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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, 1996
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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 _________
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Commission file number 1-9278
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CARLISLE COMPANIES INCORPORATED
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(Exact name of registrant as specified in its charter)
DELAWARE 31-1168055
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(State or other jurisdiction of (I.R.S. employer incorporation
or organization identification no.)
250 SOUTH CLINTON STREET, SUITE 201, SYRACUSE, NEW YORK 13202-1258
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (315) 474-2500
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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. [ ]
Aggregate market value of voting common stock held
by non-affiliates at February 24, 1997 $932,700,084
Shares of common stock outstanding at February 24, 1997 30,372,514
Portions of the definitive Proxy Statement for the Annual Meeting of
Shareholders on April 21, 1997 are incorporated by reference in Part III.
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 across
a broad range of industries, including, among others, the roofing, real estate
construction, trucking, automotive, foodservice, industrial equipment, lawn and
garden and aircraft manufacturing industries. The Company markets its products
both as a component supplier to original equipment manufacturers ("OEMs"), as
well as directly to end users.
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, services and markets or
customers served in each of the industry segments include:
CONSTRUCTION MATERIALS. The principal products of this segment are rubber,
plastic and fleece back sheeting used predominantly on non-residential flat
roofs and related roofing accessories, including flashings, fasteners, ceiling
tapes, coatings and waterproofings. The markets served include new
construction, re-roofing and maintenance of low slope roofs, water containment,
HVAC sealants, and coatings and waterproofings.
TRANSPORTATION PRODUCTS. The principal products of this segment are heavy duty
friction and braking systems for truck and off-highway equipment, rubber and
plastic automotive components, including precision-molded engine components and
blow-molded bumper beams, high grade aerospace wire, specialty trailers,
self-contained ISO 40-foot perishable cargo shipping containers, standard and
custom-built high payload trailers and dump bodies. Customers include truck
OEMs, shipping lines, heavy equipment and truck dealers and aftermarket
distributors, commercial haulers, automotive OEMs and systems suppliers, and
dairy product distributors.
GENERAL INDUSTRY. The principal products of this segment include small bias-ply
rubber tires, stamped and roll-formed wheels, commercial and institutional
plastic foodservice permanentware and catering equipment, fiber glass and
composite material trays and dishes, ceramic tableware, specialty rubber and
plastic cleaning brushes and stainless steel processing equipment and their
related process control systems. Customers include foodservice distributors,
restaurants, golf car
2
manufacturers, power equipment manufacturers, boat and utility trailer
manufacturers and dairy and pharmaceutical processors.
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):
1996 1995 1994
---- ---- ----
Construction Materials $ 325.2 $ 308.3 $ 288.6
Transportation Products 371.5 278.9 200.2
General Industry 320.8 235.3 203.9
------- ------- -------
Total $1,017.5 $ 822.5 $ 692.7
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. Since many of the Company's customers are OEMs,
marketing methods and 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, transportation products and general industry segments.
The Company believes that energy sources are secure and sufficient quantities of
raw materials can be obtained through normal sources to avoid interruption of
production in 1997.
The Company owns or holds the right to use a variety of patents,
trademarks, licenses, inventions, trade secrets and other intellectual property
rights which, in the aggregate, are considered significant to the successful
conduct of each of the Company's three industry segments. The Company has
adopted a variety of measures and programs to ensure the continued validity and
enforceability of its various intellectual property rights.
In each industry segment, the Company is engaged in businesses, and its
products serve markets, that generally are highly competitive. Product lines
serving most markets tend to be price competitive and all lines also compete on
service and product performance. No industry segment is dependent upon a single
customer, or a few customers, the loss of which would have a material adverse
effect on the segment.
3
Order Backlog was $200.8 million at December 31, 1996, and $160.7 million
at December 31, 1995, and $103.9 million at December 31, 1994. Although 19% of
the increase from December 31, 1995 was related to operations acquired in 1996,
stronger backlog positions were evident throughout all major operations within
the Company.
Research and Development expenses decreased to $11.9 million in 1996,
compared to $12.3 million in 1995, consistent with $11.9 million in 1994. Heavy
duty friction operations completed its new technology center in Charlottesville,
Virginia. The increase in R&D expenditures for high performance wire resulted
from purchases of materials for microwave coaxial cable and high speed "Z-Skew"
product development. The truck and trailer operations have incurred R&D expense
in new products which will be available for sale in Spring of 1997.
The Company employs approximately 6,900 persons on a full-time basis.
The businesses of the construction materials and transportation products
industry segments are generally 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. The businesses of all
three segments are affected by the state of the general economy.
In 1996, the Company completed five acquisitions. In February, the Company
acquired the manufacturing assets and fleece back sheeting technology of
Insulfoam, Inc. In March, the Company acquired Intero, Inc. and Unique Wheel,
Inc., leading manufacturers of steel and aluminum wheels and rims sold to OEM
trailer customers and the auto aftermarket. In August, the acquisition of
Scherping Systems, Inc. and Scherping Controls, Inc., leading suppliers of
cheese processing systems and equipment for the dairy industry, was completed.
In September, the Company acquired Hartstone, Inc., a designer and manufacturer
of ceramic tableware, cookware and decorative kitchenware. In October, the
Company completed the acquisition of the Engineered Plastics
Division of Johnson Controls, Inc. EPD's products include precision-molded
engine components and blow-molded bumper beams that are supplied to major
automakers in North America. These acquisitions will add principally to the
Company's transportation products and general industry segments.
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 financial and competitive position of the Company
or its divisions and subsidiaries.
4
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) 1996 1995 1994
------- ------- -------
Sales to Unaffiliated Customers(1)
Construction Materials 325,165 308,327 288,533
Transportation Products 371,517 278,867 200,213
General Industry 320,813 235,340 203,904
Operating Profit or Loss
Construction Materials 43,582 36,676 35,066
Transportation Products 27,495 20,241 13,497
General Industry 40,260 29,627 21,391
Interest, net ( 8,396) ( 4,055) ( 1,670)
Corporate(2) (10,901) ( 9,631) ( 9,493)
Identifiable Assets
Construction Materials 183,836 169,476 155,383
Transportation Products 309,125 210,700 122,031
General Industry 225,282 143,606 105,482
Corporate(3) 28,592 18,641 102,387
(1) Intersegment sales or transfers are not material.
(2) Includes general corporate and idle property expenses.
(3) Consists primarily of cash and cash equivalents, facilities, and other
invested assets.
