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, 2000
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)
250 SOUTH CLINTON STREET, SUITE 201, SYRACUSE, NEW YORK 13202 315-474-2500
(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, 2000 30,254,581
PART I. FINANCIAL INFORMATION
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
Three Months and Six Months ended June 30, 2000 and 1999
(Dollars in thousands, except per share amounts)
(unaudited)
Three Months Six Months
June 30, June 30,
2000 1999 2000 1999
--------- --------- --------- ---------
Net sales $ 479,430 $ 425,813 $ 913,448 $ 815,837
Cost and expenses:
Cost of goods sold 371,894 327,712 708,422 633,113
Selling and administrative expenses 46,526 44,248 95,449 87,193
Research and development expenses 4,075 4,052 8,166 7,977
(Gain) on divestiture of business ($16.6m),
net of other charges ($15.9m) -- -- -- (685)
Other (income) & expense (717) (502) (1,906) (2,181)
--------- --------- --------- ---------
Earnings before interest & income taxes 57,652 50,303 103,317 90,420
Interest expense, net 6,989 4,778 12,167 9,435
--------- --------- --------- ---------
Earnings before income taxes 50,663 45,525 91,150 80,985
Income taxes 18,723 17,527 33,750 31,179
--------- --------- --------- ---------
Net earnings $ 31,940 $ 27,998 $ 57,400 $ 49,806
========= ========= ========= =========
Average shares outstanding (000's) - basic 30,255 30,178 30,223 30,181
Basic earnings per share $ 1.06 $ 0.93 $ 1.90 $ 1.65
--------- --------- --------- ---------
Average shares outstanding (000's) - diluted 30,615 30,651 30,592 30,644
Diluted earnings per share $ 1.04 $ 0.91 $ 1.87 $ 1.62
--------- --------- --------- ---------
Dividends declared and paid per share $ 0.18 $ 0.16 $ 0.36 $ 0.32
--------- --------- --------- ---------
See accompanying notes to interim financial statements.
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CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
June 30, 2000 and December 31, 1999
(Dollars in thousands, except share data)
JUNE 30, Dec. 31,
2000 1999
----------- -----------
ASSETS (unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 7,828 $ 10,417
Receivables 272,167 245,120
Inventories (Note 2) 242,068 219,270
Deferred income taxes 32,843 32,108
Prepaid expenses and other 38,317 34,123
----------- -----------
TOTAL CURRENT ASSETS 593,223 541,038
----------- -----------
PROPERTY, PLANT AND EQUIPMENT, NET 392,827 349,451
----------- -----------
OTHER ASSETS
Patents, goodwill and other intangibles 224,338 157,967
Investments and advances to affiliates 17,104 14,321
Receivables and other assets 22,066 17,885
----------- -----------
TOTAL OTHER ASSETS 263,508 190,173
----------- -----------
$ 1,249,558 $ 1,080,662
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt, including current maturities $ 111,421 $ 1,989
Accounts payable 121,053 106,283
Accrued expenses 139,253 132,106
----------- -----------
TOTAL CURRENT LIABILITIES 371,727 240,378
----------- -----------
LONG-TERM LIABILITIES
Long-term debt 282,594 281,744
Product warranties 76,326 79,858
Other liabilities 551 549
----------- -----------
TOTAL LONG-TERM LIABILITIES 359,471 362,151
----------- -----------
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 7,676 5,571
Cumulative translation adjustments (4,451) (1,658)
Retained earnings 591,915 545,404
Cost of shares in treasury - 9,075,711 shares in 2000 and (116,111) (110,515)
9,153,006 shares in 1999
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 518,360 478,133
----------- -----------
$ 1,249,558 $ 1,080,662
=========== ===========
See accompanying notes to interim financial statements.
