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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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<C> <S>
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2000
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<C> <S>
/ / TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER 1-12557
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CASCADE CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
OREGON 93-0136592
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2201 N.E. 201ST AVE.
FAIRVIEW, OREGON 97024-9718
(Address of principal executive office) (Zip Code)
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Registrant's telephone number, including area code: (503) 669-6300
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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 / /
The number of shares outstanding of the registrant's common stock as of
April 30, 2000 was 11,439,890.
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<PAGE>
CASCADE CORPORATION AND SUBSIDIARY COMPANIES
PART 1
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
APRIL 30 JANUARY 31
2000 2000
----------- ----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 13,808 $ 23,188
Accounts receivable, less allowance for doubtful accounts
of $2,700 and $1,511.................................... 59,442 54,934
Inventories, at average cost which is lower than market:
Finished goods and components........................... 31,827 34,712
Goods in process........................................ 1,577 1,654
Raw materials........................................... 10,268 11,121
-------- --------
43,672 47,487
Deferred income taxes..................................... 3,994 3,544
Prepaid expenses and other................................ 3,546 1,693
-------- --------
Total current assets.................................... 124,462 130,846
Property, plant and equipment, at cost less accumulated
depreciation.............................................. 82,607 86,716
Deferred income taxes....................................... 9,200 9,356
Goodwill.................................................... 74,706 75,179
Other assets................................................ 9,940 10,597
-------- --------
Total assets............................................ $300,915 $312,694
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks.................................... $ 8,690 $ 8,408
Current portion of long-term debt......................... 6,124 6,137
Accounts payable.......................................... 21,570 22,960
Accrued payroll and payroll taxes......................... 6,001 5,707
Accrued environmental expenses............................ 7,910 7,910
Other accrued expenses.................................... 10,903 13,557
-------- --------
Total current liabilities............................... 61,198 64,679
Long-term debt.............................................. 99,572 109,043
Accrued environmental expenses.............................. 9,989 10,405
Other liabilities........................................... 4,250 4,260
-------- --------
Total liabilities....................................... 175,009 188,387
-------- --------
Exchangeable preferred stock and minority interest.......... 11,374 11,374
-------- --------
Shareholders' equity:
Common stock, $.50 par value, authorized 20,000,000 shares;
11,439,890 shares outstanding............................. 5,784 5,784
Additional paid-in capital.................................. 399 399
Retained earnings........................................... 126,869 122,922
Accumulated other comprehensive income:
Cumulative foreign currency translation adjustments....... (18,291) (15,943)
Treasury stock, at cost, 127,498 shares..................... (229) (229)
-------- --------
Total shareholders' equity.............................. 114,532 112,933
-------- --------
Total liabilities and shareholders' equity.............. $300,915 $312,694
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this statement.
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CASCADE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
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<CAPTION>
THREE MONTHS ENDED
APRIL 30
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2000 1999
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Net sales................................................... $ 91,982 $ 89,500
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Costs and expenses:
Cost of goods sold, excluding depreciation................ 60,421 58,830
Depreciation and amortization............................. 4,421 5,220
Selling and administrative expenses....................... 16,662 16,215
---------- ----------
81,504 80,265
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Operating income............................................ 10,478 9,235
Interest expense.......................................... 1,955 2,385
Interest income........................................... (390) (115)
Other expense, net........................................ 639 695
---------- ----------
Income before income taxes.................................. 8,274 6,270
Income taxes................................................ 3,103 2,160
---------- ----------
Net income.................................................. $ 5,171 $ 4,110
========== ==========
Basic earnings per share.................................... $ 0.45 $ 0.35
========== ==========
Diluted earnings per share.................................. $ 0.42 $ 0.33
========== ==========
Diluted weighted average shares outstanding................. 12,239,890 12,639,138
========== ==========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this statement.
