UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended DecemberFOR THE FISCAL YEAR ENDED DECEMBER 31, 19971999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from_________to_________1934.
Commission file number 1-9278
Carlisle Companies Incorporated
- -------------------------------------------------------------------------------CARLISLE COMPANIES INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 31-1168055)
- ------------------------------- -------------------------------DELAWARE 31-1168055
(State or other jurisdiction of (I.R.S. employerEmployer Identification No.)
incorporation or organization identification no.)
250 South Clinton Street, Suite 201, Syracuse, New York 13202-1258
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (315) 474-2500
--------------organization)
250 SOUTH CLINTON STREET, SUITE 201, SYRACUSE, NEW YORK 13202-1258 (315) 474-2500
(Address of principal executive office, including zip code) (Telephone Number)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
Common stock, $1 par value New York Stock Exchange
- -------------------------- -----------------------
Preferred Stock Purchase Rights New York Stock Exchange
- ------------------------------- -----------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No___No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
AggregateAs of February 24, 2000, 30,232,491 shares of common stock of the
registrant were outstanding; the aggregate market value of votingthe shares of common
stock of the registrant held by non-affiliates atwas approximately $913,759,218
based upon the closing price of the common stock on the New York Stock Exchange
on February 24, 1998 $1,276,973,417
Shares of common stock outstanding at February 24, 1998 30,188,1362000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the Annual Meeting of
Shareholders to be held on April 20, 19982000 are incorporated by reference in Part
III.
2
PART I
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.manufacturing. 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 threefour industry segments: Construction Materials, Transportation
ProductsIndustrial Components,
Automotive Components and General Industry.Industry (All Other). 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 backFleeceBACK-TM- sheeting used predominantly on non-residential flat
roofs and related roofing accessories, including flashings, fasteners, sealing
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.INDUSTRIAL COMPONENTS. The principal products of this segment are small bias-ply
rubber tires, stamped and roll-formed wheels, 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 and
specialtyspeciality electronic cable, specialty trailers, self-contained ISO 40-foot perishable cargo shipping
containers, standard and custom-built high payload trailers and dump bodies.cable. Customers include golf car manufacturers, power
equipment manufacturers, boat and utility trailer manufacturers, truck OEMs, shipping lines,
heavy equipment and truck dealers and aftermarket distributors, commercial haulers, automotiveaerospace OEMs,
and systems
suppliers, and dairy product distributors.
GENERAL INDUSTRY.electronic equipment manufacturers.
AUTOMOTIVE COMPONENTS. The principal products of this segment include small
bias-plyare highly
engineered rubber tires, stamped and roll-formed wheels,plastic components for Tier I suppliers and other
manufacturers in the automotive market.
GENERAL INDUSTRY (ALL OTHER). The principal products of this segment include
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.systems, specialty
trailers and standard and custom-built high payload trailers and dump bodies,
refrigerated truck bodies and perishable cargo container leasing. Customers
include foodservicefood service distributors, restaurants, golf car manufacturers, powerdairy product processors and
distributors, heavy equipment manufacturers, boat and utility trailer manufacturerstruck dealers, home delivery distributors,
shipping lines and dairy and
pharmaceutical processors.
2commercial haulers.
3
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):
1999 1998 1997
1996 1995
--------- --------- ------------- ---- ----
Construction Materials........................Materials $ 322.2405.4 $ 325.2371.5 $ 308.3
Transportation Products....................... 521.2 371.5 278.9316.6
Industrial Components 527.9 510.8 396.9
Automotive Components 314.3 272.0 241.3
General Industry.............................. 417.1 320.8 235.3
--------- --------- ---------
Total......................................... $ 1,260.5 $ 1,017.5 $ 822.5Industry - All Other 363.7 363.2 305.7
- ----------------------------------- -------- -------- --------
Total $1,611.3 $1,517.5 $1,260.5
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 productsConstruction Materials, Industrial Components, Automotive Components and general industryGeneral
Industry (All Other) 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 1998.2000.
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 threefour 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. NoExcept for Automotive Components, 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. Sales to its largest
customer represented 25.6% of total Automotive Components segment sales in 1999.
Order Backlog was $228.0 million at December 31, 1999, $262.1 million
at December 31, 1998, and $281.6 million at December 31, 1997, and $200.8 million at
December 31, 1996, and $160.7 million at December 31, 1995.1997.
Research and Development expenses increased towere $15.8 million in 1997,1999, compared
to $11.9$16.2 million in 1996,1998, and $12.3$15.8 million in 1995. The 1997 increase
is primarily attributable to product development for the Company's automotive
components operation.
3
1997.
The Company employs approximately 8,50010,290 persons on a full-time basis.
4
The businesses of the construction materialsConstruction Materials, Automotive Components and
transportation products
industryGeneral Industry (All Other) segments are generally not seasonal in nature.
Within the general
industryIndustrial Components segment, distribution of lawn and garden
products generally reach peak sales volume during the first two quarters of the
year. The businesses of all threefour segments are affected by the state of the
general economy.
In 1997,1999, the Company completed the following acquisitions. In April,January,
the Company acquired the assets of Overland Brakes, Inc.,Global Manufacturers Corporation, a
spring-brake
manufacturing company.manufacturer of wheel centers, hub covers, bumpers and brackets for the OEM and
auto aftermarkets. In June,May, the Company acquired The Neilson Wheel Company,
Inc.the assets of Johnson Welding &
Manufacturing Co. (d/b/a Johnson Truck Bodies), a producermanufacturer of custom
refrigerated truck bodies sold to the home delivery, dairy, convenience food
store and distributor of tire and wheel assemblies.other niche delivery markets. In July, the
acquisition of The City Machine and Wheel Company, a manufacturer and
distributor of stamped steel wheels, was completed. In September,November, the Company acquired
Conestoga Tire & Rim Inc. and Wheeltech North America, Inc.,
distributorscertain assets of tire and wheel assemblies to various marketsInnovative Engineering Limited, a cheese process engineering
business located in the United
States and Canada. In October, the Company acquired Tilden Corporation, a
value-added distributor of tire and wheel assemblies.Cambridge, New Zealand. In December, the Company purchased Zimmerman Brush Co.,acquired
(i) the assets of Marko International, Inc. a manufacturer of brushestable coverings,
table skirting and relating accessories for the janitorialfoodservice industry and sanitation markets. These acquisitions will add principally(ii)
certain assets of Cragar Industries relating to the Company's
general industry segment. In 1997, theits steel outer rim and
accessory business. The Company also completed its divestiture of
Carlisle Engineered Metals Incorporated, a metal roofing company,entered into an exclusive license to
manufacture and sold
Braemar, Inc., a small manufacturer of medical monitoring devices.sell CRAGAR brand custom wheels.
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 lossearnings and identifiable assets
by industry segmentssegment 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:
4
(IN THOUSANDS)(In Thousands) 1999 1998 1997
1996 1995
- ------------------------------------------- ---------- ---------- -------------- ---- ----
Sales to Unaffiliated Customers(1)
Construction Materials.....................Materials $ 322,228405,387 $ 325,165371,547 $ 308,327
Transportation Products.................... 521,181 371,517 278,867316,597
Industrial Components 527,902 510,780 396,941
Automotive Components 314,246 271,955 241,283
General Industry........................... 417,141 320,813 235,340
Operating Profit or LossIndustry (All Other) 363,721 363,212 305,729
Earnings before interest and
income taxes
Construction Materials.....................Materials $ 49,39858,195 $ 43,58253,030 $ 36,676
Transportation Products.................... 45,101 27,495 20,24149,120
Industrial Components 66,001 61,261 47,509
Automotive Components 21,212 17,638 18,633
General Industry........................... 50,912 40,260 29,627
Interest, net.............................. (15,337) (8,396) (4,055)Industry (All Other) 40,429 38,166 30,142
Corporate(2)............................... (11,200) (10,110) (13,290) (10,901) (9,631)
Identifiable Assets
Construction Materials.....................Materials $ 177,270229,905 $ 183,836218,045 $ 169,476
Transportation Products.................... 338,770 309,125 210,700174,157
Industrial Components 333,401 319,519 278,458
Automotive Components 209,653 213,900 178,206
General Industry........................... 320,205 225,282 143,606Industry (All Other) 262,435 262,393 215,777
Corporate(3)............................... 24,971 24,220 18,641 45,268 8,995 14,618
- ------------------------
(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.
5
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, 1997:1999:
O--OFFICE- -------------------------------------------------------------------------------------------------------------------------
O - OFFICE APPROXIMATE
M - MANUFACTURING FLOOR SPACE APPROXIMATE
PRINCIPAL PRODUCT M--MANUFACTURING OWNED FLOOR SPACE APPROXIMATE
OR ACTIVITY W--WAREHOUSINGW - WAREHOUSING LOCATION OWNED OR LEASED (SQ. FT.) ACREAGE
- ---------------------------------- ----------------- ------------------- --------------- ------------- ------------------------------------------------------------------------------------------------------------------------------------------
Corporate headquarters O Syracuse, NY Leased to 2005 15,500 ---
O,M,W Zevenaar, Holland Owned 26,000 1
---------------------------------
41,500 1
---------------------------------
- -------------------------------------------------------------------------------------------------------------------------
Elastomeric membranes and O,M,W Carlisle, PA Owned 415,774557,474 79
and
related roofing products O,M,W Greenville, IL Owned 165,430 35
O,M,W Stafford,Sapulpa, OK Owned 34,503 -
O,M,W Wylie, TX Owned 108,500 944,000 6
O,M,W Senatobia, MS Owned 54,500 -
O,M,W Bloemedalerweg,
Netherlands Leased to 2004 175,000 -
W Bloemedalerweg,
Netherlands Leased to 2004 30,000 -
O Denver, CO Leased to 2001 2,139 -
O Mississauga, Canada Leased to 2002 1,860 -
O Portland, ME Leased to 2002 5,205 -
O Sutton Courtney, UK Leased to 2003 1,000 -
W Greenville, IL Leased to 2003 40,000 -
O Akron, OH Leased to 2001 9,600 -
W Greenville, IL Leased to 2000 25,500 -
M Kingston, NY Leased to 2000 50,000 -
W Carlisle, PA Leased to 2001 49,600 -
O Bloomsburg, PA Leased to 2002 500 -
M Franklin Park, IL Leased to 2004 265,000 -
M Kingston, NY Leased to 2004 168,000 -
O Plano, TX Leased to 2004 26,878 -
O Sewickley, PA Leased to 2000 27,852 -
O Chicago, IL Leased to 2000 3,000 -
O,M,W Fontana, CA Leased to 2001 72,600 --72,587 -
O,M,W Sapulpa, OK Owned 34,550 3
O,M,W Wylie, TX Owned 44,000 6
W Greenville, ILKennesaw, GA Leased to 1999 40,000 --
W Carlisle, PA Leased to 1999 49,600 --
O,W Carollton, TX Leased to 1999 27,000 --
W Herington, Kansas Leased to 1999 32,000 --
------------- ---
989,454 132
------------- ---2002 10,720 -
---------------------------------
1,820,348 120
---------------------------------
- -------------------------------------------------------------------------------------------------------------------------
Small pneumatic tires and tubes; O,M,W Carlisle, PA Owned 494,000 29640,609 31
tubes; stamped and roll-formed wheels O,M,W Aiken, SC Owned 220,500 23420,500 18
roll-formed wheels O,M, PortW Point Fortin, Owned 167,604 ---
Trinidad, W.I.
