EXHIBIT 99.1
FOR FURTHER INFORMATION CONTACT:
Bruce A. Klein
Vice President-Finance and Chief Financial Officer
Rockford, Illinois
815-962-8867
FOR IMMEDIATE RELEASE
WEDNESDAY, SEPTEMBER 17, 2003
CLARCOR REPORTS RECORD THIRD QUARTER 2003 RESULTS
NET EARNINGS AND EARNINGS PER SHARE UP 17% OVER LAST YEAR'S Q3
UNAUDITED FISCAL THIRD QUARTER AND NINE MONTHS 2003 HIGHLIGHTS
(Amounts in thousands, except per share data and percentages)
<Table>
<Caption>
- ------------------------------------------------------------------------------------------------------------------------
QUARTER ENDED % NINE MONTHS ENDED %
8/30/03 8/31/02 CHANGE 8/30/03 8/31/02 CHANGE
- ------------------------------------------------------------------------------------------------------------------------
AS REPORTED ON A GAAP BASIS:
Net Sales $190,647 $189,368 0.7 $547,916 $524,140 4.5
Operating Profit $ 22,655 $ 20,517 10.4 $ 58,680 $ 53,719 9.2
Net Earnings $ 14,304 $ 12,185 17.4 $ 36,947 $ 30,790 20.0
Diluted Earnings Per Share $ 0.56 $ 0.48 16.7 $ 1.46 $ 1.22 19.7
- ------------------------------------------------------------------------------------------------------------------------
</Table>
THIRD QUARTER AND NINE MONTHS 2003 OPERATING REVIEW
ROCKFORD, IL, SEPTEMBER 17, 2003--CLARCOR INC. (NYSE: CLC) reported today
that third quarter 2003 sales increased by 1% and both net earnings and diluted
earnings per share increased by 17% compared to the same quarter in 2002. Third
quarter operating profit increased by 10% and operating margins improved
significantly to 11.9% in 2003 from 10.8% in 2002.
For the nine-month 2003 period, sales increased by 5%, and both net earnings and
diluted earnings per share increased by 20% compared to 2002. Nine-month
operating profit increased by 9%, and operating margins improved to 10.7% in
2003 from 10.2% in 2002.
Norm Johnson, CLARCOR's Chairman and Chief Executive Officer, said, "We had a
very good third quarter with improved operating profit and margins in all three
of our business segments. Sales growth was particularly good in our
Engine/Mobile segment. In our Industrial/Environmental segment, the picture was
more mixed with certain markets exhibiting robust sales growth and other markets
continuing to struggle. Nevertheless, we are particularly pleased with the
margin improvements we have made this year in our Industrial/Environmental
segment as we continue to make progress towards our goal of a 10% segment
operating margin.
"Our Engine/Mobile Filtration segment continues to perform superbly as sales
grew by 5% and operating profit grew by 13% despite challenging economic
conditions in the industry. We believe that we are continuing to increase our
market share in heavy-duty and railroad filtration. Operating margins have
continued to improve as a result of constant attention to our costs and an
increasing ability to leverage our cost structure with increased sales. Looking
to the future, our continuing strategy is to gain additional market share in
those areas where we are under-represented and to roll out a line of new
filtration products. We are particularly excited about the potential of new
products incorporating advanced filter media technology, not only in our
Engine/Mobile segment but also in our Industrial/Environmental segment product
line as well. Internationally, sales of our overseas operations were good in
both U.S. and local currencies, with particularly strong growth in China, South
Africa and continental Europe.
"Our Industrial/Environmental Filtration sales this quarter decreased by 2% from
the third quarter last year, but as I noted above, sales were very uneven across
different markets. As has been true all year, sales were strong for filters sold
to the oil drilling industry and the aviation and aerospace industries. We saw
lower filter and filter equipment sales in capital goods, HVAC and automotive
markets compared to last year's third quarter. We believe that sales to capital
goods markets will begin to show improvement in the fourth quarter, but that
sales to domestic automotive and HVAC markets will remain slow for the rest of
this year. As was true in our Engine/Mobile segment, international sales were
strong throughout Europe and Asia in both U.S. and local currencies. The real
story in this segment is our intense focus on improving margins. Integration
continues in our HVAC operations and we are currently incurring additional costs
to merge the manufacturing, engineering, distribution and administrative
functions of several companies. We are also seeing real progress in improved
manufacturing efficiencies, and in the future we expect to see lower operating
costs. Even with additional costs this year, segment margins overall improved to
6.3% from 5.9% last year, with several of our operations already exceeding our
minimum goal of a 10% operating margin.
