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 MARCH 31, 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)
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 May 1, 2001 30,261,292.
--------------
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
Three Months ended March 31, 2001 and 2000
(dollars in thousands, except per share amounts)
(unaudited)
Three Months
March 31,
2001 2000
--------- ---------
Net sales $ 463,158 $ 434,018
Cost and expenses:
Cost of goods sold 378,546 336,527
Selling and administrative expenses 51,512 48,922
Research and development expenses 4,004 4,092
Restructuring charges and other 37,694 --
Other income (842) (1,189)
--------- ---------
Earnings before interest & income taxes (7,756) 45,666
Interest expense, net 8,214 5,179
--------- ---------
Earnings before income taxes (15,970) 40,487
Income taxes (5,781) 15,028
--------- ---------
Net earnings $ (10,189) $ 25,459
========= =========
Average shares outstanding - basic 30,258 30,191
Basic earnings per share $ (0.33) $ 0.84
--------- ---------
Average shares outstanding - diluted 30,258 30,526
Diluted earnings per share $ (0.33) $ 0.83
--------- ---------
Dividends declared and paid per share $ 0.20 $ 0.18
--------- ---------
See accompanying notes to interim financial statements.
Page 2 of 11
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
March 31, 2001 and December 31, 2000
(Dollars in thousands, except share data)
(unaudited)
MARCH 31, DEC. 31,
2001 2000
----------- -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 9,327 $ 8,967
Receivables 263,594 213,656
Inventories (Note 2) 275,267 277,455
Deferred income taxes 20,017 22,344
Prepaid expenses and other 51,664 54,055
----------- -----------
TOTAL CURRENT ASSETS 619,869 576,477
PROPERTY, PLANT AND EQUIPMENT, NET 393,534 402,614
OTHER ASSETS
Patents, goodwill and other intangibles 276,452 251,670
Investments and advances to affiliates 68,122 66,350
Receivables and other assets 10,898 8,568
----------- -----------
TOTAL OTHER ASSETS 355,472 326,588
=========== ===========
$ 1,368,875 $ 1,305,679
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt, including current maturities $ 218,724 $ 173,762
Accounts payable 141,539 108,484
Accrued expenses 125,079 117,702
----------- -----------
TOTAL CURRENT LIABILITIES 485,342 399,948
LONG-TERM LIABILITIES
Long-term debt 282,297 281,864
Product warranties 72,006 72,789
Other liabilities 1,375 3,199
----------- -----------
TOTAL LONG-TERM LIABILITIES 355,678 357,852
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 shares 39,331 39,331
Additional paid-in capital 10,487 10,268
Cumulative translation adjustments (7,734) (4,624)
Retained earnings 602,359 618,595
Cost of shares in treasury - 9,068,666 shares in 2001 and
9,079,356 shares in 2000 (116,588) (115,691)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 527,855 547,879
----------- -----------
$ 1,368,875 $ 1,305,679
=========== ===========
See accompanying notes to interim financial statements.
Page 3 of 11
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
Condensed Statements of Consolidated Cash Flows
Three Months ended March 31, 2001 and 2000
(Dollars in thousands)
(unaudited)
MARCH 31,
2001 2000
-------- --------
OPERATING ACTIVITIES
Net earnings $(10,189) $ 25,459
Reconciliation of net earnings to cash flows:
Depreciation 14,276 11,968
Amortization 3,820 2,036
-------- --------
Write-down of machinery, equipment, inventory and goodwill 29,533 --
Changes in assets and liabilities, excluding effects of
acquisitions and divestitures:
Current and long-term receivables (37,870) (22,578)
Inventories 4,849 (10,742)
Accounts payable and accrued expenses 16,456 (1,053)
Prepaid, deferred and current income taxes 3,324 14,321
Long-term liabilities (1,525) 829
Other (3,733) 547
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 18,941 20,787
-------- --------
INVESTING ACTIVITIES
Capital expenditures (21,015) (12,874)
Acquisitions, net of cash (37,935) (4,929)
Proceeds from sale of property, equipment and business 6,374 --
Other (3,219) (3,265)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (55,795) (21,068)
-------- --------
FINANCING ACTIVITIES
Net change in short-term debt 44,962 483
Proceeds from long-term debt -- --
Reductions of long-term debt (1,024) (365)
Dividends (6,047) (5,443)
Purchases of treasury shares (677) (1,187)
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 37,214 (6,512)
-------- --------
CHANGE IN CASH AND CASH EQUIVALENTS 360 (6,793)
CASH AND CASH EQUIVALENTS
Beginning of period 8,967 10,417
-------- --------
End of period $ 9,327 $ 3,624
-------- --------
See accompanying notes to interim financial statements.