O,M,W Long Beach, CA Owned 63,50060,000 3
W Trenton, SC Leased to 1999 176,450 --
W Long Beach, CA Leased to 1998 87,000
M Milwaukee, WI Owned 99,000 --
W Waterloo, Ontario Leased to 2007 69,000 --
W Winnepeg, Manitoba Leased to 2002 48,800 --
W Saskatoon, Leased to 2002 30,200 --
Saskatchewan-
O,M,W Ontario, CA Leased to 1998 127,345 --Owned 60,000 -
O,M,W Lenexa, KS Leased to 1998 113,0002001 112,900 6
W Los Angeles, CA Leased to 2000 8,000 -
M Los Angeles, CA Leased to 2003 21,000 -
W Los Angeles, CA Leased to 2003 16,800 1
M Los Angeles, CA Leased to 2003 20,515 2
O Los Angeles, CA Leased to 2003 10,000 -
W Lakeland, FL Leased to 2003 18,750 -
W Springfield, TN Leased to 2004 56,000 -
W Spokane, WA Leased to 2000 16,000 -
M Stow, OH Leased to 2000 20,000 5
O,W Mansfield, TX Leased to 2001 38,160 -
W Perrysburg, OH Leased to 2002 64,300 ---
W Villa Rica, GA Leased to 2002 43,000 --
M Shenzhen, China-
W Winnepeg, Manitoba Leased to 1998 84,750 5
------------- ---
1,888,4492002 48,800 -
W Saskatoon, Leased to 2002 30,200 -
Saskatchewan
W Carson, CA Leased to 2003 84,044 -
O,M,W Ontario, CA Leased to 2003 87,143 -
W Montreal, Canada Leased to 2004 27,000 -
W Waterloo, Ontario Leased to 2007 69,000 -
---------------------------------
2,239,325 66
------------- ------------------------------------
6
- -------------------------------------------------------------------------------------------------------------------------
Molded plastics products for M Oklahoma City, OK Owned 147,000146,985 8
for commercial food service; ceramic W Oklahoma City, OK Leased to 1998 254,000 --
tableware O,M,W Fredonia, WI Owned 192,500 12
M Sparta, WI Owned 40,000 3service; ceramic tableware O,M Zanesville, OH Owned 125,600 16
O,M,W Sparta, WI Owned 40,000 3
W Oklahoma City, OK Leased to 1998 18,000 --
------------- ---
777,1001999 253,760 -
O Atlanta, GA Leased to 1999 1,610 -
O Des Plaines, IL Leased to 2001 1,462 -
W Chicago, IL Leased to 2004 16,000 -
O,W Charlotte, NC Leased to 2009 210,560 -
---------------------------------
988,477 39
------------- ------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
Custom-manufactured rubber and M Middlefield, OH Owned 200,600200,581 28
and plastics products, including M Crestline, OH Owned 173,000172,997 40
including precision-molded engine components M Canton, OH Owned 87,845 17
engine components and blow-molded bumper beams M Lake City, PA Owned 100,000 30
blow-molded bumper beams M Trenton, SC Owned 67,695 10
M Belleville, MI Owned 46,00076,000 5
M Erie, PA Owned 95,800 15
M Lapeer, MI Owned 96,53096,300 6
M Tuscaloosa, ALAl Owned 67,376 15
M,W Erie, PAO Chardon, OH Leased to 1999 136,050 --
M2004 8,033 -
W Canton, OH Leased to 2000 31,840 --
W Mayville, MI Leased to 1998 40,000 ---
M,W Ashtabula, OH Leased to 2000 30,000 --
W Trenton, SC-
O Livonia, MI Leased to 1998 19,000 --
O Chardon, OH2000 2,673 -
M,W Erie, PA Leased to 1998* 7,500 --
------------- ---
1,199,236 166
------------- ---
6
O--OFFICE APPROXIMATE
PRINCIPAL PRODUCT M--MANUFACTURING OWNED FLOOR SPACE APPROXIMATE
OR ACTIVITY W--WAREHOUSING LOCATION OR LEASED (SQ. FT.) ACREAGE2004 142,000 -
---------------------------------- ----------------- ------------------- --------------- ------------- -----------------
M Chihuahua, MX Leased to 2004 50,000 8
---------------------------------
1,229,140 174
---------------------------------
- -------------------------------------------------------------------------------------------------------------------------
Brake lining for trucks and O,M Ridgway,Ridgeway, PA Owned 117,300 7
trailers; brakes and actuation O,M Fredericksburg, VA Owned 90,000 3090,042 27
actuation systems; friction products O Charlottesville, VA Owned 25,000 4
friction products O,M,W Logansport, IN Owned 112,200 26
O,M,W Bloomington, IN Owned 250,000 19
O,M Brantford, Ont. Leased to 1999* 24,000 1
W Lancaster, PA Leased to 1999 39,000 --2002 86,000 2
M,W Stockton, CA Leased to 2000 27,600 2
O,M Brantford, Ontario Leased to 2002 40,000 2
M,W Pittsburg, KS Leased to 2004 30,000 --3
M,W Stockton, CA Leased to 2000 27,600 --
M Nampa, ID Leased to 2007 106,400 5
O,M,W Zevenaar, Holland Owned 26,000 1
------------- ---
847,500 95
------------- ------------------------------------
884,542 97
---------------------------------
- -------------------------------------------------------------------------------------------------------------------------
Specialized lowbed trailers for O,M Mitchell, SD Owned 242,730 27245,000 36
for construction and commercial O,M Brookville, PA Owned 111,640156,000 22
commercial markets O,M Green Pond, AL Owned 49,860 22
------------- ---
404,230 63
------------- ---14
M,W Mitchell, SD Leased to 2003 14,000 -
---------------------------------
464,860 72
---------------------------------
- -------------------------------------------------------------------------------------------------------------------------
Liquid transportTransport tanks and O,M,W New Lisbon, WI Owned 210,850252,850 31
and in-plant processing equipment O,M,W Elroy, WI Owned 84,300 7
equipment O,M,W Winsted, MN Owned 382,894 --390,894 7
O,M,W Rice Lake, WI Leased to 2002 135,000 5
O,M,W Tavares, FL Leased to 19981999 73,967 12
------------- ---
752,011 50
------------- ------------------------------------
937,011 62
---------------------------------
- -------------------------------------------------------------------------------------------------------------------------
High- and medium-temperaturemedium- O,M,W St. Augustine, FL Owned 166,750 17
temperature insulated O,M Wilmington, MA Leased to 2000 16,500 -
wire and cable O,M Essex Junction, VT Leased to 2004 46,000 -
---------------------------------
229,250 17
---------------------------------
- -------------------------------------------------------------------------------------------------------------------------
Refrigerated marine containers O,M,W Green Cove Leased to 2004 110,000 10
Springs, FL
------------- ---
7,150,230 636
------------- ---
------------- ---- -------------------------------------------------------------------------------------------------------------------------
8,944,453 658
---------------------------------
7
8
Total plant space of 7,150,2308,944,453 sq. ft. is used for:
OWNED LEASED TOTAL
---------- ---------- ----------Owned Leased Total
----- ------ -----
Office..................................................................... 388,837 76,723 465,560
Manufacturing.............................................................. 3,629,743 554,308 4,184,051
Warehousing................................................................ 963,018 1,369,571 2,332,589
*Other..................................................................... 140,730 27,300 168,030
---------- ---------- ----------
5,122,328 2,027,902 7,150,230
---------- ---------- ----------
---------- ---------- ----------Office 25,000 117,312 142,312
Manufacturing 1,210,579 700,915 1,911,494
Warehousing 0 1,014,594 1,014,594
Combined 4,503,916 1,372,137 5,876,053
--------- --------- ---------
5,739,495 3,204,958 8,944,453
========= ========= =========
As of December 31, 1997,1999, an additional 255,283655,825 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.
7
ITEM 3. LEGAL PROCEEDINGS
As of December 31, 1997,1999, 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. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
89
PART II
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, 1997,1999, there were 2,0682,546 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 19971999 and 19961998 were as follows:
1997 FIRST SECOND THIRD FOURTH
- -------------------------------------------------------------------- ---------- ---------- ---------- ---------First Second Third Fourth
----- ------ ----- ------
1999
Dividends per share................................................. $ .1225 $ .1225 $ .1400 $ .1400share $.1600 $.1600 $.1800 $.1800
Stock Price
High.............................................................. $ 35High $52 15/16 $49 9/16 $51 5/16 $43 1/8
Low $41 $42 1/4 $37 7/16 $30 5/8
$ 37 $ 46 7/8 $ 46 3/4
Low............................................................... $ 291998
Dividends per share $.1400 $.1400 $.1600 $.1600
Stock Price
High $51 1/4 $ 27 $ 34 3/4 $ 39$53 1/16 $47 15/16 $51 5/8
1996(1)
Dividends per share................................................. $ .1100 $ .1100 $ .1225 $ .1225
Stock Price
High.............................................................. $ 22 9/16 $ 28 3/16 $ 28Low $40 1/16 $ 30$39 3/8 $35 1/2 Low............................................................... $ 19 1/$32 11/16 $ 21 5/8 $ 24 1/4 $ 26 7/8
- ------------------------
(1) All amounts have been restated to reflect the two-for-one stock split
completed on January 15, 1997.
910
ITEM 6. SELECTED FINANCIAL DATA.
In thousands except per share data
(IN THOUSANDS EXCEPT
PER SHARE DATA)1999 1998 1997 1996 1995 1994
1993
------------ ------------ --------- --------- -------------- ----- ---- ---- ---- ----
SUMMARY OF OPERATIONS
Net Sales................................ $sales $1,611,256 1,517,494 1,260,550 1,017,495 822,534 692,650
611,270Gross margin $ 356,989 328,115 286,461 237,698 197,674 176,368
Selling & administrative expenses $ 173,375 160,366 143,246 128,676 109,236 102,992
Research & development $ 15,762 16,178 15,824 11,900 12,339 11,933
Interest and other expenses, net $ 12,369 11,302 10,607 5,082 3,241 2,652
Net Earnings from continuing operations..earnings $ 95,794 84,866 70,666 55,680 44,081 35,568
28,378
Basic Earningsearnings per share(1)(2)...........share $ 3.18 2.81 2.34 1.84 1.43 1.17
0.93
Diluted Earningsearnings per share(1)(2) ........share $ 3.13 2.77 2.28 1.80 1.41 1.15
0.92
FINANCIAL POSITION
Net working capital $ 300,660 223,188 191,450 175,285 153,709 164,669
Property, plant and equipment, net $ 349,451 354,769 294,165 264,238 193,134 158,238
Total assets............................. $assets $1,080,662 1,022,852 861,216 742,463 542,423 485,283
420,363
Long-term debt...........................debt $ 281,744 273,521 209,642 191,167 72,725 69,148
59,548% of total capitalization 37.1 40.2 37.5 38.3 21.0 21.8
Shareholders' equity $ 478,133 405,435 347,253 307,608 273,257 247,850
OTHER DATA
Average shares outstanding - basic 30,166 30,179 30,235 30,281 30,759 30,519
Average shares outstanding - diluted 30,635 30,674 31,025 30,953 31,266 30,960
Dividends paid...........................paid $ 20,511 18,105 15,868 14,129 12,928 11,605
10,705
Per share(1).............................share $ 0.680 0.600 0.525 0.465 0.420 0.380
0.350Capital expenditures $ 47,839 95,970 59,531 34,990 37,467 31,082
Depreciation & amortization $ 47,414 45,221 38,755 29,758 23,230 21,940
Shareholders of record 2,546 2,443 2,068 2,145 2,054 2,350
- ------------------------
(1)
All share and per share amounts have been restated to reflect the
two-for-one stock splits completedsplit on June 1, 1993 and January 15, 1997.
(2)
Earnings per share amounts prior to 1997 have been restated to comply
with Statement of Financial Accounting Standards No. 128, "Earnings Per
Share."Share". See the Notes to Consolidated Financial Statements.
11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Carlisle Companies Incorporated ("Carlisle" or the "Company")reported sales grew to
$1.26of $1.611 billion in
1997,1999, up 24%6%, or $243.0$94 million, from 19961998 sales of $1.02$1.518 billion. ThisThe primary
contributing factor to this increase is due to thewas generated through product line
expansion of product lines and market shares of Carlisle's core businessesshare gains. In addition, we completed several
complementary acquisitions in 1998 and the integration into existing
operations of several acquisitions made in 1996.1999. In 1997, net earnings reached
$70.7 million, or $2.28 per share of common stock, a 27% increase over 1996 net
earnings of $55.7 million, or $1.80 per share. This increase in earnings is
attributable to the higher sales level, and the improved operating margins
resulting from our continued focus on manufacturing and distribution costs.
