BYLAWS OF CASCADE CORPORATION (AS AMENDED FEBRUARY 11, 1999) ARTICLE I NAME AND PRINCIPAL OFFICE Section 1. The Name of this corporation is CASCADE CORPORATION, organized and existing under the laws of the State of Oregon. Section 2. The principal office and place of business of the Company shall be located at Portland, Oregon. The Company may have offices and places of business at such other places, within or without the State of Oregon, as the Board of Directors may from time to time determine. ARTICLE II CORPORATE SEAL The seal of the Company shall be an impression stamp with the following inscription: CASCADE CORPORATION - Oregon - Corporate Seal. An impression of said seal so adopted is as shown below. ARTICLE III SHAREHOLDERS Section 1. The annual meeting of the shareholders shall be held on the second Thursday in May of each year (except the second Tuesday in May of 1997) at the principal office of the Company in Portland, Oregon at 10:00 a.m., when the shareholders shall elect a Board of Directors and transact such other business as may properly come before the meeting. Section 2. Special meetings of the shareholders of the Company shall be called by the Secretary on the request of the Chairman or on the request in writing of three Directors, or on demand in writing by shareholders of record holding not less than PAGE 1 - BYLAWS
one-tenth of all shares entitled to vote at such meeting. Section 3. Written or printed notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than 10 nor more than 50 days before the date of the meeting, either personally or by mail, by or at the direction of the Secretary, or the person or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder concerned at his address as it appears on the stock books of the Company, with postage thereon prepaid. ARTICLE IV COMMITTEES
one-tenth of all shares entitled to vote at such meeting. Section 3. Written or printed notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than 10 nor more than 50 days before the date of the meeting, either personally or by mail, by or at the direction of the Secretary, or the person or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder concerned at his address as it appears on the stock books of the Company, with postage thereon prepaid. ARTICLE IV COMMITTEES Section 1. There are hereby established as committees of the Board of Directors an Audit Committee, a Compensation Committee, and a Nominating and Governance Committee, each of which shall have the powers and functions set forth herein, and such additional powers as may be delegated by the Board of Directors. The size and membership of the committees shall be determined by the Board of Directors, and, in the case of the Audit and Compensation Committees, shall be composed solely of Directors independent of management. Section 2. The Audit Committee shall select, on behalf of the Company, independent public accountants to (1) audit the books of account and other Corporate records; and (2) perform such other duties as the Committee may from time to time prescribe. The Committee shall transmit financial statements certified by such independent public accountants to the Board of Directors after the close of each fiscal year. The Committee shall confer with such accountants and approve the scope of the audit of the records. The Committee shall have the power to confer with and direct the officers of the Company to the extent necessary to review the internal controls, accounting practices, financial structure and reporting of the Company. From time to time, the Committee shall report to and advise the Board of Directors concerning the results of its consultation and review such other matters as the Committee believes merit review by the Board of Directors. Section 3. The Compensation Committee shall fix the compensation of members of the Board of Directors who are officers and other members of senior management. Section 4. The Nominating and Governance Committee shall consider and make recommendations to the Board of Directors with respect to the management PAGE 2 - BYLAWS
of the Company and the nominations or elections of directors and officers of the Company. The Committee from time to time shall consider the size and composition of the Board of Directors and make recommendations to the Board with respect to such matters. ARTICLE V DIRECTORS Section 1. The business and affairs of the Company shall be managed by a Board of not less than nine, nor more than fourteen Directors. Each Director shall be a Shareholder of the Company and, at the time of election, shall be under the age of 70 (Directors serving as of February 11, 1999, are exempt from the age limitation). A Director who ceases to be a Shareholder in the Company shall likewise cease to be a Director. Commencing with the 1999 Annual Meeting of Shareholders, nominees for election to the Board of Directors shall be divided into three groups. The terms of Directors in Group 1 expire at the first Annual Shareholders' meeting after their election, the terms of Group 2 expire at the second Annual Shareholders Meeting after their election, and the terms of Group 3 expire at the third Annual Shareholders' Meeting after their election. At each Annual Shareholders' Meeting held thereafter, Directors shall be chosen for a term of three years, to succeed those whose terms expire. Each Director shall hold office until his or her successor has been elected and qualified.
of the Company and the nominations or elections of directors and officers of the Company. The Committee from time to time shall consider the size and composition of the Board of Directors and make recommendations to the Board with respect to such matters. ARTICLE V DIRECTORS Section 1. The business and affairs of the Company shall be managed by a Board of not less than nine, nor more than fourteen Directors. Each Director shall be a Shareholder of the Company and, at the time of election, shall be under the age of 70 (Directors serving as of February 11, 1999, are exempt from the age limitation). A Director who ceases to be a Shareholder in the Company shall likewise cease to be a Director. Commencing with the 1999 Annual Meeting of Shareholders, nominees for election to the Board of Directors shall be divided into three groups. The terms of Directors in Group 1 expire at the first Annual Shareholders' meeting after their election, the terms of Group 2 expire at the second Annual Shareholders Meeting after their election, and the terms of Group 3 expire at the third Annual Shareholders' Meeting after their election. At each Annual Shareholders' Meeting held thereafter, Directors shall be chosen for a term of three years, to succeed those whose terms expire. Each Director shall hold office until his or her successor has been elected and qualified. Section 2. Any vacancy occurring in the Board of Directors, including any Directorship to be filled by reason of an increase in the number of Directors, may be filled by the affirmative vote of the majority of the remaining Directors, though less than a quorum, of the Board of Directors. Any Director so elected shall serve until the next annual meeting of shareholders and until his successor has been elected and has qualified. Section 3. A majority of the number of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors. If any meeting of the Directors cannot be organized for want of a quorum, a majority of the Directors there present may adjourn the meeting from time to time without notice until a quorum shall attend. Section 4. The Board of Directors may appoint an Executive Committee consisting of the President and not less than two other officers of the Company, to coordinate the Company's operations and to exercise general supervision over all the property, business and affairs of the Company. The President shall preside over the Executive Committee, which shall be subject to the authority of the Board of Directors and the President. PAGE 3 - BYLAWS
Section 5. Immediately after each annual election of Directors, the newly elected Directors shall meet for the purpose of organization, the election of officers of the Board of Directors and the transaction of other business. No notice of such meeting shall be required, and the meeting shall be held at the same place as the shareholders' meeting unless otherwise designated by the Chairman. Section 6. Special meetings of the Board of Directors shall be called by the Secretary, when he is requested to do so by the Chairman, upon two days' notice to each Director. Special meetings shall be called in like manner on the request of the majority of the members of the Board. Such notice may be by telephone, telegraph or mail. Special meetings of the Directors may be held at one time and at any place, without notice, when all members of the Board are present and consent thereto. The Board of Directors shall meet at such places, either within or without the State of Oregon, as may be designated in the notice of the meeting. Any business authorized or required to be transacted by the Directors may be transacted at any special meeting. ARTICLE VI COMPENSATION OF DIRECTORS AND OFFICERS No officer or Director of the Company shall be entitled to any salary or other compensation for any services rendered the Company, except when fixed or otherwise authorized and approved by resolution of the Board of Directors, or when services are rendered as a consultant to the Corporation under compensation arrangements
Section 5. Immediately after each annual election of Directors, the newly elected Directors shall meet for the purpose of organization, the election of officers of the Board of Directors and the transaction of other business. No notice of such meeting shall be required, and the meeting shall be held at the same place as the shareholders' meeting unless otherwise designated by the Chairman. Section 6. Special meetings of the Board of Directors shall be called by the Secretary, when he is requested to do so by the Chairman, upon two days' notice to each Director. Special meetings shall be called in like manner on the request of the majority of the members of the Board. Such notice may be by telephone, telegraph or mail. Special meetings of the Directors may be held at one time and at any place, without notice, when all members of the Board are present and consent thereto. The Board of Directors shall meet at such places, either within or without the State of Oregon, as may be designated in the notice of the meeting. Any business authorized or required to be transacted by the Directors may be transacted at any special meeting. ARTICLE VI COMPENSATION OF DIRECTORS AND OFFICERS No officer or Director of the Company shall be entitled to any salary or other compensation for any services rendered the Company, except when fixed or otherwise authorized and approved by resolution of the Board of Directors, or when services are rendered as a consultant to the Corporation under compensation arrangements approved by the Board of Directors or the President. ARTICLE VII OFFICERS Section 1. The officers of the Company shall include a Chairman, a President, one or more Vice Presidents as may from time to time be deemed advisable by the Board of Directors, a Secretary, a Treasurer and such other officers as may from time to time be appointed by the Board of Directors. Section 2. In case of the absence of any officer of the Company, or for any other reason that may seem sufficient to the Board, the Board of Directors may delegate his powers and duties to any other officer or to any Director. Section 3. In addition to the specific duties set forth below, the officers shall have such other authorities and perform such other duties as may elsewhere in these Bylaws be required of them or that may be usual for their officers or that may be PAGE 4 - BYLAWS
designated by resolution of the Board of Directors. ARTICLE VIII CHAIRMAN The Chairman shall preside at all meetings of the shareholders and Directors; he shall be the inspector of all elections of Directors and certify who are elected; he shall also act as inspector of the voting on any other matter or resolution unless the meeting appoints special inspectors for such purposes. The Chairman may also represent the company in any manner requested by the Board of Directors or the President. ARTICLE IX PRESIDENT Section 1. The President shall be the chief executive officer and head of the Company and shall have the general control of its business affairs.
designated by resolution of the Board of Directors. ARTICLE VIII CHAIRMAN The Chairman shall preside at all meetings of the shareholders and Directors; he shall be the inspector of all elections of Directors and certify who are elected; he shall also act as inspector of the voting on any other matter or resolution unless the meeting appoints special inspectors for such purposes. The Chairman may also represent the company in any manner requested by the Board of Directors or the President. ARTICLE IX PRESIDENT Section 1. The President shall be the chief executive officer and head of the Company and shall have the general control of its business affairs. Section 2. The President may sign, on behalf of the Company, all deeds, contracts and promissory notes, unless otherwise expressly directed by the Board of Directors, and shall have general supervision over all the property, business and interests of the Company as well as over its officers, employees and agents. Section 3. The President shall make annual reports showing the condition of the affairs of the Company, making such recommendations as he thinks proper, submitting the same to the Board of Directors, and subsequently, to the annual meeting of the shareholders; and he shall, from time to time, bring before the Directors such information as may be required touching upon the business and property of the Company. ARTICLE X SECRETARY The Secretary shall issue all notices of Directors' and shareholders' meetings, shall have the charge of the corporate seal and the Company's stock and minute books, shall countersign all certificates of stocks, bonds, deeds, mortgages and other documents requiring the seal of the Company, shall affix the corporate seal to all such documents, shall prepare and issue all certificates of stock and register and record PAGE 5 - BYLAWS
the same in the stock books and shall properly record therein all transfers, shall produce the stock books whenever required to do so by any shareholder, and shall prepare and submit at every meeting of the shareholders a certified list of the shareholders of the Company and of those shareholders entitled to vote at such meeting, which list shall be prima facie evidence of the right to vote. The Board of Directors may designate one or more Assistant Secretaries to carry out the duties of the Secretary until such vacancy is regularly filled as required. ARTICLE XI TREASURER The Treasurer shall have custody of all funds, securities and other valuables of the Company that may come into his possession and he shall deposit the same to the credit of the Company in such banks or depositories as the Board of Directors may designate. He shall bring to the attention of the Board of Directors any and all measures which in his judgment are necessary and proper to be taken for the preservation and renewal of securities in his custody and for the enforcement of the rights secured thereby and shall render a statement of the accounts of the Company whenever required by the Board of Directors.
