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 March 31, 1998
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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
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CARLISLE COMPANIES INCORPORATED
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 31-1168055
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
250 South Clinton Street, Suite 201, Syracuse, New York 13202
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(Address of principal executive offices) (Zip code)
315-474-2500
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(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 May 1, 1998 30,181,489
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Page 1 of 9
<PAGE>
PART I. FINANCIAL INFORMATION
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
Three Months ended March 31, 1998 and 1997 (Dollars in
thousands, except per share amounts)
(unaudited)
1998 1997
---- ----
Net Sales $ 363,090 $ 287,819
Cost and expenses:
Cost of goods sold 284,535 224,227
Selling and administrative 40,107 34,464
Research and development 3,886 3,855
--------- ---------
328,528 262,546
Operating profit 34,562 25,273
Other income (deductions):
Investment income 458 245
Interest expense (5,029) (3,981)
Other, net 1,380 687
--------- ---------
(3,191) (3,049)
--------- ---------
Earnings before income taxes 31,371 22,224
Income taxes 12,392 8,803
--------- ---------
Net earnings $ 18,979 $ 13,421
========= =========
Average shares outstanding - basic 30,176 30,364
Basic earnings per share $ .63 $ .44
========= =========
Average shares outstanding - diluted 30,735 31,129
Diluted earnings per share $ .62 $ .43
========= =========
Dividends declared and
paid per share $ .1400 $ .1225
========= =========
See accompanying notes to interim financial statements.
Page 2 of 9
<PAGE>
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
March 31, 1998 and December 31, 1997
(Dollars in thousands, except share amounts)
March 31, Dec. 31,
1998 1997
---- ----
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 9,709 $ 1,732
Receivables, less allowances of $5,143 in
1998 and $5,180 in 1997 219,260 184,796
Inventories 189,115 180,331
Deferred income taxes 28,520 28,462
Prepaid expenses and other 23,617 22,212
--------- ---------
Total current assets 470,221 417,533
--------- ---------
Property, plant and equipment 569,436 539,482
Less accumulated depreciation 253,887 245,317
--------- ---------
Net property, plant and equipment 315,549 294,165
--------- ---------
Other assets
Patents and other intangibles 129,356 121,772
Investments and advances to affiliates 22,077 16,467
Receivables and other assets 20,233 11,279
--------- ---------
Total other assets 171,666 149,518
--------- ---------
$ 957,436 $ 861,216
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term debt, including current maturities $ 92,421 $ 24,332
Accounts payable 101,961 75,936
Accrued expenses 123,190 125,815
--------- ---------
Total current liabilities 317,572 226,083
--------- ---------
Long-term liabilities
Long-term debt 199,700 209,642
Product warranties 75,568 73,715
Deferred compensation and other liabilities 1,625 2,940
--------- ---------
Total long-term liabilities 276,893 286,297
--------- ---------
Stockholders' equity:
Common stock, $1 par value. Authorized
50,000,000 shares; issued 39,330,624 shares 39,331 39,331
Additional paid-in capital 2,832 1,830
Retained earnings 418,111 403,356
Cost of shares in treasury (1998 - 9,148,167
shares; 1997 - 9,171,915 shares) (97,303) (95,681)
--------- ---------
Total stockholders' equity 362,971 348,836
--------- ---------
$ 957,436 $ 861,216
========= =========
See accompanying notes to interim financial statements.
