Clarke Inc. Reports Q3 2009 Results

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

HALIFAX , le 5 nov. /CNW/ - Clarke Inc. ("Clarke" or the "Company") today announced its results for the three and nine months ended September 30, 2009 . Clarke had net income for the three and nine months ended September 30, 2009 of $10.6 million and $17.4 million respectively, compared to $0.1 million and $10.3 million respectively, for the three and nine months ended September 30, 2008 . The increase in earnings during the quarter was due principally to the gain on the sale of a building previously utilized in the Home Décor segment.

Following the collapse of financial markets in late 2008 and the first quarter of 2009, the second and third quarters 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 Clarke's freight segments, 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 improve the future prospects of these businesses.

RESULTS OF OPERATIONS

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

    
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                   Three months   Three months    Nine months    Nine months
                          ended          ended          ended          ended
                   September 30,  September 30,  September 30,  September 30,
                           2009           2008           2009           2008
                              $              $              $              $
    -------------------------------------------------------------------------
    Revenue and
     other income          70.2           69.5          180.5          202.9
    Net income             10.6            0.1           17.4           10.3
    Other
     comprehensive
     income (loss)         11.9          (20.8)          10.9          (21.6)
    Comprehensive
     income (loss)         22.5          (20.7)          28.3          (11.3)
    Basic EPS -
     continuing
     operations            0.11          (0.39)          0.28          (0.03)
    Diluted EPS -
     continuing
     operations            0.11          (0.39)          0.28          (0.03)
    

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009

Revenue and other income increased by $0.7 million , or 1%, for the three months ended September 30, 2009 compared to the same period last year. Included in revenue for the period is the revenue 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 $8.9 million of revenue and other income for the current quarter. Investment and other income earned by the Investment segment increased $4.5 million over the same quarter in 2008 due to realized/unrealized gains recognized in the period compared to losses incurred in the same period in the prior year. The Steel Tanks segment also achieved better results with an increase in revenues and other income of $3.4 million . Revenues of the Freight Transportation segment decreased by $16.0 million , or 26%, to $45.0 million from $61.0 million . This segment continued to manage costs in a difficult operating environment.

Revenue and other income decreased by $22.4 million , or 11% for the nine months ended September 30, 2009 compared to the same period last year. The decrease is mainly attributable to the Freight Transportation segment, which saw revenues decrease by $34.6 million or 22%. 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 $15.5 million during the period, and the Investment and Steel Tanks segments which had increased revenue and other income in the amount of $12.4 million and $9.4 million , respectively, during the period compared to the same period in 2008.

Other comprehensive income increased by $32.7 million to $11.9 million for the three months ended September 30, 2009 compared to a loss of $20.8 million for the three months ended September 30, 2008 . This increase was mainly due to unrealized gains on our portfolio of marketable securities, as equity prices improved during the quarter.

Other comprehensive income increased by $32.5 million to $10.9 million for the nine months ended September 30, 2009 compared to a loss of $21.6 million for the nine months ended September 30, 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 three months ended September 30, 2009 was $0.11 , compared to a loss of $0.39 per share for the same period in 2008, an increase of $0.50 per share.

Basic EPS from continuing operations for the nine months ended September 30, 2009 was $0.28 , compared to a loss of $0.03 per share for the same period in 2008, an increase of $0.31 per share.

OUTLOOK

During the third quarter of 2009, Clarke's comprehensive income improved as a result of a gain on the sale of assets formerly used in the operation of the discontinued Home Décor segment and unrealized gains on marketable securities. The Company's liquidity position 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, increasing Clarke's position where there is an opportunity to build long term value and divesting of mature investments.

During the third quarter of 2009 Clarke finalized 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: Ian Wilkie, Chief Financial Officer, Clarke Inc., [phone]