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CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
Condensed Statements of Consolidated Cash Flows
Six Months ended June 30, 2000 and 1999
(Dollars in thousands)
(unaudited)
JUNE 30, June 30,
2000 1999
--------- --------
OPERATING ACTIVITIES
Net earnings $ 57,400 $ 49,806
Reconciliation of net earnings to cash flows:
Depreciation 25,065 21,850
Amortization 4,852 3,267
(Gain)/Loss on sales of property, equipment and business -- (685)
Changes in assets and liabilities, excluding effects of
acquisitions and divestitures:
Current and long-term receivables (21,234) (38,162)
Inventories (10,463) (1,559)
Accounts payable and accrued expenses 586 6,558
Prepaid, deferred and current income taxes 6,890 17,826
Long-term liabilities (6,350) 1,784
Other (923) (457)
--------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 55,823 60,228
--------- --------
INVESTING ACTIVITIES
Capital expenditures (26,451) (24,324)
Acquisitions, net of cash (129,619) (28,228)
Proceeds from sale of property, equipment and business 15,330
32
Other 4,463 (7,449)
--------- --------
NET CASH USED IN INVESTING ACTIVITIES (151,575) (44,671)
--------- --------
FINANCING ACTIVITIES
Net change in short-term debt 109,428 (9,285)
Proceeds from long-term debt 8,441
--------
Reductions of long-term debt (1,885) (1,577)
Dividends (10,889) (9,650)
Purchases of treasury shares (3,491) (718)
--------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 93,163 (12,789)
--------- --------
CHANGE IN CASH AND CASH EQUIVALENTS (2,589) 2,768
CASH AND CASH EQUIVALENTS
Beginning of period 10,417 3,883
--------- --------
End of period $ 7,828 $ 6,651
--------- --------
See accompanying notes to interim financial statements.
Page 4 of 10
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended June 30, 2000 and 1999
(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, 2000 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 1999
Annual Report to Stockholders and 1999 Form 10-K. Certain
reclassifications have been made to prior year information in
order to conform to 2000 presentation.
(2) The components of inventories are as follows:
JUNE 30, Dec. 31,
2000 1999
-------- --------
(000)'S
First-in, first-out (FIFO) costs:
Finished goods $147,379 $132,719
Work in process 30,286 27,052
Raw materials 75,446 70,735
-------- --------
$253,111 $230,506
Excess of FIFO cost over Last-in,
First-out (LIFO) inventory value (11,043) (11,236)
-------- --------
LIFO inventory value $242,068 $219,270
======== ========
(3) On June 30, 2000, the Company replaced its $125 million revolving
credit facility, expiring April 30, 2001, with a $150 million
three-year and a $200 million 364-day revolving credit facility. The
Company has used its short term borrowings to finance acquisitions
completed during the year.
(4) The Company has completed several acquisitions during the year 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 30,615,123 for the three
months ended June 30, 2000 and 30,591,604 for the six months ended
June 30, 2000 assuming the exercise of dilutive stock options.
(6) 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
Page 5 of 10
suspended operations at its container manufacturing facility. As a
result, the Company recognized a pretax 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 pretax 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 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 appropriate. The charge
related to the intangible assets was determined as the excess of the
recorded value over the projected future discounted 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.
(7) Financial information for operations by reportable business segment
is included in the following summary:
JUNE 2000 - YTD
SEGMENT INFORMATION TABLE
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/Eliminations -- (5,584) 52,525
-------- ----------- ----------
$913,448 $ 103,317 $1,249,558
-------- ----------- ----------
JUNE 1999 - YTD
SEGMENT INFORMATION TABLE
IN THOUSANDS SALES EBIT ASSETS
- ------------ ----- ---- ------
Construction Materials $187,470 $ 24,965 $ 238,017
Industrial Components 288,985 40,383 336,505
Automotive Components 165,347 12,799 215,682
General Industry (All Other) 174,035 17,910 236,844
Corporate/Eliminations -- *(5,637) 52,292
-------- ----------- ----------
$815,837 $ 90,420 $1,079,340
-------- ----------- ----------
*In the first quarter of 1999, the gain on the divestiture of the Company's
perishable cargo business and charges related to certain assets were recorded at
the corporate level. See Note 6 in the Notes to Condensed Consolidated Financial
Statements.
