-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VCbenj6ghJ1mkMfjql3guhgjQyiStFOoecatzKBDORUDF0KdwZIxgeGJ0VETsytn u5JP5EXE6yFpSaBRffWrxw== 0000912057-00-010691.txt : 20000310 0000912057-00-010691.hdr.sgml : 20000310 ACCESSION NUMBER: 0000912057-00-010691 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000309 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARLISLE COMPANIES INC CENTRAL INDEX KEY: 0000790051 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED RUBBER PRODUCTS, NEC [3060] IRS NUMBER: 311168055 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-09278 FILM NUMBER: 564723 BUSINESS ADDRESS: STREET 1: 250 S CLINTON ST STREET 2: STE 201 CITY: SYRACUSE STATE: NY ZIP: 13202 BUSINESS PHONE: 3154779108 MAIL ADDRESS: STREET 1: 250 SOUTH CLINTON STREET STREET 2: SUITE 201 CITY: SYRACUSE STATE: NY ZIP: 13202-1258 10-K 1 10-K SECURITIES AND EXCHANGE COMMISSION 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 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. Commission file number 1-9278 CARLISLE COMPANIES INCORPORATED (Exact name of registrant as specified in its charter) DELAWARE 31-1168055 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or 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 --- --- 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. [ ] As of February 24, 2000, 30,232,491 shares of common stock of the registrant were outstanding; the aggregate market value of the shares of common stock of the registrant held by non-affiliates was approximately $913,759,218 based upon the closing price of the common stock on the New York Stock Exchange on February 24, 2000. DOCUMENTS INCORPORATED BY REFERENCE Portions of the definitive Proxy Statement for the Annual Meeting of Shareholders to be held on April 20, 2000 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, roofing, construction, trucking, automotive, foodservice, industrial equipment, lawn and garden and aircraft 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 four industry segments: Construction Materials, Industrial Components, Automotive Components and General 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 FleeceBACK-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. 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, high grade aerospace wire and speciality electronic cable. Customers include golf car manufacturers, power equipment manufacturers, boat and utility trailer manufacturers, truck OEMs, heavy equipment and truck dealers and aftermarket distributors, aerospace OEMs, and electronic equipment manufacturers. AUTOMOTIVE COMPONENTS. The principal products of this segment are highly engineered rubber and 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, stainless steel processing equipment and their related process control systems, specialty trailers and standard and custom-built high payload trailers and dump bodies, refrigerated truck bodies and perishable cargo container leasing. Customers include food service distributors, restaurants, dairy product processors and distributors, heavy equipment and truck dealers, home delivery distributors, shipping lines and commercial 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 ---- ---- ---- Construction Materials $ 405.4 $ 371.5 $ 316.6 Industrial Components 527.9 510.8 396.9 Automotive Components 314.3 272.0 241.3 General Industry - 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, Industrial Components, Automotive Components and General 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 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 four 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. Except 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. Research and Development expenses were $15.8 million in 1999, compared to $16.2 million in 1998, and $15.8 million in 1997. The Company employs approximately 10,290 persons on a full-time basis. 4 The businesses of the Construction Materials, Automotive Components and General Industry (All Other) segments are generally not seasonal in nature. Within the Industrial 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 four segments are affected by the state of the general economy. In 1999, the Company completed the following acquisitions. In January, the Company acquired the assets of Global Manufacturers Corporation, a manufacturer of wheel centers, hub covers, bumpers and brackets for the OEM and auto aftermarkets. In May, the Company acquired the assets of Johnson Welding & Manufacturing Co. (d/b/a Johnson Truck Bodies), a manufacturer of custom refrigerated truck bodies sold to the home delivery, dairy, convenience food store and other niche delivery markets. In November, the Company acquired certain assets of Innovative Engineering Limited, a cheese process engineering business located in Cambridge, New Zealand. In December, the Company acquired (i) the assets of Marko International, Inc. a manufacturer of table coverings, table skirting and relating accessories for the foodservice industry and (ii) certain assets of Cragar Industries relating to its steel outer rim and accessory business. The Company also entered into an exclusive license to manufacture and 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, earnings and identifiable assets by industry segment for the last three fiscal years is as follows:
(In Thousands) 1999 1998 1997 ---- ---- ---- Sales to Unaffiliated Customers(1) Construction Materials $ 405,387 $ 371,547 $ 316,597 Industrial Components 527,902 510,780 396,941 Automotive Components 314,246 271,955 241,283 General Industry (All Other) 363,721 363,212 305,729 Earnings before interest and income taxes Construction Materials $ 58,195 $ 53,030 $ 49,120 Industrial Components 66,001 61,261 47,509 Automotive Components 21,212 17,638 18,633 General Industry (All Other) 40,429 38,166 30,142 Corporate(2) (11,200) (10,110) (13,290) Identifiable Assets Construction Materials $ 229,905 $ 218,045 $ 174,157 Industrial Components 333,401 319,519 278,458 Automotive Components 209,653 213,900 178,206 General Industry (All Other) 262,435 262,393 215,777 Corporate(3) 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, 1999:
- ------------------------------------------------------------------------------------------------------------------------- O - OFFICE APPROXIMATE M - MANUFACTURING FLOOR SPACE APPROXIMATE PRINCIPAL PRODUCT OR ACTIVITY W - 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 557,474 79 related roofing products O,M,W Greenville, IL Owned 165,430 35 O,M,W Sapulpa, OK Owned 34,503 - O,M,W Wylie, TX Owned 44,000 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 72,587 - O,W Kennesaw, GA Leased to 2002 10,720 - --------------------------------- 1,820,348 120 --------------------------------- - ------------------------------------------------------------------------------------------------------------------------- Small pneumatic tires and O,M,W Carlisle, PA Owned 640,609 31 tubes; stamped and O,M,W Aiken, SC Owned 420,500 18 roll-formed wheels O,M,W Point Fortin, Owned 167,604 - Trinidad, W.I. O,M,W Long Beach, CA Owned 60,000 3 M Milwaukee, WI Owned 99,000 - O,M,W Ontario, CA Owned 60,000 - O,M,W Lenexa, KS Leased to 2001 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 - W Winnepeg, Manitoba Leased to 2002 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 