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, 1995 ------------------------------ 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. [ ] Aggregate market value of voting common stock held by non-affiliates at February 26, 1996 $586,268,263 Shares of common stock outstanding at February 26, 1996 15,124,009 Portions of the definitive Proxy Statement for the Annual Meeting of Shareholders on April 22, 1996 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 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, refrigerated containers, insulated wire products, specialized lowbed transport trailers and specialized dump bodies and trailers; GENERAL INDUSTRY--molded plastic foodservice products, small pneumatic tires, stamped and roll-formed wheels, medical monitoring devices, insulated wire products and stainless steel in-plant processing equipment. 2
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): <TABLE> <CAPTION> 1995 1994 1993 ---- ---- ---- <S> <C> <C> <C> Construction Materials $ 308.3 $ 288.6 $ 247.6 Transportation Products 278.9 200.2 177.0 General Industry 235.3 203.9 186.7 -------- -------- -------- Total $ 822.5 $ 692.7 $ 611.3 </TABLE> 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 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, 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 1996. 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, believed to be firm, was $160.7 million at December 31, 1995 and $103.9 million at December 31, 1994. Although the majority of the increase is related to operations acquired in 1995, strong backlog positions were evident in all major operations within the construction materials and transportation products segments, as well as specialty tires and wheels operations. Backlog levels for the 3
Company's high performance wire products were more than 100% higher than a year ago. Research and Development expenses increased to $12.3 million in 1995 compared to $11.9 million in 1994 and $11.2 million in 1993. Friction and braking systems operations incurred the largest increase in expenses, as a number of new product introductions and test programs were ongoing during the year. Custom plastics and rubber operations also incurred additional product development expenses through their equipment acquisitions and plant alignment initiatives in 1995. The divestiture and closure of certain operations, which were part of the general industry segment in 1994, partially offset the increase in research and development expenses. The average number of persons employed by the Company during 1995 was 5,750 compared to 4,800 in 1994. 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. In 1995, the Company completed four acquisitions. In April, the Company acquired the assets of Thunderline Corporation, a producer of rubber parts for the automotive industry. In June, the Company acquired by merger Trail King Industries, Inc., the leading manufacturer of specialized lowbed trailers used in the transportation of construction equipment. In September, the Company acquired the assets of Ti-Brook, Inc. and Ti-Brook South, Inc., manufacturers of a variety of specialized dump bodies and trailers. In October, the Company acquired Walker Stainless Equipment Company, Inc. and two related corporations, manufacturers of transportation trailers for liquid food products and in-plant processing equipment. These acquisitions will add principally to the Company's transportation products segment. 4
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. 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: <TABLE> <CAPTION> (In thousands) 1995 1994 1993 -------- -------- -------- <S> <C> <C> <C> Sales to Unaffiliated Customers(1) Construction Materials 308,327 288,533 247,573 Transportation Products 278,867 200,213 177,005 General Industry 235,340 203,904 186,692 Operating Profit or Loss Construction Materials 36,676 35,066 25,496 Transportation Products 20,241 13,497 11,622 General Industry 29,627 21,391 18,904 Interest, net (4,055) (1,670) (1,152) Corporate(2) (9,631) (9,493) (7,958) Identifiable Assets Construction Materials 169,476 155,383 139,990 Transportation Products 210,700 122,031 109,523 General Industry 143,606 105,482 90,534 Corporate(3) 18,641 102,387 80,316 </TABLE> (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, 1995: <TABLE> <CAPTION> - ----------------------------------------------------------------------------------------------------------------------- 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 - - ----------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> Elastomeric membranes, O,M,W Carlisle, PA Owned 413,000 79 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 59,900 5 O,M Stafford, TX Leased to 1995 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 Brussels, Belgium Leased to 1996* 2,100 - O,W Mississauga, Ont. Leased to 1996* 25,000 1 O Akron, OH Leased to 1996* 9,600 - --------- --- 1,077,540 148 - ----------------------------------------------------------------------------------------------------------------------- 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 174,404 - Trinidad O,M,W Shenzhen, China Leased to 1999* 75,000 5 --------- --- 935,804 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 O,M,W Fredonia, WI Owned 192,500 12 O,M,W Sparta, WI Owned 41,100 3 O Northbrook, IL Leased to 1997* 7,300 - --------- --- 553,900 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 O,M,W Canton, OH Owned 87,800 17 O,M,W Lake City, PA Owned 103,000 30 O,M,W Trenton, SC Owned 67,700 10 M Belleville, MI Owned 46,000 - O Chardon, OH Leased to 1998* 7,500 - --------- --- 685,600 125 - ----------------------------------------------------------------------------------------------------------------------- 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 112,000 50 friction products 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 --------- --- 619,350 118 - ----------------------------------------------------------------------------------------------------------------------- Specialized lowbed trailers for O,M,W Mitchell, SD Owned 242,730 36 construction and commercial O,M,W Brookville, PA Owned 66,640 15 markets O,M,W Green Pond, AL Owned 37,860 14 --------- --- 347,230 65 6
<CAPTION> <S> <C> <C> <C> <C> <C> - ----------------------------------------------------------------------------------------------------------------------- Liquid transport tanks and O,M,W New Lisbon, WI Owned 188,604 31 in-plant processing equipment O,M,W Elroy, WI Owned 84,020 7 O,M,W Tavares, FL Leased to 1998* 54,000 18 --------- --- 326,624 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 4,842,998 619 --------- --- --------- --- </TABLE> * Lease provides for renewal Total plant space of 4,842,998 sq. ft. is used for <TABLE> <CAPTION> Owned Leased Total --------- ------- --------- <S> <C> <C> <C> Office 341,403 100,744 442,147 Manufacturing 2,775,934 341,840 3,117,774 Warehousing 1,166,377 116,700 1,283,077 --------- ------- --------- 4,283,714 559,284 4,842,998 --------- ------- --------- --------- ------- --------- </TABLE> As of December 31, 1995, 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 399,000 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 In connection with the Trail King acquisition, 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 case involves allegations by the Environmental Protection Agency that the former Trial 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. While it is difficult to estimate the future 7
cost of this litigation, the Company believes that it has established adequate reserves and that the matter will not have a material adverse impact on operating results and financial position. Except as described in the preceding paragraph, as of December 31, 1995, 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. 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, 1995, there were 2,054 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 1995 and 1994 were as follows: <TABLE> <CAPTION> First Second Third Fourth ------- ------- ------- ------- <S> <C> <C> <C> <C> 1995 - ---- Dividends per share $ .20 $ .20 $ .22 $ .22 Stock Price High $37.00 $40.38 $42.38 $43.63 Low $34.50 $36.38 $38.50 $39.88 1994 - ---- Dividends per share $ .18 $ .18 $ .20 $ .20 Stock Price High $35.25 $34.63 $35.38 $36.13 Low $30.25 $31.25 $31.25 $31.38 </TABLE> 8
ITEM 6. SELECTED FINANCIAL DATA. <TABLE> <CAPTION> (In thousands except per share data) 1995 1994 1993 1992 1991(1) -------- -------- -------- -------- ------- <S> <C> <C> <C> <C> <C> SUMMARY OF OPERATIONS Net Sales $822,534 692,650 611,270 528,052 500,771 Net earnings from continuing operations $ 44,081 35,568 28,378 24,228 6,554 Per share $ 2.82 2.30 1.83 1.58 0.43 Net earnings (loss) from discontinued operations $ - - - 471 (14,989) Per share(2) $ - - - 0.03 (0.98) Net earnings (loss) $ 44,081 35,568 28,378 24,699 (8,435) Per share(2) $ 2.82 2.30 1.83 1.61 (0.55) FINANCIAL POSITION Total assets $542,423 485,283 420,363 383,250 324,720 Long-term debt $ 72,725 69,148 59,548 69,098 48,623 OTHER DATA Dividends paid $ 12,928 11,605 10,705 10,076 9,597 Per share(2) $ .84 .76 0.70 0.66 0.63 </TABLE> (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. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The Company achieved record sales and earnings in 1995. Sales in 1995 were $822.5 million, an increase of 19% over 1994's sales of $692.7 million. Net earnings increased to $44.1 million, or $2.82 a share, a 24% increase over 1994's earnings of $35.6 million, or $2.30 a share. Each of the Company's three operating segments recorded improvements over the strong operating results reported a year ago. While raw material cost increases and operational start-up costs affected gross margins during 1995, the Company was successful in controlling selling and administrative expenses allowing for improvement in overall operating margins. 9
During 1995, the Company completed four acquisitions, adding principally to its transportation products segment. In April, the Company acquired the assets of Thunderline, a producer of rubber parts for the automotive industry. The acquisition added new products and customers to the Company's custom-molded plastics and rubber parts operations, as well as the ability to manufacture and market silicone rubber components. In June, the Company completed the acquisition of Trail King Industries, the leading manufacturer of specialized lowbed trailers used in the transportation of construction equipment and in other commercial applications. In early September, Trail King finalized the complementary acquisition of Ti-Brook, Inc. and Ti-Brook South, Inc., which design, manufacture and distribute a variety of specialized dump bodies and trailers used in the transportation of coal, palletized loads, refuse, and other products. In October, the Company acquired Walker Stainless Equipment, Inc., a leading supplier of transportation trailers for liquid food products. Walker also designs and manufactures in-plant processing equipment for the food, pharmaceutical and chemical industries. The four acquisitions should generate approximately $140 million in sales in 1996. SALES in 1995 of $822.5 million were $129.8 million higher than 1994's sales of $692.7 million, a 19% increase. Sales in 1993 were $611.3 million. A summary of sales by operating segment is presented below. <TABLE> <CAPTION> 1995 1994 1993 ------ ------ ------ <S> <C> <C> <C> Construction Materials $308.3 $288.6 $247.6 Transportation Products $278.9 $200.2 $177.0 General Industry $235.3 $203.9 $186.7 ------ ------ ------ Total $822.5 $692.7 $611.3 </TABLE> NET EARNINGS increased 24% to a record $44.1 million, or $2.82 a share, in 1995. This compares to total net earnings of $35.6 million, or $2.30 a share, in 1994 and $28.4 million, or $1.83 a share in 1993. Strong performances by each of the Company's major operations produced the record earnings in 1995. Earnings by operating segment, before income tax, interest, and corporate expense, are summarized below. <TABLE> <CAPTION> 1995 1994 1993 ----- ----- ----- <S> <C> <C> <C> Construction Materials $36.7 $35.1 $25.5 Transportation Products $20.2 $13.5 $11.6 General Industry $29.6 $21.4 $18.9 ----- ----- ----- Total $86.5 $70.0 $56.0 </TABLE> 10
CONSTRUCTION MATERIALS segment sales increased 7% in 1995 to $308.3 million compared to $288.6 million in 1994. Domestic non-residential roofing sales accounted for the increase, as 5% more square feet of roofing membrane was shipped in 1995 versus 1994. International operations were restructured in late 1995 after continued disappointing performance in most non-domestic markets. In addition, poor results from the Company's metal roofing business led to the decision to sell its West Coast operations and re-focus its efforts on eastern and midwestern markets. Segment earnings in 1995 increased 5% over 1994's excellent results, to $36.7 million. Margins were unfavorably impacted by increased sales of lower margin items and raw material cost increases which were unable to be passed along to customers. However, the operations were able to maintain comparable profitability, despite continued pricing pressure, through effective cost control and productivity improvements. Selling and administrative expenses in 1995, as a ratio to sales, decreased nearly 5% compared to 1994. TRANSPORTATION PRODUCTS segment sales reached $278.9 million in 1995, a 39% increase over 1994. Although sales from operations acquired in 1995 generated the majority of the growth, every operation in the segment recorded sales gains. Segment earnings improved an outstanding 50% in 1995 over 1994, while absorbing the first-year