Page 6 of 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Carlisle Companies Incorporated ("Carlisle" or the "Company") reported record
sales for the quarter of $479 million, up 13% over 1999, and net earnings of
$31.9 million or $1.04 per share (diluted), an increase of 14% versus second
quarter 1999 earnings of $.91 per share. Carlisle Tire & Wheel, Tensolite,
Motion Control and Carlisle Industrial Brake & Friction (Industrial Components),
Carlisle Engineered Products (Automotive Components), and Carlisle Systems &
Equipment (General Industry) recorded strong earnings growth for the quarter.
The impact of acquisitions made in 1999 and earlier this year, coupled with
improved operating margins, were responsible for the favorable results.
For the six-month period ended June 30, 2000, sales rose 12% to $913 million and
net earnings increased 15%, to $57.4 million or $1.87 per share, over the same
period in 1999. Carlisle Tire & Wheel (Industrial Components), Carlisle
Engineered Products (Automotive Components), and Carlisle Systems & Equipment
(General Industry) were the primary contributors to the sales and earnings
growth for the year.
Construction Materials sales for the second quarter 2000 were down 9% from 1999.
The decrease, primarily in the domestic roofing markets, was attributable to
sales pulled into the first quarter in anticipation of the April 1, 2000 price
increase. Although EBIT margins improved, EBIT for the quarter was down slightly
from last year. Favorable product mix and lower warranty expense were offset by
the impact of lower sales.
Industrial Components sales increased 28% over the second quarter of 1999 while
EBIT increased 32%. All businesses in this segment added positively to the
results. Sales and earnings at Carlisle Tire & Wheel fueled much of this
segment's growth, with Tensolite, Motion Control, and Carlisle Industrial Brake
& Friction contributing to the positive results. Sales at Carlisle Tire & Wheel
were aided by the acquisition of the consumer tire and wheel business of Titan
International, which was completed in April of 2000. The Company continues to
realize synergies from its acquisition integration strategies and expects to see
further improvements as the Titan integration progresses. Strengthening demand
at Tensolite's cable assembly and specialty electronic cable businesses, coupled
with favorable product mix and operational improvements, contributed to this
segment's improvement in sales and earnings over 1999. On July 5, 2000,
Tensolite announced the acquisition of UniTrek, a manufacturer of radio
frequency and microwave cable assemblies and complex wire harnesses, supplying
OEM's in the wireless communications, electronic test and measurement, and
defense electronics markets. Strong aftermarket sales at both Motion Control and
Carlisle Industrial Brake & Friction also contributed to this segment's positive
results.
Sales of the Automotive Components segment were down slightly from the second
quarter of 1999. On a comparable basis, excluding operations divested or
deconsolidated late in 1999, sales of this segment were up approximately 1% for
the quarter and 3% for the year. Automotive OEM demand has remained strong,
particularly in the light truck and SUV lines. EBIT for the quarter was up 14%
over last year as a result of improved process management and cost control. EBIT
as a percent of sales improved to 8.6% compared to 7.4% in 1999. Strong cash
flow was generated by continuing improvements in asset management.
General Industry sales were up 30% over the second quarter 1999 sales of $87
million, and EBIT increased 6%. Costs, related to acquisitions made during the
year, were the primary cause of the difference in sales to earnings growth.
Carlisle Systems & Equipment was the leading contributor to the sales and
earnings growth of this segment. The full year impact of Johnson Truck Bodies,
acquired in May of 1999, and the impact of acquisitions completed this year have
expanded the capabilities of this business in both market share and product
offerings. In April, the Company completed the acquisition of Extract
Technologies Limited, a leading UK based provider of containment and bulk powder
handling applications, used in the pharmaceutical and biotech industries. In
July, the Company announced a joint venture, to offer e-commerce capabilities
for the purchase of parts to its food and dairy processing customers.