M Oklahoma City, OK Owned 146,985 8 for commercial food O,M,W Fredonia, WI Owned 192,500 12 service; 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 1999 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 M Middlefield, OH Owned 200,581 28 and plastics products, M Crestline, OH Owned 172,997 40 including precision-molded M Canton, OH Owned 87,845 17 engine components and M Lake City, PA Owned 100,000 30 blow-molded bumper beams M Trenton, SC Owned 67,695 10 M Belleville, MI Owned 76,000 5 M Erie, PA Owned 95,800 15 M Lapeer, MI Owned 96,300 6 M Tuscaloosa, Al Owned 67,376 15 O Chardon, OH Leased to 2004 8,033 - W Canton, OH Leased to 2000 31,840 - M,W Ashtabula, OH Leased to 2000 30,000 - O Livonia, MI Leased to 2000 2,673 - M,W Erie, PA Leased to 2004 142,000 - M Chihuahua, MX Leased to 2004 50,000 8 --------------------------------- 1,229,140 174 --------------------------------- - ------------------------------------------------------------------------------------------------------------------------- Brake lining for trucks and O,M Ridgeway, PA Owned 117,300 7 trailers; brakes and O,M Fredericksburg, VA Owned 90,042 27 actuation systems; 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 W Lancaster, PA Leased to 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 Nampa, ID Leased to 2007 106,400 5 --------------------------------- 884,542 97 --------------------------------- - ------------------------------------------------------------------------------------------------------------------------- Specialized lowbed trailers O,M Mitchell, SD Owned 245,000 36 for construction and O,M Brookville, PA Owned 156,000 22 commercial markets O,M Green Pond, AL Owned 49,860 14 M,W Mitchell, SD Leased to 2003 14,000 - --------------------------------- 464,860 72 --------------------------------- - ------------------------------------------------------------------------------------------------------------------------- Liquid Transport tanks O,M,W New Lisbon, WI Owned 252,850 31 and in-plant processing O,M,W Elroy, WI Owned 84,300 7 equipment O,M,W Winsted, MN Owned 390,894 7 O,M,W Rice Lake, WI Leased to 2002 135,000 5 O,M,W Tavares, FL Leased to 1999 73,967 12 --------------------------------- 937,011 62 --------------------------------- - ------------------------------------------------------------------------------------------------------------------------- High- and medium- 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 - ------------------------------------------------------------------------------------------------------------------------- 8,944,453 658 ---------------------------------
7 8 Total plant space of 8,944,453 sq. ft. is used for:
Owned Leased Total ----- ------ ----- 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, 1999, an additional 655,825 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. ITEM 3. LEGAL PROCEEDINGS As of December 31, 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. 9 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, 1999, there were 2,546 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 1999 and 1998 were as follows:
First Second Third Fourth ----- ------ ----- ------ 1999 Dividends per share $.1600 $.1600 $.1800 $.1800 Stock Price High $52 15/16 $49 9/16 $51 5/16 $43 1/8 Low $41 $42 1/4 $37 7/16 $30 5/8 1998 Dividends per share $.1400 $.1400 $.1600 $.1600 Stock Price High $51 1/4 $53 1/16 $47 15/16 $51 5/8 Low $40 1/16 $39 3/8 $35 1/2 $32 11/16
10 ITEM 6. SELECTED FINANCIAL DATA. In thousands except per share data
1999 1998 1997 1996 1995 1994 ----- ----- ---- ---- ---- ---- SUMMARY OF OPERATIONS Net sales $1,611,256 1,517,494 1,260,550 1,017,495 822,534 692,650 Gross 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 $ 95,794 84,866 70,666 55,680 44,081 35,568 Basic earnings per share $ 3.18 2.81 2.34 1.84 1.43 1.17 Diluted earnings per share $ 3.13 2.77 2.28 1.80 1.41 1.15 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 $1,080,662 1,022,852 861,216 742,463 542,423 485,283 Long-term debt $ 281,744 273,521 209,642 191,167 72,725 69,148 % 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 $ 20,511 18,105 15,868 14,129 12,928 11,605 Per share $ 0.680 0.600 0.525 0.465 0.420 0.380 Capital 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
All share and per share amounts have been restated to reflect the two-for-one stock split on January 15, 1997. Earnings per share amounts prior to 1997 have been restated to comply with Statement of Financial Accounting Standards No. 128, "Earnings Per 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 reported sales of $1.611 billion in 1999, up 6%, or $94 million, from 1998 sales of $1.518 billion. The primary contributing factor to this increase was generated through product line expansion and market share gains. In addition, we completed several complementary acquisitions in 1998 and 1999. In 1998, sales increased 20% or $257 million, as a result of internal growth as well as acquisitions made in 1998 and the full year impact of those acquisitions completed in 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 $2.77 per share. Net earnings, in 1998, increased 20%, reflecting not only the increased sales levels, but also cost reductions. In January 1999, Carlisle exited its Perishable Cargo business, which impacts the year-to-year comparisons of operating results. After adjusting for the effect of this divestiture, pro-forma sales and net earnings increased 10% and 17%, respectively. The quarterly pro-forma results are shown in Table 1 below. TABLE 1
Pro-Forma Sales ($ 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 of 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 manufacturer 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 1998: (1) Vermont Electromagnetics and (2) Quality Microwave Interconnects, Inc., both manufacturers of specialty cable assemblies and connectors, (3) Industrial Tire Products, Inc., a distributor of industrial and recreational tire and wheel assemblies, and (4) Hardcast Europe BV, a Dutch manufacturer of adhesive and sealant products for the construction 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 increased 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 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 increased 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 sales 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 result 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 streamlined 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 this pro-forma increase, due to the acquisition 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 significant 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 $306 million. This increase was related to higher sales of specialty trailers to construction markets, plastic permanentware to the foodservice industry and refrigerated containers to the shipping industry. Segment earnings of $40 million increased 6% over 1998 segment earnings of $38 million. Pro-forma earnings grew 26%, after excluding the perishable cargo business, reflecting primarily the increase in sales in this segment. 