5
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, 1996:
____________________________________________________________________________________________________
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* 15,500 -
____________________________________________________________________________________________________
Elastomeric membranes O,M,W Carlisle, PA Owned 413,000 79
and related roofing O,M,W Greenville, IL Owned 165,400 35
products O,M Stafford, TX Owned 108,500 8
O,M Jemison, AL Owned 40,900 8
O,M Lodi, CA Leased to 1998 41,800 -
O,M Tualatin, OR Leased to 1998 59,900 5
O,M Stafford, TX Leased to 1998 56,840 3
O,M,W Fontana, CA Leased to 2001* 76,500 -
O,M,W Sapulpa, OK Owned 34,000 3
O,M,W Wylie, TX Owned 44,000 6
O,W Mississauga, Ont. Leased to 2000 25,000 1
O Akron, OH Leased to 1997* 9,600 -
M Herington, Kansas Leased to 1999* 37,000 -
------ ---
1,112,440 148
____________________________________________________________________________________________________
Small pneumatic tires O,M,W Carlisle, PA Owned 465,900 29
and tubes; stamped and O,M,W Aiken, SC Owned 220,500 23
roll-formed wheels O,M,W Port Fortin, Owned 167,604 -
Trinidad
O,M,W Long Beach, CA Owned 60,000 -
W Trenton, SC Leased to 1999* 176,450 -
O,W Long Beach, CA Leased to *** 92,000 **
O,M,W Shenzhen, China Leased to 1999* 75,000 5
------ ---
1,257,454 57
____________________________________________________________________________________________________
Molded plastics products O,M,W Oklahoma City, OK Owned 147,000 8
for commercial food W Oklahoma City, OK Leased to 1996* 166,000 -
service; ceramic
tableware O,M,W Fredonia, WI Owned 192,500 12
O,M,W Sparta, WI Owned 41,100 3
W Zanesville, OH Owned 125,600 **
W Zanesville, OH Leased to *** 6,300 -
O Northbrook, IL Leased to 1997* 7,300 -
------ ---
685,800 23
____________________________________________________________________________________________________
Custom-manufactured O,M,W Middlefield, OH Owned 200,600 28
rubber and plastics O,M,W Crestline, OH Owned 173,000 40
products, including
precision-molded O,M,W Canton, OH Owned 87,800 17
engine components O,M,W Lake City, PA Owned 103,000 30
and blow-molded bumper O,M,W Trenton, SC Owned 67,700 10
beams M Belleville, MI Owned 46,000 -
M Erie, PA Owned 95,800 -
M Lapeer, MI Owned 96,530 -
M Tuscaloosa, AL Owned 67,376 -
M Erie, PA Leased to *** 108,000* -
M Canton, OH Leased to 1998* 31,840 -
O Chardon, OH Leased to 1998* 7,500 -
--------- ---
1,085,146 125
____________________________________________________________________________________________________
6
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, W Charlottesville, VA Owned 25,000 4
friction products O,M,W Logansport, IN Owned 112,000 50
O,M,W Bloomington, IN Owned 250,000 21
O,M Brantford, Ont. Leased to 1999* 24,000 1
O,M,W Zevenaar, Holland Owned 26,000 1
--------- ---
644,350 122
____________________________________________________________________________________________________
Specialized lowbed
trailers for O,M,W Mitchell, SD Owned 242,730 36
construction and
commercial O,M,W Brookville, PA Owned 111,640 15
markets O,M,W Green Pond, AL Owned 43,860 14
--------- ---
398,230 65
____________________________________________________________________________________________________
Liquid transport
tanks and O,M,W New Lisbon, WI Owned 195,500 31
in-plant
processing equipment O,M,W Elroy, WI Owned 84,020 7
O,M,W Winsted, MN Owned 382,894 -
O,M,W Tavares, FL Leased to 1998* 73,967 18
--------- ---
737,381 56
____________________________________________________________________________________________________
High- and medium- O,M,W St. Augustine, FL Owned 166,750 17
temperature insulated
wire and cable
____________________________________________________________________________________________________
Refrigerated marine O,M Green Cove Springs, Leased to 2003* 100,000 8
containers FL
____________________________________________________________________________________________________
Recording and
monitoring devices O,M,W Burnsville, MN Leased to 1999* 14,700 2
6,217,751 623
========= ===
* Lease provides for renewal
Total plant space of 6,217,751 sq. ft. is used for
OWNED LEASED TOTAL
----- ------ -----
Office 381,983 124,172 506,155
Manufacturing 3,177,770 675,007 3,852,777
Warehousing 1,373,153 485,666 1,858,819
--------- ------- ---------
4,932,906 1,284,845 6,217,751
========= ========= =========
As of December 31, 1996, the Company owned an additional facility. It is
related to a wire and cable business sold in early 1988 and totals 120,000
square feet. The facility is being held for sale. An additional 490,080 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.
7
ITEM 3. LEGAL PROCEEDINGS
In connection with its 1995 acquisition of Trail King Industries, Inc., the
Company knowingly assumed the liabilities of the former Trail King relating to
the case UNITED STATES OF AMERICA V. TRAIL KING INDUSTRIES, INC., Case No.
94-4238, filed October 20, 1994 in the United States District Court, District of
South Dakota (the "EPA Litigation"). The case involves allegations by the
Environmental Protection Agency ("EPA") that the former Trail King violated
certain reporting requirements of the Clean Water Act. The Company has taken
appropriate remedial action and believes that Trail King is now operating in
full compliance with the Clean Water Act and the regulations thereunder. On
March 5, 1997, the Company and the EPA entered into a Consent Decree.
Pursuant to the Consent Decree and without admitting liability, the Company has
agreed to pay to the United States $400,000 in full settlement of the EPA
Litigation.
Except as described in the preceding paragraph, as of December 31, 1996,
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.
On October 4, 1996, the Company's Board of Directors declared a two-for-one
stock split of the Company's common stock. The stock split was conditioned upon
obtaining shareholder approval of an amendment to the Company's Restated
Certificate of Incorporation increasing the number of shares of common stock
authorized for issuance from 25,000,000 to 50,000,000. At a special meeting of
the Company's shareholders held December 20, 1996, the shareholders approved the
amendment thereby effecting the two-for-one stock split as follows:
FOR AGAINST ABSTAIN
--- ------- -------
Proposal to amend the 24,626,467 25,563 246,102
Company's Restated
Certificate of Incorporation
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, 1996, there were 2,145 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 1996 and 1995 were as follows:
8
FIRST SECOND THIRD FOURTH
----- ------ ----- ------
1996(1)
- ----
Dividends per share $.1100 $.1100 $.1225 $.1225
Stock Price
High $22 9/16 $28 3/16 $28 1/16 $30 1/2
Low $19 1/16 $21 5/8 $24 1/4 $26 7/8
1995(1)
- ----
Dividends per share $ .10 $ .10 $ .11 $ .11
Stock Price
High $18 1/2 $20 3/16 $21 3/16 $21 13/16
Low $17 1/4 $18 3/16 $19 1/4 $19 15/16
(1) All amounts have been restated to reflect the two-for-one stock split
completed on January 15, 1997.
9
ITEM 6. SELECTED FINANCIAL DATA.
(In thousands except
per share data) 1996 1995 1994 1993 1992
-------- -------- ------- ------- --------
SUMMARY OF OPERATIONS
- ---------------------
Net Sales $1,017,495 822,534 692,650 611,270 528,052
Net earnings from
continuing operations $ 55,680 44,081 35,568 28,378 24,228
Per share(1) $ 1.80 1.41 1.15 0.92 0.79
Net earnings from
discontinued operations $ - - - 471
Per share(1) $ - - - 0.02
Net earnings $ 55,680 44,081 35,568 28,378 24,699
Per share(1) $ 1.80 1.41 1.15 0.92 0.80
FINANCIAL POSITION
Total assets $ 742,463 542,423 485,283 420,363 383,250
Long-term debt $ 191,167 72,725 69,148 59,548 69,098
OTHER DATA
Dividends paid $ 14,129 12,928 11,605 10,705 10,076
Per share(1) $ 0.465 0.420 0.380 0.350 0.330
(1) All share and per share amounts have been restated to reflect
two-for-one stock splits completed on June 1, 1993 and January 15,
1997.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Carlisle Companies Incorporated sales increased 24% in 1996 to $1.02
billion, up $195.0 million from $822.5 million in 1995. Net earnings of $55.7
million, or $1.80 per share, were up 26% from $44.1 million, or $1.41 a share,
in 1995. Each of the Company's three operating segments reported significant
increases in both sales and earnings from improvements in ongoing operations
augmented by acquisitions made during the year.