the same in the stock books and shall properly record therein all transfers, shall produce the stock books whenever required to do so by any shareholder, and shall prepare and submit at every meeting of the shareholders a certified list of the shareholders of the Company and of those shareholders entitled to vote at such meeting, which list shall be prima facie evidence of the right to vote. The Board of Directors may designate one or more Assistant Secretaries to carry out the duties of the Secretary until such vacancy is regularly filled as required. ARTICLE XI TREASURER The Treasurer shall have custody of all funds, securities and other valuables of the Company that may come into his possession and he shall deposit the same to the credit of the Company in such banks or depositories as the Board of Directors may designate. He shall bring to the attention of the Board of Directors any and all measures which in his judgment are necessary and proper to be taken for the preservation and renewal of securities in his custody and for the enforcement of the rights secured thereby and shall render a statement of the accounts of the Company whenever required by the Board of Directors. ARTICLE XII STOCK Section 1. Certificates of stock, on a form to be approved by the Board of Directors, shall be signed by the Chairman, President or any Vice President, and by the Secretary or an Assistant Secretary, and shall have affixed thereto the corporate seal. Each certificate shall be numbered in order and shall show on the face thereof the name of the Company, that it is organized under the laws of the State of Oregon, the name of the person to whom it is issued, the class and number of shares represented thereby and the par value of the shares. A stock book shall be maintained by the Secretary, in which he shall record the name of each shareholder, the number, certificate number and class of shares held by him, the dates or issuance and the dates of any transfers of stock. Section 2. Shares of stock of the Company shall be transferable only on its books by the holder thereof in person, or by his attorney duly authorized thereto in writing, and upon the surrender and cancellation of certificates therefor duly endorsed. Section 3. In case of the loss or destruction of a certificate, another may be issued in its place upon proof of such loss or destruction satisfactory to the PAGE 6 - BYLAWS
Board of Directors and the giving of such bond or indemnity or other security as the Board of Directors may require. ARTICLE XIII INDEMNIFICATION The Company shall indemnify any Director, officer or employee or former Director, officer or employee of the Company, or any person who may have served at its request as a Director, officer or employee of another corporation, partnership, joint venture, or other enterprise, against expenses (including attorneys fees) judgments, fines and amounts paid in settlement, actually and necessarily incurred by him in connection with the defense of any action, suit or proceeding whether civil, criminal or administrative in which he is made a party by reason of being or having been such Director, officer or employee. Such indemnification shall not be deemed exclusive of any other rights to which such Director, officer or employee may be entitled. The Company shall also have the authority to indemnify any agent of the Company or any Trustee acting on behalf of the Company to the fullest extent possible under the Oregon Business Corporation Act.
Board of Directors and the giving of such bond or indemnity or other security as the Board of Directors may require. ARTICLE XIII INDEMNIFICATION The Company shall indemnify any Director, officer or employee or former Director, officer or employee of the Company, or any person who may have served at its request as a Director, officer or employee of another corporation, partnership, joint venture, or other enterprise, against expenses (including attorneys fees) judgments, fines and amounts paid in settlement, actually and necessarily incurred by him in connection with the defense of any action, suit or proceeding whether civil, criminal or administrative in which he is made a party by reason of being or having been such Director, officer or employee. Such indemnification shall not be deemed exclusive of any other rights to which such Director, officer or employee may be entitled. The Company shall also have the authority to indemnify any agent of the Company or any Trustee acting on behalf of the Company to the fullest extent possible under the Oregon Business Corporation Act. ARTICLE XIV ASSESSMENTS A holder of or subscriber to shares of the capital stock of the Company shall be subject to assessment therefor by the Board of Directors to the extent, in the aggregate, of the unpaid portion of the subscription price of the shares so held or subscribed, except as may be limited by law. ARTICLE XV DIVIDENDS Dividends shall be declared by the Board of Directors in such form, in such amounts and at such times as the Board of Directors in its sole discretion shall determine, subject only to the requirements of law, and no dividends shall be paid or other distribution of earnings made except as directed by the Board of Directors. PAGE 7 - BYLAWS
ARTICLE XVI SIGNING OF CONTRACTS, CHECKS, NOTES, ETC. In addition to the authority granted to the President by Article VIII, Section 2, the Board of Directors may, by resolution, at any time direct in what manner and by what person or persons, officer or officers all or any of its contracts, checks, notes, bonds, other evidences of indebtedness or other written instruments may be executed, and any such authorized execution shall be deemed the act of the Company. ARTICLE XVII NOTICE AND WAIVER Section 1. Whenever notice is required to be given to any shareholder or Director, and such notice is given be mail, the time of the giving of such notice shall be deemed to be the time when the same shall be deposited in the United States mail addressed to the shareholder or Director at his address as it appears on the official records of the Company, with postage thereon prepaid. Section 2. Whenever any notice is required to be given to any shareholder or Director of the Company, a waiver
ARTICLE XVI SIGNING OF CONTRACTS, CHECKS, NOTES, ETC. In addition to the authority granted to the President by Article VIII, Section 2, the Board of Directors may, by resolution, at any time direct in what manner and by what person or persons, officer or officers all or any of its contracts, checks, notes, bonds, other evidences of indebtedness or other written instruments may be executed, and any such authorized execution shall be deemed the act of the Company. ARTICLE XVII NOTICE AND WAIVER Section 1. Whenever notice is required to be given to any shareholder or Director, and such notice is given be mail, the time of the giving of such notice shall be deemed to be the time when the same shall be deposited in the United States mail addressed to the shareholder or Director at his address as it appears on the official records of the Company, with postage thereon prepaid. Section 2. Whenever any notice is required to be given to any shareholder or Director of the Company, a waiver thereof in writing signed by the person or persons entitled to such notice, whether signed before or after the time stated in such notice, shall be equivalent to the giving of such notice to that person or persons. ARTICLE XVIII AMENDMENTS These Bylaws may be altered, amended or repealed and new Bylaws may be adopted at any regular or special meeting of the Board of Directors by a vote of the majority of the Directors present at such meeting. PAGE 8 - BYLAWS
CASCADE-Registered TrademarkCORPORATION 1999 ANNUAL REPORT The World's Leading Producer of Lift Truck Attachments, Forks & Accessories
CASCADE CORPORATION & SUBSIDIARY COMPANIES FINANCIAL SUMMARY (Dollars in Thousands)
NET SALES [GRAPH] OPERATING INCOME [GRAPH]
NET INCOME
EARNINGS BEFORE INTEREST, TAXES DEPRECIATION AND AMORTIZATION (EBITDA). [GRAPH]
[GRAPH]
CASCADE-Registered TrademarkCORPORATION 1999 ANNUAL REPORT The World's Leading Producer of Lift Truck Attachments, Forks & Accessories
CASCADE CORPORATION & SUBSIDIARY COMPANIES FINANCIAL SUMMARY (Dollars in Thousands)
NET SALES [GRAPH] OPERATING INCOME [GRAPH]
NET INCOME
EARNINGS BEFORE INTEREST, TAXES DEPRECIATION AND AMORTIZATION (EBITDA). [GRAPH]
[GRAPH]
FINANCIAL HIGHLIGHTS
YEAR ENDED JANUARY 31 2000 1999 1998 1997 1996 ---------------------------------------------------------------------------------------------------(Dollars in Thousands except where noted*) Net sales Operating income Net income EBITDA(1) Cash flow from operations Cash flow from investing Cash flow from financing Per common share* Net income: Basic Diluted Book value Working capital Expenditures for property, plant and equipment Total assets Long-term debt Shareholders' equity Number of employees Dividend per share $ 324,778 $ 18,806 $ 4,934 $ 34,183(2) $ 50,135 $ 12,411 $ (45,675) $407,930 $ 36,685 $ 21,370 $ 63,745 $ 20,702 $ 3,688 $(22,501) $369,865 $ 40,770 $ 21,040 $ 61,810(3) $ 15,701 $(87,328) $ 72,921 $218,485 $ 24,850 $ 17,420 $ 36,141 $ 22,374 $(39,409) $ 9,985 $234,030 $ 16,415 $ 10,550 $ 26,685(4) $ 21,765 $(11,894) $ (3,449)
$ $ $
.40 .40(2) 9.87(2)
$ $ $
1.77 1.63 10.31
$ $ $
1.73 1.60(3) 9.32(3)
$ $ $
1.48 1.48 8.46
$ $ $
.88 .88(4) 7.74(4)
$ 66,167 $ 16,834 $312,694 $109,043 $112,933 1,842 .40
$ 94,548 $ 15,459 $347,857 $142,783 $119,494 2,174 .40
$ 81,063 $ 15,453 $349,592 $144,785 $110,551 2,322 .40
$ 32,750 $ 16,624 $199,493 $ 12,810 $ 98,757 1,293 .45
$ 49,829 $ 11,825 $153,190 $ 9,531 $ 92,057 1,103 .45
(1) Management believes that Earnings Before Interest Expense, Taxes, Depreciation and Amorti-zation (EBITDA) is a key measure of cash flow. EBITDA should not be viewed as a measurement of financial performance under Generally Accepted Accounting Principles (GAAP) or as a substitute for GAAP measurements such as net income or cash flow from operations. EBITDA is not necessarily comparable to other companies due to the lack of uniform definition of EBITDA by all companies. (2) After $12,000 ($7,600 or $.61 per share, net of tax) charge for environmental expenses. See note 12 to consolidated financial statements. (3) After $14,890 ($9,770 or $.74 per share, net of taxes) credit for environmental insurance settlements, net of
CASCADE CORPORATION & SUBSIDIARY COMPANIES FINANCIAL SUMMARY (Dollars in Thousands)
NET SALES [GRAPH] OPERATING INCOME [GRAPH]
NET INCOME
EARNINGS BEFORE INTEREST, TAXES DEPRECIATION AND AMORTIZATION (EBITDA). [GRAPH]
[GRAPH]
FINANCIAL HIGHLIGHTS
YEAR ENDED JANUARY 31 2000 1999 1998 1997 1996 ---------------------------------------------------------------------------------------------------(Dollars in Thousands except where noted*) Net sales Operating income Net income EBITDA(1) Cash flow from operations Cash flow from investing Cash flow from financing Per common share* Net income: Basic Diluted Book value Working capital Expenditures for property, plant and equipment Total assets Long-term debt Shareholders' equity Number of employees Dividend per share $ 324,778 $ 18,806 $ 4,934 $ 34,183(2) $ 50,135 $ 12,411 $ (45,675) $407,930 $ 36,685 $ 21,370 $ 63,745 $ 20,702 $ 3,688 $(22,501) $369,865 $ 40,770 $ 21,040 $ 61,810(3) $ 15,701 $(87,328) $ 72,921 $218,485 $ 24,850 $ 17,420 $ 36,141 $ 22,374 $(39,409) $ 9,985 $234,030 $ 16,415 $ 10,550 $ 26,685(4) $ 21,765 $(11,894) $ (3,449)
$ $ $
.40 .40(2) 9.87(2)
$ $ $
1.77 1.63 10.31
$ $ $
1.73 1.60(3) 9.32(3)
$ $ $
1.48 1.48 8.46
$ $ $
.88 .88(4) 7.74(4)
$ 66,167 $ 16,834 $312,694 $109,043 $112,933 1,842 .40
$ 94,548 $ 15,459 $347,857 $142,783 $119,494 2,174 .40
$ 81,063 $ 15,453 $349,592 $144,785 $110,551 2,322 .40
$ 32,750 $ 16,624 $199,493 $ 12,810 $ 98,757 1,293 .45
$ 49,829 $ 11,825 $153,190 $ 9,531 $ 92,057 1,103 .45
(1) Management believes that Earnings Before Interest Expense, Taxes, Depreciation and Amorti-zation (EBITDA) is a key measure of cash flow. EBITDA should not be viewed as a measurement of financial performance under Generally Accepted Accounting Principles (GAAP) or as a substitute for GAAP measurements such as net income or cash flow from operations. EBITDA is not necessarily comparable to other companies due to the lack of uniform definition of EBITDA by all companies. (2) After $12,000 ($7,600 or $.61 per share, net of tax) charge for environmental expenses. See note 12 to consolidated financial statements. (3) After $14,890 ($9,770 or $.74 per share, net of taxes) credit for environmental insurance settlements, net of certain expenses. See note 12 to consolidated financial statements. (4) After $12,000 ($7,800 or $.65 per share, net of taxes) charge for environmental expenses. See note 12 to consolidated financial statements.