financial results experienced at the Company's container manufacturing operation. Despite a weaker domestic automotive market in 1995 versus 1994, new products and additional capacity combined for an increase of over 12% in sales from the Company's custom-molded and extruded plastics and rubber parts operations. Custom plastics and rubber operations achieved a 15% earnings improvement while absorbing nearly $1.0 million of non-recurring plant realignment and equipment movement costs in 1995. Heavy duty friction sales to truck and trailer manufacturers declined slightly in 1995 compared to a very strong 1994, as build levels began to slow in the second half of the year. Aftermarket sales were consistent with the prior year as very competitive pricing persisted. Industrial friction and brake products operations both experienced solid sales growth in 1995, from continued penetration in international markets and new product offerings. Overall, earnings from friction and brake products operations improved over 25% from 1994. Efficiency gains and increased absorption accounted for most of the improvement. In addition, 1994's results were adversely impacted by the closure of brake products' Brazilian operations. Specialized trailers and dump body operations acquired in 1995 performed at expectations. Sales of high-performance aircraft wire increased nearly 15% over 1994, returning to 1993 levels. Earnings results continued to progress closer to acceptable returns due to the operations renewed focus on manufacturing processes. The Company's refrigerated container leasing joint venture continued to increase its market penetration and earnings in 1995. 11
GENERAL INDUSTRY segment sales increased $31.4 million to $235.3 million in 1995 compared to 1994, a 15% improvement. The segment sales comparisons were unfavorably impacted in 1995 compared to 1994 by approximately $6.7 million due to the divestitures of DSI, NETstor, and Vistatech. Segment earnings increased 39% in 1995 versus 1994. The operations which were divested or closed prior to the start of 1995 incurred losses of $3.1 million in 1994. Another record performance by the Company's specialty tires and wheels operations in 1995 resulted in sales increases of nearly $10 million compared to 1994. Increased revenues were due to continued market share gains in lawn and garden, trailer and golf car equipment. Replacement sales also increased in 1995, an area where improvements are again expected in 1996. Specialty tires and wheels operations posted a 14% earnings improvement over 1994's results. Capacity gains and production improvements at the operations manufacturing site in China helped offset higher raw material costs, resulting in margins consistent with 1994. Foodservice operations benefitted from increased market penetration and expanded product offerings through its strong distribution network, to achieve record sales and earnings results for 1995. Domestic and international growth combined to increase sales by 28% over 1994. Improvements in operating expense ratios offset a small decline in gross margins, contributing to overall earnings improvement of 27% over 1994. The Company's December, 1994 acquisition of Sparta Brush contributed positively to both sales and earnings gains in foodservice operations. Sales and earnings of high speed data wire and cable products showed strong improvements in 1995. In addition, strong backlog levels existed at year-end. New product offerings, combined with effective cost containment programs, generated positive results at the Company's medical monitoring devices operation. GROSS MARGINS as a percent of sales were 24.0% in 1995 compared to 25.5% in 1994 and 25.9% in 1993. Globally depressed selling prices and higher than anticipated material costs in the first year of production at the Company's container manufacturing operation, as well as acquisitions of lower gross margin businesses, resulted in the decline in margins in 1995. Across most operations, and particularly those in the construction materials segment, raw material costs rose in 1995, but only limited success was achieved in passing these increased costs through to customers. However, higher production volumes allowed manufacturing expenses to be more effectively absorbed, resulting in consistent gross margins at most operations in 1995. SELLING AND ADMINISTRATIVE expenses declined as a percent of sales to 13.3% in 1995, from 14.9% in 1994 and 16.1% in 1993. The strong performance in controlling expenses was evidenced by the fact that selling and administrative expenses rose only $6.2 million to support the 1995 sales increase of $129.8 million. All major operations reported lower expense ratios reflecting the continuation of 12
