Back to GetFilings.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended DECEMBER 31, 1993
----------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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 13202-1258
- --------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (315) 474-2500
-----------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
COMMON STOCK, $1 PAR VALUE NEW YORK STOCK EXCHANGE
- -------------------------- -----------------------
PREFERRED STOCK PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
- ------------------------------- -----------------------
Indicate by check mark whether the 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
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Aggregate market value of voting common stock held
by non-affiliates at February 23, 1994 $454,621,413
Shares of common stock outstanding at February 23, 1994 15,267,965
Portions of the definitive Proxy Statement for the Annual Meeting of
Shareholders on April 20, 1994 are incorporated by reference in Part III.
1 of 41
PART I
ITEM 1. BUSINESS.
Carlisle Companies Incorporated was incorporated in 1986 in Delaware as a
holding company for Carlisle Corporation, whose operations began in 1917, and
its wholly-owned subsidiaries. Unless the context of this report otherwise
requires, the words "Company" and "registrant" refer to Carlisle Companies
Incorporated and its wholly-owned subsidiaries and any divisions or
subsidiaries they may have. The Company's diversified manufacturing
operations are conducted through its subsidiaries.
The Company manufactures and distributes a wide variety of products for
industry, primarily of rubber, plastics and metal content. Its products
include both components used by other companies in the manufacture of capital
and consumer goods and those for the aftermarket. The Company is the leading
producer, or among the leading producers, of many of its lines.
Sales of the Company's products are reported by distribution to the following
three industry segments: Construction Materials, Transportation Products and
General Industry. The principal products produced and services rendered in
each of the industry segments include:
Construction Materials--elastomeric membranes, metal roofing components,
adhesives and related products for roofing systems and water barrier
applications and outdoor recreation tiles;
Transportation Products--custom manufactured rubber and plastic products for
the automotive market, brake linings and pads for heavy duty trucks, trailers
and off-road vehicles, specialty friction products, brakes and actuation
systems for construction equipment and insulated wire products;
General Industry--molded plastic foodservice products, small pneumatic tires,
stamped and roll-formed wheels, custom molded plastic components, system
integration products and insulated wire products.
The amount of total revenue contributed by the products or services in each
industry segment for each of the last three fiscal years is as follows (in
millions):
1993 1992 1991
---- ---- ----
Construction Materials $ 247.6 $ 198.7 $ 197.6
Transportation Products 177.0 172.9 169.2
General Industry 186.7 156.5 134.0
-------- -------- --------
Total $ 611.3 $ 528.1 $ 500.8
In each industry segment, the Company's products are generally distributed
either by Company-employed field sales personnel or manufacturers'
representatives. In a few instances distribution is through dealers and
independent distributors. Inasmuch as some of
2
the Company's customers are other manufacturers of relatively significant
size, marketing methods in certain operations are designed to accommodate the
requirements of a small group of high-volume producer-customers.
In each industry segment, satisfactory supplies of raw materials and adequate
sources of energy essential for operation of the Company's businesses have
generally been available to date. Uncertain economic conditions, however,
could cause shortages of some basic materials, particularly those which are
petroleum derivatives (plastic resins, synthetic rubber, etc.) and used in
the construction materials, and transportation products and general industry
segments. The Company believes, though, that energy sources are secure and
sufficient quantities of raw materials can be obtained through normal sources
to avoid interruption of production in 1994.
Patents, trademarks and licenses held by the Company generally are not
considered significant to the successful conduct of most of the segments'
businesses.
In each industry segment, the Company is engaged in businesses, and its
products serve markets, which generally are highly competitive. Product
lines serving most markets tend to be price competitive; all lines compete
not only on pricing, but also on service and product performance. No
industry segment is dependent upon a single customer, or a few customers, the
loss of any one or more of which would have a material adverse effect on the
segment.
Order Backlog, which is believed to be firm, was $86.4 million at December
31, 1993 and $91.5 million at December 31, 1992. Stronger backlog positions
at the end of 1993 were evident in the Company's automotive rubber and
plastics markets and for operations within the Construction Materials
segment. Strong backlog levels continued to be recorded at the Company's
specialty tires and wheels and aircraft wire and cable operations at the end
of 1993 though below levels of a year ago as manufacturing capacity and
productivity have increased.
Company sponsored research and development expenses increased to $11.2
million in 1993 from $10.7 million in 1992 and $10.4 million in 1991.
Increased research and development activities within the Company's automotive
rubber and plastics operations, along with expenses incurred by new
operations combined for the higher expense levels in 1993. All other major
operations maintained a similar level of research and development projects
and costs in 1993 and 1992.
The average number of persons employed by the Company during 1993 was 4,440.
The businesses of the Construction Materials and Transportation Products
industry segments are not seasonal in nature. Within the General Industry
segment, distribution of lawn and garden products generally reach peak sales
volume during the first two quarters of the year.
3
In 1993, the Company acquired most of the assets of ECI Building Components,
Inc., a metal roofing and panel manufacturer, and now operates a business with
the assets under the name Carlisle Engineered Metals Incorporated. The Company
also acquired the assets of Goodyear Tire & Rubber Company's Roofing Systems
Division, and now operates a non-residential roofing systems business under
the name Versico Incorporated. During 1993, the Company entered the market
for services to the international perishable cargo transportation industry by
establishing a partnership with Marubeni Corporation, a large Japanese
trading firm, to provide specialty equipment leasing services to shippers of
perishable cargo. Carlisle Container Manufacturing Corporation, formed in
1993, will manufacture insulated containers for transportation of perishable
cargo.
In each industry segment, the Company's compliance with Federal, State and
local provisions which have been enacted or adopted regulating the discharge
of materials into the environment, or otherwise relating to the protection of
the environment is not anticipated to have a material effect upon the capital
expenditures, earnings or the competitive position of the Company or its
divisions and subsidiaries.
Information on the Company's revenues, operating profit or loss and
identifiable assets by industry segments for the last three fiscal years, the
nature and effect of the restatement of such information as a result of
changes made in the way the Company's products or services are grouped into
industry segments and the principal products in each segment is as follows:
(In thousands) 1993 1992 1991
------- ------- -------
Sales to Unaffiliated Customers(1)
Construction Materials 247,573 198,737 197,627
Transportation Products 177,005 172,849 169,158
General Industry 186,692 156,466 133,986
Operating Profit or Loss
Construction Materials 25,496 23,715 23,014
Transportation Products 11,622 11,603 8,015
General Industry 18,904 12,685 8,087
Restructuring Charge(2) - - (18,700)
Interest, net (1,152) (528) (1,495)
Corporate(3) (7,958) (7,755) (8,360)
Identifiable Assets
Construction Materials 139,990 99,034 102,532
Transportation Products 109,523 97,196 103,381
General Industry 90,534 78,116 87,164
Corporate(4) 80,316 108,904 31,643
- -------------
1. Intersegment sales or transfers are not material.
2. In 1991, the Company accounted for certain of its operations as
discontinued operations and also recorded a restructuring charge for
continuing operations. The restructuring charge allocable to operating
expenses would reduce Transportation
4
and General Industry segment earnings in 1991 before income tax by $1.8
million and $12.8 million, respectively.
3. Includes general corporate and idle property expenses.
4. Consists primarily of cash, leasing company assets and excess
facilities.