The Company completed five acquisitions in 1996. In February, Carlisle
purchased the assets of Insul-foam, Inc., enhancing its position in the
non-residential roofing market. In March, the Company purchased Intero, Inc.
and Unique Stamping, Inc., manufacturers of steel and aluminum rims for trailer
wheel manufacturers and wheels for the automotive aftermarket. These companies
are integral to Carlisle's strategy of providing specialty tire and wheel
assemblies to original equipment markets. In August, Carlisle completed the
acquisition of
10
Scherping Systems, Inc. and Scherping Controls, Inc., a leading supplier of
cheese processing equipment for the dairy industry, extending Carlisle's Walker
Stainless steel processing equipment capabilities. In September, Carlisle
acquired Hartstone, Inc., a designer and manufacturer of ceramic tableware,
cookware and decorative kitchenware, adding new products to the Company's
foodservice business. In October, Carlisle completed its acquisition of The
Engineered Plastics Division of Johnson Controls, Inc., a supplier of
precision-molded automotive components and blow-molded bumper beams that are
sold to major automakers in North America. This acquisition has been
consolidated with Carlisle's Geauga Company to form Carlisle Engineered
Products, expanding Carlisle's technical and manufacturing capabilities as a
supplier to the transportation equipment industry.
In 1995, the Company completed four acquisitions, adding principally to the
transportation products segment. The Company acquired the assets of Thunderline
Corporation, a producer of rubber parts for the automotive industry. In June of
1995, the Company completed the acquisition of Trail King Industries, Inc., the
leading manufacturer of specialized low bed trailers used in the transportation
of construction equipment and in other commercial applications. In September
1995, Trail King finalized the complementary acquisition of Ti-Brook, Inc. a
designer, manufacturer and distributor of specialized dump bodies and trailers.
In October, the Company acquired Walker Stainless Equipment Company, a leading
supplier of transportation trailers for liquid food products, as well as a
designer and manufacturer of in-plant processing equipment for the food,
pharmaceutical and chemical industries.
SALES increased 24%, or $195.0 million in 1996 to $1.02 billion from $822.5
million in 1995. Sales in 1995 increased 19%, or $129.8 million, from 1994 sales
of $692.7 million. Acquisitions made in 1996 accounted for 42%, or $81.2
million, of the 1996 sales increase. The remaining increase in sales resulted
from a full-year's sales of acquisitions made in 1995, as well as growth in the
Company's existing operations. The acquisitions made in 1995 account for
approximately 40% of the 1995 sales increase, with the remaining due to
increases in continuing operations.
NET EARNINGS increased 26% to $55.7 million, or $1.80 a share, in 1996. This
compares to total net earnings of $44.1 million, or $1.41 a share, in 1995 and
$35.6 million, or $1.15 a share in 1994.
CONSTRUCTION MATERIALS segment sales increased 6% in 1996 to $325.2 million
compared to $308.3 million in 1995, and increased 7% in 1995, compared to $288.6
million in 1994. Increases in domestic shipments of roofing membranes of 7% and
5% in 1996 and 1995, respectively, contributed to these results. The 1995 sales
include $10.7 million from the West Coast portion of Carlisle's metal roofing
business, which was divested in 1996 because of unsatisfactory results. The
Company expects to sell the remaining assets of this business in 1997. Segment
earnings in 1996 increased to $43.6 million, or 19% over 1995 results because of
11
a favorable product mix and effective cost control. The earnings in 1995
increased 5% to $36.7 million due to effective cost control and productivity
improvements offset by pricing pressures as a result from raw material cost
increases and a less favorable product mix.
TRANSPORTATION PRODUCTS segment sales were $371.5 million in 1996, an increase
of 33%, or $92.6 million, over 1995. The 1995 segment net sales of $278.9
million was an increase of 39%, or $78.7 million, over the 1994 sales of $200.2
million. While acquisitions accounted for 36%, or $32.9 million, and 66%, or
$52.0 million, of the growth in 1996 and 1995, respectively, all operations in
this segment recorded sales gains. Segment earnings improved 34%, or $7.3
million, in 1996, and 50%, or $6.7 million, in 1995. Earnings in the
custom-molded plastics and rubber operations increased 23% in 1996 and 12% in
1995 on the strength of the new product introductions and the additional
capacity brought by acquisitions. Results in the heavy duty friction operations
were strengthened in 1996 with the success of its Altec re-manufactured brake
shoe operation, which provides a finished product to the aftermarket. Offsetting
this improvement in the aftermarket were significant declines in sales to truck
and trailer manufacturers because of reduced build levels. Heavy duty friction
product sales were down slightly in 1995, compared to a very strong 1994, as a
result of the slowing truck and trailer manufacturers' build levels in the
second half of 1995 and flat sales in the aftermarket. Brake products
experienced solid sales growth in 1996 as a result of continued penetration in
international markets and new product offerings. Earnings from friction and
brake products improved 19% in 1996 and 25% in 1995 due to increased margins
from sales in the replacement market and productivity improvements, which were
offset in 1995 by the impact of closing the Brazilian operations. The
specialized truck and trailer operations, acquired in the third and fourth
quarter of 1995, experienced shortfalls in the market for commercial trailers
and dump trailers, resulting in a slight decline in 1996 sales, compared to
1995's full year sales. Sales of aircraft wire increased 63% in 1996 and 15% in
1995, because of increases in the production of commercial aircraft. Earnings
from this operation out paced sales through improved manufacturing productivity.
The Company's refrigerated container leasing joint venture continued to grow in
sales and earnings from increased market penetration in both 1996 and 1995,
offsetting losses in its container manufacturing operations.
GENERAL INDUSTRY segment sales were $320.8 million in 1996, an increase of 36%,
or $85.5 million, over 1995. Acquisitions made in 1996 account for $48.3
million, or 56%, of this increase. Sales of $235.3 million in 1995, which
represents an increase of 15%, or $31.4 million over 1994, were unfavorably
impacted by $6.7 million as a result of divestitures in 1994. Segment earnings
were $40.3 million in 1996, an increase of 36% or $10.7 million, over 1995, and
$29.6 million in 1995, a gain of 39% or $8.2 million, over 1994. Sales in the
Company's specialty tire and wheel operation increased 36% in 1996 and 8% in
1995 not only because of the 1996 acquisition of Intero/Unique, but also because
of continued market
12
share gains in lawn and garden, trailer and golf car markets. The specialty
tire and wheel 1996 sales gains were offset by softening in the lawn and garden
original equipment markets, as several major customers reduced production
schedules to balance excess inventories. Earnings from ongoing operations were
strengthened by improved manufacturing productivity. Despite weakened markets
in 1996, sales in the foodservice operations increased 3% in 1996 and 28% in
1995 as a result of increased market penetration, expanded product offerings,
international sales and acquisitions. Earnings in the foodservice operations
increased by 20% in 1996 and 27% in 1995 primarily because of improvements in
productivity, offset in 1995 by a small decline in gross margins. The
acquisition of Walker Stainless Equipment in 1995 and Scherping Systems in 1996
contributed to the sales and earnings from the manufacturing of in-plant
processing equipment.