TO OUR SHAREHOLDERS Consolidated net sales for the fiscal year ended January 31, 2000 totaled $324,778,000, a 20.4% decrease from
TO OUR SHAREHOLDERS Consolidated net sales for the fiscal year ended January 31, 2000 totaled $324,778,000, a 20.4% decrease from sales of $407,930,000 for the prior year. Prior year sales include the mast business unit, divested in January 1999 and the Industrial Tire Division, sold in April 1999. Fourth quarter sales of $75,099,000 were 16.5% lower than the $89,985,000 reported in the prior year fourth quarter, also primarily due to the divestitures noted above. Adjusting for the divestitures, comparable consolidated net sales for year over year reflects an increase of 2.3% or $314,046,000 for fiscal year 1999 versus $306,844,000 for fiscal year 1998. Net income for the year of $4,934,000 ($.40 per share) was 76.9% below the $21,370,000 ($1.63 per share) for the year ended January 31, 1999. This year's results include special charges that stem from the integration of operations acquired over the past three years, steps taken to assure consistency of global financial reporting, the sale of the Industrial Tire Division and the significant environmental charge discussed below. Adjusting for above noted divestitures and non-recurring items, comparable operating results were $17,700,000 ($1.42 per share) versus $17,300,000 ($1.32 per share) or 2.3% higher than the prior year. We consider the results from continuing operations to be in line with our expectations for gross margin improvements and within the framework of our comprehensive restructuring and ERP implementation programs. Cascade has added to its environmental reserve a $12,000,000 pretax charge to income. The charge results from a review of potential environmental exposure including an adverse decision rendered March 24, 2000 by the Ninth Circuit Court of Appeals in connection with a lawsuit brought in 1989 by The Boeing Company. The suit dealt with ongoing environmental cleanup at the two companies' Portland plant sites. Management believes that this charge does not alter the fundamental strength of the Company nor its ability to produce products and serve its markets throughout the world. Operations are continuing to improve and expand. The challenges presented by some prior acquisitions and the environmental issues are not without understandable concern to management but we believe these special circumstances are largely behind us and above all, they do not deter our confidence and optimism in the Company's future. Attachment sales showed strength in North America, rising 9.5%, adjusted for the mast business unit sale, but remained relatively flat in Europe. Asian markets continued their recovery with our China subsidiary continuing to make remarkable progress. Australian markets remain sluggish. Among the many executive additions we have made, around the globe, we are fortunate to announce the appointment of Mr. Art Otsuka as Vice President of Asian Operations. Prior to joining Cascade, Art served as President of Komatsu Forklift USA where he achieved a remarkable 37-year career. His stature, insight and ability will be very helpful to our Asian operations. We welcome Art, and all other new members of the Cascade family. Chairman C. Calvert Knudsen announced on March 30, 2000 that the Board of Directors has appointed a special committee of independent directors to consider options to increase shareholder value. I have also advised the Board that I am working with a management group to explore the possibility for the Company to be taken private in a management-led leveraged buyout. We look forward to working with you as we grow and expand our presence in the global market. We also appreciate the continued support of our customers, suppliers and shareholders. Rest assured, your faith in us will be rewarded as we renew our focus on our core business - simply put, building the best forks and lift truck attachments in the world. Bar none.
/s/ Robert C. Warren ROBERT C. WARREN, JR. President & Chief Executive Officer
CONSOLIDATED STATEMENT OF INCOME
CONSOLIDATED STATEMENT OF INCOME (Dollars in Thousands, except per share amounts)
YEAR ENDED JANUARY 31 2000 1999 1998 -------------------------------------------------------------------------------------------Net sales $ 324,778 $407,930 $369,865 -------------------------------------------------------------------------------------------Operating expenses: Cost of goods sold 214,348 281,195 259,605 Depreciation and amortization 18,386 21,550 20,280 Selling and administrative expenses 61,238 68,500 64,100 Environmental expenses, net (Note 12) 12,000 (14,890) -------------------------------------------------------------------------------------------Total operating expenses 305,972 371,245 329,095 --------------------------------------------------------------------------------------------
Operating income
18,806
36,685
40,770
Interest expense 8,686 10,940 9,440 Interest income (1,030) (755) (610) Other (income) expense, net 4,039 (4,755) (150) -------------------------------------------------------------------------------------------Income before taxes 7,111 31,255 32,090 Income taxes (Note 4) 2,177 9,885 11,050 -------------------------------------------------------------------------------------------Net income $ 4,934 $ 21,370 $ 21,040 ============================================================================================ Dividends paid on preferred shares of subsidiaries $ 423 $ 530 $ 570 ============================================================================================ Net income applicable to common shareholders $ 4,511 $ 20,840 $ 20,470 ============================================================================================ Basic earnings per share $ .40 $ 1.77 $ 1.73 ============================================================================================ Diluted earnings per share $ .40 $ 1.63 $ 1.60 ============================================================================================
The accompanying notes to consolidated financial statements are an integral part of this statement.
CONSOLIDATED BALANCE SHEET (Dollars in Thousands except share and per share amounts)
AS OF JANUARY 31 2000 1999 --------------------------------------------------------------------------------------------------ASSETS Current assets: Cash and cash equivalents $ 23,188 $ 11,460 Accounts receivable, less allowance for doubtful accounts of $1,511 and $1,009 54,934 72,354 Inventories, at average cost which is lower than market: Finished goods and components 34,712 44,496 Goods in process 1,654 2,309 Raw materials 11,121 15,210 --------------------------------------------------------------------------------------------------47,487 62,015 Deferred income taxes (Note 4) 3,544 254 Prepaid expenses and other current assets 1,693 7,640
CONSOLIDATED BALANCE SHEET (Dollars in Thousands except share and per share amounts)
AS OF JANUARY 31 2000 1999 --------------------------------------------------------------------------------------------------ASSETS Current assets: Cash and cash equivalents $ 23,188 $ 11,460 Accounts receivable, less allowance for doubtful accounts of $1,511 and $1,009 54,934 72,354 Inventories, at average cost which is lower than market: Finished goods and components 34,712 44,496 Goods in process 1,654 2,309 Raw materials 11,121 15,210 --------------------------------------------------------------------------------------------------47,487 62,015 Deferred income taxes (Note 4) 3,544 254 Prepaid expenses and other current assets 1,693 7,640 --------------------------------------------------------------------------------------------------Total current assets 130,846 153,723 Property, plant and equipment, net (Notes 5 and 9) 86,716 100,075 Deferred income taxes (Note 4) 9,356 3,370 Goodwill 75,179 86,462 Other assets 10,597 4,227 --------------------------------------------------------------------------------------------------Total assets $ 312,694 $ 347,857 =================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable to banks (Note 5) $ 8,408 $ 9,817 Current portion of long-term debt (Note 5) 6,137 6,510 Accounts payable 22,960 26,789 Accrued payroll and payroll taxes 5,707 6,954 Accrued environmental expenditures (Note 12) 7,910 1,000 Other accrued expenses 13,557 8,105 --------------------------------------------------------------------------------------------------Total current liabilities 64,679 59,175 Long-term debt (Note 5) 109,043 142,783 Accrued environmental expenditures (Note 12) 10,405 7,228 Other liabilities 4,260 3,228 --------------------------------------------------------------------------------------------------Total liabilities 188,387 212,414 =================================================================================================== Commitments and contingencies (Notes 11, 12, 13) Mandatorily redeemable convertible preferred stock and minority interest (Note 7)
11,374
15,949
Shareholders' equity: (Notes 6 and 7) Common stock, $.50 par value, authorized 20,000,000 shares; 11,439,890 and 11,587,990 outstanding 5,784 5,858 Additional paid-in capital 399 -Retained earnings 122,922 125,065 Accumulated other comprehensive income (loss): Cumulative foreign currency translation adjustments (15,943) (11,200) Treasury stock, at cost, 127,498 shares (229) (229) --------------------------------------------------------------------------------------------------Total shareholders' equity 112,933 119,494 --------------------------------------------------------------------------------------------------Total liabilities and shareholders' equity $ 312,694 $ 347,857 ===================================================================================================
The accompanying notes to consolidated financial statements are an integral part of this statement.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (Dollars in Thousands except per share amounts)
A Common Stock Additional -----------------Paid-In Treasury Retained Co Shares Amount Capital Stock Earnings --------------------------------------------------------------------------------------------------------Balance at January 31, 1997 11,667 $ 6,024 $ $ (686) $ 94,561 Net income 21,040 Dividends ($0.40 per share) (5,505) Common stock repurchased (60) (30) (1,005) Treasury shares issued for acquisitions 254 3,711 457 Translation adjustment ---------------------------------------------------------------------------------------------------------
Balance at January 31, 1998
11,861
5,994
3,711
(229)
109,091
Net income 21,370 Dividends ($0.40 per share) (5,361) Common stock repurchased (289) (145) (3,919) Stock options exercised 15 8 239 Redemption of mandatorily redeemable convertible preferred stock (54) (35) Translation adjustment Other 1 1 23 ---------------------------------------------------------------------------------------------------------
Balance at January 31, 1999
11,588
5,858
-
(229)
125,065
Net income 4,934 Dividends ($0.40 per share) (5,321) Common stock repurchased (176) (88) (1,756) Conversion of preferred stock 28 14 399 Translation adjustment ---------------------------------------------------------------------------------------------------------
Balance at January 31, 2000 11,440 $ 5,784 $ 399 $ (229) $ 122,922 ---------------------------------------------------------------------------------------------------------
The accompanying notes to consolidated financial statements are an integral part of this statement.