In 1996,1998, sales increased 24%,20% or
$195.0$257 million, due to continuedas a result of internal growth in
core businesses, as well as acquisitions made in
19961998 and to the full-year
effectfull year impact of those acquisitions madecompleted in 1995.1997.
Net earnings in 1999 were $95.8 million, or $3.13 per share, a 13%
increase over 1998 net earnings of $84.9 million, or $2.77 per share. Net
earnings, in 1998, increased 26%20%, or $11.6
million, in 1996 reflecting bothnot only the increased sales
levels, but also cost reductions.
In January 1999, Carlisle exited its Perishable Cargo business, which
impacts the year-to-year comparisons of operating results. After adjusting for
the effect of this divestiture, pro-forma sales and reductionsnet earnings increased 10%
and 17%, respectively. The quarterly pro-forma results are shown in costs.
Although not having a significant effect onTable 1
below.
TABLE 1
Pro-Forma
Sales ($ millions) Without
As reported Perishable Cargo Operation
1999 1998 % change 1999 1998 % change
---- ---- -------- ---- ---- --------
First Quarter $ 390.0 $ 363.1 7% $ 375.8 $ 347.0 8%
Second Quarter $ 425.8 $ 395.6 8% $ 425.8 $ 380.1 12%
Third Quarter $ 400.9 $ 378.0 6% $ 400.9 $ 357.3 12%
Fourth Quarter $ 394.6 $ 380.8 4% $ 394.6 $ 361.8 9%
------- ------- -- ------- ------- --
Total $1,611.3 $1,517.5 6% $1,597.1 $1,446.2 10%
Net Earnings ($ millions) Pro-Forma
Without
As reported Perishable Cargo Operation
----------- --------------------------
1999 1998 % change 1999 1998 % change
---- ---- -------- ---- ---- --------
First Quarter $21.8 $19.0 15% $21.0 $18.2 15%
Second Quarter $28.0 $24.6 14% $27.8 $23.5 18%
Third Quarter $24.7 $22.3 11% $24.5 $21.2 16%
Fourth Quarter $21.3 $19.0 12% $21.1 $17.9 18%
----- ----- --- ----- ----- ---
Total $95.8 $84.9 13% $94.4 $80.8 17%
Sales and net earnings in 1999 mark the eighth consecutive year of
year-to-year improvements. Approximately 70% of this year's growth came from the
combination of market growth, product line extensions, market share gains and
cost reductions. The strong rebound in the automotive market, the expansion of
sales orof insulation and thermoplastic polyolefin (TPO) roofing membrane, as well
as strong growth in our specialty tire and wheel, systems and equipment, and
foodservices businesses are the primary contributors to our 1999 sales increase.
Improved operational efficiencies at several operations, along with sales
increases, account for the increased earnings from internal operations.
Continuing progress was made on the program to improve the profitability of
assets employed in the business.
The effective tax rate was reduced from 39.5% to 38.4%. This reduction
was the result of the implementation of various state tax strategies initiated
over the last two years.
During 1999, we completed five complementary acquisitions. We
purchased: (1) Global Manufacturing, a record numbermanufacturer of stamped steel wheels for
industrial and recreational applications and styled steel wheels for the
automotive aftermarket (2) Johnson Truck Bodies, a manufacturer of fiber glass
custom truck bodies for the delivery of food products to stores and homes, (3)
Innovative Engineering Limited, an engineering and equipment supplier of cheese
making systems, (4) Marko International, Inc., a supplier of table coverings,
table skirtings and other accessories for the foodservice market, and (5) the
custom steel wheel business of Cragar Industries, Inc., which produces and
markets CRAGAR brand custom steel wheels to the automotive aftermarket.
12
Four acquisitions were completed in 1997. Throughout the year we
acquired several small bias-ply tire1998: (1) Vermont Electromagnetics
and wheel manufacturing(2) Quality Microwave Interconnects, Inc., both manufacturers of specialty
cable assemblies and distributing
companies, which extend both our product offeringsconnectors, (3) Industrial Tire Products, Inc., a
distributor of industrial and geographic distribution
ofrecreational tire and wheel assemblies, to lawn and garden, trailer and other original
equipment manufacturers. These transactions were as follows: (i) The City
Machine & Wheel Company, (ii) The Neilson Wheel Company, Inc., (iii) Conestoga
Tire & Rim
10
Inc., (iv) Wheeltech North America, Inc., and (v) Tilden Corporation. In
April, we purchased Overland Brakes, Inc., a small spring-brake manufacturing
company, complementing our heavy-duty friction products. In December, we
purchased Zimmerman Brush Co., a small, privately owned manufacturer of
brushes for the janitorial and sanitation market. Also in December, we signed
letters of intent to purchase(4)
Hardcast Europe BV, a Dutch manufacturer of
specialty adhesive and sealant products for
the European construction market,
and to establish a joint venture with Lander Plastics, a British manufacturer
of plastic automotive components. The Hardcast Europe acquisition was
completed in January 1998. In addition, we completed the following
divestitures in 1997: (i) in February, we divested the remaining operations of
Carlisle Engineered Metals Incorporated, a metal roofing company and, (ii) in
October, we sold Braemar, Inc., a small manufacturer of medical monitoring
devices.
Several acquisitions made in 1996 were integrated into Carlisle during 1997.
These 1996 acquisitions include the following: (i) Insul-foam, Inc., which
brought new technology to the EPDM rubber roofing market, (ii) Intero, Inc. and
Unique Wheel, Inc., manufacturers of steel and aluminum wheels and rims, (iii)
Scherping Systems, Inc. and Scherping Controls, Inc., companies that design and
manufacture in-plant processing equipment for the cheese industry, (iv)
Hartstone, Inc., which designs and manufactures ceramic tableware, and (v) The
Engineered Plastics Division of Johnson Controls, Inc., which manufactures
highly engineered plastic components for the automotive industry.market.
OPERATING SEGMENTS
CONSTRUCTION MATERIALS
Segment sales grew 9% in 1999 to $405 million, an increase of $33
million over 1998 sales of $372 million. This sales growth resulted from the
expansion of insulation and thermoplastic polyolefin (TPO) shipments to the
roofing systems market by Carlisle SynTec. Carlisle Coatings & Waterproofing
experienced higher sales driven by its tape and sealant products. In 1998,
segment sales declinedincreased 17% from 1997 sales of $317 million as a result of
increased market share and new products.
Segment earnings were up 10% in 1999 to $58 million, reflecting
increased sales levels, improved operational performance and favorable warranty
experience, partially offset by 0.9%the absorption of increased raw material costs
and changes in product mix. Also, during 1999, Carlisle SynTec successfully
implemented an integrated company-wide information system, which will further
improve the efficiencies of this segment. The 1998 segment earnings of $53
million were up 8% over 1997 segment earnings of $49 million, primarily due to
$322.2increased sales.
Return on assets improved from 24% to 25% as a result of both increased
asset efficiency and profit margins.
INDUSTRIAL COMPONENTS
Segment sales were $528 million in 1999, a 3% increase over 1998 sales
of $511 million. The primary cause of the increase was the growth of new
customers and new products in the specialty tire and wheel business of Carlisle
Tire & Wheel, as well as acquisitions that were completed in 1999 and 1998.
Decreased customer requirements for aerospace bulk cable negatively impacted
Tensolite's sales. Sales at Motion Control Industries and Carlisle Industrial
Brake & Friction were down in 1999, due to lower demand in the heavy duty
friction aftermarket and off-highway industrial brakes for mining and
agricultural applications. In 1998, segment sales increased 29% over 1997 as a slightsales
of $397 million. The primary cause of this increase was the growth of tire and
wheel assemblies, especially to the aftermarket, increased shipment of high
performance wire to aircraft manufacturers, and the acquisition of two high
speed data cable assembly companies.
Segment earnings increased 8% to $66 million in 1999. The main factors
in the increase were product line extension and operational improvements at our
specialty tire and wheel businesses. Offsetting these improvements were lower
earnings at our specialty wire and cable business and Carlisle Industrial Brake
& Friction due to less robust markets. In 1998, segment earnings of $61 million
increased 29% over 1997 segment earnings of $47 million. This earnings growth
was consistent with the increase in sales. Return on assets in 1999 increased to
20% from 19% in 1998.
AUTOMOTIVE COMPONENTS
In 1999, segment sales increased 16% to $314 million over 1998 sales of
$272 million. This growth was the ongoingresult of a very strong automotive and light
truck market coupled with new product introductions. Segment sales were up 13%
in 1998, over 1997 sales of $241 million. This increase was due to product line
extensions, which were offset by the effects of the General Motors (GM) strike.
Segment earnings of $21 million represent an increase of 20% over 1998
segment earnings of $18 million. Earnings in 1999 increased due to the impact of
the GM strike in 1998 as well as improved product mix. In the fourth quarter,
this business was offsetstreamlined and an unprofitable operation eliminated. Earnings
in 1998 decreased 5% from the 1997 level of $19 million due primarily to the
inefficiencies generated by the rapid ramp-up of production for new programs
interrupted by the GM strike in 1998. Return on assets improved from 8% in 1998
to 10% in 1999 as asset efficiency increased and profit margins improved.
13
GENERAL INDUSTRY (ALL OTHER)
The General Industry (All Other) segment sales of $364 million were
flat with 1998 sales of $363 million. On a pro-forma basis, excluding the effect
of the perishable cargo divestiture in January 1999, sales increased 20% over
1998. Sales and earnings at Carlisle Systems & Equipment account for much of
the remaining assets of Carlisle Engineered Metals.
The 1997 earnings of $49.4 million in this segment were up 13.3% over 1996
earnings of $43.6 million, reflecting improving margins from a changing product
mix, improved warranty results and the elimination of lossespro-forma increase, due to the divestitureacquisition of Johnson Truck Bodies as well
as internal growth. Carlisle Transportation Products' sales were up over 1998
primarily due to a strong highway construction market. Higher sales were
recorded in our foodservice business due to product line expansions in both
international and domestic markets. Carlisle FoodService Products completed the
metal roofing company. The 1996significant upgrade of a new customer service system, as well as opening two new
distribution facilities. Segment sales in 1998 were up 19% over 1997 sales of
$325.2 million
reflect an$306 million. This increase of 6% over 1995 sales of $308.3 million. An 18.8% jump in
1996 over 1995 earnings is attributablewas related to the increased sales levels and
improved operating margins.
TRANSPORTATION PRODUCTS segment sales reached $521.2 million in 1997,
40.3%, or $149.7 million, over 1996 sales of $371.5 million. The 1996 sales
level is an increase of 33.2%, or $92.7 million over the 1995 level. The
increases in 1997 sales reflect the full-year effect of the consolidation of
The Engineered Plastics Division of Johnson Controls, acquired in October
1996, with Geauga Company to form Carlisle Engineered Products, Inc., which
supplies highly engineered plastic, rubber and metal components to the
automotive industry. Also contributing to the 1997 sales growth in this
segment are the continued robust sales of aircraft wire, increased direct
sales of refrigerated containers, penetration of additional channels of
distribution of heavy-duty friction products to the aftermarket, and
increasedhigher sales of specialty trailers to
construction markets. The 1996 sales
increase reflects record sales gains from all operations, and, to a lesser
extent, companies acquired in 1996 and 1995. Operating earnings in this
segment climbed 64.0%, or
11
$17.6 million, to $45.1 million. This increase reflects the higher level of
sales of componentsmarkets, plastic permanentware to the automotivefoodservice industry aircraft wire and
specialty
trailers, as well asrefrigerated containers to the shipping industry.
Segment earnings of $40 million increased margins due to improved manufacturing
processes in6% over 1998 segment earnings
of $38 million. Pro-forma earnings grew 26%, after excluding the specialty trailerperishable
cargo business, and especially in the
refrigerated container business.
