<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 September 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
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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 November 1, 1998 30,178,457
Page 1 of 9
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PART I. FINANCIAL INFORMATION
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statement of Earnings
Three Months and Nine Months ended September 30, 1998 and 1997
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Net Sales $ 377,985 $315,707 $1,136,655 $940,897
Cost and expenses:
Cost of goods sold 296,037 240,618 887,789 725,505
Selling and administrative 39,291 36,331 119,849 105,811
Research and development 4,146 3,942 12,224 11,705
-------- -------- --------- -------
339,474 280,891 1,019,862 843,021
Operating profit 38,511 34,816 116,793 97,876
Other income (deductions):
Investment income 660 409 1,991 991
Interest expense (5,873) (3,961) (16,666) (12,231)
Other, net 3,573 1,045 6,724 2,652
-------- -------- --------- -------
(1,640) (2,507) (7,951) (8,588)
--------- -------- --------- -------
Earnings before income taxes 36,871 32,309 108,842 89,288
Income taxes 14,551 12,791 42,992 35,369
-------- -------- -------- --------
Net earnings $ 22,320 $ 19,518 $ 65,850 $ 53,919
--------- -------- --------- -------
--------- -------- --------- -------
Average shares outstanding - basic 30,182 30,155 30,180 30,261
Basic earnings per share: $ 0.74 $ 0.64 $ 2.18 $ 1.78
--------- -------- --------- -------
--------- -------- --------- -------
Average shares outstanding - diluted 30,616 31,036 30,690 31,024
Diluted earnings per share: $ .73 $ 0.63 $ 2.15 $ 1.74
--------- -------- --------- -------
--------- -------- --------- -------
Dividends declared and
paid per share $ .1600 $ .1400 $ .4400 $ .3850
--------- -------- --------- -------
--------- -------- --------- -------
</TABLE>
See accompanying notes to interim financial statements.
Page 2 of 9
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CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
September 30, 1998 and December 31, 1997
(Dollars in thousands except share amounts)
<TABLE>
<CAPTION>
Sept. 30, Dec. 31,
1998 1997
---------- -----------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 12,384 $ 1,732
Receivables, less allowances of $4,950 in
1998 and $5,180 in 1997 230,634 184,796
Inventories 196,530 180,331
Deferred income taxes 28,504 28,462
Prepaid expenses and other 23,730 22,212
---------- --------
Total current assets 491,782 417,533
Property, plant and equipment 609,222 539,482
Less accumulated depreciation 270,352 245,317
---------- --------
Net property, plant and equipment 338,870 294,165
Other assets
Patents and other intangibles 130,762 121,772
Investments and advances to affiliates 22,221 16,467
Receivables and other assets 23,970 11,279
---------- --------
Total other assets 176,953 149,518
---------- --------
$1,007,605 $861,216
---------- --------
---------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings $ 11,343 $ 24,332
Accounts payable 95,274 75,936
Accrued expenses 129,428 125,815
---------- --------
Total current liabilities 236,045 226,083
---------- --------
Long-term liabilities
Long-term debt 298,454 209,642
Product warranties 76,278 73,715
Deferred compensation and other liabilities 3,527 2,940
---------- --------
Total long-term liabilities 378,259 286,297
---------- --------
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 4,308 1,830
Retained earnings 455,928 403,356
Cost of shares in treasury (1998 - 9,148,198
shares; 1997 - 9,171,915 shares) (106,266) (95,681)
---------- --------
Total stockholders' equity 393,301 348,836
---------- --------
$1,007,605 $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
Nine Months ended September 30, 1998 and 1997
(Dollars in thousands)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Operating Activities
Net earnings $ 65,850 $ 53,919
Reconciliation of net earnings to cash flows:
Depreciation 29,822 25,238
Amortization 5,511 4,652
Changes in assets and liabilities, excluding
effects of acquisitions and sale of business:
Current & long-term receivables (52,616) (29,259)
Inventories (13,277) (19,319)
Accounts payable & accrued expenses 16,885 22,027
Prepaid, deferred & current income taxes 1,461 10,972
Loss on sale of facility 0 332
Long-term liabilities (1,889) (1,612)
Other (3,050) (705)
-------- --------
48,697 66,245
-------- --------
Investing Activities
Capital expenditures (72,720) (39,218)
Acquisitions, net of cash (19,974) (30,603)
Sales of property, equipment & business 4,855 12,336
Other 999 49
-------- --------
(86,840) (57,436)
-------- --------
Financing Activities
Proceeds from short-term borrowings 95,989 - -
Proceeds from long-term debt 100,000 153,796
Reductions of short-term borrowings (109,447) - -
Reductions of long-term debt (10,719) (125,127)
Dividends (13,278) (11,647)
Purchases of treasury shares (13,750) (17,869)
-------- --------
48,795 (847)
-------- --------
Change in cash and cash equivalents 10,652 7,962
Cash and cash equivalents
Beginning of period 1,732 8,312
-------- --------
End of period $ 12,384 $ 16,274
-------- --------
-------- --------
</TABLE>
See accompanying notes to interim financial statements.
