-----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, FodO2NRSWt8JwhXiDc6C17+/ydl1JKX93Cm2mUZldQhIWYjAtxw0luwqIJU1oKRg 95aiX7+/il2wgf/FhZDU6A== 0001005477-01-500453.txt : 20010813 0001005477-01-500453.hdr.sgml : 20010813 ACCESSION NUMBER: 0001005477-01-500453 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010810 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09278 FILM NUMBER: 1703747 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-Q 1 d01-34123.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO ____________. 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) Brixham Green One, 15800 John J. Delaney Drive, Charlotte, NC 28277 704-752-1100 (Address of principal executive office, including zip code) (Telephone Number)
Indicate by check mark whether 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|_| Shares of common stock outstanding at August 1, 2001 30,260,245. ---------- CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES Condensed Consolidated Statements of Earnings Three Months and Six Months ended June 30, 2001 and 2000 (dollars in thousands, except per share amounts) (unaudited)
Three Months Six Months June 30, June 30, 2001 2000 2001 2000 --------- --------- --------- --------- Net sales $ 490,433 $ 479,430 $ 953,591 $ 913,448 Cost and expenses: Cost of goods sold 399,790 371,894 778,336 708,422 Selling and administrative expenses 52,521 46,526 104,034 95,449 Research and development expenses 4,467 4,075 8,472 8,166 Restructuring charges and other -- -- 37,694 -- Other (income) & expense (246) (717) (1,090) (1,906) --------- --------- --------- --------- Earnings before interest & income taxes 33,901 57,652 26,145 103,317 Interest expense, net 7,898 6,989 16,112 12,167 --------- --------- --------- --------- Earnings before income taxes 26,003 50,663 10,033 91,150 Income taxes 9,411 18,723 3,630 33,750 --------- --------- --------- --------- Net earnings $ 16,592 $ 31,940 $ 6,403 $ 57,400 ========= ========= ========= ========= Average shares outstanding - basic 30,262 30,255 30,259 30,223 Basic earnings per share $ 0.55 $ 1.06 $ 0.21 $ 1.90 --------- --------- --------- --------- Average shares outstanding - diluted 30,494 30,615 30,499 30,592 Diluted earnings per share $ 0.54 $ 1.04 $ 0.21 $ 1.87 --------- --------- --------- --------- Dividends declared and paid per share $ 0.20 $ 0.18 $ 0.40 $ 0.36 --------- --------- --------- ---------
See accompanying notes to interim financial statements. Page 2 of 12 CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES Condensed Consolidated Balance Sheets June 30, 2001 and December 31, 2000 (Dollars in thousands, except per share data)
JUNE 30, 2001 Dec. 31, 2000 ------------- ------------- (unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 9,225 $ 8,967 Receivables, less allowances of $6,161 in 2001 and $5,688 in 2000 285,622 213,656 Inventories (Note 2) 247,489 277,455 Deferred income taxes 20,195 22,344 Prepaid expenses and other 59,123 54,055 ----------- ----------- TOTAL CURRENT ASSETS 621,654 576,477 ----------- ----------- PROPERTY, PLANT AND EQUIPMENT, NET 397,579 402,614 ----------- ----------- OTHER ASSETS Patents, goodwill and other intangibles 275,966 251,670 Investments and advances to affiliates 68,782 66,350 Receivables and other assets 22,646 8,568 ----------- ----------- TOTAL OTHER ASSETS 367,394 326,588 ----------- ----------- $ 1,386,627 $ 1,305,679 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Short-term debt, including current maturities $ 206,480 $ 173,762 Accounts payable 139,114 108,484 Accrued expenses 150,153 117,702 ----------- ----------- TOTAL CURRENT LIABILITIES 495,747 399,948 ----------- ----------- LONG-TERM LIABILITIES Long-term debt 283,199 281,864 Product warranties 70,531 72,789 Other liabilities 2,176 3,199 ----------- ----------- TOTAL LONG-TERM LIABILITIES 355,906 357,852 ----------- ----------- 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 39,331 39,331 Additional paid-in capital 11,027 10,268 Cumulative translation adjustment (8,426) (4,624) Retained earnings 612,892 618,595 Cost of shares in treasury - 9,070,621 shares in 2001 and 9,079,356 shares in 2000 (119,850) (115,691) ----------- ----------- TOTAL SHAREHOLDERS' EQUITY 534,974 547,879 ----------- ----------- $ 1,386,627 $ 1,305,679 =========== ===========
See accompanying notes to interim financial statements. Page 3 of 12 CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES Condensed Statements of Consolidated Cash Flows Six Months Ended June 30, 2001 and 2000 (Dollars in thousands) (unaudited)
