EX-99.1 2 c11513exv99w1.htm PRESS RELEASE exv99w1
 

(CLARCOR LOGO)
FOR FURTHER INFORMATION CONTACT:
Bruce A. Klein
Vice President-Finance and Chief Financial Officer
Franklin, Tennessee
615-771-3100
FOR IMMEDIATE RELEASE
WEDNESDAY, JANUARY 17, 2007
CLARCOR REPORTS RECORD FOURTH QUARTER AND FISCAL 2006 RESULTS
NET EARNINGS INCREASED FOR THE 14TH CONSECUTIVE YEAR
Fiscal Fourth Quarter and Full Year 2006 Highlights
(Amounts in thousands, except per share data and percentages)
                                                 
    Quarter Ended   %   Year Ended   %
    12/2/06   12/3/05   Change   12/2/06   12/3/05   Change
Net Sales
   $ 232,578     $ 241,524       (3.7 )   $ 904,347     $ 873,974       3.5  
Operating Profit
   $ 39,155     $ 38,807       0.9     $ 126,328     $ 118,492       6.6  
Net Earnings
   $ 26,741     $ 25,038       6.8     $ 82,710     $ 76,393       8.3  
Diluted Earnings Per Share
   $ 0.52     $ 0.48       8.3     $ 1.59     $ 1.46       8.9  
Average Diluted Shares Outstanding
     51,727       52,353       (1.2 )     52,177       52,216       (0.1 )
Fourth quarter fiscal 2006 was a 13-week quarter compared to fourth quarter fiscal 2005 which was 14-week quarter; fourth quarter 2006 sales, operating income, net earnings and diluted earnings per share were reduced by approximately 8% compared to 2005 due to the one-week difference. Fiscal 2006 was a 52-week year compared to fiscal 2005 which was a 53-week year; full year 2006 sales, operating income, net earnings and diluted earnings per share were reduced by approximately 2% compared to 2005 due to the one-week difference.
Fourth Quarter and Full Year 2006 Operating Review
FRANKLIN, TN, January 17, 2007— CLARCOR Inc. (NYSE: CLC) reported today its 14th consecutive increase in annual earnings. Fiscal 2006 net earnings increased 8% from 2005. Fiscal 2006 was a 52-week year compared to fiscal 2005 which was a 53-week year. On a same-weeks basis, net earnings increased by approximately 10% in 2006 from 2005.
Fiscal 2006 fourth quarter net earnings increased 7% from 2005. Fiscal 2006 fourth quarter was a 13-week quarter compared to 2005 which was a 14-week quarter. On a same-weeks basis, net earnings increased by approximately 15% in 2006 from 2005.
Fourth quarter operating margins improved in 2006 to 16.8% from 16.1% in 2005 and full year operating margins improved to 14.0% in 2006 from 13.6% in 2005. The impact on sales and operating profit from foreign currency fluctuations for both the fourth quarter and the full year 2006 was not material.

 

 

Norm Johnson, CLARCOR’s Chairman and Chief Executive Officer, said, “Fiscal 2006 marked CLARCOR’s 14th consecutive year of earnings growth, and the fourth quarter this year was particularly strong. Operating margins rose to 16.8% compared to 16.1% in 2005. Although sales declined in the quarter due to this year’s fourth quarter being one week shorter than last year, operating profit and net earnings were stronger than we originally expected and rose even with one week less this year compared to 2005. The one-week change reduced sales and operating profit for the quarter on a same-weeks basis by approximately 8%.
“Engine/Mobile Filtration sales rose by 3% in the fourth quarter of 2006 compared to the same period in 2005 but increased by 11% on a same-weeks basis. Operating margins improved to 25.1% in 2006 compared to 23.4% in 2005. Sales of heavy-duty filters through our traditional aftermarket distribution and OEM dealers, both in domestic and international markets, were strong throughout the quarter. We experienced strong growth not only in the on-road truck market, but in off-road applications for construction, mining and agricultural equipment as well. Locomotive filter sales also grew driven by the increase in freight shipped on North American railroads.
“Industrial/Environmental Filtration sales declined by 9% from last year’s fourth quarter and by 2% on a same-weeks basis. The restructuring of our HVAC operations within this segment is proceeding well. We completed the closure of one manufacturing plant in North Carolina and have signed a lease to open a new HVAC facility in Pennsylvania. We expect this facility to be in production by the end of the second quarter of 2007. The plant will be focused on serving our customers in the Northeast. Although we incurred virtually no restructuring costs nor realized any cost savings during the quarter, we have placed orders for a significant amount of capital equipment. This equipment is designed to significantly increase manufacturing productivity in our HVAC facilities, and we believe will provide significant cost savings and efficiency benefits beginning in 2007.
“For 2007, we expect that we will incur approximately $2.1 million in costs related to the restructuring of our HVAC operations. Offsetting these costs, we expect that we will realize approximately $3.4 million in cost reductions, primarily in the third and fourth quarters of 2007. Therefore, we expect a net benefit of approximately $1.3 million in 2007, though we believe the annual benefit will be much larger as the restructuring costs are a one-time item and the cost reductions will recur every year going forward. Total capital equipment spending related to the restructuring program is estimated be approximately $15 million in 2007.
“Other markets in our Industrial/Environmental segment, both in domestic and in international markets, were strong in the fourth quarter of 2006. We saw a rebound in orders for sand control filters used in off-shore oil drilling during the quarter, which offset a slower first half of 2006. This not only bodes well for 2007 shipments, but we expect that orders for these products will continue to be strong throughout 2007. Sales of filter products for aviation, aviation fuel, aerospace, resin and fiber applications were also strong throughout the quarter. With the opening of our new manufacturing facility in China, we are proceeding with plans to manufacture sand control filters, dust collector cartridges and fiber resin filters at our Chinese factory.
“Operating margins for the fourth quarter in the Industrial/Environmental segment were the highest of the year at 9.8%, though lower than last year’s 10.6%. As we have noted, operating margins in most non-HVAC product lines and markets are well above 10%, and the goal of our HVAC restructuring program is to increase our HVAC operating margins to the 10% level.

