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 SEPTEMBER 30, 2000
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 November 1, 2000 30,255,302
<PAGE>
PART I. FINANCIAL INFORMATION
Carlisle Companies Incorporated and Subsidiaries
Condensed Consolidated Statements of Earnings
Three Months and Nine Months ended September 30, 2000 and 1999
(Dollars in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
September 30, September 30,
2000 1999 2000 1999
----------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Net sales $444,367 $400,855 $1,357,816 $1,216,692
Cost and expenses:
Cost of goods sold 348,566 310,928 1,056,988 944,040
Selling and administrative expenses 42,857 42,516 138,306 129,709
Research and development expenses 3,878 3,908 12,045 11,886
(Gain) on divestiture of business
($16.6m), net of other
charges ($15.9m) -- -- -- (685)
Other (income) & expense (1,540) (1,513) (3,446) (3,694)
--------- ---------- ----------- -----------
Earnings before interest &
income taxes 50,606 45,016 153,923 135,436
Interest expense, net 6,418 4,893 18,585 14,328
--------- ---------- ------------ -----------
Earnings before income taxes 44,188 40,123 135,338 121,108
Income taxes 15,978 15,447 49,729 46,626
--------- ---------- ------------ -----------
Net earnings $ 28,210 $ 24,676 $ 85,609 $ 74,482
========= ========== ============ ===========
Average shares outstanding
(000's)-basic 30,255 30,178 30,234 30,180
Basic earnings per share $ 0.93 $ 0.82 $ 2.83 $ 2.47
----------- ---------- ------------ -----------
Average shares outstanding
(000's)-diluted 30,611 30,616 30,599 30,636
Diluted earnings per share $ 0.92 $ 0.81 $ 2.80 $ 2.43
----------- ---------- ------------ -----------
Dividends declared and paid per share $ 0.20 $ 0.18 $ 0.56 $ 0.50
----------- ---------- ------------ -----------
</TABLE>
See accompanying notes to interim financial statements.
Page 2 of 11
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Carlisle Companies Incorporated and Subsidiaries
Condensed Consolidated Balance Sheets
September 30, 2000 and December 31, 1999
(Dollars in thousands, except share data)
September 30, Dec. 31,
2000 1999
------------ -----------
Assets (unaudited)
Current assets
Cash and cash equivalents $ 29,513 $ 10,417
Receivables 268,500 245,120
Inventories (Note 2) 262,862 219,270
Deferred income taxes 33,527 32,108
Prepaid expenses and other 42,570 34,123
----------- -----------
Total current assets 636,972 541,038
----------- -----------
Property, plant and equipment, net 405,866 349,451
----------- -----------
Other assets
Patents, goodwill and other intangibles 247,974 157,967
Investments and advances to affiliates 60,190 14,321
Receivables and other assets 20,506 17,885
----------- -----------
Total other assets 328,670 190,173
----------- -----------
$ 1,371,508 $ 1,080,662
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities
Short-term debt, including current maturities $ 227,472 $ 1,989
Accounts payable 115,410 106,283
Accrued expenses 130,770 132,106
----------- -----------
Total current liabilities 473,652 240,378
----------- -----------
Long-term liabilities
Long-term debt 282,216 281,744
Product warranties 72,394 79,858
Other liabilities 3,033 549
----------- -----------
Total long-term liabilities 357,643 362,151
----------- -----------
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 7,707 5,571
Cumulative translation adjustments (6,012) (1,658)
Retained earnings 614,074 545,404
Cost of shares in treasury -
9,075,322 shares in 2000
and 9,153,006 shares in 1999 (114,887) (110,515)
----------- -----------
Total shareholders' equity 540,213 478,133
----------- -----------
$ 1,371,508 $ 1,080,662
=========== ===========
See accompanying notes to interim financial statements.
Page 3 of 11
<PAGE>
Carlisle Companies Incorporated and Subsidiaries
Condensed Statements of Consolidated Cash Flows
Nine Months ended September 30, 2000 and 1999
(Dollars in thousands)
(unaudited)
September 30, September 30,
2000 1999
------------ ------------
Operating activities
Net earnings $ 85,609 $ 74,482
Reconciliation of net earnings to cash flows:
Depreciation 38,068 32,191
Amortization 7,942 5,223
(Gain)/Loss on sales of property, equipment
and business -- (685)
Changes in assets and liabilities, excluding
effects of acquisitions and divestitures:
Current and long-term receivables (12,758) (35,871)
Inventories (22,966) (6,111)
Accounts payable and accrued expenses (22,079) 663
Prepaid, deferred and current income
taxes 6,172 17,632
Long-term liabilities (7,989) 1,309
Other (5,006) 745
--------- ---------
Net cash provided by operating activities 66,993 89,578
--------- ---------
Investing activities
Capital expenditures (49,692) (33,383)
Acquisitions, net of cash (205,993) (28,228)
Proceeds from sale of property,
equipment and business 53 16,328
Other 3,692 127
--------- ---------
Net cash used in investing activities (251,940) (45,156)
--------- ---------
Financing activities
Net change in short-term debt 225,483 (28,365)
Proceeds from long-term debt -- 10,000
Reductions of long-term debt (2,265) (1,744)
Dividends (16,939) (15,089)
Purchases of treasury shares (2,236) (2,386)
--------- ---------
Net cash provided by (used in)
financing activities 204,043 (37,584)
--------- ---------
Change in cash and cash equivalents 19,096 6,838
Cash and cash equivalents
Beginning of period 10,417 3,883
--------- ---------
End of period $ 29,513 $ 10,721
--------- ---------
See accompanying notes to interim financial statements.