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 1997 to 21.6% in 1998, and increased to 22.2% in 1999. The decline from 1997 to 1998 largely reflects the competitive marketplace and changing mix in Carlisle'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 to 10.8% in 1999, reflecting the continued emphasis on cost control throughout all operations and lower cost structures in Carlisle's overall businesses. TOTAL COSTS, which include raw material, manufacturing, selling, general and administrative costs, expressed as a percentage of total sales, have remained fairly consistent, decreasing slightly in 1999 to 89.6% of sales from 90.0% of sales in 1998 and 89.9% of sales in 1997. The improvement in this total cost relationship in 1999 was due to improved operating efficiencies. The 1998 decline from 1997's level of 89.9% percent of sales was due to operational improvements offset by the GM strike and the change in product mix in the construction materials operations. INTEREST EXPENSE, NET decreased to $19.2 million in 1999 from $19.7 million in 1998, 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 1999 due to the reduction of the Company's ownership in its leasing joint venture. INCOME TAXES, for financial reporting purposes, decreased in 1999 to an effective tax rate of 38.4%, compared to 39.5% in 1998 and 1997. This reduction was the outcome of the implementation of various state tax strategies developed in previous years. RECEIVABLES, of $245 million, reflect an increase of 9% over the 1998 level of $225 million. This increase was in line with the sales growth. The 1998 level of receivables represented a 22% increase over 1997 levels and was primarily the result of higher December sales. INVENTORIES, valued primarily by the last-in, first-out (LIFO) method, were $219 million at year-end 1999, a 13% increase over the 1998 year-end level of $194 million. The increase in 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 current year. The 1998 inventory level increased 7% over 1997, due primarily to acquisitions made during the year. CAPITAL EXPENDITURES totaled $48 million in 1999, a significant reduction from the $96 million incurred in 1998. The 1999 level was more consistent with previous levels, which reflects a normalized level of capital spending. The 1998 increase was primarily attributable to investments in production capacity in Mexico, expanded warehousing and distribution 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. LIQUIDITY, CAPITAL RESOURCES AND ENVIRONMENTAL CASH FLOWS provided by operating activities increased $39 million to $136 million in 1999 from $97 million in 1998. Cash used in investing activities was $86 million versus $133 million in 1998, a decrease of $47 million. This decrease was attributable to cash received from the divestiture of the perishable cargo business, net of a $39 million tax payment, as well as a reduction in the level of capital expenditures. The net cash used in financing activities in 1999 was $44 million versus cash provided of $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 1998, of $38 million, reflects the net increase in debt after the early payment of higher cost debt and stock repurchases. Carlisle has a $125 million revolving credit facility available for acquisitions and general corporate purposes. In May 1998, Carlisle issued to the public $100 million of ten-year bonds at a rate of 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 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 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 material charges relating to environmental matters in 1999 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 phase, and the authentication phase, which included simulated testing in a 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 did not provide 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 failure. There were no disruptions to Carlisle businesses as a result of the 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 have a material adverse effect on the Company's financial condition or operations. 15 BACKLOG AND FUTURE OUTLOOK BACKLOG was $228 million at December 31, 1999 compared to $247 million (excluding Carlisle perishable cargo backlog of $15 million) in 1998. Higher backlog at Carlisle Systems & Equipment and Carlisle FoodService reflects the strong market penetration achieved by these businesses. Automotive Components backlog was down from December 1998 due to the high demand in the fourth 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 systems, allowed more rapid response to customer needs and contributed 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 operating success. With a growing market and a commitment to constant increased operating efficiency, 2000 should prove to be another strong year for Carlisle. 16 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. CONSOLIDATED STATEMENT OF EARNINGS For the years ended December 31. In thousands except per share data.
1999 1998 1997 ---- ---- ---- Net sales $1,611,256 $1,517,494 $1,260,550 ---------- ---------- ---------- Cost and expenses: Cost of goods sold 1,254,267 1,189,379 974,089 Selling and administrative expenses 173,375 160,366 143,246 Research and development expenses 15,761 16,178 15,824 Gain on divestiture of business ($16.6m), net of other charges ($15.9m) 685 -- -- Other income & expense 6,099 8,414 4,723 ---------- ---------- ---------- Earnings before interest & income taxes 174,637 159,985 132,114 Interest expense, net 19,154 19,716 15,330 ---------- ---------- ---------- Earnings before income taxes 155,483 140,269 116,784 Income taxes 59,689 55,403 46,118 ---------- ---------- ---------- Net earnings $95,794 $84,866 $70,666 ========== ========== ========== Average shares outstanding - basic 30,166 30,179 30,235 Basic earnings per share $3.18 $2.81 $2.34 Average shares outstanding - diluted 30,635 30,674 31,025 Diluted earnings per share $3.13 $2.77 $2.28
See accompanying Notes to Consolidated Financial Statements. 17 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (In thousands except share data)
ADDITIONAL CUMULATIVE COST OF COMMON PAID-IN RETAINED TRANSLATION SHARES STOCK CAPITAL EARNINGS ADJUSTMENT IN TREASURY Balance at December 31,1996 $39,331 $ 480 $ 348,558 $ 105 ($ 80,866) Net earnings -- -- 70,666 -- -- Cash dividends - $0.525 per share -- -- (15,868) -- -- Exercise of stock options & other -- 1,350 -- -- 3,295 Purchase of 550,980 treasury shares -- -- -- -- (18,110) Translation adjustment -- -- -- (1,688) -- ------------------------------------------------------------------ Balance at December 31,1997 39,331 1,830 403,356 (1,583) (95,681) Net earnings -- -- 84,866 -- -- Cash dividends - $0.60 per share -- -- (18,105) -- -- Exercise of stock options & other -- 2,371 -- -- 3,309 Purchase of 283,598 treasury shares -- -- -- -- (14,372) Translation adjustment -- -- -- 113 -- ------------------------------------------------------------------ Balance at December 31, 1998 39,331 4,201 470,117 (1,470) (106,744) Net earnings -- -- 95,794 -- -- Cash dividends - $0.68 per share -- -- (20,511) -- -- Exercise of stock options & other -- 1,370 4 -- 616 Purchase of 103,208 treasury shares -- -- -- -- (4,387) Translation adjustment -- -- -- (188) -- ------------------------------------------------------------------ Balance at December 31, 1999 $39,331 $5,571 $ 545,404 ($1,658) ($110,515) ------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements. 18 CONSOLIDATED BALANCE SHEET As of December 31. In thousands except share data.
