ITEM 1. BUSINESS.
Carlisle Companies Incorporated was incorporated in 1986 in Delaware as a holding company for Carlisle Corporation, whose operations began in 1917, and its wholly-owned subsidiaries. Unless the context of this report otherwise requires, the words "Company" and "registrant" refer to Carlisle Companies Incorporated and its wholly-owned subsidiaries and any divisions or subsidiaries they may have. The Company's diversified manufacturing operations are conducted through its subsidiaries.
The Company manufactures and distributes a wide variety of products across a broad range of industries, including, among others, the roofing, real estate construction, trucking, automotive, foodservice, industrial equipment, lawn and garden and aircraft manufacturing industries. The Company markets its products both as a component supplier to original equipment manufacturers ("OEMs"), as well as directly to end users.
Sales of the Company's products are reported by distribution to the following three industry segments: Construction Materials, Transportation Products and General Industry. The principal products, services and markets or customers served in each of the industry segments include:
CONSTRUCTION MATERIALS. The principal products of this segment are rubber, plastic and fleece back sheeting used predominantly on non-residential flat roofs and related roofing accessories, including flashings, fasteners, ceiling tapes, coatings and waterproofings. The markets served include new construction, re-roofing and maintenance of low slope roofs, water containment, HVAC sealants, and coatings and waterproofings.
TRANSPORTATION PRODUCTS. The principal products of this segment are heavy duty friction and braking systems for truck and off-highway equipment, rubber and plastic automotive components, including precision-molded engine components and blow-molded bumper beams, high grade aerospace wire, specialty trailers, self-contained ISO 40-foot perishable cargo shipping containers, standard and custom-built high payload trailers and dump bodies. Customers include truck OEMs, shipping lines, heavy equipment and truck dealers and aftermarket distributors, commercial haulers, automotive OEMs and systems suppliers, and dairy product distributors.
GENERAL INDUSTRY. The principal products of this segment include small bias-ply rubber tires, stamped and roll-formed wheels, commercial and institutional plastic foodservice permanentware and catering equipment, fiber glass and composite material trays and dishes, ceramic tableware, specialty rubber and plastic cleaning brushes and stainless steel processing equipment and their related process control systems. Customers include foodservice distributors, restaurants, golf car
manufacturers, power equipment manufacturers, boat and utility trailer manufacturers and dairy and pharmaceutical processors.
The amount of total revenue contributed by the products or services in each industry segment for each of the last three fiscal years is as follows (in millions):
1996 1995 1994 ---- ---- ---- Construction Materials $ 325.2 $ 308.3 $ 288.6 Transportation Products 371.5 278.9 200.2 General Industry 320.8 235.3 203.9 ------- ------- ------- Total $1,017.5 $ 822.5 $ 692.7
In each industry segment, the Company's products are generally distributed either by Company-employed field sales personnel or manufacturers' representatives. In a few instances, distribution is through dealers and independent distributors. Since many of the Company's customers are OEMs, marketing methods and certain operations are designed to accommodate the requirements of a small group of high-volume producer-customers.
In each industry segment, satisfactory supplies of raw materials and adequate sources of energy essential for operation of the Company's businesses have generally been available to date. Uncertain economic conditions, however, could cause shortages of some basic materials, particularly those which are petroleum derivatives (plastic resins, synthetic rubber, etc.) and used in the construction materials, transportation products and general industry segments. The Company believes that energy sources are secure and sufficient quantities of raw materials can be obtained through normal sources to avoid interruption of production in 1997.
The Company owns or holds the right to use a variety of patents, trademarks, licenses, inventions, trade secrets and other intellectual property rights which, in the aggregate, are considered significant to the successful conduct of each of the Company's three industry segments. The Company has adopted a variety of measures and programs to ensure the continued validity and enforceability of its various intellectual property rights.
In each industry segment, the Company is engaged in businesses, and its products serve markets, that generally are highly competitive. Product lines serving most markets tend to be price competitive and all lines also compete on service and product performance. No industry segment is dependent upon a single customer, or a few customers, the loss of which would have a material adverse effect on the segment.
Order Backlog was $200.8 million at December 31, 1996, and $160.7 million at December 31, 1995, and $103.9 million at December 31, 1994. Although 19% of the increase from December 31, 1995 was related to operations acquired in 1996, stronger backlog positions were evident throughout all major operations within the Company.
Research and Development expenses decreased to $11.9 million in 1996, compared to $12.3 million in 1995, consistent with $11.9 million in 1994. Heavy duty friction operations completed its new technology center in Charlottesville, Virginia. The increase in R&D expenditures for high performance wire resulted from purchases of materials for microwave coaxial cable and high speed "Z-Skew" product development. The truck and trailer operations have incurred R&D expense in new products which will be available for sale in Spring of 1997.
The Company employs approximately 6,900 persons on a full-time basis.
The businesses of the construction materials and transportation products industry segments are generally not seasonal in nature. Within the general industry segment, distribution of lawn and garden products generally reach peak sales volume during the first two quarters of the year. The businesses of all three segments are affected by the state of the general economy.
In 1996, the Company completed five acquisitions. In February, the Company acquired the manufacturing assets and fleece back sheeting technology of Insulfoam, Inc. In March, the Company acquired Intero, Inc. and Unique Wheel, Inc., leading manufacturers of steel and aluminum wheels and rims sold to OEM trailer customers and the auto aftermarket. In August, the acquisition of Scherping Systems, Inc. and Scherping Controls, Inc., leading suppliers of cheese processing systems and equipment for the dairy industry, was completed. In September, the Company acquired Hartstone, Inc., a designer and manufacturer of ceramic tableware, cookware and decorative kitchenware. In October, the Company completed the acquisition of the Engineered Plastics Division of Johnson Controls, Inc. EPD's products include precision-molded engine components and blow-molded bumper beams that are supplied to major automakers in North America. These acquisitions will add principally to the Company's transportation products and general industry segments.
In each industry segment, the Company's compliance with Federal, State and local provisions which have been enacted or adopted regulating the discharge of materials into the environment or otherwise relating to the protection of the environment is not anticipated to have a material effect upon the capital expenditures, earnings or the financial and competitive position of the Company or its divisions and subsidiaries.
Information on the Company's revenues, operating profit or loss and identifiable assets by industry segments for the last three fiscal years, the nature and effect of the restatement of such information as a result of changes made in the way the Company's products or services are grouped into industry segments and the principal products in each segment is as follows:
(In thousands) 1996 1995 1994 ------- ------- -------
Sales to Unaffiliated Customers(1) Construction Materials 325,165 308,327 288,533 Transportation Products 371,517 278,867 200,213 General Industry 320,813 235,340 203,904
Operating Profit or Loss Construction Materials 43,582 36,676 35,066 Transportation Products 27,495 20,241 13,497 General Industry 40,260 29,627 21,391 Interest, net ( 8,396) ( 4,055) ( 1,670) Corporate(2) (10,901) ( 9,631) ( 9,493)
Identifiable Assets Construction Materials 183,836 169,476 155,383 Transportation Products 309,125 210,700 122,031 General Industry 225,282 143,606 105,482 Corporate(3) 28,592 18,641 102,387
(1) Intersegment sales or transfers are not material.
(2) Includes general corporate and idle property expenses.
(3) Consists primarily of cash and cash equivalents, facilities, and other invested assets.
