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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JANUARY 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 2-23666
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CASCADE CORPORATION
AN OREGON CORPORATION
I.R.S. EMPLOYER IDENTIFICATION NUMBER 93-0136592
2020 S.W. 4TH AVENUE
PORTLAND, OREGON 97201
503-227-0024
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Not applicable
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common stock: Over the counter market
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes X No
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State the aggregate market value of the voting stock held by non-affiliates
of the registrant as of March 31, 1995: $159,131,228. As of this date there
were 397 shareholders, including blocks of shares held by various depositories.
It is the Company's belief that when the shares held by the depositories are
attributed to the beneficial owners the total number of shareholders exceeds
1,500.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the close of the latest practicable date: Common
shares outstanding 12,009,904, net of treasury shares.
DOCUMENTS INCORPORATED BY REFERENCE
Definitive Proxy Statement dated April 7, 1995-Parts I and III
1994 Annual Report to Shareholders-Part II
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TABLE OF CONTENTS
PART I PAGE
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ITEM 1. BUSINESS 1
Products and Marketing 1
Competition 1
Customers and Suppliers 1
Patents and Licenses 2
Research and Development 2
Foreign Operations 2
ITEM 2. PROPERTIES 3
ITEM 3. LEGAL PROCEEDINGS 3
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS 3
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS 4
ITEM 6. SELECTED FINANCIAL DATA 4
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 4
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 6
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE 6
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 6
ITEM 11. EXECUTIVE COMPENSATION 6
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 6
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 6
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K 7
SIGNATURES 8
NOTE: All references to the fiscal year (i.e. Fiscal 1992, 1993 and 1994) refer
to the period ended January 31 of the year subsequent to the fiscal year (i.e.
January 31, 1993, January 31, 1994, and January 31, 1995).
PART I
ITEM 1. BUSINESS
PRODUCTS AND MARKETING
Cascade Corporation and its subsidiaries ("the Company") are engaged in the
business of designing, manufacturing and selling hydraulically actuated
equipment used almost exclusively in materials handling applications. Products
include lift truck attachments, masts, hose reels, hydraulic cylinders and
replacement parts for the aforementioned products. The Company's manufacturing
activities are conducted in its plants at Portland, Oregon; Springfield, Ohio;
Warner Robins, Georgia and Westminster, South Carolina. Subsidiaries also
conduct manufacturing activities in The Netherlands and the United Kingdom.
Subsidiaries conduct sales, engineering and warehousing operations in Canada,
Korea, Germany, France, Finland, Spain, Sweden, South Africa and Japan.
Executive offices are in Portland, Oregon. There are 993 people employed by the
Company and its subsidiaries.
The Company manufactures an extensive line of hydraulically actuated
attachments designed for mounting on industrial lift trucks. The primary
function of these products is to increase the scope and efficiency of materials
handling applications normally performed by lift trucks. The Company presently
offers a wide variety of functionally different attachments, each of which has
several models, capacities and optional combinations. These attachments have
been designed to clamp, lift, rotate, push, pull, tilt and sideshift a variety
of loads such as appliances, paper rolls, baled materials, textiles, beverage
containers, drums, canned goods, bricks, masonry blocks, lumber, plywood and
boxed, packaged, palletized and containerized products of virtually all types.
During the last five years, attachments, masts and hose reels have
accounted for 71% to 78% of the Company's consolidated sales. During this same
period, hydraulic cylinders accounted for approximately 8% to 19% of the
Company's consolidated sales. Replacement parts and other sales amounted to
approximately 9% to 14% of total sales between 1990 and 1994.
The Company's lift truck attachments, masts and hose reels are sold to
equipment dealers and manufacturers. Products are marketed throughout the
United States, Canada, Latin America, Europe, the Middle East, Australia, New
Zealand, South Africa, and Asia.