GROSS MARGINS as a percent of sales were 23.4% in 1996, 24.0% in 1995 and 25.5%
in 1994. This decline reflects not only depressed selling prices, plus the
first year start-up costs in 1995, in the Company's container manufacturing
operation, but also lower gross margins in acquired companies, which are offset
by corresponding lower SG&A cost structures. Operations across all segments,
however, maintained consistent margins, with higher production volumes allowing
manufacturing expenses to be absorbed effectively.
SELLING AND ADMINISTRATIVE expenses, as a percent of sales, declined from 14.9%
in 1994 to 13.3% in 1995 and 12.6% in 1996, reflecting disciplined cost control
activities applied against increased sales throughout all operations. Expense
levels in the construction materials segment were reduced approximately $1.9
million compared to prior year, primarily because of the divestiture of the
engineering metals operation on the West Coast in early 1996.
RESEARCH AND DEVELOPMENT expenses decreased to $11.9 million in 1996, compared
to $12.3 million in 1995, consistent with $11.9 million in 1994. Heavy duty
friction operations completed its new technology center in Charlottesville,
Virginia. The increase in R&D expenditures for high performance wire resulted
from purchases of materials for microwave coaxial cable and high speed "Z-Skew"
product development. The truck and trailer operations have incurred R&D expense
in new products which will be available for sale in Spring of 1997.
INTEREST EXPENSE was $9.1 million in 1996, $6.1 million in 1995 and $4.6 million
in 1994. The increase in interest expense was attributable primarily to the
Company's increased levels of debt.
INCOME TAXES were computed for financial statement purposes at 39.5% in 1996,
the same rate used in 1995 and 1994. An analysis of income taxes for each year
is presented in the Notes to Consolidated Financial Statements.
13
ORDER BACKLOG was $200.8 million at December 31, 1996, and $160.7 million at
December 31, 1995, and $103.9 million at December 31, 1994. Although 19% of the
increase from December 31, 1995 was related to operations acquired in 1996,
stronger backlog positions were evident throughout all major operations within
the Company.
ACCOUNTS RECEIVABLE were $158.5 million at year-end 1996 and $126.6 million at
the end of 1995. The acquisitions made in 1996 accounted for $28.4 million, or
89%, of the 1996 increase and $12.9 million or 47%, of the 1995 increase. The
growth in sales revenue at each of the Company's major operations was the
remaining factor contributing to the higher receivables balance. An aggressive
effort is consistently made to manage receivables across the Company. The
average days' sales in the average accounts receivables outstanding declined to
55 days in 1996 from 56 days in 1995 and 60 days in 1994.
INVENTORIES valued primarily by the last-in, first-out (LIFO) method, were
$137.1 million at December 31, 1996, compared to $121.7 million at December 31,
1995. Of the increase in inventories, $14.1 million is attributable to
acquisitions made in 1996. The remainder of the increase reflects strong demand
and backlog, as well as the operation's normal seasonal buildup.
WORKING CAPITAL was $175.3 million at December 31, 1996 and $153.7 million at
December 31, 1995. The $21.6 million increase resulted principally from
acquisitions made in 1996.
CAPITAL EXPENDITURES totaled $35.0 million in 1996, compared to $37.5 million in
1995. Significant projects in 1996 included a pressure-sensitive tape line for
construction materials; presses, tire building machines and other related
equipment for the specialty tire and wheels operation in Trinidad; and new cable
wrapping equipment. In 1995, the major components of capital spending were the
purchase of a state-of-the-art rubber mixing system for the construction
materials segment; the purchase of additional molds and assets to expand
specialty tires and wheels operations; and the expansion of molding production
capabilities at custom plastics and rubber operations.
CASH FLOWS provided by operating activities were $86.0 million in 1996 compared,
to $55.7 million in 1995 and $72.6 million in 1994. Investing activities,
primarily company acquisitions and capital expenditures, increased in 1996 to
$165.4 million from $100.7 million in 1995 and $38.8 million in 1994. The
Company utilized $124.4 million of its revolving credit facilities in 1996 to
finance its acquisitions. The Company also purchased $14.2 million of treasury
stock and paid out $14.1 million in dividends in 1996. In addition, 147,600
shares of treasury stock were issued as part of the acquisition of Hartstone,
Inc. In 1995, the Company purchased $9.4 million of stock for treasury and
paid out $12.9 million in dividends. In 1994, the Company obtained $8.0 million
in long-term financing, purchased $10.9 million of treasury stock and paid
14
out $11.6 million in dividends. In addition, $11.0 million of treasury stock
was issued for the acquisition of the Sparta Brush Company.
In April 1996, the Company secured a $100 million revolving credit
facility, which was subsequently increased to $150 million. The Company's
primary liquidity and capital sources are its operations, revolving credit
facility and long-term borrowings. The Company continues to have substantial
borrowing capacity and financial flexibility. Carlisle issued ten year bonds
for $150 million at the end of January 1997. The net proceeds from these bonds
were used to repay amounts outstanding under the revolving credit facility, $115
million at December 31, 1996, and other short term debt. The remaining net
proceeds from this offering will be used for general corporate purposes.
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 1996 or prior years, and none are anticipated in the
foreseeable future.
THE 1997 OUTLOOK is favorable. With the successful integration of the various
businesses acquired in 1995 and 1996, and the growth of our existing core
businesses, 1997 should be another strong year for Carlisle.
With the introduction of new products and continued growth in industrial
construction, reflecting the overall level of domestic economic activity, as
well as the repair and replacement of existing commercial roofs, the
Construction Materials segment should produce solid results in 1997.
Continued growth in the Transportation segment is expected in 1997. With
stable demand for automobiles and a broadened customer base, growth in
engineered plastic and rubber components should continue in 1997. While some
further decline in the manufacturing of Class 8 trucks is expected, stable sales
and earnings are anticipated from heavy duty friction and brake products as a
result of aftermarket demand and new product development. The ongoing
integration of the manufacturing of steel deck trailer and dump bodies,
offsetting a decline in the dairy tanker market, should result in strong
performances in the specialty trailer businesses. Strong backlogs in high
performance aircraft wire and continued market growth should result in another
strong year. With the productivity gains and increased customer base developed
in 1996, the results from the manufacturing of refrigerated containers should
improve, provided that market conditions improve. The existing lease rate plus
market growth should result in growth in earnings from the Company's
refrigerated container leasing joint venture.
15
Solid results are expected in the General Industry segment from Carlisle's
leading position in specialty tires and wheels. Additional product offerings and
market development in foodservice operations, along with strong demand for
stainless steel in-plant processing equipment, will also strengthen the growth
in General Industry.
Our future is promising. Our confidence is based on a sound backlog, a
leading position in many niche markets, growing international activities,
available financial resources, and talented and dedicated employees. We expect
to continue to progress toward our long-term goals for growth in sales and
earnings.
