Clarke Inc. Reports Q2 2009 Results



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

    HALIFAX, Aug. 6 /CNW/ - Clarke Inc. ("Clarke" or the "Company") today
announced its results for the three and six months ended June 30, 2009. Clarke
had net income for the three and six months ended June 30, 2009 of $16.8
million and $6.7 million respectively, compared to $12.4 million and $10.3
million respectively, for the three and six months ended June 30, 2008. The
increase in earnings during the quarter was due principally to the recognition
of future income tax assets related to the wind up of the Home Décor segment.
    Following the collapse of financial markets in late 2008 and the first
quarter of 2009, the second quarter of 2009 offered some recovery in equity
prices. This was reflected by an increase in the market value of our portfolio
of marketable securities in the second quarter of 2009. However, the general
economic slowdown has continued to adversely affect our core operating
segments, with reduced industry volumes creating significant competitive
pressure for our freight subsidiaries.

    RESULTS OF OPERATIONS

    Highlights of the interim consolidated financial statements for the three
and six months ended June 30, 2009 compared to the three and six months ended
June 30, 2008 are as follows:

    
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                         Three     Three       Six       Six
                                        months    months    months    months
                                         ended     ended     ended     ended
                                       June 30,  June 30,  June 30,  June 30,
                                          2009      2008      2009      2008
                                             $         $         $         $
    -------------------------------------------------------------------------
    Revenue and other income              63.8      70.6     110.3     133.4
    Net income                            16.8      12.4       6.8      10.3
    Other comprehensive income (loss)     13.3       6.8      (1.1)     (0.9)
    Comprehensive income                  30.1      19.2       5.7       9.4
    Basic EPS - continuing operations     0.65      0.44      0.17      0.34
    Diluted EPS - continuing operations   0.42      0.29      0.17      0.27
    

    THREE AND SIX MONTHS ENDED JUNE 30, 2009

    Revenue and other income decreased by $6.8 million, or 10% for the three
months ended June 30, 2009 compared to the same period last year. The decrease
is mainly due to the results of the Freight Transportation segment, which
decreased by $12.6 million to $43.5 million from $56.1 million, or 22%. This
segment continued to manage costs in a difficult operating environment.
However, reduced volumes led to a decrease in revenue and other income.
Partially offsetting this decrease was the addition of the Entertainment
segment which represents 50% of the operations of a jointly controlled
investment. This segment was not included in the results from operations in
the prior year and contributed $6.5 million of revenue and other income for
the current quarter.
    Revenue and other income decreased by $23.1 million, or 17% for the six
months ended June 30, 2009 compared to the same period last year. The decrease
is mainly attributable to the Freight Transportation segment, which saw
revenues decrease by $18.6 million or 19%. This segment continued to manage
costs in a difficult operating environment. Also contributing to this 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.
    The other comprehensive income of $13.3 million for the three months
ended June 30, 2009 and $6.8 million for the three months ended June 30, 2008
were mainly due to unrealized gains on our portfolio of marketable securities,
as markets recovered slightly during those quarters.
    The other comprehensive losses of $1.1 million for the six months ended
June 30, 2009 and $0.9 million for the six months ended June 30, 2008 were
mainly due to unrealized losses on our portfolio of marketable securities for
the first quarter of 2008 and 2009, which in each case were higher than the
gains recorded in the second quarter of the year.
    Basic EPS from continuing operations for the three months ended June 30,
2009 was $0.65, compared to income of $0.44 per share for the same period in
2008, an increase of $0.21 per share.
    Basic EPS from continuing operations for the six months ended June 30,
2009 was $0.17, compared to $0.34 per share for the same period in 2008, a
decrease of $0.17 per share.

    OUTLOOK

    Clarke's operating businesses and investment portfolio have been
adversely affected by turmoil in the financial markets and a general slowdown
in the economy. While there have been signs of recovery in some areas, many
industry sectors have not yet stabilized to a point where accurate forecasts
or related commentary specifying future results are possible.
    The market value of Clarke's portfolio of marketable securities recovered
somewhat in the second quarter of 2009. The Investment segment continues to
generate positive cash flow through distributions received from investments.
    During the second quarter of 2009 Clarke agreed to the sale of all
remaining assets previously used in the operation of its discontinued Home
Décor segment. This final sale stemmed from planning and effort that extended
across several prior quarters, reflecting the variability in quarterly results
that the Company's activist investing strategy can be expected to generate.
Although there can be no assurance of future gains, the Company will continue
to work with management and equity partners in each of Clarke's portfolio
companies in an effort to build value through the development and execution of
strategic plans that are tailored to each individual business. We will
position the portfolio for further recovery and act on opportunities to
realize value as they arise.
    Clarke will continue to seek out investment opportunities within its
current portfolio of holdings that, in management's view, will deliver
attractive returns in the long term and, where possible, will invest alongside
experienced operators and strategic partners in businesses that demonstrate
growth or turnaround potential. As 2009 continues to unfold, Clarke remains
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, 2008, is available at www.sedar.com and www.clarkeinc.com.

    About Clarke

    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, 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. With respect to the
Company's Entertainment segment, such risks and uncertainties include, without
limitation, the impact of the Internet on retail distribution channels and
delivery format, potential product returns, and the accounting provisions made
for such product returns. 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.
    %SEDAR: 00009934E




For further information:

For further information: Ian Wilkie, Chief Financial Officer, Clarke
Inc., (902) 442-3990


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