Hydraulic cylinders are used primarily as components to transmit power in
lift trucks and other types of machinery and industrial equipment. A
substantial number of cylinders are utilized in the Company's proprietary lift
truck attachments and masts. In the United Kingdom, hydraulic cylinders are
also sold to manufacturers of various types of materials handling and other
mobile equipment, usually through negotiations with the customer's purchasing
and engineering departments.
COMPETITION
The Company believes that in all marketing areas, it is one of the leading
independent suppliers of hydraulically actuated materials handling equipment
designed for mounting on industrial lift trucks. Several of the lift truck
manufacturers, who are customers of the Company, are also competitors in varying
degrees to the extent that they manufacture a portion of their attachment
requirements. Since the Company offers a broad line of attachments capable of
supplying a significant part of the total requirements for the entire lift truck
industry, it believes that its relatively high unit volume results in lower
costs which would be difficult for any individual lift truck manufacturer to
achieve.
The Company's order backlog for all products at January 31, 1995, 1994 and
1993 was approximately $27,010,000, $16,520,000 and $11,730,000 respectively.
At January 31,1995 approximately 84% (83% and 87% at January 31, 1994 and 1993)
of the order backlog was due for delivery within 60 days and substantially all
within six months
CUSTOMERS AND SUPPLIERS
Since the Company deals with lift truck manufacturers and their dealers, a
substantial portion of its sales are made to the approximately ten major
companies in the industry. NACCO Industries Inc., is the company's single
largest customer. Sales to it and its subsidiaries, Hyster Company and Yale
Materials Handling Inc., were 10.8%, 9.8% and 10.5% of consolidated sales during
the years ended January 31, 1995, 1994 and 1993, respectively.
1
The Company purchases materials and components necessary to produce its
products from many different suppliers. The principal items purchased are
rolled products from steel mills, unfinished castings and forgings, hydraulic
motors and hardware items such as fasteners, rollers, hydraulic seals and hose
assemblies. With few exceptions, all raw materials are available from several
domestic and foreign suppliers.
PATENTS AND LICENSES
Patents have been a relatively unimportant factor in the development of the
Company's business. While the Company holds rights under numerous patents, it
believes that the business is not, to any significant degree, dependent on any
patent or group of patents.
RESEARCH AND DEVELOPMENT
Most of the Company's research and product development activities are
performed in a 28,000 square-foot product development center in Portland,
Oregon. The corporate engineering staff develops and designs almost all the
products sold by the Company. This staff numbers approximately 58 engineers and
is continually involved in developing new products and applications in the
materials handling field and improving existing product lines. Consolidated
expenditures for engineering research and development activities in fiscal years
ended January 31, 1995, 1994 and 1993 were approximately $4,500,000, $3,680,000
and $2,906,000, respectively. Substantially all such activities were sponsored
by the Company and its subsidiaries.
FOREIGN OPERATIONS
Cascade N.V. was organized in The Netherlands in 1958 and is engaged in the
business of manufacturing and marketing hydraulically actuated lift truck
attachments. This subsidiary presently has warehouse, sales and service
facilities in Dusseldorf, Germany; Paris, France; Vantaa, Finland; Barcelona,
Spain and Helsingborg, Sweden. Cascade N.V. and its subsidiaries have 196
employees.
Cascade (U.K.) Ltd. was incorporated in the United Kingdom in 1967 and
manufactures and markets hydraulic cylinders and lift truck attachments. This
subsidiary employs 169 people.
Cascade (Canada) Inc. was incorporated in Canada in 1970 and presently
conducts marketing and limited engineering and manufacturing activities from
Toronto, Ontario. This subsidiary presently employs 37 people.
Cascade Corporation (Africa) Pty. Limited, employing 8 people, was
organized in 1967 in South Africa and its activities consist of sales,
engineering and warehousing.
Cascade (Japan) Ltd. was incorporated under the laws of Oregon in 1967, and
carries on engineering, sales and distribution activities in the Japanese
domestic market. A portion of this subsidiary's sales are produced by local
subcontractors. This subsidiary employs 25 people.
