Clearfield, Inc. Reports Third Quarter FY2010 Performance

Record Quarterly Operating Income is Fueled by Gross Margin Gains and Revenue Stabilization

MINNEAPOLIS, July 29, 2010 (GLOBE NEWSWIRE) --

  * Revenue:             $6.8 million, up 43.5% from last quarter; down 5.3% from
                         previous year's third quarter
  * Gross profit:        $2.6 million, up 50.2% from last quarter; down 3.0% from
                         previous year's third quarter
  * Gross margin:        38.4%, up from 37.5% in previous year's third quarter
                         $611,000, up $68,000 or 12.6% from previous year's third
  * Operating income:     quarter
                         $629,000, up $42,000 or 7.2% from previous year's third
  * Net income:           quarter
  * Basic and diluted
   net income per
   share:                $.05

Clearfield, Inc. (Nasdaq:CLFD), the specialist in fiber management solutions for Fiber to the Premises (FTTp) deployments, today announced results for the third fiscal quarter of 2010 which ended June 30, 2010. Net income was $629,000 or $.05 per basic and diluted income per share, up 7.2% from the previous year's third quarter. Operating income rose 12.6% to $611,000, up $68,000 from the previous year's third quarter. Gross margin improvements of nearly 1% as compared to prior year's third quarter off-set a 5.3% reduction in revenue for the quarter as compared to the third quarter of 2009. Revenue for the quarter ended June 30, 2010 was $6,778,000 in comparison to $7,160,000 for the quarter ended June 30, 2009. Gross profit dollars for the third quarter of fiscal 2010 were $2,603,000 in comparison to $2,684,000 for the third quarter of fiscal 2009, a decrease of 3.0%. Gross margins for the quarter improved one percent to 38.4% from the same quarter of last fiscal year. The year-over-year improvement is the result of product mix, material cost improvements and manufacturing efficiency. Operating expenses were $1,993,000, a decrease of 7% from $2,142,000 in the same quarter of fiscal 2009. While the Company continues to invest in sales, marketing and engineering resources during this period, these increased costs were off-set by a $300,000 reduction in incentive compensation expense.

Year to Date

Revenue for the first three quarters of fiscal 2010 was $16,446,000 in comparison to $18,326,000 for the same period of 2009, a decrease of 10%. Gross profit for the nine month period was $6,038,000 in comparison to $6,517,000 for the comparable period for fiscal 2009, a decrease of 7%. Gross margins have continued to improve year-to-date to 37% for the nine months ended June 30, 2010 compared to 36% from the same period of last fiscal year. Operating expenses were $5,747,000 for the nine months ended June 30, 2010 an increase of 2% from $5,637,000 in the same period of fiscal 2009. The Company's operating income through the first three quarters of fiscal 2010 was $291,000 compared to $880,000 in the same period of fiscal 2009 with net income for the same respective periods of $361,000 and $936,000.

Comments on Operations

"Our market is building momentum as the economy strengthens," commented Cheri Beranek, President and Chief Executive Officer of Clearfield. "Our continual improvement programs focused on enhancing gross margins are fueling the significant gains in operating income for the Company this quarter. Strong summer fiber optic deployments and the funding associated with the broadband stimulus programs are just now beginning to bear fruit for Clearfield."

"As our market landscape changes due to consolidation of our customers and competitors, Clearfield's long-standing commitment to nimble product development initiatives, aggressive sales strategies and a customer-first value system is resonating strongly with customers and our pipeline of active quotes continues to expand."

About Clearfield, Inc.

Clearfield, Inc. designs and manufactures the FieldSmart Fiber Management Platform, which includes its latest generation FieldSmart Fiber Crossover Distribution System (FxDS), FieldSmart Fiber Scalability Center (FSC) and FieldSmart Fiber Delivery Point (FDP) series. The FxDS, FSC and FDP product lines are based upon the patent pending technologies of the Clearview and xPAK cassettes and support a wide range of panel configurations, densities, connectors and adapter options, and are offered alongside an assortment of passive optical components. Clearfield provides a complete line of fiber and copper assemblies for inside plant, outside plant and access networks. Clearfield is a public company, traded on Nasdaq:CLFD. www.ClearfieldConnection.com

