ --------- ------ ---------
<S> <C> <C> <C> <C>
Outstanding at beginning of year 75,253 $ 16.37 - -
Granted 93,341 $ 16.00 77,355 $ 16.37
Forfeited (23,162) $ 16.17 (2,102) $ 16.37
------- -------
Outstanding at end of year 145,432 $ 16.17 75,253 $ 16.37
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
The following table summarizes information about fixed options outstanding at
January 31, 1997.
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE NUMBER OF WEIGHTED CONTRACTUAL
PRICE RANGE SHARES AVERAGE PRICE LIFE
----------- --------- ------------- -----------
<S> <C> <C> <C> <C>
$ 16.37 64,455 $ 16.37 8
$ 16.00 80,977 $ 16.00 9
</TABLE>
NOTE 6 - CAPITAL STOCK
There are 200,000 shares authorized of no par value preferred stock; none
are outstanding.
11 ----------------------------------------------------------------------------
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CASCADE CORPORATION & SUBSIDIARY COMPANIES
- --------------------------------------------------------------------------------
NOTE 7- BENEFIT PLANS
The Company has defined benefit plans covering certain U.S. and Canadian
employees. The benefits are based on years of service and average earnings over
a specified five-year period of prior service. The Company's funding policy is
to make annual contributions that are between the minimum amount required by the
Employee Retirement Income Security Act and the maximum amount deductible under
the current tax regulations. Substantially all plan assets are invested in
government or corporate bonds.
Net pension cost, the plans' funded status and significant assumptions include
the following:
<TABLE>
<CAPTION>
Year Ended January 31
1997 1996 1995
(Dollars In Thousands)
<S> <C> <C> <C>
Interest cost on projected benefit obligation $ 248 $ 314 $ 271
Actual return on assets (257) (517) 65
Net amortization and deferral 268 432 (96)
------- ------- -------
Net periodic pension cost $ 259 $ 229 $ 240
------- ------- -------
------- ------- -------
Projected and accumulated vested benefit obligation $(6,106) $(4,261) $(3,893)
Plan assets at fair value 6,147 3,866 3,053
------- ------- -------
Plan assets in excess of (less than)
projected benefit obligation 41 (395) (840)
Unrecognized prior service cost 120 133 146
Unrecognized net loss 1,208 1,231 1,142
------- ------- -------
Prepaid pension expense $ 1,369 $ 969 $ 448
------- ------- -------
------- ------- -------
Discount rate 7.25% 6.75% 8.50%
Expected long-term rate of return 7.25% 8.00% 8.00%
</TABLE>
In December 1988, the Company amended the plan covering U.S. employees to limit
benefits to those accrued through December 31, 1988. Also effective January 1,
1989, the Company instituted a defined contribution plan and a limited matching
contribution program, both pursuant to applicable provisions of the Internal
Revenue Code, and contributed $1,488,000, $1,318,000 and $1,195,000 for 1996,
1995 and 1994, respectively.
12 -----------------------------------------------------------------------------
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CASCADE CORPORATION & SUBSIDIARY COMPANIES
- --------------------------------------------------------------------------------
NOTE 8 - POSTRETIREIMENT BENEFITS OTHER THAN PENSIONS
The Company provides health care benefits for eligible retirees. The Company
accounts for such costs under FAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." Therefore, the Company is accruing
the future costs of providing such benefits to eligible active employees during
the years they render service.