ITEM 2.
ITEM 2. PROPERTIES
The following table sets forth certain information with respect to the principal properties and plants of the Company as of December 31, 1996:
* Lease provides for renewal
Total plant space of 6,217,751 sq. ft. is used for
OWNED LEASED TOTAL ----- ------ -----
Office 381,983 124,172 506,155 Manufacturing 3,177,770 675,007 3,852,777 Warehousing 1,373,153 485,666 1,858,819 --------- ------- --------- 4,932,906 1,284,845 6,217,751 ========= ========= =========
As of December 31, 1996, the Company owned an additional facility. It is related to a wire and cable business sold in early 1988 and totals 120,000 square feet. The facility is being held for sale. An additional 490,080 sq. ft. is leased by the Company, under various agreements, principally for warehousing and distribution. All of the manufacturing and most of the office and warehousing space is of masonry and steel construction and most are equipped with automatic sprinkler systems. Approximately one-third of the owned office, manufacturing and warehousing space has been constructed within the last twenty years; the remaining buildings are from twenty to seventy years old and have been maintained in good condition.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
In connection with its 1995 acquisition of Trail King Industries, Inc., the Company knowingly assumed the liabilities of the former Trail King relating to the case UNITED STATES OF AMERICA V. TRAIL KING INDUSTRIES, INC., Case No. 94-4238, filed October 20, 1994 in the United States District Court, District of South Dakota (the "EPA Litigation"). The case involves allegations by the Environmental Protection Agency ("EPA") that the former Trail King violated certain reporting requirements of the Clean Water Act. The Company has taken appropriate remedial action and believes that Trail King is now operating in full compliance with the Clean Water Act and the regulations thereunder. On March 5, 1997, the Company and the EPA entered into a Consent Decree. Pursuant to the Consent Decree and without admitting liability, the Company has agreed to pay to the United States $400,000 in full settlement of the EPA Litigation.
Except as described in the preceding paragraph, as of December 31, 1996, other than ordinary routine litigation incidental to the business, which is being handled in the ordinary course of business, neither the Company nor any of its subsidiaries is a party to, nor are any of their properties subject to any material pending legal proceedings, nor are any such proceedings known to be contemplated by governmental authorities.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On October 4, 1996, the Company's Board of Directors declared a two-for-one stock split of the Company's common stock. The stock split was conditioned upon obtaining shareholder approval of an amendment to the Company's Restated Certificate of Incorporation increasing the number of shares of common stock authorized for issuance from 25,000,000 to 50,000,000. At a special meeting of the Company's shareholders held December 20, 1996, the shareholders approved the amendment thereby effecting the two-for-one stock split as follows:
FOR AGAINST ABSTAIN --- ------- ------- Proposal to amend the 24,626,467 25,563 246,102 Company's Restated Certificate of Incorporation
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.
The Company's common stock is traded on the New York Stock Exchange. As of December 31, 1996, there were 2,145 shareholders of record.
Quarterly cash dividends paid and the high and low prices of the Company's stock on the New York Stock Exchange in 1996 and 1995 were as follows:
FIRST SECOND THIRD FOURTH ----- ------ ----- ------ 1996(1) - ---- Dividends per share $.1100 $.1100 $.1225 $.1225
Stock Price High $22 9/16 $28 3/16 $28 1/16 $30 1/2 Low $19 1/16 $21 5/8 $24 1/4 $26 7/8
1995(1) - ---- Dividends per share $ .10 $ .10 $ .11 $ .11
Stock Price High $18 1/2 $20 3/16 $21 3/16 $21 13/16 Low $17 1/4 $18 3/16 $19 1/4 $19 15/16
(1) All amounts have been restated to reflect the two-for-one stock split completed on January 15, 1997.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA.
(In thousands except per share data) 1996 1995 1994 1993 1992 -------- -------- ------- ------- --------
SUMMARY OF OPERATIONS - --------------------- Net Sales $1,017,495 822,534 692,650 611,270 528,052 Net earnings from continuing operations $ 55,680 44,081 35,568 28,378 24,228 Per share(1) $ 1.80 1.41 1.15 0.92 0.79 Net earnings from discontinued operations $ - - - 471 Per share(1) $ - - - 0.02 Net earnings $ 55,680 44,081 35,568 28,378 24,699 Per share(1) $ 1.80 1.41 1.15 0.92 0.80
FINANCIAL POSITION Total assets $ 742,463 542,423 485,283 420,363 383,250 Long-term debt $ 191,167 72,725 69,148 59,548 69,098
OTHER DATA Dividends paid $ 14,129 12,928 11,605 10,705 10,076 Per share(1) $ 0.465 0.420 0.380 0.350 0.330
(1) All share and per share amounts have been restated to reflect two-for-one stock splits completed on June 1, 1993 and January 15, 1997.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Carlisle Companies Incorporated sales increased 24% in 1996 to $1.02 billion, up $195.0 million from $822.5 million in 1995. Net earnings of $55.7 million, or $1.80 per share, were up 26% from $44.1 million, or $1.41 a share, in 1995. Each of the Company's three operating segments reported significant increases in both sales and earnings from improvements in ongoing operations augmented by acquisitions made during the year.
The Company completed five acquisitions in 1996. In February, Carlisle purchased the assets of Insul-foam, Inc., enhancing its position in the non-residential roofing market. In March, the Company purchased Intero, Inc. and Unique Stamping, Inc., manufacturers of steel and aluminum rims for trailer wheel manufacturers and wheels for the automotive aftermarket. These companies are integral to Carlisle's strategy of providing specialty tire and wheel assemblies to original equipment markets. In August, Carlisle completed the acquisition of
Scherping Systems, Inc. and Scherping Controls, Inc., a leading supplier of cheese processing equipment for the dairy industry, extending Carlisle's Walker Stainless steel processing equipment capabilities. In September, Carlisle acquired Hartstone, Inc., a designer and manufacturer of ceramic tableware, cookware and decorative kitchenware, adding new products to the Company's foodservice business. In October, Carlisle completed its acquisition of The Engineered Plastics Division of Johnson Controls, Inc., a supplier of precision-molded automotive components and blow-molded bumper beams that are sold to major automakers in North America. This acquisition has been consolidated with Carlisle's Geauga Company to form Carlisle Engineered Products, expanding Carlisle's technical and manufacturing capabilities as a supplier to the transportation equipment industry.
In 1995, the Company completed four acquisitions, adding principally to the transportation products segment. The Company acquired the assets of Thunderline Corporation, a producer of rubber parts for the automotive industry. In June of 1995, the Company completed the acquisition of Trail King Industries, Inc., the leading manufacturer of specialized low bed trailers used in the transportation of construction equipment and in other commercial applications. In September 1995, Trail King finalized the complementary acquisition of Ti-Brook, Inc. a designer, manufacturer and distributor of specialized dump bodies and trailers. In October, the Company acquired Walker Stainless Equipment Company, a leading supplier of transportation trailers for liquid food products, as well as a designer and manufacturer of in-plant processing equipment for the food, pharmaceutical and chemical industries.
SALES increased 24%, or $195.0 million in 1996 to $1.02 billion from $822.5 million in 1995. Sales in 1995 increased 19%, or $129.8 million, from 1994 sales of $692.7 million. Acquisitions made in 1996 accounted for 42%, or $81.2 million, of the 1996 sales increase. The remaining increase in sales resulted from a full-year's sales of acquisitions made in 1995, as well as growth in the Company's existing operations. The acquisitions made in 1995 account for approximately 40% of the 1995 sales increase, with the remaining due to increases in continuing operations.
