EXHIBIT 99.1
FOR FURTHER INFORMATION CONTACT:
Bruce A. Klein
Vice President-Finance and Chief Financial Officer
Franklin, Tennessee
615-771-3100
FOR IMMEDIATE RELEASE
WEDNESDAY, JANUARY 12, 2005
CLARCOR REPORTS RECORD FOURTH QUARTER AND FISCAL 2004 RESULTS
FOURTH QUARTER 2004 SALES UP 7%; NET EARNINGS UP 22% OVER 2003
FULL YEAR 2004 SALES UP 6%; NET EARNINGS UP 17% OVER 2003
FISCAL FOURTH QUARTER AND FULL YEAR 2004 HIGHLIGHTS
(Amounts in thousands, except per share data and percentages)
<Table>
<Caption>
QUARTER ENDED YEAR ENDED
11/27/04 11/29/03 % CHANGE 11/27/04 11/29/03 % CHANGE
-------- -------- -------- -------- -------- --------
Net Sales $207,493 $193,442 7.3 $787,686 $741,358 6.2
Operating Profit $ 31,071 $ 28,382 9.5 $ 98,177 $ 87,062 12.8
Net Earnings $ 21,547 $ 17,605 22.4 $ 63,997 $ 54,552 17.3
Diluted Earnings Per Share $ 0.83 $ 0.68 22.1 $ 2.48 $ 2.15 15.3
Average Diluted Shares Outstanding 25,959 25,741 0.8 25,753 25,373 1.5
</Table>
FOURTH QUARTER AND FULL YEAR 2004 OPERATING REVIEW
FRANKLIN, TN, JANUARY 12, 2005-- CLARCOR INC. (NYSE: CLC) reported today
that fourth quarter 2004 sales and net earnings increased by 7% and 22%,
respectively, compared to the same quarter in 2003. Fourth quarter operating
profit increased by 10%, and operating margin improved to 15.0% in 2004 compared
to 14.7% in 2003.
For the full year 2004, sales increased by 6% and net earnings and diluted
earnings per share increased by 17% and 15%, respectively, compared to 2003.
Operating profit increased by 13%, and operating margins improved to 12.5% from
11.7% in 2003. Foreign currency fluctuations increased fiscal 2004 fourth
quarter sales by $1 million and full year sales by $4 million.
There were two non-recurring items in the fourth quarter and for the full year
of 2004 that affected net earnings:
o Costs to relocate the company's headquarters to Franklin, TN were
approximately $2.2 million for fiscal 2004 or approximately $0.05 per
share. Relocation costs incurred in the fourth quarter of 2004 were
approximately $0.3 million.
o Tax benefits arising from the recently enacted American Jobs Creation
Act of 2004 increased after-tax earnings in the fourth quarter and for
the full year of 2004 by approximately $1.2 million, or approximately
$0.05 per share.
Norm Johnson, CLARCOR's Chairman and Chief Executive Officer, said, "Fiscal 2004
marked CLARCOR's 12th consecutive year of earnings growth. Fourth quarter
earnings were significantly stronger than we originally expected due primarily
to higher margins in our filtration and packaging businesses. Fourth quarter
Engine/Mobile segment margins improved to 22.1% from 21.9% last year.
Industrial/Environmental segment margins improved to 10.2%, the highest level
ever achieved by that segment, compared to 10.0% in last year's fourth quarter.
Margins also improved at our Packaging segment to 12.0% in 2004 from 11.1% in
2003. The improvement in margins was driven by cost reductions and improved
plant productivity, and increasing demand for our higher margin filter products.
Although like many companies, we faced substantially higher raw material costs
in 2004, particularly for steel and filtration media, we passed through these
costs to our customers whenever possible.
"Engine/Mobile Filtration sales increased by 11% in the fourth quarter of 2004
compared to the same quarter in 2003. Sales of heavy-duty filters through our
traditional aftermarket distribution, both in domestic and international
markets, were strong throughout the quarter. Our new partnership with
Caterpillar Inc. to sell Baldwin-branded filters to Caterpillar dealers expanded
with additional dealers added to the program in the fourth quarter. We expect
this program to continue to grow through 2005 and 2006. We also saw growth at
Clark Filter, our railroad filter operation, driven by the increase in freight
shipped on North American railroads. Clark Filter is also our primary
manufacturing facility for dust collector cartridges and this business grew
solidly in the fourth quarter. Based on current trends, we anticipate this
continuing in 2005.