1999 1998 ----- ---- ASSETS CURRENT ASSETS Cash and cash equivalents $ 10,417 $ 3,883 Receivables, less allowances of $4,963 in 1999 and $4,864 in 1998 245,120 225,348 Inventories 219,270 193,650 Deferred income taxes 32,108 26,040 Prepaid expenses and other 34,123 29,604 ----------- ----------- TOTAL CURRENT ASSETS 541,038 478,525 ----------- ----------- PROPERTY, PLANT AND EQUIPMENT, NET 349,451 354,769 ----------- ----------- OTHER ASSETS Patents, goodwill and other intangibles 157,967 139,744 Investments and advances to affiliates 14,321 34,892 Receivables and other assets 17,885 14,922 ----------- ----------- TOTAL OTHER ASSETS 190,173 189,558 ----------- ----------- $ 1,080,662 $ 1,022,852 CURRENT LIABILITIES Short-term debt, including current maturities $ 1,989 $ 31,241 Accounts payable 106,283 101,859 Accrued expenses 132,106 122,237 ----------- ----------- TOTAL CURRENT LIABILITIES 240,378 255,337 ----------- ----------- LONG-TERM LIABILITIES Long-term debt 281,744 273,521 Product warranties 79,858 75,084 Other liabilities 549 13,475 ----------- ----------- TOTAL LONG-TERM LIABILITIES 362,151 362,080 ----------- ----------- SHAREHOLDERS' EQUITY Preferred stock, $1 par value. Authorized and unissued 5,000,000 shares Common stock, $1 par value. Authorized 100,000,000 shares; issued 39,330,624 shares 39,331 39,331 Additional paid-in capital 5,571 4,201 Cumulative transition adjustments (1,658) (1,470) Retained earnings 545,404 470,117 Cost of shares in treasury - 9,203,095 shares in 1999 and 9,152,167 (110,515) (106,744) shares in 1998 ----------- ----------- TOTAL SHAREHOLDERS' EQUITY 478,133 405,435 ----------- ----------- $ 1,080,662 $ 1,022,852
See accompanying Notes to Consolidated Financial Statements. 19 CONSOLIDATED STATEMENT OF CASH FLOWS For the years ended December 31. In thousands.
1999 1998 1997 ---- ---- ---- OPERATING ACTIVITIES Net earnings $ 95,794 $ 84,866 $ 70,666 Reconciliation of net earnings to cash flows: Depreciation 39,832 37,617 32,477 Amortization 7,582 7,604 6,278 (Gain)/Loss on sales of property, equipment and business (1,777) (3,156) (993) Changes in assets and liabilities, excluding effects of acquisitions and divestitures: Current and long-term receivables (18,622) (43,786) (19,659) Inventories (13,471) (10,526) (31,118) Accounts payable and accrued expenses 4,440 25,450 9,245 Prepaid, deferred and current income taxes 15,761 (7,568) 10,887 Long-term liabilities 4,585 5,217 3,279 Other 1,969 1,086 1,924 --------- --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES 136,093 96,804 82,986 --------- --------- --------- INVESTING ACTIVITIES Capital expenditures (47,839) (95,970) (59,531) Acquisitions, net of cash (42,393) (31,577) (45,380) Proceeds from sale of property, equipment and business 17,157 11,344 15,815 Other (12,544) (16,761) (4,090) --------- --------- --------- NET CASH USED IN INVESTING ACTIVITIES (85,619) (132,964) (93,186) --------- --------- --------- FINANCING ACTIVITIES Net proceeds from short-term debt (29,285) 15,827 13,458 Proceeds from long-term debt 10,000 104,235 150,000 Reductions of long-term debt (1,744) (49,274) (125,860) Dividends (20,511) (18,105) (15,868) Purchases of treasury shares (2,400) (14,372) (18,110) --------- --------- --------- NET CASH (USED IN)/ PROVIDED BY FINANCING ACTIVITIES (43,940) 38,311 3,620 --------- --------- --------- CHANGE IN CASH AND CASH EQUIVALENTS 6,534 2,151 (6,580) CASH AND CASH EQUIVALENTS Beginning of year 3,883 1,732 8,312 --------- --------- --------- End of year $ 10,417 $ 3,883 $ 1,732 ========= ========= =========
See accompanying Notes to Consolidated Financial Statements. 20 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 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 $6.6 million and $4.3 million at December 31, 1999 and 1998, respectively (net of accumulated amortization of $16.5 million and $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 $151.3 million and $135.4 million at December 31, 1999 and 1998, respectively (net of accumulated amortization of $19.8 million and $13.6 million, respectively), and is amortized on a straight line basis over various periods not exceeding 30 years. The Company evaluates the carrying value of goodwill and other intangible assets if facts and circumstances suggest that they may be impaired. Impairments would be recognized when the expected future operating cash flows derived from such intangible assets is less 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, in 1999, 1998 and 1997, respectively. Future minimum payments under various noncancelable operating leases in each of the next five years are approximately $7.6 million in 2000, $6.8 million in 2001, $6.0 million in 2002, $5.2 million in 2003 and $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. EARNINGS PER SHARE. Earnings per share is determined in accordance with STATEMENT OF FINANCIAL ACCOUNTING STANDARDS (SFAS) No. 128, "Earnings per 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. 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 1999 presentation. OPERATIONAL 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:
IN THOUSANDS 1999 1998 ---- ---- FIFO cost (approximates current costs): Finished goods $ 132,719 $ 113,852 Work in process 27,052 24,665 Raw materials 70,735 68,979 --------- --------- $ 230,506 $ 207,496 Excess of FIFO cost over LIFO value (11,236) (13,846) --------- --------- $ 219,270 $ 193,650 ========= =========
PROPERTY, PLANT & EQUIPMENT The components of property, plant and equipment are:
IN THOUSANDS 1999 1998 ---- ---- Land $ 5,640 $ 6,936 Buildings & leasehold improvements 149,924 142,525 Machinery & equipment 473,662 436,222 Projects in progress 28,859 44,890 --------- --------- $ 658,085 $ 630,573 Accumulated depreciation (308,634) (275,804) --------- --------- $ 349,451 $ 354,769 ========= =========
BORROWINGS Long-term debt includes:
IN THOUSANDS 1999 1998 ---- ---- 6.70% senior notes due 2008 $ 100,000 $ 100,000 7.25% senior notes due 2007 150,000 150,000 Industrial Development and Revenue Bonds due through 2018 26,595 16,645 Other, including capital lease obligations 7,138 8,832 --------- --------- $ 283,733 $ 275,477 Less current maturities (1,989) (1,956) --------- --------- $ 281,744 $ 273,521 ========= =========
