Acquisitions

12 Months Ended

Dec. 31, 2011

Acquisitions

Acquisitions

Note 3—Acquisitions

• 2011 Acquisitions

  Tri-Star Electronics International, Inc.

        On December 2, 2011, the Company acquired 100% of the equity of TSEI Holdings, Inc. ("Tri-Star") for a total cash purchase price of $284.4 million, net of $4.5 million cash acquired. The Company funded the acquisition with borrowings under the Facility. See Note 15 for further information regarding borrowings. The acquisition of Tri-Star adds capabilities and technology to strengthen the Company's interconnect products business by expanding its product and service range to its customers. Tri-Star will operate within the Carlisle Interconnect Technologies segment.

        The following table summarizes the consideration transferred to acquire Tri-Star and the preliminary allocation among the assets acquired and liabilities assumed. The acquisition has been accounted for using the acquisition method of accounting which requires that the consideration be allocated to the acquired assets and assumed liabilities based on their acquisition date fair values with the remainder allocated to goodwill.

• Tri-Star Electronics International, Inc.

	Preliminary Allocation
(in millions)	12/2/2011
Total cash consideration transferred	$	288.9
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash & cash equivalents	$	4.5
Receivables		14.0
Inventories		22.8
Prepaid expenses and other current assets		6.7
Property, plant and equipment		15.4
Definite-lived intangible assets		112.0
Indefinite-lived intangible assets		28.0
Other long-term assets		0.1
Accounts payable		(6.5	)
Accrued expenses		(4.4	)
Other long-term liabilities		(60.4	)
Total identifiable net assets		132.2
Goodwill	$	156.7

        The preliminary goodwill recognized in the acquisition of Tri-Star is attributable to the workforce of Tri-Star, the consistent financial performance of this complementary supplier of high-reliability interconnect products to leading aerospace, avionics and electronics companies and the enhanced scale that Tri-Star brings to the Company. Tri-Star brings additional high-end connector products and qualified positions to serve the Company's existing commercial aerospace and industrial customers. Tri-Star will also supply the Company with efficient machining and plating processes that will lower costs and improve product quality. Favorable trends in the commercial aerospace markets and increasing electronic content in several industrial end markets provide a solid growth platform for the Interconnect Technologies segment. Goodwill arising from the acquisition of Tri-Star is not deductible for income tax purposes. All of the preliminary goodwill was assigned to the Interconnect Technologies segment. Preliminary indefinite-lived intangible assets of $28.0 million represent acquired trade names. Of the $112.0 million value preliminary allocated to definite-lived intangible assets, approximately half was allocated to technology assets, and half to customer relationships, with useful lives ranging from 10 to 15 years.

        The fair values of the inventory, property, plant and equipment and other intangible assets are preliminary and subject to change pending receipt of the final third-party valuations for those assets. The Company has also recorded deferred tax liabilities related to the intangible assets as of December 2, 2011 which are preliminary and subject to change pending final assessment of the acquisition date fair values and tax basis of the acquired assets and assumed liabilities.

        Tri-Star contributed revenues of $7.8 million and earnings before interest and taxes ("EBIT") of $0.6 million for the period from December 2, 2011 to December 31, 2011. EBIT for Tri-Star includes $1.1 million in cost of goods sold related to amortization of an adjustment to Tri-Star's inventory to reflect fair value that was subsequently sold during the fourth quarter of 2011. The Company also recorded $0.3 million of acquisition-related expenses related to due diligence and legal fees in 2011. The revenues and earnings of Tri-Star, when combined with those of the Company for 2011 and 2010, as though the acquisition occurred on January 1, 2010, were not materially different than the reported results of each respective period.

• PDT Phoenix GmbH

        On August 1, 2011, the Company acquired 100% of the equity of PDT for €77.0 million, or $111.0 million, net of €5.3 million, or $7.6 million, cash acquired. Of the €82.3 million, or $118.6 million gross purchase price, €78.7 million, or $113.4 million, was paid in cash initially funded with borrowings under the Company's revolving credit facility, most of which were subsequently repaid, as well as cash on hand. PDT is a leading manufacturer of EPDM-based (rubber) roofing membranes and industrial components serving European markets. The acquisition of PDT provides a platform to serve the European market for single-ply roofing systems, and expands the Company's growth internationally. PDT will operate within the Construction Materials segment.

        The agreement to acquire PDT provided for contingent consideration based on future earnings. The fair value of contingent consideration recognized at the acquisition date was €3.6 million, or $5.2 million, and was estimated using the discounted cash flow method based on financial projections of the acquired company.