"Industrial/Environmental Filtration sales increased by 5% from last year's
fourth quarter. Most of the overall increase was due to our acquisition of
Purolator EFP in September. Filter demand in industrial markets used in
applications in oil and gas drilling, aviation fuel, defense and fluid power
continued to be very strong in the fourth quarter, as they have been throughout
2004. Demand in Europe for our sewage treatment systems continues to be solid.
After several years of declining demand, we began to see increased orders in the
fourth quarter for filtration systems sold into the capital goods markets, such
as dust collectors and electrostatic precipitation equipment. Sales of HVAC
filters, however, were below those of last year. This decline was caused by
strong price competition in commercial, industrial and wholesale markets and
decreased demand for environmental filters sold to the major automobile
companies.
"We continue to improve the cost structure and manufacturing efficiencies in our
Industrial/Environmental companies and, as a result, operating margins improved
by nearly one full percentage point from 2003 to 2004 and reached 7.2%. We
expect further improvement in 2005 towards our goal of a 10% annual operating
margin for our Industrial/Environmental segment. The integration of Purolator
EFP has gone well and we expect the acquisition, which we completed in September
2004, will be accretive to earnings in 2005. Purolator EFP sells critical-use,
final filters for the plastics, fibers and polymers industry.
"At most of our companies located outside the U.S, we had a very good year in
2004, continuing the strong performance we saw in 2003. Strong growth and
increasing profitability continued in our Facet operations in Europe and our
Baldwin operations in China, South Africa, Mexico and Australia. Our engine
filtration and industrial filter systems business in England struggled
throughout 2004 to integrate a recent acquisition and did not perform well. We
are putting great emphasis on fixing problems in our manufacturing operations
there. As sales at this operation have remained steady throughout 2004 despite
manufacturing problems, we expect to see a significant improvement in
profitability there in 2005. Though currency movements do not usually have a
significant impact on our international results, the weakening of the U.S.
dollar in the fourth quarter helped our reported sales and earnings. If the
dollar continues at current levels or weakens further, we expect favorable
currency results will add to what we believe will be another strong year
internationally.
"Packaging segment sales increased 2% in the fourth quarter of 2004 compared to
the fourth quarter of 2003 and operating profit improved by 10%. For the full
year, sales grew by 6% and operating profit by 12%. The improvement in operating
profit was due to significant emphasis on cost reductions and particularly on
improving plant productivity. Product demand was stable for flat sheet coating
and decorating, but declined in plastics packaging. We expect that sales will
continue to grow in 2005 with improved operating margins as well.
"During the fourth quarter of 2004, cash from operations totaled $30 million and
for the year cash from operations was $74 million. Capital expenditures for the
quarter and the year were $7 million and $22 million, respectively. We continue
to generate strong levels of cash flow and at year-end our debt to equity ratio
was 5.4%. Our fourth quarter and year-end tax rate in 2004 declined from last
year as we reduced tax reserves due to the recently enacted American Jobs
Creation Act of 2004. In 2005, we expect our effective tax rate to be
approximately 36.5%.
"We expect capital expenditures in the range of $25 to $30 million in 2005, up
from $22 million in 2004. Capital spending will be focused on the development of
new products, including the development of new filter media, investing to expand
the capabilities of our filtration research and technical centers and the
completion of a new aviation fuel test facility in Greensboro, North Carolina.
We are also planning to install a new manufacturing line at our Baldwin facility
in Kearney, Nebraska for the production of our Channel Flow(R) engine air
filters.
"Costs to comply with the requirements of Sarbanes-Oxley Section 404 were
approximately $1.8 million, or $0.04 per share in 2004. These costs will
continue in 2005. Our external auditors have not yet completed their audit of
our internal control system and so we are not able to comment on the results.
"Though it is still early in the new fiscal year, product demand for heavy-duty,
aerospace and specialty process liquid filters remains strong. Dust collector
cartridges and systems are experiencing a rebound from declining sales over the
last three to four years, with an increasing backlog and strong quote activity.
We are also optimistic that we will see an upturn in HVAC filter sales.
"Our international operations are doing very well, particularly in China and
continental Europe. We expect significant improvement in our UK engine filter
operations in 2005. We believe the market in Europe will expand for sales of our
sewage treatment systems, and are exploring opportunities to transfer this
technology and our manufacturing experience with small sewage treatment systems
to the United States, Latin America and Asia.
"Our Total Filtration Program continued to grow in 2004 and we expect this will
continue in 2005. 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. We have completed the transition of all of our
company-owned branches and stores from selling primarily air filtration HVAC
products to selling our entire range of liquid and air filter products. We
expect 2005 to be a year where we focus more intensely than ever on the
development of new filter products, enhanced filter media and expanding the
technical and testing facilities at our Industrial/Environmental filter
companies.