GENERAL INDUSTRY segment sales grew 30.0%, or $96.3 million, to $417.1
million in 1997. This increase isreflecting primarily due to internal growth of tire and
wheel assemblies, plastic foodservice products and in-plant processing equipment
through expanding our market shares of current products and extending existing
products to new markets. The full-year effect of acquisitions made in 1996 and
acquisitions made in 1997 account for approximately 29.0% of the increase in
1997 sales in this segment.
In 1996,Earnings in 1998 were up 27% over 1997 earnings of $30 million. This growth was
due to the general increase in sales, improved manufacturing efficiencies and
increased share of the leasing market in our perishable cargo business. Return
on assets increased to 15.4% in 1999, from 14.5% in 1998, as a result of
improved profit margins.
FINANCIAL RESULTS
GROSS MARGIN, expressed as a percent of sales, represents the
difference between net sales and cost of goods sold. These margins declined from
22.7% of sales in this segment1997 to 21.6% in 1998, and increased 36.0%, or
$85.5 million, to $320.8 million, reflecting both growth22.2% in internal businesses1999. The
decline from 1997 to 1998 largely reflects the competitive marketplace and
acquisitions. Operating earningschanging mix in this segmentCarlisle's total sales. In 1999, improved operational
efficiency, as well as improved product mix, accounted for the higher margin
rate.
SELLING AND ADMINISTRATIVE COSTS, expressed as a percent of sales,
declined from 11.4% in 1997 to 10.6% in 1998, but increased 26.3%, or
$10.6 million, to $50.9 million,10.8% in 1999,
reflecting the higher level of sales. Segment
earningscontinued emphasis on cost control throughout all operations and
lower cost structures in 1996 were $40.3 million; a 35.9% or $10.6 million increase over 1995
earnings. The increase in 1996 sales results from the contribution of the
specialty wheel businesses of Intero and Unique Wheel acquired in March 1996 and
from market share gains in the lawn and garden, trailer and golf car markets.
FINANCIAL RESULTSCarlisle's overall businesses.
TOTAL COSTS, which include raw material, manufacturing, selling,
general and administrative costs, expressed as a percentage of total sales, continuedhave
remained fairly consistent, decreasing slightly in 1999 to decline89.6% of sales from
90.0% of sales in 1997 to1998 and 89.9% of sales downin 1997. The improvement in this total
cost relationship in 1999 was due to improved operating efficiencies. The 1998
decline from 90.5%1997's level of sales in 1996. In
1995, these costs were 90.7% percent of sales. This decline in total costs
reflects an ongoing focus on improving purchasing, manufacturing and
distribution of products throughout all Carlisle operations.
GROSS MARGINS, expressed as a89.9% percent of sales represent what is left
after costs of purchasing raw materialswas due to operational
improvements offset by the GM strike and of manufacturing products (i.e.,
cost of goods sold) are subtracted from sales. These margins declined from 24.0%
of salesthe change in 1995 to 23.4% in 1996 and 22.7% in 1997. While operations across all
segments maintained consistent gross margins generally, this decline largely
reflects the changingproduct mix in Carlisle's total sales. In 1997, operations with
lower gross margins, but also with lower corresponding selling, general and
administrative costs, represent greater proportions of total Carlisle sales.
SELLING AND ADMINISTRATIVE costs, expressed as a percent of sales, declined
from 13.3% in 1995 to 12.6% in 1996 and 11.4% in 1997 reflecting both
disciplined cost control throughout all operations and the
increasing proportion
of activities with lower cost structures in Carlisle's overall sales.construction materials operations.
INTEREST EXPENSE, increasedNET decreased to $16.5$19.2 million in 19971999 from $9.1$19.7
million in 19961998, due to the lower debt levels maintained throughout the year.
Planned capital expenditures and acquisitions were financed through internally
generated cash flows.
OTHER, NET decreased to $6.1 million in 1995,1999 due to the increasing levelreduction of
12
debt used to finance acquisitions and capital expenditures and relatively
constant interest rates.the Company's ownership in its leasing joint venture.
INCOME TAXES, for financial reporting purposes, have remained constant atdecreased in 1999 to an
effective tax rate of 38.4%, compared to 39.5% in 1998 and 1997. This reduction
was the outcome of earnings before tax in 1997, 1996 and 1995,
generally reflecting stable Federal andthe implementation of various state tax rates. Taxes are discussed
more completelystrategies developed
in the Notes to Consolidated Financial Statements.
ACCOUNTS RECEIVABLE were $184.8previous years.
RECEIVABLES, of $245 million, reflect an increase of 16.6%9% over the 19961998
level of $158.5$225 million. This increase is consistentwas in line with a higherthe sales growth. The 1998
level of sales, partially offset by an increasing portion of sales from businesses that
requirereceivables represented a lower investment in accounts receivable, and an ongoing effort to
manage receivables at all operations. The 1996 level of accounts receivable
represent a 25.2%22% increase over 1995,1997 levels and iswas
primarily attributable to
acquisitions made during the year.result of higher December sales.
INVENTORIES, valued primarily by the last-in, first-out (LIFO) method,
were $180.3$219 million at year-end 1997,1999, a 31.5%13% increase over 1996the 1998 year-end level
of $137.1$194 million. Approximately one-third of thisThe increase isin inventory at year-end was primarily due to
higher
14
inventory at specialty tire and wheel and roofing operations in preparation for
the spring selling season, as well as from acquisitions made during the year, while normal seasonal buildup, strong demand and backlogs
at most operations explain the remaining two-thirds.current
year. The year-end 19961998 inventory level increased $15.4 million7% over 1995 levels, or 12.7%,1997, due primarily to
acquisitions made during the year.
CAPITAL EXPENDITURES totaled $59.5$48 million in 1997,1999, a significant
increase
over 1996reduction from the $96 million incurred in 1998. The 1999 level was more
consistent with previous levels, which reflects a normalized level of $35.0 million. Thiscapital
spending. The 1998 increase iswas primarily attributable to investments in
injection-moldingproduction capacity in Mexico, expanded warehousing and blow-molding equipment to meet growth
opportunities in Carlisle's automotive components operation. Additionally, other
significant projects in 1997 includedistribution facilities
for our foodservice operation, increased production capacity for tire and wheel
assemblies, specialty trailer products, high speed data wire and cable
assemblies, and plant and equipment to manufacture insulation and TPO roofing
membranes, additional warehousing space for finished specialty tire and
wheel assemblies and EPDM roofing products, increased production capacity of
heavy-duty friction products, increased capacity to produce Tufflite-TM- wire
and in-plant processing equipment for the food and pharmaceutical industries. In
1996, the major projects include equipment to produce a pressure-sensitive tape
line for EPDM rubber roofing systems, presses and tire building machines for a
specialty tire plant in Trinidad, and cable wrapping equipment for Tufflite-TM-
wire.membranes.
LIQUIDITY, CAPITAL RESOURCES AND ENVIRONMENTAL
CASH FLOWS provided by operating activities were $83.0increased $39 million to
$136 million in 1997,
a slight decline1999 from $86.0$97 million in 1996. This decline is primarily due to
higher levels of inventories offsetting increases in net earnings and
depreciation and amortization charges to earnings. Cash flows from operating
activities were $55.7 million in 1995.1998. Cash used in investing activities
was $93.2 million;$86 million versus $133 million in 1998, a decrease of $47 million. This
decrease was attributable to cash received from the 1996 leveldivestiture of $165.4the
perishable cargo business, net of a $39 million resulting
from lower levels of acquisitionstax payment, as well as a
reduction in 1997 partially offset by the increased level of capital expenditures. In 1995, theThe net cash used in investingfinancing
activities in 1999 was $100.7$44 million which includes acquisition expendituresversus cash provided of $67.0 million.$38 million in 1998.
The 1999 amount reflects the repayment of short-term borrowings, outstanding at
the end of 1998, and dividend payments. The net cash provided by financing
activities in 1997 was $3.61998, of $38 million, which
reflects increasesthe net increase in debt offset by dividend paymentsafter the
early payment of higher cost debt and stock repurchases.
The
13
cash provided by financing activities of $84.5 million in 1996 was
essentially due to increases in debt financing.
Carlisle has a $125.0$125 million revolving credit facility available for
acquisitions and general corporate purposes. In January 1997,May 1998, Carlisle issued to the
public $150.0$100 million of ten-year bonds at a rate of 7.25%6.70%. The net proceeds from
these bonds were used to repay amounts outstanding under the revolving credit
facility and to fund other needs throughout 1997.1998. The Company's primary sources
of liquidity and capital are cash flows from operations and borrowing capacity.
Carlisle continues to maintain substantial flexibility to meet anticipated needs
for liquidity and capital investment opportunities.
Carlisle management recognizes the importance of the Company's
responsibilities toward matters of environmental concern. Programs are in place
to monitor and test facilities and surrounding environments and, where
practical, to recycle materials. Carlisle has not incurred any material charges
relating to environmental matters in 19971999 or in prior years, and none are
currently anticipated.
YEAR 2000
During the last several years, and in the normal course of business,
Carlisle has replaced a substantial portion of its older computer software and
systems with new systems that are Year 2000 compliant. These investments are
expected to assist Carlisle in improving its operational ratios. With respect to
the remaining information systems, as well as the Company's embedded technology,
the Company adopted a program (involving both internal personnel and third-party
consultants) of (i) assessment, (ii) remediation, and (iii) authentication. The
Company has completed the assessment phase, the remediation programsphase, and the
authentication phase, which included simulated testing in place fora Year 2000
environment. The Company will continue testing its systems throughout the first
quarter of 2000. The cost to the Company, of completing these efforts did not
exceed $750,000.
Carlisle has maintained a formal communication program with its
significant suppliers and large customers, which it will conclude in the first
quarter of 2000. As part of this program, Carlisle has, and will continue to (1)
evaluate the supplier's year 2000 compliance plans and state of readiness and
(2) determine whether a year 2000-related event will impede the ability of a
particular supplier to continue to provide goods and services. Contingency plans
were adopted for any significant supplier that aredid not currentlyprovide an appropriate
and timely response to Carlisle or if the results of a risk assessment
identified a business process at risk of a Year 2000 compliant. The total costfailure.
There were no disruptions to Carlisle businesses as a result of compliance isthe
changeover to the Year 2000. However, there can be no guarantee that Year 2000
failures experienced by third parties during the first quarter of 2000 would not
expected to
have a material impactadverse effect on the Company's operations, liquidityfinancial condition or
capital resources. However, we are unable to predict all the implications of
the Year 2000 issue as it relates to our customers, suppliers and other
entities.operations.
15
BACKLOG AND FUTURE OUTLOOK
BACKLOG was $281.6$228 million at December 31, 19971999 compared to $200.8$247 million
(excluding Carlisle perishable cargo backlog of $15 million) in 1996. This 40.2% increase in1998. Higher
backlog at Carlisle Systems & Equipment and Carlisle FoodService reflects stronger positions
at all major operations within the
Company, especiallystrong market penetration achieved by these businesses. Automotive Components
backlog was down from December 1998 due to the high demand in the containerfourth quarter
1998, created by the GM strike. Also, Construction Materials backlog was down
due to reporting enhancements made in conjunction with the implementation of new
business software.
The elimination of capacity limitations, through significant capital
expenditures in 1998 and the continued implementation of lean manufacturing
operation.
Our companies have developed consistent strategiessystems, allowed more rapid response to grow their
businesses both internallycustomer needs and through acquisitions. In 1997, Carlislecontributed to
backlog reductions in several businesses. Reduced aerospace wire demand is
reflected in the lower backlog.
We continue to concentrate on our longstanding operating principles of:
targeted market leadership; growth from within; lean organizational structure;
low cost, decentralized operations; and strategic acquisitions to achieve our
sales and earnings growth objectives. As we move ahead, we are confident that
adherence to these principles will bring continued to increase market shares, improve manufacturing processes and
target new markets with expanded products to complement the Company's core
strengths.operating success. With a
record backlog, management is confident that our ongoinggrowing market and a commitment to these proven strategies will yield favorable results in 1998.