        The purchase price of PDT included certain assets of the PDT Profiles business, which the Company sold on January 2, 2012 for $22.7 million, subject to working capital adjustment. The PDT Profiles business has been classified as held for sale at the date of acquisition and on the Company's Consolidated Balance Sheet as of December 31, 2011. The following table summarizes the consideration transferred to acquire PDT and the preliminary allocation among the assets acquired and liabilities assumed. The acquisition has been accounted for using the acquisition method of accounting which requires that the consideration be allocated to the acquired assets and assumed liabilities based on their acquisition date fair values with the remainder allocated to goodwill.

• PDT Phoenix GmbH

	Preliminary Allocation			Measurement Period Adjustments			Revised Preliminary Allocation
(in millions)	8/1/2011			8/1/2011			8/1/2011
Consideration transferred:
Cash consideration	$	113.4		$	—		$	113.4
Contingent consideration		4.9			0.3			5.2
Total fair value of consideration transferred	$	118.3		$	0.3		$	118.6
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash & cash equivalents	$	7.5		$	0.1		$	7.6
Receivables		5.9			6.3			12.2
Inventories		8.1			2.4			10.5
Prepaid expenses and other current assets		3.3			(0.6	)		2.7
Current assets held for sale		9.9			(6.3	)		3.6
Property, plant and equipment		2.9			0.5			3.4
Definite-lived intangible assets		42.9			14.2			57.1
Indefinite-lived intangible assets		—			6.9			6.9
Other long-term assets		0.1			—			0.1
Non-current assets held for sale		17.8			3.8			21.6
Accounts payable		(5.1	)		(3.9	)		(9.0	)
Accrued expenses		(0.3	)		(0.9	)		(1.2	)
Current liabilities associated with assets held for sale		(4.7	)		4.7			—
Other long-term liabilities		(15.2	)		(11.5	)		(26.7	)
Non-current liabilities associated with assets held for sale		(1.5	)		1.5			—
Total identifiable net assets		71.6			17.2			88.8
Goodwill	$	46.7		$	(16.9	)	$	29.8

        The revised preliminary purchase price allocation reflects updated fair value estimates for assets acquired and liabilities assumed, based on information that is currently available. The amount of goodwill recognized in the acquisition of PDT is attributable to the workforce of PDT, the solid financial performance of this leading manufacturer of single-ply roofing and waterproofing systems and the significant strategic value of the business to Carlisle. PDT provides Carlisle with a solid manufacturing and knowledge base for single-ply roofing products in Europe and provides an established distribution network throughout Europe, both of which enhance Carlisle's goal of expanding its global presence. The European market shows favorable trends towards single-ply roofing applications and Carlisle can provide additional product development and other growth resources to PDT. Goodwill arising from the acquisition of PDT is not deductible for income tax purposes. All of the preliminary goodwill was assigned to the Construction Materials segment. Preliminary indefinite-lived intangible assets of $6.9 million represent acquired trade names. Of the $57.1 million value preliminary allocated to definite-lived intangible assets, approximately $33.3 million was allocated to patents, with useful lives ranging from 10 to 25 years and $23.8 million was allocated to customer relationships, with useful lives of 19 years.

        The fair values of the inventory, property, plant and equipment and other intangible assets are preliminary and subject to change pending receipt of the final third-party valuations for those assets. The Company has also recorded deferred tax liabilities related to the intangible assets as of August 1, 2011 which are preliminary and subject to change pending final assessment of the acquisition date fair values and tax basis of the acquired assets and assumed liabilities.

        PDT contributed revenues of $29.4 million and earnings before interest and taxes ("EBIT") of $1.0 million for the period from August 1, 2011 to December 31, 2011. EBIT for PDT includes $2.1 million in cost of goods sold related to amortization of an adjustment to PDT's inventory to reflect fair value that was subsequently sold in 2011. The Company also recorded $0.9 million of acquisition-related expenses related to due diligence and legal fees in 2011. The revenues and earnings of PDT, when combined with those of the Company for 2011 and 2010, as though the acquisition occurred on January 1, 2010, were not materially different than the reported results of each respective period.

• 2010 Acquisition

  Hawk Corporation

        On December 1, 2010, the Company completed the acquisition of all of the outstanding equity of Hawk for approximately $343.4 million, net of $70.7 million cash acquired. The Company also assumed Hawk's 8.75% senior notes previously due November 1, 2014 (the "Hawk senior notes"). The Hawk senior notes were recorded at estimated fair value of $59.0 million on the date of acquisition. The consideration transferred to and equity acquired from Hawk's shareholders consisted of the following:

• •

  $50.00 per share in cash for each outstanding share of Class A common stock representing a purchase price of approximately $388.0 million,

  •

  $50.00 per share in cash less the applicable exercise price for the cancellation of stock options on Hawk's Class A common stock representing a purchase price of approximately $24.6 million, and

  •

  $1,000 per share in cash for each share of the outstanding Series D preferred stock representing a purchase price of approximately $1.5 million.