2001 2000 -------- --------- OPERATING ACTIVITIES Net earnings $ 6,403 $ 57,400 Reconciliation of net earnings to cash flows: Depreciation 28,467 25,065 Amortization 7,630 4,852 Write-down of machinery, equipment, inventory and goodwill 29,525 -- Changes in assets and liabilities, excluding effects of acquisitions and divestitures: Current and long-term receivables (66,025) (21,234) Inventories 32,502 (10,463) Accounts payable and accrued expenses 21,059 586 Prepaid, deferred and current income taxes 2,878 6,890 Long-term liabilities (2,953) (6,350) Other (3,365) (923) -------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES 56,121 55,823 -------- --------- INVESTING ACTIVITIES Capital expenditures (36,955) (26,451) Acquisitions, net of cash (37,934) (129,619) Proceeds from sale of property, equipment and business 6,635 32 Other (4,699) 4,463 -------- --------- NET CASH USED IN INVESTING ACTIVITIES (72,953) (151,575) -------- --------- FINANCING ACTIVITIES Net change in short-term debt 32,718 109,428 Proceeds from long-term debt -- 0 Reductions of long-term debt (122) (1,885) Dividends (12,106) (10,889) Purchases of treasury shares (3,400) (3,491) -------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIES 17,090 93,163 -------- --------- CHANGE IN CASH AND CASH EQUIVALENTS 258 (2,589) CASH AND CASH EQUIVALENTS Beginning of period 8,967 10,417 -------- --------- End of period $ 9,225 $ 7,828 ======== =========
See accompanying notes to interim financial statements. Page 4 of 12 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Six Months Ended June 30, 2001 and 2000 (1) The accompanying unaudited condensed consolidated financial statements include the accounts of Carlisle Companies Incorporated and its wholly-owned subsidiaries (together, the "Company"). Intercompany transactions and balances have been eliminated in consolidation. The unaudited condensed consolidated financial statements have been prepared in accordance with Article 10-01 of Regulation S-X of the Securities and Exchange Commission and, as such, do not include all information required by generally accepted accounting principles. However, in the opinion of the Company, these financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the financial statements for the interim period presented herein. Results of operations for the three months and six months ended June 30, 2001 are not necessarily indicative of the operating results for the full year. While the Company believes that the disclosures presented are adequate to make the information not misleading, it is suggested that these financial statements be read in conjunction with the financial statements and notes included in the Company's 2000 Annual Report to Stockholders and 2000 Form 10-K. (2) The components of inventories are as follows:
JUNE 30, Dec. 31, 2001 2000 --------- --------- (000)'S First-in, first-out (FIFO) costs: Finished goods $ 153,604 $ 175,861 Work in process 28,030 31,687 Raw materials 79,872 82,694 --------- --------- $ 261,506 $ 290,242 Excess of FIFO cost over Last-in, First-out (LIFO) inventory value (14,017) (12,787) --------- --------- LIFO inventory value $ 247,489 $ 277,455 ========= =========
(3) On June 29, 2001, upon expiration of its $200 million 364-Day Revolving Credit Facility, the Company renewed the 364-Day facility and increased the amount available to $225 million. (4) The Company has recently completed several acquisitions and has tentatively considered the carrying value of the acquired assets to approximate their fair value, with all of the excess of those acquisition costs being attributable to goodwill. The Company is in the process of fully evaluating the assets acquired and, as a result, the purchase price allocation among the tangible and intangible assets acquired and their useful lives may change. (5) Diluted earnings per share of common stock are based on the weighted average number of shares outstanding of 30,494,023 for the three months ended June 30, 2001 and 30,499,166 for the six months ended June 30, 2001, assuming the exercise of dilutive stock options. Page 5 of 12 (6) RECENT ACCOUNTING STANDARDS - Effective January 1, 2001, the Company implemented SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". This statement standardizes the accounting for derivatives and hedging activities and requires that all derivatives be recognized in the statement of financial position as either assets or liabilities at fair value. Changes in the fair value of derivatives that do not meet the hedge accounting criteria are to be reported in earnings. Implementation of this pronouncement did not have a material effect since the Company has not