CONSOLIDATED STATEMENT OF CASHFLOWS (Dollars in Thousands)
Year Ended January 31 2000 1999 199 --------------------------------------------------------------------------------------------------------CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 4,934 $ 21,370 $ 21,0 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 18,386 21,550 20,2 Deferred income taxes (9,373) 1,770 (9,8 Loss (gain) on sale of property 1,223 (3,873) Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: Accounts receivable 9,847 (10,083) (9 Inventories 3,877 (3,735) (6,6 Prepaid expenses 5,778 (1,629) (3,5 Accounts payable and accrued expenses 4,344 2,570 (7,0 Accrued environmental expenditures 10,087 (3,088) 1,4 Other liabilities 1,032 (4,150) 1,0 --------------------------------------------------------------------------------------------------------Net cash provided by operating activities 50,135 20,702 15,7 ---------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASHFLOWS (Dollars in Thousands)
Year Ended January 31 2000 1999 199 --------------------------------------------------------------------------------------------------------CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 4,934 $ 21,370 $ 21,0 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 18,386 21,550 20,2 Deferred income taxes (9,373) 1,770 (9,8 Loss (gain) on sale of property 1,223 (3,873) Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: Accounts receivable 9,847 (10,083) (9 Inventories 3,877 (3,735) (6,6 Prepaid expenses 5,778 (1,629) (3,5 Accounts payable and accrued expenses 4,344 2,570 (7,0 Accrued environmental expenditures 10,087 (3,088) 1,4 Other liabilities 1,032 (4,150) 1,0 --------------------------------------------------------------------------------------------------------Net cash provided by operating activities 50,135 20,702 15,7 --------------------------------------------------------------------------------------------------------CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment (16,834) (15,459) (15,4 Business acquisitions (72,5 Proceeds from sale of assets 29,785 11,375 5,0 Other assets (540) 7,772 (4,3 --------------------------------------------------------------------------------------------------------Net cash provided (used) by investing activities 12,411 3,688 (87,3 --------------------------------------------------------------------------------------------------------CASH FLOWS FROM FINANCING ACTIVITIES: Payments on long-term debt (61,783) (5,241) (36,0 Proceeds from issuance of long-term debt 28,844 135,7 Notes payable to banks, net (1,409) (3,376) (20,2 Redemption of convertible preferred stock and minority interest (4,162) (4,730) Repurchase of common stock (1,844) (4,064) (1,0 Issuance of common stock 271 Cash dividends paid (5,321) (5,361) (5,5 --------------------------------------------------------------------------------------------------------Net cash (used) provided by financing activities (45,675) (22,501) 72,9 --------------------------------------------------------------------------------------------------------EFFECT OF EXCHANGE RATE CHANGES (5,143) (3,395) (3,9 --------------------------------------------------------------------------------------------------------INCREASE IN CASH AND CASH EQUIVALENTS 11,728 (1,506) (2,6
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 11,460 12,966 15,6 --------------------------------------------------------------------------------------------------------CASH AND CASH EQUIVALENTS AT END OF YEAR $ 23,188 $ 11,460 $ 12,9 ========================================================================================================= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year for: Interest Income taxes Conversion of mandatorily redeemable convertible preferred stock to common stock Exchangeable preferred stock issued for acquisition
$ $ $ $
8,515 8,561 413 -
$ 12,220 $ 13,925 $ $ -
$ 8,6 $ 12,9 $ $ 15,6
The accompanying notes to consolidated financial statements are an integral part of this statement.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF PRINCIPAL ACCOUNTING POLICIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF PRINCIPAL ACCOUNTING POLICIES THE COMPANY Cascade Corporation (the Company) is an international company engaged in the business of designing, manufacturing and selling equipment used primarily in material handling applications. The Company manufactures an extensive line of hydraulically actuated attachments designed for mounting on lift trucks. Other major products include forks for lift trucks and hydraulic cylinders used primarily in material handling operations. Accordingly, the Company's sales and the collection of accounts receivable are largely dependent on the sales of lift trucks and on the sales of replacement parts. In addition, the majority of the Company's sales are made in North America. Headquartered in Portland, Oregon, the Company employs more than 1,800 people and maintains operations in 15 countries outside the United States. The Company was founded in 1943. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. Intercompany balances and transactions have been eliminated. CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of cash on deposit and highly liquid investments with maturities of three months or less. DEPRECIATION AND AMORTIZATION Property, plant and equipment are stated at cost. Depreciation is generally provided on the straight-line basis over the estimated useful lives of the assets ranging from 15 to 35 years for buildings and 3 to 12 years for machinery and equipment. Goodwill consists of the cost of acquired businesses (Note 10) in excess of the fair value of net identifiable assets acquired. Generally, goodwill is amortized on the straight-line basis over 20 years. On a periodic basis, the Company reviews the realizability of recorded long-lived assets based upon expectations of nondiscounted cash flows of the acquired businesses. As of January 31, 2000, the Company believes that there are no significantly impaired long-lived assets. Accumulated amortization of goodwill and other assets was $12,451,000 and $9,518,000 at January 31, 2000 and 1999, respectively. RESEARCH AND DEVELOPMENT COSTS Research and development costs are expensed as incurred. Research and development expense is related to developing new products and to improving existing products or processes. INCOME TAXES Income taxes are accounted for in accordance with Statement of Financial Accounting Standards No. 109 (SFAS 109) "Accounting for Income Taxes." Deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. DIVESTITURE OF INDUSTRIAL TIRES LIMITED On April 29, 1999 the Company completed the sale of its tire, wheel and baseband business to Maine Rubber Company for approximately $38,108,000 including the assumption of liabilities. The Company recorded an after tax loss on the sale of approximately $1,085,000. In fiscal 1999 and 1998 the tire, wheel, and baseband business contributed approximately $10,832,000 and $47,086,000 in sales respectively. DIVESTITURE OF WORLDMAST PRODUCT LINE
On January 22, 1999, the Company completed the sale of its Worldmast product line to Lift Technologies, Inc. for approximately $11,242,000. A former Cascade officer and director is the principal owner of Lift Technologies, Inc. The Company recorded a gain on the sale of $582,000. The transaction included the sale of the Worldmast factory in Westminster, South Carolina as well as other related manufacturing assets in North America and Europe. In fiscal 1998, the Worldmast product line contributed approximately $54,000,000 in net sales. FORWARD EXCHANGE CONTRACTS The Company enters into foreign exchange contracts to manage its exposure to foreign currency exchange risk. At January 31, 2000, the Company had approximately $18,252,000 in contracts to buy or sell foreign currency in the future. Substantially all of these contracts mature in one month or less. Gains or losses on such contracts are recognized in income and are measured over the period of the contract by reference to the forward rate for a contract to be consummated on the same future date as the original contract. STOCK-BASED COMPENSATION The Company accounts for its stock-based compensation under APB 25. FOREIGN CURRENCY TRANSLATION The Company translated the balance sheets of its foreign subsidiaries using fiscal year end exchange rates. The statements of income are translated using the average exchange rates for the
fiscal year. The effects of such translations are included in the shareholders' equity account "cumulative foreign currency translation adjustments" as decreases of $4,743,000, $3,184,000, and $6,874,000 for the years ended January 31, 2000, 1999 and 1998, respectively ENVIRONMENTAL REMEDIATION The Company accrues environmental remediation costs if it is probable that an asset has been impaired or a liability incurred at the financial statement date and the amount can be reasonably estimated. Environmental compliance costs are expensed as incurred. Certain environmental costs are capitalized and depreciated over their estimated useful lives. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES The fair value of the Company's monetary assets and liabilities are evaluated based upon the existing interest rates related to such assets and liabilities compared to current market rates of interest. The carrying value of all of the Company's monetary assets and liabilities approximates fair value as of January 31, 2000 and 1999. REVENUE RECOGNITION The Company recognizes revenue when products are shipped to customers. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. Changes in such estimates may affect amounts reported in future periods. Significant estimates and judgements made by management of the Company include matters such as the collectibility of accounts receivable, realizability of deferred income tax assets, realizability of intangible assets and future costs of environmental matters. NOTE 2 - ADOPTION OF FINANCIAL ACCOUNTING STANDARDS NUMBER 133 The Company adopted Statement of Financial Accounting Standards No. 133 (FAS 133), "Accounting for
fiscal year. The effects of such translations are included in the shareholders' equity account "cumulative foreign currency translation adjustments" as decreases of $4,743,000, $3,184,000, and $6,874,000 for the years ended January 31, 2000, 1999 and 1998, respectively ENVIRONMENTAL REMEDIATION The Company accrues environmental remediation costs if it is probable that an asset has been impaired or a liability incurred at the financial statement date and the amount can be reasonably estimated. Environmental compliance costs are expensed as incurred. Certain environmental costs are capitalized and depreciated over their estimated useful lives. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES The fair value of the Company's monetary assets and liabilities are evaluated based upon the existing interest rates related to such assets and liabilities compared to current market rates of interest. The carrying value of all of the Company's monetary assets and liabilities approximates fair value as of January 31, 2000 and 1999. REVENUE RECOGNITION The Company recognizes revenue when products are shipped to customers. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. Changes in such estimates may affect amounts reported in future periods. Significant estimates and judgements made by management of the Company include matters such as the collectibility of accounts receivable, realizability of deferred income tax assets, realizability of intangible assets and future costs of environmental matters. NOTE 2 - ADOPTION OF FINANCIAL ACCOUNTING STANDARDS NUMBER 133 The Company adopted Statement of Financial Accounting Standards No. 133 (FAS 133), "Accounting for Derivative Instruments and Hedging Activities" in 1998. The adoption resulted in no material adjustment to the Company's financial statements. NOTE 3 - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company has operations and sells products to dealers and original equipment manufacturers throughout the world. The Company's activities expose it to a variety of market risks, including the effects of changes in foreign currency exchange rates. These financial exposures are monitored and managed by the Company within the Company's foreign exchange management policy as approved by the Board of Directors. The Company's riskmanagement program focuses on the unpredictability of financial markets and seeks to reduce the effects that the volatility of these markets may have on its operating results. The Company maintains a foreign currency risk-management strategy that uses derivative instruments to protect its interests from unanticipated fluctuations in earnings caused by volatility in currency exchange rates. Various amounts of the Company's payables, receivables and subsidiary royalties are denominated in foreign currencies, thereby creating exposures to changes in exchange rates. The Company purchases foreign currency forward-exchange contracts, with contract terms normally lasting less than one month, to protect against the adverse effects that exchange rate fluctuations may have on foreign currency denominated trade receivables and trade payables. These derivatives do not qualify for hedge accounting, in accordance with FAS 133, because they relate to existing assets or liabilities denominated in a foreign currency. The gains and losses on both the derivatives and the foreign currency denominated trade receivables and payables are recorded as transaction adjustments in current earnings thereby minimizing the effect on current earnings of exchange-rate fluctuations.