16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
CONSOLIDATED STATEMENT OF EARNINGS
FOR YEARS ENDED DECEMBER 31
(In thousands except per share data)
1996 1995 1994
------ ------ ------
Net sales $1,017,495 $ 822,534 $692,650
----------- ---------- ---------
Cost and expenses:
Cost of goods sold 779,797 624,860 516,282
Selling and administrative
expenses 128,676 109,236 102,992
Research and development
expenses 11,900 12,339 11,933
--------- ---------- ---------
920,373 746,435 631,207
Other income (deductions):
Investment income 666 2,020 2,977
Interest expense ( 9,062) ( 6,075) ( 4,647)
Other, net 3,314 814 ( 982)
--------- ---------- ---------
( 5,082) ( 3,241) ( 2,652)
--------- ---------- ---------
Earnings before income taxes 92,040 72,858 58,791
Income taxes 36,360 28,777 23,223
Net earnings $ 55,680 $ 44,081 $ 35,568
=========== ========== =========
Average shares and equivalents 30,953 31,266 30,960
Net earnings per share: $ 1.80 $ 1.41 $ 1.15
----------- ---------- ---------
See accompanying Notes to Consolidated Financial Statements.
17
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, 1993 $19,665 $ 132 $258,956 $(58,230)
Net earnings - - 35,568 -
Cash dividends - $0.380
a share - - (11,605) -
Exercise of stock
options & other - 7,826 - 6,442
Purchase of 657,482
treasury shares - - - (10,904)
-------------------------------------------
Balance at
December 31, 1994 19,665 7,958 282,919 (62,692)
Net earnings - - 44,081 -
Cash dividends - $0.420
a share - - (12,928) -
Exercise of stock
options & other - 1,358 - 2,344
Purchase of 496,616
treasury share - - - ( 9,448)
-------------------------------------------
Balance at
December 31, 1995 19,665 9,316 314,072 (69,796)
Net earnings - - 55,680 -
Cash dividends -$0.465
a share - - (14,129) -
Exercise of stock
options & other - 3,765 - 3,098
Purchase of 649,966
treasury shares - - - (14,168)
-------------------------------------------
19,665 13,081 355,623 (80,866)
Two-for-one stock split 19,666 (12,601) (7,065) -
-------------------------------------------
Balance at
December 31, 1996 $39,331 $ 480 $348,558 $(80,866)
See accompanying Notes to Consolidated Financial Statements.
18
CONSOLIDATED BALANCE SHEET
AT DECEMBER 31
IN THOUSANDS EXCEPT SHARE DATA 1996 1995
------ ------
ASSETS
Current assets
Cash and cash equivalents $ 8,312 $ 3,198
Receivables, less allowances of $4,097
in 1996 and $3,721 in 1995 158,463 126,610
Inventories 137,092 121,736
Deferred income taxes 25,036 18,127
Prepaid expenses and other 17,030 12,273
--------- ---------
Total current assets 345,933 281,944
--------- ---------
Property, plant and equipment, net 264,238 193,134
--------- ---------
Other assets
Patents, goodwill and other intangibles 108,648 37,080
Investments and advances to affiliates 11,976 11,223
Receivables and other assets 9,854 10,866
Deferred income taxes 1,814 8,176
--------- ---------
Total other assets 132,292 67,345
--------- ---------
$742,463 $542,423
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 74,338 $ 45,194
Accrued expenses 96,310 83,041
--------- ---------
Total current liabilities 170,648 128,235
--------- ---------
Long-term liabilities
Long-term debt 191,167 72,725
Product warranties 71,478 65,851
Deferred compensation and other
liabilities 1,667 2,355
--------- ---------
Total long-term liabilities 264,312 140,931
--------- ---------
Shareholders' equity
Preferred stock, $1 par value. Authorized
and unissued 5,000,000 shares
Common stock, $1 par value. Authorized
50,000,000 shares; issued 39,330,624
shares 39,331 19,665
Additional paid-in capital 480 9,316
Retained earnings 348,558 314,072
Cost of shares in treasury-8,979,300
shares in 1996 and 8,692,948
shares in 1995 ( 80,866) ( 69,796)
--------- ---------
Total shareholders' equity 307,503 273,257
--------- ---------
$742,463 $542,423
========= =========
See accompanying Notes to Consolidated Financial Statements.
19
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR YEARS ENDED DECEMBER 31
(IN THOUSANDS) 1996 1995 1994
OPERATING ACTIVITIES
Net earnings $55,680 $44,081 $35,568
Reconciliation of net earnings
to cash flows:
Depreciation 25,320 20,331 18,322
Amortization 4,438 2,899 3,618
Loss on sales of property,
equipment, and business 216 570 108
Changes in assets and liabilities,
excluding effects of
acquisitions and divestitures:
Current and long-term receivables ( 13,237) ( 8,616) ( 8,558)
Inventories ( 5,837) ( 17,324) ( 7,572)
Accounts payable and
accrued expenses 16,667 1,928 13,763
Prepaid, deferred and current income
taxes ( 4,260) ( 993) 1,270
Long-term liabilities 4,939 7,429 13,302
Other 2,106 5,398 2,755
--------- --------- ---------
Net cash provided by operating
activities 86,032 55,703 72,576
--------- --------- ---------
Investing Activities
Capital expenditures ( 34,990) ( 37,467) ( 31,082)
Acquisitions, net of cash (133,719) ( 67,006) ( 8,417)
Sales of property, equipment, and
business 3,489 2,794 4,881
Other ( 155) 1,014 ( 4,229)
Net cash used in investing activities (165,375) (100,665) (38,847)
Financing Activities
Proceeds from long-term debt 124,358 -- 8,000
Reductions of long-term debt ( 11,604) ( 436) ( 50)
Dividends ( 14,129) ( 12,928) ( 11,605)
Purchases of treasury shares ( 14,168) ( 9,448) ( 10,904)
--------- --------- ---------
Net cash provided by (used in)
financing activities 84,457 ( 22,812) ( 14,559)
--------- --------- ---------
Change in cash and cash equivalents 5,114 ( 67,774) 19,170
Cash and cash equivalents
Beginning of year 3,198 70,972 51,802
--------- --------- ---------
End of year $ 8,312 $ 3,198 $ 70,972
========= ========= =========
See accompanying Notes to Consolidated Financial Statements.
20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Carlisle Companies Incorporated and Subsidiaries
SUMMARY OF ACCOUNTING POLICIES
BASIS OF CONSOLIDATION. The consolidated financial statements include the
accounts of the Company and its subsidiaries. Investments in affiliates where
the Company does not have majority control, none of which are significant, are
accounted for on the equity method. All material intercompany transactions and
accounts have been eliminated.
REVENUE RECOGNITION. The Company recognizes revenues from product sales upon
shipment to the customer. The substantial majority of the Company's product
sales are to customers in the United States.
USE OF ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.
CASH AND CASH EQUIVALENTS. The Company generally considers securities with a
remaining maturity of three months or less when acquired to be cash equivalents.
Cash and cash equivalents are stated at cost, which approximates market value.