Cascade Korea Limited was incorporated under the laws of the Republic of
Korea in 1990. Its activities are limited to sales and service and employs 3
people.
The Company is a joint venture partner in the People's Republic of China
although its investment and the joint venture's contributions to sales and
income are not material.
There are no material risks attendant to the Company's foreign operations
other than those incidental to the regular course of business. For further
information about foreign operations, see Note 8 on page 15 of the 1994 Annual
Report to Shareholders.
2
ITEM 2. PROPERTIES
The Company owns and leases various types of properties located throughout
the continental United States, Europe, Canada, Australia, South Africa and
Japan. Of the above mentioned properties, the following are considered
principal facilities:
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Building
Square Land
Location Footage Acreage Type of Activity
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United States
Portland, Oregon Leased 6,000 Office
Portland, Oregon Owned 147,000 48 Manufacturing, Engineering
Research, Office
Springfield, Ohio Owned 185,000 10 Manufacturing, Office
Warner Robins, Georgia Owned 62,000 20 Manufacturing, Office
Westminster, South Carolina Owned 110,000 52 Manufacturing, Office
Europe
Almere, The Netherlands Owned 129,000 3 Manufacturing,Office
Almere, The Netherlands Owned 18,000 1 *
Diemen, The Netherlands Owned 47,000 2 *
Hoorn, The Netherlands Owned 44,000 3 Manufacturing, Office
Dusseldorf, Germany Leased 15,000 2 Warehouse, Office
Paris, France Owned 6,000 2 Warehouse, Office
Newcastle, United Kingdom Owned 88,000 8 Manufacturing, Office
Sheffield, United Kingdom Leased 5,500 1 Warehouse, Office
Other Foreign
Toronto, Canada Leased 42,000 1 Warehouse, Office
Sydney, Australia Owned 9,000 1 Warehouse, Office
Johannesburg, South Africa Leased 10,000 1 Warehouse, Office
Osaka, Japan Leased 16,000 1 Warehouse, Office
*The former European headquarters in Almere and the former manufacturing facility in Diemen are currently held for investment
purposes.
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Several subsidiary companies are parties to various leases of office and
computer equipment, storage space and automobiles which are of minor
consequence.
ITEM 3. LEGAL PROCEEDINGS
Neither the Company nor any of its subsidiaries are involved in any
material pending legal proceedings other than litigation related to
environmental matters or matters in the regular course of business. The Company
and its subsidiaries are adequately insured against product liability, personal
injury and property damage claims which may occasionally arise.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Incorporated by reference to definitive Proxy Statement dated April 7,
1995. No matters were submitted to a vote of security holders during the fourth
quarter ended January 31, 1995.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Incorporated by reference to 1994 Annual Report to Shareholders, Page 17.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated by reference to 1994 Annual Report to Shareholders, Page 1.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL OVERVIEW
Earnings for 1994 (the year ended January 31, 1995) were substantially
higher than either 1993 or 1992. Consolidated sales for 1994 totaled
$183,365,000, an increase of 30% when compared to sales of $141,325,000 in 1993
and a 24% increase compared to 1992 sales of $148,435,000.
In fiscal year 1994, North American sales of materials handling
products were 33% greater than in 1993, reflecting extremely strong market
conditions in the lift truck industry. Sales in Europe increased 34% over 1993,
a result of substantially increased hydraulic cylinder shipments along with
solid improvement in attachment sales in most European markets. Sales in Japan
and South Africa were slightly lower than in 1993, reflecting continued weakness
in those markets.
Improved market penetration, record increases in lift truck sales and new
product introductions have contributed to record results in our primary lift
truck attachment business. While we see improvements in the important European
market, we continue to face depressed business conditions in Japan, our other
key international market. Due primarily to our strength in the domestic market
our current rate of incoming orders and our backlog are at record levels. We
continue to expand and strengthen our new product development, sales and
customer service activities.