        There were no other assets, liabilities or contingent consideration transferred to Hawk shareholders in connection with the acquisition. The Company funded the acquisition with cash on hand and borrowings under the Facility. See Note 15 for further information regarding borrowings.

        Hawk contributed revenues of $302.7 million and EBIT of $59.9 million for the year ended December 31, 2011.

        Hawk contributed revenues of approximately $21.6 million and an EBIT loss of approximately $11.5 million for the period from December 1, 2010 to December 31, 2010. EBIT for December of 2010 includes approximately $10.4 million of acquisition-related costs and severance payments as well as approximately $3.8 million of incremental amortization and depreciation expense related to inventory, intangible assets and property, plant and equipment described more fully below. The following unaudited pro forma summary presents consolidated information of the Company as if the business combination had occurred on January 1, 2009 based on the purchase price allocation presented below:

(in millions)	Pro Forma Year Ended December 31, 2010		Pro Forma Year Ended December 31, 2009
Revenue	$	2,759.7	$	2,430.5
Income from continuing operations	$	147.7	$	144.6

        These pro forma amounts have been calculated after applying the Company's accounting policies and adjusting Hawk's results to reflect the additional depreciation and amortization that would have been recorded assuming the fair value adjustments to the acquired assets and assumed liabilities had been applied from January 1, 2009, together with the associated estimated incremental financing costs and tax effects. The pro forma amounts also reflect the aforementioned $10.4 million of acquisition-related costs as having incurred in 2009.

        In 2010, the Company incurred approximately $3.1 million of acquisition-related costs, primarily for professional fees incurred as part of the bidding and share tender process. In the fourth quarter of 2010, the Company also incurred costs related to payments made to certain Hawk employees, primarily former executive officers, of approximately $7.3 million, for contractual termination benefits consisting of severance payments, continuing medical insurance coverage and other benefits. These expenses are included in general and administrative expenses in the Company's 2010 consolidated statement of earnings and comprehensive income. As part of the merger agreement, the Company was not required to reimburse Hawk for its acquisition-related costs.

        The following table summarizes the consideration transferred to acquire Hawk and the allocation of the consideration to the acquired assets and assumed liabilities. The acquisition of Hawk has been accounted for using the acquisition method of accounting which requires that the consideration be allocated to the acquired assets and assumed liabilities based on their acquisition date fair values with the remainder allocated to goodwill. See Note 10 for further information regarding fair value measurements.

• Hawk Corporation

	Preliminary Allocation			Measurement Period Adjustments			Final Allocation
(in millions)	12/1/2010			12/1/2010			12/1/2010
Total cash consideration transferred	$	414.1		$	—		$	414.1
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash & cash equivalents	$	70.7		$	—		$	70.7
Short-term investments		5.3			—			5.3
Receivables		40.7			—			40.7
Inventories		45.1			—			45.1
Prepaid expenses and other current assets		12.9			(6.9	)		6.0
Property, plant and equipment		74.7			0.9			75.6
Definite-lived intangible assets		92.5			2.5			95.0
Indefinite-lived intangible assets		55.1			(1.6	)		53.5
Other long-term assets		5.9			—			5.9
Accounts payable		(30.6	)		—			(30.6	)
Accrued expenses		(33.7	)		1.3			(32.4	)
Long-term debt		(59.0	)		—			(59.0	)
Pension obligations		(2.3	)		—			(2.3	)
Deferred tax liabilities		(68.9	)		8.7			(60.2	)
Deferred revenue		(2.0	)		—			(2.0	)
Other long-term liabilities		(8.8	)		—			(8.8	)
Total identifiable net assets		197.6			4.9			202.5
Goodwill	$	216.5		$	(4.9	)	$	211.6

        The final purchase price allocation reflects updated fair value estimates for assets acquired and liabilities assumed, based on available information and third-party valuation. In addition to the workforce of Hawk and the cost reduction synergies recognized in the acquisition of Hawk, the amount of goodwill is attributable to the significant strategic benefits of the transaction to Carlisle, thus creating a solid platform for growth. The acquisition of Hawk adds superior friction capability to Carlisle's existing friction and hydraulic product lines, thus enabling Carlisle to offer a full range of friction product solutions to customers and generate additional revenue through broader product lines, services and distribution. The acquisition expands Carlisle's global footprint, particularly outside the U.S., better positioning Carlisle to participate in emerging market growth. The addition of Hawk significantly improves Carlisle's aftermarket product portfolio and distribution network and enhances Carlisle's efficiency and ability to provide innovative friction solutions. Goodwill arising from the acquisition of Hawk is not deductible for income tax purposes. All of the goodwill was assigned to the Brake & Friction segment.