INVENTORIES. 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. 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, GOODWILL AND OTHER INTANGIBLES. Patents and other intangibles, recorded
at cost, amounted to $6.9 million and $8.1 million at December 31, 1996 and
1995, respectively (net of accumulated amortization of $12.8 million and $11.0
million, respectively), and are amortized over their remaining lives averaging
five years. Goodwill, representing the excess of acquisition cost over the fair
value of specifically identifiable assets acquired, was $101.8 million and $29.0
million at December 31, 1996 and 1995, respectively (net of accumulated
amortization of $3.6 million and $1.1 million, respectively), and is amortized
on a straight-
21
line basis over various periods not exceeding 30 years. The Company evaluates
the recoverability of goodwill based on the estimated, undiscounted future cash
flows attributable to the operations with which the goodwill is associated.
PRODUCT WARRANTIES. The Company offers warranties on the sales of certain of its
products and records an accrual for estimated future claims. Such accruals are
based upon historical experience and management's estimate of the level of
future claims.
LEASES. The Company is obligated under various noncancelable operating leases
for certain facilities and equipment. Rent expense was $2.6 million, $2.8
million, and $2.6 million, in 1996, 1995 and 1994 respectively.
INCOME TAXES. 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. 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.
FAIR VALUE OF FINANCIAL INSTRUMENTS. The estimated fair market values of the
Company's financial instruments approximate their recorded values.
RECLASSIFICATIONS. Certain reclassifications have been made to prior years'
information to conform to 1996 presentation.
INVENTORIES
The components of inventories are:
IN THOUSANDS 1996 1995
---- ----
FIFO cost (approximates current costs):
Finished goods $ 82,253 $ 65,995
Work in process 17,574 15,016
Raw materials 51,872 56,810
--------- ---------
$151,699 $137,821
Excess of FIFO cost over LIFO value ( 14,607) ( 16,085)
--------- ---------
$137,092 $121,736
========= =========
22
PROPERTY, PLANT & EQUIPMENT
The components of property, plant and equipment are:
IN THOUSANDS 1996 1995
---- ----
Land $ 6,316 $ 5,283
Buildings & leasehold improvements 114,384 97,725
Machinery & equipment 341,296 272,718
Projects in progress 21,016 17,836
--------- ---------
483,012 393,562
Accumulated depreciation (218,774) (200,428)
--------- ---------
$264,238 $193,134
========= =========
BORROWINGS
Long-term debt includes:
IN THOUSANDS 1996 1995
---- ----
Short-term obligations to be refinanced $124,358 $ --
8.09% senior notes due 1998-2002 48,000 48,000
Industrial Development and Revenue
Bonds due through 2014 12,505 21,760
Other, including capital lease obligations 7,005 3,732
--------- --------
$191,868 $73,492
Less current maturities ( 701) ( 767)
--------- --------
$191,167 $72,725
========= ========
On January 28, 1997, the Company issued $150 million in notes due in 2007
at an interest rate of 7.25%. The net proceeds will be used to repay all
amounts outstanding under the Company's revolving credit facility, to repay
other short-term indebtedness and for general corporate purposes.
A revolving credit facility was established in 1996 for $150 million with
various banks. As of December 31, 1996, $35 million was unused. The Company
also had available unsecured lines of credit from banks of $20 million, of which
$10.6 million was unused as of December 31, 1996.
At December 31, 1996, letters of credit amounting to $19.1 million were
outstanding, primarily to provide security under insurance arrangements and
certain borrowings.
The weighted average interest rates on the revenue bonds for 1996 and 1995
were 3.5% and 4.4%, respectively.
23
The debt facilities contain various restrictive covenants and limitations,
all of which were complied with in 1996 and 1995. The industrial development
and revenue bonds are collateralized by the facilities and equipment acquired
through the proceeds of the related bond issuances.
Cash payments for interest were $6.9 million in 1996, $5.9 million in 1995,
and $4.4 million in 1994.
The aggregate amount of long-term debt maturing in each of the next five
years is approximately $0.7 million in 1997, and $10.3 million in 1998 through
2001.
ACQUISITIONS
Acquisitions completed by the Company in the last three years include:
1996-The Engineered Plastics Division (EPD) of Johnson Controls, Inc., a leading
supplier of technologically advanced components to the automotive industry;
Intero, Inc., and Unique Stamping, Inc., manufacturers of steel and aluminum
wheels and rims for the OEM trailer market and automotive aftermarket; Scherping
Systems, Inc. and Scherping Controls, Inc., a leading supplier of cheese
processing equipment for the dairy industry; Hartstone, Inc., a leading designer
and manufacturer of ceramic tableware, cookware and decorative kitchenware, and
the manufacturing assets and fleece back sheeting technology of Insulfoam, Inc.;
1995-Trail King Industries, a manufacturer of specialized trailers used in the
transportation of construction equipment; Ti-Brook, Inc. and Ti-Brook South,
Inc., manufacturers of a variety of dump bodies and trailers; Walker Stainless
Equipment Company, a manufacturer of stainless steel equipment; and Thunderline
Corporation, a designer and manufacturer of custom-molded rubber parts utilized
for the automobile industry; 1994-Sparta Brush Company, a manufacturer of
specialized brushes and cleaning tools; and the coatings and waterproofing
business of Quaker Construction Products, Inc.
These acquisitions were completed for cash, assumptions of debt, and
issuance of stock aggregating approximately $257.6 million and have been
accounted for as purchases. The Sparta Brush Company and Hartstone, Inc.,
acquisitions included the issuance of treasury shares amounting to $15.3
million.
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.
24
SHAREHOLDERS' EQUITY
On October 4, 1996, the Company's Board of Directors authorized a
two-for-one stock split which was issued on January 15, 1997, to shareholders of
record on January 2, 1997. The split resulted in the issuance of 19,665,312 new
shares of common stock including 4,489,650 shares issued as treasury shares. In
addition, authorized shares were increased from 25,000,000 to 50,000,000. 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 Shareholders' Rights Agreement which is designed to
protect shareholder 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 shareholders 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. On August 7, 1996, the Company amended
the Shareholders' Rights Agreement to, among other things, extend the term of
the Rights until August 6, 2006.
Common shareholders of record on 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 is
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.
In 1996, 33,132 shares of restricted stock were issued and 2,114 shares
were surrendered under the terms of the program. At December 31, 1996 an
additional 2,208,552 shares of the Company's common stock was available for
issuance as restricted stock.
25
The activity under the stock options plan is as follows:
Number Option
of Shares Prices
--------- ------
Outstanding at December 31, 1993 1,320,718 $ 8.07-15.38
Options granted 201,000 16.25-17.25
Options exercised ( 239,580) 8.07-12.32
Options surrendered ( 28,866) 12.32
Outstanding at December 31, 1994 1,253,272 $8.07-17.25
Options granted 442,000 17.32-20.82
Options exercised ( 211,476) 8.41-12.32
Options surrendered ( 4,798) 12.32
Outstanding at December 31, 1995 1,478,998 $8.07-20.82
Options granted 396,000 19.88-28.82
Options exercised ( 175,892) 8.07-16.25
Options surrendered ( 2,276) 12.32
Outstanding at December 31, 1996 1,696,830 8.07-28.82
==========
Exercisable at December 31, 1996 1,237,663 8.07-28.82
==========
Available for grant at December 31, 1996 288,182
==========
In 1996, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 123, "Accounting for Stock-Based Compensation," issued in October
1995. In accordance with the provisions of SFAS No. 123, the Company applies
APB Opinion 25 and related interpretations in accounting for its stock
compensation plans and, accordingly, does not recognize compensation cost for
its stock option plan. If the Company had elected to recognize compensation
cost based on the fair value of the options granted at grant date as prescribed
by SFAS No. 123, the effect on net earnings and earnings per share, in 1996 and
1995, would not have been significant.