ACCOUNTING PRONOUNCEMENT
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosures about Segments
of an Enterprise and Related Information." This statement adopts the management
approachconstant increased operating efficiency, 2000
should prove to classifying the segments of an enterprise, which is different from
the current industry approach. The provisions of this statement will be implemented with theanother strong year ending December 31, 1998.
14for Carlisle.
16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
CONSOLIDATED STATEMENT OF EARNINGS
FOR YEARS ENDED DECEMBER 31For the years ended December 31. In thousands except per share data.
(IN THOUSANDS EXCEPT PER SHARE DATA)
- ----------------------------------------------------------------------------------------------------------------------1999 1998 1997
---- ---- ----
1997 1996 1995
------------ ------------Net sales $1,611,256 $1,517,494 $1,260,550
---------- Net sales..................................................................... $ 1,260,550 $ 1,017,495 $ 822,534---------- ----------
Cost and expenses:
Cost of goods sold..........................................................sold 1,254,267 1,189,379 974,089 779,797 624,860
Selling and administrative expenses.........................................expenses 173,375 160,366 143,246 128,676 109,236
Research and development expenses...........................................expenses 15,761 16,178 15,824
11,900 12,339
------------ ------------ ----------
1,133,159 920,373 746,435Gain on divestiture of business ($16.6m),
net of other charges ($15.9m) 685 -- --
Other income (deductions):
Investment income........................................................... 1,172 666 2,020& expense 6,099 8,414 4,723
---------- ---------- ----------
Earnings before interest & income taxes 174,637 159,985 132,114
Interest expense............................................................ (16,502) (9,062) (6,075)
Other, net.................................................................. 4,723 3,314 814
------------ ------------expense, net 19,154 19,716 15,330
---------- (10,607) (5,082) (3,241)
------------ ---------------------- ----------
Earnings before income taxes..................................................taxes 155,483 140,269 116,784
92,040 72,858
Income taxes..................................................................taxes 59,689 55,403 46,118
36,360 28,777---------- ---------- ----------
Net earnings.................................................................. $ 70,666 $ 55,680 $ 44,081
------------ ------------ ----------
------------ ------------ ----------earnings $95,794 $84,866 $70,666
========== ========== ==========
Average shares outstanding-basic..............................................outstanding - basic 30,166 30,179 30,235 30,281 30,759
Basic earnings per share...................................................... $ 2.34 $ 1.84 $ 1.43
------------ ------------ ----------share $3.18 $2.81 $2.34
Average shares outstanding-diluted............................................ $outstanding - diluted 30,635 30,674 31,025 30,953 31,266
Diluted earnings per share.................................................... $ 2.28 $ 1.80 $ 1.41
------------ ------------ ----------
------------ ------------ ----------share $3.13 $2.77 $2.28
See accompanying Notes to Consolidated Financial Statements.
1517
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands except per share data)
ADDITIONAL CUMULATIVE COST OF
COMMON PAID-IN RETAINED TRANSLATION SHARES IN
STOCK CAPITAL EARNINGS ADJUSTMENT IN TREASURY
--------- ----------- ---------- ----------
Balance at December 31, 1994................................................31,1996 $39,331 $ 19,665480 $ 7,958348,558 $ 282,919 $ (62,692)105 ($ 80,866)
Net earnings...................................................earnings -- -- 44,08170,666 -- --
Cash dividends--$0.420dividends - $0.525 per share...............................share -- -- (12,928)(15,868) -- --
Exercise of stock options & other..............................other -- 1,3581,350 -- 2,344-- 3,295
Purchase of 496,616550,980 treasury shares............................shares -- -- -- (9,448)
--------- ----------- ---------- ------------ (18,110)
Translation adjustment -- -- -- (1,688) --
------------------------------------------------------------------
Balance at December 31, 1995................................................ $ 19,665 $ 9,316 $ 314,072 $ (69,796)31,1997 39,331 1,830 403,356 (1,583) (95,681)
Net earnings...................................................earnings -- -- 55,68084,866 -- --
Cash dividends -$0.465- $0.60 per share...............................share -- -- (14,129)(18,105) -- --
Exercise of stock options & other..............................other -- 3,7652,371 -- 3,098-- 3,309
Purchase of 649,966283,598 treasury shares............................shares -- -- -- (14,168)
--------- ----------- ---------- ----------
19,665 13,081 355,623 (80,866)
Two-for-one stock split........................................ 19,666 (12,601) (7,065) -- --------- ----------- ---------- ----------(14,372)
Translation adjustment -- -- -- 113 --
------------------------------------------------------------------
Balance at December 31, 1996................................................ $1998 39,331 $ 480 $ 348,558 $ (80,866)4,201 470,117 (1,470) (106,744)
Net earnings...................................................earnings -- -- 70,66695,794 -- --
Cash dividends--$0.525dividends - $0.68 per share...............................share -- -- (15,868)(20,511) -- --
Exercise of stock options & other..............................other -- 1,3501,370 4 -- 3,295616
Purchase of 550,980103,208 treasury shares............................shares -- -- -- (18,110)
--------- ----------- ---------- ------------ (4,387)
Translation adjustment -- -- -- (188) --
------------------------------------------------------------------
Balance at December 31, 1997................................................1999 $39,331 $5,571 $ 39,331 $ 1,830 $ 403,356 $ (95,681)
--------- ----------- ---------- ----------545,404 ($1,658) ($110,515)
------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements.
1618
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31As of December 31. In thousands except share data.
(IN THOUSANDS EXCEPT SHARE DATA) 1997 1996
----------- -----------1999 1998
----- ----
ASSETS
Current assetsCURRENT ASSETS
Cash and cash equivalents.............................................................equivalents $ 1,73210,417 $ 8,3123,883
Receivables, less allowances of $5,180$4,963 in 19971999 and $4,097$4,864 in 1996..................... 184,796 158,4631998 245,120 225,348
Inventories .......................................................................... 180,331 137,092219,270 193,650
Deferred income taxes................................................................. 28,462 25,036taxes 32,108 26,040
Prepaid expenses and other............................................................ 22,212 17,030other 34,123 29,604
----------- -----------
Total current assets................................................................ 417,533 345,933TOTAL CURRENT ASSETS 541,038 478,525
----------- -----------
Property, plant and equipment, net...................................................... 294,165 264,238PROPERTY, PLANT AND EQUIPMENT, NET 349,451 354,769
----------- -----------
Other assetsOTHER ASSETS
Patents, goodwill and other intangibles............................................... 121,772 108,648intangibles 157,967 139,744
Investments and advances to affiliates................................................ 16,467 11,976affiliates 14,321 34,892
Receivables and other assets.......................................................... 11,279 9,854
Deferred income taxes................................................................. -- 1,814assets 17,885 14,922
----------- -----------
Total other assets.................................................................. 149,518 132,292TOTAL OTHER ASSETS 190,173 189,558
----------- -----------
$861,216 $ 742,463
----------- -----------
----------- -----------1,080,662 $ 1,022,852
CURRENT LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term debt, including current maturities.........................................maturities $ 24,3321,989 $ --31,241
Accounts payable...................................................................... 75,936 74,338payable 106,283 101,859
Accrued expenses...................................................................... 125,815 96,310expenses 132,106 122,237
----------- -----------
Total current liabilities........................................................... 226,083 170,648TOTAL CURRENT LIABILITIES 240,378 255,337
----------- -----------
LONG-TERM LIABILITIES
Long-term debt 281,744 273,521
Product warranties 79,858 75,084
Other liabilities Long-term debt........................................................................ 209,642 191,167
Product warranties.................................................................... 73,715 71,478
Deferred compensation and other liabilities........................................... 2,940 1,667549 13,475
----------- -----------
Total long-term liabilities......................................................... 286,297 264,312TOTAL LONG-TERM LIABILITIES 362,151 362,080
----------- -----------
Shareholders' equitySHAREHOLDERS' EQUITY
Preferred stock, $1 par value. Authorized and unissued 5,000,000 shares
Common stock, $1 par value. Authorized 50,000,000100,000,000 shares;
issued 39,330,624 shares....shares 39,331 39,331
Additional paid-in capital............................................................ 1,830 480capital 5,571 4,201
Cumulative transition adjustments (1,658) (1,470)
Retained earnings..................................................................... 403,356 348,558earnings 545,404 470,117
Cost of shares in treasury-9,171,915treasury - 9,203,095 shares in 19971999 and 8,979,3009,152,167 (110,515) (106,744)
shares in 1996...... (95,681) (80,866)1998 ----------- -----------
Total shareholders' equity.......................................................... 348,836 307,503TOTAL SHAREHOLDERS' EQUITY 478,133 405,435
----------- -----------
$861,216 $ 742,463
----------- -----------
----------- -----------1,080,662 $ 1,022,852
See accompanying Notes to Consolidated Financial Statements.
1719
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR YEARS ENDED DECEMBER 31For the years ended December 31. In thousands.
1999 1998 1997
1996 1995
---------- ---------- -------------- ---- ----
(IN THOUSANDS)
OPERATING ACTIVITIES
Net earnings.................................................................earnings $ 70,66695,794 $ 55,68084,866 $ 44,08170,666
Reconciliation of net earnings to cash flows:
Depreciation...............................................................Depreciation 39,832 37,617 32,477
25,320 20,331
Amortization...............................................................Amortization 7,582 7,604 6,278
4,438 2,899
(Gain)/lossLoss on sales of property, equipment and business.....................business (1,777) (3,156) (993) 216 570
Changes in assets and liabilities, excluding effects of acquisitions
and divestitures:
Current and long-term receivables..........................................receivables (18,622) (43,786) (19,659)
(13,237) (8,616)
Inventories................................................................Inventories (13,471) (10,526) (31,118) (5,837) (17,324)
Accounts payable and accrued expenses......................................expenses 4,440 25,450 9,245 16,667 1,928
Prepaid, deferred and current income taxes.................................taxes 15,761 (7,568) 10,887
(4,260) (993)
Long-term liabilities......................................................liabilities 4,585 5,217 3,279
4,939 7,429
Other......................................................................Other 1,969 1,086 1,924
2,106 5,398
---------- ---------- ----------
Net cash provided by operating activities....................................--------- --------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 136,093 96,804 82,986
86,032 55,703
---------- ---------- ----------
Investing Activities--------- --------- ---------
INVESTING ACTIVITIES
Capital expenditures.......................................................expenditures (47,839) (95,970) (59,531) (34,990) (37,467)
Acquisitions, net of cash..................................................cash (42,393) (31,577) (45,380)
(133,719) (67,006)
SalesProceeds from sale of property, equipment and business..................................business 17,157 11,344 15,815
3,489 2,794
Other .....................................................................(12,544) (16,761) (4,090)
(155) 1,014
---------- ---------- ------------------- --------- ---------
NET CASH USED IN INVESTING ACTIVITIES (85,619) (132,964) (93,186)
--------- --------- ---------
FINANCING ACTIVITIES
Net cash used in investing activities........................................ (93,186) (165,375) (100,665)
Financing Activities
Proceedsproceeds from short-term debt..............................................debt (29,285) 15,827 13,458 -- --
Proceeds from long-term debt...............................................debt 10,000 104,235 150,000 124,358 --
Reductions of long-term debt...............................................debt (1,744) (49,274) (125,860)
(11,604) (436)
Dividends..................................................................Dividends (20,511) (18,105) (15,868) (14,129) (12,928)
Purchases of treasury shares...............................................shares (2,400) (14,372) (18,110)
(14,168) (9,448)
---------- ---------- ----------
Net cash provided by (used in) financing activities..........................--------- --------- ---------
NET CASH (USED IN)/ PROVIDED BY FINANCING ACTIVITIES (43,940) 38,311 3,620
84,457 (22,812)
---------- ---------- ----------
Change in cash and cash equivalents .........................................--------- --------- ---------
CHANGE IN CASH AND CASH EQUIVALENTS 6,534 2,151 (6,580)
5,114 (67,774)
Cash and cash equivalentsCASH AND CASH EQUIVALENTS
Beginning of year..........................................................year 3,883 1,732 8,312
3,198 70,972
---------- ---------- ------------------- --------- ---------
End of year................................................................year $ 10,417 $ 3,883 $ 1,732
$ 8,312 $ 3,198
---------- ---------- ----------
---------- ---------- ----------========= ========= =========
See accompanying Notes to Consolidated Financial Statements.
