<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 MARCH 31, 1999
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 May 1, 1999 30,178,481
<PAGE>
PART I. FINANCIAL INFORMATION
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
Three Months ended March 31, 1999 and 1998 (Dollars in
thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Net Sales $ 390,024 $ 363,090
Cost and expenses:
Cost of goods sold 305,401 284,535
Selling and administrative 42,945 40,107
Research and development 3,925 3,886
Gain on divestiture of business ($16,600),
net of other charges ($15,900) 685 --
Other income & expense, net 1,679 1,380
--------- ---------
Earnings before interest & taxes 40,117 35,942
Interest, net (4,657) (4,571)
--------- ---------
Earnings before income taxes 35,460 31,371
Income taxes 13,652 12,392
--------- ---------
Net earnings $ 21,808 $ 18,979
========= =========
Average shares outstanding - basic 30,183 30,176
Basic earnings per share $ .72 $ .63
========= =========
Average shares outstanding - diluted 30,639 30,735
Diluted earnings per share $ .71 $ .62
========= =========
Dividends declared and
paid per share $ .1600 $ .1400
========= =========
</TABLE>
See accompanying notes to interim financial statements.
<PAGE>
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
March 31, 1999 and December 31, 1998
(Dollars in thousands, except share amounts)
<TABLE>
<CAPTION>
MARCH 31, Dec. 31,
1999 1998
----------- -----------
ASSETS (unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 23,305 $ 3,883
Receivables, less allowances of $5,031 in
1999 and $4,864 in 1998 248,624 225,348
Inventories 205,681 193,650
Deferred income taxes 24,719 26,040
Prepaid expenses and other 32,031 29,604
----------- -----------
TOTAL CURRENT ASSETS 534,360 478,525
----------- -----------
PROPERTY, PLANT AND EQUIPMENT 642,138 630,573
Less accumulated depreciation 286,301 275,804
----------- -----------
NET PROPERTY, PLANT AND EQUIPMENT 355,837 354,769
----------- -----------
OTHER ASSETS
Patents and other intangibles 133,946 139,744
Investments and advances to affiliates 8,739 34,892
Receivables and other assets 15,777 14,922
Deferred Income Tax 18,383 --
----------- -----------
TOTAL OTHER ASSETS 176,845 189,558
----------- -----------
$ 1,067,042 $ 1,022,852
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt, including current maturities $ 1,749 $ 31,241
Accounts payable 116,195 101,859
Accrued expenses 166,751 122,237
----------- -----------
TOTAL CURRENT LIABILITIES 284,695 255,337
----------- -----------
LONG-TERM LIABILITIES
Long-term debt 281,823 273,521
Product warranties 76,126 75,084
Deferred compensation and other liabilities 1,024 12,005
----------- -----------
TOTAL LONG-TERM LIABILITIES 358,973 360,610
----------- -----------
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 4,836 4,201
Retained earnings 487,095 470,117
Cost of shares in treasury (1999 - 9,150,287
shares; 1998 - 9,152,167 shares) (107,888) (106,744)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 423,374 406,905
----------- -----------
$ 1,067,042 $ 1,022,852
=========== ===========
</TABLE>
See accompanying notes to interim financial statements.
<PAGE>
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
Condensed Statements of Consolidated Cash Flows
Three Months ended March 31, 1999 and 1998
(Dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 21,808 $ 18,979
Reconciliation of net earnings to cash flows:
Depreciation 11,294 9,967
Amortization 1,590 1,899
(Gain)/Loss on sales of property, equipment
& business, net of other charges (685) --
Changes in assets and liabilities, excluding
effects of acquisitions and divestitures:
Current & long-term receivables (22,654) (33,280)
Inventories (8,919) (6,884)
Accounts payable & accrued expenses 1,798 18,173
Prepaid, deferred & current income taxes 11,113 3,184
Long-term liabilities 785 (1,530)
Other 1,112 254
-------- --------
Net cash provided by operating activities 17,242 10,762
-------- --------
INVESTING ACTIVITIES
Capital expenditures (14,638) (29,087)
Acquisitions, net of cash (10,584) (17,240)
Sales of property, equipment & business 50,068 3,763
Other 3,863 (11,747)
-------- --------
Net cash used in investing activities 28,709 (54,311)
-------- --------
FINANCING ACTIVITIES
Net change in short-term borrowings (29,285) 68,178
Proceeds from long-term debt 8,441 --
Reductions of long-term debt (346) (10,031)
Dividends (4,830) (4,225)
Purchases of treasury shares (509) (2,396)
-------- --------
Net cash provided by financing activities (26,529) 51,526
-------- --------
CHANGE IN CASH AND CASH EQUIVALENTS 19,422 7,977
CASH AND CASH EQUIVALENTS
Beginning of period 3,883 1,732
-------- --------
End of period $ 23,305 $ 9,709
======== ========
</TABLE>
See accompanying notes to interim financial statements.
