TSX: CKI, CKI.DB; CKI.DB.A
HALIFAX, March 5 /CNW/ - Clarke Inc. ("Clarke" or the "Company") today announced its results for the three months and year ended December 31, 2009. During 2009 the Company consolidated its portfolio of investments and reduced its total debt level. Although profits were not up across all segments, overall earnings improved significantly, as compared to the results delivered in 2008.
Clarke had net income for the year ended December 31, 2009 of $15.5 million compared to a net loss of $124.0 million for the year ended December 31, 2008. The significant losses in 2008 were mainly due to other-than-temporary-impairments of $146.9 million on available for sale and significantly influenced investments (2009 - $21.0 million). The net income for 2009 included the sale of a building previously utilized in the operation of the former Home Décor segment which generated income of $7.8 million before income taxes.
Following the collapse of financial markets in late 2008 and the first quarter of 2009, the remainder of 2009 offered a recovery in equity prices. This was reflected by an increase in the market value of Clarke's portfolio of marketable securities. However, the general economic slowdown has continued to adversely affect our Freight Transportation segment, with reduced industry volumes creating significant competitive pressure. Clarke has continued to work closely with management in place at its core businesses, achieving cost savings and executing strategic transactions that are expected to improve the future prospects of these businesses.
RESULTS OF OPERATIONS
Highlights of the consolidated financial statements for the three months and year ended December 31, 2009 compared to the three months and year ended December 31, 2008 are as follows:
For the For the
three months three months For the For the
ended ended year ended year ended
(in millions, December 31, December 31, December 31, December 31,
except per 2009 2008 2009 2008
share amounts) $ $ $ $
other income 68.9 61.0 249.4 263.9
Net income (loss) (1.8) (134.4) 15.5 (124.0)
income 9.7 38.4 20.6 16.7
income (loss) 7.9 (96.0) 36.1 (107.3)
Basic EPS -
operations (0.08) (4.65) 0.20 (4.70)
Diluted EPS -
operations 0.15 (4.50) 0.20 (4.70)
Basic EPS -
(loss) (0.07) (4.87) 0.59 (4.50)
QUARTER ENDED DECEMBER 31, 2009
Revenue and other income have increased $7.9 million, or 13%, compared to the same quarter last year, with the increase mainly coming from sales in the Entertainment segment. The operating results of the Entertainment segment began to be proportionately consolidated as at March 25, 2009 and are included in the results for the three months ended December 31, 2009. Unrealized/realized securities gains were $1.5 million in the quarter, compared to a loss of $9.1 million in the same quarter of the prior year.
The Freight Transportation segment had income before income taxes of $2.3 million for the three months ended December 31, 2009, compared to $2.5 million in the same quarter in 2008.
The Investment segment had a loss before income taxes of $2.6 million for the quarter, compared to a loss before income taxes of $155.2 million for the comparative quarter in 2008. This variance is primarily due to the other-than-temporary impairment charges to marketable securities of $131.3 million during the three months ended December 31, 2008 compared to $5.4 million for the three months ended December 31, 2009. These other-than-temporary impairments taken in 2008 reflect the acceleration of adverse capital market deterioration during that year.
For the three months ended December 31, 2009, Clarke's basic EPS from continuing operations was a loss of $0.08, compared to a loss of $4.65 for the same quarter in 2008.
YEAR ENDED DECEMBER 31, 2009
Revenue and other income decreased by $14.5 million, or 5% for the year ended December 31, 2009 compared to the same period last year. The decrease is mainly attributable to the Freight Transportation segment, which saw revenues decrease by $41.1 million or 19%. Also contributing to the decline in revenue was the reclassification of the Home & Garden segment, for which results were included in the first quarter of 2008. This investment was accounted for under the equity method beginning in the second quarter of 2008 and reclassified to the Investment segment. The results for the first quarter were reclassified to the Other segment for the year ended December 31, 2008, and were excluded in the current period. This decrease was partially offset by the addition of the Entertainment segment, which contributed $23.5 million during the period, and the Investment and Steel Tanks segments which had increased revenue and other income in the amount of $15.2 million and $12.8 million, respectively, during the period compared to the same period in 2008.
Other comprehensive income increased by $3.9 million to $20.6 million for the year ended December 31, 2009 compared to $16.7 million for the year ended December 31, 2008. This increase was mainly due to unrealized gains on our portfolio of marketable securities, as equity prices improved during the year.