23 On May 15, 1998, the Company issued $100 million in notes due in 2008 at an interest rate of 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. On December 29, 1998, the Company retired 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. As of December 31, 1999, $125 million was available under this facility. The Company has available unsecured lines of credit from banks of $40 million, of which $40 million was available as of December 31, 1999. At December 31, 1999, letters of credit amounting to $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 1999 and 1998 were 4.6% and 4.3%, respectively. The debt facilities contain various restrictive covenants and limitations, all of which were complied with in 1999 and 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. Interest expense, net is shown net of interest income of $2.6 million in 1999, $3.0 million in 1998, and $1.2 million in 1997. The aggregate amount of long-term debt maturing in each of the next five years is approximately $2.0 million in 2000, $2.2 million in 2001, $1.2 million in 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. SHAREHOLDERS' EQUITY The Company has a Shareholders' Rights Agreement that 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 restricted stock awards. At December 31, 1999, 15,699 nonvested shares were outstanding and 2,158,798 shares were available for issuance under the Company's restricted stock plan. The activity under the stock option plan is as follows:
Weighted Average Number Exercise of Shares Price Outstanding at December 31, 1996 1,696,830 $15.77 Options granted 214,000 29.50 Options exercised (340,584) 11.71 --------- Outstanding at December 31, 1997 1,570,246 $18.52 Options granted 239,000 46.56 Options exercised (282,413) 16.32 --------- Outstanding at December 31, 1998 1,526,833 $23.32 Options granted 430,500 38.35 Options exercised (40,316) 16.69 --------- Outstanding at December 31, 1999 1,917,017 $26.84 --------- --------- Available for grant at December 31, 1999 4,682
The following tables summarize information about stock options outstanding as of December 31, 1999: Options Outstanding:
Number Weighted Range of Outstanding Weighted Average Average Exercise Prices at 12/31/99 Remaining Years Exercise Price --------------- ----------- --------------- -------------- $ 8.10-9.78 150,657 1.7 $9.11 12.32-17.25 239,528 3.5 14.41 17.32-19.63 222,000 5.1 17.71 19.88-29.50 634,332 6.5 23.68 32.75-48.38 670,500 9.1 41.27 --------- 1,917,017 =========
Options Exercisable:
Number Range of Exercisable Weighted Average Exercise Prices at 12/31/99 Exercise Price --------------- ----------- -------------- $ 8.10-9.78 150,657 $9.11 12.32-17.25 239,528 14.41 17.32-19.63 222,000 17.71 19.88-29.50 634,332 23.68 32.75-48.38 303,833 42.64 --------- 1,550,350 =========
At December 31, 1998, 1,296,166 options were exercisable at a weighted average price of $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. 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-forma effect on net earnings and earnings per share, in 1999, 1998 and 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, respectively. Pursuant to the transition provisions of SFAS No. 123, the pro-forma effect includes only the vested portion of options granted in 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. 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 ---- ---- ---- Service cost $ 5,848 $ 5,258 $ 4,366 Interest cost 7,633 7,113 6,734 Expected return on plan assets (8,689) (8,014) (6,968) Net amortization and deferral (393) (381) (512) ------- ------- ------- Net periodic benefit cost $ 4,399 $ 3,976 $ 3,620 ======= ======= =======
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. The assumed rate of compensation increase was 4.5% in 1999, 4% in 1998 and 1997; and the expected rate of return on plan assets was 9.25% in 1999 and 1998, and 8.75% in 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, in 1999, 1998 and 1997, 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 1999, 1998 and 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 ---- ---- ---- Currently payable Federal $ 77,425 $ 38,496 $ 39,262 State, local and other 7,472 8,340 8,242 -------- -------- -------- $ 84,897 $ 46,836 $ 47,504 ======== ======== ======== Deferred liability (benefit) Federal $(23,166) $ 5,572 $ (1,363) State, local and other (2,042) 2,995 (23) -------- -------- -------- $(25,208) $ 8,567 $ (1,386) -------- -------- -------- Total provision $ 59,689 $ 55,403 $ 46,118 ======== ======== ========
Deferred tax assets (liabilities) are comprised of the following at December 31:
IN THOUSANDS 1999 1998 ---- ---- Product warranty $ 42,007 $ 46,047 Inventory reserves 4,099 3,495 Doubtful receivables 1,608 3,742 Employee benefits 12,024 11,799 Other, net 9,256 11,879 -------- -------- Deferred assets $ 68,994 $ 76,962 -------- -------- Depreciation (24,659) (55,473) Other, net (2,229) (4,591) -------- -------- Deferred liabilities (26,888) (60,064) -------- -------- Net deferred tax asset $ 42,106 $ 16,898 ======== ========
27 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 ---- ---- ---- Federal income taxes at statutory rate $54,419 $49,095 $40,875 State income taxes, net of federal income tax benefit 4,043 5,798 3,842 Other, net 1,227 510 1,401 ------- ------- ------- $59,689 $55,403 $46,118 ======= ======= ======= Effective income tax rate 38.4% 39.5% 39.5%
Cash payments for income taxes were $84.9 million, $58.7 million and $30.7 million in 1999, 1998 and 1997, 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 products and services, 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 segments: CONSTRUCTION MATERIALS---the principal products of this segment are rubber, plastic and fleece back sheeting used predominantly on non-residential flat roofs and related roofing accessories, including flashings, fasteners, 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. 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, high grade aerospace wire and specialty electronic cable. Customers include golf car manufacturers, power equipment manufacturers, boat and utility trailer manufacturers, truck OEMs, heavy equipment and truck dealers and aftermarket distributors, aerospace OEMs, and electronic equipment manufacturers. AUTOMOTIVE COMPONENTS---the principal products of this segment are highly engineered rubber and 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, stainless steel processing equipment and their related process control 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 foodservice distributors, restaurants, dairy product processors and distributors, heavy equipment and truck dealers, home delivery distributors, shipping lines and commercial 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:
Earnings before Depreciation Interest & and 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 $ 316,597 $ 49,120 $ 174,157 $ 6,179 $ 8,109 Industrial 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 (All Other 305,729 30,142 215,777 10,714 17,016 Corporate -- (13,290) 14,618 893 209 ---------------------------------------------------------------------------------- $1,260,550 $ 132,114 $ 861,216 $38,755 $59,531 ----------------------------------------------------------------------------------
29 QUARTERLY FINANCIAL DATA Unaudited IN THOUSANDS EXCEPT PER SHARE DATA