aggressive cost containment programs. Acquisitions of operations in 1995 with comparably lower-cost selling and administrative expense structures also contributed to the improved ratios. RESEARCH AND DEVELOPMENT expenses increased to $12.3 million in 1995 compared to $11.9 million in 1994 and $11.2 million in 1993. Friction and braking systems operations incurred the largest increase in expenses, as a number of new product introductions and test programs were ongoing during the year. Custom plastics and rubber operations also incurred additional product development expenses through equipment acquisition and plant realignment initiatives in 1995. The divestiture and closure of certain operations, which were part of the general industry segment in 1994, partially offset the increase in research and development expenses. INTEREST EXPENSE was $6.1 million in 1995, compared to $4.6 million in 1994 and $4.3 million in 1993. In June of 1995, the Company assumed $3.8 million of long-term debt related to the acquisition of Trail King. Also, in the second half of 1994, the Company secured $8.0 million of low rate industrial development bonds to finance equipment purchases for its container manufacturing operation. These actions along with higher interest rates in 1995, contributed to the higher interest expense for the year. INCOME TAXES were computed for financial statement purposes at 39.5% in 1995, the same rate used in 1994 and 1993. The increase in the corporate federal tax rate legislated in 1993 is reflected in each year's income tax rates for the Company. An analysis of income taxes for each year is presented in the Notes to Consolidated Financial Statements. ORDER BACKLOG was $160.7 million at December 31, 1995 and $103.9 million at December 31, 1994. Although the majority of the increase is related to operations acquired in 1995, stronger backlog positions were evident at all major operations within the construction materials and transportation products segments, as well as specialty tires and wheels operations. Backlog levels for the Company's high performance wire products were more than 100% higher than a year ago. ACCOUNTS RECEIVABLE were $126.6 million at year end 1995 compared to $99.4 million at the end of 1994. Higher fourth quarter sales revenue at each of the Company's major operations accounted for slightly more than half of the higher receivable balances, with acquisitions made in 1995 accounting for the remainder of the increase, or approximately $12.9 million. Receivables continue to be aggressively managed across the Company, as the average number of days accounts receivable remained outstanding declined 7% from the prior year. INVENTORIES valued primarily by the last-in, first-out (LIFO) method were $121.7 million at December 31, 1995 compared to $74.9 million at 13
December 31, 1994. Nearly 65% of the $46.8 million increase relates to acquisitions made in 1995. The remainder of the increase in year-end inventories is attributable to general industry segment and container manufacturing operations. Specialty tires and wheels operations account for $7.7 million of the Company's increased inventory levels at year-end, reflecting strong demand and backlog as well as the operations' efforts to be more responsive to its markets, which are cyclically stronger in the first half of the year. Foodservice plastics operations also recorded higher inventory levels at the end of 1995, further strengthening its ability to effectively fill customers' orders while adding to its product offerings. WORKING CAPITAL was $153.7 million at December 31, 1995 and $164.7 million at December 31, 1994. Cash balances decreased $67.8 million at year end 1995 versus 1994 due principally to the Company's active acquisition program. Increased end of year sales and production activity is reflected in both receivables and inventory balances, as well as current liabilities at December 31, 1995. CAPITAL EXPENDITURES totaled $37.5 million in 1995 and $31.1 million in 1994. Construction materials operations nearly completed a new, state-of-the-art, rubber mixing system. Actual production is planned to begin in February 1996 with full production expected by April 1, 1996. The new system will allow for significant capacity increases and improve raw material and production efficiencies. Other significant projects in 1995 included the purchase of additional molds