By using derivative financial instruments to hedge exposures to changes in exchange rates, the Company exposes itself to credit risk and market risk. Credit risk is the failure of the counter-party to perform under the terms of the derivatives contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates repayment risk for the Company. When the fair value of a derivative contract is negative, the Company owes the counterparty and, therefore, it does not possess repayment risk. The Company minimizes the credit or repayment risk in derivative instruments by: entering into transactions with counterparties whose credit ratings are AA or higher; monitoring the amount of exposure to each counterparty; and monitoring the financial condition of its counterparties.
Market risk is the adverse effect on the value of a foreign-exchange contract that results from a change in the underlying exchange rates. The market risk associated with foreign-exchange contracts is managed by the establishment and monitoring of parameters that limit the types and degree of market risk that may be undertaken. NOTE 4 - INCOME TAXES
Year Ended January 31 2000 1999 1998 -----------------------------------------------------------------------------------------------(Dollars in Thousands) Income before taxes was as follows: United States $ 3,323 $23,260 $28,260 Foreign 3,788 7,995 3,830 -----------------------------------------------------------------------------------------------Total $ 7,111 $31,255 $32,090 -----------------------------------------------------------------------------------------------Taxes charged (credited) against operations were as follows: Current Federal $ 1,852 $ 6,625 $ 9,105 State 406 1,300 925 Foreign 8,624 1,425 4,260 -----------------------------------------------------------------------------------------------Total 10,882 9,350 14,290 -----------------------------------------------------------------------------------------------Deferred Federal (2,353) 150 (430) State (58) 65 (80) Foreign (6,294) 320 (2,730) -----------------------------------------------------------------------------------------------Total (8,705) 535 (3,240) -----------------------------------------------------------------------------------------------Total income taxes $ 2,177 $ 9,885 $11,050 -----------------------------------------------------------------------------------------------The federal rate reconciles to the effective rate as follows: Federal statutory rate 35.0% 35.0% 35.0% State income taxes, net of federal tax benefits 2.9 2.9 1.7 Effect of foreign tax rates 15.0 (3.8) .6 Foreign sales corporation (3.3) (.4) (.7) International financing (17.0) (3.9) (.7) Tax credits and other (2.0) 1.8 (1.5) -----------------------------------------------------------------------------------------------Effective income tax rate 30.6% 31.6% 34.4% ------------------------------------------------------------------------------------------------
The deferred tax liabilities (assets) recorded on the consolidated balance sheet are comprised of the following:
January 31 2000 1999 ---------------------------------------------------------------(Dollars in Thousands) Accruals not deductible until paid Accrued environmental expenditures Other $ (1,148) (2,230) (166) $ (968) 799 (85)
Market risk is the adverse effect on the value of a foreign-exchange contract that results from a change in the underlying exchange rates. The market risk associated with foreign-exchange contracts is managed by the establishment and monitoring of parameters that limit the types and degree of market risk that may be undertaken. NOTE 4 - INCOME TAXES
Year Ended January 31 2000 1999 1998 -----------------------------------------------------------------------------------------------(Dollars in Thousands) Income before taxes was as follows: United States $ 3,323 $23,260 $28,260 Foreign 3,788 7,995 3,830 -----------------------------------------------------------------------------------------------Total $ 7,111 $31,255 $32,090 -----------------------------------------------------------------------------------------------Taxes charged (credited) against operations were as follows: Current Federal $ 1,852 $ 6,625 $ 9,105 State 406 1,300 925 Foreign 8,624 1,425 4,260 -----------------------------------------------------------------------------------------------Total 10,882 9,350 14,290 -----------------------------------------------------------------------------------------------Deferred Federal (2,353) 150 (430) State (58) 65 (80) Foreign (6,294) 320 (2,730) -----------------------------------------------------------------------------------------------Total (8,705) 535 (3,240) -----------------------------------------------------------------------------------------------Total income taxes $ 2,177 $ 9,885 $11,050 -----------------------------------------------------------------------------------------------The federal rate reconciles to the effective rate as follows: Federal statutory rate 35.0% 35.0% 35.0% State income taxes, net of federal tax benefits 2.9 2.9 1.7 Effect of foreign tax rates 15.0 (3.8) .6 Foreign sales corporation (3.3) (.4) (.7) International financing (17.0) (3.9) (.7) Tax credits and other (2.0) 1.8 (1.5) -----------------------------------------------------------------------------------------------Effective income tax rate 30.6% 31.6% 34.4% ------------------------------------------------------------------------------------------------
The deferred tax liabilities (assets) recorded on the consolidated balance sheet are comprised of the following:
January 31 2000 1999 ---------------------------------------------------------------(Dollars in Thousands) Accruals not deductible until paid $ (1,148) $ (968) Accrued environmental expenditures (2,230) 799 Other (166) (85) ---------------------------------------------------------------Current deferred income taxes $ (3,544) $ (254) ---------------------------------------------------------------Depreciation $ 6,986 $ 4,030 Employee benefits (1,189) (1,178) Accrued environmental expenditures (4,570) (3,920) Foreign tax credits (8,085) (2,208) Net operating losses (791) Other (2,498) (94) ---------------------------------------------------------------(10,147) (3,370)
Deferred tax asset valuation allowance 791 ---------------------------------------------------------------Noncurrent deferred income taxes $(9,356) $ (3,370) ----------------------------------------------------------------
The Company has foreign loss carryforwards of $2,198,000 at January 31, 2000, which do not expire. No benefit for the foreign tax losses has been recognized in the financial statements. The Company has recognized the benefit of U.S. foreign tax credit carryforwards of $493,000 which expire on January 31, 2005. Additionally, a benefit of $7,592,000 has been recognized for U.S. foreign tax credits attributed to foreign earnings not yet repatriated. The five-year expiration period does not begin until the foreign earnings are repatriated. NOTE 5 - BORROWINGS
January 31 2000 1999 ----------------------------------------------------------------------------------------(Dollars in Thousands) $50 million Commercial Paper, backed by $100 million revolving credit facility, sold at discount, interest at variable rates (6.35% at 1/31/2000) $100 million currently financial (6.73% at revolving line of credit, interest payable at a variable rate (based on certain ratios of the Company) over prime or LIBOR 1/31/00); principal payable in 2002
$ 27,844
$
-
-
59,000
6.7% mortgage note, due quarterly through 2008 secured by plant 6.92% series A and series B senior notes, interest payable currently, principal due annually 2002 through 2007 Fixed assets under capital lease, variable interest (7.3% at 1/31/00), monthly payments through 200l 4.1% mortgage note, due semi-annually through 2001, secured by building
5,241
6,856
75,000
75,000
6,527
5,908
-
1,031
Other 568 1,498 ----------------------------------------------------------------------------------------115,180 149,293 Less current maturities 6,137 6,510 ----------------------------------------------------------------------------------------Total long-term debt $109,043 $142,783 -----------------------------------------------------------------------------------------
The revolving line of credit agreement, the series A and B senior notes, and the commercial paper backed by the revolving line of credit contain dividend restrictions and certain covenants, including covenants related to subsidiary indebtedness, additional indebtedness, net worth, fixed charges, funded debt and leverage ratios. Maturities of long-term debt for the years January 31, 2001 through January 31, 2005, and thereafter, respectively, are $6,137,000, $14,691,000, $40,960,000, $13,117,000, $13,117,000 and $27,158,000. Borrowing arrangements with commercial banks provided short-term lines of credit at January 31, 2000 totalling $22,872,000, of which $14,464,000 was unused. Average interest rates on short-term borrowings were 4.5% and 3.7% at January 31, 2000 and 1999, respectively. Commercial paper maturities are 60 days or less. However, it is management's intention to extend these maturities based on market acceptance.
NOTE 6 - STOCK OPTION PLAN
NOTE 6 - STOCK OPTION PLAN The Company has reserved 800,000 shares of common stock for the Cascade Corporation 1995 Senior Managers' Incentive Stock Option Plan (the Plan). The Plan permits the award of incentive stock options (ISO) to officers and key employees. Under the terms of the Plan, the purchase price of shares subject to each ISO granted must not be less than the fair market value on the date of grant. Accordingly, no compensation cost has been recognized for the stock option plan. Outstanding options vest after three or four years and are exercisable for ten years from the date of grant. The Company has determined that the pro forma effects of applying SFAS 123 would reduce earnings by $358,000, $362,000, and $247,000 for 1999, 1998, and 1997, respectively, using the following assumptions:
Year Ended January 31 2000 1999 1998 --------------------------------------------------------------------(Dollars in Thousands) Risk-free interest rate Expected life Expected volatility Expected dividend yield 5.4% 5 Years 33% 3.1% 5.5% 5 Years 35% 2.5% 6.5% 5 Years 30% 2.5%
A summary of the Plan's status at January 31, 2000, 1999 and 1998 together with changes during the periods then ended are presented in the following table:
Weighted Average Price Per Share --------------$16.17
Balance January 31, 1997
Shares -----145,432
Granted 136,262 15.25 Forfeited (1,971) 15.25 --------------------------------------------------------------------Balance January 31, 1998 279,723 $15.73 Granted 237,337 16.37 Exercised (15,077) 16.37 Forfeited (122,794) 15.87 --------------------------------------------------------------------Balance January 31, 1999 379,189 $16.00 Granted 49,595 13.00 Exercised Forfeited (89,304) 15.75 --------------------------------------------------------------------Balance January 31, 2000 339,480 $15.70 =====================================================================
The following table summarizes information about fixed options outstanding at January 31, 2000.