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CASCADE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED--IN THOUSANDS)
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<CAPTION>
THREE MONTHS ENDED
APRIL 30
-------------------
2000 1999
-------- --------
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Cash flows from operating activities:
Net income................................................ $ 5,171 $ 4,110
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................... 4,421 5,220
Provision for bad debts................................. 1,200
Deferred income taxes................................... (294) (3,069)
Loss on disposal of property............................ -- 1,025
Changes in operating assets and liabilities:
Accounts receivable....................................... (5,708) 9,952
Inventories............................................... 3,815 13,508
Prepaid expenses and other................................ (1,852) (1,105)
Accounts payable and accrued expenses..................... (4,166) (7,587)
Other liabilities......................................... (10) 625
------- -------
Net cash provided by operating activities............... 2,577 22,679
------- -------
Cash flows from investing activities:
Acquisition of property, plant and equipment.............. (1,184) (4,334)
Proceeds from disposition of property, plant and
equipment............................................... 54 22,949
Other assets.............................................. 7 (6,668)
------- -------
Net cash provided by (used in) investing activities..... (1,123) 11,947
------- -------
Cash flows from financing activities:
Payments on long-term debt................................ (9,484) (21,659)
Notes payable to banks.................................... 282 (2,527)
Repurchase of common stock................................ -- (1,846)
Cash dividends............................................ (1,224) (1,365)
------- -------
Net cash provided by (used in) by financing
activities............................................ (10,426) (27,397)
------- -------
Effect of exchange rate changes............................. (408) (881)
------- -------
Increase (decrease) in cash and cash equivalents............ (9,380) 6,348
Cash and cash equivalents at beginning of year.............. 23,188 11,460
------- -------
Cash and cash equivalents at end of period.................. $13,808 $17,808
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest................................................ $ 843 $ 1,290
Income taxes............................................ $ 7,715 $ 2,403
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this statement.
<PAGE>
CASCADE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS)
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<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL OTHER QUARTERLY
------------------- PAID-IN TREASURY RETAINED COMPREHENSIVE COMPREHENSIVE
SHARES AMOUNT CAPITAL STOCK EARNINGS INCOME INCOME
-------- -------- ---------- -------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
January 31, 2000... 11,440 $5,784 $ 399 $ (229) $ 122,922 $(15,943) $ --
Net income........... -- -- -- -- 5,171 -- 5,171
Dividends ($.10 per
share)............. -- -- -- -- (1,224) -- --
Translation
adjustment......... -- -- -- -- -- (2,348) (2,348)
------ ------ ------- -------- --------- -------- ------
Balance at April 30,
2000............... 11,440 $5,784 $ 399 $ (229) $ 126,869 $(18,291) $2,823
====== ====== ======= ======== ========= ======== ======
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this statement.
<PAGE>
CASCADE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--INFORMATION ABOUT OPERATIONS
(In thousands)
(Unaudited)
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<CAPTION>
THREE MONTHS ENDED APRIL 30, 2000 NORTH AMERICA EUROPE OTHER ELIMINATIONS CONSOLIDATED
--------------------------------- ------------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales to unaffiliated customers... $ 56,314 $25,838 $ 9,830 $ -- $ 91,982
Transfer between areas................ 5,329 7,106 254 (12,689) --
-------- ------- ------- --------- --------
Total net sales....................... 61,643 32,944 10,084 (12,689) 91,982
-------- ------- ------- --------- --------
Net income (loss)..................... 4,216 1,021 (66) -- 5,171
-------- ------- ------- --------- --------
Identifiable assets................... $172,618 $95,522 $34,184 $ -- $302,324
-------- ------- ------- --------- --------
THREE MONTHS ENDED APRIL 30, 1999
--------------------------------------
Net sales to unaffiliated customers... $ 57,850 $23,680 $ 7,970 $ -- $ 89,500
Transfer between areas................ 6,740 8,976 234 (15,950) --
-------- ------- ------- --------- --------
Total net sales....................... 64,590 32,656 8,204 (15,950) 89,500
-------- ------- ------- --------- --------
Net income............................ 3,130 960 20 -- 4,110
-------- ------- ------- --------- --------
Identifiable assets................... $184,928 $97,483 $34,653 $ -- $317,064
-------- ------- ------- --------- --------
</TABLE>
NOTE 2--DIVESTITURE (UNAUDITED)
The consolidated financial statements for the three months ended April 30, 1999,
reflect the sale of assets and assumption of certain liabilities of the
Company's Industrial Tire Division and the wheel and baseband manufacturing
operations of its Cascade Kenhar Division in Guelph, Ontario to Maine Rubber
Company for a sales price of $38,892,651 (US). Maine Rubber Company paid
(1) $26,808,737 (US) in cash, and (2) $7,307,552 (US) in the form of a junior
subordinated note to be paid over four years, and assumed $4,776,362 (US) in
liabilities. The note bears interest rate of 8% per annum and is not
collateralized.