ITEM 2. PROPERTIES
The following table sets forth certain information with respect to the
principal properties and plants of the Company as of December 31, 1993:
_________________________________________________________________________________________________________________________________
O - OFFICE APPROXIMATE
PRINCIPAL PRODUCT M - MANUFACTURING OWNED FLOOR SPACE
OR ACTIVITY W - WAREHOUSING LOCATION OR LEASED (SQ. FT.) ACREAGE
_________________________________________________________________________________________________________________________________
Corporate headquarters O Syracuse, NY Leased to 2005(1) 15,500 -
_________________________________________________________________________________________________________________________________
High-performance O,M,W Burnsville, MN Owned 27,400 5
peripheral controllers
and interfaces, cassettes,
tape drives and hierarchical
storage management
_________________________________________________________________________________________________________________________________
Elastomeric membranes, O,M,W Carlisle, PA Owned 388,000 77
metal roofing components O,M,W Greenville, IL Owned 165,400 35
and related roofing O,M Stafford, TX Owned 108,500 8
products O,M Jemison, AL Owned 40,900 8
O,M Lodi, CA Leased to 1995 41,800 -
O,M Tualatin, OR Leased to 1995 57,700 -
O,M Stafford, TX Leased to 1995 56,840 -
O,M,W Wylie, TX Owned 44,000 6
O,W Brussels, Belgium Leased to 1996(1) 11,000 -
O Akron, OH Leased to 1996(1) 9,600 -
------- ---
764,400 134
_________________________________________________________________________________________________________________________________
Computer hardware systems
integration and data O,M,W Englewood, CO Leased to 1996 25,000 -
communications equipment
_________________________________________________________________________________________________________________________________
Small pneumatic tires O,M,W Carlisle, PA Owned 483,800 29
and tubes; stamped and O,M,W Aiken, SC Owned 220,500 23
roll-formed wheels ------- --
704,300 52
_________________________________________________________________________________________________________________________________
Molded plastics products O,M,W Oklahoma City, OK Owned 147,000 8
for commercial food O,M,W Lake City, PA Owned 103,000 30
service O,M,W Fredonia, WI Owned 192,500 12
O Northbrook, IL Leased to 1997(1) 7,300 -
------- --
449,800 50
_________________________________________________________________________________________________________________________________
Custom-manufactured O,M,W Middlefield, OH Owned 200,600 28
rubber and plastics O,M,W Crestline, OH Owned 173,000 40
products O,M,W Canton, OH Owned 87,800 17
O,M,W Trenton, SC Owned 67,700 10
O Chardon, OH Leased to 1998(1) 7,500 -
------- --
536,600 95
_________________________________________________________________________________________________________________________________
Brake lining for trucks O,M,W Ridgway, PA Owned 117,350 15
and trailers; brakes and O,M,W Fredericksburg, VA Owned 90,000 30
actuation systems; O,M,W Logansport, IN Owned 107,000 50
friction products O,M,W Bloomington, IN Owned 250,000 21
O,M,W Zevenaar, Holland Owned 26,000 1
O,M,W Sorocaba, Brazil Owned 31,100 11
------- ---
621,450 128
_________________________________________________________________________________________________________________________________
High- and medium- O,M,W St. Augustine, FL Owned 166,750 17
temperature insulated
wire and cable
_________________________________________________________________________________________________________________________________
Products for passive O,M,W Graham, TX Leased to 1994(1) 20,600 -
components in
electronics
5
_________________________________________________________________________________________________________________________________
O - OFFICE APPROXIMATE
PRINCIPAL PRODUCT M - MANUFACTURING OWNED FLOOR SPACE
OR ACTIVITY W - WAREHOUSING LOCATION OR LEASED (SQ. FT.) ACREAGE
_________________________________________________________________________________________________________________________________
Refrigerated marine O,M Green Cove Springs, Leased to 2003(1) 83,000 -
containers FL
_________________________________________________________________________________________________________________________________
3,574,140 481
(1) Lease provides for renewal
Total plant space of 3,574,140 sq. ft. is used for
Owned Leased Total
----- ------ -----
Office 311,200 79,800 391,000
Manufacturing 1,993,400 225,540 2,218,940
Warehousing 933,700 30,500 964,200
--------- ------ ---------
3,238,300 335,840 3,574,140
========= ======= =========
As of December 31, 1993, the Company owned three additional facilities. One
is related to a wire and cable business sold in early 1988, one is a wire and
cable operation relocated in 1989, and the other is related to a commercial
foodservice business relocated in 1992. These facilities, totaling
approximately 500,000 sq. ft., are being held for sale. An additional
523,000 sq. ft. is leased by the Company, under various agreements,
principally for warehousing and distribution. All of the manufacturing and
most of the office and warehousing space is of masonry and steel construction
and most are equipped with automatic sprinkler systems. Approximately one-
third of the owned office, manufacturing and warehousing space has been
constructed within the last twenty years; the remaining buildings are from
twenty to seventy years old and have been maintained in good condition.
ITEM 3. LEGAL PROCEEDINGS
As of December 31, 1993, other than ordinary routine litigation incidental to
the business, which is being handled in the ordinary course of business,
neither the Company nor any of its subsidiaries is a party to, nor are any of
their properties subject to any material pending legal proceedings, nor are
any such proceedings known to be contemplated by governmental authorities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
6
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS.
The Company's common stock is traded on the New York Stock Exchange. As of
December 31, 1993, there were 2,186 shareholders of record.
Quarterly cash dividends paid and the high and low prices of the Company's
stock on the New York Stock Exchange in 1993 and 1992 were as follows:
First Second Third Fourth
----- ------ ----- ------
1993
----
Dividends per share $ .17 $ .17 $ .18 $ .18
Stock Price(1)
High $27.75 $29.88 $34.25 $34.50
Low $23.13 $26.38 $28.13 $28.50
1992
----
Dividends per share $ .16 $ .16 $ .17 $ .17
Stock Price
High $20.75 $22.88 $22.50 $23.75
Low $18.50 $17.63 $19.38 $20.25
(1) Reflects two-for-one stock split on June 1, 1993.
ITEM 6. SELECTED FINANCIAL DATA.
(In thousands except
per share data) 1993 1992 1991(1) 1990 1989
------ ------ ------ ----- -----
1990 1989
Summary Of Operations
- ---------------------
Net Sales $611,270 528,052 500,771 498,473 436,384
Net earnings from
continuing operations $ 28,378 24,228 6,554 24,408(3) 23,897
Per share $ 1.83 1.58 0.43 1.54(3) 1.48
Net earnings (loss) from
discontinued operations $ - 471 (14,989) (2,650) 3,096(4)
Per share(2) $ - 0.03 (0.98) (0.17) 0.19(4)
Net earnings (loss) $ 28,378 24,699 (8,435) 21,758 26,993
Per share(2) $ 1.83 1.61 (0.55) 1.37 1.67
Financial Position
- ------------------
Total assets $420,363 383,250 324,720 300,858 266,507
Long-term debt $ 59,548 69,098 48,623 44,501 17,417
Other Data
- ----------
Dividends paid $ 10,705 10,076 9,597 9,675 9,511
Per share(2) $ 0.70 0.66 0.63 0.61 0.59
7
(1) In 1991, the operational restructuring of the Company resulted in
certain of its business units being accounted for as discontinued operations.
The information presented above reflects the activities and balances of
continuing operations, unless otherwise noted.
(2) All share and per share amounts have been restated to reflect a two-for-
one stock split on June 1, 1993.
(3) In 1992, SFAS No. 109 "Accounting for Income Taxes" was adopted
retroactively in 1990. As a result, an additional charge of $1.0 million,
($0.06) a share, was recorded against net earnings from continuing operations
in 1990, and shareholders' equity and total assets were restated in 1991 and
1990.
(4) Includes a gain of $5.9 million, $0.37 a share, on the sale of Graham
Japan Limited, a joint venture.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The Company's sales increased 16% and net earnings from continuing operations
improved 17% in 1993 compared to 1992. Sales in 1993 were $611.3 million
versus sales in 1992 of $528.1 million. Net earnings from continuing
operations improved to $28.4 million, $1.83 a share, from $24.2 million,
$1.58 a share in 1992. In 1992, discontinued operations contributed an
additional $0.5 million, $0.03 a share, to net earnings resulting in total
earnings of $24.7 million, $1.61 a share.
In the second quarter of 1993, prompted by strong growth in the price of the
Company's shares, the Company executed a two-for-one stock split. All share
information has been adjusted in this report to reflect the split.
The Company completed two acquisitions in 1993 to expand and
strengthen its operations within its construction materials segment.
Acquired in January 1993 were the assets of ECI Building Components, Inc.
(now operating as Carlisle Engineered Metals Incorporated), an architectural
metal roofing and panel manufacturer. In March 1993, the Company purchased
the Roofing Systems division of Goodyear Tire & Rubber Company (now operating
as Versico Incorporated), broadening its coverage of the non-residential EPDM
roofing market.
Sales in 1993 increased over 1992's levels as the result of record
performances by operations within the Company's General Industry segment and
the performance of the acquisitions made within the Construction Materials
segment. A summary of sales by operating segment is presented below.