NET EARNINGS increased 26% to $55.7 million, or $1.80 a share, in 1996. This compares to total net earnings of $44.1 million, or $1.41 a share, in 1995 and $35.6 million, or $1.15 a share in 1994.
CONSTRUCTION MATERIALS segment sales increased 6% in 1996 to $325.2 million compared to $308.3 million in 1995, and increased 7% in 1995, compared to $288.6 million in 1994. Increases in domestic shipments of roofing membranes of 7% and 5% in 1996 and 1995, respectively, contributed to these results. The 1995 sales include $10.7 million from the West Coast portion of Carlisle's metal roofing business, which was divested in 1996 because of unsatisfactory results. The Company expects to sell the remaining assets of this business in 1997. Segment earnings in 1996 increased to $43.6 million, or 19% over 1995 results because of
a favorable product mix and effective cost control. The earnings in 1995 increased 5% to $36.7 million due to effective cost control and productivity improvements offset by pricing pressures as a result from raw material cost increases and a less favorable product mix.
TRANSPORTATION PRODUCTS segment sales were $371.5 million in 1996, an increase of 33%, or $92.6 million, over 1995. The 1995 segment net sales of $278.9 million was an increase of 39%, or $78.7 million, over the 1994 sales of $200.2 million. While acquisitions accounted for 36%, or $32.9 million, and 66%, or $52.0 million, of the growth in 1996 and 1995, respectively, all operations in this segment recorded sales gains. Segment earnings improved 34%, or $7.3 million, in 1996, and 50%, or $6.7 million, in 1995. Earnings in the custom-molded plastics and rubber operations increased 23% in 1996 and 12% in 1995 on the strength of the new product introductions and the additional capacity brought by acquisitions. Results in the heavy duty friction operations were strengthened in 1996 with the success of its Altec re-manufactured brake shoe operation, which provides a finished product to the aftermarket. Offsetting this improvement in the aftermarket were significant declines in sales to truck and trailer manufacturers because of reduced build levels. Heavy duty friction product sales were down slightly in 1995, compared to a very strong 1994, as a result of the slowing truck and trailer manufacturers' build levels in the second half of 1995 and flat sales in the aftermarket. Brake products experienced solid sales growth in 1996 as a result of continued penetration in international markets and new product offerings. Earnings from friction and brake products improved 19% in 1996 and 25% in 1995 due to increased margins from sales in the replacement market and productivity improvements, which were offset in 1995 by the impact of closing the Brazilian operations. The specialized truck and trailer operations, acquired in the third and fourth quarter of 1995, experienced shortfalls in the market for commercial trailers and dump trailers, resulting in a slight decline in 1996 sales, compared to 1995's full year sales. Sales of aircraft wire increased 63% in 1996 and 15% in 1995, because of increases in the production of commercial aircraft. Earnings from this operation out paced sales through improved manufacturing productivity. The Company's refrigerated container leasing joint venture continued to grow in sales and earnings from increased market penetration in both 1996 and 1995, offsetting losses in its container manufacturing operations.
GENERAL INDUSTRY segment sales were $320.8 million in 1996, an increase of 36%, or $85.5 million, over 1995. Acquisitions made in 1996 account for $48.3 million, or 56%, of this increase. Sales of $235.3 million in 1995, which represents an increase of 15%, or $31.4 million over 1994, were unfavorably impacted by $6.7 million as a result of divestitures in 1994. Segment earnings were $40.3 million in 1996, an increase of 36% or $10.7 million, over 1995, and $29.6 million in 1995, a gain of 39% or $8.2 million, over 1994. Sales in the Company's specialty tire and wheel operation increased 36% in 1996 and 8% in 1995 not only because of the 1996 acquisition of Intero/Unique, but also because of continued market
share gains in lawn and garden, trailer and golf car markets. The specialty tire and wheel 1996 sales gains were offset by softening in the lawn and garden original equipment markets, as several major customers reduced production schedules to balance excess inventories. Earnings from ongoing operations were strengthened by improved manufacturing productivity. Despite weakened markets in 1996, sales in the foodservice operations increased 3% in 1996 and 28% in 1995 as a result of increased market penetration, expanded product offerings, international sales and acquisitions. Earnings in the foodservice operations increased by 20% in 1996 and 27% in 1995 primarily because of improvements in productivity, offset in 1995 by a small decline in gross margins. The acquisition of Walker Stainless Equipment in 1995 and Scherping Systems in 1996 contributed to the sales and earnings from the manufacturing of in-plant processing equipment.
GROSS MARGINS as a percent of sales were 23.4% in 1996, 24.0% in 1995 and 25.5% in 1994. This decline reflects not only depressed selling prices, plus the first year start-up costs in 1995, in the Company's container manufacturing operation, but also lower gross margins in acquired companies, which are offset by corresponding lower SG&A cost structures. Operations across all segments, however, maintained consistent margins, with higher production volumes allowing manufacturing expenses to be absorbed effectively.
SELLING AND ADMINISTRATIVE expenses, as a percent of sales, declined from 14.9% in 1994 to 13.3% in 1995 and 12.6% in 1996, reflecting disciplined cost control activities applied against increased sales throughout all operations. Expense levels in the construction materials segment were reduced approximately $1.9 million compared to prior year, primarily because of the divestiture of the engineering metals operation on the West Coast in early 1996.
RESEARCH AND DEVELOPMENT expenses decreased to $11.9 million in 1996, compared to $12.3 million in 1995, consistent with $11.9 million in 1994. Heavy duty friction operations completed its new technology center in Charlottesville, Virginia. The increase in R&D expenditures for high performance wire resulted from purchases of materials for microwave coaxial cable and high speed "Z-Skew" product development. The truck and trailer operations have incurred R&D expense in new products which will be available for sale in Spring of 1997.
INTEREST EXPENSE was $9.1 million in 1996, $6.1 million in 1995 and $4.6 million in 1994. The increase in interest expense was attributable primarily to the Company's increased levels of debt.
INCOME TAXES were computed for financial statement purposes at 39.5% in 1996, the same rate used in 1995 and 1994. An analysis of income taxes for each year is presented in the Notes to Consolidated Financial Statements.
ORDER BACKLOG was $200.8 million at December 31, 1996, and $160.7 million at December 31, 1995, and $103.9 million at December 31, 1994. Although 19% of the increase from December 31, 1995 was related to operations acquired in 1996, stronger backlog positions were evident throughout all major operations within the Company.
ACCOUNTS RECEIVABLE were $158.5 million at year-end 1996 and $126.6 million at the end of 1995. The acquisitions made in 1996 accounted for $28.4 million, or 89%, of the 1996 increase and $12.9 million or 47%, of the 1995 increase. The growth in sales revenue at each of the Company's major operations was the remaining factor contributing to the higher receivables balance. An aggressive effort is consistently made to manage receivables across the Company. The average days' sales in the average accounts receivables outstanding declined to 55 days in 1996 from 56 days in 1995 and 60 days in 1994.
