EX-99.1 2 c23047exv99w1.htm PRESS RELEASE exv99w1
 

Exhibit 99.1
(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 16, 2008
CLARCOR REPORTS RECORD FOURTH QUARTER AND FISCAL 2007 RESULTS
2007 SALES, NET EARNINGS AND EARNINGS PER SHARE INCREASE
FOR THE 15th CONSECUTIVE YEAR
Fiscal Fourth Quarter and Full Year 2007 Highlights
(Amounts in thousands, except per share data and percentages)
                                                 
    Quarter Ended     %     Year Ended     %  
    12/1/07     12/2/06     Change     12/1/07     12/2/06     Change  
 
Net Sales
   $ 238,266     $ 232,578       2.4     $ 921,191     $ 904,347       1.9  
Operating Profit
   $ 40,111     $ 39,155       2.4     $ 129,814     $ 126,328       2.8  
Net Earnings
   $ 26,742     $ 26,741       0.0     $ 90,659     $ 82,710       9.6  
Diluted Earnings Per Share
   $ 0.53     $ 0.52       1.9     $ 1.78     $ 1.59       11.9  
Average Diluted Shares Outstanding
     50,409       51,727       (2.5 )     50,885       52,177       (2.5 )
Fourth Quarter and Full Year 2007 Operating Review
FRANKLIN, TN, January 16, 2008— CLARCOR Inc. (NYSE: CLC) reported today its 15th consecutive annual increase in sales and earnings. Fiscal 2007 net earnings increased 10% from 2006, and diluted earnings per share increased by 12%. Fiscal 2007 fourth quarter net earnings were even with 2006 results, and diluted earnings per share increased by 2%.
Fourth quarter operating margins in both 2007 and 2006 were 16.8%; full year operating margins improved to 14.1% in 2007 from 14.0% in 2006. Foreign currency fluctuations improved fourth quarter 2007 sales and operating profit by $6 million and $1 million, respectively, and full year 2007 sales and operating profit by $14 million and $2 million, respectively.
Norm Johnson, CLARCOR’s Chairman and Chief Executive Officer, said, “Fiscal 2007 marked CLARCOR’s 15th consecutive year of earnings growth. Though fourth quarter sales and operating profit did not grow significantly from last year’s fourth quarter, the 2006 fourth quarter was unusually strong. We are pleased that operating margins remained at 16.8% for the quarter and improved slightly to 14.1% for the entire year. More importantly, as our new fiscal year begins our

 

 