 

 

“Our Packaging segment had an exceptionally strong final quarter and full year. For the full year, sales grew by 8% and 10% on a same-weeks basis. Operating profit in 2006 grew by 20% for the year and 22% on a same-weeks basis with operating margins reaching 9.7% for all of 2006. Indeed, operating margins in the fourth quarter 2006 at 12.6% were the highest achieved by this segment in over ten years. The improvement in sales was due to the introduction of a wide array of new packaging designs, primarily in partnership with major consumer product companies, and price increases. Demand was strong for both metal and plastic packaging products. The improvement in operating profit was due to continuing emphasis on cost reductions and improving plant productivity driven by increased sales.
“Fiscal 2006 was another strong cash flow year for CLARCOR. Cash increased from $19 million at the end of 2005 to nearly $30 million at the end of 2006 even after we repurchased $29 million of our common stock during 2006. In addition, short-term investments increased from $10 million to $32 million during 2006. We still have approximately $110 million remaining under our current share repurchase authorization. Capital expenditures for the quarter and the year were $6 million and $18 million, respectively. Capital spending was significantly lower in the fourth quarter than we had expected. Though we have placed orders for a substantial amount of new equipment, it was not delivered as quickly as we had anticipated.
“Our effective tax rate in the fourth quarter 2006 was 32.4% and 34.5% for the full year. The lower fourth quarter tax rate was due to a greater increase in earnings from our foreign operations compared to growth in the U.S. and lower state tax charges. As Congress did not pass the Research and Experimentation Tax Credit extension until December, we were unable to record this benefit during the last 11 months of 2006. We expect to record a cumulative benefit from this credit of approximately $450,000 covering the last 11 months of 2006 in the first quarter of 2007. In 2007, we expect our effective tax rate to be approximately 34.5% to 35.0%. If our non-U.S. operations continue to grow at a faster rate than our U.S. operations, our effective tax rate should be at the lower end of this range.
“We expect capital expenditures in the range of $45 million to $55 million in 2007. This increase is substantial compared to the last few years’ capital spending and is due to both our HVAC restructuring plans and capacity expansion plans at our Engine/Mobile facilities. We expect above industry average growth to continue at our Engine/Mobile plants, and therefore we will need to increase production levels there. We also expect to invest additional monies into new products, particularly in new media development. We expect delivery of our nanofiber manufacturing line in February and anticipate having that line in production later in the year.
“In 2006, we recognized approximately $0.02 per share in stock option expense, which was not treated as an expense in 2005. Stock option expense should be approximately $0.03 per share in 2007.
“We are concerned, as are many other U.S. companies, at increasing costs for certain raw materials, energy, and particularly health care and transportation. We have been able to increase our prices to offset a significant portion of these costs and expect to continue to do so in 2007. We are fortunate to have low levels of debt and strong cash flows, and though we do not look forward to any further increases in interest rates, any such increases will have little impact on our financial condition. We expect, as has been the case for the last several years, that our growth outside the U.S. in 2007 will be stronger than domestic growth. We expect 2007 to be our 15th record year in both sales and earnings for CLARCOR, with continued strong cash flow and diluted earnings per share in the range of $1.67 to $1.77.”
CLARCOR will be holding a conference call to discuss the fourth quarter and full year results at 10:00 am CST on January 18, 2007. Interested parties can listen to the conference call at www.clarcor.com or www.viavid.net. A replay will be available on these websites and also at 888-203-1112 or 719-457-0820 and providing confirmation code 4269592. The replay will be available through January 28, 2007 by telephone and for 30 days on the Internet.