INVENTORIES valued primarily by the last-in, first-out (LIFO) method, were $137.1 million at December 31, 1996, compared to $121.7 million at December 31, 1995. Of the increase in inventories, $14.1 million is attributable to acquisitions made in 1996. The remainder of the increase reflects strong demand and backlog, as well as the operation's normal seasonal buildup.
WORKING CAPITAL was $175.3 million at December 31, 1996 and $153.7 million at December 31, 1995. The $21.6 million increase resulted principally from acquisitions made in 1996.
CAPITAL EXPENDITURES totaled $35.0 million in 1996, compared to $37.5 million in 1995. Significant projects in 1996 included a pressure-sensitive tape line for construction materials; presses, tire building machines and other related equipment for the specialty tire and wheels operation in Trinidad; and new cable wrapping equipment. In 1995, the major components of capital spending were the purchase of a state-of-the-art rubber mixing system for the construction materials segment; the purchase of additional molds and assets to expand specialty tires and wheels operations; and the expansion of molding production capabilities at custom plastics and rubber operations.
CASH FLOWS provided by operating activities were $86.0 million in 1996 compared, to $55.7 million in 1995 and $72.6 million in 1994. Investing activities, primarily company acquisitions and capital expenditures, increased in 1996 to $165.4 million from $100.7 million in 1995 and $38.8 million in 1994. The Company utilized $124.4 million of its revolving credit facilities in 1996 to finance its acquisitions. The Company also purchased $14.2 million of treasury stock and paid out $14.1 million in dividends in 1996. In addition, 147,600 shares of treasury stock were issued as part of the acquisition of Hartstone, Inc. In 1995, the Company purchased $9.4 million of stock for treasury and paid out $12.9 million in dividends. In 1994, the Company obtained $8.0 million in long-term financing, purchased $10.9 million of treasury stock and paid
out $11.6 million in dividends. In addition, $11.0 million of treasury stock was issued for the acquisition of the Sparta Brush Company.
In April 1996, the Company secured a $100 million revolving credit facility, which was subsequently increased to $150 million. The Company's primary liquidity and capital sources are its operations, revolving credit facility and long-term borrowings. The Company continues to have substantial borrowing capacity and financial flexibility. Carlisle issued ten year bonds for $150 million at the end of January 1997. The net proceeds from these bonds were used to repay amounts outstanding under the revolving credit facility, $115 million at December 31, 1996, and other short term debt. The remaining net proceeds from this offering will be used for general corporate purposes.
The Company recognizes the importance of its responsibilities toward matters of environmental concern. Programs are in place to monitor and test facilities and surrounding environments, as well as to recycle materials where practical. The Company has not incurred any material charges relating to environmental matters in 1996 or prior years, and none are anticipated in the foreseeable future.
THE 1997 OUTLOOK is favorable. With the successful integration of the various businesses acquired in 1995 and 1996, and the growth of our existing core businesses, 1997 should be another strong year for Carlisle.
With the introduction of new products and continued growth in industrial construction, reflecting the overall level of domestic economic activity, as well as the repair and replacement of existing commercial roofs, the Construction Materials segment should produce solid results in 1997.
Continued growth in the Transportation segment is expected in 1997. With stable demand for automobiles and a broadened customer base, growth in engineered plastic and rubber components should continue in 1997. While some further decline in the manufacturing of Class 8 trucks is expected, stable sales and earnings are anticipated from heavy duty friction and brake products as a result of aftermarket demand and new product development. The ongoing integration of the manufacturing of steel deck trailer and dump bodies, offsetting a decline in the dairy tanker market, should result in strong performances in the specialty trailer businesses. Strong backlogs in high performance aircraft wire and continued market growth should result in another strong year. With the productivity gains and increased customer base developed in 1996, the results from the manufacturing of refrigerated containers should improve, provided that market conditions improve. The existing lease rate plus market growth should result in growth in earnings from the Company's refrigerated container leasing joint venture.
Solid results are expected in the General Industry segment from Carlisle's leading position in specialty tires and wheels. Additional product offerings and market development in foodservice operations, along with strong demand for stainless steel in-plant processing equipment, will also strengthen the growth in General Industry.
Our future is promising. Our confidence is based on a sound backlog, a leading position in many niche markets, growing international activities, available financial resources, and talented and dedicated employees. We expect to continue to progress toward our long-term goals for growth in sales and earnings.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
CONSOLIDATED STATEMENT OF EARNINGS FOR YEARS ENDED DECEMBER 31
(In thousands except per share data)
1996 1995 1994 ------ ------ ------ Net sales $1,017,495 $ 822,534 $692,650 ----------- ---------- --------- Cost and expenses: Cost of goods sold 779,797 624,860 516,282 Selling and administrative expenses 128,676 109,236 102,992 Research and development expenses 11,900 12,339 11,933 --------- ---------- --------- 920,373 746,435 631,207 Other income (deductions): Investment income 666 2,020 2,977 Interest expense ( 9,062) ( 6,075) ( 4,647) Other, net 3,314 814 ( 982) --------- ---------- --------- ( 5,082) ( 3,241) ( 2,652) --------- ---------- ---------
Earnings before income taxes 92,040 72,858 58,791 Income taxes 36,360 28,777 23,223
Net earnings $ 55,680 $ 44,081 $ 35,568 =========== ========== =========
Average shares and equivalents 30,953 31,266 30,960
Net earnings per share: $ 1.80 $ 1.41 $ 1.15 ----------- ---------- ---------
See accompanying Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands except per share data) Additional Cost of Common Paid-in Retained Shares in STOCK CAPITAL EARNINGS TREASURY -------- --------- -------- ---------
Balance at December 31, 1993 $19,665 $ 132 $258,956 $(58,230) Net earnings - - 35,568 - Cash dividends - $0.380 a share - - (11,605) - Exercise of stock options & other - 7,826 - 6,442 Purchase of 657,482 treasury shares - - - (10,904) ------------------------------------------- Balance at December 31, 1994 19,665 7,958 282,919 (62,692) Net earnings - - 44,081 - Cash dividends - $0.420 a share - - (12,928) - Exercise of stock options & other - 1,358 - 2,344 Purchase of 496,616 treasury share - - - ( 9,448) ------------------------------------------- Balance at December 31, 1995 19,665 9,316 314,072 (69,796) Net earnings - - 55,680 - Cash dividends -$0.465 a share - - (14,129) - Exercise of stock options & other - 3,765 - 3,098 Purchase of 649,966 treasury shares - - - (14,168) ------------------------------------------- 19,665 13,081 355,623 (80,866) Two-for-one stock split 19,666 (12,601) (7,065) - ------------------------------------------- Balance at December 31, 1996 $39,331 $ 480 $348,558 $(80,866)
See accompanying Notes to Consolidated Financial Statements.
