<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13
[X] OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
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
incorporation or organization) identification no.)
250 South Clinton Street, Suite 201, Syracuse, New York 13202
(Address of principal executive offices) (Zip code)
315-474-2500
(Registrant's telephone number, including area code)
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, 1998 30,181,351
-----------
Page 1 of 9
<PAGE>
PART I. FINANCIAL INFORMATION
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statement of Earnings
Three Months and Six Months ended June 30, 1998 and 1997
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
------------------------------ -----------------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Sales $395,580 $337,372 $758,670 $625,191
Cost and expenses:
Cost of goods sold 307,217 260,660 591,752 484,887
Selling and administrative 40,451 35,016 80,558 69,480
Research and development 4,193 3,909 8,078 7,764
------ ------- ------- -------
351,861 299,585 680,388 562,131
Operating profit 43,719 37,787 78,282 63,060
Other income (deductions):
Investment income 873 336 1,331 582
Interest expense (5,764) (4,289) (10,793) (8,270)
Other, net 1,772 920 3,151 1,608
------ ------ ------ ------
(3,119) ( 3,033) ( 6,311) ( 6,080)
------ ------ ------ ------
Earnings before income taxes 40,600 34,754 71,971 56,980
Income taxes 16,049 13,774 28,441 22,579
------- ------- ------- -------
Net earnings $ 24,551 $ 20,980 $ 43,530 $ 34,401
-------- -------- -------- --------
-------- -------- -------- --------
Average shares outstanding - basic 30,181 30,263 30,179 30,314
Basic earnings per share: $ 0.81 $ 0.69 $ 1.44 $ 1.13
-------- -------- -------- --------
-------- -------- -------- --------
Average shares outstanding - diluted 30,725 30,907 30,730 31,018
Diluted earnings per share: $ 0.80 $ 0.68 $ 1.42 $ 1.11
-------- -------- -------- --------
-------- -------- -------- --------
Dividends declared and $ .1400 $ .1225 $ .2800 $ .2450
-------- -------- -------- --------
-------- -------- -------- --------
paid per share
</TABLE>
See accompanying notes to interim financial statements.
Page 2 of 9
<PAGE>
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
June 30, 1998 and December 31, 1997
(Dollars in thousands except share amounts)
<TABLE>
<CAPTION>
June 30, Dec. 31,
1998 1997
------- -------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 26,757 $ 1,732
Receivables, less allowances of $5,118 in
1998 and $5,180 in 1997 225,332 184,796
Inventories 190,056 180,331
Deferred income taxes 28,518 28,462
Prepaid expenses and other 23,512 22,212
------- -------
Total current assets 494,175 417,533
------- -------
Property, plant and equipment 588,748 539,482
Less accumulated depreciation 261,209 245,317
------- -------
Net property, plant and equipment 327,539 294,165
------- -------
Other assets
Patents and other intangibles 128,492 121,772
Investments and advances to affiliates 23,668 16,467
Receivables and other assets 22,743 11,279
------- -------
Total other assets 174,903 149,518
------- -------
$996,617 $861,216
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings $ 11,322 $ 24,332
Accounts payable 108,459 75,936
Accrued expenses 123,735 125,815
------- -------
Total current liabilities 243,516 226,083
------- -------
Long-term liabilities
Long-term debt 298,617 209,642
Product warranties 75,169 73,715
Deferred compensation and other liabilities 3,508 2,940
------- ------
Total long-term liabilities 377,294 286,297
------- -------
Shareholders' equity:
Common stock, $1 par value. Authorized
50,000,000 shares; issued 39,330,624 shares 39,331 39,331
Additional paid-in capital 4,294 1,830
Retained earnings 438,436 403,356
Cost of shares in treasury (1998 - 9,149,135
shares; 1997 - 9,171,915 shares) (106,254) ( 95,681)
-------- --------
Total shareholders' equity 375,807 348,836
-------- --------
$996,617 $861,216
-------- --------
-------- --------
</TABLE>
See accompanying notes to interim financial statements.
