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, JANUARY 14, 2004
CLARCOR REPORTS RECORD FOURTH QUARTER AND FISCAL 2003 RESULTS
FULL YEAR 2003 SALES UP 4% AND NET EARNINGS UP 17% OVER 2002
FISCAL FOURTH QUARTER AND FULL YEAR 2003 HIGHLIGHTS
(Amounts in thousands, except per share data and percentages)
- ------------------------------------- ------------------------ ------- ----------------------- -----------
QUARTER ENDED % YEAR ENDED %
11/29/03 11/30/02 CHANGE 11/29/03 11/30/02 CHANGE
- ------------------------------------- ------------------------ ------- ----------------------- -----------
Net Sales $193,442 $191,423 1.1 $741,358 $715,563 3.6
Operating Profit $ 28,382 $ 24,056 18.0 $ 87,062 $ 77,775 11.9
Net Earnings $ 17,605 $ 15,811 11.3 $ 54,552 $ 46,601 17.1
Diluted Earnings Per Share $ 0.68 $ 0.62 9.7 $ 2.15 $ 1.85 16.2
Average Diluted Shares Outstanding 25,741 25,319 1.7 25,373 25,172 0.8
- ------------------------------------- ------------------------ ------- ----------------------- -----------
Note: A tax benefit arising from a research and experimental tax credit was
recorded in the fourth quarter of fiscal 2002 and is included in the columns
headed "Quarter Ended 11/30/02" and "Year Ended 11/30/02." The benefit
reduced income tax expense in the fourth quarter 2002 and for the full year
2002 by approximately $1.0 million and increased diluted earnings per share
by $0.04.
FOURTH QUARTER AND FULL YEAR 2003 OPERATING REVIEW
ROCKFORD, IL, JANUARY 14, 2004 - CLARCOR INC. (NYSE: CLC) reported today that
fourth quarter 2003 sales, net earnings and diluted earnings per share increased
by 1%, 11% and 10%, respectively, compared to the same quarter in 2002. Fourth
quarter operating profit increased by 18% and operating margin improved to 14.7%
in 2003 compared to 12.6% in 2002. Comparisons of fourth quarter net earnings in
2003 were affected by last year's fourth quarter non-recurring after-tax gain of
$1 million or $0.04 per share arising from a research and experimental tax
credit. Earnings before income taxes increased 20% in 2003 from 2002, both for
the fourth quarter and for the full year.
For the full year 2003, sales increased by 4% and net earnings and diluted
earnings per share increased by 17% and 16%, respectively, compared to 2002. The
growth in sales and profits for the year was primarily due to internal growth,
as there were no acquisitions completed during fiscal 2003. Foreign currency
fluctuations increased fiscal 2003 fourth quarter sales by $4 million and full
year sales by $9 million.
Norm Johnson, CLARCOR's Chairman and Chief Executive Officer, said, "Fiscal 2003
marks CLARCOR's 11th consecutive year of earnings growth. Fourth quarter
earnings were significantly stronger than we originally expected. This was due
principally to higher margins in our filtration businesses, particularly in our
Industrial/Environmental segment. Fourth quarter Industrial/Environmental
segment margins improved to 10.0%, the highest level ever achieved by that
segment, compared to 7.3% in last year's fourth quarter. For the full year,
gross margins and operating margins both improved by nearly one percentage point
in 2003 from 2002 levels, driven principally by productivity gains at our
factories and cost reductions.
"Engine/Mobile Filtration sales increased by 5% in the fourth quarter of 2003
compared to the same quarter in 2002. Sales of heavy-duty filters through our
traditional aftermarket distribution, both in domestic and international
markets, were strong during the quarter. We also saw increasing sales of
heavy-duty filters to OEM dealer organizations, a traditional market channel
that we focused on expanding in 2003. Operating margin for the 2003 fourth
quarter was 21.9% compared to 21.3% in the 2002 fourth quarter. Our
Engine/Mobile Filtration factories are highly productive and the increase in
sales for the quarter led to the 60 basis point increase in margin.