"We are concerned, as are many other U.S. companies, at increasing costs for
certain raw materials, energy and health care. Each of these costs grew by
double-digit percentages in 2004, which may continue in 2005. Although a
significant increase in interest rates will not be good for the economy, either
in the U.S. or abroad, we are fortunate to have low levels of debt and strong
cash flow. Costs to comply with increasing government regulations rose more
steeply in 2004 than we had seen previously and we do not see this trend
abating. Yet, even with these headwinds, we expect 2005 to be our 13th straight
record year in both sales and earnings for CLARCOR, with continued strong cash
flow and diluted earnings per share in the range of $2.63 to $2.73 excluding the
effect, which we have not yet determined, of the recently enacted requirement to
expense stock options."
CLARCOR will be holding a conference call to discuss the fourth quarter and full
year results at 10:00 am CST on January 13, 2005. Interested parties can listen
to the conference call at www.clarcor.com or www.viavid.com. A replay will be
available on these websites and also at 877-519-4471 or 973-341-3080 and
providing confirmation code 5479627. The replay will be available through
January 20, 2005 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.
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, health care 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, the cost of compliance with recently
enacted regulatory requirements, the effect of changes in accounting rules and
other factors discussed in filings made with the Securities and Exchange
Commission.
TABLES FOLLOW
- MORE -
CLARCOR 2004 UNAUDITED FOURTH QUARTER RESULTS cont'd.
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands except per share data)
<Table>
<Caption>
Fourth Quarter Twelve Months
---------------------------- ----------------------------
For periods ended November 27, 2004 and November 29, 2003 2004 2003 2004 2003
- --------------------------------------------------------------------------------------------------------------------------------
Net sales ....................................................... $ 207,493 $ 193,442 $ 787,686 $ 741,358
Cost of sales ................................................... 142,682 132,853 547,058 519,667
------------ ------------ ------------ ------------
Gross profit .................................................. 64,811 60,589 240,628 221,691
Selling and administrative expenses ............................. 33,740 32,207 142,451 134,629
------------ ------------ ------------ ------------
Operating profit .............................................. 31,071 28,382 98,177 87,062
Other income (expense) .......................................... 793 (603) 883 (1,003)
------------ ------------ ------------ ------------
Earnings before income taxes and minority earnings ............ 31,864 27,779 99,060 86,059
Income taxes .................................................... 10,190 10,117 34,717 31,371
------------ ------------ ------------ ------------
Earnings before minority earnings ............................. 21,674 17,662 64,343 54,688
Minority interests in earnings of subsidiaries .................. (127) (57) (346) (136)
------------ ------------ ------------ ------------
Net earnings .................................................... $ 21,547 $ 17,605 $ 63,997 $ 54,552
============ ============ ============ ============
Net earnings per common share:
Basic ......................................................... $ 0.84 $ 0.70 $ 2.51 $ 2.17
============ ============ ============ ============
Diluted ....................................................... $ 0.83 $ 0.68 $ 2.48 $ 2.15
============ ============ ============ ============
Average shares outstanding:
Basic ......................................................... 25,612,338 25,304,251 25,492,157 25,106,561
Diluted ....................................................... 25,958,942 25,741,481 25,753,369 25,372,806
</Table>
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<Table>
<Caption>
November 27, November 29,
2004 2003
- ---------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash investments ................ $ 22,520 $ 8,348
Accounts receivable, net ................. 143,719 127,546
Inventories .............................. 115,571 99,673
Other .................................... 22,180 21,835
------------ ------------
Total current assets .................. 303,990 257,402
Plant assets, net ........................... 142,242 129,572
Acquired intangibles, net ................... 147,789 122,351
Pension assets .............................. 24,574 20,153
Other assets ................................ 9,202 8,759
------------ ------------
$ 627,797 $ 538,237
============ ============