utilized derivative financial instruments or entered into hedging transactions. In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Standards (SFAS) Number 141, "Business Combinations" which establishes that all business combinations be accounted for by the purchase method of accounting and establishes new standards for recognizing goodwill and intangible assets. Under the provisions of this pronouncement, an intangible asset is recognized apart from goodwill if it arises from contractual or other legal rights or if it is separable. The Statement applies to all business combinations initiated after June 30, 2001 and to all business combinations accounted for by the purchase method of accounting for which the acquisition date is July 1, 2001 or later. Additionally, this Statement requires that the provisions regarding the recognition of goodwill and intangibles under SFAS 142 be applied to its business combinations accounted for by the purchase method of accounting for which the acquisition date was prior to July 1, 2001. In June 2001, the FASB also issued SFAS 142, "Goodwill and Other Intangible Assets" which establishes new standards for how goodwill and other intangible assets are to be accounted for subsequent to their acquisition. This statement must be adopted by the company January 1, 2002. Under this statement, goodwill is classified as an infinite-lived asset and is no longer subject to amortization but rather will be evaluated on at least an annual basis for impairment based on fair-value. To comply with the provisions of this statement, the Company is required to reassess the useful lives of its intangible assets acquired on or before June 30, 2001. The Company will also be required to perform impairment tests on all goodwill recorded as of January 1, 2002 and record any impairment charges by December 31, 2002. Additionally, in the initial period of adoption and in each subsequent period thereafter until all periods presented are consistent with the provisions of this pronouncement, the Company is required to present adjusted net income for prior periods. The Company is currently evaluating what impact SFAS 141 and SFAS 142 will have on its results of operations. (7) In the first quarter of 2001, the Company recorded a restructuring charge of $37.7 million ($24.0 million after tax or $0.79 per diluted share) primarily composed of costs to exit and realign facilities that have under-performed in the automotive components and transportation businesses. Included in this total are facility closures and write-downs of property, plant and equipment, inventory and goodwill of $29.5 million and severance and other employee costs of $8.2 million. As of June 30, 2001, payments of $0.9 million have been made for these charges. The Company anticipates that the remaining costs and actions required to exit and realign these operations will be completed by the end of the first quarter of 2002. For facilities to be closed, the tangible assets to be disposed of have been written down to their estimated fair value, less cost of disposal. All intangible assets associated with the facility closures have been evaluated and the carrying value of goodwill adjusted if necessary. The carrying value of intangible assets was evaluated based upon expected future operating cash Page 6 of 12 flows. Considerable management judgment is necessary to estimate fair value, accordingly, actual results could vary significantly from such estimates. The restructuring initiative provides for a reduction of approximately 980 employees related to position eliminations from the facility closures and streamlining of operations. As of June 30, 2001, approximately 40% of these reductions have been made. (8) Financial information for operations by reportable business segment is included in the following summary:
JUNE 2001 - YTD SEGMENT INFORMATION TABLE TOTAL IN THOUSANDS SALES EBIT ASSETS -------- ---------- ---------- Construction materials $221,527 $ 26,431 $ 307,664 Industrial components 360,417 29,908 529,523 Automotive components 140,193 7,374 135,101 General Industry (All other) 231,454 8,263 365,500 Corporate -- *(45,831) 48,839 -------- ---------- ---------- $953,591 $ 26,145 $1,386,627 -------- ---------- ---------- JUNE 2000 - YTD SEGMENT INFORMATION TABLE TOTAL IN THOUSANDS SALES EBIT ASSETS -------- ---------- ---------- Construction materials $188,397 $ 25,009 $ 240,540 Industrial components 346,935 50,792 465,409 Automotive components 164,472 14,178 179,064 General Industry (All other) 213,644 18,922 312,020 Corporate -- (5,584) 52,525 -------- ----------- ---------- $913,448 $ 103,317 $1,249,558 -------- ----------- ----------