"Packaging segment sales improved as flat sheet decorating sales offset a
decline in sales of plastic items. Improving manufacturing efficiencies, though
still less than what we believe we can achieve in this segment, led to an
improvement in operating profit of over 11% compared to the last year's third
quarter. For the remainder of the year, we expect that sales and operating
profit will approximate last year's fourth quarter.
"We are steadily decreasing our borrowings with an additional reduction in
outstanding debt of $23 million during the quarter and a reduction of over $45
million since the end of last year. Capital equipment spending should come in at
approximately $14 million to $17 million for 2003. Foreign currency fluctuations
had an immaterial impact on our third quarter sales and net earnings.
2
"There is no doubt that our biggest challenge, and also our highest priority, is
to grow sales. We are pleased that our sales have grown throughout the recession
and that our margins have consistently improved. Still, growing sales in the
future at a faster rate is our top priority and I want to explain briefly how we
intend to do this:
o Diversify our Total Filtration Program into non-automotive sectors:
Although our Total Filtration Program has been successful, it has
relied too heavily for growth from its automotive customers. We have
now assigned salespeople and allocated resources to grow the Program
more heavily into non-automotive sectors.
o Expand presence in under-represented markets: Though we sell to many
end-use markets in our Engine/Mobile segment, we have always been more
heavily represented in the over-the-road truck market. We have
developed new programs to grow sales in agricultural, construction and
mining markets more intensively than we have in the past. We have also
developed new products and programs which are designed specifically
for both our independent distributors and for OEM engine companies.
o Expand the product range sold by our branches: By the end of this year
we will have transferred our twenty air filter branch outlets from our
HVAC manufacturing companies to our Total Filtration Services (TFS)
organization. Under TFS, these branches will focus on selling the
entire range of CLARCOR products instead of their previous focus on
selling primarily HVAC products.
o Increase filter service revenues: Margins from selling filter services
are generally higher than from selling filter products. To grow our
service revenues and to more effectively package our filter products
with our service capabilities, we have created a new and separate
marketing and sales organization to grow our service business. We will
initially focus on doing this through our TFS branches, and will then
expand our filter service line throughout the country.
o Leverage the Purolator and Facet brands: We have many brand names,
some better known than others and some which are known only within
very narrow industrial sectors. Two of our best known brands are
"Purolator" and "Facet." We will group our industrial liquid filter
companies under the brand "Purolator Advanced Filtration." We believe
that we will grow sales of our industrial liquid filter products
significantly by leveraging the brand equity that has been created
from over 40 years under the Purolator and Facet names.
o Bring in new management to lead our industrial liquid filter growth:
We have recently hired Doug Workman, who was formerly General Manager
and Vice President at Filterite, as President of Purolator Advanced
Filtration. His background in liquid filtration, particularly in sales
and marketing, is a significant addition to CLARCOR as he will lead
the reorganization of our various liquid filter companies into a
single, dedicated team.
3
o Continue the expansion of our operations in China: Eight years ago, we
established a manufacturing plant in China. This year, sales of its
products, which are sold in both Chinese and overseas markets,
increased by more than 20%. We plan on investing additional resources
to further expand its operations and product capabilities and we see
China as a major contributor to our growth in the future.
o Continue to seek acquisitions: As we have for many years, we will
continue to look to acquisitions for additional growth. With
relatively little debt -- our current debt to capital ratio is less
than 12% -- we have the ability to grow the company substantially if
the right acquisition becomes available at the right price. We expect
to expand our current product, technical and geographical capabilities
through acquisitions and alliances with other companies. No filter
company has more than an 8% market share and so we expect significant
consolidation in our industry in the future. We are fortunate that we
have the skills, experience and financial resources to take advantage
of this opportunity.