CLC Air operation is starting to show the operating improvements we expected when we initiated our restructuring program at the end of 2006.
“Engine/Mobile Filtration sales rose by 9% in the fourth quarter of 2007 compared to the same period in 2006. Operating margins for the quarter were 24.4%. Sales of heavy-duty filters through our traditional domestic aftermarket distribution and to OEM companies and dealers rose by 8% for the quarter. International sales rose by 12%. We experienced strong growth in both on-road and off-road markets, and for most major filter applications.
“Within our Industrial/Environmental Filtration segment, there were significant differences in sales growth in the fourth quarter of 2007 compared to 2006 between industrial and environmental air filter markets. Our filter sales to industrial markets grew by 6% for the quarter. In certain industrial filter markets, sales grew even more strongly: sales of air pollution control systems rose by 20%, sales of filter products for the aerospace and oil and gas industries rose by 9% and sales of filter products for the fibers and resin markets rose by 21%. Offsetting strong growth in these markets was a decline of 7% in sales of environmental air filters in the fourth quarter of 2007. However, the decline in environmental air filter sales in the fourth quarter was less than it had been in the previous three quarters of 2007 as the restructuring efforts at our CLC Air operation are beginning to have a positive impact.
Overall, Industrial/Environmental Filtration segment operating margins improved from 9.8% in 2006’s fourth quarter to 10.3% in the 2007 quarter. Environmental air filter sales incurred a small loss in the fourth quarter, but much less than the loss in any of the other quarters in 2007. This is a major change and we believe results from the restructuring program at CLC as productivity and service levels improve and the benefits from cost reduction programs accelerates. Approximately 55% of the segment’s sales came from environmental air filter markets in 2007. We remain confident that operating margins in our environmental air filter business will continue to improve towards our goal of 10%.
“The CLC Air restructuring program was an exceptionally important project at CLARCOR in 2007, and this will not change in 2008. We were disappointed at the delays in achieving the project’s operating goals for margin improvement in 2007 due to not receiving new manufacturing equipment on the schedule we had expected. The equipment is being delivered now and deliveries will continue throughout 2008. We expect to place new equipment in every CLC Air manufacturing facility with total estimated equipment spending of approximately $22 million for this program by the end of 2009. We expect the improvement in operating profit from 2007 to 2008 at CLC Air will be approximately $10 million, with profit improvement accelerating as the year progresses. Also, we have not changed our original goal of a $14 million improvement in operating profit at CLC Air by the end of 2009.
“As we had expected, our Packaging segment’s fourth quarter showed a sales decline from 2006 which reflected the same conditions that were evident during the first three quarters of 2007. The drop in sales was largely caused by delays and cancellations of customers’ new product introductions. Though operating margins dropped during the quarter, as they did for all of 2007, we were still pleased with the 8.8% margins achieved by our Packaging business in the fourth quarter. A few years ago, a drop in sales would have meant a more substantial margin decline; this was averted as the segment’s management responded quickly with major cost reduction initiatives. We expect that sales will grow 5% to 6% at our Packaging business in 2008 and that margins will recover to 2006 levels.

 

 

“During the quarter, we settled two lawsuits — one a contract dispute with EDS and the other a patent infringement case. We are unable to disclose the specific terms of the settlements due to confidentiality restrictions, but we can say that we view the outcome of these matters as very favorable to CLARCOR. In addition to a net monetary recovery that we received of approximately $1 million from these two settlements, we believe we also avoided approximately $2.5 million in future litigation costs and the disruption that a trial would have entailed. Additionally, in the patent infringement matter, we received a license to use these patents in perpetuity as part of the settlement agreement.
“Fiscal 2007 was another strong cash flow year for CLARCOR. Cash provided by operating activities increased from $64 million in 2006 to $137 million in 2007. During 2007, our Board of Directors authorized a new share repurchase program for $250 million over a three-year period. During the fourth quarter, we repurchased approximately $26 million of CLARCOR stock at an average purchase price of $35.34 per share. For all of 2007, we repurchased approximately $75 million of our stock at an average purchase price of $32.94 per share. We also raised our dividend by 10.3% in September 2007.
“Our effective tax rate in the fourth quarter 2007 was 34.0% and 30.4% for the full year. The lower 2007 tax rate was due to various tax credits and reserve adjustments recorded earlier in 2007. In 2008, we expect our effective tax rate to be approximately 33% to 34%, which reflects faster growth in our non-U.S. businesses where income tax rates are generally lower than in the U.S.
“Capital expenditures for the quarter and the year were approximately $8 million and $37 million, respectively. Capital spending was somewhat lower in the fourth quarter than we had expected. As noted above, we had placed orders for new equipment that was not delivered as quickly as we had anticipated. We expect capital expenditures in the range of $40 million to $50 million in 2008. This increase is due to the CLC Air restructuring program and to capacity expansion plans in our Engine/Mobile facilities. We expect above industry average growth to continue in our Engine/Mobile heavy-duty engine business, and therefore we need to increase production capacity and warehouse space.
“Though our acquisition of Perry Equipment Company (Peco) did not close until early in fiscal 2008, we worked on the transaction throughout most of 2007. We have merged Peco with our Facet operation to form one of the largest natural resources filtration companies in the world, with a specific emphasis on filtration for the natural gas and oil industries. We are very excited at the technology resources and market opportunities that the merged companies have. With their operations throughout Europe and Asia, as well as in the U.S., and relationships with some of the largest private and publicly owned oil and gas companies in the world, we expect notably faster growth from Peco/Facet than from our other businesses. As demand for energy continues to increase and with the broad range of filtration products offered by Peco/Facet, we are already seeing opportunities for growth that exceed what either company could have achieved on its own.