 

 

CLARCOR is based in Franklin, Tennessee, and is a diversified marketer and manufacturer of mobile, industrial and environmental filtration products and consumer and industrial packaging products sold in domestic and international markets. Common shares of the Company are traded on the New York Stock Exchange under the symbol CLC.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements made in this press release, other than statements of historical fact, are forward-looking statements. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include, among other things: statements and assumptions relating to future growth, earnings, earnings per share and other financial performance measures, as well as management’s short-term and long-term performance goals; statements relating to the anticipated affects on results of operations or financial condition from recent and expected developments or events; statements relating to the Company’s business and growth strategies; statements regarding anticipated results of the Company’s intended restructuring of certain operations and rationalization of facilities; and any other statements or assumptions that are not historical facts. The Company believes that its expectations are based on reasonable assumptions. However, these forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the Company’s actual results, performance or achievements, or industry results, to differ materially from the Company’s expectations of future results, performance or achievements expressed or implied by these forward-looking statements. In addition, the Company’s past results of operations do not necessarily indicate its future results. These and other uncertainties are discussed in the “Risk Factors’’ section of the Company’s 2005 Form 10-K. The future results of the Company may fluctuate as a result of these and other risk factors detailed from time to time in the Company’s filings with the Securities and Exchange Commission. You should not place undue reliance on any forward-looking statements. These statements speak only as of the date of this press release. Except as otherwise required by applicable laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements or the risk factors described in this press release, whether as a result of new information, future events, changed circumstances or any other reason after the date of this press release.
TABLES FOLLOW
- more -

 

 

CLARCOR 2006 FOURTH QUARTER RESULTS cont’d.
CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in thousands except per share data)
                                 
    Fourth Quarter     Twelve Months  
For periods ended December 2, 2006 and December 3, 2005   2006     2005     2006     2005  
 
Net sales
   $ 232,578     $ 241,524     $ 904,347     $ 873,974  
Cost of sales
     159,807       166,297       628,864       608,242  
 
                        
Gross profit
     72,771       75,227       275,483       265,732  
Selling and administrative expenses
     33,616       36,420       149,155       147,240  
 
                        
Operating profit
     39,155       38,807       126,328       118,492  
Other income (expense)
     493       (441 )     613       (570 )
 
                        
Earnings before income taxes and minority interests
     39,648       38,366       126,941       117,922  
Income taxes
     12,856       13,167       43,795       40,968  
 
                        
Earnings before minority interests
     26,792       25,199       83,146       76,954  
Minority interests in earnings of subsidiaries
     (51 )     (161 )     (436 )     (561 )
 
                        
 
                                
Net earnings
   $ 26,741     $ 25,038     $ 82,710     $ 76,393  
 
                        
 
                                
Net earnings per common share:
                                
Basic
   $ 0.52     $ 0.48     $ 1.60     $ 1.48  
 
                        
Diluted
   $ 0.52     $ 0.48     $ 1.59     $ 1.46  
 
                        
 
                                
Average shares outstanding:
                                
Basic
     51,153,048       51,751,603       51,570,165       51,658,347  
Diluted
     51,727,449       52,353,021       52,176,515       52,215,689  
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
                 
    December 2,     December 3,  
    2006     2005  
 
Assets
                
Current assets:
                
Cash and cash investments
   $ 29,051     $ 18,502  
Short-term investments
     32,195       10,400  
Accounts receivable, net
     158,157       152,755  
Inventories
     129,673       117,508  
Other
     31,264       25,768  
 
            
Total current assets
     380,340       324,933  
Plant assets, net
     146,529       149,505  
Acquired intangibles, net
     169,033       168,176  
Pension assets
     19,851       22,069  
Other assets
     11,763       10,589  
 
            
 
   $ 727,516     $ 675,272  
 
            
 
                
Liabilities
                
Current liabilities:
                
Current portion of long-term debt
   $ 58     $ 233  
Accounts payable and accrued liabilities
     107,129       108,693  
Income taxes
     11,241       12,544  
 