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.
26
Pension expense includes:
IN THOUSANDS 1996 1995 1994
---- ---- ----
Service cost $3,374 $2,335 $2,498
Interest cost on projected
benefit obligation 6,122 5,682 5,037
Actual return on plan assets (6,440) (5,982) (5,757)
Net amortization and deferral ( 80) ( 38) ( 57)
Total pension expense $2,976 $1,997 $1,721
======= ======= =======
The funded status of the plans at December 31 was:
IN THOUSANDS 1996 1995
Actuarial present value of ---- ----
accumulated benefit obligation
Vested $72,709 $67,529
Non-vested 1,435 1,127
-------- --------
$74,144 $68,656
======== ========
Plan assets at fair value $90,737 $81,035
Projected benefit obligation (86,135) (80,304)
-------- --------
Plan assets in excess of projected
benefit obligation 4,602 731
Unamortized transition asset ( 4,285) ( 4,969)
Unrecognized prior service costs 3,031 5,198
Unrecognized net gains (11,695) ( 8,080)
Accrued pension expense $(8,347) $(7,120)
======== ========
The projected benefit obligation was determined using an assumed discount
rate of 7.75% in 1996 and 1995, and 8.25% in 1994. The assumed rate of
compensation increase was 4.5% and the expected rate of return on plan assets
was 8.75% in 1996, 1995 and 1994.
Additionally, the Company maintains a retirement savings plan covering
substantially all employees other than those employees under collective
bargaining agreements. Plan expense was $3.2 million, $2.7 million, and $2.6
million, in 1996, 1995 and 1994, respectively.
The Company also has a limited number of unfunded post-retirement benefit
programs. The post-retirement benefit expense for the Company, inclusive of the
components of service costs, interest costs and the amortization of the
unrecognized transition obligation, was approximately $0.6 million ($0.4 million
after tax) during 1996, 1995 and 1994. The present value of the Company's
obligation under these plans is not significant.
27
INCOME TAXES
The provision for income taxes was as follows:
IN THOUSANDS 1996 1995 1994
---- ---- ----
Currently payable
Federal $27,954 $24,828 $18,276
State, local and other 9,788 7,742 8,046
-------- -------- --------
$37,742 $32,570 $26,322
Deferred (benefit)
Federal $(1,238) $(3,563) $( 839)
State, local and other ( 144) (230) (2,260)
-------- -------- --------
$(1,382) $(3,793) $(3,099)
-------- -------- --------
Total Provision $36,360 $28,777 $23,223
======== ======== ========
Deferred tax assets (liabilities) are comprised of the following at
December 31:
IN THOUSANDS 1996 1995
---- ----
Product warranty $ 34,232 $ 31,191
Inventory reserves 2,703 1,944
Doubtful receivables 2,423 1,728
Employee benefits 7,206 6,489
Other, net 9,699 8,834
--------- ---------
Deferred assets $ 56,263 $ 50,186
--------- ---------
Depreciation $(29,037) $(22,73)
Other, net (376) (1,151)
--------- ---------
Deferred liabilities $(29,413) $(23,883)
Net deferred tax assets $ 26,850 $ 26,303
========= =========
No valuation allowance is required for the deferred tax assets based on the
Company's past tax payments and estimated future taxable income.
A reconciliation of taxes computed at the statutory rate with the tax
provision is as follows:
28
IN THOUSANDS 1996 1995 1994
Federal income taxes
at statutory rate $32,214 $25,500 $20,577
State income taxes, net of
federal income tax benefit 2,912 2,706 2,881
Other, net 1,234 571 (235)
-------- -------- --------
$36,360 $28,777 $23,223
-------- -------- --------
Effective income tax rate 39.5% 39.5% 39.5%
Cash payments for income taxes were $40.5 million, $28.7 million and $22.3
million in 1996, 1995 and 1994, respectively.
29
SEGMENT INFORMATION
The Company's operations are classified into the following business
segments:
CONSTRUCTION MATERIALS. The principal products of this segment are rubber,
plastic and fleece back sheeting used predominantly on non-residential flat
roofs and related roofing accessories, including flashings, fasteners, ceiling
tapes, coatings and waterproofings. The markets served include new
construction, re-roofing and maintenance of low slope roofs, water containment,
HVAC sealants, and coatings and waterproofings.
TRANSPORTATION PRODUCTS. The principal products of this segment are heavy duty
friction and braking systems for truck and off-highway equipment, rubber and
plastic automotive components, including precision-molded engine components and
blow-molded bumper beams, high grade aerospace wire, specialty trailers,
self-contained ISO 40-foot perishable cargo shipping containers, standard and
custom-built high payload trailers and dump bodies. Customers include truck
OEMs, shipping lines, heavy equipment and truck dealers and aftermarket
distributors, commercial haulers, automotive OEMs and systems suppliers, and
dairy product distributors.
GENERAL INDUSTRY. The principal products of this segment include small bias-ply
rubber tires, stamped and roll-formed wheels, commercial and institutional
plastic foodservice permanentware and catering equipment, fiber glass and
composite material trays and dishes, ceramic tableware, specialty rubber and
plastic cleaning brushes and stainless steel processing equipment and their
related process control systems. Customers include foodservice distributors,
restaurants, golf car manufacturers, power equipment manufacturers, boat and
utility trailer manufacturers and dairy and pharmaceutical processors.
CORPORATE--includes general corporate and idle property expenses. Corporate
assets consist primarily of cash and cash equivalents, facilities, and other
invested assets.
30
Financial information for operations by reportable business segment is
included in the following summary:
(In thousands) Earnings
Before Deprec.