Revenue for 1993 declined from 1992 results. A 10% increase in North
American materials handling equipment sales was offset by a 21% decrease in
Europe and a 12% decrease in Japan.
RESULTS OF OPERATIONS
Net income for the year ended January 31, 1995 was $12,250,000 ($1.02 per
share). Please note that all per share amounts reported are based on 12,009,904
shares, the number of shares outstanding after the 100% stock dividend that was
distributed on March 15, 1995.
Net income for fiscal 1994 increased by 109% when compared to 1993 income
of $5,865,000 ($.49 per share) before the effect of an accounting change. It was
an increase of 59% when compared to net income of $7,695,000 ($.64 per share) in
1992. Net income for 1993 was adversely affected by a $1,980,000 net after tax
charge due to the adoption of Statement of Financial Accounting Standards No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions".
Net income in fiscal 1994 represents a 15.8% return on shareholders' equity
compared to 4.9% in 1993 and 9.8% in 1992. Expressed as a return on sales, net
income was 6.7% in 1994 versus 2.8% in 1993 and 5.2% in 1992.
The Company continues to be involved with environmental investigations,
evaluations and remediation efforts relating to trace levels of
trichloroethylene by-products associated with manufacturing processes that were
discontinued nearly 20 years ago. In 1994 charges for these purposes were
approximately $2,400,000. Future investigation and remediation costs are
subject to many
4
uncertainties and we are unable to determine the ultimate aggregate monetary
liability. Future expenses are estimated to be within a range of $3,000,000 to
$4,000,000, most of which is likely to be incurred in the next two to years. We
remain confident that a substantial portion of past and future costs will be
covered by applicable insurance policies, and legal action has been initiated
against a number of insurers to enforce the terms of their policies.
Fiscal 1993 and 1992 earnings were adversely impacted by low sales volumes
in European and Japanese operations. In addition, environmental regulatory
compliance costs of $1,640,000 and $1,550,000 also adversely effected earnings
in 1993 and 1992, respectively.
The Cascade WORLD MAST-TM- product line continues to enjoy excellent
customer acceptance, and 1994 sales in the U.S. increased by 45% over 1993
results. Compared to 1992 volumes, this represents an 81% increase. These
increased sales volumes, together with improved production processes, produced a
meaningful contribution to 1994 earnings.
Over the three year period from fiscal year 1992 to fiscal year 1994, both
cost of goods sold and selling, general and administrative expenses, as
indicated in the Consolidated Statement of Income and Retained Earnings on page
8 of the 1994 Annual Report, have increased in absolute dollars as volumes
increased. In 1994, cost of goods sold as a percent of net sales decreased to
64.6% from 65.0% in 1993. Cost of sales increased from 64.2% in 1992 to 65.0%
in 1993 due to low manufacturing volumes in Europe. Selling and administrative
expenses as a percent of net sales decreased to 19.1% in 1994 compared to 21.6%
in 1993 and 20.8% in 1992. Inflation and changing prices have not had a
material impact on the Company's income in fiscal 1992 through 1994.
During 1994 the currencies of most of the countries in which our
subsidiaries operate strengthened against the U.S. dollar, resulting in an
increase of $3,041,000 ($.25 per share) in shareholders' equity for the year.
In fiscal 1993 and 1992, these translation adjustments resulted in decreases of
$1,181,000 ($.1O per share) and $2,165,000 ($.18 per share), respectively.
LIQUIDITY AND CAPITAL RESOURCES
Capital expenditures for 1994 totaled $21,900,000 compared to $8,100,000
and $7,800,000 for 1993 and 1992, respectively. During 1994, construction was
completed on a new manufacturing and European headquarters facility in Almere,
The Netherlands accounting for approximately $13,000,000 of total expenditures
for the year. During 1992, land for the new facility in Europe was acquired at
a cost of $1,300,000. Planned capital expenditures for 1995 of $12,100,000
reflect the Company's practice of investing 130% to 150% of depreciation in
advanced manufacturing, engineering and information systems technology.