Page 3 of 9
<PAGE>
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
Condensed Statements of Consolidated Cash Flows
Six Months ended June 30, 1998 and 1997
(Dollars in thousands)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Operating Activities
Net earnings $43,530 $34,401
Reconciliation of net earnings to cash flows:
Depreciation 20,056 16,693
Amortization 3,686 3,000
Changes in assets and liabilities, excluding
effects of acquisitions and sale of business:
Current & long-term receivables (48,203) (47,601)
Inventories (7,548) (5,052)
Accounts payable & accrued expenses 31,041 18,190
Prepaid, deferred & current income taxes (3,280) 8,621
Long-term liabilities (2,684) (2,812)
Other 525 604
------- ------
37,123 26,044
------- ------
Investing Activities
Capital expenditures (52,297) (21,895)
Acquisitions, net of cash (17,474) (4,082)
Sales of property, equipment & business 4,892 5,895
Other (1,005) --
------ -----
(65,884) (20,082)
------ ------
Financing Activities
Proceeds from short-term borrowings 95,989 --
Proceeds from long-term debt 100,000 152,647
Reductions of short-borrowings (109,447) --
Reductions of long-term debt (10,605) (124,871)
Dividends (8,450) (7,427)
Purchases of treasury shares ( 13,701) (16,624)
------- ------
53,786 3,725
------- ------
Change in cash and cash equivalents 25,025 9,687
Cash and cash equivalents
Beginning of period 1,732 8,312
------ ------
End of period $26,757 $17,999
------- -------
------- -------
</TABLE>
See accompanying notes to interim financial statements.
Page 4 of 9
<PAGE>
Notes to Condensed Consolidated Financial Statements
Three and Six Months Ended June 30, 1998 and 1997
(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 position as of
June 30, 1998 and December 31, 1997, the results of its operations for
the three months and the six months ended June 30, 1998 and 1997, and
its cash flows for the six months ended June 30, 1998 and 1997.
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 1997 Annual Report to
Shareholders.
(2) The components of inventories are as follows:
<TABLE>
<CAPTION>
June 30, Dec. 31,
1998 1997
------ -----
(000)'s
<S> <C> <C>
First-in, first-out (FIFO) costs:
Finished goods $112,398 $111,403
Work in process 23,082 23,250
Raw materials 69,250 60,375
------- -------
$204,730 $195,028
Excess of FIFO cost over Last-in,
First-out (LIFO) inventory value ( 14,674) ( 14,697)
-------- --------
LIFO inventory value $190,056 $180,331
-------- ---------
-------- ---------
</TABLE>
(3) Net earnings per share of common stock are based on the weighted
average number of shares outstanding of 30,724,623 for the three months
ended June 30, 1998 and 30,729,597 for the six months ended June 30,
1998 assuming the exercise of dilutive stock options.
Page 5 of 9
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
For the second quarter of 1998, Carlisle reported record sales and earnings.
Sales of $395.6 million for the second quarter ended June 30, 1998, reflect a
17% increase over 1997's second quarter sales of $337.4 million. Net earnings
rose 17% to $24.6 million, or $.80 a share (diluted) versus 1997 quarterly
earnings of $21.0 million, or $.68 a share (diluted), surpassing previous
records for quarterly sales and earnings. The strong second quarter combined
with an exceptional first quarter contributed to produce six-month net earnings
of $43.5 million, or $1.42 a share on $758.7 million in sales. This compares
with 1997 year-to-date sales of $625.2 million and net earnings of $34.4
million, or $1.11 a share.
Construction Materials segment sales of $95.2 million, for the second quarter of
1998, were up 9% over 1997 second quarter sales of $87.3 million. For the six
months ended June 30, 1998, sales increased to $165.5 million from $144.7
million in 1997. Strong sales activity in the domestic roofing markets, as well
as increased sales activity in the coatings and waterproofing operations, were
primarily responsible for the increase in the construction segment's sales.
Pre-tax earnings of $15.3 million for the second quarter of 1998, compared to
1997 second quarter earnings of $14.1 million. On a year-to-date basis, pre-tax
earnings rose to $23.4 million from $20.0 million last year. Despite margin
pressures due to competitiveness in the marketplace and increased raw material
costs, this segment continues to report strong gains in sales and earnings.
Sales in the Transportation Products segment increased 11% in the second quarter
of 1998, to $154.7 million from $139.4 million in the second quarter of last
year. Pre-tax earnings increased 17% to $14.3 million in the second quarter of
1998 versus $12.2 million in 1997. On a year-to-date basis, sales of $309.5
million were up over 1997 sales of $262.9 million. Pre-tax earnings of $29.7
million exceeded 1997 pre-tax earnings of $22.3 million. Second quarter sales
and earnings at the Company's engineered products operations were affected by
the UAW strikes at General Motors. The impact was $0.02 per share. The Company
is implementing measures to minimize the impact of the work stoppage. Record
market demand in the Company's heavy friction products operations contributed to
the favorable sales and earnings increase over 1997 levels. The Company's
specialized trailer operations experienced continued strong demand, particularly
in the construction markets it serves, benefitting from increased spending on
highway maintenance and repair across the United States. Sales and earnings at
the wire operations continue to be led by the sale of the Company's patented,
high quality, Tufflite wire to the aerospace industry. The year-over-year
results of the perishable cargo operations continue to improve, reflecting
progress in the container manufacturing operations as well as repeated positive
performance at the container leasing operations.