*In the first quarter of 2001, the restructuring charges were recorded at the corporate level. See Note 7 in the Notes to Condensed Consolidated Financial Statements. Page 7 of 12 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Carlisle Companies Incorporated ("Carlisle" or the "Company") reported record sales of $490.4 million, up 2% over 2000. Net earnings of $16.6 million or $0.54 per share (diluted), compared to $1.04 per share in the second quarter 2000. Second quarter sales were driven by increased volume in the Construction Materials segment and growth through acquisition in the General Industry segment. The reduction in earnings is primarily attributable to the continued decline in demand at operations serving transportation, telecommunications, and outdoor power equipment markets. As the slow market conditions experienced in the beginning of the year continued into the second quarter, Carlisle management reduced production at several manufacturing operations in order to control inventory levels. Diminished absorption of fixed costs on lower production, continued pricing pressures to maintain market share, and higher utility and raw material costs were the primary factors responsible for the lower gross margin. Manufacturing costs continued to receive the utmost attention and cost reduction programs continued. However, the favorable impact of these initiatives was more than offset by lower production levels. Acquisitions made in the last twelve months contributed $27 million of sales growth and $.4 million of earnings. Net sales in the first half of 2001 were $953.6 million, a 4% increase over 2000. Current year to date net earnings of $6.4 million or $0.21 per share, include the $24.0 million or $0.79 per share, after tax restructuring charge recorded in the first quarter. After factoring out the effect of the restructuring charge, net earnings from operations were $30.4 million or $1.00 per share. This result compares to $1.87 per share over the same period in 2000. Construction Materials sales of $130 million in the second quarter increased 29% over 2000 second quarter sales of $101 million. The increase was primarily in the domestic roofing market on higher shipments of rubber membrane and accessories, thermoplastic polyolefin (TPO) roofing membrane, and insulation shipments. Although operating earnings improved 9% over last year the increase did not keep pace with sales. Steps implemented in 2000 to reduce selling and administrative costs had a positive impact on current year operating costs, but did not offset the market pressures on selling prices, and increased raw material costs. Comparative results were also impacted by stronger sales of lower margin products. Industrial Component sales decreased 8% from the second quarter 2000 with operating earnings down 58%. Most of the change was the result of lower sales and earnings at Carlisle Tire & Wheel Company. Shipments to original equipment customers were significantly off when compared to a year ago, particularly in the lawn and garden markets. As a result of the sharp decline in orders from these customers, CT&W reduced production throughout many of its operations. In addition, competitive pricing pressures in other markets, and rising energy and raw material costs negatively impacted operating earnings. Carlisle Industrial Brake & Friction and Motion Control also reported lower sales and earnings. The market softness experienced during the first quarter in the heavy duty truck, heavy construction and mining equipment markets continued into the second quarter. Sales at Tensolite were up in the second quarter as a result of the acquisition of UniTrek, in July 2000, and Connecting Devices, in March of this year. Tensolite earnings continued to be negatively impacted by softness in the telecommunications market. Automotive Components sales for the quarter were down 12%, which reflect lower automotive build levels. Operating earnings of $4.2 million, decreased 39% as compared to the same period last year as production levels were adjusted to coincide with softer demand. The benefits of reduced overhead and labor costs, as a result of the restructuring charge recorded in the first quarter, were more than offset by the under absorption of fixed costs due to lower production levels. Page 8 of 12 General Industry sales of $121 million were up 6% over the second quarter 2000, while operating earnings were down 55%. Reduced production volume at most of the operations in this business segment was the primary factor behind the deterioration in earnings. Excluding