            
Total current liabilities
     118,428       121,470  
Long-term debt
     15,946       16,009  
Long-term pension liabilities
     17,476       16,287  
Other liabilities
     38,157       38,673  
 
            
 
     190,007       192,439  
Shareholders’ Equity
     537,509       482,833  
 
            
 
   $ 727,516     $ 675,272  
 
            
SUMMARY CASH FLOWS
(Dollars in thousands)
                 
    Twelve Months  
    2006     2005  
 
From Operating Activities
                
Net earnings
   $ 82,710     $ 76,393  
Depreciation
     20,891       19,749  
Amortization
     2,188       1,338  
Stock compensation expense
     2,597       836  
Excess tax benefits from stock compensation
     (3,490 )     —  
Changes in assets and liabilities
     (42,184 )     (9,478 )
Other, net
     869       508  
 
            
Total provided (used) by operating activities
     63,581       89,346  
 
            
 
                
From Investing Activities
                
Plant asset additions
     (17,588 )     (24,032 )
Business acquisitions
     (4,627 )     (28,133 )
Other, net
     873       653  
 
            
Total provided (used) by investing activities
     (21,342 )     (51,512 )
 
            
 
                
From Financing Activities
                
Net payments under line of credit
     —       (7,500 )
Payments on long-term debt
     (554 )     (811 )
Cash dividends paid
     (14,203 )     (13,385 )
Excess tax benefits from stock compensation
     3,490       —  
Purchase of treasury stock
     (28,909 )     (10,461 )
Other, net
     6,535       (3,542 )
 
            
Total provided (used) by financing activities
     (33,641 )     (35,699 )
 
            
 
                
Effect of exchange rate changes on cash
     1,951       (1,053 )
 
            
 
                
Change in Cash and Cash Investments
   $ 10,549     $ 1,082  
 
            

 

 

CLARCOR 2006 FOURTH QUARTER RESULTS cont’d.
QUARTERLY INCOME STATEMENT DATA BY SEGMENT
(Dollars in thousands)
                                                         
    2006  
    Quarter     Quarter             Quarter             Quarter        
    Ended     Ended     Six     Ended     Nine     Ended     Twelve  
    March 4     June 3     Months     September 2     Months     December 2     Months  
Net sales by segment:
                                                        
Engine/Mobile Filtration
   $ 91,032     $ 101,429     $ 192,461     $ 103,358     $ 295,819     $ 103,271     $ 399,090  
Industrial/Environmental Filtration
     102,656       103,866       206,522       106,263       312,785       107,650       420,435  
Packaging
     19,495       21,781       41,276       21,889       63,165       21,657       84,822  
 
                                          
 
   $ 213,183     $ 227,076     $ 440,259     $ 231,510     $ 671,769     $ 232,578     $ 904,347  
 
                                          
 
                                                        
Operating profit by segment:
                                                        
Engine/Mobile Filtration
   $ 19,073     $ 22,446     $ 41,519     $ 25,147     $ 66,666     $ 25,932     $ 92,598  
Industrial/Environmental Filtration
     5,485       1,594       7,079       7,965       15,044       10,497       25,541  
Packaging
     1,315       2,181       3,496       1,967       5,463       2,726       8,189  
 
                                          
 
   $ 25,873     $ 26,221     $ 52,094     $ 35,079     $ 87,173     $ 39,155     $ 126,328  
 
                                          
 
                                                        
Operating margin by segment:
                                                        
Engine/Mobile Filtration
     21.0 %     22.1 %     21.6 %     24.3 %     22.5 %     25.1 %     23.2 %
Industrial/Environmental Filtration
     5.3 %     1.5 %     3.4 %     7.5 %     4.8 %     9.8 %     6.1 %
Packaging
     6.7 %     10.0 %     8.5 %     9.0 %     8.6 %     12.6 %     9.7 %
 
                                          
 
     12.1 %     11.5 %     11.8 %     15.2 %     13.0 %     16.8 %     14.0 %
 
                                          
                                                         
    2005  
    Quarter     Quarter             Quarter             Quarter        
    Ended     Ended     Six     Ended     Nine     Ended     Twelve  
    February 26     May 28     Months     August 27     Months     December 3     Months  
Net sales by segment:
                                                        
Engine/Mobile Filtration
   $ 83,129     $ 93,722     $ 176,851     $ 90,686     $ 267,537     $ 100,646     $ 368,183  
Industrial/Environmental Filtration
     97,198       106,668       203,866       105,153       309,019       118,429       427,448  
Packaging
     15,934       19,396       35,330       20,564       55,894       22,449       78,343  
 