1820
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
under the equity method. Equity income related to such investments is recorded
in Other, net. 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. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS.
Debt securities with a remaining maturity of three months or less when
acquired are considered 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 allocated 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 $5.3$6.6
million and $6.9$4.3 million at December 31, 19971999 and 1996,1998, respectively (net of
accumulated amortization of $14.6$16.5 million and $12.8$16.3 million, respectively), and
are amortized over their remaining lives, which average five years. Goodwill,
representing the excess of acquisition cost over the fair value of specifically
identifiable assets acquired, was $116.5$151.3 million and $101.8$135.4 million at December
31, 19971999 and 1996,1998, respectively (net of accumulated amortization of $7.8$19.8
million and $3.6$13.6 million, respectively), and is amortized on a straight line
basis over various periods not exceeding 30 years. The Company evaluates the
recoverabilitycarrying value of goodwill based onand other intangible assets if facts and
circumstances suggest that they may be impaired. Impairments would be recognized
when the estimated, undiscountedexpected future operating cash flows attributable to the operations with which the goodwillderived from such intangible
assets is associated.
19less than their carrying value.
21
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 $8.4 million, $6.6
million and $5.4 million, $2.6 millionin 1999, 1998 and $2.81997, respectively. Future minimum
payments under various noncancelable operating leases in each of the next five
years are approximately $7.6 million in 1997, 1996,2000, $6.8 million in 2001, $6.0 million
in 2002, $5.2 million in 2003 and 1995, respectively.$4.5 million in 2004.
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 a portion or all of a deferred tax asset is not expected to be
realized, a valuation allowance is recognized.
NET EARNINGS PER SHARE.
In 1997, the Financial Accounting Standards Board
issued StatementEarnings per share is determined in accordance with STATEMENT OF
FINANCIAL ACCOUNTING STANDARDS (SFAS) No. 128, "Earnings per Share." SFAS No. 128 replaced the
calculation of primary and fully diluted earnings per share with basic and
diluted earnings per share.Share". Basic
earnings per share excludes the dilutive effects of options, warrants, and
convertible securities. Diluted earnings per share gives effect to all dilutive
securities that were outstanding during the period. All earnings per share amounts have been presented or
restated to conform to the SFAS No. 128 requirements. The only difference between
basic and diluted earnings per share of the Company is the effect of dilutive
stock options.
FAIR VALUE OF FINANCIAL INSTRUMENTS.
The estimated fair market values of the Company's financial instruments
approximate their recorded values.
OTHER COMPREHENSIVE INCOME.
The Company has determined the components of other comprehensive
income, such as cumulative translation adjustments and minimum pension
liability, are not significant.
RECLASSIFICATIONS.
Certain reclassifications have been made to prior years' information to
conform to 19971999 presentation.
20OPERATIONAL RESTRUCTURING AND IMPAIRMENT OF ASSETS.
In January 1999, the Company announced the reduction of its interest in
its perishable cargo business, consisting of its container leasing joint venture
and container manufacturing operations. On January 28, 1999 the Company sold 85%
of its interest in its leasing joint venture. In connection with the reduction
in the Company's interest in the leasing joint venture, the Company suspended
operations at its container manufacturing facility. As a result, the Company
recognized a pre-tax gain of $16.6 million in the first quarter of 1999. These
operations are associated with the Company's General Industry (All Other)
segment.
In conjunction with the implementation of the 1999 business plan, the
Company completed certain product line realignments, manufacturing improvements
and facility relocations and upgrades at its operating businesses resulting in
certain assets that are no longer required or will be reallocated. In the first
quarter of 1999, the Company recognized a $15.9 million pre-tax charge related
to these assets. Approximately 75% of this charge related to machinery and
equipment primarily associated with the foodservice, roofing, tire and wheel and
automotive components manufacturing operations, with the remainder related to
goodwill and other intangible assets associated with acquisitions made in prior
22
years. The amount of the charge of machinery and equipment was determined to be
the excess of the recorded values over the estimated fair values. The fair
values were determined using estimated market values or projected future
discounted cash flows, whichever was deemed appropriated. The charge related to
the intangible assets was determined as the excess of the recorded value over
the projected future undiscounted cash flows.
The net effect of the above items is reflected under the caption "gain
on divestiture of business, net of other charges" on the face of the Company's
Consolidated Statement of Earnings.
INVENTORIES
The components of inventories are:
1997 1996
---------- ----------IN THOUSANDS 1999 1998
---- ----
In Thousands
FIFO cost (approximates current costs):
Finished goods...........................................................................goods $ 111,403132,719 $ 82,253113,852
Work in process.......................................................................... 23,250 17,574process 27,052 24,665
Raw materials............................................................................ 60,375 51,872
---------- ----------materials 70,735 68,979
--------- ---------
$ 195,028230,506 $ 151,699207,496
Excess of FIFO cost over LIFO value...................................................... (14,697) (14,607)
---------- ----------value (11,236) (13,846)
--------- ---------
$ 180,331219,270 $ 137,092
---------- ----------
---------- ----------193,650
========= =========
PROPERTY, PLANT & EQUIPMENT
The components of property, plant and equipment are:
1997 1996
---------- ----------IN THOUSANDS 1999 1998
---- ----
In Thousands
Land......................................................................................Land $ 6,8045,640 $ 6,3166,936
Buildings & leasehold improvements........................................................ 123,432 114,384improvements 149,924 142,525
Machinery & equipment..................................................................... 383,560 341,296equipment 473,662 436,222
Projects in progress...................................................................... 25,686 21,016
---------- ----------
539,482 483,012progress 28,859 44,890
--------- ---------
$ 658,085 $ 630,573
Accumulated depreciation.................................................................. (245,317) (218,774)
---------- ----------depreciation (308,634) (275,804)
--------- ---------
$ 294,165349,451 $ 264,238
---------- ----------
---------- ----------354,769
========= =========
BORROWINGS
Long-term debt includes:
1997 1996
---------- ----------IN THOUSANDS 1999 1998
---- ----
In Thousands
Short-term obligations to be refinanced...................................................6.70% senior notes due 2008 $ --100,000 $ 124,358100,000
7.25% senior notes due 2007...............................................................2007 150,000 --
8.09% senior notes due 1998-2002 48,000 48,000150,000
Industrial Development and Revenue Bonds due
through 2014................................. 12,460 12,5052018 26,595 16,645
Other, including capital lease obligations................................................ 10,056 7,005
---------- ----------obligations 7,138 8,832
--------- ---------
$ 220,516283,733 $ 191,868275,477
Less current maturities................................................................... (10,874) (701)
---------- ----------maturities (1,989) (1,956)
--------- ---------
$ 209,642281,744 $ 191,167
---------- ----------
---------- ----------273,521
========= =========
23
On January 28, 1997,May 15, 1998, the Company issued $150$100 million in notes due in 20072008
at an interest rate of 7.25%6.70%. The net proceeds were used to repay all amounts
outstanding under the Company's revolving credit facility, to repay other
short-term indebtedness and for general corporate purposes.
21
In 1997,On December 29, 1998, the Company amended itsretired the 8.09% senior notes due
1998-2002 with cash generated from operations and short-term borrowings.
Included in Other, net is a $1.8 million charge related to this prepayment.
The Company has a $125 million revolving credit facility with various
banks to reduce the amount from $150 million to $125 million.banks. As of December 31, 1997, $1231999, $125 million was available under this facility.
The Company has available unsecured lines of credit from banks of $20$40 million,
of which $18.5$40 million was available as of December 31, 1997.1999.
At December 31, 1997,1999, letters of credit amounting to $19.5$22.1 million were
outstanding, primarily to provide security under insurance arrangements and
certain borrowings.
The weighted average interest rates on the revenue bonds for 19971999 and
19961998 were 4.2%4.6% and 3.5%4.3%, respectively.
The debt facilities contain various restrictive covenants and
limitations, all of which were complied with in 19971999 and 1996.1998. The industrial
development and revenue bonds are collateralized by the facilities and equipment
acquired through the proceeds of the related bond issuances. On January 1, 1999,
the Company secured a $10 million Industrial Development Revenue Bond due
December 31, 2018 at LIBOR +.4%.
Cash payments for interest were $19.1 million in 1999, $21.3 million in
1998, and $12.3 million in 1997, $6.91997.
Interest expense, net is shown net of interest income of $2.6 million
in 1996,
and $5.91999, $3.0 million in 1995.1998, and $1.2 million in 1997.
The aggregate amount of long-term debt maturing in each of the next
five years is approximately $10.9$2.0 million in 1998, $11.42000, $2.2 million in 1999 through
2001, and $10.4$1.2
million in 2002.2002, $3.8 million in 2003, $1.3 million in 2004 and $273.2 million
thereafter.
ACQUISITIONS
In each of the last three years, the Company has completed various
acquisitions, all of which have been accounted for as purchases. Results of
operations for these acquisitions, 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
the acquisition.
22
SHAREHOLDERS' EQUITY
On October 4, 1996, the Company's Board of Directors authorized a
two-for-one stock split which was completed 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 whichthat 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.
In April 1999, the shareholders approved an increase in the number of
authorized common shares of the Company from 50 million shares to 100 million
shares.
EMPLOYEE STOCK OPTIONS & INCENTIVE PLAN
24
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.
At December 31, 1997, 24,8851999, 15,699 nonvested shares were outstanding and
2,190,2662,158,798 shares were available for issuance under the Company's restricted
stock plan.
23
The activity under the stock option plan is as follows:
WEIGHTED
AVERAGE
NUMBER EXERCISE
OF SHARES PRICE
----------- -----------Weighted
Average
Number Exercise
of Shares Price
Outstanding at December 31, 1994.......................................................... 1,253,272 $ 11.601996 1,696,830 $15.77
Options granted........................................................................... 442,000 17.87granted 214,000 29.50
Options exercised......................................................................... (211,476) 9.49
Options surrendered....................................................................... (4,798) 12.32
-----------exercised (340,584) 11.71
---------
Outstanding at December 31, 1995.......................................................... 1,478,998 $ 13.771997 1,570,246 $18.52
Options granted........................................................................... 396,000 20.73granted 239,000 46.56
Options exercised......................................................................... (175,892) 10.05
Options surrendered....................................................................... (2,276) 12.32
-----------exercised (282,413) 16.32
---------
Outstanding at December 31, 1996.......................................................... 1,696,830 15.771998 1,526,833 $23.32
Options granted........................................................................... 214,000 29.50granted 430,500 38.35
Options exercised......................................................................... (340,584) 11.71
-----------exercised (40,316) 16.69
---------
Outstanding at December 31, 1997.......................................................... 1,570,246 18.521999 1,917,017 $26.84
---------
---------
Available for grant at December 31, 1997.................................................. 74,182
-----------
-----------1999 4,682
The following tables summarize information about stock options
outstanding as of December 31, 1997:1999:
Options Outstanding:
Options Outstanding:
RANGE OF
EXERCISE NUMBER WEIGHTED AVERAGE WEIGHTED AVERAGE
PRICES OUTSTANDING REMAINING YRS. EXERCISE PRICE
-Number Weighted
Range of Outstanding Weighted Average Average
Exercise Prices at 12/31/99 Remaining Years Exercise Price
--------------- ----------- --------------- -------------- ----------- ------------------- -----------------
$ 8.07-9.78 175,732 4.5 $ 9.018.10-9.78 150,657 1.7 $9.11
12.32-17.25 367,182 6.6 15.07239,528 3.5 14.41
17.32-19.63 392,000 8.0 17.63222,000 5.1 17.71
19.88-29.50 635,332 9.3 23.69
-----------
1,570,246
-----------634,332 6.5 23.68
32.75-48.38 670,500 9.1 41.27
---------
1,917,017
=========
Options Exercisable:
Options Exercisable:
RANGE OF
EXERCISE NUMBER WEIGHTED AVERAGE
PRICES EXERCISABLE EXERCISE PRICE
-Number
Range of Exercisable Weighted Average
Exercise Prices at 12/31/99 Exercise Price
--------------- ----------- -------------- ----------- -----------------
$ 8.07-9.78 175,732 $ 9.018.10-9.78 150,657 $9.11
12.32-17.25 367,182 15.07239,528 14.41
17.32-19.63 392,000 17.63222,000 17.71
19.88-29.50 362,221 22.47
----------
1,297,135
----------634,332 23.68
32.75-48.38 303,833 42.64
---------
1,550,350
=========
At December 31, 1996, 1,285,4971998, 1,296,166 options were exercisable at a weighted
average price of $14.52.$20.12.