Income & Capital
Sales Taxes Assets Amort. Spending
------ -------- ------- ------- --------
1996
- ----
Construction Materials $325,165 $43,582 $183,836 $ 6,220 $ 6,580
Transportation Products 371,517 27,495 309,125 11,637 16,960
General Industry 320,813 40,260 225,282 11,201 11,360
Interest, net --- ( 8,396) --- --- ---
Corporate --- (10,901 24,220 700 90
--------- -------- -------- ------- -------
$1,017,495 $92,040 $742,463 $29,758 $34,990
========== ======== ======== ======= =======
1995
- ----
Construction Materials $308,327 $36,676 $169,476 $ 5,810 $ 9,622
Transportation Products 278,867 20,241 210,700 9,617 14,175
General Industry 235,340 29,627 143,606 7,076 13,404
Interest, net -- ( 4,055) -- -- --
Corporate -- ( 9,631) 18,641 727 266
--------- -------- -------- ------- -------
$ 822,534 $72,858 $542,423 $23,230 $37,467
========== ======== ======== ======= =======
1994
- ----
Construction Materials $ 288,533 $35,066 $155,383 $ 5,886 $ 3,166
Transportation Products 200,213 13,497 122,031 8,906 16,403
General Industry 203,904 21,391 105,482 6,296 11,214
Interest, net -- ( 1,670) -- -- --
Corporate -- ( 9,493) 102,387 852 299
--------- -------- -------- ------- -------
$ 692,650 $58,791 $485,283 $21,940 $31,082
========== ======== ======== ======= =======
QUARTERLY FINANCIAL DATA
(In thousands except per share
data) (unaudited)
FIRST SECOND THIRD FOURTH YEAR
--------- -------- -------- ------- ----------
1996
- ----
Net sales $ 225,121 262,315 252,603 277,456 $1,017,495
Gross margin $ 52,371 64,484 62,638 58,205 $ 237,698
Operating expenses $ 33,733 35,273 35,551 36,019 $ 140,576
Net earnings $ 10,639 16,441 15,461 13,139 $ 55,680
Net earnings per share: $ 0.35 0.53 0.50 0.42 $ 1.80
Dividends per share: $ 0.1100 0.1100 0.1225 0.1225 0.4650
Stock price:
High $ 22 9/16 $ 28 3/16 $ 28 1/16 $ 30 1/2
Low $ 19 1/16 $ 21 5/8 $ 24 1/4 $ 26 7/8
1995
- ----
Net sales $ 187,972 200,802 216,551 217,209 $822,534
Gross margin $ 44,443 50,223 52,792 50,216 $197,674
Operating expenses $ 30,039 28,727 31,017 31,792 $121,575
Net earnings $ 8,561 12,416 12,528 10,576 $ 44,081
Net earnings per share: $ 0.28 0.39 0.40 0.34 $ 1.41
Dividends per share: $ 0.10 0.10 0.11 0.11 $ 0.42
Stock price:
High $ 18 1/2 $ 20 3/16 $ 21 3/16 $21 13/16
Low $ 17 1/4 $ 18 3/16 $ 19 1/4 $19 15/16
31
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors
Carlisle Companies Incorporated:
We have audited the accompanying consolidated balance sheets of Carlisle
Companies Incorporated and subsidiaries as of December 31, 1996 and 1995 and the
related consolidated statements of earnings, shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1996. These
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 audit 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 financial statements referred to above present fairly,
in all material respects, the financial position of Carlisle Companies
Incorporated and subsidiaries as of December 31, 1996 and 1995, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1996, in conformity with generally accepted accounting
principles.
Arthur Andersen LLP
/s/ Arthur Andersen LLP
New York, New York
January 28, 1997
32
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
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, 1996, 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
- ---- --- ---------------------- -----------------
Stephen P. Munn 54 Chief Executive Officer September, 1988
since September, 1988, to date
and Chairman of the
Board since January,
1994, and President from
September, 1988 to
February, 1995, of the
Company.
Dennis J. Hall 55 President, since February, August, 1989
1995, and Executive Vice to date
President, Treasurer and Chief
Financial Officer, from
August, 1989 to February,
1995, of the Company.
Robert J. Ryan, Jr. 52 Vice President, Treasurer January, 1996
and Chief Financial to date
Officer of the Company.
John W. Altmeyer 38 Vice President, Corporate August, 1989
Development of the to date
Company.
Steven J. Ford 37 Vice President, Secretary and July, 1995
General Counsel, of the Company to date
since July, 1995. Previously
an associate with Bond,
Schoeneck & King, Syracuse, NY.
Scott A. Kingsley(1) 32 Vice President, Controller April, 1996 to
of the Company. December, 1996
(1) Mr. Kingsley currently serves the Company as chief financial officer of
Carlisle Engineered Products, a wholly-owned subsidiary.
33
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 6, 1997.
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 6, 1997.
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 6, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not applicable.
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, 1996,
1995 and 1994
Consolidated Statement of Shareholders' Equity, years ended
December 31, 1996, 1995 and 1994
Consolidated Balance Sheet, December 31, 1996 and 1995
Consolidated Statement of Cash Flows, years ended December 31,
1996, 1995 and 1994
Notes to Consolidated Financial Statements
Financial statement supplementary notes applicable to the filing of this
report are as follows:
Page
1. Other current liabilities 38
34
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.****
(3.2) Certificate of Amendment of the Restated Certificate of
Incorporation dated December 20, 1996.
(4) Shareholders' Rights Agreement, February 8, 1989.*
(4.1) Amendment to Shareholders' Rights Agreement, dated August 7,
1996.*****
(10.1) Executive 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.***
(12) Ratio of Earnings to Fixed Charges.
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Public Accountants.
(27) Financial Data Schedule as of December 31, 1996 and for the
twelve months ended December 31 1996.
* 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 with the Company's definitive proxy statement dated March
9, 1994 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.
***** Filed as an Exhibit to Form 8-A/A filed on August 9, 1996 and
incorporated herein by reference.
On October 17, 1996, the Company filed with the Commission a Current Report
on Form 8-K dated October 4, 1996 describing the Company's acquisition of
substantially all of the assets of the Engineered Plastics Division ("EPD") of
Hoover Universal, Inc., a wholly-owned subsidiary of Johnson Controls, Inc. for
$80,000,000 in cash plus the assumption of
35
certain liabilities totaling approximately $26.5 million. The assets acquired
primarily included certain facilities and equipment used in the manufacture of
injection-molded and blow-molded plastic parts for the automotive industry and
related automotive tooling, as well as substantially all of the inventory and
accounts and notes receivable of EPD. On December 9, 1996, the Company filed
with the Commission an Amendment to Form 8-K on Form 8-K/A describing the change
to Rule 3-05 of Regulation S-X removing the requirement to provide audited
financial statements and pro forma financial information.
The Company will furnish to the Commission upon request its long-term debt
instruments not listed in this Item.
36
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, President and a Director
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/ Peter F. Krogh
Stephen P. Munn, Chairman Peter F. Krogh, Director
Chief Executive Officer
and a Director
(Principal Executive Officer) /s/ Donald G. Calder
/s/ Robert J. Ryan Donald G. Calder, Director
Robert J. Ryan,
Vice President, Treasurer /s/ Paul J. Choquette, Jr.
and Chief Financial Officer
(Principal Financial Officer) Paul J. Choquette, Jr.,
Director
/s/ Scott A. Kingsley
/s/ Henry J. Forrest
Scott A. Kingsley
Controller Henry J. Forrest, Director
(Principal Accounting Officer)
March 7, 1997
37
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES
SUPPLEMENTARY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 1. OTHER CURRENT LIABILITIES - Other current liabilities at December 31
consist of the following:
(000's)
1996 1995
---- ----
Employee compensation and benefits $25,304 $21,044
Product warranties 28,371 27,675
Insurance 9,888 7,727
Other accrued expenses 32,746 26,595
------- -------
$96,309 $83,041
======= =======
38
CARLISLE COMPANIES INCORPORATED
COMMISSION FILE NUMBER 1-9278
FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1996
EXHIBIT LIST
(3.2) Certificate of Amendment of the Restated
Certificate of Incorporation, dated
December 20, 1996
(12) Ratio of Earnings to Fixed Charges
(21) Subsidiaries of the Registrant
(23) Consent of Independent Public Accountants
(27) Financial Data Schedule as of
December 31, 1996 and for the twelve
months ended December 31, 1996
39