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Clarke Inc. Reports 2012 Third Quarter Results and Quarterly Dividend Declaration

HALIFAX, Nov. 7, 2012 /CNW/ - Clarke Inc. ("Clarke" or the "Company") (TSX: CKI CKI.DB.A) today announced its results for the three and nine months ended September 30, 2012.

For the three and nine months ended September 30, 2012, the Company generated revenue and other income of $71.4 million and $179.5 million compared to $41.9 million and $133.6 million in the corresponding periods in 2011. This was due to continued positive trends in the Freight Transportation and Commercial Tanks & Home Heating segments as well as a meaningful increase in the Company's marketable securities portfolio. Net income attributable to equity holders of the Company for the three and nine months ended September 30, 2012 was $11.9 million and $4.7 million or $0.71 and $0.28 per share compared with a net loss of $16.3 million and $18.9 million or a loss of $0.81 and $0.94 per share in the corresponding periods in 2011. Net income was principally comprised of unrealized gains on the Company's publicly-traded securities of $8.1 million and $2.4 million, respectively, compared to unrealized losses of $20.1 million and $22.3 million in the same periods in 2011. The unrealized gains reflect a recovery in the Company's marketable securities portfolio.

Clarke's Board of Directors also announced today a quarterly dividend of $0.06 per common share payable on December 17, 2012 to shareholders of record at the end of business on November 30, 2012. The Board of Directors believes that the payment of a dividend is a useful way to return capital to shareholders and that this level of dividend will continue to allow Clarke to pursue its current business plan and invest in attractive growth opportunities. Over the next several quarters, the Board of Directors will consider increasing the Company's dividend depending on business conditions and expectations.

RESULTS OF OPERATIONS

Highlights of the interim condensed consolidated financial statements for the three and nine months ended September 30, 2012 compared to the three and nine months ended September 30, 2011 are as follows:

         
    Three months
ended
     September 30,
2012
$
Three months
ended
September 30,
2011
$
  Nine months
ended
September 30,
2012
$
Nine months
ended
September 30,
2011
$
Revenue and other income 71.4  41.9  179.5  133.6 
Income (loss) from continuing
operations attributable to
equity holders of the Company
11.9  (16.2) 4.7  (25.0)
Net income (loss) attributable to
equity holders of the Company
11.9  (16.3) 4.7  (18.9)
Comprehensive income (loss)
attributable to equity holders of
the Company
11.8  (16.0) 4.6  (18.8)
Basic earnings per share ("EPS")
(in dollars)
       
  Income (loss) from continuing
operations
0.71  (0.81) 0.28  (1.25)
  Net income (loss) 0.71  (0.81) 0.28  (0.94)
Total assets 241.5  242.7  241.5  242.7 
Cash dividends paid per share
(in dollars)
0.06  ―  0.06  ― 
Book value per share (in dollars) 5.55  4.33  5.55  4.33 

Clarke's Freight Transportation segment had revenue and other income of $48.5 million and $139.2 million for the three and nine months ended September 30, 2012 compared to $48.1 million and $132.7 million in the same periods in 2011. This increase in revenue is primarily a result of the acquisition of refrigeration transportation assets acquired in 2011 and an increased focus on revenue growth. This segment delivered EBITDA for the three and nine months ended September 30, 2012 of $5.5 million and $11.0 million compared to $6.5 million and $12.2 million in the same periods in 2011. The increase in revenue and other income in this segment have not materialized into increased EBITDA due in part to pricing pressure and initial costs related to the refrigeration transportation business acquired in 2011, as well as non-routine repairs and maintenance performed on the Company's cargo vessel during the year.

Clarke's Commercial Tanks & Home Heating segment had revenue and other income of $13.6 million and $36.0 million for the three and nine months ended September 30, 2012 compared to $11.7 million and $27.1 million in the same periods in 2011. This result is primarily due to incremental sales associated with businesses acquired in 2011 and a stronger US dollar in 2012 compared to that in 2011, which has a positive impact on revenue and margins. Increased revenue and other income in this segment resulted in EBITDA of $2.5 million and $6.1 million for the three and nine months ended September 30, 2012 compared to $2.8 million and $4.1 million in the same periods in 2011. The segment's commercial steel tank division had a record backlog at quarter-end.

The Company expects full-year financial results of the Freight Transportation segment to meet and the Commercial Tanks & Home Heating segment to exceed the results generated in the comparable prior period.

On June 19, 2012, the Company announced that it intended to seek approval of the holders of its 6% convertible unsecured subordinated debentures due December 31, 2013 (the "2013 Debentures") to amend the terms of the 2013 Debentures at a meeting of the debentureholders (the "Meeting") to be held on July 25, 2012 and subsequently extended to be held on August 22, 2012 in order to give more time to debentureholders to tender their proxies and vote on the proposed amendments. Although the majority of debentureholders who delivered proxies in respect of the Meeting voted in favour of the proposed amendments, Clarke did not obtain the required two-thirds approval to pass the proposed amendments to the 2013 Debentures.

During the nine months ended September 30, 2012, the Company repurchased 326,602 Common Shares at an average price of $4.16 per Common Share and $1.0 million principal amount of its 2013 Debentures at an average price of $97 per $100 of face value. Given the opportunity, the Company will continue to repurchase the Company's Common Shares and 2013 Debentures at times and prices that management believes are beneficial to the Company.

Further information about Clarke, including Clarke's Interim Condensed Consolidated Financial Statements and Management's Discussion & Analysis for the three and nine months ended September 30, 2012, is available at www.sedar.com and www.clarkeinc.com.

About Clarke

Halifax-based Clarke invests in a variety of private and publicly-traded businesses and participates actively where necessary to enhance the performance of such businesses and increase its return. Clarke's securities trade on the Toronto Stock Exchange (CKI; 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 Commercial Tanks & Home Heating segment, such risks and uncertainties include, without limitation, the costs of housing and major consumer products, energy costs, alternative energy sources, steel costs, product liability claims, 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 actions, events or results not to be as 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.

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