"Industrial/Environmental Filtration sales decreased by $741,000 or 1% from last
year's fourth quarter. As has been the case throughout 2003, filters sold to
industrial markets used in applications in oil and gas drilling, defense and
fluid power grew strongly in the fourth quarter. Sales of filtration equipment,
such as dust collectors and electrostatic precipitators, were lower this year
than last year. Interest in these products, which are sold mainly to
manufacturers, is beginning to grow, but to date, we have not yet seen an
increase in order rates. Sales of HVAC filters were also below last year's
levels overall, although certain HVAC markets continue to grow, such as private
label sales through retail mass merchants. The strong improvement in operating
margin in the segment reflects the efforts made by our Industrial/Environmental
segment employees throughout 2003 to reduce costs and improve operating
efficiency. For the year, the segment's operating margin rose to 6.3% from last
year's 5.4% and we expect further improvement in 2004 towards our goal of a 10%
annual operating margin.
"While Packaging segment sales decreased 5% in the fourth quarter of 2003
compared to the fourth quarter of 2002, operating profit improved. The
improvement in operating profit was due to a change in an inventory costing
method and from cost reduction efforts begun early in 2003. Product demand was
stable for flat sheet coating and decorating, but declined in plastics
packaging. Our Packaging segment expects that sales will grow by more than 5% in
2004, primarily from its metal printing and coating business, based on current
customer order rates. The operation is also undertaking a review of customer
profitability and expects that certain customer relationships will be terminated
or changed during 2004 where profitability is unacceptable and unlikely to
change. Even so, we expect sales to increase in 2004 and margins to improve from
eliminating unprofitable business.
"During the fourth quarter of 2003, cash from operations totaled $34 million
compared to $22 million in the fourth quarter of 2002. For the year, cash from
operations reached $88 million, a new high for CLARCOR, up from $85 million in
2002. Cash was used to further reduce our debt by $28 million in the quarter and
to make a $3 million pension plan contribution. For the full year 2003, we
reduced bank debt by nearly $74 million. We now have a debt to total capital
ratio of approximately 5%. Capital expenditures for the quarter and the year
were $4 million and $13 million, respectively.
"We expect 2004 to be our 12th straight record year in both sales and earnings
growth for CLARCOR, with continued strong cash flow. We expect diluted earnings
per share to be in the range of $2.25 to $2.35 in 2004. As previously announced,
CLARCOR will move its corporate headquarters to Nashville, TN in 2004. Costs for
this move, which will largely be a one-time expense incurred primarily in 2004,
are still being finalized and have not been reflected in the earnings per share
estimate for 2004. However, we estimate that these costs will not exceed $0.07
per share in 2004.
"Capital expenditures will increase from $13 million in 2003 to $25 to $30
million in 2004. The additional expenditures over 2003 levels are focused on the
development of new products through an expansion of our air filtration technical
center in Louisville, Kentucky and our process liquid technical center in
Greensboro, North Carolina, and to build a new aviation fuel test facility.
"Though it is still early in the new fiscal year, product demand for heavy-duty,
aerospace, and specialty process liquid filters remains good, continuing the
previous quarter's momentum. HVAC filter sales are stable and we remain
optimistic, though we have not seen any change as yet, that we will see an
upturn for filtration systems sold into capital goods markets in 2004. We expect
our Total Filtration Program to grow in 2004, coming off a slow 2003 caused by
lower sales of maintenance filters to automobile and automotive parts
manufacturers. The Total Filtration Program's growth in the future is expected
to come from increasing sales to non-automotive customers and expansion of our
filter service business. In early 2004, we will complete the changeover of our
20 company-owned branches and stores from selling primarily air filtration HVAC
products to selling our entire range of liquid and air filter products. These
outlets will become CLARCOR Total Filter Stores.
"Although we made no acquisitions in 2003, we looked at many potential
opportunities in the U.S., Europe and Asia. As we have for many years, we will
continue to seek acquisitions for additional growth. With strong cash flow and
relatively little debt, we have the ability to grow the company substantially if
the right acquisition becomes available at the right price.
"If U.S. and European economies continue to improve as many economists believe,
we expect to have a good 2004 with earnings at the high end of our estimated
range. In Asia and particularly in China, we see great opportunity. We have had
manufacturing operations in China for over eight years. Although currently less
than 2% of our total revenues, sales of our China operations grew by 25% in
2003. We expect sales growth to continue in China at a double-digit pace. We
plan to substantially expand production of filter products over the next several
years in China. Our Chinese operations represent an opportunity of great
promise, and though certainly a long-term investment, we will continue to invest
and grow in that region."