8
1993 1992 1991
_____ _____ _____
Construction Materials $247.6 $198.7 $197.6
Transportation Products $177.0 $172.9 $169.2
General Industry $186.7 $156.5 $134.0
______ ______ ______
Total $611.3 $528.1 $500.8
Construction Materials segment sales in 1993 of $247.6 million increased by
$48.9 million when compared to 1992, as the acquisitions made in early 1993
recorded revenues of $43.3 million. Non-residential roofing demand was
effectively flat in 1993 versus 1992's depressed levels, while pricing levels
declined slightly. Continued market share improvements, including increased
international shipments, contributed to 1993's record segment sales levels.
The segment's sales comparisons were also impacted in 1993 by the decision to
discontinue the sales of plenum cable. The elimination of this product line
caused a $4.4 million reduction in 1993's sales compared to the prior year.
Transportation Products segment sales improved 2% to $177.0 million in 1993
compared to 1992. Aircraft wire product sales in 1993 improved $4.2 million
over 1992's levels as the Company's Tufflite wire products gained market
acceptance during the year. Demand for the Company's braking system products
declined while heavy-duty friction products sold to the original equipment
tractor/trailer market were up over 25% in a strong market in 1993. Heavy
duty friction aftermarket revenues improved 2% compared to 1992. Custom rubber
and plastic sales to automobile equipment manufacturers finished strongly in
the latter part of 1993 as automobile and truck production surpassed 1992
levels. This stronger market brought sales volume increases which were
partially offset by lower prices throughout 1993 to net a 3% sales increase
over 1992.
General Industry segment sales were up 19% in 1993 over 1992 as the two
primary operations in the segment achieved record high results. In 1993, the
Company's specialty tires and wheels operations recorded a 22% sales increase
over 1992, after achieving a similar improvement in 1992 over 1991.
Increased sales from specialty tires and wheels operations were the result of
higher volumes from market share gains, an extended lawn and garden season in
1993, expanded product offerings and successful penetration into new markets.
The Company's foodservice plastics operations also achieved record sales
levels in 1993 as revenues increased 11% over 1992. Market share gains,
particularly in the Company's contract plastic molding operations, combined
with expanded foodservice product offerings to achieve the successful 1993
results. Other operations within the general industry segment, including
high speed data wire and cable and system integration products also improved
their market positions in 1993 to produce higher sales.
9
Net earnings from continuing operations improved 17% in 1993 over 1992 on the
strength of performances of operations within the Construction Materials and
General Industry segments. Net earnings from continuing operations in 1993
were $28.4 million, $1.83 a share, compared to $24.2 million, $1.58 a share,
in 1992. This compares to net earnings from continuing operations of $6.6
million, $0.43 a share, in 1991 after taking an $11.6 million after-tax
charge, $0.76 a share, for operational restructuring. In 1991, the Company
recorded losses associated with the operations and discontinuance of its
operations engaged in the production, sale and maintenance of computer tape
products and systems hardware. These operations were sold in 1992.
A summary of after-tax results for the last three years is presented below.
1993 1992 1991
---- ---- ----
Continuing Operations
---------------------
Net earnings before
restructuring charge $28.4 $24.2 $ 18.2
Per share $1.83 $1.58 $ 1.19
Restructuring charge -- -- $(11.6)
Per share -- -- $(0.76)
Net earnings $28.4 $24.2 $ 6.6
Per share $1.83 $1.58 $ 0.43
Discontinued Operations
-----------------------
Loss from operations -- -- $ (2.4)
Per share -- -- $(0.15)
Gain (loss) on discontinuance -- $ 0.5 $(12.6)
Per share -- $ 0.03 $(0.83)
Net earnings (loss) -- $ 0.5 $(15.0)
Per share -- $ 0.03 $(0.98)
Total net earnings (loss) $28.4 $ 24.7 $ (8.4)
Per share $1.83 $ 1.61 $(0.55)
Earnings by continuing operating segment, before income tax, interest,
restructuring charge and corporate expense, are summarized below.
1993 1992 1991
---- ---- ----
Construction Materials $25.5 $23.7 $23.0
Transportation Products $11.6 $11.6 $ 8.0
General Industry $18.9 $12.7 $ 8.1
---- ---- ----
Total $56.0 $48.0 $39.1
10
Earnings from the Construction Materials segment improved 8% in 1993 versus
1992. Contributing to the earnings improvement was a favorable product mix
and lower operating expenses within non-residential roofing systems operations.
Partially offsetting these gains were initial year operating expenses absorbed
in 1993 associated with the acquisition and establishment of Carlisle
Engineered Metals Incorporated. The Company's initial year entry into the
metal roofing market brought lower overall margins to this segment in 1993.
Transportation Products segment earnings in 1993 were flat compared to 1992.
Earnings improved significantly from aircraft wire operations on higher sales
and improved operational margins. Heavy duty friction operations earnings were
impacted by an unfavorable product mix, as a higher percentage of sales in 1993
originated from its lower margin original equipment business compared to a year
ago. Lower sales of braking system products in 1993, particularly in
international markets, also negatively impacted segment earnings compared to
1992. Earnings from sales of custom rubber and plastics products to the
automotive industry declined as the result of a full year impact of price
concessions in 1993, which partially impacted 1992. Lower overall
administrative expenses helped offset some of the effect of reduced prices in
this segment in 1993.
Operations within the General Industry segment recorded earnings in 1993 at a
level 49% higher than 1992. Earnings in this segment improved 57% in 1992 over
1991. The increased 1993 sales of specialty tires and wheels operations
produced a gain in earnings of 25%. Competitive pricing actions pushed margins
downward but lower expenses continued to have a favorable effect upon earnings.
Foodservice plastics operations improved earnings by 20% in 1993 versus 1992,
again primarily driven by higher revenues. Margin percentages were slightly
lower in 1993 as the result of the product mix of foodservice plastics products
sold. Administrative expenses in relation to foodservice plastics sales were
at lower levels in 1993 contributing to the improved earnings performance over
1992. High speed data wire and cable and system integration operations also
improved their profitability in 1993 on the strength of major cost reduction
efforts and higher sales levels.
Gross margins as a percent of sales were 25.9% in 1993, compared to 26.3% in
1992 and 26.0% in 1991. The reduction in gross margins as a percent of sales
in 1993 was caused by unfavorable product mixes and the inability to pass
through material cost increases in some markets. The economic conditions in
the first half of 1993 produced competitive pricing pressures, particularly
within the Transportation Products segment. A higher mix of sales in 1993 to
lower margin original equipment manufacturers in proportion to sales into the
aftermarket resulted in lower comparative margin ratios within the heavy-duty
friction operation. Improved overhead absorption from increased sales and
effective cost reduction and expense control programs in each operating segment
in 1993 combined to help offset the lower margin levels.
11
Selling and administrative expenses continued to decline as a percent of sales
to 16.1% in 1993, from 16.4% in 1992 and 17.2% in 1991. In the Construction
Materials segment, excluding 1993 acquisitions, expense levels were reduced by
approximately $1.0 million in 1993 compared to 1992. Higher expenses were
required, however, in the first year of operations of the segment's 1993
acquisitions, resulting in an unfavorable effect upon the Company's overall
expense ratios.
Transportation Products segment operations reduced selling and administrative
expenses by over $2.2 million in 1993 versus 1992. Higher sales levels and
expense containment programs in place at operations within the general industry
segment contributed to improved expense ratios for the segment.
Research and development expenses increased to $11.2 million in 1993 from $10.7
million in 1992 and $10.4 million in 1991. Increased research and development
activities within the Company's automotive rubber and plastics operations,
along with expenses incurred by new Company operations combined for the higher
expense levels in 1993. All other major operations maintained a similar level
of research and development projects and costs in 1993 and 1992.
Interest expense was $4.3 million in 1993 compared to $5.2 million in 1992 and
$4.4 million in 1991. Two actions taken in 1993 resulted in lowering interest
expense for the Company. The Company paid down $12.0 million of its 8% senior
notes in March 1993 and refinanced its $8.5 million revenue bond issue to an
adjustable rate bond in June 1993. The bond refinancing resulted in the
average interest rate paid on the bonds after the refinancing to be 2.6% versus
its previous 10.25% fixed rate.
Income taxes were computed for financial statement purposes at a rate of 39.5%
in 1993 compared to 39% in 1992 and 38% in 1991. The higher rate in 1993 is
primarily the result of the increase in the corporate federal tax rate
legislated in 1993. An analysis of the provision for income taxes for each of
the years is included in the Notes to Consolidated Financial Statements.