 

 

“There seems to be a growing consensus that 2008 may be a difficult year for the U.S. economy. We are fortunate to have a strong balance sheet with debt to total capital of less than 20% and strong, consistent cash flows. We expect, as has been the case for the last several years, that our growth outside the U.S. in 2008 will be stronger than domestic growth, and with the Peco acquisition, our non-U.S. sales in 2008 will be greater than they were in 2007. Even if the U.S. slips into a recession, as some economists have predicted, we still expect 2008 to be our 16th record year in both sales and earnings for CLARCOR, with continued strong cash flow and diluted earnings per share in the range of $1.85 to $2.05.”
CLARCOR will be holding a conference call to discuss the fourth quarter and full year results at 10:00 am CST on January 17, 2008. 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 by providing confirmation code 4478117. The replay will be available through January 24, 2008, 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, financial performance measures related to Peco and the Company, the estimated financial impact of the Peco transaction on the Company’s earnings, as well as management’s short-term and long-term performance goals; statements regarding anticipated order patterns from our customers or the anticipated economic conditions of the industries and markets that we serve; statements relating to the anticipated effects on results of operations or financial condition from recent and expected developments or events; statements relating to the Company’s business and growth strategies; 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. These risks include the failure the failure to realize the economic and strategic benefits of the Peco transaction. 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 2006 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

 

 

CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands except per share data)
                                 
    Fourth Quarter     Twelve Months  
For periods ended December 1, 2007 and December 2, 2006   2007     2006     2007     2006  
 
Net sales
   $ 238,266     $ 232,578     $ 921,191     $ 904,347  
Cost of sales
     163,139       159,807       641,457       628,864  
 
                        
Gross profit
     75,127       72,771       279,734       275,483  
Selling and administrative expenses
     35,016       33,616       149,920       149,155  
 
                        
Operating profit
     40,111       39,155       129,814       126,328  
Other income
     414       493       695       613  
 
                        
Earnings before income taxes and minority interests
     40,525       39,648       130,509       126,941  
Income taxes
     13,797       12,856       39,675       43,795  
 
                        
Earnings before minority interests
     26,728       26,792       90,834       83,146  
Minority interests in earnings of subsidiaries
     14       (51 )     (175 )     (436 )
 
                        
 
                                
Net earnings
   $ 26,742     $ 26,741     $ 90,659     $ 82,710  
 
                        
 
                                
Net earnings per common share:
                                
Basic
   $ 0.54     $ 0.52     $ 1.80     $ 1.60  
 
                        
Diluted
   $ 0.53     $ 0.52     $ 1.78     $ 1.59  
 
                        
 
                                
Average shares outstanding:
                                
Basic
     49,733,736       51,153,048       50,345,774       51,570,165  
Diluted
     50,408,823       51,727,449       50,885,314       52,176,515  
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
                 
    December 1,     December 2,  
    2007     2006  
 
Assets
                
Current assets:
                
Cash and cash investments
   $ 36,059     $ 29,051  
Short-term investments
     4,884       32,195  
Accounts receivable, net
     166,912       158,157  
Inventories
     135,846       129,673  
Other
     28,219       31,264  
 
            
Total current assets
     371,920       380,340  
Plant assets, net
     169,212       146,529  
Acquired intangibles, net
     177,927       169,033  
Pension assets
     8,341       19,851  
Other assets
     11,735       11,763  
 
            
 
   $ 739,135     $ 727,516  
 
            
 
                
Liabilities
                
Current liabilities:
                