Additionally, in June, the Company completed the acquisition of Process Controls
Engineering (PCE), a systems design and integration company serving the
Page 7 of 10
food and dairy processing industries. These acquisitions will further expand the
global reach of this business. The Company's Transportation Products business
has experienced softening due to the impact of higher fuel and interest costs,
which have negatively impacted the entire market for original equipment
commercial trailer and dump truck bodies. Carlisle FoodService reported positive
sales gains, driven by acquisitions made during the year. In April, Carlisle
FoodService completed the acquisition of the Dura-Ware Company, a manufacturer
of commercial cookware and servingware for the foodservice and hospitality
markets, which will complement its existing product lines.
ACQUISITIONS
In the second quarter, Carlisle completed four acquisitions: The consumer tire
and wheel business of Titan International, Inc.; the Dura-Ware Company, a
manufacturer of commercial cookware and servingware; Extract Technologies
Limited, a leading biotech/pharmaceutical systems provider, headquartered in
Huddersfield, England; and Process Controls Engineering, a systems design and
integration company serving the food and dairy processing industries.
Additionally, the Company announced a 25% equity investment in Icopal A/S,
Europe's leading commercial roofing systems company. Also, the Company announced
the intent to acquire Red River Manufacturing Inc., a specialty trailer
manufacturer. In early July, the Company announced the acquisition of UniTrek, a
manufacturer of radio frequency and microwave cable assemblies and complex wire
harnesses, supplying OEM's in the wireless communications, electronic test and
measurement, and defense electronics markets.
CASH FLOWS
Cash generated from operations for the second quarter was $35 million, an
increase of $31 million over 1999 second quarter operating cash flows of $4
million. The increase for the quarter is attributable to higher earnings and
improved working capital management. For the six months ended June 30, 2000,
cash generated from operations was $56 million, compared to $60 million in 1999,
for the same period. The 1999 six-month cash flows reflect the impact of the
proceeds, net of a $39 million tax payment, from the divestiture of the
Perishable Cargo business, completed in the first quarter of 1999.
BACKLOG
The consolidated backlog of $264 million at June 30, 2000 rose 15% over June 30,
1999 level of $229 million. Improved backlog positions at Carlisle Tire & Wheel,
Tensolite and Carlisle Systems & Equipment were driven by acquisitions made by
these companies as well as increased market demand.
Page 8 of 10
PART II. OTHER INFORMATION
Item 4. Submission of matters to a vote of security holders
(a) The Company's 2000 Annual Meeting of Shareholders was held on April
20, 2000.
(b) At the 2000 Annual Meeting of Shareholders, the election of four
directors were approved as follows:
DIRECTOR FOR AGAINST WITHHELD NON-VOTE
-------- --- ------- -------- --------
Paul J. Choquette, Jr. 40,099,407 -- 433,603 --
Stephen P. Munn 39,952,996 -- 471,845 --
G. FitzGerald Ohrstrom 40,087,646 -- 441,299 --
Magalen C. Webert 40,091,721 -- 437,811 --
(c) At the 2000 Annual Meeting of Shareholders, a proposal to amend the
Company's Executive Incentive Program to increase the number of
shares of common stock authorized for issuance under the Stock Option
Plan from 1,600,000 to 2,600,000 shares was approved as follows:
FOR AGAINST WITHHELD NON-VOTE
--- ------- -------- --------
Proposal to Amend
Executive Incentive Program 35,315,718 4,713,711 309,624 --
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.
(27) Financial Data Schedule as of June 30, 2000 and for the six months
ended June 30, 2000.
(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 9 of 10
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 9, 2000 By: /s/ DENNIS J. HALL
--------------------------------
Dennis J. Hall
Vice Chairman
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