Order backlog was $86.4 million at December 31, 1993 and $91.5 million at
December 31, 1992. Stronger backlog positions at the end of 1993 were evident
in the Company's automotive rubber and plastics markets and for operations
within the Construction Materials segment. Strong backlog levels continued to
be recorded at the Company's specialty tires and wheels and aircraft wire and
cable operations at the end of 1993 though below levels of a year ago as
manufacturing capacity and productivity have increased.
Accounts receivable were $91.2 million at December 31, 1993 compared to $71.8
million at December 31, 1992. The acquisitions made in 1993 account for $6.1
million of the increase. Strong fourth quarter sales performances from the
construction materials segment and from automotive rubber and plastics
operations resulted in an increased 1993 year-end receivable balance compared
to a year ago.
12
Inventories valued primarily by the last-in, first-out (LIFO) method were $65.0
million at December 31, 1993 compared to $50.0 million at December 31, 1992.
The acquisitions made in 1993 account for $12.9 million of the inventory
increase. Higher inventory levels at year end 1993, after historically low
levels at the end of 1992 at the Company's specialty tires and wheels and
aircraft wire and cable operations were partially offset by reductions from
aggressive inventory management within foodservice plastics and friction
operations.
Working capital was $144.5 million at December 31, 1993 and $162.1 million at
December 31, 1992. In 1993, the Company paid down $12.0 million of long-term
debt and increased levels of internal investment through capital spending.
These factors along with the effects of the 1993 acquisitions are the primary
factors for the change in working capital.
Capital expenditures totaled $28.5 million in 1993 and $19.9 million in 1992.
Major projects in 1993 included the acquisition of machinery to expand and
improve the Company's automotive rubber and plastics operations, add capacity
to the specialty tire and wheels operations and provide advanced processing
technology into construction material operations. In 1992, the major
components of activity included adding capacity in the Company's foodservice
plastics operations and purchasing assets to expand non-automotive plastic
molding capabilities.
Cash flows provided by operating activities were $32.8 million in 1993 compared
to $49.8 million in 1992. The lower amount provided in 1993 results from
higher levels of working capital employed by operations at year end 1993 versus
1992 and higher tax payments required during the course of 1993. Investing
activities absorbed $49.4 million of cash flow in 1993 through capital
spending, operational investments and company acquisitions. In 1992, net cash
was provided from investing activities of $18.3 million as capital spending was
exceeded by cash received from the sale of excess facilities and discontinued
operations. Financing activities in 1993 were driven by the pay-down of senior
long-term debt and higher dividend payments resulting in reductions in cash of
$22.2 million. Financing activities in 1992 provided cash of $8.0 million as
net proceeds from long-term debt exceeded dividend payments.
The Company's primary liquidity and capital sources are its operations, bank
lines of credit and long-term borrowings. The Company continues to have
substantial borrowing capacity and financial flexibility.
The Company recognizes the importance of its responsibilities toward matters of
environmental concern. Programs are in place to monitor and test facilities and
surrounding environments, as well as to recycle materials where practical. The
Company has not incurred any material charges relating to environmental matters
in 1993 or in prior years, and none are anticipated in the foreseeable future.
13
The 1994 outlook for the Company is good. Effective cost control has been an
important factor in the earnings improvement of the Company. Continuation of
this cost control with improving conditions in our markets should result in
better performance as the year evolves.
Non-residential roofing markets will continue to be dominated by repair and
replacement demand in a slowly improving market. The effects of the 1993
acquisitions of a metal roofing business and a membrane roofing business,
included for a full year in 1994, will have a favorable impact upon earnings.
The Company's strong competitive position places us favorably to take advantage
of opportunities presented by a strengthening market.
The optimistic outlook for automobile and truck production will translate into
stronger performance in our Transportation Products segment. The results of
our custom-molded rubber and plastic products should improve at least as much
as the overall market. We will continue the diversification of our customer
base. The strength in original equipment markets for friction products is
expected to continue. Improved financial performance, however, depends upon a
rebound in the aftermarket. A strengthening economy is the primary stimulus to
overall freight movement. Strong domestic growth and new products will result
in a rebound in performance for the Company's friction business. The 1993
momentum in the high performance aircraft wire and cable business is expected
to continue. Excellent acceptance by the major manufacturers in the industry
will continue to allow us to overcome the weakness in the overall aviation
market.
The Company's leading position in specialty tires and wheels is expected to
generate further gains in this well performing business. Growing participation
in golf car and trailer tires combined with good results from the lawn and
garden sector provide for an optimistic outlook. Similarly, the record
performance of our foodservice plastics business is expected to continue in
1994. Added product lines, improved internal efficiency and attractive markets
should produce another outstanding year.
Overall, the outlook for the Company in 1994 and beyond is bright. The order
backlog is good, financial resources are in place, domestic markets are
improving and our international presence is growing. The Company expects to
make further strategic investments that will blend with the positive momentum
of our existing businesses to provide consistent and progressive long-term
performance improvement that translates to value for our customers and our
shareholders.
14
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
CONSOLIDATED STATEMENT OF EARNINGS
FOR YEARS ENDED DECEMBER 31
(In thousands except per share data)
1993 1992 1991
------ ------ ------
Net sales $611,270 $528,052 $500,771
------- ------- -------
Cost and expenses:
Cost of goods sold 452,792 389,191 370,747
Selling and administrative
expenses 98,449 86,876 86,259
Research and development
expenses 11,165 10,724 10,423
Restructuring charge - - 18,700
------- ------- -------
562,406 486,791 486,129
------- ------- -------
Other income (deductions):
Investment income 3,158 4,646 2,881
Interest expense (4,310) (5,174) (4,376)
Other, net (800) (1,013) (2,586)
------- ------- -------
(1,952) (1,541) (4,081)
------- ------- -------
Earnings from continuing
operations before income taxes 46,912 39,720 10,561
Income taxes 18,534 15,492 4,007
------- ------- -------
Earnings from continuing operations 28,378 24,228 6,554
------- ------- -------
Discontinued operations, net of tax:
Loss from operations - - (2,387)
Earnings (loss) on
discontinuance - 471 (12,602)
------- ------- -------
Earnings (loss) from discontinued
operations - 471 (14,989)
------- ------- --------
Net earnings (loss) $ 28,378 $ 24,699 $ (8,435)
======= ======= =======
Average shares and equivalents 15,478 15,337 15,268
Net earnings (loss) per share:
Continuing operations $ 1.83 $ 1.58 $ 0.43
Discontinued operations - 0.03 (0.98)
------- ------- -------
$ 1.83 $ 1.61 $ (0.55)
15
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands except per share data)
Additional Cost of
Common Paid-in Retained Shares in
Stock Capital Earnings Treasury
------ ---------- -------- ---------
Balance at
December 31, 1990 $ 9,833 $ 763 $252,938 $(57,043)
Net loss - - (8,435) -
Cash dividends - $0.63
a share - - (9,597) -
Exercise of stock
options & other - 276 - 1,192
Purchase of 44,456
treasury shares - - - (809)
------------------ ------------------- -------------------- -----------
Balance at
December 31, 1991 9,833 1,039 234,906 (56,660)
Net earnings - - 24,699 -
Cash dividends - $0.66
a share - - (10,076) -
Exercise of stock
options & other - 397 - 1,084
Purchase of 46,566
treasury shares - - - (1,020)
------------------ ------------------- -------------------- -----------
Balance at
December 31, 1992 9,833 1,436 249,529 (56,596)
Net earnings - - 28,378 -
Cash dividends - $0.70
a share - - (10,705) -
Exercise of stock
options & other - 282 - 351
Two-for-one stock split 9,832 (1,586) (8,246) -
Purchase of 64,734
treasury shares - - - (1,985)
------------------ ------------------- -------------------- -----------
Balance at
December 31, 1993 $19,665 $ 132 $258,956 $(58,230)
See accompanying Notes to Consolidated Financial Statements.