        The fair value of the assets acquired includes trade receivables of approximately $40.7 million, reflecting the gross amount due under the contracts, less $0.7 million which was expected to be uncollectible. The Company did not acquire any other class of receivables as a result of the acquisition.

        As part of applying the acquisition method of accounting, the Company recorded finished goods and work-in-process inventory at estimated fair value. The adjustment to Hawk's historical carrying value of inventory to effect fair value was approximately $4.5 million, with approximately $2.8 million related to finished goods and $1.7 million related to work-in-process inventory. In December of 2010, the Company sold substantially all of the related finished goods inventory and as a result recognized the $2.8 million incremental fair value adjustment in cost of goods sold. The Company recognized the remaining $1.7 million related to work-in-process inventory in the first quarter of 2011.

        The $53.5 million allocated to indefinite-lived intangible assets represents registered trademarks and tradenames that are not subject to amortization. Of the $95.0 million allocated to definite-lived intangible assets, $44.2 million represents acquired technology with useful lives ranging from 11 to 15 years. The remaining $50.8 million of definite-lived intangible assets represent customer relationships, with useful lives ranging from 15 to 16 years. See Note 13 for additional information regarding intangible assets.

• 2009 Acquisitions

  Japan Power Brake

        On October 1, 2009, the Company acquired the remaining 51% interest in JPB, a leading provider of high performance braking solutions for off-highway equipment, primarily in the mining and construction industries in Japan, for a purchase price of approximately $4.2 million. In 2009, in connection with this purchase, a gain of $0.8 million was recognized in Other expense (income), net on the Company's previous 49% interest in JPB. JPB is located in Atsugi, Japan and is under the management direction of the off-highway braking business that is included in the Brake & Friction segment. The purchase price included an allocation of $0.9 million to other intangible assets reflecting a non-compete agreement with a useful life of 10 years. The remaining purchase price was allocated to current assets; property, plant and equipment; and current liabilities.

• Electronic Cable Specialists

        On October 1, 2009, the Company acquired 100% of the equity of ECS, a leading provider of electrical and structural products and services for the aviation, medical and industrial markets, for a purchase price of approximately $42.4 million. The acquisition of ECS expanded Carlisle's product and system reach into additional avionics applications and strengthened Carlisle's engineering and design capabilities. The acquisition allowed for reduction of expenses through consolidation of certain sales, general and administrative functions and through in-house production of certain components which were previously purchased by ECS from third parties. Carlisle also expects to achieve increased sales from its existing customer base with the addition of the engineering and design capabilities of ECS. ECS is located in Franklin, WI and is under the management direction of the Interconnect Technologies segment. The purchase price allocation resulted in current assets of $15.1 million; property, plant and equipment of $1.9 million; goodwill of $13.5 million, identified intangible assets of $14.5 million, and non-interest bearing current liabilities of $2.6 million. Of the $14.5 million of acquired intangible assets, $2.6 million was assigned to trade names that are not subject to amortization, $4.5 million was assigned to customer relationships with a determinable useful life of 17 years, and the remaining $7.4 million was assigned to other intangible assets with a weighted average useful life of 14.7 years. The goodwill from this acquisition is deductible for tax purposes.

• Jerrik Incorporated

        On September 18, 2009, the Company acquired the assets of Jerrik, a recognized leader in the design and manufacture of highly engineered military and aerospace filter connections, for approximately $33 million. The acquisition expanded the Company's range of products serving the defense and aerospace markets. The acquisition allowed for reduction of expenses through consolidation of certain sales, general and administrative functions and through in-house production of certain components, which were previously purchased by Jerrik from third parties. Jerrik is located in Tempe, AZ and is under the management direction of the Interconnect Technologies segment. The purchase price allocation resulted in current assets of $7.9 million; property, plant and equipment of $1.8 million; goodwill of $13.7 million, identified intangible assets of $10.8 million, and current liabilities of $1.2 million. Of the $10.8 million of acquired intangible assets, $0.2 million was assigned to trade names with determinable useful life of 2 years, $7.1 million was assigned to customer relationships with a determinable useful life of 18 years, and the remaining $3.5 million was assigned to other intangible assets with a weighted average useful life of 18.1 years. The goodwill from this acquisition is deductible for tax purposes.