Page 4 of 9
<PAGE>
Notes to Condensed Consolidated Financial Statements
Nine and Three Months Ended September 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
September 30, 1998 and December 31, 1997, the results of its operations
for the three months and the nine months ended September 30, 1998 and
1997, and its cash flows for the nine months ended September 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
Stockholders.
(2) The components of inventories are as follows:
<TABLE>
<CAPTION>
Sept. 30, Dec. 31,
1998 1997
------ -----
(000)'s
<S> <C> <C>
First-in, first-out (FIFO) costs:
Finished goods $116,439 $111,403
Work in process 25,795 23,250
Raw materials 68,734 60,375
-------- --------
$210,968 $195,028
--------
Excess of FIFO cost over Last-in,
First-out (LIFO) inventory value (14,438) (14,697)
-------- --------
LIFO inventory value $196,530 $180,331
-------- --------
-------- --------
</TABLE>
(3) Basic earnings per share of common stock are based on the weighted
average number of shares outstanding of 30,181,804 for the three months
ended September 30, 1998 and 30,179,830 for the nine months ended
September 30, 1998. Diluted earnings per share of common stock are
based on the weighted average number of shares outstanding of
30,616,291 for the three months ended September 30, 1998 and 30,690,052
for the nine months ended September 30, 1998 assuming the exercise of
dilutive stock options.
(4) The Company issued $100.0 million, 6.7%, 10-year public debt in May of
1998.
Page 5 of 9
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Management's Discussion and Analysis of
Financial Condition and Results of Operations
In the third quarter of 1998, Carlisle continued to report record
quarterly sales and earnings. Sales of $378.0 million for the third quarter
ended September 30, 1998, reflect a 20% increase over 1997's third quarter sales
of $315.7 million. Net earnings rose 14% to $22.3 million, or $0.73 a share
(diluted) versus 1997 quarterly earnings of $19.5 million, or $0.63 a share,
surpassing previous records for quarterly sales and earnings. The continued
strong quarterly results brought the nine-month net earnings to $65.8 million,
or $2.15 a share (diluted) on $1,136.7 million in sales. These results represent
a 21% increase over 1997 nine-month sales of $940.9 million and a 22% increase
over 1997 nine-month earnings of $53.9 million, or $1.74 per share.
Construction Materials segment third quarter sales of $109.1 million are
up 16% over 1997 third quarter sales of $94.4 million. For the nine months ended
September 30, 1998, sales grew to $274.5 million from $238.3 million in 1997.
Contributing to these sales increases are strong domestic roofing sales and
increased penetration in some markets. Also adding to 1998 sales is increased
sales of coatings and waterproofing, in part due to a recent European
acquisition. Pre-tax earnings of $17.4 million for the third quarter of 1998 are
a slight increase over third quarter 1997 of $17.0 million. On a year-to-date
basis, pre-tax earnings rose to $40.8 million, an increase of 10% over last
year's nine-month earnings of $37.0 million. Earnings growth did not fully
reflect strong sales growth due to a competitive market which prevented
recapturing raw material increases and a product mix which included a higher
proportion of lower margin product.
Transportation Products segment sales increased 22% in the third
quarter of 1998, to $151.7 million from $124.2 million in the third quarter of
last year. In this quarter, pre-tax earnings increased 19% to $12.6 million
versus $10.6 million in 1997. Nine-month sales of $461.2 million in this segment
were up 19% over 1997 sales of $387.1 million. Pre-tax earnings of $42.3 million
in the recent nine month period exceed 1997 pre-tax earnings of $32.8 million by
29%. Earnings at the Company's engineered products operations were affected
adversely by work stoppages at General Motors. The third quarter impact was
$0.03 per share, which brings the year-to-date impact to $0.05 per share. The
specialized trailer operations experienced continued strong demand, particularly
in the construction markets. Sales and earnings at the wire operations continue
to be led by the sale of the Company's patented, high performance, Tufflite wire
to the aerospace industry. Results in the perishable cargo operations reflect
year-over-year improvements in manufacturing and consistent growth in container
leasing operations.