16
CONSOLIDATED BALANCE SHEET
AT DECEMBER 31
(In thousands except per 1993 1992
share data) ------ ------
ASSETS
Current assets
Cash and cash equivalents $ 51,802 $ 90,605
Receivables, less allowances of $3,906 in
1993 and $4,785 in 1992 91,158 71,822
Inventories 64,976 49,973
Deferred income taxes 16,456 16,870
Prepaid expenses and other 12,287 7,956
------- -------
Total current assets 236,679 237,226
------- -------
Property, plant and equipment,
net 142,229 122,051
------- -------
Other assets
Patents and other intangibles 15,831 9,403
Investments and advances to affiliates 14,780 8,695
Receivables and other assets 7,889 5,053
Deferred income taxes 2,955 822
Net non-current assets of discontinued - 278
operations
------- -------
Total other assets 41,455 24,251
------- -------
$420,363 $383,528
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 28,681 $ 19,252
Accrued expenses 63,524 55,886
------- -------
Total current liabilities 92,205 75,138
------- -------
Long-term liabilities
Long-term debt 59,548 69,098
Product warranties 46,803 32,266
Deferred compensation and other liabilities 1,284 2,824
------- -------
Total long-term liabilities 107,635 104,188
------- -------
Shareholders' equity
Preferred stock, $1 par value. Authorized
and unissued 5,000,000 shares
Common stock, $1 par value. Authorized
25,000,000 shares; issued 19,665,312
shares 19,665 9,833
Additional paid-in capital 132 1,436
Retained earnings 258,956 249,529
Cost of shares in treasury - 4,412,188
shares in 1993 and 4,374,582 shares
in 1992 (58,230) (56,596)
------- -------
Total shareholders' equity 220,523 204,202
------- -------
$420,363 $383,528
======= =======
See accompanying Notes to Consolidated Financial Statements.
17
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR YEARS ENDED DECEMBER 31
(In thousands)
1993 1992 1991
------ ------ ------
Operating Activities
Net earnings (loss) $ 28,378 $ 24,699 $ (8,435)
Reconciliation of net earnings (loss)
to cash flows:
Depreciation 18,125 17,159 17,532
Amortization 2,563 1,647 1,895
Restructuring charge -- -- 18,700
Estimated loss on discontinuance of
operations -- -- 20,325
Loss (gain) on sales of property
and equipment 25 (992) --
Changes in assets and liabilities
excluding effects of acquisitions:
Current and long-term receivables (15,107) 1,234 4,481
Inventories (5,792) 2,341 3,255
Accounts payable and accrued expenses 14,284 (3,517) (5,943)
Prepaid, deferred and current income
taxes (4,293) 6,943 (16,004)
Long-term liabilities (1,621) 673 3,894
Other (4,048) 549 1,174
Net assets of discontinued operations 278 (906) 10,403
------- ------- -------
Net cash provided by operating
activities 32,792 49,830 51,277
------- ------- -------
Investing Activities
Capital expenditures (28,490) (19,924) (19,711)
Acquisitions, net of cash (15,701) (997) (23,311)
Sales of property and equipment 921 4,309 84
Other (6,085) 198 --
Net activities of discontinued operations -- 34,723 (1,059)
------- ------- -------
Net cash provided by (used in)
investing activities (49,355) 18,309 (43,997)
------- ------- -------
Financing Activities
Proceeds from long-term debt 2,500 23,000 6,500
Reductions of long-term debt (12,050) (3,850) (3,464)
Short-term borrowings -- -- (3,121)
Dividends (10,705) (10,076) (9,597)
Purchases of treasury shares (1,985) (1,020) (809)
------- ------- -------
Net cash provided by (used in)
financing activities (22,240) 8,054 (10,491)
------- ------- -------
Change in cash and cash equivalents (38,803) 76,193 (3,211)
Cash and cash equivalents
Beginning of year 90,605 14,412 17,623
------- ------- -------
End of year $ 51,802 $ 90,605 $ 14,412
======= ======= =======
See accompanying Notes to Consolidated Financial Statements.
18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF ACCOUNTING POLICIES
The consolidated financial statements include the accounts of the Company and
its subsidiaries. Investments in less than majority owned affiliates, none
of which are significant, are accounted for on the equity method. All
material intercompany transactions and accounts have been eliminated.
Cash and cash equivalents include all cash balances and highly liquid
investments with original maturities of three months or less.
Inventories are valued at lower of cost or market. Cost for inventories is
determined for a majority of the Company's inventories by the last-in, first-
out (LIFO) method with the remainder determined by the first-in, first-out
(FIFO) method.
Property, plant and equipment are stated at cost. Costs assigned to
property, plant and equipment of acquired companies are based on estimated
fair value at the date of acquisition. Depreciation is principally computed
on the straight line basis over the estimated useful lives of the assets.
Asset lives are 20 to 40 years for buildings, 5 to 15 years for machinery and
equipment and 3 to 10 years for leasehold improvements.
Patents and other intangibles, obtained through acquisitions, are recorded at
cost (net of accumulated amortization of $5.4 million and $4.9 million at
December 31, 1993 and 1992, respectively) and amortized over their remaining
lives averaging six to eight years. Also included is the excess of
acquisition cost over the value of assets acquired, $2.3 million and $2.4
million at December 31, 1993 and 1992, respectively, and is being amortized
over various periods not exceeding 30 years. Amortization expense is
recorded on the straight-line method.
The Company maintains product warranties reserves to provide for future
claims. Extended periods of coverage are available on certain products for a
fee.
Deferred tax assets and liabilities are recognized for the future tax
consequences of the differences between financial statement carrying amounts
of assets and liabilities and their respective tax bases. These balances are
measured using enacted tax rates expected to apply to taxable income in the
years in which such temporary differences are expected to be recovered or
settled. If it is more likely than not that some portion or all of a
deferred tax asset will not be realized, a valuation allowance is recognized.
Net earnings per share of common stock are based on the weighted average
number of common shares and common equivalent shares outstanding during the
period, assuming the exercise of stock options.
19
Certain reclassifications have been made to prior years' information to
conform to 1993 presentation.
INVENTORIES
The components of inventories are:
(In Thousands) 1993 1992
------ ------
FIFO cost (approximates current costs):
Finished goods $43,714 $39,126
Work in process 8,761 6,546
Raw materials 27,212 20,335
------- -------
$79,687 $66,007
Excess of FIFO cost over LIFO value (14,711) (16,034)
------- -------
$64,976 $49,973
PROPERTY, PLANT & EQUIPMENT
The components of property, plant and equipment are:
(In Thousands) 1993 1992
------ ------
Land $ 5,109 $ 3,897
Buildings & leasehold improvements 87,268 84,332
Machinery & equipment 216,289 187,444
Projects in progress 10,128 7,323
-------- --------
318,794 282,996
Accumulated depreciation (176,565) (160,945)
-------- --------
$142,229 $122,051
20
BORROWINGS
Long-term debt, all unsecured, includes:
(In Thousands) 1993 1992
------ ------
8% senior notes due 1998-2002 $48,000 $60,000
Variable rate revenue bonds due 2008 8,500 8,500
Variable rate revenue bonds due 2003 2,500 --
Other 598 648
------ ------
$59,598 $69,148
Less: current maturities 50 50
------ ------
$59,548 $69,098
In 1993, the Company paid down $12.0 million of its 8% notes and refinanced
its previous 10.25% fixed rate revenue bonds to variable rate bonds.
Additional variable rate industrial revenue bonds of $2.5 million were also
secured in 1993. The interest rate on the revenue bonds at December 31, 1993
was 3.2%.
The debt facilities contain various restrictive covenants and limitations,
all of which were complied with in 1993 and 1992.
Cash payments for interest were $4.9 million in 1993, $3.7 million in 1992,
and $4.1 million in 1991.
The Company had $10.1 million and $10.7 million of outstanding letters of
credit issued against credit lines at December 31, 1993 and 1992,
respectively.
The aggregate amount of long-term debt maturing in each of the five years
subsequent to December 31, 1993 is approximately $0.1 million a year through
1997 and $9.7 in 1998.
21
ACQUISITIONS
Acquisitions completed by the Company in the last three years include: 1993-
ECI Building Components Incorporated, a metal roofing and panel manufacturer
and Goodyear Tire & Rubber Company's Roofing Systems Division, a distributor
and seller of non-residential roofing systems; 1991-SiLite Incorporated, a
manufacturer of plasticware products for the foodservice industry. These
acquisitions were completed for cash and assumption of debt and certain other
liabilities of approximately $52.6 million and have been accounted for as
purchases.