CONSOLIDATED BALANCE SHEET AT DECEMBER 31
IN THOUSANDS EXCEPT SHARE DATA 1996 1995 ------ ------ ASSETS Current assets Cash and cash equivalents $ 8,312 $ 3,198 Receivables, less allowances of $4,097 in 1996 and $3,721 in 1995 158,463 126,610 Inventories 137,092 121,736 Deferred income taxes 25,036 18,127 Prepaid expenses and other 17,030 12,273 --------- --------- Total current assets 345,933 281,944 --------- --------- Property, plant and equipment, net 264,238 193,134 --------- --------- Other assets Patents, goodwill and other intangibles 108,648 37,080 Investments and advances to affiliates 11,976 11,223 Receivables and other assets 9,854 10,866 Deferred income taxes 1,814 8,176 --------- --------- Total other assets 132,292 67,345 --------- --------- $742,463 $542,423 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 74,338 $ 45,194 Accrued expenses 96,310 83,041 --------- --------- Total current liabilities 170,648 128,235 --------- --------- Long-term liabilities Long-term debt 191,167 72,725 Product warranties 71,478 65,851 Deferred compensation and other liabilities 1,667 2,355 --------- --------- Total long-term liabilities 264,312 140,931 --------- --------- Shareholders' equity Preferred stock, $1 par value. Authorized and unissued 5,000,000 shares Common stock, $1 par value. Authorized 50,000,000 shares; issued 39,330,624 shares 39,331 19,665 Additional paid-in capital 480 9,316 Retained earnings 348,558 314,072 Cost of shares in treasury-8,979,300 shares in 1996 and 8,692,948 shares in 1995 ( 80,866) ( 69,796) --------- --------- Total shareholders' equity 307,503 273,257 --------- --------- $742,463 $542,423 ========= =========
See accompanying Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR YEARS ENDED DECEMBER 31
(IN THOUSANDS) 1996 1995 1994
OPERATING ACTIVITIES Net earnings $55,680 $44,081 $35,568 Reconciliation of net earnings to cash flows: Depreciation 25,320 20,331 18,322 Amortization 4,438 2,899 3,618 Loss on sales of property, equipment, and business 216 570 108 Changes in assets and liabilities, excluding effects of acquisitions and divestitures: Current and long-term receivables ( 13,237) ( 8,616) ( 8,558) Inventories ( 5,837) ( 17,324) ( 7,572) Accounts payable and accrued expenses 16,667 1,928 13,763 Prepaid, deferred and current income taxes ( 4,260) ( 993) 1,270 Long-term liabilities 4,939 7,429 13,302 Other 2,106 5,398 2,755 --------- --------- --------- Net cash provided by operating activities 86,032 55,703 72,576 --------- --------- ---------
Investing Activities Capital expenditures ( 34,990) ( 37,467) ( 31,082) Acquisitions, net of cash (133,719) ( 67,006) ( 8,417) Sales of property, equipment, and business 3,489 2,794 4,881 Other ( 155) 1,014 ( 4,229)
Net cash used in investing activities (165,375) (100,665) (38,847)
Financing Activities Proceeds from long-term debt 124,358 -- 8,000 Reductions of long-term debt ( 11,604) ( 436) ( 50) Dividends ( 14,129) ( 12,928) ( 11,605) Purchases of treasury shares ( 14,168) ( 9,448) ( 10,904) --------- --------- ---------
Net cash provided by (used in) financing activities 84,457 ( 22,812) ( 14,559) --------- --------- ---------
Change in cash and cash equivalents 5,114 ( 67,774) 19,170 Cash and cash equivalents Beginning of year 3,198 70,972 51,802 --------- --------- --------- End of year $ 8,312 $ 3,198 $ 70,972 ========= ========= =========
See accompanying Notes to Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Carlisle Companies Incorporated and Subsidiaries
SUMMARY OF ACCOUNTING POLICIES
BASIS OF CONSOLIDATION. The consolidated financial statements include the accounts of the Company and its subsidiaries. Investments in affiliates where the Company does not have majority control, none of which are significant, are accounted for on the equity method. All material intercompany transactions and accounts have been eliminated.
REVENUE RECOGNITION. The Company recognizes revenues from product sales upon shipment to the customer. The substantial majority of the Company's product sales are to customers in the United States.
USE OF ESTIMATES. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
CASH AND CASH EQUIVALENTS. The Company generally considers securities with a remaining maturity of three months or less when acquired to be cash equivalents. Cash and cash equivalents are stated at cost, which approximates market value.
INVENTORIES. Inventories are valued at lower of cost or market. Cost for inventories is determined for a majority of the Company's inventories by the last-in, first-out (LIFO) method with the remainder determined by the first-in, first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment are stated at cost. Costs assigned to property, plant and equipment of acquired companies are based on estimated fair value at the date of acquisition. Depreciation is principally computed on the straight line basis over the estimated useful lives of the assets. Asset lives are 20 to 40 years for buildings, 5 to 15 years for machinery and equipment and 3 to 10 years for leasehold improvements.
PATENTS, GOODWILL AND OTHER INTANGIBLES. Patents and other intangibles, recorded at cost, amounted to $6.9 million and $8.1 million at December 31, 1996 and 1995, respectively (net of accumulated amortization of $12.8 million and $11.0 million, respectively), and are amortized over their remaining lives averaging five years. Goodwill, representing the excess of acquisition cost over the fair value of specifically identifiable assets acquired, was $101.8 million and $29.0 million at December 31, 1996 and 1995, respectively (net of accumulated amortization of $3.6 million and $1.1 million, respectively), and is amortized on a straight-
line basis over various periods not exceeding 30 years. The Company evaluates the recoverability of goodwill based on the estimated, undiscounted future cash flows attributable to the operations with which the goodwill is associated.
PRODUCT WARRANTIES. The Company offers warranties on the sales of certain of its products and records an accrual for estimated future claims. Such accruals are based upon historical experience and management's estimate of the level of future claims.
LEASES. The Company is obligated under various noncancelable operating leases for certain facilities and equipment. Rent expense was $2.6 million, $2.8 million, and $2.6 million, in 1996, 1995 and 1994 respectively.
INCOME TAXES. Deferred tax assets and liabilities are recognized for the future tax consequences of the differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. These balances are measured using enacted tax rates expected to apply to taxable income in the years in which such temporary differences are expected to be recovered or settled. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized.
NET EARNINGS PER SHARE. Net earnings per share of common stock are based on the weighted average number of common shares and common equivalent shares outstanding during the period, assuming the exercise of stock options.
FAIR VALUE OF FINANCIAL INSTRUMENTS. The estimated fair market values of the Company's financial instruments approximate their recorded values.
RECLASSIFICATIONS. Certain reclassifications have been made to prior years' information to conform to 1996 presentation.
INVENTORIES
The components of inventories are:
IN THOUSANDS 1996 1995 ---- ----
FIFO cost (approximates current costs): Finished goods $ 82,253 $ 65,995 Work in process 17,574 15,016 Raw materials 51,872 56,810 --------- ---------
$151,699 $137,821 Excess of FIFO cost over LIFO value ( 14,607) ( 16,085) --------- --------- $137,092 $121,736 ========= =========
PROPERTY, PLANT & EQUIPMENT
The components of property, plant and equipment are:
IN THOUSANDS 1996 1995 ---- ----
Land $ 6,316 $ 5,283 Buildings & leasehold improvements 114,384 97,725 Machinery & equipment 341,296 272,718 Projects in progress 21,016 17,836 --------- --------- 483,012 393,562 Accumulated depreciation (218,774) (200,428) --------- --------- $264,238 $193,134 ========= ========= BORROWINGS Long-term debt includes:
IN THOUSANDS 1996 1995 ---- ----
Short-term obligations to be refinanced $124,358 $ -- 8.09% senior notes due 1998-2002 48,000 48,000 Industrial Development and Revenue Bonds due through 2014 12,505 21,760 Other, including capital lease obligations 7,005 3,732 --------- -------- $191,868 $73,492 Less current maturities ( 701) ( 767) --------- -------- $191,167 $72,725 ========= ========
On January 28, 1997, the Company issued $150 million in notes due in 2007 at an interest rate of 7.25%. The net proceeds will be used to repay all amounts outstanding under the Company's revolving credit facility, to repay other short-term indebtedness and for general corporate purposes.