Exercise Price 13.00 15.25 16.00 16.38 Number of Shares 40,147 68,355 31,430 199,548 Weighted Average Price 13.00 15.25 16.00 16.38 Weighted Average Contractual Life 9 7 6 7
NOTE 7 - CAPITAL STOCK There were 1,100,000 exchangeable preferred shares of Cascade (Canada) Ltd. outstanding with an approximate value of $15,640,000. In fiscal 1998, 300,000 exchangeable shares were redeemed for $4,350,000. Holders of exchangeable shares are entitled to voting rights of an equivalent number of the
Company common shares and are entitled to dividends equivalent to those declared and paid on like numbers of Cascade common stock. As of January 31, 2000, 800,000 of the shares are still outstanding. Cascade (Canada) Ltd. is a wholly owned subsidiary of Cascade Corporation. Therefore although the Exchangeable Shares have rights comparable with the Company's common stock, the Exchangeable Shares have been accounted for, based on their form, as minority interest on the Company's balance sheet. 330,000 shares of Cascade (Ontario), Inc. preferred stock have been repurchased by the Company. Each share of preferred stock was convertible into one share of the Company's common stock at the holders' option. The preferred stock gave the holder the ability to require the Company to repurchase the shares on or after January 13, 2002 at the original issuance price of approximately $15 per share, for a maximum repurchase obligation of approximately $4,950,000. Therefore, the Preferred Stock was classified as "Mandatorily Redeemable Convertible Preferred Stock". The provisions of the preferred stock also entitled the holder to cumulative dividends paid on the common shares of Cascade Corporation and to a liquidation preference equal to approximately $15 per share in priority to any payment on any shares ranking junior to the Preferred Stock. As of January 31, 2000 no shares were outstanding. There are 200,000 shares authorized of no par value preferred stock. As of January 31, 2000 no shares were outstanding.
NOTE 8 - EARNINGS PER SHARE The Company calculates earnings per share in accordance with Statement of Financial Accounting Standards No. 128 (SFAS 128) "Earnings Per Share." Accordingly, basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects potential dilution that could occur if convertible securities or stock options were exercised or converted into common stock.
Year Ended January 31 2000 1999 1998 ---------------------------------------------------------------------------(Dollars and Shares in Thousands Except Per Share Amounts) Basic Earnings Per Share: Net income $ 4,934 $ 21,370 $21,040 Preferred stock dividends (423) (530) (570) ---------------------------------------------------------------------------Income available to common shareholders 4,511 20,840 20,470 ---------------------------------------------------------------------------Basic weighted-average shares of common stock outstanding 11,402 11,748 11,858 ---------------------------------------------------------------------------Basic EPS $ .40 $ 1.77 $ 1.73 ============================================================================ Diluted Earnings Per Share: Income available to common shareholders 4,511 20,840 $20,470 Effect of dilutive securities: Mandatorily redeemable convertible preferred stock 320 410 440 Exchangeable preferred stock 103 120 130 ---------------------------------------------------------------------------Net income $ 4,934 $ 21,370 $21,040 ============================================================================ Weighted-Average shares of common stock outstanding 11,402 11,748 11,858 Assumed conversion of mandatorily convertible preferred stock 800 1,091 985 Exchangeable preferred stock 183 309 330 Dilutive effect of stock options 17 ---------------------------------------------------------------------------Diluted weighted-average shares of common stock outstanding 12,385 13,148 13,190
NOTE 8 - EARNINGS PER SHARE The Company calculates earnings per share in accordance with Statement of Financial Accounting Standards No. 128 (SFAS 128) "Earnings Per Share." Accordingly, basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects potential dilution that could occur if convertible securities or stock options were exercised or converted into common stock.
Year Ended January 31 2000 1999 1998 ---------------------------------------------------------------------------(Dollars and Shares in Thousands Except Per Share Amounts) Basic Earnings Per Share: Net income $ 4,934 $ 21,370 $21,040 Preferred stock dividends (423) (530) (570) ---------------------------------------------------------------------------Income available to common shareholders 4,511 20,840 20,470 ---------------------------------------------------------------------------Basic weighted-average shares of common stock outstanding 11,402 11,748 11,858 ---------------------------------------------------------------------------Basic EPS $ .40 $ 1.77 $ 1.73 ============================================================================ Diluted Earnings Per Share: Income available to common shareholders 4,511 20,840 $20,470 Effect of dilutive securities: Mandatorily redeemable convertible preferred stock 320 410 440 Exchangeable preferred stock 103 120 130 ---------------------------------------------------------------------------Net income $ 4,934 $ 21,370 $21,040 ============================================================================ Weighted-Average shares of common stock outstanding 11,402 11,748 11,858 Assumed conversion of mandatorily convertible preferred stock 800 1,091 985 Exchangeable preferred stock 183 309 330 Dilutive effect of stock options 17 ---------------------------------------------------------------------------Diluted weighted-average shares of common stock outstanding 12,385 13,148 13,190 ---------------------------------------------------------------------------Diluted EPS $ .40 $ 1.63 $ 1.60 ============================================================================
NOTE 9 - PROPERTY, PLANT AND EQUIPMENT
January 31 2000 1999 ---------------------------------------------------------------(Dollars in Thousands) Land $ 4,850 $ 5,261 Construction in progress 442 99 Buildings 39,394 43,146 Machinery and equipment 143,090 162,194 ---------------------------------------------------------------187,776 210,700 Accumulated depreciation (101,060) (110,625) ---------------------------------------------------------------$ 86,716 $ 100,075 ================================================================
NOTE 10 - ACQUISITIONS In February 1997, the Company purchased all of the outstanding capital stock of Hyco-Cascade Pty., Ltd., an Australian manufacturer and distributor of lift truck attachments and accessories. The amount paid in connection with this purchase was $12,603,000, which consisted of $7,447,000 in debt, $3,656,000 in common stock and $1,500,000 in cash. On March 11, 1997 the Company acquired all of the outstanding capital stock of Kenhar Corporation. Kenhar Corporation is the world's leading manufacturer of forks for lift trucks with sales and manufacturing locations in North America, Europe and Asia. The aggregate purchase price for this acquisition was approximately $71,944,000 and included $56,304,000 in debt and 1,100,000 exchangeable preferred shares of Cascade (Canada) Ltd. (Exchangeable Shares valued at approximately $15,640,000.) The Company also made other acquisitions during 1997 totaling $10,377,000. When the Company purchased Kenhar Corporation, a number of Kenhar's subsidiaries had minority interest holders. The Company has now acquired all of these minority interests. In addition, during 1997, the Company purchased a U.S. manufacturer of hydraulic cylinders and a European fork manufacturer. NOTE 11 - COMMITMENTS AND CONTINGENCIES The Company leases certain of its facilities and equipment under noncancelable operating leases. The minimum rental commitments under these leases for the years ending January 31, 2001 through January 31, 2005, respectively, are $3,896,000, $2,396,000, $1,675,000, $917,000 and $316,000. For the years ended January 31, 2000, 1999 and 1998 total rentals charged to expense amounted to $1,986,000, $4,800,000 and $2,042,000. NOTE 12 - ENVIRONMENTAL MATTERS The Company is engaged in environmental investigations and remediation efforts in its ordinary course of business. The Company has sued a number of its insurers to enforce policies it contends provide coverage for expenses associated with these efforts. Earnings for the year ended January 31, 2000 include a charge for $12,000,000 resulting from the Company's change in estimate regarding its environmental exposures. This change in estimate was caused by a number of factors, including an adverse legal decision rendered in March 2000 in connection
with a lawsuit brought by the Boeing Corporation. The after-tax impact of this accrual on net income was approximately $7,600,000. Earnings for the year ended January 31, 1998 include the effect of settlements with several insurers totaling $23,750,000. The impact of these settlements on 1998 net income, after adjusting for certain litigation and environmental expenses and income taxes, was approximately $9,770,000. Litigation against two remaining insurers resulted in a jury verdict in the Company's favor. As issues involving damages, prejudgment interest, attorneys fees, and declaratory relief are pending before the trial court, the financial statements have not been adjusted to account for the jury verdict. The Company's accrued environmental liability at January 31, 2000 totalled $18,315,000, of which $7,910,000 is expected to be spent in 2000. The Company believes this accrual is adequate and fairly approximates known future remediation costs. However, since future remediation costs are subject to many uncertainties, company estimates may continue to be revised and therefore, actual expenses may exceed the amount recorded at January 31, 2000. NOTE 13 - PENSION AND OTHER POSTRETIREMENT BENEFITS The Company has defined benefit plans covering certain employees. In December 1988, the Company amended the plan covering its U.S. employees to limit benefits to those accrued through December 31, 1988. During 1997, the Company settled the U.S. pension obligation under this plan by funding lump sum distributions or nonparticipating annuity contracts.
with a lawsuit brought by the Boeing Corporation. The after-tax impact of this accrual on net income was approximately $7,600,000. Earnings for the year ended January 31, 1998 include the effect of settlements with several insurers totaling $23,750,000. The impact of these settlements on 1998 net income, after adjusting for certain litigation and environmental expenses and income taxes, was approximately $9,770,000. Litigation against two remaining insurers resulted in a jury verdict in the Company's favor. As issues involving damages, prejudgment interest, attorneys fees, and declaratory relief are pending before the trial court, the financial statements have not been adjusted to account for the jury verdict. The Company's accrued environmental liability at January 31, 2000 totalled $18,315,000, of which $7,910,000 is expected to be spent in 2000. The Company believes this accrual is adequate and fairly approximates known future remediation costs. However, since future remediation costs are subject to many uncertainties, company estimates may continue to be revised and therefore, actual expenses may exceed the amount recorded at January 31, 2000. NOTE 13 - PENSION AND OTHER POSTRETIREMENT BENEFITS The Company has defined benefit plans covering certain employees. In December 1988, the Company amended the plan covering its U.S. employees to limit benefits to those accrued through December 31, 1988. During 1997, the Company settled the U.S. pension obligation under this plan by funding lump sum distributions or nonparticipating annuity contracts. The Company's funding policy for the foreign pension plan is to make annual contributions based on actuarially determined funding requirements. The pension benefits are based on years of service and average earnings over a specified five-year period of time. The Company sponsors a number of defined contribution plans covering substantially all North American employees. Employees may contribute to these plans and the Company matches these contributions in varying degrees. The Company also makes contributions to certain plans based on a percentage of wages. Defined contribution pension expense for the Company was $2,243,000, $2,267,000, and $1,901,000 for the years ended January 31, 2000, 1999 and 1998, respectively. The Company provides health care benefits for eligible retirees. The Company accounts for such costs under Statement of Financial Accounting Standards No.106 "Employers' Accounting for Postretirement Benefits Other Than Pensions." Therefore, the Company is accruing the future costs of providing such benefits to eligible active employees during the years they render service. To estimate the costs of health care benefits for eligible retirees, health care costs were assumed to increase at an annual rate of 10% with the rate of increase declining ratably to 4% by 2005 and thereafter. If the cost trend rates were increased by one percentage point, the accumulated post-retirement benefit obligation as of January 31, 2000 would increase by $491,469 and net periodic post-retirement benefit cost would increase by $52,783.