                                          
 
   $ 196,261     $ 219,786     $ 416,047     $ 216,403     $ 632,450     $ 241,524     $ 873,974  
 
                                          
 
                                                        
Operating profit by segment:
                                                        
Engine/Mobile Filtration
   $ 16,778     $ 19,629     $ 36,407     $ 20,500     $ 56,907     $ 23,507     $ 80,414  
Industrial/Environmental Filtration
     3,969       6,234       10,203       8,544       18,747       12,519       31,266  
Packaging
     333       1,690       2,023       2,008       4,031       2,781       6,812  
 
                                          
 
   $ 21,080     $ 27,553     $ 48,633     $ 31,052     $ 79,685     $ 38,807     $ 118,492  
 
                                          
 
                                                        
Operating margin by segment:
                                                        
Engine/Mobile Filtration
     20.2 %     20.9 %     20.6 %     22.6 %     21.3 %     23.4 %     21.8 %
Industrial/Environmental Filtration
     4.1 %     5.8 %     5.0 %     8.1 %     6.1 %     10.6 %     7.3 %
Packaging
     2.1 %     8.7 %     5.7 %     9.8 %     7.2 %     12.4 %     8.7 %
 
                                          
 
     10.7 %     12.5 %     11.7 %     14.3 %     12.6 %     16.1 %     13.6 %
 
                                          

 

 

CLARCOR 2006 FOURTH QUARTER RESULTS cont’d.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Dollars in thousands)
                                         
    Quarter     Quarter             Quarter        
    Ended     Ended     One Week     Ended        
    December     December     of Quarter     December 3,     Quarter to  
    2,2006     3,2005     Ended     2005 on a     Quarter % on  
    (13 Week     (14 Week     December 3,     Same-     Same-weeks  
    Quarter)     Quarter)     2005     weeks Basis     Basis  
Net sales by segment:
                                        
Engine/Mobile Filtration
   $ 103,271     $ 100,646     $ 7,200     $ 93,446       10.5 %
Industrial/Environmental Filtration
     107,650       118,429       8,500       109,929       -2.1 %
Packaging
     21,657       22,449       1,600       20,849       3.9 %
 
                              
 
   $ 232,578     $ 241,524     $ 17,300     $ 224,224       3.7 %
 
                              
 
                                        
Operating profit by segment:
                                        
Engine/Mobile Filtration
   $ 25,932     $ 23,507     $ 1,700     $ 21,807       18.9 %
Industrial/Environmental Filtration
     10,497       12,519       900       11,619       -9.7 %
Packaging
     2,726       2,781       200       2,581       5.6 %
 
                              
 
   $ 39,155     $ 38,807     $ 2,800     $ 36,007       8.7 %
 
                              
                                         
    Fiscal Year     Fiscal Year             Fiscal Year        
    2006     2005     One Week     2005 on a     Year to Year %  
    (52 week     (53 Week     of Fiscal     Same-     on Same-  
    year)     Year)     Year 2005     weeks Basis     weeks Basis  
Net sales by segment:
                                        
Engine/Mobile Filtration
   $ 399,090     $ 368,183     $ 6,900     $ 361,283       10.5 %
Industrial/Environmental Filtration
     420,435       427,448       8,100       419,348       0.3 %
Packaging
     84,822       78,343       1,500       76,843       10.4 %
 
                              
 
   $ 904,347     $ 873,974     $ 16,500     $ 857,474       5.5 %
 
                              
 
                                        
Operating profit by segment:
                                        
Engine/Mobile Filtration
   $ 92,598     $ 80,414     $ 1,500     $ 78,914       17.3 %
Industrial/Environmental Filtration
     25,541       31,266       600       30,666       -16.7 %
Packaging
     8,189       6,812       100       6,712       22.0 %
 
                              
 
   $ 126,328     $ 118,492     $ 2,200     $ 116,292       8.6 %
 
                              
Although the comparison of quarterly and fiscal year data on a same-weeks basis is not a measure of financial performance under GAAP, the Company believes it is useful in understanding the impact of having an additional week in its 2005 fiscal year and fourth quarter. Removing the impact of the additional week in the prior year provides a comparable measure of the changes in net sales and operating profit quarter over quarter and year over year. The additional week amount shown is an estimate based on the number of weeks and does not consider certain factors or allocations that may occur only on an annual basis. The estimated amount is based on the average week for the actual 2005 year or quarter, as applicable, rather than the specific last week of the year or quarter. Management does not intend these items to be considered in isolation or as a substitute for the related GAAP measures.
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