First Second Third Fourth Year ----- ------ ----- ------ ---- 1999 Net sales $390,024 425,813 400,855 394,564 $1,611,256 Gross margin $84,623 98,101 89,927 84,338 $356,989 Operating expenses $46,870 48,300 46,425 47,541 $189,136 Net earnings $21,808 27,998 24,676 21,312 $95,794 Basic earnings per share $0.72 0.93 0.82 0.71 $3.18 Diluted earnings per share $0.71 0.91 0.81 0.70 $3.13 Dividends per share $0.1600 0.1600 0.1800 0.1800 $0.6800 Stock price: High $52 15/16 49 9/16 51 5/16 43 1/8 Low $41 42 1/4 37 7/16 30 5/8 1998 Net sales $363,090 395,580 377,985 380,839 $1,517,494 Gross margin $78,555 88,363 81,948 79,249 $328,115 Operating expenses $43,993 44,644 43,437 44,470 $176,544 Net earnings $18,979 24,551 22,320 19,016 $84,866 Basic earnings per share $0.63 0.81 0.74 0.63 $2.81 Diluted earnings per share $0.62 0.80 0.73 0.62 $2.77 Dividends per share $0.1400 0.1400 0.1600 0.1600 $0.6000 Stock price: High $51 1/4 53 1/16 47 15/16 51 5/8 Low $40 1/16 39 3/8 35 1/2 32 11/16
30 Report of Independent 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, 1999 and 1998, and the related consolidated statements of earnings, shareholders' equity and cash flows for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits 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 as of December 31, 1999 and 1998, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1999, in conformity with generally accepted accounting principles. New York, New York January 25, 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 furnished to the Company by the executive officers. Except as otherwise indicated each executive officer has had the same principal occupation or employment during the past five years.
Name Age Positions With Company Period of Service - -------------------------------------------------------------------------------------------------------------------- Stephen P. Munn 57 Chief Executive Officer September, 1988 to date since September, 1988; Chairman of the Board since January, 1994; and President from September, 1988 to February, 1995. Dennis J. Hall 58 Chief Operating Officer August, 1989 to date and Vice Chairman since March, 1999; President from February, 1995 to March, 1999; and Executive Vice President, Treasurer and Chief Financial Officer from August, 1989 to February, 1995. Scott C. Selbach 44 Vice President, Corporate July, 1989 to date Development since August, 1997; Vice President, Europe from August, 1995 to August, 1997; and Vice President, Secretary and General Counsel from July, 1989 to August, 1995. John S. Barsanti 48 Vice President and Chief April, 1991 to date Financial Officer 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 March, 1999 and President of Carlisle Tire & Wheel Company since January, 1991. Steven J. Ford 40 Vice President, Secretary and General July, 1995 to date Counsel since July, 1995. Formerly an Associate with Bond, Schoeneck & King, Syracuse, NY.
32 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, 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, 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, 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, 1999, 1998 and 1997 Consolidated Statement of Shareholders' Equity, years ended December 31, 1999, 1998 and 1997 Consolidated Balance Sheet, December 31, 1999 and 1998 Consolidated Statement of Cash Flows, years ended December 31, 1999, 1998 and 1997 Notes to Consolidated Financial Statements 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.****** (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. 34 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CARLISLE COMPANIES INCORPORATED /s/ DENNIS J. HALL - ------------------------------ By: Dennis J. Hall, Chief Operating Officer and Vice 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, Chief Magalen C. Webert, Director Executive Officer and Chairman of the Board of Directors (Principal Executive Officer) /s/ DONALD G. CALDER /s/ JOHN S. BARSANTI Donald G. Calder, Director - ----------------------------------- ------------------------------ John S. Barsanti, Vice President and Chief /s/ HENRY J. FORREST Financial Officer ------------------------------ (Principal Financial Officer Henry J. Forrest, Director and Principal Accounting Officer) /s/ 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, 2000 35 CARLISLE COMPANIES INCORPORATED COMMISSION FILE NUMBER 1-9278 FORM 10-K FOR FISCAL YEAR ENDED DECEMBER 31, 1999 EXHIBIT LIST (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 EX-3.3 2 EXHIBIT 3.3 Exhibit 3.3 CERTIFICATE OF AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION OF CARLISLE COMPANIES INCORPORATED It is hereby certified that: 1. The name of the corporation is Carlisle Companies Incorporated (the "Corporation"). 2. The Restated Certificate of Incorporation of the Corporation is hereby amended by striking out in its entirety Paragraph A of Article FOURTH and restating said Paragraph as follows: FOURTH: A. The total number of shares of stock which the Corporation shall have authority to issue is One Hundred and Five Million (105,000,000) shares, divided into two (2) classes as follows: (i) One Hundred Million (100,000,000) shares, each to be of the par value of one dollar ($1.00), and to be designated as Common Stock; and, (ii) Five Million (5,000,000) shares, each to be of the par value of one dollar ($1.00), and to be designated as Preferred Stock." 3. The amendment of the Restated Certificate of Incorporation herein certified has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by Stephen P. Munn, its Chairman and Chief Executive Officer and attested by Steven J. Ford, its Secretary, this 29th day of April, 1999. CARLISLE COMPANIES INCORPORATED By: /s/ STEVEN P. MUNN ------------------------------------ Stephen P. Munn, Chairman and Chief Executive Officer ATTEST: /s/ STEVEN J. FORD - ------------------------- Steven J. Ford, Secretary EX-10.4 3 EXHIBIT 10.4 Exhibit 10.4 CARLISLE COMPANIES INCORPORATED NONEMPLOYEE DIRECTORS STOCK OPTION PLAN (Effective as of December 1, 1999) 1. PURPOSE. The Carlisle Companies Incorporated Nonemployee Directors Stock Option Plan (the "Plan") is intended to advance the interests of Carlisle Companies Incorporated (the "Company") and its stockholders by attracting, retaining and motivating the performance of nonemployee Directors (each a "Nonemployee Director") of the Company, and to encourage and enable Nonemployee Directors to acquire and retain a proprietary interest in the Company by ownership of its stock. 