Page 4 of 11
<PAGE>
Notes to Condensed Consolidated Financial Statements
Nine Months Ended September 30, 2000 and 1999
(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 and nine months ended September 30, 2000 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 1999 Annual Report to
Stockholders and 1999 Form 10-K. Certain reclassifications have been
made to prior year information in order to conform to 2000
presentation.
(2) The components of inventories are as follows:
September 30, Dec. 31,
2000 1999
------ ------
(000)'s
First-in, first-out (FIFO) costs:
Finished goods $157,073 $132,719
Work in process 32,905 27,052
Raw materials 83,795 70,735
-------- --------
$273,773 $230,506
Excess of FIFO cost over Last-in,
First-out (LIFO) inventory value ( 10,911) ( 11,236)
-------- --------
LIFO inventory value $262,862 $219,270
======== ========
(3) On June 30, 2000, the Company replaced its $125 million revolving credit
facility, expiring April 30, 2001, with a $150 million three-year and a
$200 million 364-day revolving credit facility. The Company has used its
short term borrowings to finance acquisitions completed during the year.
(4) The Company has completed several acquisitions during the year 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.
(5) Diluted earnings per share of common stock are based on the weighted
average number of shares outstanding of 30,611,495 for the three months
ended September 30, 2000 and 30,598,500 for the nine months ended
September 30, 2000 assuming the exercise of dilutive stock options.
(6) Pending Accounting Standards - In December 1999, the Securities an
Exchange Commission issued Staff Accounting Bulletin No. 101("SAB 101"),
"Revenue Recognition in Financial
Page 5 of 11
<PAGE>
Statements," which is required to be adopted by the Company in the
quarter ended December 31, 2000. SAB 101 clarifies certain conditions
regarding the culmination of an earnings process and customer acceptance
requirements in order to recognize revenue. The adoption of this new
requirement is not expected to have a material impact on the financial
position or results of operations of the Company.
In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of
SFAS No. 133", which deferred SFAS No. 133's effective date to fiscal
quarters beginning after June 15, 2000. 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. The adoption of this new requirement is not
expected to have a material impact on the financial position or results
of operations of the Company.
(7) 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 General Industry (All Other) segment.
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 appropriate. 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, net of other charges" on the face of the
Company's Condensed Consolidated Statements of Earnings.
(8) Financial information for operations by reportable business segment is
included in the following summary:
September 2000 - YTD
Segment Information Table
In thousands Sales EBIT Assets
----- ---- ------
Construction Materials $ 307,888 $ 46,131 $ 296,280
Page 6 of 11
<PAGE>
Industrial Components 499,722 68,745 490,849
Automotive Components 233,469 18,007 166,727
General Industry (All
other) 316,737 31,298 338,154
Corporate/Eliminations -- (10,258) 79,498
---------- -------- ----------
$1,357,816 $153,923 $1,371,508
---------- -------- ----------
September 1999 - YTD
Segment Information Table
In thousands Sales EBIT Assets
----- ---- ------
Construction Materials $ 301,366 $ 44,749 $ 242,242
Industrial Components 408,974 52,694 332,503
Automotive Components 237,148 16,070 213,636
General Industry (All
other) 269,204 30,301 237,850
Corporate/Eliminations -- *(8,378) 47,282
---------- -------- ----------
$1,216,692 $135,436 $1,073,513
---------- -------- ----------
*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 6 in the Notes to
Condensed Consolidated Financial Statements.
Page 7 of 11
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Carlisle Companies Incorporated ("Carlisle" or the "Company") reported record
third quarter sales of $444 million and record third quarter net earnings of
$28.2 million, or $0.92 per share (diluted). The Industrial Components segment
was the primary contributor to the sales and earnings improvement.
For the nine-months ended September 30, 2000, sales of $1.4 billion were up 12%
over 1999 year-to-date sales of $1.2 billion, and net earnings of $85.6 million
were up 15% over the same period last year. Acquisitions made in the Industrial
Components and General Industry segments were the primary contributors to the
sales and net earnings gains on a year-to-date basis. In addition, the Company
continued to effectively implement cost reduction and productivity improvements
throughout its operations.