CLARCOR will be holding a conference call to discuss the fourth quarter and full
year results at 10:00 am CST on January 15, 2004. Interested parties can listen
to the conference call at www.clarcor.com or www.companyboardroom.com. A replay
will be available on these websites and also at 877-519-4471 or 973-341-3080 and
providing confirmation code 4382605. The replay will be available through
January 22, 2004 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
CLARCOR 2003 FOURTH QUARTER RESULTS cont'd.
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands except per share data)
Fourth Quarter Twelve Months
---------------------------- ----------------------------
For periods ended November 29, 2003 and November 30, 2002 2003 2002 2003 2002
- ----------------------------------------------------------------------------------------------------------------------------------
Net sales .......................................................... $ 193,442 $ 191,423 $ 741,358 $ 715,563
Cost of sales ...................................................... 132,853 133,701 519,667 508,273
------------ ------------ ------------ ------------
Gross profit .................................................. 60,589 57,722 221,691 207,290
Selling and administrative expenses ................................ 32,207 33,666 134,629 129,515
------------ ------------ ------------ ------------
Operating profit .............................................. 28,382 24,056 87,062 77,775
Other income (expense) ............................................. (660) (891) (1,139) (6,401)
------------ ------------ ------------ ------------
Earnings before income taxes .................................. 27,722 23,165 85,923 71,374
Income taxes ....................................................... 10,117 7,354 31,371 24,773
------------ ------------ ------------ ------------
Net earnings ....................................................... $ 17,605 $ 15,811 $ 54,552 $ 46,601
============ ============ ============ ============
Net earnings per common share:
Basic ........................................................... $ 0.70 $ 0.63 $ 2.17 $ 1.88
============ ============ ============ ============
Diluted ......................................................... $ 0.68 $ 0.62 $ 2.15 $ 1.85
============ ============ ============ ============
Average shares outstanding:
Basic ........................................................... 25,304,251 24,909,768 25,106,561 24,839,812
Diluted ......................................................... 25,741,481 25,319,279 25,372,806 25,171,931
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
November 29, November 30,
2003 2002
- ---------------------------------------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash investments ........................................... $ 8,348 $ 13,747
Accounts receivable, net ............................................ 127,546 121,482
Inventories ......................................................... 99,673 101,846
Other ............................................................... 21,835 22,671
--------------- ---------------
Total current assets ......................................... 257,402 259,746
Plant assets, net ......................................................... 129,572 132,892
Acquired intangibles, net ................................................. 122,351 122,529
Pension assets ............................................................ 20,153 21,771
Other assets .............................................................. 8,759 9,181
--------------- ---------------
$ 538,237 $ 546,119
=============== ===============
LIABILITIES
Current liabilities:
Current portion of long-term debt ................................... $ 674 $ 68,456
Accounts payable and accrued
liabilities .................................................. 102,322 97,738
Income taxes ........................................................ 8,377 8,061
--------------- ---------------
Total current liabilities .................................... 111,373 174,255
Long-term debt ............................................................ 16,913 22,648
Long-term pension liabilities ............................................. 7,813 7,823
Other liabilities ......................................................... 31,746 25,932
--------------- ---------------
167,845 230,658
SHAREHOLDERS' EQUITY ...................................................... 370,392 315,461
--------------- ---------------
$ 538,237 $ 546,119
=============== ===============
SUMMARY CASH FLOWS
(Dollars in thousands)
Twelve Months
--------------------------------------------
2003 2002
- ------------------------------------------------------------------------------------------------------------------------------
FROM OPERATING ACTIVITIES
Net earnings .............................................................. $ 54,552 $ 46,601
Depreciation .............................................................. 18,078 18,999
Amortization .............................................................. 907 761
Changes in assets and liabilities ......................................... 14,118 18,436
Other, net ................................................................ 241 222
--------------- ---------------
Total provided (used) by
operating activities ............................................ 87,896 85,019
--------------- ---------------
FROM INVESTING ACTIVITIES
Plant asset additions ..................................................... (13,042) (12,204)
Business acquisitions ..................................................... -- (6,677)
Other, net ................................................................ 56 (97)
--------------- ---------------
Total provided (used) by
investing activities ............................................ (12,986) (18,978)
--------------- ---------------
FROM FINANCING ACTIVITIES
Proceeds from line of credit .............................................. 108,386 24,333
Payments on line of credit ................................................ (170,859) (68,500)
Payments on long-term debt ................................................ (11,044) (5,604)
Cash dividends paid ....................................................... (12,406) (11,975)
Other, net ................................................................ 5,254 1,972
--------------- ---------------
Total provided (used) by
financing activities ............................................ (80,669) (59,774)
--------------- ---------------
Effect of exchange rate
changes on cash ...................................................... 360 62
--------------- ---------------
CHANGE IN CASH AND
CASH INVESTMENTS ...................................................... $ (5,399) $ 6,329
=============== ===============
5
CLARCOR 2003 FOURTH QUARTER RESULTS cont'd.