NOTE 13 - PENSION AND OTHER POSTRETIREMENT BENEFITS (continued) The status of employee pension and other postretirement benefit plans is summarized below:
Pension Benefits O Year Ended January 31 2000 1999 1998 2000 --------------------------------------------------------------------------------------------------------(Dollars in Thousands) CHANGE IN BENEFIT OBLIGATION Benefit obligation at beginning of year Service cost Interest cost Participant contributions Plan amendments Acquisition and divestitures Exchange rate changes Settlements Benefits paid
$ 7,904 193 310 94 (2,578) 8 (452)
$ 6,001 289 392 134 (142) (10) (230)
$ 5,629 237 529 187 3,653 (4,603) (625)
$
5,120 83 324 (540)
NOTE 13 - PENSION AND OTHER POSTRETIREMENT BENEFITS (continued) The status of employee pension and other postretirement benefit plans is summarized below:
Pension Benefits O Year Ended January 31 2000 1999 1998 2000 --------------------------------------------------------------------------------------------------------(Dollars in Thousands) CHANGE IN BENEFIT OBLIGATION Benefit obligation at beginning of year $ 7,904 $ 6,001 $ 5,629 $ 5,120 Service cost 193 289 237 83 Interest cost 310 392 529 324 Participant contributions 94 134 187 Plan amendments Acquisition and divestitures (2,578) (142) 3,653 Exchange rate changes (10) Settlements 8 (4,603) Benefits paid (452) (230) (625) (540) Actuarial (gain) or loss 366 1,470 994 (395) --------------------------------------------------------------------------------------------------------Benefit obligation at end of year $ 5,845 $ 7,904 $ 6,001 $ 4,592 ========================================================================================================= CHANGE IN PLAN ASSETS Fair value of plan assets at beginning of year $ 7,185 $ 6,070 $ 5,656 $ Actual return on plan assets 529 1,129 468 Acquisition and divestitures (2,482) (261) 3,691 Settlements (4,603) Employer contributions 376 374 1,296 540 Participant contributions 87 134 187 Benefits paid (452) (230) (625) (540) Exchange rate changes (31) --------------------------------------------------------------------------------------------------------Fair value of plan assets at end of year $ 5,243 $ 7,185 $ 6,070 $ ========================================================================================================= RECONCILIATION OF FUNDED STATUS Funded status $ (602) $ (719) $ 69 $ (4,592) Unrecognized actuarial (gain) or loss 751 19 1,461 Unrecognized prior service cost Prepaid costs --------------------------------------------------------------------------------------------------------Net amount recognized at year-end $ 149 $ (700) $ 69 $ (3,131) ========================================================================================================= AMOUNTS RECOGNIZED IN THE STATEMENT OF FINANCIAL POSITION CONSIST OF: Prepaid benefit cost $ 149 $ $ 69 $ Accrued benefit liability (700) (3,131) --------------------------------------------------------------------------------------------------------Net amount recognized at year-end $ 149 $ (700) $ 69 $ (3,131) ========================================================================================================= COMPONENTS OF NET PERIODIC BENEFIT COST Service cost $ 193 $ 289 $ 237 $ 83 Interest cost 310 392 529 324 Expected return on plan assets (370) (312) (425) Amortization of prior service cost 5 Amortization of transitional (asset) or obligation 25 Recognized net actuarial (gain) or loss 3 165 --------------------------------------------------------------------------------------------------------Net periodic benefit cost $ 136 $ 369 $ 371 $ 572 ========================================================================================================= WEIGHTED-AVERAGE ASSUMPTIONS AS OF DEC. 31 Discount rate 5.75% 6.50% 7.50% 7.50% Expected long-term rate of return on plan 7.00% 6.50% 8.00% N/A assets
NOTE 14 - INFORMATION ABOUT OPERATIONS
YEAR ENDED JANUARY 31 NORTH AMERICA EUROPE OTHER ELIMINA --------------------------------------------------------------------------------------------------------(Dollars in Thousands) 2000 Sales to unaffiliated customers $ 201,710 $ 89,307 $ 33,761 $
NOTE 14 - INFORMATION ABOUT OPERATIONS
YEAR ENDED JANUARY 31 NORTH AMERICA EUROPE OTHER ELIMINA --------------------------------------------------------------------------------------------------------(Dollars in Thousands) 2000 Sales to unaffiliated customers $ 201,710 $ 89,307 $ 33,761 $ Transfers between areas 26,071 34,406 508 (60 --------------------------------------------------------------------------------------------------------Total revenue $ 227,781 $ 123,713 $ 34,269 $ (60 --------------------------------------------------------------------------------------------------------Net income $ 6,462 $ 74 $ (1,602) $ --------------------------------------------------------------------------------------------------------Identifiable assets $ 186,397 $ 90,905 $ 34,899 $ --------------------------------------------------------------------------------------------------------1999 Sales to unaffiliated customers $ 264,625 $ 111,245 $ 32,060 $ Transfers between areas 15,626 7,679 352 (23 --------------------------------------------------------------------------------------------------------Total revenue $ 280,251 $ 118,924 $ 32,412 $ (23 --------------------------------------------------------------------------------------------------------Net income $ 18,135 $ 3,605 $ (370) $ --------------------------------------------------------------------------------------------------------Identifiable assets $ 183,943 $ 130,390 $ 33,524 $ --------------------------------------------------------------------------------------------------------1998 Sales to unaffiliated customers $ 230,140 $ 102,570 $ 37,155 $ Transfers between areas 17,500 1,020 310 (18 --------------------------------------------------------------------------------------------------------Total revenue $ 247,640 $ 103,590 $ 37,465 $ (18 --------------------------------------------------------------------------------------------------------Net income $ 19,125 $ 2,895 $ (980) $ --------------------------------------------------------------------------------------------------------Identifiable assets $ 220,194 $ 95,894 $ 33,504 $ ---------------------------------------------------------------------------------------------------------
NOTE 15 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
1ST QUARTER 2ND QUARTER 3RD QUART --------------------------------------------------------------------------------------------------------(Dollars in Thousands except per share amounts) YEAR ENDED JANUARY 31, 2000 Net sales $ 89,500 $ 77,709 $ 82,47 Gross profit before depreciation $ 30,670 $ 27,671 $ 27,11 Net income (loss) $ 4,110 $ 4,442 $ 1,34 Net income (loss) per share: Basic $ .35 $ .38 $ .1 Diluted $ .33 $ .35 $ .1 YEAR ENDED JANUARY 31, 1999 Net sales $ 107,125 $ 105,160 $ 105,66 Gross profit before depreciation $ 33,490 $ 32,075 $ 33,32 Net income $ 6,815 $ 5,490 $ 6,02 Net income per share: Basic $ .56 $ .45 $ .5 Diluted $ .51 $ .41 $ .4
REPORT OF INDEPENDENT ACCOUNTANTS TO THE BOARD OF DIRECTORS & SHAREHOLDERS OF CASCADE CORPORATION In our opinion, the accompanying consolidated balance sheet and the related consolidated statement of income, of changes in shareholders' equity and of cash flows present fairly, in all material respects, the financial position of Cascade Corporation and its subsidiaries at January 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended January 31, 2000 in conformity with accounting
NOTE 15 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
1ST QUARTER 2ND QUARTER 3RD QUART --------------------------------------------------------------------------------------------------------(Dollars in Thousands except per share amounts) YEAR ENDED JANUARY 31, 2000 Net sales $ 89,500 $ 77,709 $ 82,47 Gross profit before depreciation $ 30,670 $ 27,671 $ 27,11 Net income (loss) $ 4,110 $ 4,442 $ 1,34 Net income (loss) per share: Basic $ .35 $ .38 $ .1 Diluted $ .33 $ .35 $ .1 YEAR ENDED JANUARY 31, 1999 Net sales $ 107,125 $ 105,160 $ 105,66 Gross profit before depreciation $ 33,490 $ 32,075 $ 33,32 Net income $ 6,815 $ 5,490 $ 6,02 Net income per share: Basic $ .56 $ .45 $ .5 Diluted $ .51 $ .41 $ .4
REPORT OF INDEPENDENT ACCOUNTANTS TO THE BOARD OF DIRECTORS & SHAREHOLDERS OF CASCADE CORPORATION In our opinion, the accompanying consolidated balance sheet and the related consolidated statement of income, of changes in shareholders' equity and of cash flows present fairly, in all material respects, the financial position of Cascade Corporation and its subsidiaries at January 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended January 31, 2000 in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP Portland, Oregon March 28, 2000
SHAREHOLDER INFORMATION Cascade's Form 10-K Report to the Securities and Exchange Commission is available to shareholders and others who request it. To obtain copies, please write to Cascade Corporation, P.O. Box 20187, Portland, Oregon 97294-0187. Or visit our website at www.cascorp.com. ANNUAL MEETING The Annual Meeting of the shareholders of Cascade Corporation will be held at Cascade Corporation Corporate Headquarters, 2201 N.E. 201st Ave, Fairview, Oregon at 10:00 a.m. on Thursday, May 11, 2000. A formal notice of the meeting, together with a proxy statement and proxy form, will be mailed to shareholders. MARKET INFORMATION The high and low sales prices of the common stock of Cascade Corporation during 2000 and 1999 were as follows:
YEAR ENDED JANUARY 31 2000 1999
SHAREHOLDER INFORMATION Cascade's Form 10-K Report to the Securities and Exchange Commission is available to shareholders and others who request it. To obtain copies, please write to Cascade Corporation, P.O. Box 20187, Portland, Oregon 97294-0187. Or visit our website at www.cascorp.com. ANNUAL MEETING The Annual Meeting of the shareholders of Cascade Corporation will be held at Cascade Corporation Corporate Headquarters, 2201 N.E. 201st Ave, Fairview, Oregon at 10:00 a.m. on Thursday, May 11, 2000. A formal notice of the meeting, together with a proxy statement and proxy form, will be mailed to shareholders. MARKET INFORMATION The high and low sales prices of the common stock of Cascade Corporation during 2000 and 1999 were as follows:
YEAR ENDED JANUARY 31 2000 1999 --------------------------------------------------------------------------------------------------------HIGH LOW HIGH LOW Market price range First quarter $ 17.25 $ 9.94 $ 18.25 $ 14.31 Second quarter 14.88 12.94 18.44 15.08 Third quarter 13.38 8.94 16.94 11.63 Fourth quarter 11.13 8.00 16.25 13.00
COMMON STOCK DIVIDENDS
YEAR ENDED JANUARY 31 2000 1999 --------------------------------------------------------------First quarter $ .10 $ .10 Second quarter .10 .10 Third quarter .10 .10 Fourth quarter .10 .10 --------------------------------------------------------------Total $ .40 $ .40 ===============================================================
FORWARD-LOOKING STATEMENTS Forward-looking statements throughout this report are based upon assumptions involving a number of risks and uncertainties. Factors which could cause actual results to differ materially from these forward-looking statements include, but are not limited to competitive factors in, and the cyclical nature of, the materials handling industry; fluctuations in lift truck orders or deliveries, availability and cost of raw materials; general business and economic conditions in North America, Europe and Asia; foreign currency fluctuations; effectiveness of the Company's cost reduction initiatives; and the Company's success in organizationally and operationally integrating recently acquired businesses. INVESTOR INFORMATION TRANSFER AGENT & REGISTRAR ChaseMellon Shareholder Services, L.L.C. Shareholder Relations P.O. Box 3315 South Hackensack, N. J. 07606 (800) 522-6645
www.chasemellon.com STOCK EXCHANGE LISTING The Company's stock is traded on the New York Stock Exchange under the symbol CAE.
