Clarke Inc. announces second quarter 2008 results



    TSX:  CKI, CKI.DB; CKI.DB.A

    Soft capital markets create opportunities for future growth

    HALIFAX, Aug. 14 /CNW/ - Clarke Inc. ("Clarke" or the "Company") today
announced its results for the quarter ended June 30, 2008. During the quarter,
the Company reported net income of $12.4 million, compared to net income of
$28.1 million in the second quarter of 2007, reflecting fewer realized gains,
and losses incurred by new subsidiaries Granby and Art in Motion. Clarke
posted other comprehensive income for the quarter of $6.8 million, as compared
to other comprehensive income of $8.5 million for the same period last year.
These amounts reflect an increase in the value of marketable securities held
at June 30, 2008 and 2007.
    Clarke's Board of Directors also announced today a $0.04 per common share
cash dividend payable on August 31, 2008 to shareholders of record at the end
of business on August 22, 2008.
    In the first half of 2007, Clarke was able to realize significant gains
on the sale of several meaningful investments. In the final quarter of 2007
and to date in 2008, global credit challenges and North American economic
weakness have created an environment that presents fewer opportunities to sell
investments at a significant premium and more opportunities to invest on
attractive terms. Clarke has reacted by identifying a select group of core
investments that management believes represent the best long term growth
opportunities and by investing additional cash and effort in these businesses.
In the second quarter of 2008 Clarke increased its position in certain of
these businesses at prices that management considers attractive. For example,
Clarke made meaningful investments in Cinram International Income Fund,
Supremex Income Fund and Avenir Diversified Income Trust.
    Although Clarke's earnings in the second quarter and first six months of
2008 did not match those achieved in the second quarter and first six months
of 2007, management believes that efforts undertaken during the quarter will
be accretive to shareholder value in the long run. We have spent time working
actively to make operational changes at the investee company level that we
believe will lead to improved future performance.

    
    RESULTS OF OPERATIONS

    Highlights of the interim consolidated financial statements for the three
and six months ended June 30, 2008 compared to the three and six months ended
June 30, 2007 are as follows:

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                       Three months   Three months   Six months   Six months
                              ended          ended        ended        ended
                            June 30,       June 30,     June 30,     June 30,
                               2008           2007         2008         2007
                                  $              $            $            $
    -------------------------------------------------------------------------
    Revenue and other income   78.1           90.9        149.2        147.0
    EBITDA(*)                  13.1           44.6         15.8         60.2
    Net income                 12.4           28.1         10.3         40.2
    Other comprehensive
     income (loss)(xx)          6.8            8.5         (0.9)        20.5
    Basic EPS(xx)              0.44           1.08         0.36         1.56
    Diluted EPS(xx)            0.29           0.60         0.29         0.88

    (*)  EBITDA is a non-GAAP measure. Please refer to the description of
         EBITDA provided on page 2 of the MD&A,
    (xx) For the three and six months ended June 30, 2007, the per share
         information has been adjusted in the table above to reflect the
         2-for-1 stock split, effected by way of a stock dividend paid on
         June 29, 2007.

    The table below provides a reconciliation of EBITDA to net income.

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                       Three months   Three months   Six months   Six months
                              ended          ended        ended        ended
                            June 30,       June 30,     June 30,     June 30,
                               2008           2007         2008         2007
                                  $              $            $            $
    -------------------------------------------------------------------------
    Net income                 12.4           28.1         10.3         40.2
    Income from discontinued
     operations                (0.7)             -         (3.1)        (4.1)
    Provision for income
     taxes (recovery)          (3.7)          12.0         (1.0)        15.2
    Interest expense            3.6            3.8          7.0          7.5
    Depreciation and
     amortization               1.5            0.7          2.6          1.4
    -------------------------------------------------------------------------
    EBITDA from continuing
     operations                13.1           44.6         15.8         60.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    In the second quarter of 2008, the results of Clarke's Investment segment
were lower than those of the same period in 2007, largely due to Clarke's
lower level of realized gains. Management saw fewer opportunities to realize
attractive gains on positions held during the quarter, and focused on making
well-priced strategic investments. In total during the quarter, Clarke made a
net investment of $9.7 million in marketable securities and acquisitions.
EBITDA for the segment decreased $33.6 million, from $41.1 million in 2007 to
$7.5 million in 2008. In the second quarter of 2007, when capital markets were
much more robust, Clarke exited a number of positions for significant gains.
    Clarke's principal freight subsidiaries, Clarke Transport and Clarke Road
Transport, performed well despite a challenging operating environment
characterized by rising fuel costs. Clarke's Freight Transportation segment,
including its shipping and passenger ferry operations, delivered EBITDA of
$6.6 million in the three months ended June 30, 2008, an increase of
$1.5 million from $5.1 million in the same quarter last year, due in the most
part to EBITDA improvements in the intermodal transportation operations.
    EBITDA for Clarke's new reporting segments were weak for the three months
ending June 30, 2008. The new Home Décor and Steel Tanks segments, made up of
AIM and Granby, respectively, continued to face a challenging U.S. consumer
market, and the resulting generally weak sales led to a combined EBITDA loss
of $0.2 million. However, in the Steel Tanks segment in particular, the first
half of the year generally represents a lower-demand season, with results
typically higher in the latter half of the year.
    Clarke continues to have a solid balance sheet notwithstanding the
substantial investments made during the quarter. At June 30, 2008, cash and
cash equivalents were $1.3 million (December 31, 2007 - $44.0 million). The
market value of Clarke's marketable securities was $266.0 million compared to
$218.6 million at December 31, 2007, as a result of further investment in key
strategic businesses, partially offset by a decline in the fair value of the
marketable security portfolio.
    Shareholders' equity increased by $5.4 million, from $198.7 million at
December 31, 2007 to $204.1 million at June 30, 2008. The increase is largely
attributable to the net income for the six months to June 30, 2008, offset by
the repurchase of common shares in excess of their net book value under the
Normal Course Issuer Bid.