25
In accordance with the provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation," 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. Compensation
cost was estimated using the Black-Scholes model with the following assumptions:
dividend yield of 1.75 percent;
24
a life of 7 years; volatility of 24 percent; and risk-free interest rate of 6
percent. The weighted-average fair value of those stock options granted in
1997, 1996, and 1995 was $9.61, $6.75, and $5.82, respectively. 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 pro
formapro-forma
effect on net earnings and earnings per share, in 1997 ,19961999, 1998 and 1995,1997, would
have been approximately $2.5 million or $.08 per share, $1.7 million or $.06 per
share and $1.5 million or $.05 per share, $1.1 million or
$.03 per share and $0.5 million or $.02 per share, respectively. Pursuant to the
transition provisions of SFAS No. 123, the pro formapro-forma effect includes only the
vested portion of options granted duringin and after 1995. Options vest over a three
year period. Compensation cost was estimated using the Black-Scholes model with
the following assumptions: expected dividend yield of 1.70 percent in 1999, 1.20
percent in 1998 and 1.75 percent in 1997; an expected life of 7 years; expected
volatility of 33.2 percent in 1999, 25.6 percent in 1998 and 24.0 percent in
1997; and risk-free interest rate of 5.5 percent in 1999, 5.5 percent in 1998
and 6.0 percent in 1997. The weighted-average fair value of those stock options
granted in 1999, 1998 and 1997 was $14.66, $16.35, and $9.61, respectively.
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:The Company adopted SFAS No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits". The Company has restated prior year
defined benefit retirement plan disclosures to conform to the requirements of
SFAS No.132.
The change in projected benefit obligation:
IN THOUSANDS
1999 1998
---- ----
Benefit obligation at beginning
of year $ 107,879 $ 99,551
Service cost 5,848 5,258
Interest cost 7,633 7,113
Amendments 532 702
Actuarial (gain) loss (6,748) 2,972
Benefits paid (7,019) (7,717)
--------- ---------
Benefit obligation at end of year $ 108,125 $ 107,879
========= =========
The change in plan assets:
IN THOUSANDS
1999 1998
---- ----
Fair value of plan assets at
beginning of year $ 114,465 $ 104,015
Actual return on plan assets 1,114 17,098
Company contribution 1,499 1,069
Benefits paid (7,019) (7,717)
--------- ---------
Fair value of plan assets at end of year $ 110,059 $ 114,465
========= =========
Reconciliation of the accrued benefit cost recognized in the financial
statements:
IN THOUSANDS 1999 1998
---- ----
Funded status $ 2,250 $ 6,586
Unrecognized net actuarial loss (14,640) (15,321)
Unrecognized prior service cost (2,979) (3,363)
Unrecognized transition asset (2,213) (2,901)
--------- ---------
Accrued benefit cost $ (17,582) $ (14,999)
========= =========
26
Components of net periodic benefit cost at December 31:
IN THOUSANDS
1999 1998 1997
1996 1995
---------- ---------- -------------- ---- ----
In Thousands
Service cost..................................................................cost $ 5,848 $ 5,258 $ 4,366
$ 3,374 $ 2,335
Interest cost on projected benefit obligation.................................7,633 7,113 6,734
6,122 5,682
ActualExpected return on plan assets.................................................. (17,976) (6,440) (5,982)assets (8,689) (8,014) (6,968)
Net amortization and deferral................................................. 10,496 (80) (38)
---------- ---------- ----------
Total pension expense.........................................................deferral (393) (381) (512)
------- ------- -------
Net periodic benefit cost $ 4,399 $ 3,976 $ 3,620
$ 2,976 $ 1,997
---------- ---------- ----------
---------- ---------- ----------======= ======= =======
The funded status of the plans at December 31 was:
1997 1996
---------- ----------
In Thousands
Actuarial present value of accumulated benefit obligation
Vested.................................................................................... $ 80,936 $ 72,709
Non-vested................................................................................ 6,362 1,435
---------- ----------
$ 87,298 $ 74,144
---------- ----------
---------- ----------
Plan assets at fair value................................................................. $ 104,015 $ 90,737
Projected benefit obligation.............................................................. (99,551) (86,135)
---------- ----------
Plan assets in excess of projected benefit obligation..................................... 4,464 4,602
Unamortized transition asset.............................................................. (3,589) (4,285)
Unrecognized prior service costs.......................................................... (3,889) 3,031
Unrecognized net gains.................................................................... (9,078) (11,695)
---------- ----------
Accrued pension expense .................................................................. $ (12,092) $ (8,347)
---------- ----------
---------- ----------
25
The projected benefit obligation was determined using an assumed
discount rate of 7.75% in 1999, 7.00% in 1998, and 7.25% in 1997 and 7.75% in 1996 and 1995.1997. The assumed
rate of compensation increase was 4.5% in 1999, 4% in 19971998 and 4.5% in 1996 and 1995;1997; and the
expected rate of return on plan assets was 9.25% in 1999 and 1998, and 8.75% in
1997, 1996, and 1995.1997. The 1999 pension plan disclosures were determined using a September 30
measurement date.
Additionally, the Company maintains a retirement savings plan covering
substantially all employees other than those employees under collective
bargaining agreements. Plan expense was $4.9 million, $4.9 million and $4.7
million, $3.2 million,in 1999, 1998 and $2.7
million, in 1997, 1996, and 1995, respectively.
The Company also has a limited number of unfunded post-retirement
benefit programs for which the expense, inclusive of the components of service
costs, interest costs and the amortization of the unrecognized transition
obligation, was approximately $0.4 million in 19971999, 1998 and $0.6 million in 1996 and 1995.1997. 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 1999 1998 1997
1996 1995
--------- --------- ------------- ---- ----
In Thousands
Currently payable
Federal........................................................................Federal $ 39,26277,425 $ 27,95438,496 $ 24,82839,262
State, local and other.........................................................other 7,472 8,340 8,242
9,788 7,742
--------- --------- ----------------- -------- --------
$ 84,897 $ 46,836 $ 47,504
======== ======== ========
Deferred liability (benefit)
Federal $(23,166) $ 37,742 $ 32,570
Deferred (benefit)
Federal........................................................................5,572 $ (1,363) $ (1,238) $ (3,563)
State, local and other.........................................................other (2,042) 2,995 (23)
(144) (230)
--------- --------- ----------------- -------- --------
$(25,208) $ 8,567 $ (1,386)
-------- -------- --------
Total provision $ (1,382)59,689 $ (3,793)
--------- --------- ---------
Total Provision..................................................................55,403 $ 46,118
$ 36,360 $ 28,777
--------- --------- ---------
--------- --------- ---------======== ======== ========
Deferred tax assets (liabilities) are comprised of the following at
December 31:
1997 1996
---------- ----------IN THOUSANDS 1999 1998
---- ----
In Thousands
Product warranty..........................................................................warranty $ 35,34642,007 $ 34,23246,047
Inventory reserves........................................................................ 3,197 2,703reserves 4,099 3,495
Doubtful receivables...................................................................... 1,719 2,423receivables 1,608 3,742
Employee benefits......................................................................... 12,114 7,206benefits 12,024 11,799
Other, net................................................................................ 12,088 9,699
---------- ----------net 9,256 11,879
-------- --------
Deferred assets...........................................................................assets $ 64,46468,994 $ 56,263
---------- ----------
Depreciation.............................................................................. $ (37,394) $ (29,037)76,962
-------- --------
Depreciation (24,659) (55,473)
Other, net................................................................................ (1,606) (376)
---------- ----------net (2,229) (4,591)
-------- --------
Deferred liabilities...................................................................... (39,000) (29,413)
---------- ----------liabilities (26,888) (60,064)
-------- --------
Net deferred tax assets...................................................................asset $ 25,46442,106 $ 26,850
---------- ----------
---------- ----------16,898
======== ========
2627
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 1999 1998 1997
1996 1995
--------- --------- ------------- ---- ----
In Thousands
Federal income taxes at statutory rate........................................... $ 40,875 $ 32,214 $ 25,500rate $54,419 $49,095 $40,875
State income taxes, net of federal income tax benefit............................benefit 4,043 5,798 3,842
2,912 2,706
Other, net.......................................................................net 1,227 510 1,401
1,234 571
--------- --------- ---------
$ 46,118 $ 36,360 $ 28,777------- ------- -------
$59,689 $55,403 $46,118
======= ======= =======
Effective income tax rate........................................................ 39.5%rate 38.4% 39.5% 39.5%
Cash payments for income taxes were $84.9 million, $58.7 million and
$30.7 million $40.5 million,in 1999, 1998 and $28.7
million1997, respectively.
SEGMENT INFORMATION
Effective December 31, 1998, the Company adopted the provisions of SFAS
No. 131, "Disclosures about Segments of an Enterprise and Related Information".
The Company has restated its prior year segment disclosures to conform to the
requirements of SFAS No. 131. The Company's reportable segments have been
organized around differences in 1997, 1996,products and 1995, respectively.
27
SEGMENT INFORMATIONservices, and operating segments
have been aggregated. The accounting policies of the segments are the same as
those described in the summary of significant accounting policies. The chief
operating decision maker evaluates segment performance by earnings before
interest and income taxes. The Company's operations are classified into the
following business
segments:
CONSTRUCTION MATERIALS--theMATERIALS---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,
sealing 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--theINDUSTRIAL COMPONENTS---the principal products of this segment are
small bias-ply rubber tires, stamped and roll-formed wheels, heavy duty friction
and braking systems for truck and off-highway equipment, rubber
and plastic automotive components, high grade aerospace
wire and specialty electronic cable, specialty trailers, self-contained ISO 40-foot perishable
cargo shipping containers, standard and custom-built high payload trailers and
dump bodies.cable. Customers include golf car manufacturers,
power equipment manufacturers, boat and utility trailer manufacturers, truck
OEMs, shipping lines, heavy equipment and truck dealers and aftermarket distributors, commercial haulers, automotiveaerospace
OEMs, and systems suppliers, and dairy product distributors.
GENERAL INDUSTRY--theelectronic equipment manufacturers.
AUTOMOTIVE COMPONENTS---the principal products of this segment include small
bias-plyare
highly engineered rubber tires, stamped and roll-formed wheels,plastic components for Tier I suppliers and other
manufacturers in the automotive market.
GENERAL INDUSTRY (ALL OTHER)---the principal products of this segment
include 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.systems, specialty
trailers and standard and custom-built high payload trailers and dump bodies,
refrigerated fiberglass truck bodies and perishable cargo container leasing.
Customers include golf car manufacturers,
powerfoodservice distributors, restaurants, dairy product
processors and distributors, heavy equipment manufacturers, boat and utility trailer manufacturers, food
servicetruck dealers, home delivery
distributors, shipping lines and dealers, and dairy and pharmaceutical processors.
CORPORATE--includescommercial haulers.
CORPORATE---includes general corporate and idle property expenses.
Corporate assets consist primarily of cash and cash equivalents, facilities, and
other invested assets.
28
Financial information for operations by reportable business segment is
included in the following summary:
In Thousands
EARNINGS
BEFORE DEPREC.