General Industry segment sales increased 32% in the second quarter of 1998, to
$145.7 million from $110.7 million in the second quarter of last year. Pre-tax
earnings increased 23% to $18.6 million in the second quarter of 1998 versus
$15.1 million in the second quarter of 1997. For the six months ended June 30,
1998, sales climbed to $283.7 million versus $217.6 million last year and
pre-tax earnings increased to $34.4 million from $29.0 million. The increase in
sales and earnings of this segment were led by the Company's tire and wheel
operations. Sales at the tire and wheel operations continue to out perform 1997
results on increased volume to OEM and replacement customers serving the
trailer, lawn and garden and golf car markets.
Page 6 of 9
<PAGE>
Additionally, there were continued improvements in the integration of several
acquisitions made in 1997, by the tire and wheel operations. Sales and earnings
of the Company's specialty electronics cable and assembly operations benefitted
from the acquisition of a specialty cable manufacturer in March of 1998, and the
growth of the high speed data and electronics markets. Sales at the Company's
foodservice and brush manufacturing operations were up over 1997 levels, but
margins were negatively impacted by lower than expected sales volumes at the
ceramics operations, as well as by continued competitive pricing in the
foodservice business. Consolidation among U.S. dairy processors dampened sales
and earnings of the Company's stainless steel processing equipment operations.
Working capital was $250.7 million at June 30, 1998 compared to $152.6 million
at March 31, 1998 and $207.1 million at June 30, 1997. The increase in working
capital from March 31, 1998, is primarily due to the repayment of short term
borrowings in May of 1998, through the issuance of $100.0 million, 6.7%, 10-year
public debt.
The Company has remediation programs in place for its systems that are not
currently Year 2000 compliant. The total cost of compliance is not expected to
have a material impact on the Company's operations, liquidity or capital
resources. However, we are unable to predict all the implications of the Year
2000 issue as it relates to our customers, suppliers and other entities.
Page 7 of 9
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Company's 1998 Annual Meeting of Shareholders was held on April 20,
1998.
(b) At the 1998 Annual Meeting of Shareholders, the election of four
directors were approved as follows:
<TABLE>
<CAPTION>
Director For Against Withheld Non-Vote
-------- --- ------- -------- --------
<S> <C> <C> <C> <C>
Donald G. Calder 41,601,609 -- 499,093 8,263,397
Dennis J. Hall 41,595,535 -- 505,167 8,263,397
Eriberto R. Scocimara 41,583,109 -- 517,593 8,263,397
</TABLE>
(c) At the 1998 Annual Meeting of Shareholders, a proposal to amend the
Company's Executive Incentive Program to increase the number of shares
of common stock that may be issued under the Stock Option Plan by
600,000 shares from 1,000,000 to 1,600,000 was approved as follows:
<TABLE>
<CAPTION>
For Against Withheld Non-Vote
<S> <C> <C> <C> <C>
Proposal to Amend Executive 37,654,442 3,755,865 690,395 8,263,397
Incentive Program
</TABLE>
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, 1998 and for the
six months ended June 30, 1998.
(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 8 of 9
<PAGE>
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 11, 1998 By /s/Robert J. Ryan, Jr.
------------------- ------------------------
Robert J. Ryan, Jr.
Vice President, Treasurer
and Chief Financial Officer
Page 9 of 9
<PAGE>
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:
<TABLE>
<CAPTION>
Six months
Ended Year Ended December 31
--------- -------------------------------------------------
6/30/98 1997 1996 1995 1994 1993
--------- ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
Ratio of
Earnings
to Fixed 5.65% 6.06% 7.47% 8.70% 9.73% 9.89%
Charges
</TABLE>
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.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CARLISLE COMPANIES INCORPORATED FOR THE SIX MONTH
PERIOD ENDING JUNE 30, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 26,757
<SECURITIES> 0
<RECEIVABLES> 225,332
<ALLOWANCES> 5,118
<INVENTORY> 190,056
<CURRENT-ASSETS> 494,175
<PP&E> 588,748
<DEPRECIATION> 261,209
<TOTAL-ASSETS> 996,617
<CURRENT-LIABILITIES> 243,516
<BONDS> 298,617
0
0
<COMMON> 39,331
<OTHER-SE> 438,437
<TOTAL-LIABILITY-AND-EQUITY> 996,617
<SALES> 758,670
<TOTAL-REVENUES> 758,670
<CGS> 591,752
<TOTAL-COSTS> 680,388
<OTHER-EXPENSES> 3,151
<LOSS-PROVISION> 482
<INTEREST-EXPENSE> 9,462
<INCOME-PRETAX> 71,971
<INCOME-TAX> 28,441
<INCOME-CONTINUING> 43,530
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,530
<EPS-PRIMARY> 1.44
<EPS-DILUTED> 1.42
</TABLE>