Page 6 of 9
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General Industry segment sales increased 21% in the third quarter of
1998, to $117.2 million from $97.1 million in the third quarter of last year.
Pre-tax earnings increased 19% to $13.5 million in the third quarter of 1998
versus $11.3 million in the comparable quarter last year. For the nine months
ended September 30, 1998, sales climbed to $401.0 million, a 27% increase over
last year nine-month sales of $315.5 million. Nine-month pre-tax earnings in
this segment grew 19% to $47.9 million from $40.4 million. These increases in
sales and earnings were led by the Company's tire and wheel operations, which
continue to outperform 1997 results on increased volume to OEM and replacement
customers serving the trailer, lawn and garden, ATV and golf car markets, along
with improvements from the integration of several acquisitions made in 1997.
Additionally, the Company completed the acquisition of a distributor of
industrial and recreational tire and wheel assemblies, effective September 30,
1998. Sales and earnings of the Company's specialty electronics cable and
assembly operations benefited not only from robust industry growth, but also
from the March 1998 acquisition of a specialty cable manufacturer. In September
of 1998, the Company also completed the acquisition of a manufacturer of
microwave coaxial cable connectors and assemblies serving the
telecommunications, computer and test measurement and instrument industries.
Sales and earnings at the Company's foodservice and brush manufacturing
operations were up significantly over 1997 levels. Consolidations among U.S.
dairy processors continue to dampen sales and earnings of the Company's
stainless steel processing equipment operations.
Working capital was $255.7 million at September 30, 1998 compared to
$250.7 million at June 30, 1998 and $203.4 million at September 30, 1997.
During the last several years, and in the normal course of business,
the Company has replaced a substantial portion of its older computer programs
and systems with new systems that are Year 2000 compliant. With respect to the
remaining information systems, as well as the Company's embedded technology, the
Company has adopted a program (involving both internal personnel and third-party
consultation) of (i) assessment, (ii) remediation, and (iii) authentication. As
of this filing, the Company has substantially completed the assessment phase and
is pursuing appropriate remedial action for the systems determined to be
non-compliant. The authentication phase will include simulated testing in a Year
2000 environment. The estimated cost of the Company's completed and remaining
efforts is not expected to exceed $500,000.
The Company has also initiated a formal communication process with its
significant suppliers and large customers and once the assessment phase is
completed, the Company will determine what remedial action should be taken
(including contingency plans).
The Company expects to complete the remediation phase of its program by
January 1, 1999, with the authentication phase continuing throughout 1999. The
Company believes that upon completion of the program, the Year 2000 issue will
not pose a significant operational problem for its computer systems. However,
there can be no guarantee that the failure of third parties to become Year
2000-ready would not have a material adverse effect on the Company's financial
condition or operations.
Page 7 of 9
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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 September 30, 1998 and for the
nine months ended September 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
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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 November 10, 1998 By /s/ Robert J. Ryan, Jr.
--------------------- ------------------------
Robert J. Ryan, Jr.
Vice President, Treasurer
and Chief Financial Officer
Page 9 of 9
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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>
Nine months
Ended Year Ended December 31
------- ----------------------------------------------------------------------------
9/30/98 1997 1996 1995 1994 1993
--------- ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
Ratio of
Earnings
to Fixed 5.52% 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 NINE MONTH
PERIOD ENDING SEPTEMBER 30, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 12,384
<SECURITIES> 0
<RECEIVABLES> 235,584
<ALLOWANCES> 4,950
<INVENTORY> 196,530
<CURRENT-ASSETS> 491,782
<PP&E> 609,222
<DEPRECIATION> 270,352
<TOTAL-ASSETS> 1,007,605
<CURRENT-LIABILITIES> 236,045
<BONDS> 298,454
0
0
<COMMON> 39,331
<OTHER-SE> 353,970
<TOTAL-LIABILITY-AND-EQUITY> 1,007,605
<SALES> 1,136,655
<TOTAL-REVENUES> 1,136,655
<CGS> 887,789
<TOTAL-COSTS> 1,019,862
<OTHER-EXPENSES> (6,724)
<LOSS-PROVISION> 579
<INTEREST-EXPENSE> 14,675
<INCOME-PRETAX> 108,842
<INCOME-TAX> 42,992
<INCOME-CONTINUING> 65,850
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 65,850
<EPS-PRIMARY> 2.18
<EPS-DILUTED> 2.15
</TABLE>