Page 4 of 11
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 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 ended March 31, 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. Certain reclassifications have been
made to prior year information in order to conform to 2001
presentation.
(2) The components of inventories are as follows:
MARCH 31, DEC. 31,
2001 2000
--------- ---------
(000)'S
First-in, first-out (FIFO) costs:
Finished goods $ 171,378 $ 175,861
Work in process 33,339 31,687
Raw materials 83,639 82,694
--------- ---------
$ 288,356 $ 290,242
Excess of FIFO cost over Last-in,
First-out (LIFO) inventory value (13,089) (12,787)
--------- ---------
LIFO inventory value $ 275,267 $ 277,455
========= =========
(3) 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.
(4) Earnings per share of common stock are based on the weighted average
number of shares outstanding of 30,257,825 for the three months ended
March 31, 2001. The calculation of diluted earnings per share excludes
the effect of dilutive securities aggregating approximately 254,000
shares because they would have been antidilutive.
(5) 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.
Page 5 of 11
(6) 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 $29.4
million and severance and other employee costs of $8.2 million. As of
March 31, 2001, payments of $0.3 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 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.
(7) Financial information for operations by reportable business segment is
included in the following summary:
MARCH 2001 - YTD
SEGMENT INFORMATION TABLE
Total
IN THOUSANDS Sales EBIT Assets
----- ---- ------
Construction materials $ 91,818 $ 8,939 $ 273,606
Industrial components 191,770 18,721 554,160
Automotive components 68,844 3,111 123,648
All other 110,726 3,259 371,766
Corporate -- *(41,786) 45,695
----------- ----------- -----------
$ 463,158 $ (7,756) $ 1,368,875
----------- ----------- -----------
MARCH 2000 - YTD
SEGMENT INFORMATION TABLE
Total
IN THOUSANDS Sales EBIT Assets
----- ---- ------
Construction materials $ 87,580 $ 8,924 $ 231,256
Industrial components 162,975 24,435 365,314
Automotive components 83,431 7,194 192,469
All other 100,032 8,611 284,269
Corporate -- (3,498) 42,036
----------- ----------- -----------
$ 434,018 $ 45,666 $ 1,115,344
----------- ----------- -----------
- ----------
* In the first quarter of 2001, the restructuring charges were recorded
at the corporate level. See Note 6 in the Notes to Condensed
Consolidated Financial Statements.
Page 6 of 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Carlisle Companies Incorporated reported first quarter sales of $463 million and
a net loss for the quarter of $10.2 million or $0.33 per share (diluted). After
factoring out the effect of a $24.0 million after-tax restructuring charge
recorded in the quarter, net earnings from operations were $13.9 million, or
$0.45 per share.
Sales for the quarter were up 7% over last year's first quarter sales of $434
million. Carlisle Tire & Wheel, Carlisle Process Systems, Tensolite and Carlisle
SynTec led the Company in sales growth.
Net earnings before the restructuring charge were $13.9 million, or $0.45 per
share versus $25.5 million, or $0.83 per share for the first quarter of 2000.
The reduction in net earnings was caused by continued decline in demand in many
of our markets. Carlisle is experiencing the recessionary conditions that exist
throughout the manufacturing community. Demand among the automotive and other
industrial transportation industries has been especially soft. The weakness in
demand has resulted in aggressive pricing as competitors seek to maintain volume
and control inventories. Raw material and utility price pressures have increased
our cost base. These conditions, coupled with the diminishing absorption of
fixed costs due to lower production volumes, have affected our results
unfavorably.
In the first quarter of 2001, the Company recorded a $24.0 million after tax, or
$0.79 per share, restructuring charge to earnings. Our policy is to continually
evaluate all of the businesses and markets in which we participate. Accordingly,
we are consolidating and realigning facilities in order to improve future
operating performance. The $24.0 million after tax restructuring charge is
primarily (84%) composed of costs related to exiting and realigning facilities
that have under performed in the automotive components and transportation
businesses and are 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. It is intended that the actions
required to exit and realign these operations will be completed within the next
twelve months. 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. The subsequent discussion of operations by segment excludes the
effect of the restructuring charge.