Page 3 of 9
<PAGE>
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
Condensed Statements of Consolidated Cash Flows
Three Months ended March 31, 1998 and 1997
(Dollars in thousands)
(unaudited)
1998 1997
---- ----
Operating Activities
Net earnings $ 18,979 $ 13,421
Reconciliation of net earnings to cash flows:
Depreciation 9,967 8,336
Amortization 1,899 1,540
Changes in assets and liabilities, excluding
effects of acquisitions and divestitures:
Current & long-term receivables (42,280) (19,542)
Inventories (6,884) (14,062)
Accounts payable & accrued expenses 18,173 927
Prepaid, deferred & current income taxes 3,184 7,660
Long-term liabilities (1,530) (775)
Other 254 2,622
--------- ---------
Net cash provided by operating activities 1,762 127
--------- ---------
Investing Activities
Capital expenditures (29,087) (10,255)
Acquisitions, net of cash (17,240) (2,104)
Sales of property, equipment & business 3,763 5,556
Other (2,747) --
--------- ---------
Net cash used in investing activities (45,311) (6,803)
--------- ---------
Financing Activities
Proceeds from short-term borrowings 68,178 --
Proceeds from long-term debt -- 150,006
Reductions of long-term debt (10,031) (124,711)
Dividends (4,225) (3,721)
Purchases of treasury shares (2,396) (10,260)
--------- ---------
Net cash provided by financing activities 51,526 11,314
--------- ---------
Change in cash and cash equivalents 7,977 4,638
Cash and cash equivalents
Beginning of period 1,732 8,312
--------- ---------
End of period $ 9,709 $ 12,950
========= =========
See accompanying notes to interim financial statements.
Page 4 of 9
<PAGE>
Notes to Condensed Consolidated Financial Statements
Three Months Ended March 31, 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 statements for the interim period presented herein.
Results of operations for the three-month period ended March 31, 1998 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 1997 Annual Report to Stockholders.
(2) The components of inventories are as follows:
March 31, Dec. 31,
1998 1997
---- ----
(000)'s
First-in, first-out (FIFO) costs:
Finished goods $ 115,688 $ 111,403
Work in process 22,809 23,250
Raw materials 65,459 60,375
--------- ---------
$ 203,956 $ 195,028
Excess of FIFO cost over Last-in,
First-out (LIFO) inventory value (14,841) (14,697)
--------- ---------
LIFO inventory value $ 189,115 $ 180,331
========= =========
(3) Diluted earnings per share of common stock are based on the weighted
average number of shares outstanding of 30,734,571 for the three months
ended March 31, 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
Carlisle Companies achieved record first quarter sales of $363.1 million and net
earnings of $19.0 million or $.62 a share (diluted). First quarter sales
increased 26% over 1997 sales of $287.8 million. Earnings rose 42% over 1997
first quarter earnings of $13.4 million or $.43 a share (diluted). Record first
quarter performance was spurred by the strong segment sales and earnings growth
for all our segments.
Construction segment sales of $70.3 million rose 24% over 1997 levels of $56.6
million. Segment earnings for the quarter improved 37% to $8.1 million compared
to 1997 earnings of $5.9 million. The mild winter weather experienced in the
Northeastern and Midwestern United States enabled construction projects to
continue with few interruptions, thus sustaining demand for roofing products
during the generally slow first quarter. While we are generally pleased with
these first quarter results, some of the unusually good first quarter results
can be explained by sales that would ordinarily occur throughout the year under
more normal weather conditions.
Transportation Products segment sales of $154.8 million reflected a 25% increase
over 1997 while first quarter segment earnings of $15.3 million outpaced 1997
earnings by 50%. Significant improvements in the operating performance of the
Company's container manufacturing operation coupled with continued positive
results of the container leasing joint venture were the primary contributors to
the jump in this segment's 1998 first quarter earnings. Sales and earnings of
the Company's wire operations continue to benefit from the strong aerospace and
data communications markets. In March 1998, the Company completed the
acquisition of Vermont Electromagnetics Corporation, a manufacturer of specialty
coaxial cable assemblies and connectors serving the computer, medical
electronics and telecommunications markets. The specialized trailer operations
continue to report favorable sales and earnings resulting from expanded market
share and the introduction of several new products. Improved sales and earnings
at the Company's heavy-duty friction and industrial friction operations reflect
favorable product mix. The Company's engineered products operations continue to
show improved sales and earnings through the on-going integration of the Johnson
Controls assets purchased in October 1996. The Company also completed the
establishment of a joint venture with Lander Plastics, Ltd. in March 1998, which
will expand its capabilities to manufacture and supply components to automotive
customers in the United Kingdom and other European countries.