<PAGE>
CASCADE CORPORATION AND SUBSIDIARY COMPANIES
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Neither the Company nor any of its subsidiaries are involved in any material
pending legal proceedings other than environmental litigation or litigation
incidental to the regular course of business. The Company and its subsidiaries
are adequately insured against product liability, personal injury and property
damage claims which may arise occasionally.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
On March 29, 2000, R.C. Warren, President and Chief Executive Officer, advised
the Board of Directors that he and a management group were exploring the
possibility for the Company to be taken private in a management led leveraged
buyout. Chairman C. Calvert Knudsen appointed a Special Committee of Independent
directors, consisting of James S. Osterman, Chairman, Nicholas R. Lardy,
Ernest C. Mercier, and Nancy A. Wilgenbusch, to consider options to increase
shareholder value. Henry Wessinger II later joined the Committee. On May 11,
2000, the Special Committee announced it had retained Gleacher & Co. to advise
it on strategic alternatives to maximize shareholder value, including a sale or
merger of the Company.
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K
(A) EXHIBITS
11. Computation of Earnings Per Share
(B) REPORTS ON FORM 8-K
During the quarter ended April 30, 2000, the Company filed a report on Form 8-K
dated April 4, 2000, which disclosed the appointment of a Special Committee of
the Board of Directors as discussed in Item 5 above.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Consolidated net sales for the three months ended April 30, 2000 totaled
$91,982,000, an increase of 2.8% compared to sales of $89,500,000 recorded in
the three months ended April 30, 1999. Prior year net sales include net sales of
$10,922,000 from the industrial tire division, which was sold in April 1999. The
higher consolidated net sales in 2000 reflects increased sales throughout the
world. Earnings for the quarter include an after tax charge for approximately
$750,000 ($.06 per share) for bad debt expense related to a receivable from a
major OEM customer which declared bankruptcy. Reported net income for the three
months ended April 30, 2000 was $5,171,000 ($.42 per share) as compared to net
income for the prior year quarter of $4,110,000 ($.33 per share). Expressed as a
return on sales, net
<PAGE>
income for the first three months ended April 30, 2000 was 5.6% compared to 4.6%
for the corresponding prior year quarter.
North American lift truck industry bookings and shipments (of applicable lift
truck classes) were strong in the first quarter of 2000 and experienced growth
of 33% and 12%, respectively, compared to the same period in the prior year.
Cost of sales, excluding depreciation and amortization, during the first three
months ended April 30, 2000 and 1999, was $60,421,000 and $58,830,000,
respectively. Cost of sales as a percentage of net sales was 65.7% and 65.7%,
respectively, for the three months ended April 30, 2000 and 1999.
Depreciation and amortization expense decreased to $4,421,000, 4.8% of net sales
during the first quarter of 2000, from $5,220,000, 5.8% of net sales for the
prior year period. The decrease in depreciation and amortization expense in the
first quarter of 2000 as compared to the first quarter of 1999 is due to the
inclusion in 1999 of depreciation and amortization expense for the Company's
industrial tire division, which was sold in April 1999.
The Company's selling and administrative expenses increased in the first quarter
of 2000 to $16,662,000 as compared to $16,215,000. The selling and
administrative expenses as a percentage of net sales were 18.1% for both the
first quarter of 2000 and 1999. The overall increase in the first quarter of
2000 is due primarily to the increase in bad debt expense from the bankruptcy of
a major OEM customer.