"We now expect full year 2003 diluted earnings per share to be in the $2.00 to
$2.05 range, with fourth quarter diluted earnings per share in the $0.54 to
$0.59 range. We believe that international sales should maintain their momentum
through at least the rest of this year. If the anticipated improvement in
capital equipment spending does finally happen and if, as many economists
expect, the domestic economy continues to improve, we should have a strong
fourth quarter and a good start for fiscal 2004."
CLARCOR will be holding a conference call to discuss the third quarter results
at 10:00 am CDT on September 18, 2003. Interested parties can listen to the
conference call through the Internet at www.clarcor.com or
www.companyboardroom.com. A replay will be available on these websites and also
at 877-519-4471 or 973-3415-3080 by providing confirmation code 4167843. The
replay will be available through September 26th by telephone and for 30 days on
the Internet.
CLARCOR is based in Rockford, Illinois, 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.
The statements in this release concerning the Company's sales, earnings,
business performance and prospects are forward-looking statements that involve
significant risks and uncertainties, including the effect of changes in product
demand, availability of labor, price and product competition, raw material
costs, energy prices, productivity improvement and plant consolidation programs,
distribution channels, acquisitions and divestitures, general economic
conditions in both domestic and foreign markets, interest rates, currency
fluctuations, the success of our Total Filtration Program, the success of sales
and marketing programs and other factors discussed in filings made with the
Securities and Exchange Commission.
TABLES FOLLOW
4
CLARCOR 2003 UNAUDITED THIRD QUARTER RESULTS cont'd.
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands except per share data)
Third Quarter Nine Months
---------------------------- ----------------------------
For periods ended August 30, 2003 and August 31, 2002 2003 2002 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------
Net sales............................................ $ 190,647 $ 189,368 $ 547,916 $ 524,140
Cost of sales........................................ 134,493 135,810 386,814 374,572
----------- ----------- ----------- -----------
Gross profit.................................... 56,154 53,558 161,102 149,568
Selling and administrative expenses.................. 33,499 33,041 102,422 95,849
----------- ----------- ----------- -----------
Operating profit................................ 22,655 20,517 58,680 53,719
Other income (expense)............................... (112) (1,448) (479) (5,510)
----------- ----------- ----------- -----------
Earnings before income taxes.................... 22,543 19,069 58,201 48,209
Income taxes......................................... 8,239 6,884 21,254 17,419
----------- ----------- ----------- -----------
Net earnings......................................... $ 14,304 $ 12,185 $ 36,947 $ 30,790
=========== =========== =========== ===========
Net earnings per common share:
Basic............................................. $ 0.57 $ 0.49 $ 1.48 $ 1.24
=========== =========== =========== ===========
Diluted........................................... $ 0.56 $ 0.48 $ 1.46 $ 1.22
=========== =========== =========== ===========
Average shares outstanding:
Basic............................................. 25,174,259 24,896,048 25,046,912 24,817,964
Diluted........................................... 25,534,741 25,300,904 25,280,719 25,187,422
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
August 30, November 30,
2003 2002
- ---------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash investments...................... $ 9,493 $ 13,747
Accounts receivable, net....................... 118,952 121,482
Inventories.................................... 105,582 101,846
Other.......................................... 22,567 22,671
-------- --------
Total current assets.................... 256,594 259,746
Plant assets, net.................................... 127,223 132,892
Acquired intangibles, net............................ 122,238 122,529
Pension assets....................................... 21,015 21,771
Other assets......................................... 10,118 9,181
-------- --------
$537,188 $546,119
======== ========
LIABILITIES
Current liabilities:
Current portion of long-term debt.............. $ 5,815 $ 68,456