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended March 31, 1999 and 1998
(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, 1999 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 1998 Annual Report to
Stockholders.
(2) The components of inventories are as follows:
<TABLE>
<CAPTION>
MARCH 31, Dec. 31,
1999 1998
-------- --------
(000)'S
<S> <C> <C>
First-in, first-out (FIFO) costs:
Finished goods $120,688 $113,852
Work in process 28,076 24,665
Raw materials 70,517 68,979
-------- --------
$219,281 $207,496
Excess of FIFO cost over Last-in,
First-out (LIFO) inventory value (13,600) (13,846)
-------- --------
LIFO inventory value $205,681 $193,650
======== ========
</TABLE>
(3) Diluted earnings per share of common stock are based on the weighted
average number of shares outstanding of 30,638,938 for the three months
ended March 31, 1999 assuming the exercise of dilutive stock options.
(4) 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 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 All Other segment.
<PAGE>
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 appropriated. 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 and other charges" on the face of the
Company's Consolidated Statement of Earnings.
(5) Financial information for operations by reportable business segment is
included in the following summary:
MARCH 1999 - YTD
SEGMENT INFORMATION
<TABLE>
<CAPTION>
SALES EBIT ASSETS
----- ---- ------
<S> <C> <C> <C>
Construction Materials $ 76,277 $ 8,333 $ 221,385
Industrial Components 145,099 20,403 347,502
Automotive Components 81,920 6,650 226,851
All Other 86,728 7,421 226,990
Corporate/Eliminations *(2,690) 44,314
-------- -------- ----------
$390,024 $ 40,117 $1,067,042
======== ======== ==========
</TABLE>
<PAGE>
MARCH 1998 - YTD
SEGMENT INFORMATION
<TABLE>
<CAPTION>
SALES EBIT ASSETS
----- ---- ------
<S> <C> <C> <C>
Construction Materials $ 69,423 $ 8,111 $188,546
Industrial Components 139,425 18,221 321,274
Automotive Components 68,385 6,033 192,139
All Other 85,857 6,933 234,331
Corporate/Eliminations (3,357) 21,146
-------- ------- --------
$363,090 $35,942 $957,436
======== ======= ========
</TABLE>
Reconciliation of earnings before interest and income taxes to earnings before
income taxes:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Earnings before interest and income $40,117 $35,942
taxes
Investment Income 690 458
Interest expense 5,347 5,029
------- -------
Earnings before income taxes $35,460 $31,371
======= =======
</TABLE>
*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 4 in the Notes to Condensed Consolidated Financial
Statements.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Carlisle Companies Incorporated achieved record first quarter sales of $390.0
million and net earnings of $21.8 million or $0.71 a share, diluted. First
quarter sales increased 7% over 1998 sales of $363.1 million, reflecting strong
sales in automotive components and market gains in the industrial components
segment.
Net earnings for the first quarter are up 15% over 1998 earnings of $19.0
million, or $0.62 a share. Included in this quarter's earnings is a pretax gain
of approximately $16.6 million, due to the reduction of the Company's interest
in its perishable cargo business, in both the leasing operations and the
container manufacturing operations. Excluding this gain, the impact of this
divestiture on anticipated 1999 net earnings, is a reduction of approximately
$.06 a share. 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 a $15.9 million pretax charge to earnings for the write-off of
certain machinery and equipment and intangible assets. These charges will result
in reduced depreciation and amortization, generating an earnings gain of
approximately $1.6 million, or $.05 per share, that will be recognized ratably
over the remainder of 1999. These two items resulted in a net increase to first
quarter earnings per
<PAGE>
share of $.01 a share. In addition, through the implementation of various tax
strategies, net earnings for the first quarter reflects a reduction in the
Company's effective tax rate from 39.5% to 38.5%. The positive impact to net
earnings resulting from this change is $0.3 million or $.01 a share. Net
earnings for the first quarter 1999, before the effect of the net gain,
impairment charges, and tax rate change, would be $21.0 million or $0.69 a
share, an 11% increase over 1998 earnings. The increase in earnings reflects the
increased level of sales and operational improvements versus first quarter last
year.
Construction Materials segment sales of $76.3 million are up 10% over 1998 sales
of $69.4 million. Domestic roofing sales remain strong and the Company's TPO and
FleeceBACK product lines have been well received into the market. The unusually
good first quarter results in 1998, due to favorable weather conditions,
overshadow the 1999 sales gains achieved by this segment. First quarter earnings
before interest and taxes ("EBIT") of $8.3 million are up 3% from $8.1 million
in 1998. First quarter 1999 EBIT reflects unrecovered raw material price
increases and a higher percentage of lower margin insulation sales versus first
quarter last year.
Industrial Components segment sales increased 4%, over 1998, to $145.1 million.