Results of operations, which have been included in the consolidated financial
statements since their respective acquisition dates, did not have a material
effect on consolidated operating results of the Company in the years of
acquisition.
OPERATIONAL RESTRUCTURING
In the third quarter of 1991, the Company recorded a restructuring charge of
$18.7 million for costs associated with the relocation and consolidation of
operations and the elimination of product lines. The charge included
provisions for personnel severance, relocation and training costs, equipment
relocation and related facility costs, the write-down of assets and other
costs associated with the repositioning and removal of product lines. The
restructuring charge is separately identified in the Consolidated Statement
of Earnings for 1991.
DISCONTINUED OPERATIONS
In September 1991, the Company announced its decision to sell its businesses
engaged in the production, sale and maintenance of computer tape products and
systems integration hardware. A provision was recorded in 1991 for
anticipated disposal costs and the write-down of related assets to estimated
realizable value totalling $20.3 million, $12.6 million after-tax.
In 1992, the Company sold its quarter-inch tape business, as well as its
half-inch tape business, to substantially eliminate the operations which are
classified as discontinued operations. The Company recognized earnings in
1992 from discontinued operations of $0.9 million, $0.5 million after-tax, as
it adjusted its estimates due to better than anticipated performance.
In 1991, net sales from discontinued operations were $88.1 million through
September 30, and $117.5 million for the year. Losses from discontinued
operations before tax were $3.9 million in 1991.
SHAREHOLDERS' EQUITY
On April 20, 1993 the Company's Board of Directors authorized a two-for-one
stock split which was issued on June 1, 1993, to shareholders of record on
May 11, 1993. The split resulted in the issuance of 9,832,656 new shares of
common stock and the reissuance of 2,175,479 shares of common stock held in
treasury.
22
All references in the financial statements to average number of shares
outstanding and related prices, per share amounts, and stock option plan data
have been restated to reflect the split.
The Company has a Stockholders' Rights Plan which is designed to protect
stockholder investment values. A dividend distribution of one Preferred Stock
Purchase Right for each outstanding share of the Company's common stock was
declared, payable to stockholders of record on March 3, 1989. The rights will
become exercisable under certain circumstances, including the acquisition of
25% of the Company's common stock, or 40% of the voting power, in which case
all rights holders except the acquiror may purchase the Company's common
stock at a 50% discount. If the Company is acquired in a merger or other
business combination, and the rights have not been redeemed, rights holders
may purchase the acquiror's shares at a 50% discount.
Common stockholders of record May 30, 1986 are entitled to five votes per
share. Common stock acquired subsequent to that date entitles the holder to
one vote per share until held four years, after which time the holder will be
entitled to five votes.
EMPLOYEE STOCK OPTIONS & INCENTIVE PLAN
The Company maintains an Executive Incentive Program for executives and
certain other employees of the Company and its operating divisions and
subsidiaries. The Program contains a plan, for those who are eligible, to
receive cash bonuses and/or shares of restricted stock. The Program also has
a stock option plan available to certain employees who are not eligible to
receive cash or restricted stock awards.
The Program makes available up to 627,099 shares of the Company's common
stock for issuance as restricted stock and up to 736,392 shares for stock
option grants. In 1993, 23,116 shares of restricted stock were issued and
4,951 shares were surrendered under the terms of the Program.
23
The activity under the stock option plan, as restated, is as follows:
Number Option
of shares Prices
--------- ------
Outstanding at
December 31, 1990 240,910 $13.88-18.00
Options granted 179,544 16.13-17.50
Options exercised (55,916) 15.06-18.00
Options surrendered (16,164) 16.38-18.00
-------
Outstanding at
December 31, 1991 348,374 $13.88-18.00
Options granted 118,300 19.57
Options exercised (72,998) 15.00-19.57
Options surrendered (7,162) 13.88-19.57
-------
Outstanding at
December 31, 1992 386,514 $13.88-19.57
Options granted 293,775 24.63-30.75
Options exercised (7,030) 13.88-19.56
Options surrendered (12,900) 19.56-24.63
-------
Outstanding at
December 31, 1993 660,359 $16.13-30.75
=======
Exercisable at
December 31, 1993 362,403 $16.13-30.75
=======
Available for grant at
December 31, 1993 25,798
=======
RETIREMENT PLANS
The Company maintains defined benefit retirement plans for the majority of
its employees. Benefits are based primarily on years of service and earnings
of the employee. Plan assets consist primarily of publicly-listed common
stocks and corporate bonds.
24
Pension expense includes:
(In Thousands) 1993 1992 1991
------ ------ ------
Service cost $2,396 $2,435 $2,776
Interest cost on projected
benefit obligation 5,053 4,892 4,325
Actual return on plan
assets (8,617) (4,488) (14,317)
Net amortization and
deferral 2,944 (1,000) 9,029
----- ----- -----
Total pension expense $1,776 $1,839 $1,813
The funded status of the plans at December 31 was:
(In Thousands) 1993 1992
---- ----
Actuarial present value of
accumulated benefit obligation:
Vested $56,680 $49,250
Non-vested 1,025 844
------ ------
$57,705 $50,094
====== ======
Plan assets at fair value $71,811 $66,772
Projected benefit obligation (68,548) (61,897)
------ ------
Plan assets in excess of
projected benefit obligation 3,263 4,875
Unamortized transition asset (5,695) (7,034)
Unrecognized prior service costs 4,413 5,146
Unrecognized net gains (6,830) (6,145)
------ ------
Accrued pension expense $(4,849) $(3,158)
====== ======
The projected benefit obligation was determined using an assumed discount
rate of 7.75% in 1993 and 8.50% in 1992. The assumed rate of compensation
increase was 4.5% in 1993 and 5.5% in 1992. The expected rate of return on
plan assets was 8.75% in 1993, 1992 and 1991.
In 1992, the sale of discontinued operations and the corresponding reduction
in retirement plan participants resulted in a plan curtailment. The effects
of the curtailment were to decrease the unamortized balance of unrecognized
prior service costs and to decrease the projected benefit obligation of the
retirement plan which resulted in a net gain of $1.2 million. This gain is
included in the computation of the net loss on the disposal of discontinued
operations as reported in the Consolidated Statement of Earnings.
25
In the first quarter of 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 106, "Employers Accounting for Post-
Retirement Benefits Other Than Pensions". The Company has a limited number
of post-retirement benefit programs and participants. Accordingly, the
Company has elected to record the previously unrecognized obligations arising
from the adoption of SFAS No. 106 prospectively as a component of future
years expense, amortized over a 20 year period. The annual SFAS No. 106
expense for the Company, inclusive of the components of service costs,
interest costs and the amortization of the unrecognized transition
obligation, is approximately $0.6 million, $0.4 million after tax. The
resulting annual expense in 1993 is not materially different than the
Company's post-retirement benefits expense in 1992 and 1991 and is not
material to its Consolidated Statement of Earnings.
INCOME TAXES
The provision for income taxes was as follows:
1993 1992 1991
---- ---- ----
(In Thousands)
Continuing operations $18,534 $15,492 $ 4,007
Discontinued operations - 390 (9,187)
------ ------ ------
Total provision $18,534 $15,882 $ (5,180)
====== ====== ======
Currently payable
Federal $15,981 $ 6,330 $ 3,492
State, local and other 4,272 3,003 1,546
------ ------ ------
$20,253 $ 9,333 $ 5,038
------ ------ ------
Deferred (benefit)
Federal $(1,588) $ 5,661 $ (9,136)
State, local and other (131) 888 (1,082)
------ ------ ------
$(1,719) $ 6,549 $(10,218)
------ ------ ------
Total provision $18,534 $15,882 $ (5,180)
====== ====== ======
26
Deferred tax assets (liabilities) are comprised of the following at
December 31:
(In Thousands) 1993 1992 1991
------ ------ ------
Product warranty $17,927 $14,216 $12,952
Inventory reserves 1,636 1,142 949
Doubtful receivables 2,000 1,894 1,789
Employee benefits 3,739 2,610 938
Asset write-downs and
relocation expense 2,477 7,707 14,431
Other, net 8,369 4,524 4,821
------ ------ ------
Deferred assets $ 36,148 $ 32,093 $35,880
------- ------- ------
Depreciation $(13,901) $(12,923) $(12,301)
Other, net (2,836) (1,478) (1,694)
------- ------- -------
Deferred liabilities $(16,737) $(14,401) $(13,995)
------- ------- -------
Net deferred tax assets $ 19,411 $ 17,692 $ 21,885
======= ======= =======
A reconciliation of taxes computed at the statutory rate with the tax
provision is as follows:
(In Thousands) 1993 1992 1991
------ ------ ------
Federal income taxes
at statutory rate $16,419 $13,798 $(4,629)
State income taxes, net of
federal income tax benefit 2,051 1,944 27
Other, net 64 140 (578)
------ ------ ------
$18,534 $15,882 $(5,180)
Effective income tax rate 39.5% 39% 38%
The Company adopted SFAS No. 109 "Accounting for Income Taxes", in 1992 and
applied its provisions retroactively to 1990.