Dividends totaled $.375 for 1994 consisting of the regular $.075 quarterly
dividends as well as a special year-end dividend of $.075. The Board of
Directors also declared a 100% stock dividend distributed on March 15, 1995.
Dividends totaled $.30 for 1993 consisting of the regular $.075 quarterly
dividends. In 1992 a special year-end dividend of $.05 was declared in addition
to the regular quarterly dividends of $.075 for a total of $.35.
Cash generated from operating activities resulted in a substantial increase
in cash to $17,203,000 at January 31, 1995. Current assets at January 31, 1995
were 2.2 times current debt. Short and long-term debt increased during the year
from $4,193,000 at January 31, 1994 to $13,864,000. Long-term debt of
$7,809,000 reflects mortgage financing for the new European facility. Combined
short and long-term debt amounts to about 16% of shareholders' equity. This
strong financial position, together with available borrowing capacity, is more
than sufficient to meet our projected short term needs.
5
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated by reference to 1994 Annual Report to Shareholders, pages 8 to 16.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information on Directors is incorporated by reference to definitive Proxy
Statement dated April 7, 1995.
The term of office of all officers is one year. Names, ages and position
of all executive officers of Cascade Corporation follow.
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Year First
Elected
Name Age Officer Present Position
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Joseph J. Barclay 62 1968 Chairman, Chief Executive Officer and Director
Robert C Warren, Jr. 46 1984 President, Chief Operating Officer and Director
Gregory S. Anderson 46 1991 Vice President-Human Resources
Gerald M. Bitz 60 1974 Vice President-Finance and Secretary
Terry H. Cathey 47 1993 Vice President-Manufacturing
Zouhdi M. Derhalli 62 1993 Vice President-Engineering
Lawrence S. Maunder 62 1990 Vice President-Marketing
James P. Miller 47 1992 Treasurer
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ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference to definitive Proxy Statement dated April 7, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Incorporated by reference to definitive Proxy Statement dated April 7, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
INDEX TO FINANCIAL STATEMENTS
(a) 1. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements, together with the report thereon of
Price Waterhouse dated March 17, 1995, appearing on pages 8 to 16 of the
accompanying 1994 Annual Report are incorporated by reference in this Form 10-K
Annual Report. With the exception of the aforementioned information and
information incorporated in Items 5, 6 and 8, the 1994 Annual Report is not to
be deemed filed as part of this report.
2. FINANCIAL STATEMENT SCHEDULES--1994, 1993 AND 1992
Financial statement schedules not included in this Form 10-K Annual Report
have been omitted because they are not applicable or not required.
The individual financial statements of the registrant and its subsidiaries
have been omitted since the registrant is primarily an operating company and all
subsidiaries included in the consolidated financial statements, in the
aggregate, do not have minority equity interests and/or indebtedness to any
person other than the registrant or its consolidated subsidiaries in amounts
which together exceed 5% of the total consolidated assets at January 31, 1995,
except indebtedness incurred in the ordinary course of business which is not
overdue and which matures within one year from the year of its creation.
3. EXHIBITS
1. Copy of Notice of Annual Meeting dated April 7, 1995.
2. Copy of Form of Proxy for Annual Meeting.
3. Basic documents incorporated by reference:
Articles of Incorporation filed with the Commission May 28, 1965.
Amendment to Articles of Incorporation filed in Proxy Statement for
annual meeting of shareholders May 12, 1987, filed with the
Commission April 14, 1988.
Amendment to Articles of Incorporation filed in Proxy Statement for
annual meeting of shareholders May 9, 1989, filed with the
Commission April 27, 1990.
By-Laws, as amended to February 8, 1989, filed with the Commission
April 27,1990.
Specimen copy of stock certificate, filed as Exhibit 4-1 to Form S-1,
filed with the Commission May 28, 1965.
(b) REPORTS ON FORM 8-K
During the quarter ended January 31, 1995, the Company was not required to
file a Form 8-K with the Commission.
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