A revolving credit facility was established in 1996 for $150 million with various banks. As of December 31, 1996, $35 million was unused. The Company also had available unsecured lines of credit from banks of $20 million, of which $10.6 million was unused as of December 31, 1996.
At December 31, 1996, letters of credit amounting to $19.1 million were outstanding, primarily to provide security under insurance arrangements and certain borrowings.
The weighted average interest rates on the revenue bonds for 1996 and 1995 were 3.5% and 4.4%, respectively.
The debt facilities contain various restrictive covenants and limitations, all of which were complied with in 1996 and 1995. The industrial development and revenue bonds are collateralized by the facilities and equipment acquired through the proceeds of the related bond issuances.
Cash payments for interest were $6.9 million in 1996, $5.9 million in 1995, and $4.4 million in 1994.
The aggregate amount of long-term debt maturing in each of the next five years is approximately $0.7 million in 1997, and $10.3 million in 1998 through 2001.
ACQUISITIONS
Acquisitions completed by the Company in the last three years include: 1996-The Engineered Plastics Division (EPD) of Johnson Controls, Inc., a leading supplier of technologically advanced components to the automotive industry; Intero, Inc., and Unique Stamping, Inc., manufacturers of steel and aluminum wheels and rims for the OEM trailer market and automotive aftermarket; Scherping Systems, Inc. and Scherping Controls, Inc., a leading supplier of cheese processing equipment for the dairy industry; Hartstone, Inc., a leading designer and manufacturer of ceramic tableware, cookware and decorative kitchenware, and the manufacturing assets and fleece back sheeting technology of Insulfoam, Inc.; 1995-Trail King Industries, a manufacturer of specialized trailers used in the transportation of construction equipment; Ti-Brook, Inc. and Ti-Brook South, Inc., manufacturers of a variety of dump bodies and trailers; Walker Stainless Equipment Company, a manufacturer of stainless steel equipment; and Thunderline Corporation, a designer and manufacturer of custom-molded rubber parts utilized for the automobile industry; 1994-Sparta Brush Company, a manufacturer of specialized brushes and cleaning tools; and the coatings and waterproofing business of Quaker Construction Products, Inc.
These acquisitions were completed for cash, assumptions of debt, and issuance of stock aggregating approximately $257.6 million and have been accounted for as purchases. The Sparta Brush Company and Hartstone, Inc., acquisitions included the issuance of treasury shares amounting to $15.3 million.
Results of operations, which have been included in the consolidated financial statements since their respective acquisition dates, did not have a material effect on consolidated operating results of the Company in the years of acquisition.
SHAREHOLDERS' EQUITY
On October 4, 1996, the Company's Board of Directors authorized a two-for-one stock split which was issued on January 15, 1997, to shareholders of record on January 2, 1997. The split resulted in the issuance of 19,665,312 new shares of common stock including 4,489,650 shares issued as treasury shares. In addition, authorized shares were increased from 25,000,000 to 50,000,000. All references in the financial statements to average number of shares outstanding and related prices, per share amounts, and stock option plan data have been restated to reflect the split.
The Company has a Shareholders' Rights Agreement which is designed to protect shareholder investment values. A dividend distribution of one Preferred Stock Purchase Right for each outstanding share of the Company's common stock was declared, payable to shareholders of record on March 3, 1989. The Rights will become exercisable under certain circumstances, including the acquisition of 25% of the Company's common stock, or 40% of the voting power, in which case all rights holders except the acquiror may purchase the Company's common stock at a 50% discount. If the Company is acquired in a merger or other business combination, and the Rights have not been redeemed, rights holders may purchase the acquiror's shares at a 50% discount. On August 7, 1996, the Company amended the Shareholders' Rights Agreement to, among other things, extend the term of the Rights until August 6, 2006.
Common shareholders of record on May 30, 1986 are entitled to five votes per share. Common stock acquired subsequent to that date entitles the holder to one vote per share until held four years, after which time the holder is entitled to five votes.
EMPLOYEE STOCK OPTIONS & INCENTIVE PLAN
The Company maintains an Executive Incentive Program for executives and certain other employees of the Company and its operating divisions and subsidiaries. The Program contains a plan, for those who are eligible, to receive cash bonuses and/or shares of restricted stock. The Program also has a stock option plan available to certain employees who are not eligible to receive cash or restricted stock awards.
In 1996, 33,132 shares of restricted stock were issued and 2,114 shares were surrendered under the terms of the program. At December 31, 1996 an additional 2,208,552 shares of the Company's common stock was available for issuance as restricted stock.
The activity under the stock options plan is as follows:
Number Option of Shares Prices --------- ------
Outstanding at December 31, 1993 1,320,718 $ 8.07-15.38 Options granted 201,000 16.25-17.25 Options exercised ( 239,580) 8.07-12.32 Options surrendered ( 28,866) 12.32
Outstanding at December 31, 1994 1,253,272 $8.07-17.25 Options granted 442,000 17.32-20.82 Options exercised ( 211,476) 8.41-12.32 Options surrendered ( 4,798) 12.32
Outstanding at December 31, 1995 1,478,998 $8.07-20.82 Options granted 396,000 19.88-28.82 Options exercised ( 175,892) 8.07-16.25 Options surrendered ( 2,276) 12.32
Outstanding at December 31, 1996 1,696,830 8.07-28.82 ========== Exercisable at December 31, 1996 1,237,663 8.07-28.82 ========== Available for grant at December 31, 1996 288,182 ==========
In 1996, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," issued in October 1995. In accordance with the provisions of SFAS No. 123, the Company applies APB Opinion 25 and related interpretations in accounting for its stock compensation plans and, accordingly, does not recognize compensation cost for its stock option plan. If the Company had elected to recognize compensation cost based on the fair value of the options granted at grant date as prescribed by SFAS No. 123, the effect on net earnings and earnings per share, in 1996 and 1995, would not have been significant.
RETIREMENT PLANS
The Company maintains defined benefit retirement plans for the majority of its employees. Benefits are based primarily on years of service and earnings of the employee. Plan assets consist primarily of publicly-listed common stocks and corporate bonds.
Pension expense includes:
IN THOUSANDS 1996 1995 1994 ---- ---- ---- Service cost $3,374 $2,335 $2,498 Interest cost on projected benefit obligation 6,122 5,682 5,037 Actual return on plan assets (6,440) (5,982) (5,757) Net amortization and deferral ( 80) ( 38) ( 57)
Total pension expense $2,976 $1,997 $1,721 ======= ======= =======
The funded status of the plans at December 31 was:
IN THOUSANDS 1996 1995 Actuarial present value of ---- ---- accumulated benefit obligation Vested $72,709 $67,529 Non-vested 1,435 1,127 -------- -------- $74,144 $68,656 ======== ========
Plan assets at fair value $90,737 $81,035 Projected benefit obligation (86,135) (80,304) -------- -------- Plan assets in excess of projected benefit obligation 4,602 731 Unamortized transition asset ( 4,285) ( 4,969) Unrecognized prior service costs 3,031 5,198 Unrecognized net gains (11,695) ( 8,080) Accrued pension expense $(8,347) $(7,120) ======== ========
The projected benefit obligation was determined using an assumed discount rate of 7.75% in 1996 and 1995, and 8.25% in 1994. The assumed rate of compensation increase was 4.5% and the expected rate of return on plan assets was 8.75% in 1996, 1995 and 1994.