LIABILITIES
Current liabilities:
Current portion of long-term debt ........ $ 420 $ 674
Accounts payable and accrued
liabilities ........................... 117,859 102,322
Income taxes ............................. 7,993 8,377
------------ ------------
Total current liabilities ............. 126,272 111,373
Long-term debt .............................. 24,130 16,913
Long-term pension liabilities ............... 11,256 7,813
Other liabilities ........................... 37,677 31,746
------------ ------------
199,335 167,845
SHAREHOLDERS' EQUITY ........................ 428,462 370,392
------------ ------------
$ 627,797 $ 538,237
============ ============
</Table>
SUMMARY CASH FLOWS
(Dollars in thousands)
<Table>
<Caption>
Twelve Months
----------------------------
2004 2003
- -----------------------------------------------------------------------
FROM OPERATING ACTIVITIES
Net earnings ........................... $ 63,997 $ 54,552
Depreciation ........................... 18,241 18,078
Amortization ........................... 910 907
Changes in assets and liabilities ...... (8,566) 14,118
Other, net ............................. (176) 241
------------ ------------
Total provided (used) by
operating activities ............. 74,406 87,896
------------ ------------
FROM INVESTING ACTIVITIES
Plant asset additions .................. (22,352) (13,042)
Business acquisitions .................. (41,893) --
Other, net ............................. 2,036 56
------------ ------------
Total provided (used) by
investing activities ............. (62,209) (12,986)
------------ ------------
FROM FINANCING ACTIVITIES
Proceeds from line of credit ........... 30,713 108,386
Payments on line of credit ............. (19,000) (170,859)
Payments on long-term debt ............. (519) (11,044)
Cash dividends paid .................... (12,834) (12,406)
Other, net ............................. 2,703 5,254
------------ ------------
Total provided (used) by
financing activities ............. 1,063 (80,669)
------------ ------------
Effect of exchange rate
changes on cash ..................... 912 360
------------ ------------
CHANGE IN CASH AND
CASH INVESTMENTS .................... $ 14,172 $ (5,399)
============ ============
</Table>
CLARCOR 2004 UNAUDITED FOURTH QUARTER RESULTS cont'd.
QUARTERLY INCOME STATEMENT DATA BY SEGMENT
(Dollars in thousands)
<Table>
<Caption>
2004
-----------------------------------------------------------------------------------------------
QUARTER QUARTER QUARTER QUARTER
ENDED ENDED SIX ENDED NINE ENDED TWELVE
FEBRUARY 28 MAY 29 MONTHS AUGUST 28 MONTHS NOVEMBER 27 MONTHS
------------ --------- --------- ------------ --------- ------------ ---------
NET SALES BY SEGMENT:
Engine/Mobile Filtration .... $ 70,800 $ 82,992 $ 153,792 $ 83,771 $ 237,563 $ 82,479 $ 320,042
Industrial/Environmental
Filtration ............... 88,962 98,249 187,211 102,646 289,857 106,772 396,629
Packaging ................... 15,510 17,471 32,981 19,792 52,773 18,242 71,015
------------ --------- --------- ------------ --------- ------------ ---------
$ 175,272 $ 198,712 $ 373,984 $ 206,209 $ 580,193 $ 207,493 $ 787,686
============ ========= ========= ============ ========= ============ =========
OPERATING PROFIT BY SEGMENT:
Engine/Mobile Filtration .... $ 14,425 $ 16,989 $ 31,414 $ 16,892 $ 48,306 $ 18,258 $ 66,564
Industrial/Environmental
Filtration ............... 3,252 6,076 9,328 8,457 17,785 10,886 28,671
Packaging ................... 136 1,153 1,289 1,665 2,954 2,197 5,151
Relocation Costs ............ -- (425) (425) (1,514) (1,939) (270) (2,209)
------------ --------- --------- ------------ --------- ------------ ---------
$ 17,813 $ 23,793 $ 41,606 $ 25,500 $ 67,106 $ 31,071 $ 98,177
============ ========= ========= ============ ========= ============ =========
OPERATING MARGIN BY SEGMENT:
Engine/Mobile Filtration .... 20.4% 20.5% 20.4% 20.2% 20.3% 22.1% 20.8%
Industrial/Environmental
Filtration ............... 3.7% 6.2% 5.0% 8.2% 6.1% 10.2% 7.2%
Packaging ................... 0.9% 6.6% 3.9% 8.4% 5.6% 12.0% 7.3%
------------ --------- --------- ------------ --------- ------------ ---------
10.2% 12.0% 11.1% 12.4% 11.6% 15.0% 12.5%
============ ========= ========= ============ ========= ============ =========
</Table>
<Table>
<Caption>
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
======== ======== ======== =========== ======== =========== ========
OPERATING MARGIN BY SEGMENT:
Engine/Mobile Filtration .... 19.0% 19.5% 19.3% 20.5% 19.7% 21.9% 20.3%
Industrial/Environmental
Filtration ............... 2.6% 5.7% 4.2% 6.3% 4.9% 10.0% 6.3%
Packaging ................... 3.0% 5.1% 4.2% 7.2% 5.3% 11.1% 6.8%
-------- -------- -------- ----------- -------- ----------- --------
9.0% 11.1% 10.1% 11.9% 10.7% 14.7% 11.7%
======== ======== ======== =========== ======== =========== ========
</Table>