Cash payments for income taxes were $23.6 million, $9.6 million, and $12.3
million in 1993, 1992 and 1991, respectively.
27
SEGMENT INFORMATION
The Company's continuing operations are classified into the following
business segments:
CONSTRUCTION MATERIALS--elastomeric membranes, metal roofing components,
adhesives and related products for roofing systems and water barrier
applications and outdoor recreation tiles.
TRANSPORTATION PRODUCTS--custom manufactured rubber and plastic products for
the automotive market, brake linings and pads for heavy-duty trucks, trailers
and off-road vehicles, specialty friction products, brakes and actuation
systems for construction equipment and insulated wire products.
GENERAL INDUSTRY--molded plastic foodservice products, small pneumatic tires,
stamped and roll-formed wheels, custom molded plastic components, system
integration products and insulated wire products.
CORPORATE--includes general corporate and idle property expenses. Corporate
assets consist primarily of cash, leasing company assets and excess facilities.
Financial information for continuing operations by reportable business segment
is included in the following summary:
(In Thousands)
Earnings
Before Deprec.
Income & Capital
Sales Taxes(1) Assets Amort. Spending
----- --------- ------ ------- --------
1993
- ----
Construction Materials $247,573 $ 25,496 $139,990 $ 5,762 $ 3,474
Transportation Products 177,005 11,622 109,523 7,220 10,887
General Industry 186,692 18,904 90,534 6,864 9,074
Interest, net -- (1,152) -- -- --
Corporate -- (7,958) 80,316 842 5,055
------- ------- ------- ------- -------
$611,270 $ 46,912 $420,363 $ 20,688 $ 28,490
======= ======= ======= ======= =======
1992
- ----
Construction Materials $198,737 $ 23,715 $ 99,034 $ 5,098 $ 2,451
Transportation Products 172,849 11,603 97,196 7,026 7,830
General Industry 156,466 12,685 78,116 6,187 8,330
Interest, net -- (528) -- -- --
Corporate -- (7,755) 108,904 495 1,313
------- ------- ------- ------- -------
$528,052 $ 39,720 $383,250 $ 18,806 $ 19,924
======= ======= ======= ======= =======
28
Earnings
Before Deprec.
Income & Capital
Sales Taxes(1) Assets Amort. Spending
----- --------- ------ ------- --------
1991(1)
- ----
Construction Materials $197,627 $ 23,014 $102,532 $ 5,289 $ 3,791
Transportation Products 169,158 8,015 103,381 7,745 6,193
General Industry 133,986 8,087 87,164 5,778 8,227
Restructuring charge -- (18,700) -- -- --
Interest, net -- (1,495) -- -- --
Corporate -- (8,360) 31,643 615 1,500
------- ------- ------- ------- -------
$500,771 $ 10,561 $324,720 $ 19,427 $ 19,711
======= ======= ======= ======= =======
(1) In 1991, the Company accounted for certain of its operations as
discontinued operations and also recorded a restructuring charge for
continuing operations. The restructuring charge allocable to operating
expenses would reduce Transportation Products and General Industry segment
earnings in 1991 before income tax by $1.8 million and $12.8 million
respectively.
QUARTERLY FINANCIAL DATA
(In thousands except per share
data) (unaudited) First Second Third Fourth Year
----- ------ ----- ------ ----
1993
Net sales $ 138,420 160,785 160,615 151,450 $611,270
Gross margin $ 35,174 41,953 41,623 39,728 $158,478
Operating expenses $ 24,855 29,049 28,054 27,656 $109,614
Earnings from continuing
operations $ 5,901 7,483 8,061 6,933 $ 28,378
Net earnings $ 5,901 7,483 8,061 6,933 $ 28,378
Net earnings per share: $ 0.38 0.48 0.52 0.45 $ 1.83
1992
Net sales $ 132,561 142,157 134,027 119,307 $528,052
Gross margin $ 34,941 35,788 35,586 32,546 $138,861
Operating expenses $ 25,892 24,743 24,400 22,565 $ 97,600
Earnings from continuing
operations $ 5,351 6,504 6,605 5,768 $ 24,228
Net earnings $ 5,598 6,651 6,682 5,768 $ 24,699
Net earnings per share:
Continuing operations $ 0.35 0.42 0.43 0.38 $ 1.58
Net earnings $ 0.37 0.43 0.43 0.38 $ 1.61
All per share amounts have been restated to reflect the two-for-one stock split
on June 1, 1993.
29
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Carlisle Companies Incorporated:
We have audited the accompanying consolidated balance sheet of Carlisle
Companies Incorporated and subsidiaries as of December 31, 1993 and 1992, and
the related consolidated statements of earnings, shareholders' equity, and
cash flows for each of the years in the three-year period ending December 31,
1993. These consolidated financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Carlisle
Companies Incorporated and subsidiaries as of December 31, 1993 and 1992, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1993, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick
/s/ KPMG Peat Marwick
Syracuse, New York
February 2, 1994
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
30
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth certain information relating to each executive
officer of the Company as of December 31, 1993, as furnished to the Company
by the executive officers. Except as otherwise indicated each executive
officer has had the same principal occupation or employment during the past
five years.
Name Age Positions With Company Period of Service
- ---- --- ---------------------- -----------------
E. Douglas Kenna(a) 69 Chairman of the Board April, 1975
of the Company to January, 1994
Stephen P. Munn 51 President and Chief September, 1988
Executive Officer of the to date
Company, since September,
1988, and Chairman of the
Board of the Company,
since January, 1994.
Dennis J. Hall 52 Executive Vice President, August, 1989
Treasurer and Chief to date
Financial Officer of the
Company. President, 1988-
1989, Carrier Transicold, a
division of United Tech-
nologies Corporation.
John W. Altmeyer 35 Vice President, Corporate August, 1989
Development of the to date
Company. Previously held
various financial positions
with Carrier Corporation, a
division of United Technolo-
gies Corporation, since
1981.
John S. Barsanti 42 Vice President, Planning April, 1991
and Administration of the to date
Company. Chief Financial
Officer, 1989-1991, Legrand
SA, North American operations.
James B. Pineau 36 Vice President, Controller May, 1989
and Assistant Treasurer to date
of the Company. Previously
held various financial
management positions with
Continental Information
Systems, Inc., since 1987.
31
Scott C. Selbach 38 Vice President, Secretary July, 1989
and General Counsel of to date
the Company. Associate,
1984-1989, Bond, Schoeneck
& King, Syracuse, New York.
(a) Mr. Kenna retired as Chairman of the Board of the Company on January 1,
1994.
The officers have been elected to serve at the pleasure of the Board of
Directors of the Company. There are no family relationships between any of
the above officers, and there is no arrangement or understanding between any
officer and any other person pursuant to which he was selected an officer.
Information required by Item 10 with respect to directors of the Company is
incorporated by reference to the Company's definitive proxy statement filed
with the Securities and Exchange Commission on March 9, 1994.
ITEM 11. EXECUTIVE COMPENSATION.