Basic EPS from continuing operations for the year ended December 31, 2009 was $0.20, compared to a loss of $4.70 per share for the same period in 2008, an increase of $4.90 per share.
During the year ended December 31, 2009, Clarke's comprehensive income improved with the recovery in the market value of certain publicly traded investments and an improvement in the financial performance of the Steel Tanks segment. The Company also benefited from a gain on the sale of assets formerly used in the operation of the discontinued Home Décor segment. The Company's liquidity position has improved, as non-core investments were sold to support the repurchase of Clarke securities and the investment in businesses considered to be core investments.
In the coming quarters, management will continue to focus its efforts and the Company's capital on core investments. Clarke will remain actively involved at the board level with these businesses, participating in their development and strategic direction. We will seek to identify, incentivize and retain strong management teams that can develop and implement effective business plans. We will also augment many of the functions performed by these management teams, by drawing upon our training and experience to deliver treasury, tax, real estate, valuations, accounting, IT and legal services, particularly in the context of corporate transactions.
Given the opportunity, we will continue to repurchase the Company's own securities at prices that management feels are below their intrinsic value. We will also constantly review the Company's portfolio of investments, divesting of mature investments and increasing Clarke's position where there is an opportunity to build long term value.
Clarke management will continue to work with management and equity partners in each of the Company's portfolio investments, in an effort to build value through the development and execution of strategic plans. We will position the portfolio for continued earnings growth and will act on opportunities to realize value as they arise.
Clarke will continue to seek out investment opportunities that, in management's view, will deliver attractive returns in the long term. We will, where possible, invest alongside experienced operators and strategic partners in businesses that demonstrate growth or turnaround potential. In 2010, Clarke will remain very active on its shareholders' behalf, utilizing the Company's investment experience and strategic relationships to build businesses that are expected to deliver long-term shareholder value.
Further information about Clarke, including Clarke's Consolidated Financial Statements and Management's Discussion & Analysis for the year ended December 31, 2009, is available at www.sedar.com and www.clarkeinc.com.
Halifax-based Clarke Inc. invests in undervalued businesses and participates actively where necessary to enhance performance and increase return. 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.
Note on Forward-Looking Statements and Risks
This press release may contain or refer to certain forward-looking statements relating, but not limited to, the Company's expectations, intentions, plans and beliefs with respect to the Company. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "does not expect", "is expected", "budget", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or equivalents or variations, including negative variations, of such words and phrases, or state that certain actions, events or results, "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Forward-looking statements include, without limitation, those with respect to the future price of securities held by the Company, changes in these securities holdings, changes to the Company's hedging practices, currency fluctuations, requirements for additional capital, changes to government regulations and the timing and possible outcome of pending litigation. Forward-looking statements rely on certain underlying assumptions, that if not realized, can result in such forward-looking statements not being achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements.
With respect to the Company's Investment segment, such risks and uncertainties include, without limitation, the Company's investment strategy, legal and regulatory risks, general market risk, potential lack of diversification in the Company's investments, reliance on certain key executives, interest rates and foreign currency fluctuations and other factors. With respect to the Company's Freight Transportation segment, such risks and uncertainties include, without limitation, competition, fuel costs, expiry of certain leases, labour relations, the use of third party service providers, dependence on certain personnel, fuel costs, weather conditions, customer relationships, claims, litigation and insurance, government regulation of the transport industry and other factors. With respect to the Company's Steel Tanks segment, such risks and uncertainties include, without limitation, the costs of housing and major consumer products, energy costs, alternative energy sources, foreign exchange risk, and other factors. Other general risks and uncertainties include, without limitation, environmental considerations, use of information technology and information systems, safety issues, concentration of sales among a small number of customers, the seasonality of business cycles for certain segments, commodity market risk, risks associated with investment in derivative instruments and other factors.
Although the Company has attempted to identify important factors that could cause actual actions, events or results or cause actions, events or results not to be estimated or intended, there can be no assurance that forward- looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Other than as required by applicable Canadian securities laws, the Company does not update or revise any such forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events. Accordingly, readers should not place undue reliance on forward-looking statements.
SOURCE Clarke Inc.
For further information: For further information: Ian Wilkie, Chief Financial Officer, Clarke Inc., (902) 442-3990