Current portion of long-term debt
   $ 94     $ 58  
Accounts payable and accrued liabilities
     109,619       107,129  
Income taxes
     4,458       11,241  
 
            
Total current liabilities
     114,171       118,428  
Long-term debt
     17,329       15,946  
Long-term pension liabilities
     15,104       17,476  
Other liabilities
     36,801       38,157  
 
            
SUMMARY CASH FLOWS
(Dollars in thousands)
                 
    Twelve Months  
    2007     2006  
 
From Operating Activities
                
Net earnings
   $ 90,659     $ 82,710  
Depreciation
     20,858       20,891  
Amortization
     2,531       2,188  
Stock compensation expense
     4,014       2,597  
Excess tax benefits from stock compensation
     (2,759 )     (3,490 )
Changes in short-term investments
     27,311       (21,795 )
Changes in assets and liabilities, excluding short-term investments
     (6,468 )     (20,389 )
Other, net
     1,178       869  
 
            
Total provided by operating activities
     137,324       63,581  
 
            
 
                
From Investing Activities
                
Plant asset additions
     (37,024 )     (17,588 )
Business acquisitions
     (12,319 )     (4,627 )
Other, net
     1,476       873  
 
            
Total used in investing activities
     (47,867 )     (21,342 )
 
            
 
                
From Financing Activities
                
Payments on long-term debt
     (4,622 )     (554 )
Cash dividends paid
     (15,024 )     (14,203 )
Excess tax benefits from stock compensation
     2,759       3,490  
Purchase of treasury stock
     (74,864 )     (28,909 )
Other, net
     6,229       6,535  
 
            

 

 

CLARCOR 2007 FOURTH QUARTER RESULTS cont’d.
QUARTERLY INCOME STATEMENT DATA BY SEGMENT
(Dollars in thousands)
                                                         
                            2007                      
    Quarter     Quarter             Quarter             Quarter        
    Ended     Ended     Six     Ended     Nine     Ended     Twelve  
    March 3     June 2     Months     September 1     Months     December 2     Months  
Net sales by segment:
                                                        
Engine/Mobile Filtration
   $ 96,696     $ 108,504     $ 205,200     $ 112,280     $ 317,480     $ 112,549     $ 430,029  
Industrial/Environmental Filtration
     96,239       106,185       202,424       104,980       307,404       107,119       414,523  
Packaging
     16,595       20,436       37,031       21,010       58,041       18,598       76,639  
 
                                          
 
   $ 209,530     $ 235,125     $ 444,655     $ 238,270     $ 682,925     $ 238,266     $ 921,191  
 
                                          
 
                                                        
Operating profit by segment:
                                                        
Engine/Mobile Filtration
   $ 20,277     $ 24,445     $ 44,722     $ 26,629     $ 71,351     $ 27,481     $ 98,832  
Industrial/Environmental Filtration
     2,874       5,498       8,372       6,100       14,472       10,992       25,464  
Packaging
     430       1,557       1,987       1,893       3,880       1,638       5,518  
 
                                          
 
   $ 23,581     $ 31,500     $ 55,081     $ 34,622     $ 89,703     $ 40,111     $ 129,814  
 
                                          
 
                                                        
Operating margin by segment:
                                                        
Engine/Mobile Filtration
     21.0 %     22.5 %     21.8 %     23.7 %     22.5 %     24.4 %     23.0 %
Industrial/Environmental Filtration
     3.0 %     5.2 %     4.1 %     5.8 %     4.7 %     10.3 %     6.1 %
Packaging
     2.6 %     7.6 %     5.4 %     9.0 %     6.7 %     8.8 %     7.2 %
 
                                          
 
     11.3 %     13.4 %     12.4 %     14.5 %     13.1 %     16.8 %     14.1 %
 
                                          
                                                         
                            2006                      
    Quarter     Quarter             Quarter             Quarter        
    Ended     Ended     Six     Ended     Nine     Ended     Twelve  
    March 4     June 3     Months     September 2     Months     December 3     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 %