Accounts payable and accrued liabilities...... 96,291 97,738
Income taxes................................... 6,829 8,061
-------- --------
Total current liabilities............... 108,935 174,255
Long-term debt....................................... 40,100 22,648
Long-term pension liabilities........................ 8,311 7,823
Other liabilities.................................... 27,138 25,932
-------- --------
184,484 230,658
SHAREHOLDERS' EQUITY................................. 352,704 315,461
-------- --------
$537,188 $546,119
======== ========
SUMMARY CASH FLOWS
(Dollars in thousands)
Nine Months
--------------------------------
2003 2002
- ---------------------------------------------------------------------------------------------------
From Operating Activities
Net earnings........................................ $ 36,947 $ 30,790
Depreciation........................................ 14,554 14,781
Amortization........................................ 681 545
Changes in assets and liabilities................... 1,306 17,348
Other, net.......................................... 82 (63)
--------- --------
Total provided (used) by
operating activities...................... 53,570 63,401
--------- --------
From Investing Activities
Plant asset additions............................... (8,877) (9,612)
Business acquisitions............................... - (6,559)
Other, net.......................................... (3) 259
--------- --------
Total provided (used) by
investing activities...................... (8,880) (15,912)
--------- --------
From Financing Activities
Proceeds from line of credit........................ 108,565 10,000
Payments on line of credit.......................... (148,444) (45,000)
Payments on long-term debt.......................... (5,310) (5,295)
Cash dividends paid................................. (9,218) (8,922)
Other, net.......................................... 5,246 1,850
--------- --------
Total provided (used) by
financing activities...................... (49,161) (47,367)
--------- --------
Effect of exchange rate
changes on cash................................ 217 164
--------- --------
Change in Cash and
Cash Investments................................ $ (4,254) $ 286
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5
CLARCOR 2003 UNAUDITED THIRD QUARTER RESULTS cont'd.
QUARTERLY INCOME STATEMENT DATA BY SEGMENT
(Dollars in thousands)
2003
--------------------------------------------------------------
QUARTER QUARTER QUARTER
ENDED ENDED SIX ENDED NINE
MARCH 1 MAY 31 MONTHS AUGUST 30 MONTHS
-------- -------- -------- --------- --------
NET SALES BY SEGMENT:
Engine/Mobile Filtration.......................... $ 66,776 $ 73,066 $139,842 $ 73,815 $213,657
Industrial/Environmental Filtration............... 90,369 95,852 186,221 98,683 284,904
Packaging......................................... 14,349 16,857 31,206 18,149 49,355
-------- -------- -------- -------- --------
$171,494 $185,775 $357,269 $190,647 $547,916
======== ======== ======== ======== =========
OPERATING PROFIT BY SEGMENT:
Engine/Mobile Filtration.......................... $ 12,686 $ 14,253 $ 26,939 $ 15,137 $ 42,076
Industrial/Environmental Filtration............... 2,373 5,417 7,790 6,218 14,008
Packaging......................................... 428 868 1,296 1,300 2,596
-------- -------- -------- -------- --------
$ 15,487 $ 20,538 $ 36,025 $ 22,655 $ 58,680
======== ======== ======== ======== ========
2002
-------------------------------------------------------------
QUARTER QUARTER QUARTER
ENDED ENDED SIX ENDED NINE
MARCH 2 JUNE 1 MONTHS AUGUST 31 MONTHS
-------- -------- -------- --------- --------
NET SALES BY SEGMENT:
Engine/Mobile Filtration.......................... $ 57,839 $ 64,760 $122,599 $ 70,385 $192,984
Industrial/Environmental Filtration............... 85,950 94,377 180,327 101,174 281,501
Packaging......................................... 14,473 17,373 31,846 17,809 49,655
-------- -------- -------- -------- --------
$158,262 $176,510 $334,772 $189,368 $524,140
======== ======== ======== ======== ========
OPERATING PROFIT BY SEGMENT:
Engine/Mobile Filtration.......................... $ 11,258 $ 13,169 $ 24,427 $ 13,358 $ 37,785
Industrial/Environmental Filtration............... 2,530 4,672 7,202 5,994 13,196
Packaging......................................... 618 955 1,573 1,165 2,738
-------- -------- --------- -------- --------
$ 14,406 $ 18,796 $ 33,202 $ 20,517 $ 53,719
======== ======== ======== ======== ========
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