The following table sets forth the plan's status reconciled with the amount
included in the Consolidated Balance Sheets:
<TABLE>
<CAPTION>
January 31
1997 1996 1995
(Dollars in Thousands)
<S> <C> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $(2,342) $(2,551) $(2,557)
Fully eligible active plan participants (416) (350) (210)
Other active plan participants (1,249) (1,502) (849)
------- ------- -------
(4,007) (4,403) (3,616)
Plan assets at fair value - - -
------- ------- -------
Accumulated postretirement benefit obligation
in excess of plan assets (4,007) (4,403) (3,616)
Unrecognized net loss 974 1,436 708
------- ------- -------
$(3,033) $(2,967) $(2,908)
------- ------- -------
------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
The net periodic postretirement benefit costs
are as follows: January 31
1997 1996 1995
(Dollars in Thousands)
<S> <C> <C> <C>
Service cost $ 83 $ 56 $ 42
Interest cost 288 295 230
Net amoritization and deferral 84 23 29
------- ------- -------
Net periodic postretirement benefit cost $ 455 $ 374 $ 301
------- ------- -------
------- ------- -------
</TABLE>
To estimate these costs, health care costs were assumed to increase at an annual
rate of 9% after 1996 with the rate of increase declining ratably to 4% by 2001
and thereafter. The weighted average discount rate was assumed to be 7.25%,
6.75% and 8.5% for 1996, 1995 and 1994, respectively. If the cost trend rates
were increased by one percentage point, the accumulated postretirement benefit
obligation as of January 31, 1997 would increase by $416,000 and net periodic
postretirement benefit cost would increase by $43,000.
13 -----------------------------------------------------------------------------
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CASCADE CORPORATION & SUBSIDIARY COMPANIES
- --------------------------------------------------------------------------------
NOTE 9 - ACQUISITIONS
INDUSTRIAL TIRES LIMITED
In January 1997, the Company purchased all of the outstanding capital stock of
Industrial Tire Limited (ITL), a Canadian corporation that manufactures solid
rubber tires for the material handling industry. The aggregate purchase price,
including direct costs of acquisition and 330,000 shares of Cascade (Canada),
Inc. Preferred Stock (the Preferred Stock), was $23,660,000. This transaction
has been accounted for using the purchase method of accounting.
Each share of Preferred Stock is convertible into one share of the Company's
common stock at the holder's option. In addition, the Preferred Stock gives the
holder the ability to require the Company to repurchase the shares on or after
January 13, 2002 at the original issuance price of approximately $15 per share,
for a maximum repurchase obligation of approximately $4,950,000. Consequently,
the Preferred Stock is classified as "Mandatorily Redeemable Convertible
Preferred Stock" as of January 31, 1997. The provisions of the Preferred Stock
also entitle the holder to cumulative dividends paid on the common shares of
Cascade Corporation and to a liquidation preference equal to approximately $15
per share in priority to any payment on any shares ranking junior to the
Preferred Stock.
OTHER ACQUISITIONS
In addition to the acquisition discussed above, during 1996, the Company
acquired two other manufacturers in related businesses. The purchase price for
the acquisitions was $4,063,000. These transactions have also been accounted
for under the purchase method of accounting; therefore, the acquired businesses
have been included in the Company's results of operations since each respective
acquisition date.
PRO FORMA INFORMATION
In accordance with APB 16, the following unaudited pro forma information is
provided. The total revenues include the consolidated revenues of the Company
as reported and the net revenues of the acquired business as if they had been
acquired as of the beginning of the respective periods. The revenues have not
been adjusted to consider any benefit that may have occurred from the
combination of the operations. The pro forma net income and net income per
share have been adjusted to include the additional costs of depreciation,
goodwill amortization and interest expense based on the actual purchase price
and related borrowings. Expenses have not been reduced to reflect any
operational efficiencies that may result from the combination of the entities.
The unaudited pro forma information is not necessarily indicative of what actual
results would have been had the acquisitions been completed by the Company at
the beginning of the respective periods.