the contribution of acquisitions, Transportation Products net sales were below the second quarter 2000, and earnings declined due to competitive pricing, unabsorbed fixed costs associated with lower production levels, and increased utility costs. Carlisle FoodService sales and earnings were down from last year as consumer discretionary spending continued to be limited due to the uncertainty in the economy. Lower sales, coupled with production cutbacks, are the primary factors causing the decrease in earnings. Sales at Carlisle Systems & Equipment increased primarily as a result of acquisitions completed over the last nine months. Earnings in this business have been negatively impacted by depressed conditions in the perishable food delivery markets served by Johnson Truck Bodies. CASH FLOWS Cash flow from operations in the second quarter was $37 million, up from $35 million in 2000. For the six months ended June 30, 2001, cash generated from operations of $56 million was equal to a year ago. The increase for the quarter was attributable to working capital improvements as demonstrated by a $28 million reduction in inventory. Higher receivable balances, principally due to special dating programs in the roofing business, dampened working capital improvements. BACKLOG The June 30, 2001 backlog of $290 million was 10% over June 30, 2000 of $264 million. Improved backlog positions at Tensolite and Carlisle Systems & Equipment were driven by acquisitions and increased market demand. FIRST QUARTER 2001 RESTRUCTURING UPDATE In the first quarter of 2001, the Company recorded a $24.0 million after tax, or $0.79 per share, restructuring charge to earnings. The $24.0 million after tax restructuring charge was primarily (84%) composed of costs related to exiting and realigning facilities that had under performed in the automotive components and transportation businesses and were not forecasted to perform at our standard. Approximately $18.8 million after tax (78%) of the total charge is related to machinery, equipment, inventory and goodwill write-offs. The remainder of $5.2 million after tax represents anticipated cash expenses from involuntary employee terminations and other restructuring costs. The Company is proceeding with the exit and realignment of certain facilities and expects to have these actions completed by the first quarter of 2002. To date, 40% of the workforce reductions have taken place. The Company expects the future savings of reduced depreciation and employee expense to approximate $1.8 million, or $0.06 per share, on an annual basis. Page 9 of 12 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS. The Company has not utilized derivative financial instruments or derivative commodity instruments in its cash and cash equivalents. Our transactions are predominantly conducted, and our accounts are primarily denominated, in United States dollars. Accordingly, the Company had limited exposure to significant foreign currency risk. Even so, our financial results could be significantly affected by factors such as changes in foreign currency exchange rates or weak economic conditions in our markets. PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The Company's 2001 Annual Meeting of Shareholders was held on April 20, 2001. (b) At the 2001 Annual Meeting of Shareholders, the election of four directors were approved as follows:
DIRECTOR FOR AGAINST WITHHELD NON-VOTE -------- --- ------- -------- -------- Donald G. Calder 36,479,654 -- 286,122 -- Dennis J. Hall 35,678,738 -- 1,086,038 -- Eriberto R. Scocimara 36,458,031 -- 307,745 -- Robin W. Sternbergh 36,472,711 -- 294,065 --
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits applicable to the filing of this report are as follows: (12) Ratio of Earnings to Fixed Charges. (b) Report on Form 8-K: No reports on Form 8-K were filed during the quarter for which this report on Form 10-Q is filed. Page 10 of 12 SIGNATURE Pursuant to the requirements of the Securities and 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 Date August 10, 2001 By: /s/ Dennis J. Hall ----------------- --------------------------- Dennis J. Hall Vice Chairman and Chief Financial Officer Page 11 of 12 EX-12 3 ex-12.txt RATIO OF EARNINGS TO FIXED CHARGES 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:
6 MONTHS ENDED YEAR ENDED DECEMBER 31, ------- -------------------------------------------- 6/30/01 2000 1999 1998 1997 1996 ------- ---- ---- ---- ---- ---- Ratio of Earnings to Fixed Charges 1.44 5.27 7.41 5.19 6.06 7.47
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. Page 12 of 12 -----END PRIVACY-ENHANCED MESSAGE-----