General Industry segment sales rose 28% to $138.0 million for the first quarter
from $107.6 million in 1997. Earnings for the first quarter increased 17% to
$15.8 million over 1997 earnings of $13.5 million. The integration of the
Company's 1997 specialty tire and wheel acquisitions, coupled with favorable
manufacturing performances contributed significantly to this segment's sales and
earnings increase. Foodservice sales improved over 1997 levels reflecting
favorable customer response and market share gains, but this unit continues to
face margin pressures. This segment's first quarter results also benefited from
the expansion of the Company's brush manufacturing
Page 6 of 9
<PAGE>
operations. The Company's stainless steel processing equipment operations also
contributed to the favorable first quarter sales results.
Gross margins were 21.6% of sales during the first three months of 1998 compared
to 22.1% for the same period in 1997. This decrease reflects the continued
change in sales mix across all segments.
Selling and administrative expenses as a percentage of sales declined to 11% in
the first three months of 1998 from 12% in the same period of 1997. This decline
reflects the Company's continued commitment to control costs throughout all
operations.
Interest expense increased to $5.0 million for the first quarter of 1998
compared to $4.0 million for the same period of 1997, reflecting the increased
level of debt. The increase in borrowings was used to finance acquisitions and
capital expenditures.
Capital expenditures totaled $29.1 million for the first quarter of 1998
compared to $10.3 million for the first quarter of 1997. This increase is
attributable to investments in injection-molding and blow-molding equipment in
the automotive components operations, the purchase of facilities for the
specialty wheel operations and the purchase of warehousing space for finished
specialty tire and wheel assemblies and EPDM roofing materials. Other
significant projects in the first quarter of 1998 included plant and equipment
to manufacture TPO roofing membranes, as well as warehousing and distribution
systems for the foodservice operations.
Working Capital was $152.6 million at March 31, 1998 compared to $191.5 million
at December 31, 1997 and $203.3 at March 31, 1997. Excluding short-term
borrowings, working capital for the quarter increased $29.2 million. The
increase in receivables, inventory and current liabilities reflects increased
sales levels partially offset by improved working capital management.
We are enthusiastic about our record first quarter but remain realistic that
this quarter's results were exceptional. The impact of favorable weather
conditions and significant improvements over first quarter 1997 at our container
manufacturing operations have resulted in a very good start to 1998, which
should enable us to meet our goals for 1998.
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 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 March 31, 1998 and for the three
months ended March 31, 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 May 4, 1998 By /s/Robert J. Ryan, Jr.
-------------------- ------------------------
Robert J. Ryan, Jr.
Vice President, Treasurer
and Chief Financial Officer
Page 9 of 9
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's ratio of earnings to fixed
charges for periods indicated:
3 Months
Ended Year Ended December 31,
----- -----------------------
3/31/98 1997 1996 1995 1994 1993
------- ---- ---- ---- ---- ----
Ratio of Earnings to
Fixed Charges 5.34 6.06 7.47 8.70 9.73 9.89
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>
<ARTICLE> 5
<LEGEND>
This schedule contains Summary Financial Information extracted from the
Financial Statements of Carlisle Companies Incorporated for the three month
period ending March 31, 1998, and is qualified in its entirety by reference to
such Financial Statements.
</LEGEND>
<CIK> 0000790051
<NAME> CARLISLE COMPANIES INCORPORATED
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 9,709
<SECURITIES> 0
<RECEIVABLES> 224,403
<ALLOWANCES> 5,143
<INVENTORY> 189,115
<CURRENT-ASSETS> 470,221
<PP&E> 569,436
<DEPRECIATION> 253,887
<TOTAL-ASSETS> 957,436
<CURRENT-LIABILITIES> 317,572
<BONDS> 199,700
0
0
<COMMON> 39,331
<OTHER-SE> 362,971
<TOTAL-LIABILITY-AND-EQUITY> 957,436
<SALES> 363,090
<TOTAL-REVENUES> 363,090
<CGS> 284,535
<TOTAL-COSTS> 328,528
<OTHER-EXPENSES> 1,380
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<INCOME-PRETAX> 31,371
<INCOME-TAX> 12,392
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