Interest expense in the first quarter of 2000 was $1,955,000 as compared to
$2,385,000 in the first quarter of 1999. The decrease is the result of lower
levels of debt in the first quarter of 2000 as compared to the first quarter of
1999 due to reductions in revolving credit facilities and the repayment of debt
with the proceeds from the sale of the industrial tire division.
Other expense for the first quarter of 2000 of $639,000 is primarily related to
various miscellaneous expenses. Other expense for the first quarter of 1999 of
$695,000 is primarily attributed to the loss from the sale of the industrial
tire division.
The effective tax rate for the three months ended April 30, 2000 was 37.5%
compared with 34.4% for the prior year quarter and 30.6% for the year ended
January 31, 2000. The increase in the rate is due to the impact of foreign tax
rates and international financing facilities.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended April 30, 2000, the Company generated $2,577,000
in cash from operating activities compared with $22,679,000 for the three months
ended April 30, 1999. Cash and cash equivalents at the end of the first quarter
of 2000 totaled $13,808,000.
The Company's total long- and short-term debt-to-equity ratio was 1.00 to 1.00
and working capital was $62,620,000 at April 30, 2000. As of April 30, 2000, the
Company had loan commitments with commercial banks totaling $82,872,000 of which
$30,869,000 was used. During the three months ended April 30, 2000 the Company
paid down revolving credit facilities by $9,484,000. The Company believes its
available cash and credit facilities are more than sufficient to meet its
short-term requirements.
Capital expenditures for the three months ended April 30, 2000 were $1,184,000
compared with $4,334,000 during the corresponding period in the prior year.
Capital expenditures for new facilities, machinery, equipment and tooling over
the preceding five years have totaled approximately $76.2 million. Planned
capital expenditures for the fiscal year ending January 31, 2001 are estimated
at $12 million. The Company plans to use operating cash flows, leases and
existing credit facilities to fund current year capital expenditures.
During the three months ended April 30, 2000, the U.S. dollar weakened against
the major currencies included in the Company's consolidated financial
statements. As a result, the cumulative translation adjustment reduced
shareholders' equity by $2,348,000 at April 30, 2000.
<PAGE>
IMPACT OF THE YEAR 2000 ISSUE
The Company experienced no material problems regarding the year 2000 Issue. The
Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Some of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000.
The Company initiated the implementation of an enterprise-wide resource planning
(ERP) software system to link all of its core business systems throughout the
Company. This implementation was the result of normal business migration to
improved and expanded software systems to increase the Company's ability to
improve its operational efficiency, reduce costs and enhance overall quality. As
part of this implementation, the Company replaced those business systems that it
believed would encounter the Year 2000 Issue. The Company plans to complete the
ERP project in the year 2002. The total cost of the ERP project will approximate
$16 million, including approximately $6.1 million and $8.3 million spent during
fiscal 1999 and 1998, respectively. The remaining cost of the ERP project will
be funded through operating cash flows and leases.
FORWARD-LOOKING STATEMENTS
Forward-looking statements throughout this report are based upon assumptions
involving a number of risks and uncertainties. Factors which could cause actual
results to differ materially from these forward-looking statements include, but
are not limited to competitive factors in, and the cyclical nature of, the lift
truck industry; fluctuations in lift truck orders or deliveries, availability
and cost of raw materials; general business and economic conditions in North
America, Europe and Asia; foreign currency fluctuations; and the effectiveness
of the Company's cost reduction initiatives.
<PAGE>
CASCADE CORPORATION AND SUBSIDIARY COMPANIES
SIGNATURES
The enclosed financial statements have not been certified by independent
accountants. However, to the best of my knowledge and belief these financial
statements have been prepared in conformity with generally accepted accounting
principles and on a basis substantially consistent with audited financial
statements included in the annual report filed with the Commission for the
preceding fiscal year.
The Company believes that all adjustments, consisting of normal recurring
adjustments, necessary for a fair statement of the results of operations, have
been included.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CASCADE CORPORATION
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<S> <C>
6/14/00 /s/ KURT G. WOLLENBERG
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Date Kurt G. Wollenberg,
Senior Vice President--Finance
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