    OUTLOOK

    Throughout the balance of 2008, Clarke will continue to employ its
disciplined investment strategy and will work to achieve improvements in its
investee businesses, all with the ultimate goal of delivering long-term
shareholder value.
    Senior executives of Clarke will continue to serve at the Board level and
work with the management of investee companies to reduce inefficiencies,
improve processes, and develop strategic relationships that will leave these
companies better positioned to deliver value when market conditions improve.
Clarke will also continue to add bench strength to its investment team,
enabling it to have a deeper impact on its investee companies and to widen the
scope of its activities aimed at increasing long-term returns for its
shareholders.
    In the Freight Transportation segment, Clarke will continue to focus on
efficiency improvements and initiatives for organic growth, building on a
strong overall performance to date in 2008. Management will also review and
assess opportunities relating to strategic transactions or commercial
agreements, to determine whether value can be realized or efficiencies can be
gained.
    The weakening U.S. consumer market and strong Canadian dollar will likely
continue to translate into challenges for several of Clarke's new operating
segments in 2008, in particular the Home Décor and Steel Tanks segments.
Clarke is actively working with these businesses to improve efficiencies,
assess strategic alternatives and position them to best capitalize on any
recovery in market conditions.
    Clarke will take advantage of any buying opportunities available in the
current market to build positions in a select number of core businesses that
management believes will deliver attractive returns in the long term. Clarke
is also actively seeking out opportunities that will allow it to invest
alongside experienced operators and strategic partners in businesses that
demonstrate growth or turnaround potential. Entering the third quarter of
2008, Clarke remains very active on its shareholders' behalf, leveraging the
Company's strong balance sheet, investment experience and strategic
relationships to build businesses that will deliver long-term shareholder
value.
    Clarke's Consolidated Financial Statements and Management's Discussion &
Analysis for the three and six months ended June 30, 2008, and news releases,
are available at www.sedar.com and www.clarkeinc.com.

    About Clarke

    Halifax-based Clarke Inc., led by an entrepreneurial team of investment
professionals, is an activist and catalyst investment company that creates
shareholder value by identifying businesses with the potential for improved
performance, and working actively to uncover the value. Clarke's securities
trade on the Toronto Stock Exchange (CKI, CKI.DB; CKI.DB.A); for more
information about Clarke Inc., please visit our website at www.clarkeinc.com.

    Risks

    Clarke's investment activity is influenced by timing and market
conditions, its ability to uncover hidden value, and a variety of risks,
including market, investment, economic, diversification, interest, foreign
exchange, derivative, dependence on key executives, legal and regulatory
risks, and therefore there can be no assurance that investment activities will
result in investment gains. The transportation business is subject to a number
of risks which can include decreases in demand in times of economic downturn,
increased competition including with respect to pricing, variations in the
cost of fuel, dependence on key personnel, expiry of leases, third party
services, labour relations, currency and interest rate fluctuations, customer
credit risk, legal and regulatory risks, insurance costs, adverse weather
conditions and accidents. Other segments are subject to sales concentration
risk, regulation, commodity markets, environmental, information technology and
safety risk.

    Forward-Looking Statements

    Certain passages in this news release may contain forward-looking
statements about future operations, financial results, objectives and
strategies of the Company. Forward-looking statements are typically identified
by the words "believe", "expect", "anticipate", "intend", "estimate", and
similar expressions. These statements are necessarily based on estimates and
assumptions that are inherently subject to risks and uncertainties, many of
which are beyond Clarke's control.
    Actual results may differ materially from expected results if known or
unknown risks affect the business, or if estimates or assumptions used in the
preparation of the consolidated financial statements and information and
analysis in this news release turn out to be inaccurate. As a result, there
can be no guarantee that any forward-looking statement will materialize.
Management disclaims any intention, and assumes no obligation, to update any
forward-looking statement, even if new information becomes available, as a
result of future events or for any other reason. Readers are urged to consider
these and other such factors carefully, and not place undue emphasis on
Clarke's forward-looking statements.
    %SEDAR: 00009934E




For further information:

For further information: Blair Cook, Chief Financial Officer, Clarke
Inc., (902) 442-3412


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