Forward-Looking Statements

Forward-looking statements contained herein are made pursuant to the safe harbor provisions of the Private Litigation Reform Act of 1995. These statements are based upon the Company's current expectations and judgments about future developments in the Company's business. Certain important factors could have a material impact on the Company's performance, including, without limitation the effect of the significant downturn in the U.S. economy on Clearfield's customers; the impact of the American Recovery and Reinvestment Act or any other legislation on customer demand and purchasing patterns; cyclical selling cycles; need to introduce new products and effectively compete against competitive products; dependence on third-party manufacturers; limited experience in manufacturing, reliance on key customers; rapid changes in technology; the negative effect of product defects; the need to protect its intellectual property; the impact on its financial results or stock price of its ability to use its deferred tax asset, consisting primarily of net operating loss carryforwards, to offset future taxable income; the valuation of its goodwill and the effect of its stock price, among other factors, on the evaluation of goodwill; and other factors set forth in Clearfield's Annual Report on Form 10-K for the year ended September 30, 2009 as well as other filings with the Securities and Exchange Commission. The Company undertakes no obligation to update such statements to reflect actual events.



  CLEARFIELD, INC.
  CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
  UNAUDITED


                           Three Months Ended     Nine Months Ended June
                                June 30,                    30,
                         ----------------------  ------------------------

                            2010        2009        2010         2009
                         ----------  ----------  -----------  -----------

  Revenues               $6,778,193  $7,160,039  $16,445,626  $18,325,930


  Cost of sales           4,174,998   4,475,573   10,407,347   11,809,104
                         ----------  ----------  -----------  -----------

  Gross profit            2,603,195   2,684,466    6,038,279    6,516,826

  Operating expenses
  Selling, general and
   administrative         1,992,576   2,142,074    5,746,913    5,637,002
                         ----------  ----------  -----------  -----------

  Income from
   operations               610,619     542,392      291,366      879,824

  Other income
   (expense)
    Interest income          36,491      34,764      112,125       83,758
    Interest expense             --     (1,260)        (820)      (4,751)

    Other income             11,498      48,243       35,850       75,818
                         ----------  ----------  -----------  -----------

                             47,989      81,747      147,155      154,825
                         ----------  ----------  -----------  -----------
  Income before income
   taxes                    658,608     624,139      438,521    1,034,649

  Income tax expense         29,595      37,119       77,559       99,093


                         ----------  ----------  -----------  -----------

  Net income               $629,013    $587,020     $360,962     $935,556
                         ==========  ==========  ===========  ===========


  Net income per share:
                         ----------  ----------  -----------  -----------

  Basic                        $.05        $.05         $.03         $.08
                         ==========  ==========  ===========  ===========

  Diluted                      $.05        $.05         $.03         $.08
                         ==========  ==========  ===========  ===========

  Weighted average
   shares outstanding:
   Basic                 11,995,331  11,938,131   11,987,793   11,938,131
   Diluted               12,437,853  11,945,419   12,460,069   12,945,419

  CLEARFIELD, INC.
  BALANCE SHEETS
  UNAUDITED


                              June 30,     September
                                2010        30, 2009
                            ------------  ------------
  Assets
  Current Assets
  Cash and cash
   equivalents                $4,886,316    $4,731,735
  Short-term investments       1,345,566     2,108,566
  Accounts receivable, net     2,473,885     2,723,414
  Inventories                  1,431,792     1,153,862

  Other current assets           213,553       180,635
                            ------------  ------------
   Total Current Assets       10,351,112    10,898,212

  Property, plant and
   equipment, net              1,385,062     1,319,492

  Other Assets
  Long-term investments        3,760,163     2,840,000
  Goodwill                     2,570,511     2,570,511
  Intangibles                     27,649            --
  Deferred taxes --long
   term                        2,168,674     2,231,990

  Other                          176,368       568,554
                            ------------  ------------

  Total other assets           8,703,365     8,211,055
                            ------------  ------------

   Total Assets              $20,439,539   $20,428,759
                            ============  ============

  Liabilities and
   Shareholders' Equity
  Total current
   liabilities                $2,006,903    $2,493,006

  Deferred rent                   82,320        87,942
                            ------------  ------------
   Total Liabilities           2,089,223     2,580,948

  Shareholders' Equity
  Common stock                   119,953       119,746
  Additional paid-in
   capital                    52,513,475    52,372,139

  Accumulated deficit       (34,283,112)  (34,644,074)
                            ------------  ------------
   Total Shareholders'
    Equity                    18,350,316    17,847,811
                            ------------  ------------
   Total Liabilities and
    Shareholders' Equity     $20,439,539   $20,428,759
                            ============  ============
CONTACT:  Clearfield, Inc.
          Cheryl P. Beranek, Chief Executive Officer and President
          763-476-6866
          Investor-relations@clfd.net