Construction Materials sales of $120 million, for the third quarter 2000, were
up 5% over 1999 third quarter sales of $114 million. Increased sales of TPO
membrane and insulation products were the primary contributors to the sales
increase. Earnings before interest and taxes ("EBIT") for the quarter of $21.1
million were up 7% over the third quarter last year. In July, the Company
announced that it purchased a 25% equity interest in Icopal a/s, a leading
European roofing systems company with sales exceeding $600 million. Earnings
from the investment in Icopal are accounted for using the equity method. The
Icopal earnings contribution is shown in the Construction Materials segment's
earnings results, but sales, under equity accounting rules, were not impacted.
Icopal's contribution and continued favorable warranty experience accounted for
40% and 60% respectively, of the earnings improvement in the segment, offsetting
the negative effect of rising material costs in a very competitive roofing
market.
Industrial Components reported robust growth in both sales and earnings. Sales
of $153 million for the third quarter outpaced 1999 sales by 27%, while EBIT of
$18.0 million exceeded last year by 46%. Carlisle Tire & Wheel fueled the sales
and earnings growth of this segment through the acquisitions of the consumer
tire and wheel business of Titan International, Inc. acquired in April of this
year, and the CRAGAR steel wheel product line, which was acquired in December of
1999. Tensolite reported improved results over the third quarter of 1999 through
its expansion into new cable assembly markets as well as increased aerospace
cable demand. In July, the Company completed the acquisition of UniTrek Company,
a manufacturer of radio frequency and microwave cable assemblies, and wire
harnesses supplied to customers in various wireless markets. UniTrek will
further expand the Company's product offerings in this growing market. Reduced
production levels, experienced at many of the heavy-duty truck manufacturers,
have negatively impacted sales and earnings of the Company's heavy-duty brake
lining business. Strong aftermarket demand, favorable product mix and the
successful implementation of operating efficiencies at Carlisle Industrial Brake
& Friction added to this segment's sales and earnings growth.
Automotive Components reported a 15% increase in EBIT on slightly lower sales
for the quarter ended September 30, 2000, compared to third quarter 1999. Sales
in this segment have remained strong throughout the year, after taking into
consideration the deconsolidation of its small U.K. joint venture and the
cessation of its tool manufacturing operations, which together contributed
Page 8 of 11
<PAGE>
$14.5 million to sales in 1999. The Company's focus on operational efficiencies
has resulted in improvements to operating profits and this segment's return on
assets.
General Industry sales of $103 million were up 8% over 1999 third quarter sales
of $95 million. Sales gains at Carlisle Systems & Equipment and Carlisle
FoodService were supported by acquisitions made during the year. EBIT for this
segment of $11.6 million for the third quarter 2000, was 6% below the same
period last year. During the quarter FoodService announced price increases to
cover cost increases already experienced, which will not have an effect until
the fourth quarter. Additionally, rising fuel costs, exacerbated by higher
interest rates and regulatory legislation, have negatively impacted demand and
margins at Carlisle Transportation Products.
Acquisitions
During the third quarter, Carlisle completed four acquisitions: UniTrek, a
manufacturer of radio frequency and microwave cable assemblies and complex wire
harnesses, supplying OEM's in the wireless communications, electronic test and
measurement, and defense electronics markets; a 25% equity investment in Icopal
a/s, Europe's leading commercial roofing systems company; Red River
Manufacturing Inc., a specialty trailer manufacturer; and Zimmer Corporation,
which will broaden Carlisle's global offerings of cheese equipment and whey
processing systems.
Cash Flows
Cash generated from operations for the third quarter was $11 million. Increased
net income, amortization and depreciation were partially offset by higher
working capital needs, as the Company took advantage of quarter-end discounts
and increased inventory levels for seasonal demands. For the nine months ended
September 30, 2000, cash generated from operations was $67 million, compared to
$90 million in 1999 for the same period. The 1999 nine-month cash flows reflect
the impact of the proceeds, net of a $39 million tax payment, from the
divestiture of the Perishable Cargo business, completed in the first quarter of
1999. Excluding this tax payment, operating cash flows are up $16 million year
over year. On June 30 of 2000, the Company secured financing under a $350
million revolving credit facility. Short-term borrowings of $227 million at
September 30, 2000 were used to fund acquisitions completed during the year.
Backlog
The consolidated backlog of $264 million at September 30, 2000 rose 21% over the
September 30, 1999 backlog of $218 million. Improved backlog positions at
Carlisle Tire & Wheel, Tensolite and Carlisle Industrial Brake & Friction were
driven by acquisitions made during the year and increased demand in these
markets.
Page 9 of 11
<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 September 30, 2000 and for the
nine months ended September 30, 2000.
(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 10 of 11
<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 November 10, 2000 By: /s/Dennis J. Hall
---------------------- -------------------------------------
Dennis J. Hall
Vice Chairman
Page 11 of 11