and assets to expand specialty tires and wheels operations in China, expansion of molding production capabilities at custom plastics and rubber operations, and the purchase of presses and molds to increase capacity and product availability for foodservice plastics operations. In 1994, the major components of capital spending were the purchase of machinery and equipment for the Company's container manufacturing operation, and the purchase of manufacturing equipment to establish specialty tires and wheels operations in China. CASH FLOWS provided by operating activities were $55.7 million in 1995 compared to $72.6 million in 1994. Planned increases in inventory quantity levels, principally in the general industry segment, resulted in a decrease in operating cash at year-end. Investing activities, primarily Company acquisitions and capital expenditures, increased in 1995 to $100.7 million versus $38.8 million in 1994. The Company purchased $9.4 million of treasury stock and paid out $12.9 million in dividends in 1995. In 1994, the Company obtained $8.0 million in long-term financing, purchased $10.9 million of treasury stock and paid out $11.6 million in dividends. In addition, $11.0 million of treasury stock was issued for the acquisition of the Sparta Brush Company. 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. 14
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 1995 or prior years, and none are anticipated in the foreseeable future. THE 1996 OUTLOOK is good. In all major markets the Company's competitive position is sound. Continuation of the attention to fundamental practices of cost control, quality improvement, product development, and customer service, combined with the acquisition of businesses that strive to adhere to these operating principles, should result in a year of solid performance. Non-residential roofing markets, long dominated by repair and replacement demand, should see an improving new construction roofing market with favorable interest rates. In the transportation markets, lower interest rates should provide for stable automobile demand, while success in broadening the Company's base of customers for custom-molded plastics and rubber products should result in another year of improved performance. While a decline in demand by original equipment customers of friction products is expected, an increase in demand for aftermarket products should result. A fair domestic market outlook combined with improving international markets should provide the opportunity for strong performance. Solid full-year results are expected from the Company's specialty trailer operations. Acquired facilities in the northeast and southeast are expected to result in additional penetration of eastern U.S. markets for steel deck trailers. A steady improvement in the high performance wire and cable business is expected as gains in market share continue, derived from superior product advantages. Continuing productivity gains and strong demand should result in strong growth in the Company's refrigerated container business. Continuation of an aggressive market penetration approach should result in another year of improvement in performance at the Company's refrigerated container leasing joint venture. The Company's leading position in specialty tires and wheels is expected to result in another record year supported by increased production capacity at its manufacturing site in China. Foodservice operations are expected to improve upon 1995's record results through additional product offerings and enhanced penetration of international markets. Strong demand for stainless steel in- plant processing equipment is expected in 1996, combined with various operational improvements at these operations, should produce solid financial results. 15
Overall, the outlook for 1996 and beyond is good. The order backlog is strong and financial resources are secure. A tapering down of economic activity in domestic markets should not prevent the Company from producing improved results. The variety of markets served and growing international activities should sustain the Company's growth momentum. 