QUARTERLY INCOME STATEMENT DATA BY SEGMENT
(Dollars in thousands)
2003
--------------------------------------------------------------------------------
QUARTER QUARTER QUARTER QUARTER
ENDED ENDED SIX ENDED NINE ENDED TWELVE
MARCH 1 MAY 31 MONTHS AUGUST 30 MONTHS NOVEMBER 29 MONTHS
--------- --------- -------- --------- -------- ------------ ---------
NET SALES BY SEGMENT:
Engine/Mobile Filtration .................... $ 66,776 $ 73,066 $139,842 $ 73,815 $213,657 $ 74,140 $287,797
Industrial/Environmental Filtration ......... 90,369 95,852 186,221 98,683 284,904 101,371 386,275
Packaging ................................... 14,349 16,857 31,206 18,149 49,355 17,931 67,286
-------- -------- -------- -------- -------- -------- --------
$171,494 $185,775 $357,269 $190,647 $547,916 $193,442 $741,358
======== ======== ======== ======== ======== ======== ========
OPERATING PROFIT BY SEGMENT:
Engine/Mobile Filtration .................... $ 12,686 $ 14,253 $ 26,939 $ 15,137 $ 42,076 $ 16,223 $ 58,299
Industrial/Environmental Filtration ......... 2,373 5,417 7,790 6,218 14,008 10,163 24,171
Packaging ................................... 428 868 1,296 1,300 2,596 1,996 4,592
-------- -------- -------- -------- -------- -------- --------
$ 15,487 $ 20,538 $ 36,025 $ 22,655 $ 58,680 $ 28,382 $ 87,062
======== ======== ======== ======== ======== ======== ========
2002
--------------------------------------------------------------------------------
QUARTER QUARTER QUARTER QUARTER
ENDED ENDED SIX ENDED NINE ENDED TWELVE
MARCH 2 JUNE 1 MONTHS AUGUST 31 MONTHS NOVEMBER 30 MONTHS
--------- -------- ------- ---------- -------- ----------- --------
NET SALES BY SEGMENT:
Engine/Mobile Filtration .................... $ 57,839 $ 64,760 $122,599 $ 70,385 $192,984 $ 70,528 $263,512
Industrial/Environmental Filtration ......... 85,950 94,377 180,327 101,174 281,501 102,112 383,613
Packaging ................................... 14,473 17,373 31,846 17,809 49,655 18,783 68,438
-------- -------- -------- -------- -------- -------- --------
$158,262 $176,510 $334,772 $189,368 $524,140 $191,423 $715,563
======== ======== ======== ======== ======== ======== ========
OPERATING PROFIT BY SEGMENT:
Engine/Mobile Filtration .................... $ 11,258 $ 13,169 $ 24,427 $ 13,358 $ 37,785 $ 14,994 $ 52,779
Industrial/Environmental Filtration ......... 2,530 4,672 7,202 5,994 13,196 7,474 20,670
Packaging ................................... 618 955 1,573 1,165 2,738 1,588 4,326
-------- -------- -------- -------- -------- -------- --------
$ 14,406 $ 18,796 $ 33,202 $ 20,517 $ 53,719 $ 24,056 $ 77,775
======== ======== ======== ======== ======== ======== ========
6
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