Additionally, the Company maintains a retirement savings plan covering substantially all employees other than those employees under collective bargaining agreements. Plan expense was $3.2 million, $2.7 million, and $2.6 million, in 1996, 1995 and 1994, respectively.
The Company also has a limited number of unfunded post-retirement benefit programs. The post-retirement benefit expense for the Company, inclusive of the components of service costs, interest costs and the amortization of the unrecognized transition obligation, was approximately $0.6 million ($0.4 million after tax) during 1996, 1995 and 1994. The present value of the Company's obligation under these plans is not significant.
INCOME TAXES
The provision for income taxes was as follows:
IN THOUSANDS 1996 1995 1994 ---- ---- ----
Currently payable Federal $27,954 $24,828 $18,276 State, local and other 9,788 7,742 8,046 -------- -------- -------- $37,742 $32,570 $26,322 Deferred (benefit) Federal $(1,238) $(3,563) $( 839) State, local and other ( 144) (230) (2,260) -------- -------- -------- $(1,382) $(3,793) $(3,099) -------- -------- -------- Total Provision $36,360 $28,777 $23,223 ======== ======== ========
Deferred tax assets (liabilities) are comprised of the following at December 31:
IN THOUSANDS 1996 1995 ---- ----
Product warranty $ 34,232 $ 31,191 Inventory reserves 2,703 1,944 Doubtful receivables 2,423 1,728 Employee benefits 7,206 6,489 Other, net 9,699 8,834 --------- --------- Deferred assets $ 56,263 $ 50,186 --------- --------- Depreciation $(29,037) $(22,73) Other, net (376) (1,151) --------- --------- Deferred liabilities $(29,413) $(23,883)
Net deferred tax assets $ 26,850 $ 26,303 ========= =========
No valuation allowance is required for the deferred tax assets based on the Company's past tax payments and estimated future taxable income.
A reconciliation of taxes computed at the statutory rate with the tax provision is as follows:
IN THOUSANDS 1996 1995 1994
Federal income taxes at statutory rate $32,214 $25,500 $20,577 State income taxes, net of federal income tax benefit 2,912 2,706 2,881 Other, net 1,234 571 (235) -------- -------- -------- $36,360 $28,777 $23,223 -------- -------- -------- Effective income tax rate 39.5% 39.5% 39.5%
Cash payments for income taxes were $40.5 million, $28.7 million and $22.3 million in 1996, 1995 and 1994, respectively.
SEGMENT INFORMATION
The Company's operations are classified into the following business segments:
CONSTRUCTION MATERIALS. The principal products of this segment are rubber, plastic and fleece back sheeting used predominantly on non-residential flat roofs and related roofing accessories, including flashings, fasteners, ceiling tapes, coatings and waterproofings. The markets served include new construction, re-roofing and maintenance of low slope roofs, water containment, HVAC sealants, and coatings and waterproofings.
TRANSPORTATION PRODUCTS. The principal products of this segment are heavy duty friction and braking systems for truck and off-highway equipment, rubber and plastic automotive components, including precision-molded engine components and blow-molded bumper beams, high grade aerospace wire, specialty trailers, self-contained ISO 40-foot perishable cargo shipping containers, standard and custom-built high payload trailers and dump bodies. Customers include truck OEMs, shipping lines, heavy equipment and truck dealers and aftermarket distributors, commercial haulers, automotive OEMs and systems suppliers, and dairy product distributors.
GENERAL INDUSTRY. The principal products of this segment include small bias-ply rubber tires, stamped and roll-formed wheels, commercial and institutional plastic foodservice permanentware and catering equipment, fiber glass and composite material trays and dishes, ceramic tableware, specialty rubber and plastic cleaning brushes and stainless steel processing equipment and their related process control systems. Customers include foodservice distributors, restaurants, golf car manufacturers, power equipment manufacturers, boat and utility trailer manufacturers and dairy and pharmaceutical processors.
CORPORATE--includes general corporate and idle property expenses. Corporate assets consist primarily of cash and cash equivalents, facilities, and other invested assets.
Financial information for operations by reportable business segment is included in the following summary:
(In thousands) Earnings Before Deprec. Income & Capital Sales Taxes Assets Amort. Spending ------ -------- ------- ------- -------- - ---- Construction Materials $325,165 $43,582 $183,836 $ 6,220 $ 6,580 Transportation Products 371,517 27,495 309,125 11,637 16,960 General Industry 320,813 40,260 225,282 11,201 11,360 Interest, net --- ( 8,396) --- --- --- Corporate --- (10,901 24,220 700 90 --------- -------- -------- ------- ------- $1,017,495 $92,040 $742,463 $29,758 $34,990 ========== ======== ======== ======= ======= - ---- Construction Materials $308,327 $36,676 $169,476 $ 5,810 $ 9,622 Transportation Products 278,867 20,241 210,700 9,617 14,175 General Industry 235,340 29,627 143,606 7,076 13,404 Interest, net -- ( 4,055) -- -- -- Corporate -- ( 9,631) 18,641 727 266 --------- -------- -------- ------- ------- $ 822,534 $72,858 $542,423 $23,230 $37,467 ========== ======== ======== ======= ======= - ---- Construction Materials $ 288,533 $35,066 $155,383 $ 5,886 $ 3,166 Transportation Products 200,213 13,497 122,031 8,906 16,403 General Industry 203,904 21,391 105,482 6,296 11,214 Interest, net -- ( 1,670) -- -- -- Corporate -- ( 9,493) 102,387 852 299 --------- -------- -------- ------- ------- $ 692,650 $58,791 $485,283 $21,940 $31,082 ========== ======== ======== ======= =======
QUARTERLY FINANCIAL DATA (In thousands except per share data) (unaudited) FIRST SECOND THIRD FOURTH YEAR --------- -------- -------- ------- ---------- - ---- Net sales $ 225,121 262,315 252,603 277,456 $1,017,495 Gross margin $ 52,371 64,484 62,638 58,205 $ 237,698 Operating expenses $ 33,733 35,273 35,551 36,019 $ 140,576 Net earnings $ 10,639 16,441 15,461 13,139 $ 55,680 Net earnings per share: $ 0.35 0.53 0.50 0.42 $ 1.80 Dividends per share: $ 0.1100 0.1100 0.1225 0.1225 0.4650 Stock price: High $ 22 9/16 $ 28 3/16 $ 28 1/16 $ 30 1/2 Low $ 19 1/16 $ 21 5/8 $ 24 1/4 $ 26 7/8
- ---- Net sales $ 187,972 200,802 216,551 217,209 $822,534 Gross margin $ 44,443 50,223 52,792 50,216 $197,674 Operating expenses $ 30,039 28,727 31,017 31,792 $121,575 Net earnings $ 8,561 12,416 12,528 10,576 $ 44,081 Net earnings per share: $ 0.28 0.39 0.40 0.34 $ 1.41 Dividends per share: $ 0.10 0.10 0.11 0.11 $ 0.42 Stock price: High $ 18 1/2 $ 20 3/16 $ 21 3/16 $21 13/16 Low $ 17 1/4 $ 18 3/16 $ 19 1/4 $19 15/16
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors Carlisle Companies Incorporated:
We have audited the accompanying consolidated balance sheets of Carlisle Companies Incorporated and subsidiaries as of December 31, 1996 and 1995 and the related consolidated statements of earnings, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Carlisle Companies Incorporated and subsidiaries as of December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles.