Information required by Item 11 is incorporated by reference to the Company's
definitive proxy statement filed with the Securities and Exchange Commission
on March 9, 1994.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Information required by Item 12 is incorporated by reference to the Company's
definitive proxy statement filed with the Securities and Exchange Commission
on March 9, 1994.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not Applicable
32
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
Financial statements required by Item 8 are as follows:
Consolidated Statement of Earnings, years ended December 31, 1993,
1992 and 1991
Consolidated Statement of Shareholders' Equity, years ended
December 31, 1993, 1992 and 1991
Consolidated Balance Sheet, December 31, 1993 and 1992
Consolidated Statement of Cash Flows, years ended December 31,
1993, 1992 and 1991
Notes to Consolidated Financial Statements
Financial statement supplementary notes applicable to the filing of this
report are as follows:
Page
1. Other current liabilities 37
2. Maintenance and repair costs 37
3. Discontinued operations 37
Financial statement schedules applicable to the filing of this report are as
follows:
Page
V - Property, Plant and Equipment 38
VI - Accumulated Depreciation of
Property, Plant and Equipment 38
All other schedules are omitted because the required information is
inapplicable or the information is presented in the financial statements or
related notes.
Exhibits applicable to the filing of this report are as follows:
(3) By-laws of the Company *
(3.1) Restated Certificate of Incorporation as amended April 22, 1991***
(4) Shareholders' Rights Agreement, February 8, 1989.*
(10.1) 1988 Executive Long-Term Incentive Program.*
(10.2) Representative copy of Executive Severance Agreement, dated
December 19, 1990, between the Company and certain individuals,
including the five most highly compensated executive officers of
the Company.**
(10.3) Summary Plan Description of Carlisle Companies Incorporated
Director Retirement Program, effective November 6, 1991.***
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Auditors.
33
* Filed as an Exhibit to the Company's annual report on Form 10-K for
the year ended December 31, 1988 and incorporated herein by
reference.
** Filed as an Exhibit to the Company's annual report on Form 10-K for
the year ended December 31, 1990 and incorporated herein by
reference.
*** Filed as an Exhibit to the Company's annual report on Form 10-K for
the year ended December 31, 1991 and incorporated herein by
reference.
No reports on Form 8-K were filed during the last quarter of the period
covered by this report.
The Company will furnish to the Commission upon request its long-term debt
instruments not listed in this Item.
34
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
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
/s/ Dennis J. Hall
By: Dennis J. Hall, Executive Vice President and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
/s/ Stephen P. Munn /s/ Magalen O. Bryant
Stephen P. Munn, Chairman, Magalen O. Bryant, Director
President and Chief Executive
Officer and a Director
(Principal Executive Officer)
/s/ Donald G. Calder
/s/ Dennis J. Hall Donald G. Calder, Director
Dennis J. Hall, Executive Vice
President, Treasurer and Chief
Financial Officer /s/ Paul J. Choquette, Jr.
(Principal Financial Officer)
Paul J. Choquette, Jr., Director
/s/ James B. Pineau
James B. Pineau, Vice President /s/ Henry J. Forrest
and Controller
(Principal Accounting Officer) Henry J. Forrest, Director
/s/ David G. Thomas
David G. Thomas, Director
March 28, 1994
35
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Carlisle Companies Incorporated
Under date of February 2, 1994, we reported on the consolidated balance sheet
of Carlisle Companies Incorporated and subsidiaries as of December 31, 1993
and 1992, and the related consolidated statements of earnings, stockholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1993, as contained in this annual report on Form 10-K for the year
ended December 31, 1993. These consolidated financial statements and our report
thereon are incorporated by reference to this Form 10-K for the year ended
December 31, 1993. In connection with our audits of the aforementioned
consolidated financial statements, we also have audited the related
supplementary notes and financial statement schedules as listed in Item 14 of
this Form 10-K. These supplementary notes and financial statement schedules are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these supplementary notes and financial statement
schedules based on our audits.
In our opinion, such supplementary notes and financial statement schedules,
when considered in relation to the basic consolidated financial statements
taken as whole, present fairly, in all material respects, the information set
forth therein.
KPMG Peat Marwick
Syracuse, New York /s/ KPMG Peat Marwick
February 2, 1994
36
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
SUPPLEMENTARY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
Note 1. Other Current Liabilities - Other current liabilities at December
------------------------- 31 consist of the following:
(000's)
1993 1992
---- ----
Employee compensation and benefits $14,676 12,361
Product warranties 21,404 16,469
Insurance 5,867 6,001
Other accrued expenses 21,577 21,055
------ ------
63,524 55,886
====== ======
Note 2. Maintenance and Repair Costs
----------------------------
Maintenance and repair costs of $11.2 million, $11.1 million and $8.7 million
in 1993, 1992, and 1991 respectively, have been charged to earnings as cost
of goods sold or selling and administrative expenses.
Note 3. Discontinued Operations
-----------------------
Net sales from discontinued operations were $58.4 million and $117.5 million
in 1992 and 1991 respectively.
37
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
SCHEDULE V
PROPERTY, PLANT AND EQUIPMENT
(AMOUNTS IN THOUSANDS)
Balance at Balance
beginning Additions Retirements Other at end
of year (at cost) & sales changes(1) of year
- ---------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1993
Buildings $ 82,769 $ 1,580 $ (180) $ 1,683 $ 85,852
Machinery and equipment 187,444 23,789 (3,783) 8,839 216,289
Leasehold improvements 1,563 158 (102) (203) 1,416
Projects in progress 7,323 2,963 0 (158) 10,128
-------------------------------------------------------------------
279,099 28,490 (4,065) 10,161 313,685
Land 3,897 0 (55) 1,267 5,109
-------------------------------------------------------------------
$ 282,996 $28,490 $(4,120) $ 11,428 $318,794
-------------------------------------------------------------------
-------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1992
Buildings $ 85,171 $ 4,160 $(5,155) $ (1,407) $ 82,769
Machinery and equipment 184,514 13,241 (7,466) (2,845) 187,444
Leasehold improvements 1,058 57 (25) 473 1,563
Projects in progress 4,874 2,466 0 (17) 7,323
-------------------------------------------------------------------
275,617 19,924 (12,646) (3,796) 279,099
Land 4,736 0 (397) (442) 3,897
-------------------------------------------------------------------
$ 280,353 $19,924 $(13,043) $ (4,238) $282,996
-------------------------------------------------------------------
-------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1991
Buildings $ 78,739 $ 3,187 $ (23) $ 3,268 $ 85,171
Machinery and equipment 160,170 13,491 (8,071) 18,924 184,514
Leasehold improvements 1,459 738 (747) (392) 1,058
Projects in progress 5,462 2,295 (302) (2,581) 4,874
-------------------------------------------------------------------
245,830 19,711 (9,143) 19,219 275,617
Land 4,692 0 (228) 272 4,736
-------------------------------------------------------------------
$ 250,522 $19,711 $(9,371) $ 19,491 $280,353
-------------------------------------------------------------------
-------------------------------------------------------------------
(1) Includes amounts related to companies acquired in 1993, 1992 and 1991
of $9,727, $266 and $14,227, respectively.
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
SCHEDULE VI
ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
(AMOUNTS IN THOUSANDS)
Balance at Balance
beginning Additions Retirements Other at end
of year (at cost) & sales changes(1) of year
- --------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1993
Buildings $ 38,894 $ 2,567 $ (145) $ 4 $ 41,320
Machinery and equipment 121,290 15,467 (2,917) 668 134,508
Leasehold improvements 761 91 (111) (4) 737
-------------------------------------------------------------------
$ 160,945 $18,125 $(3,173) $ 668 $176,565
-------------------------------------------------------------------
-------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1992
Buildings $ 39,299 $ 2,662 $ (2,558) $ (509) $ 38,894
Machinery and equipment 115,063 14,391 (6,595) (1,569) 121,290
Leasehold improvements 999 107 (25) (320) 761
-------------------------------------------------------------------
$155,361 $17,160 $ (9,178) $ (2,398) $160,945
-------------------------------------------------------------------
-------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1991
Buildings $ 36,328 $ 3,738 $ (42) $ (725) $ 39,299
Machinery and equipment 104,007 13,686 (1,683) (947) 115,063
Leasehold improvements 789 108 0 102 999
-------------------------------------------------------------------
$141,124 $17,532 $(1,725) $ (1,570) $155,361
-------------------------------------------------------------------
-------------------------------------------------------------------
Amounts on Schedules V and VI have been restated to reflect operational
restructuring and discontinued operations.
Schedules V and VI should be read in conjunction with the Notes to
Consolidated Financial Statements.
38
CARLISLE COMPANIES INCORPORATED
COMMISSION FILE NUMBER 1-9278
FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1993
EXHIBIT LIST
Page
----
(21) Subsidiaries of the Registrant 40
(23) Consent of Independent Auditors 41
39