INCOMEEarnings before Depreciation
Interest & CAPITAL
SALES TAXES ASSETS AMORT. SPENDINGand Capital
IN THOUSANDS Sales Income taxes Assets Amortization Spending
----- ------------ ---------- ---------- ---------- ---------------- ------------ --------
1999
Construction Materials $ 405,387 $ 58,195 $ 229,905 $ 7,149 $ 9,045
Industrial Components 527,902 66,001 333,401 16,942 17,000
Automotive Components 314,246 21,212 209,653 10,873 10,526
General Industry (All Other 363,721 40,429 262,435 11,646 10,880
Corporate -- (11,200) 45,268 804 388
----------------------------------------------------------------------------------
$1,611,256 $ 174,637 $1,080,662 $47,414 $47,839
----------------------------------------------------------------------------------
1998
Construction Materials $ 371,547 $ 53,030 $ 218,045 $ 7,439 $12,849
Industrial Components 510,780 61,261 319,519 15,270 33,540
Automotive Components 271,955 17,638 213,900 10,005 27,442
General Industry (All Other 363,212 38,166 262,393 11,590 21,749
Corporate -- (10,110) 8,995 917 390
----------------------------------------------------------------------------------
$1,517,494 $ 159,985 $1,022,852 $45,221 $95,970
----------------------------------------------------------------------------------
1997
Construction Materials.............................Materials $ 322,228316,597 $ 49,39849,120 $ 177,270174,157 $ 6,4016,179 $ 8,109
Transportation Products............................ 521,181 45,101 338,770 16,738 24,856Industrial Components 396,941 47,509 278,458 12,398 19,743
Automotive Components 241,283 18,633 178,206 8,571 14,454
General Industry................................... 417,141 50,912 320,205 14,723 26,357
Interest, net...................................... -- (15,337) -- -- --
Corporate..........................................Industry (All Other 305,729 30,142 215,777 10,714 17,016
Corporate -- (13,290) 24,97114,618 893 209
------------ ---------- ---------- ---------- --------------------------------------------------------------------------------------------
$1,260,550 $ 1,260,550 $ 116,784132,114 $ 861,216 $ 38,755 $ 59,531
------------ ---------- ---------- ---------- ----------
------------ ---------- ---------- ---------- ----------
1996
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
------------ ---------- ---------- ---------- ----------
------------ ---------- ---------- ---------- ----------
1995
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
------------ ---------- ---------- ---------- ----------
------------ ---------- ---------- ---------- ----------$38,755 $59,531
----------------------------------------------------------------------------------
29
QUARTERLY FINANCIAL DATA
(In thousands except per share
data) (unaudited)Unaudited
IN THOUSANDS EXCEPT PER SHARE DATA
FIRST SECOND THIRD FOURTH YEAR
------------ ---------- --------- --------- ------------First Second Third Fourth Year
----- ------ ----- ------ ----
19971999
Net sales.......................................... $ 287,819 337,372 315,707 319,652 $ 1,260,550sales $390,024 425,813 400,855 394,564 $1,611,256
Gross margin....................................... $ 63,592 76,712 75,089 71,068 $ 286,461margin $84,623 98,101 89,927 84,338 $356,989
Operating expenses................................. $ 38,319 38,925 40,273 41,553 $ 159,070expenses $46,870 48,300 46,425 47,541 $189,136
Net earnings....................................... $ 13,421 20,980 19,518 16,747 $ 70,666earnings $21,808 27,998 24,676 21,312 $95,794
Basic earnings per share(1)........................ $ 0.44 0.69 0.65 0.56 $ 2.34share $0.72 0.93 0.82 0.71 $3.18
Diluted earnings per share(1)...................... $ 0.43 0.68 0.63 0.54 $ 2.28share $0.71 0.91 0.81 0.70 $3.13
Dividends per share................................ $ 0.1225 0.1225 0.1400 0.1400 $ 0.5250share $0.1600 0.1600 0.1800 0.1800 $0.6800
Stock price:
High............................................. $ 35High $52 15/16 49 9/16 51 5/16 43 1/8
Low $41 42 1/4 37 7/16 30 5/8
37 46 7/8 46 3/4
Low.............................................. $ 29 1/4 27 34 3/4 39 5/8
19961998
Net sales.......................................... $ 225,121 262,315 252,603 277,456 $ 1,017,495sales $363,090 395,580 377,985 380,839 $1,517,494
Gross margin....................................... $ 52,371 64,484 62,638 58,205 $ 237,698margin $78,555 88,363 81,948 79,249 $328,115
Operating expenses................................. $ 33,733 35,273 35,551 36,019 $ 140,576expenses $43,993 44,644 43,437 44,470 $176,544
Net earnings....................................... $ 10,639 16,441 15,461 13,139 $ 55,680earnings $18,979 24,551 22,320 19,016 $84,866
Basic earnings per share(1)........................ $ 0.35 0.54 0.51 0.43 $ 1.84share $0.63 0.81 0.74 0.63 $2.81
Diluted earnings per share(1) $ 0.35 0.53 0.50 0.42 $ 1.80share $0.62 0.80 0.73 0.62 $2.77
Dividends per share................................ $ 0.1100 0.1100 0.1225 0.1225 0.4650share $0.1400 0.1400 0.1600 0.1600 $0.6000
Stock price:
High............................................. $ 22 9/16 28 3/16 28High $51 1/4 53 1/16 3047 15/16 51 5/8
Low $40 1/16 39 3/8 35 1/2 Low.............................................. $ 19 1/32 11/16 21 5/8 24 1/4 26 7/8
(1) The 1996 and first three quarters30
Report of 1997 earnings per share amounts have
been restated to comply with Statement of Financial Accounting Standards No.
128, "Earnings Per Share."
29
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTSIndependent Public Accountants
To the Board of Directors of Carlisle Companies Incorporated:
We have audited the accompanying consolidated balance sheets of Carlisle
Companies Incorporated (a Delaware corporation) and subsidiaries as of December
31, 19971999 and 19961998, and the related consolidated statements of earnings,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1997.1999. 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 auditaudits 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, 19971999 and 1996,1998, and the results of theirits operations and theirits cash
flows for each of the three years in the period ended December 31, 1997,1999, in
conformity with generally accepted accounting principles.
Arthur Andersen LLP
/s/ Arthur Andersen LLP
New York, New York
January 26, 1998
3025, 2000
31
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
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, 1997, 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 SERVICEName Age Positions With Company Period of Service
- ------------------------------------------ --- ------------------------------------------ ---------------------------------------------------------------------------------------------------------------------------------------
Stephen P. Munn 5557 Chief Executive Officer since September, September, 1988 to 1988, anddate
since September, 1988;
Chairman of the Board
since date
January, 1994,1994; and
President from September,
1988 to February, 1995.
Dennis J. Hall 5658 Chief Operating Officer August, 1989 to date
and Vice Chairman since
March, 1999; President sincefrom
February, 1995 to March, 1999; and August, 1989 to
Executive Vice President, Treasurer
and date Chief Financial Officer from
August, 1989 to February, 1995.
Scott C. Selbach 4244 Vice President, Corporate Development July, 1989 to date
Development since August, 1997. Formerly1997;
Vice President, Europe from
August, 1995 to August, 19971997; and Vice
President, Secretary and General
Counsel from July, 1989 to August,
1995.
Robert J. Ryan, Jr. 53John S. Barsanti 48 Vice President Treasurer and Chief January, 1996April, 1991 to date
Financial Officer. FormerlyOfficer from March,
1999; President of Walker
Stainless Equipment Company from
October, 1995 to March, 1999; and Vice
President, Planning & Administration
from April, 1991 to October, 1995.
Richmond D. McKinnish 50 Executive Vice President from August, 1974 to date
Disciplined Capital Management, Syracuse,
NY.March, 1999 and President of
Carlisle Tire & Wheel Company
since January, 1991.
Steven J. Ford 3840 Vice President, Secretary and General July, 1995 to date
Counsel since July, 1995. Formerly an
associateAssociate with Bond, Schoeneck & King,
Syracuse, NY.
3132
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 9, 1998.2000.
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 9, 1998.2000.
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 9, 1998.2000.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not applicable.
PART IV
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, 1997, 19961999, 1998
and 19951997
Consolidated Statement of Shareholders' Equity, years ended
December 31, 1997, 19961999, 1998 and 19951997
Consolidated Balance Sheet, December 31, 19971999 and 19961998
Consolidated Statement of Cash Flows, years ended December 31, 1997, 19961999,
1998 and 19951997
Notes to Consolidated Financial Statements
Financial statement supplementary notes applicable to the filing of this
report are as follows:
PAGE
-----
1. Other current liabilities 35
All other schedules are omitted because the required information is
inapplicable or the information is presented in the financial statements or
related notes.
32
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(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.******
(3.3) Certificate of Amendment of the Restated Certificate of
Incorporation dated April 29, 1999.
33
(4) Shareholders' Rights Agreement, February 8, 1989.*
(4.1) Amendment to Shareholders' Rights Agreement, dated August 7,
1996.*****
(4.2) Trust Indenture.*******
(10.1) Executive Incentive Program.**
(10.2) Amendment to Executive Incentive Program.********
(10.3) 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.***
(10.4) Summary Plan Description of Carlisle Companies Incorporated
Director Retirement Program, effective November 6, 1991.***
(10.5) Nonemployee Director Stock Option Plan
(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, 1999 and for the
twelve months ended December 31 1999.
* 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.
******Filed as an Exhibit to the Company's annual report on Form
10-K for the year ended December 31, 1996 and incorporated
herein by reference.
******* Filed as an Exhibit to the Company's registration statement on
Form S-3 (No. 333- 16785) and incorporated herein by
reference.
******** Filed with the Company's definitive proxy statement dated
March 9, 1998 and incorporated herein by reference.
No reports on Form 8-K were filed during the last quarter of the
period covered by this report.
The Company will furnish to the Commission upon request its long-term debt
instruments not listed in this Item.
3334
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/ DennisDENNIS J. HallHALL
- ------------------------------
By: Dennis J. Hall, PresidentChief Operating Officer and a DirectorVice Chairman of the Board
of Directors
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/ MAGALEN C. WEBERT
- ----------------------------------- ------------------------------
Stephen P. Munn, /s/ Peter F. Krogh
Stephen P. Munn, Chairman, Chief Magalen C. Webert, Director
Executive Peter F. Krogh, Director Officer and
a DirectorChairman of the Board of Directors
(Principal Executive Officer) /s/ DonaldDONALD G. CalderCALDER
/s/ Robert J. Ryan, Jr.JOHN S. BARSANTI Donald G. Calder, Director
Robert J. Ryan, Jr.,- ----------------------------------- ------------------------------
John S. Barsanti, Vice
President /s/ Paul J. Choquette, Jr.
Treasurer and Chief /s/ HENRY J. FORREST
Financial Officer ------------------------------
(Principal Financial Officer and PaulHenry J. Choquette, Jr.Forrest, Director
and Principal Accounting
Officer)
/s/ Henry J. Forrest
Henry J. Forrest,PETER L.A. JAMIESON
------------------------------
Peter L.A. Jamieson, Director
/s/ G. FITZGERALD OHRSTROM
------------------------------
G. FitzGerald Ohrstrom, Director
/s/ ROBIN W. STERNBERGH
------------------------------
Robin W. Sternbergh, Director
March 9, 1998
34
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
SUPPLEMENTARY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
Note 1. Other Current Liabilities-- Other current liabilities at December 31
consist of the following:
(000'S)
---------------------
1997 1996
---------- ---------
Employee compensation and benefits $ 32,268 $ 25,304
Product warranties 29,710 28,371
Insurance 12,250 9,888
Other accrued expenses 51,587 32,747
---------- ---------
$ 125,815 $ 96,310
---------- ---------
---------- ---------
2000
35
CARLISLE COMPANIES INCORPORATED
COMMMISSIONCOMMISSION FILE NUMBER 1-9278
FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 19971999
EXHIBIT LIST
(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, 1997 and for the twelve months ended
December 31, 1997
(3.3) Certificate of Amendment of the Restated Certificate of Incorporation.
(10.4) Nonemployee Directors Stock Option Plan
(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, 1999 and for the twelve
months ended December 31, 1999
36