THE BOARD C. CALVERT KNUDSEN Chairman Director, West Fraser Timber Co., Ltd.; Trustee, Washington Research Foundation; ROBERT C. WARREN, JR. President & Chief Executive Officer of the Corporation Director, Esco Corporation, manufacturers and distributors of high-alloy steel products. ERIC HOFFMAN Chairman, Hoffman Corporation, general contractors. GREG H. KUBICEK President, The Holt Company, a commercial real estate development company; President, Holt Homes, Inc., and Affiliates; Director, Bay Audio, an in-home audio and electronics firm. NICHOLAS R. LARDY Senior Fellow, The Brookings Institution, a policy research institution. ERNEST C. MERCIER Chairman, Oxford Properties Group Inc.,a company owning and managing commercial real estate; Director, Camvec Corporation, a transportation company; Director, Golden Star Resources Ltd., a gold and diamond exploration company. JAMES S. OSTERMAN President, Outdoor Products Group, Oregon Cutting Systems, Division of Blount, Inc., a diversified manufacturer. JACK B. SCHWARTZ Partner, Newcomb, Sabin, Schwartz & Landsverk, LLP, Attorneys; Assistant Secretary of the Corporation. HENRY W. WESSINGER II Senior Vice President, Ragen MacKenzie Inc., a brokerage firm; Trustee, Oregon Graduate Institute of Science and Technology; Trustee, Catlin Gabel School Foundation. Director, River View Cemetery. NANCY A. WILGENBUSCH President, Marylhurst University; Director, Pacificorp, an energy company; Director, Power Cor, an Australian subsidiary of Pacificorp; Director and Chairman, Portland branch of the Federal Reserve Bank of San Francisco. CORPORATE OFFICERS ROBERT C. WARREN, JR. President & Chief Executive Officer RICHARD S. ANDERSON Senior Vice President - International TERRY H. CATHEY
THE BOARD C. CALVERT KNUDSEN Chairman Director, West Fraser Timber Co., Ltd.; Trustee, Washington Research Foundation; ROBERT C. WARREN, JR. President & Chief Executive Officer of the Corporation Director, Esco Corporation, manufacturers and distributors of high-alloy steel products. ERIC HOFFMAN Chairman, Hoffman Corporation, general contractors. GREG H. KUBICEK President, The Holt Company, a commercial real estate development company; President, Holt Homes, Inc., and Affiliates; Director, Bay Audio, an in-home audio and electronics firm. NICHOLAS R. LARDY Senior Fellow, The Brookings Institution, a policy research institution. ERNEST C. MERCIER Chairman, Oxford Properties Group Inc.,a company owning and managing commercial real estate; Director, Camvec Corporation, a transportation company; Director, Golden Star Resources Ltd., a gold and diamond exploration company. JAMES S. OSTERMAN President, Outdoor Products Group, Oregon Cutting Systems, Division of Blount, Inc., a diversified manufacturer. JACK B. SCHWARTZ Partner, Newcomb, Sabin, Schwartz & Landsverk, LLP, Attorneys; Assistant Secretary of the Corporation. HENRY W. WESSINGER II Senior Vice President, Ragen MacKenzie Inc., a brokerage firm; Trustee, Oregon Graduate Institute of Science and Technology; Trustee, Catlin Gabel School Foundation. Director, River View Cemetery. NANCY A. WILGENBUSCH President, Marylhurst University; Director, Pacificorp, an energy company; Director, Power Cor, an Australian subsidiary of Pacificorp; Director and Chairman, Portland branch of the Federal Reserve Bank of San Francisco. CORPORATE OFFICERS ROBERT C. WARREN, JR. President & Chief Executive Officer RICHARD S. ANDERSON Senior Vice President - International TERRY H. CATHEY Senior Vice President - Americas KURT G. WOLLENBERG Senior Vice President - Finance, Secretary and Treasurer GREGORY S. ANDERSON Vice President - Human Resources
CHARLIE S. MITCHELSON Vice President and Managing Director - Europe ROBERT L. MOTT Vice President - OEM Group ART OTSUKA Vice President - Asian Operations ANTHONY F. SPINELLI Managing Director - Canadian Operations
GLOBAL NETWORK AUSTRALIA Adelaide Brisbane Melbourne Perth Sydney CANADA Guelph, Ontario Mississauga, Ontario CHINA Xiamen Hebei ENGLAND Cramlington Manchester Sheffield FINLAND Vantaa FRANCE La Machine Paris GERMANY Monchengladbach ITALY Brescia JAPAN Osaka KOREA Inchon NEW ZEALAND Auckland SOUTH AFRICA Johnannesburg
GLOBAL NETWORK AUSTRALIA Adelaide Brisbane Melbourne Perth Sydney CANADA Guelph, Ontario Mississauga, Ontario CHINA Xiamen Hebei ENGLAND Cramlington Manchester Sheffield FINLAND Vantaa FRANCE La Machine Paris GERMANY Monchengladbach ITALY Brescia JAPAN Osaka KOREA Inchon NEW ZEALAND Auckland SOUTH AFRICA Johnannesburg SPAIN Barcelona SWEDEN Vaggeryd THE NETHERLANDS Almere Hoorn UNITED STATES
CALIFORNIA Los Angeles San Francisco GEORGIA Atlanta Warner Robins ILLINOIS Chicago NEW YORK Buffalo NORTH CAROLINA Beulaville OHIO Findlay Springfield OREGON Portland TENNESSEE Memphis TEXAS Dallas A TOP 100 COMPANY For the second year in a row, Cascade has been selected as one of the 100 Best Companies to Work For in Oregon for the year 2000 by Oregon Business Magazine. Cascade ranked in the top third of companies selected. Companies are judged on five criteria: pay and benefits; employee involvement; community involvement; advancement and training; and workplace culture.
1999 ANNUAL REPORT [LOGO] CORPORATE HEADQUARTERS 2201 NE 201st Fairview, OR 97024 MAILING ADDRESS P.O. Box 20187 Portland, OR 97294-0187 800 CASCADE
1999 ANNUAL REPORT [LOGO] CORPORATE HEADQUARTERS 2201 NE 201st Fairview, OR 97024 MAILING ADDRESS P.O. Box 20187 Portland, OR 97294-0187 800 CASCADE (227-2233) www.cascorp.com -C- 2000 Cascade is a registered trademark of Cascade Corporation -C- 2000 All Rights Reserved.
ARTICLE 5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1999 ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. MULTIPLIER: 1,000
PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS BASIC EPS DILUTED
12 MOS JAN 31 2000 JAN 31 2000 23,188 0 54,934 1,511 47,487 130,846 187,776 101,060 312,694 64,679 109,043 11,374 0 5,784 107,149 312,694 324,778 324,778 214,348 305,972 4,039 0 8,686 7,111 2,177 4,934 0 0 0 4,934 .40 .40
12 MOS JAN 31 1999 JAN 31 1999 11,460 0 72,354 1,009 62,015 153,723 210,700 110,625 347,857 59,175 142,783 15,949 0 5,858 113,636 347,857 407,930 407,930 281,195 371,245 (4,755) 0 10,940 31,255 9,885 21,370 0 0 0 21,370 1.77 1.63
12 MOS JAN 31 1998 JAN 31 1998 12,966 0 62,271 743 52,280 140,693 200,425 99,278 349,592 59,630 144,785 20,590 0 5,994 104,557 349,592 369,865 369,865 259,605 329,095 (150) 0 9,440 32,090 11,050 21,040 0 0 0 21,040 1.73 1.60
ARTICLE 5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1999 ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. MULTIPLIER: 1,000
PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS BASIC EPS DILUTED
12 MOS JAN 31 2000 JAN 31 2000 23,188 0 54,934 1,511 47,487 130,846 187,776 101,060 312,694 64,679 109,043 11,374 0 5,784 107,149 312,694 324,778 324,778 214,348 305,972 4,039 0 8,686 7,111 2,177 4,934 0 0 0 4,934 .40 .40
12 MOS JAN 31 1999 JAN 31 1999 11,460 0 72,354 1,009 62,015 153,723 210,700 110,625 347,857 59,175 142,783 15,949 0 5,858 113,636 347,857 407,930 407,930 281,195 371,245 (4,755) 0 10,940 31,255 9,885 21,370 0 0 0 21,370 1.77 1.63
12 MOS JAN 31 1998 JAN 31 1998 12,966 0 62,271 743 52,280 140,693 200,425 99,278 349,592 59,630 144,785 20,590 0 5,994 104,557 349,592 369,865 369,865 259,605 329,095 (150) 0 9,440 32,090 11,050 21,040 0 0 0 21,040 1.73 1.60