Construction Materials sales of $92 million for the first quarter were up 5%
over 2000 first quarter sales of $88 million. Sales in the domestic roofing
market rose over last year as a result of increased thermoplastic polyolefin
(TPO) roofing membrane and insulation shipments. A portion of the first quarter
increase can be attributed to the unusually slow December, which was the result
of the harsh weather conditions experienced throughout the Northeast and Central
Midwestern regions.
Operating earnings of $8.9 million for the Construction Materials segment were
flat over the first quarter of 2000. Although sales were up, margins were down
due to the effects of higher raw material costs. In addition, this segment's
product mix included fast growing but lower margin TPO roofing membrane and
insulation products.
Sales in the Automotive Components segment declined over the first quarter of
2000. Throughout the first quarter of 2001, assembly locations at each of the
major domestic automotive OEM's experienced multiple weeks of production
shutdowns. Automotive build requirements have fluctuated as the industry has
moved aggressively to reduce vehicle inventories in face of uncertain demand.
Earnings in this segment were down 57% as compared to the first quarter of 2000,
due to the reductions in production volumes this quarter.
Page 7 of 11
Industrial Component sales of $192 million were up 18% over last year. This
sales increase came principally from the acquisition of the Consumer Tire &
Wheel Division of Titan International, which was acquired by Carlisle Tire &
Wheel in April of 2000, offsetting some slowness in the core lawn and garden
markets. Tensolite's sales were up for the quarter, as a result of its
acquisition of UniTrek in July of 2000. In addition, in March of 2001, Tensolite
acquired Connecting Devices, Inc., a designer and manufacturer of RF/microwave
connectors and cable assemblies serving the wireless, Internet infrastructure
and opto-electronic switch markets. Carlisle Motion Control and Carlisle
Industrial Brake & Friction have seen softness in the heavy duty truck, and
heavy construction and mining equipment markets, offsetting some slight
improvement in aftermarket businesses.
Earnings in the Industrial Components segment were down 23% over last year,
reflecting the impact of reduced volumes in Carlisle's core businesses and the
impact of lower margins in acquired businesses.
General Industry sales of $111 million were up 11% over the first quarter of
2000. Carlisle Systems & Equipment led the segment in sales growth as a result
of completed acquisitions. These sales gains were partially offset by the
ongoing weakness in the transportation markets, particularly in the trailer
markets of Carlisle Transportation Products and Johnson Truck Bodies. Carlisle
FoodService's sales were up over last year as a result of the acquisition of
Dura-Ware in February of 2000. Unfortunately, some of FoodService's other
businesses have experienced softness, as consumer discretionary spending has
decreased.
ACQUISITIONS
Carlisle has completed five acquisitions in the first quarter of 2001: Stork
Friesland B.V. and Siersema Sheffers B.V., both Dutch based designers and
sellers of evaporators and spray dryers for milk powder processing; EcoStar,
Inc, a provider of synthetic roofing tiles for the steep-slope roofing market;
Wincanton Engineering Ltd., a UK based designer and manufacturer of processing
equipment for the food, dairy, and beverage industries; and Connecting Devices,
Inc., a designer and manufacturer of RF/microwave connectors and cable
assemblies serving the wireless, Internet infrastructure and opto-electronic
switch markets. Although acquisitions completed since the first quarter of 2000
contributed $51 million of sales revenue and no earnings in the first quarter of
2001, we are optimistic that the synergies that will come as well as the
strategic development provided will result in attractive investments for the
Carlisle shareholder.
CASH FLOWS
Cash flow from operations of $18.9 million was down $1.8 million from a year
ago. This decrease was primarily the result of lower earnings recorded in the
first quarter of 2001. Two factors principally impacted working capital. First,
receivable collections slowed as an unusual number of our customers delayed
payments. Second, inventory levels were up versus the first quarter of 2000 as a
result of acquisitions completed in 2000 and early 2001. Additionally, we
experienced a slower first quarter in our lawn and garden markets as compared to
a strong first quarter in 2000. Action programs are in place to reduce working
capital and improvement is expected in the second quarter.
BACKLOG
Backlog of $301 million as of March 31, 2001, was up 23% over March 2000 backlog
of $246 million and up 13% over December 2000. Significant increases occurred at
Tensolite and Carlisle Systems & Equipment, helped by acquisitions.
Page 8 of 11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS.
The Company has not utilized derivative financial instruments or
derivative commodity instruments in our 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 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 9 of 11
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 May 11, 2001 By: /s/ Dennis J. Hall
--------------------- -----------------------------------
Dennis J. Hall
Vice Chairman
Page 10 of 11