Year ended January 31
1997 1996
UNAUDITED (Dollars in thousands except per share)
Total revenue $259,548 $286,229
-------- --------
-------- --------
Net income $ 14,975 $ 7,955
-------- --------
-------- --------
Net income per share $ 1.24 $ .65
-------- --------
-------- --------
14 ---------------------------------------------------------------------------
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CASCADE CORPORATION & SUBSIDIARY COMPANIES
- --------------------------------------------------------------------------------
NOTE 10 - INFORMATION ABOUT OPERATIONS
The Company designs, manufactures and markets equipment used in materials
handling applications. Sales to the largest single customer were 9.2%, 9.7% and
10.8% of consolidated sales during the years ended January 31, 1997, 1996 and
1995, respectively. Information about the Company's operations in different
geographic areas is shown below:
<TABLE>
<CAPTION>
Year ended January 31
(Dollars in Thousands)
NORTH ELIMIN- CONSOLI-
1997 AMERICA EUROPE OTHER ATIONS DATED
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Sales to unaffiliated customers $130,145 $ 67,925 $ 20,415 $ $218,485
Transfers between areas 16,971 305 334 (17,610)
-------- -------- -------- -------- --------
Total revenue $147,116 $ 68,230 $ 20,749 $(17,610) $218,485
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Net income $ 12,845 $ 2,815 $ 1,760 $ 17,420
-------- -------- -------- --------
-------- -------- -------- --------
Identifiable assets $114,873 $ 65,932 $ 18,688 $199,493
-------- -------- -------- --------
-------- -------- -------- --------
1996
Sales to unaffiliated customers $139,950 $ 75,375 $ 18,705 $ $234,030
Transfers between areas 14,607 587 747 (15,941)
-------- -------- -------- -------- --------
Total revenue $154,557 $ 75,962 $ 19,452 $(15,941) $234,030
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Net income $ 5,809 $ 4,078 $ 663 $ 10,550
-------- -------- -------- --------
-------- -------- -------- --------
Identifiable assets $ 72,847 $ 64,367 $ 15,976 $153,190
-------- -------- -------- --------
-------- -------- -------- --------
1995
Sales to unaffiliated customers $115,061 $ 53,737 $ 14,567 $ $185,365
Transfers between areas 11,016 119 721 (11,856)
-------- -------- -------- -------- --------
Total revenue $126,077 $ 53,856 $ 15,288 $(11,856) $183,365
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Net income $ 9,598 $ 2,480 $ 172 $ 12,250
-------- -------- -------- --------
-------- -------- -------- --------
Identifiable assets $ 69,087 $ 53,210 $ 14,812 $137,109
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
NOTE 11 - COMMITMENTS AND CONTINGENCIES
The Company leases certain of its facilities and equipment under noncancelable
operating leases. The minimum rental commitments under these leases for the
years ended January 31, 1998 through January 31, 2001, respectively, are
$900,000, $509,000, $331,000 and $76,000. For the years ended January 31, 1997,
1996 and 1995, total rentals charged to expense amounted to $789,000, $705,000
and $591,000.
NOTE 12 - ENVIRONMENTAL MATTERS
The Company is engaged in environmental investigations and remediation efforts
in its ordinary course of business. In the year ended January 31, 1996, the
Company accrued a charge of $12,000,000 ($7,800,000 after tax) to provide for
probable future costs related to its Portland, Oregon manufacturing facility.
In accordance with management expectations, the Company incurred actual charges
totaling $1,587,000 during 1997. The Company has reviewed the remaining accrued
liability of $10,413,000 and determined that it fairly approximates the cost of
future known remediation costs at this facility. However, since future
remediation costs are subject to many uncertainties, actual expenses may vary
from the amount recorded at January 31, 1997.
15 -----------------------------------------------------------------------------
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CASCADE CORPORATION & SUBSIDIARY COMPANIES
- --------------------------------------------------------------------------------
NOTE 12 - ENVIRONMENTAL MATTERS CONTINUED
The Company has made claims under various insurance policies. Based upon
current Oregon court decisions and advice from legal counsel, the Company
believes it will recover all or a substantial portion of the past and future
costs of investigation and remediation. Litigation has been initiated to
enforce terms of these policies. No adjustments have been made to the financial
statements with respect to the potential outcome of this uncertainty.
NOTE 13 - SUBSEQUENT EVENT
In March 1997, the Company acquired all the outstanding capital stock of Kenhar
Corporation, a Canadian corporation that manufactures forks for lift trucks.
The aggregate purchase price was approximately $73,090,000 and includes
$57,450,000 in cash and approximately $15,640,000 in stock.
Additionally, the Company purchased all of the outstanding stock of Hyco-Cascade
subsequent to year end. Hyco-Cascade is an Australian manufacturer and
distributor of lift truck attachments and accessories. The amount paid in
connection with this purchase was $12,244,000, which consisted of $7,538,000 in
cash, $3,206,000 in stock and $1,500,000 in debt.
QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE FIGURES)
<TABLE>
<CAPTION>
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
<S> <C> <C> <C> <C>
YEAR ENDED JANUARY 31, 1997
Net sales $57,010 $54,805 $54,870 $51,800
Gross profit before depreciation 19,665 19,040 19,160 17,540
Net income 4,390 4,335 4,365 4,330
Net income per share $ .37 $ .37 $ .37 $ .37
<CAPTION>
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
YEAR ENDED JANUARY 31, 1996
Net sales $57,150 $58,650 $58,480 $59,750
Gross profit before depreciation 19,555 20,380 19,875 20,875
Net income (loss) 4,290 4,605 4,680 (3,025)
Net income (loss) per share $ .36 $ .38 $ .39 $ (.25)
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS & SHAREHOLDERS OF CASCADE CORPORATION
In our opinion, the consolidated financial statements appearing on pages 5
through 16 of this annual report present fairly, in all material respects, the
financial position of Cascade Corporation and its subsidiaries at January 31,
1997 and 1996, and the results of their operations and their cash flows for each
of the three years in the period ended January 31, 1997, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/Price Waterhouse LLP
Portland, Oregon
March 18, 1997
16 -----------------------------------------------------------------------------
<PAGE>
INVESTOR INFORMATION
STOCKHOLDER INFORMATION
Cascade's Form 10-K Report to the Securities and Exchange Commission for 1996 is
available to stockholders and others who request it.
To obtain copies, please write to Cascade Corporation, 2020 S.W. 4th Avenue,
Suite 600, Portland, Oregon 97201.
TRANSFER AGENT & REGISTRAR
Chase Mellon
Shareholder Services L.L.C.
Shareholder Relations
P.O. Box 3315
South Hackensack, N. J. 07606
(800) 522-6645
ANNUAL MEETING
The Annual Meeting of the Stockholders of Cascade Corporation will be held at
The Governor Hotel, 611 S.W. 10th Avenue, Portland, Oregon at 10:00 a.m. on
Tuesday, May 13, 1997.
A formal notice of the meeting, together with a proxy statement and proxy form,
will be mailed to stockholders.
STOCK EXCHANGE LISTING
The Company's stock is traded on the New York Stock Exchange
under the symbol CAE
MARKET INFORMATION
The high and low sales prices of the common stock of Cascade Corporation during
1996 and 1995 were as follows:
INVESTOR RELATIONS COUNSEL
Gerald A. Parsons
(503) 228-2909
Year ended January 31
1997 1996
--------------------- ----------------------
HIGH LOW HIGH LOW
--------------------- ----------------------
Market price range
First quarter $ 14.50 $ 11.75 $ 17.00 $ 12.00
Second quarter 16.50 12.75 17.25 14.50
Third quarter 14.50 11.50 16.25 13.00
Fourth quarter 16.50 11.50 15.50 11.75
COMMON STOCK DIVIDENDS
Year ended January 31
1997 1996
------------------------
First quarter 9.0 cents 9.0 cents
Second quarter 9.0 9.0
Third quarter 9.0 9.0
Fourth quarter 18.0 18.0
---- -----
45.0 cents 45.0 cents
---- -----
---- -----
In February 1995 the Company declared a 100% stock dividend.
17 -----------------------------------------------------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-01-1996
<PERIOD-END> JAN-31-1997
<CASH> 15,642
<SECURITIES> 0
<RECEIVABLES> 43,696
<ALLOWANCES> 227
<INVENTORY> 36,002
<CURRENT-ASSETS> 98,629
<PP&E> 155,801
<DEPRECIATION> 74,408
<TOTAL-ASSETS> 199,493
<CURRENT-LIABILITIES> 65,879
<BONDS> 0
4,950
0
<COMMON> 6,024
<OTHER-SE> 92,733
<TOTAL-LIABILITY-AND-EQUITY> 199,493
<SALES> 218,485
<TOTAL-REVENUES> 218,485
<CGS> 143,080
<TOTAL-COSTS> 143,080
<OTHER-EXPENSES> 65
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (200)
<INCOME-PRETAX> 24,985
<INCOME-TAX> 7,565
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,420
<EPS-PRIMARY> 1.48
<EPS-DILUTED> 1.48
</TABLE>