2. ADMINISTRATION. (a) Subject to the express provisions of the Plan, the Board of Directors of the Company (the "Board") shall have discretionary authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, to determine the details and provisions of each Stock Option Agreement (as defined in Section 7 of the Plan), and to make all determinations necessary or advisable in the administration of the Plan. All such actions and determinations by the Board shall be conclusively binding for all purposes and upon all persons. Notwithstanding the foregoing or anything elsewhere in the Plan, with respect to any Option granted under the Plan, the Board shall have no discretionary authority to determine the number of shares of the Company's common stock (the "Carlisle Shares") covered by such Option, the option price for the Carlisle Shares or the date of grant, all such determinations occurring automatically pursuant to Section 5(b) of the Plan. The Board shall not be liable for any action or determination made in good faith with respect to the Plan, any Option or any Stock Option Agreement entered into hereunder. (b) "Option" means an option to purchase Carlisle Shares granted under the Plan. 3. NUMBER OF CARLISLE SHARES SUBJECT TO PLAN. Subject to adjustment pursuant to the provisions of Section 4 of the Plan, the maximum number of Carlisle Shares which may be issued and sold hereunder shall be 200,000 and all such Shares must be held in the Company's treasury. Carlisle Shares covered by an Option that shall have been exercised shall not again be available for an Option grant. If an Option shall terminate for any reason without being wholly exercised, the number of Carlisle Shares to which such Option termination relates shall again be available for grant. 4. ANTIDILUTION. In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger or consolidation, or the sale, conveyance, lease or other transfer by the Company of all or substantially all of its property, or any other change in the corporate structure or shares of the Company, pursuant to any of which events the then outstanding Carlisle Shares are split up or combined, or are changed into, become exchangeable at the holder's election for, or entitle the holder thereof to, other shares of stock, or in the case of any other transaction described in Section 424(a) of the Internal Revenue Code of 1986, as amended (the "Code"), the Board may proportionately change the number and kind of shares (including by substitution of shares of another corporation) subject to the Options and/or the option price of such shares in the manner that it may deem to be equitable and appropriate. 5. OPTION GRANTS. (a) Effective December 1, 1999 and as authorized by resolution of the Board, the Company grants each Nonemployee Director serving at such time an Option to purchase 5,000 Carlisle Shares at an option price of $35.1875, the closing price on the New York Stock Exchange ("NYSE") of the Carlisle Shares on December 1, 1999. (b) Commencing in 2001 and each year thereafter for the duration of the Plan, on the date of the Company's February Board of Directors' meeting for the applicable year (or such other date as the Board shall determine), the Company shall grant each Nonemployee Director serving at such time an Option to purchase 1,000 Carlisle Shares at an option price equal to the closing price on the NYSE of the Carlisle Shares on the date of such meeting; PROVIDED, HOWEVER, that each such grant shall be conditioned upon the Company's net earnings for the immediately preceding calendar year equaling or exceeding the net earnings set forth in the approved Operating Plan for such year. 6. VESTING; TERM OF OPTIONS. (a) Each Option shall vest and become exercisable as follows: (i) one-third (1/3) on the date of grant, (ii) an additional one-third (1/3) on the one year anniversary of the date of grant, and (iii) the remaining one-third (1/3) on the second anniversary of the date of grant, PROVIDED that the Nonemployee Director to whom such Option was granted remains a Nonemployee Director on those dates. In addition, all Options granted to a Nonemployee Director whose term as a Director ends as a result of the death, Permanent or Total Disability (as defined in Section 10(b) of the Plan) or a Change in Control (as defined in Section 10(c) of the Plan) shall vest and become exercisable immediately upon the expiration of his or her term. (b) Notwithstanding anything elsewhere in the Plan to the contrary, an unexercised Option shall expire on the day immediately preceding the ten year anniversary of grant (the "Expiration Date"). 7. STOCK OPTION AGREEMENT. The Company and each Nonemployee Director granted an Option hereunder (the "Optionee") shall enter into a stock option agreement (the "Stock Option Agreement") which shall set forth such terms and conditions of the Option as may be determined by the Board to be consistent with the Plan, and which may include additional provisions and restrictions that are not inconsistent with the Plan. 8. OPTION EXERCISE. A vested Option may be exercised in whole or in part at any time (but in respect to whole Carlisle Shares only) within the period permitted for the exercise thereof, and shall be exercised by written notice of intent to exercise the Option for a specified number of Carlisle Shares delivered to the Company at its principal office, and payment in full of the option price for the specified number of Carlisle Shares. The option price shall be payable in cash. 9. TRANSFERABILITY OF OPTIONS. All Options shall be nontransferable except (i) upon the Optionee's death, by the Optionee's will or the laws of descent and distribution or (ii) on a case-by-case basis as may be approved by the Board in its discretion. 10. TERMINATION OF SERVICE. (a) If an Optionee's service as a member of the Board shall terminate as a result of death, all non-vested Options shall vest and become exercisable and the executor or administration of the estate of the decedent, or the person or persons to whom an Option shall have been validly transferred pursuant to will or the laws of descent and distribution, shall exercise all outstanding Options by the earlier of (i) twelve months from the date of termination, or (ii) the Expiration Date. Any Options not so exercised shall be forfeited. (b) If an Optionee's service as a member of the Board shall terminate as a result of his Permanent and Total Disability, all non-vested Options shall vest and become exercisable and the Optionee (or in the case of an Optionee who is legally incapacitated, his guardian or legal representative) shall exercise all outstanding Options by the earlier of (i) twelve months from the date of termination, or (ii) the Expiration Date. All Options not so exercised shall be forfeited. "Permanent and Total Disability" means the inability of an Optionee to perform his duties as a member of the Board by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. (c) If an Optionee's service as a member of the Board shall terminate in connection with a Change in Control of the Company, all non-vested Options shall vest and become exercisable and the Optionee shall exercise all outstanding Options by the earlier of (i) twelve months from the date of termination, or (ii) the Expiration Date. All Options not so exercised shall be forfeited. For purposes of this Plan, the following definitions shall apply: "Change in Control" shall occur in the event: (i) any Person shall become directly or indirectly, the Beneficial Owner of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company's then outstanding securities for the election of directors or fifty percent (50%) or more of the Company's then outstanding shares of common stock, or (ii) any Person commences a tender offer