The increase is primarily due to expanded sales of tire and wheel assemblies.
Sales of the Company's cable assembly operation were above 1998, driven by two
acquisitions made during 1998. These sales gains were dampened by a major
customer's implementation of lean manufacturing methods and are expected to
return to normal levels in the second half of the year. The Company also
announced the 5-year extension of its supply contract with Boeing for the supply
of its patented Tufflite 2000, which will be used on all Next-Generation 737 and
757 single-aisle airplanes. This segment's industrial friction and off-highway
brake businesses have been negatively impacted by the slowdown in the
agriculture and mining industries. Segment EBIT of $20.4 million increased 12%
over 1998 EBIT of $18.2 million. This increase primarily reflects the sales
changes in each of this segment's businesses, as well as lower raw material
costs and operational efficiencies achieved by the tire and wheel operations. A
changing product mix and new product introductions negatively impacted the
Company's off-highway brake operations. Increased EBIT in the cable assembly
operations were slightly offset by lower aerospace sales volumes for the
quarter. In January of 1999, the tire and wheel operation completed the
acquisition of Global Manufacturers Corporation, a leading manufacturer of
stamped wheel components, supplying the aftermarket, and Acro Coat, Inc., an
affiliated powder coating business.
Automotive Components segment sales increased 20% over 1998 to $81.9 million,
reflecting robust demand at all OEMs, and the continued ramp-up of programs that
were delayed due to the GM strike in the summer of 1998. This segment reported
EBIT of $6.6 million, an increase of 10% over first quarter 1998. The aggressive
build levels and rapid ramp-up of various programs, which have required the
Company to adjust labor and production requirements, resulted in inefficiencies,
which have negatively impacted EBIT.
Sales in the General Industry (All Other) category of $86.7 million increased
slightly over first quarter 1998 sales. Sales gains at the Company's stainless
processing equipment, specialty trailer and foodservice
<PAGE>
operations offset lower volumes at the container manufacturing operations, due
to the planned shutdown. EBIT of $7.5 million is up 7% over 1998, reflecting
operational improvements in the processing equipment and foodservice businesses.
Working capital of $249.7 million at March 31, 1999, compared to $223.2 million
at December 31, 1998 and $152.6 million at March 31, 1998. The increase is due
to debt reductions, net of cash, as well as the seasonal buildup of receivables
and inventory.
Backlog of $236.5 million at March 31, 1999 is up 18% over March 31,1998,
excluding the one-time contract at the container manufacturing operations,
reflecting stronger positions at all of the Company's major operations.
During the last several years, and in the normal course of business, Carlisle
has replaced a substantial portion of its older computer software 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
consultants) of (i) assessment, (ii) remediation, and (iii) authentication. At
this time, the Company has substantially completed the assessment phase and is
pursuing appropriate remedial action for the systems determined to be
noncompliant. The authentication phase includes 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.
Carlisle also has a formal communication program 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).
Carlisle has completed the remediation phase of its program throughout most of
its operations, with the remaining operations expected to be completed by
mid-1999, and 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.
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, 1999 and for the three
months ended March 31, 1999.
<PAGE>
(b) Report on Form 8-K:
On February 11, 1999, the Company filed with the Commission a Current Report on
Form 8-K dated January 28, 1999 describing the sale by the Company of a 51%
membership interest in Container Leasing International, LLC to MAC Reefers, Inc.
<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 10, 1999 By /s/ JOHN S. BARSANTI
----------------------------
John S. Barsanti
Vice President,
and Chief Financial Officer
<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>
3 Months
Ended Year Ended December 31,
-------- ----------------------------
3/31/99 1998 1996 1995 1994 1993
------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Fixed Charges 6.59 5.19 7.47 8.70 9.73 9.89
</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 three month
period ending March 31, 1999, and is qualified in its entirety by reference to
such Financial Statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 253,655
<ALLOWANCES> 5,031
<INVENTORY> 205,681
<CURRENT-ASSETS> 534,360
<PP&E> 642,138
<DEPRECIATION> 286,301
<TOTAL-ASSETS> 1,067,042
<CURRENT-LIABILITIES> 284,695
<BONDS> 281,823
0
0
<COMMON> 39,331
<OTHER-SE> 384,043
<TOTAL-LIABILITY-AND-EQUITY> 1,067,042
<SALES> 390,024
<TOTAL-REVENUES> 390,024
<CGS> 305,401
<TOTAL-COSTS> 352,271
<OTHER-EXPENSES> 2,364
<LOSS-PROVISION> 249
<INTEREST-EXPENSE> 4,657
<INCOME-PRETAX> 35,460
<INCOME-TAX> 13,652
<INCOME-CONTINUING> 21,808
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,808
<EPS-PRIMARY> .72
<EPS-DILUTED> .71
</TABLE>