Arthur Andersen LLP
/s/ Arthur Andersen LLP
New York, New York January 28, 1997
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth certain information relating to each executive officer of the Company as of December 31, 1996, as furnished to the Company by the executive officers. Except as otherwise indicated each executive officer has had the same principal occupation or employment during the past five years.
Name Age Positions With Company Period Of Service - ---- --- ---------------------- -----------------
Stephen P. Munn 54 Chief Executive Officer September, 1988 since September, 1988, to date and Chairman of the Board since January, 1994, and President from September, 1988 to February, 1995, of the Company.
Dennis J. Hall 55 President, since February, August, 1989 1995, and Executive Vice to date President, Treasurer and Chief Financial Officer, from August, 1989 to February, 1995, of the Company.
Robert J. Ryan, Jr. 52 Vice President, Treasurer January, 1996 and Chief Financial to date Officer of the Company.
John W. Altmeyer 38 Vice President, Corporate August, 1989 Development of the to date Company.
Steven J. Ford 37 Vice President, Secretary and July, 1995 General Counsel, of the Company to date since July, 1995. Previously an associate with Bond, Schoeneck & King, Syracuse, NY.
Scott A. Kingsley(1) 32 Vice President, Controller April, 1996 to of the Company. December, 1996
(1) Mr. Kingsley currently serves the Company as chief financial officer of Carlisle Engineered Products, a wholly-owned subsidiary.
The officers have been elected to serve at the pleasure of the Board of Directors of the Company. There are no family relationships between any of the above officers, and there is no arrangement or understanding between any officer and any other person pursuant to which he was selected an officer.
Information required by Item 10 with respect to directors of the Company is incorporated by reference to the Company's definitive proxy statement filed with the Securities and Exchange Commission on March 6, 1997.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
Information required by Item 11 is incorporated by reference to the Company's definitive proxy statement filed with the Securities and Exchange Commission on March 6, 1997.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required by Item 12 is incorporated by reference to the Company's definitive proxy statement filed with the Securities and Exchange Commission on March 6, 1997.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not applicable.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
Financial statements required by Item 8 are as follows:
Consolidated Statement of Earnings, years ended December 31, 1996, 1995 and 1994 Consolidated Statement of Shareholders' Equity, years ended December 31, 1996, 1995 and 1994 Consolidated Balance Sheet, December 31, 1996 and 1995 Consolidated Statement of Cash Flows, years ended December 31, 1996, 1995 and 1994 Notes to Consolidated Financial Statements
Financial statement supplementary notes applicable to the filing of this report are as follows: Page 1. Other current liabilities 38
All other schedules are omitted because the required information is inapplicable or the information is presented in the financial statements or related notes.
Exhibits applicable to the filing of this report are as follows:
(3) By-laws of the Company.* (3.1) Restated Certificate of Incorporation as amended April 22, 1991.**** (3.2) Certificate of Amendment of the Restated Certificate of Incorporation dated December 20, 1996. (4) Shareholders' Rights Agreement, February 8, 1989.* (4.1) Amendment to Shareholders' Rights Agreement, dated August 7, 1996.***** (10.1) Executive Incentive Program.** (10.2) Representative copy of Executive Severance Agreement, dated December 19, 1990, between the Company and certain individuals, including the five most highly compensated executive officers of the Company.*** (10.3) Summary Plan Description of Carlisle Companies Incorporated Director Retirement Program, effective November 6, 1991.*** (12) Ratio of Earnings to Fixed Charges. (21) Subsidiaries of the Registrant. (23) Consent of Independent Public Accountants. (27) Financial Data Schedule as of December 31, 1996 and for the twelve months ended December 31 1996.
* Filed as an Exhibit to the Company's annual report on Form 10-K for the year ended December 31, 1988 and incorporated herein by reference.
** Filed with the Company's definitive proxy statement dated March 9, 1994 and incorporated herein by reference.
*** Filed as an Exhibit to the Company's annual report on Form 10-K for the year ended December 31, 1990 and incorporated herein by reference.
**** Filed as an Exhibit to the Company's annual report on Form 10-K for the year ended December 31, 1991 and incorporated herein by reference.
***** Filed as an Exhibit to Form 8-A/A filed on August 9, 1996 and incorporated herein by reference.
On October 17, 1996, the Company filed with the Commission a Current Report on Form 8-K dated October 4, 1996 describing the Company's acquisition of substantially all of the assets of the Engineered Plastics Division ("EPD") of Hoover Universal, Inc., a wholly-owned subsidiary of Johnson Controls, Inc. for $80,000,000 in cash plus the assumption of
certain liabilities totaling approximately $26.5 million. The assets acquired primarily included certain facilities and equipment used in the manufacture of injection-molded and blow-molded plastic parts for the automotive industry and related automotive tooling, as well as substantially all of the inventory and accounts and notes receivable of EPD. On December 9, 1996, the Company filed with the Commission an Amendment to Form 8-K on Form 8-K/A describing the change to Rule 3-05 of Regulation S-X removing the requirement to provide audited financial statements and pro forma financial information.
The Company will furnish to the Commission upon request its long-term debt instruments not listed in this Item.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CARLISLE COMPANIES INCORPORATED
/s/ Dennis J. Hall
By: Dennis J. Hall, President and a Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
/s/ Stephen P. Munn /s/ Peter F. Krogh
Stephen P. Munn, Chairman Peter F. Krogh, Director Chief Executive Officer and a Director (Principal Executive Officer) /s/ Donald G. Calder
/s/ Robert J. Ryan Donald G. Calder, Director
Robert J. Ryan, Vice President, Treasurer /s/ Paul J. Choquette, Jr. and Chief Financial Officer (Principal Financial Officer) Paul J. Choquette, Jr., Director /s/ Scott A. Kingsley /s/ Henry J. Forrest Scott A. Kingsley Controller Henry J. Forrest, Director (Principal Accounting Officer)
March 7, 1997
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES SUPPLEMENTARY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 1. OTHER CURRENT LIABILITIES - Other current liabilities at December 31 consist of the following:
(000's) 1996 1995 ---- ----
Employee compensation and benefits $25,304 $21,044 Product warranties 28,371 27,675 Insurance 9,888 7,727 Other accrued expenses 32,746 26,595 ------- ------- $96,309 $83,041 ======= =======
CARLISLE COMPANIES INCORPORATED COMMISSION FILE NUMBER 1-9278 FORM 10-K FOR FISCAL YEAR ENDED DECEMBER 31, 1996
EXHIBIT LIST
(3.2) Certificate of Amendment of the Restated Certificate of Incorporation, dated December 20, 1996
(12) Ratio of Earnings to Fixed Charges
(21) Subsidiaries of the Registrant
(23) Consent of Independent Public Accountants
(27) Financial Data Schedule as of December 31, 1996 and for the twelve months ended December 31, 1996