pursuant to Regulation 14D promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, or any successor provision thereto, which, if successful, would result in such Person becoming the Beneficial Owner of fifty percent (50%) or more of the combined voting power of the Company's then outstanding securities for the election of directors or fifty percent (50%) or more of the Company's then outstanding shares of commons stock. "Affiliate" and "Associate" shall have the meanings of such terms under Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934; "Beneficial Owner" shall have the meaning given such term under Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934; "Person" shall mean and include any individual, corporation, partnership or other person or entity and any Group and all Affiliates and Associates of any such individual, corporation, partnership, or other person or entity or Group; "Group" shall mean persons and entities that act in concert as described in Section 14(d)(2) of the Securities Exchange Act of 1934 (other than the Company or any subsidiary thereof and other than any profit-sharing employee stock ownership or any other employee benefit plan of the Company or such subsidiary, or any trustee of or fiduciary with respect to any such plan when acting in any such capacity and other than any executive officer of the Company). (d) If an Optionee's service as a member of the Board shall terminate for any reason other than death, Permanent and Total Disability, Change in Control or removal for cause, all non-vested Options shall remain non-vested and the Optionee shall exercise each previously vested Option by the earlier of (i) ninety days from the date of termination, or (ii) the Expiration Date. Any Option not so exercised shall be forfeited. (e) If an Optionee shall be removed from the Board for cause, the Optionee's right to exercise any unexercised portion of his Options shall immediately terminate and all rights thereunder shall cease. An Optionee shall be considered to have been removed for "cause" when he or she shall have been removed from the Board by the stockholders of the Company for cause in accordance with applicable state law and the Restated Certificate of Incorporation of the Company. 11. ISSUANCE OF CERTIFICATES. The Company shall issue a stock certificate in the name of the Optionee (or other person exercising the Option in accordance with the provisions of the Plan) for the Carlisle Shares purchased by exercise of an Option as soon as practicable after due exercise and payment of the option price for such Carlisle Shares. 12. TERMINATION; AMENDMENT. The Plan shall continue until terminated by the Board. The Board may at any time amend or modify the Plan; PROVIDED, HOWEVER, that the Board may not act more than once every six months to amend the provisions of the Plan relating to the determination of the number of Carlisle Shares subject to a particular Option, the option price or the date of grant of any Option under the Plan. Notwithstanding the foregoing, no amendment or modification of the Plan shall in any manner affect any Option previously granted without the consent of the Optionee. 13. MISCELLANEOUS. (a) Nothing in the Plan, in the grant of any Option or in any Stock Option Agreement shall confer upon any Nonemployee Director the right to continued service as a member of the Board. (b) An Optionee or the permitted transferee of an Option shall have no rights as a shareholder with respect to any Carlisle Shares subject to Option prior to the purchase of the Carlisle Shares by exercise of the Option. Nothing contained in the Plan or in the Stock Option Agreement shall create an obligation on the part of the Company to repurchase any Carlisle Shares acquired hereunder. (c) The Plan shall be binding upon the Company, its successors and assigns, and the Optionee, his executor , administrator and permitted transferees. (d) Whenever used herein, nouns in the singular shall include the plural, and the masculine pronoun shall include the feminine gender. (e) If any provision of the Plan or any Stock Option Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction. (f) The validity and construction of the Plan and the Stock Option Agreements shall be governed by the laws of the State of New York. EX-12 4 EXHIBIT 12 Exhibit 12 RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the Company's ratio of earnings to fixed charges for periods indicated:
Year Ended December 31, ------------------------------------------------ 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Ratio of Earnings to Fixed Charges 7.41 5.19 6.06 7.47 8.70
For purposes of computing the ratio of earnings to fixed charges, earnings are defined as earnings before income taxes plus fixed charges. Fixed charges consist of interest expense (including capitalized interest) and the portion of rental expense that is representative of the interest factor (deemed to be one-third of minimum operating lease rentals). The earnings to fixed charges calculation reflects the Company's proportionate share of income, expense and fixed charges attributable to the Company's investment in majority-owned unconsolidated subsidiaries and joint ventures. EX-21 5 EXHIBIT 21 Exhibit 21 CARLISLE COMPANIES INCORPORATED Subsidiaries of the Registrant
Jurisdiction of Incorporation -------------- Carlisle Companies Incorporated (Registrant) Delaware Subsidiaries: Carlisle Corporation - Carlisle Engineered Products, Inc. Delaware Carlisle FoodService Products Incorporated Delaware Three wholly-owned domestic subsidiaries Carlisle SynTec Incorporated Delaware Four wholly-owned domestic subsidiaries Carlisle Tire & Wheel Company Delaware Three wholly-owned domestic subsidiaries One wholly-owned foreign subsidiary Geauga Company Delaware Motion Control Industries, Inc. Delaware One foreign joint venture (49% ownership) One wholly-owned domestic subsidiary Tensolite Company Delaware Trail King Industries, Inc. South Dakota Walker Stainless Equipment Company, Inc. Delaware Johnson Truck Bodies, Inc. Delaware
EX-23 6 EXHIBIT 23 Exhibit 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report included in this Form 10-K, into the Company's previously filed Registration Statement File Nos. 33-28052, 33-56737, 33-66932, 33-56735, 33-57113, 33-66934 and 333-16785. Arthur Andersen LLP /s/ Arthur Andersen LLP New York, New York March 9, 2000 EX-27 7 EXHIBIT 27
5 This schedule contains Summary Financial information extracted from the Financial Statements of Carlisle Companies Incorporated for the twelve month period ending December 31, 1999, and is qualified in its entirety by reference to such financial statements. 1,000 12-MOS DEC-31-1999 JAN-01-1999 DEC-31-1999 10,417 0 250,083 4,963 219,270 541,038 658,085 308,634 1,080,662 240,378 281,744 0 0 39,331 438,802 1,080,662 1,611,256 1,611,256 1,254,267 1,443,403 (6,784) 1,134 19,154 155,483 59,689 0 0 0 0 95,794 3.18 3.13
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