16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. CONSOLIDATED STATEMENT OF EARNINGS FOR YEARS ENDED DECEMBER 31 <TABLE> <CAPTION> (In thousands except per share data) 1995 1994 1993 --------- --------- --------- <S> <C> <C> <C> Net sales $822,534 $692,650 $611,270 --------- --------- --------- Cost and expenses: Cost of goods sold 624,860 516,282 452,792 Selling and administrative expenses 109,236 102,992 98,449 Research and development expenses 12,339 11,933 11,165 --------- --------- --------- 746,435 631,207 562,406 --------- --------- --------- Other income (deductions): Investment income 2,020 2,977 3,158 Interest expense (6,075) (4,647) (4,310) Other, net 814 (982) (800) --------- --------- --------- (3,241) (2,652) (1,952) --------- --------- --------- Earnings before income taxes 72,858 58,791 46,912 Income taxes 28,777 23,223 18,534 --------- --------- --------- Net earnings $ 44,081 $ 35,568 $ 28,378 --------- --------- --------- --------- --------- --------- Average shares and equivalents 15,633 15,480 15,478 Net earnings per share: $ 2.82 $ 2.30 $ 1.83 --------- --------- --------- </TABLE> See accompanying Notes to Consolidated Financial Statements. 17
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY <TABLE> <CAPTION> (In thousands except per share data) Additional Cost of Common Paid-in Retained Shares in Stock Capital Earnings Treasury -------- --------- --------- --------- <S> <C> <C> <C> <C> 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) Net earnings - - 35,568 - Cash dividends - $0.76 a share - - (11,605) - Exercise of stock options & other - 7,826 - 6,442 Purchase of 328,741 treasury shares - - - (10,904) ------------------------------------------------------- Balance at December 31, 1994 $19,665 $ 7,958 $282,919 $(62,692) Net earnings - - 44,081 - Cash dividends - $0.84 a share - - (12,928) - Exercise of stock options & other - 1,358 - 2,344 Purchase of 248,308 treasury shares - - - (9,448) ------------------------------------------------------- Balance at December 31, 1995 $19,665 $ 9,316 $314,072 $(69,796) </TABLE> See accompanying Notes to Consolidated Financial Statements. 18
CONSOLIDATED BALANCE SHEET AT DECEMBER 31 <TABLE> <CAPTION> (In thousands except per 1995 1994 share data) ------ ------ <S> <C> <C> ASSETS Current assets Cash and cash equivalents $ 3,198 $ 70,972 Receivables, less allowances of $3,721 in 1995 and $3,835 in 1994 126,610 99,412 Inventories 121,736 74,937 Deferred income taxes 18,127 17,041 Prepaid expenses and other 12,273 10,881 --------- --------- Total current assets 281,944 273,243 --------- --------- Property, plant and equipment, net 193,134 158,238 --------- --------- Other assets Patents and other intangibles 37,080 18,373 Investments and advances to affiliates 11,223 19,009 Receivables and other assets 10,866 10,951 Deferred income taxes 8,176 5,469 --------- --------- Total other assets 67,345 53,802 --------- --------- $542,423 $485,283 --------- --------- --------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 45,194 $ 34,123 Accrued expenses 83,041 74,451 --------- --------- Total current liabilities 128,235 108,574 --------- --------- Long-term liabilities Long-term debt 72,725 69,148 Product warranties 65,851 57,981 Deferred compensation and other liabilities 2,355 1,730 --------- --------- Total long-term liabilities 140,931 128,859 --------- --------- 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 19,665 Additional paid-in capital 9,316 7,958 Retained earnings 314,072 282,919 Cost of shares in treasury - 4,346,474 shares in 1995 and 4,252,782 shares in 1994 (69,796) (62,692) --------- --------- Total shareholders' equity 273,257 247,850 --------- --------- $542,423 $485,283 --------- --------- --------- --------- </TABLE> See accompanying Notes to Consolidated Financial Statements. 19
CONSOLIDATED STATEMENT OF CASH FLOWS FOR YEARS ENDED DECEMBER 31 <TABLE> <CAPTION> (In thousands) 1995 1994 1993 --------- --------- --------- <S> <C> <C> <C> Operating Activities Net earnings $ 44,081 $ 35,568 $ 28,378 Reconciliation of net earnings to cash flows: Depreciation 20,331 18,322 18,125 Amortization 2,899 3,618 2,563 Loss on sales of property, equipment and business 570 108 25 Changes in assets and liabilities excluding effects of acquisitions and divestitures: Current and long-term receivables (8,616) (8,558) (15,107) Inventories (17,324) (7,572) (5,792) Accounts payable and accrued expenses 1,928 13,763 14,284 Prepaid, deferred and current income taxes (993) 1,270 (4,293) Long-term liabilities 7,429 13,302 (1,621) Other 5,398 2,755 (3,770) --------- --------- --------- Net cash provided by operating activities 55,703 72,576 32,792 --------- --------- --------- Investing Activities Capital expenditures (37,467) (31,082) (28,490) Acquisitions, net of cash (67,006) (8,417) (15,701) Sales of property, equipment and business 2,794 4,881 921 Other 1,014 (4,229) (6,085) --------- --------- --------- Net cash used in investing activities (100,665) (38,847) (49,355) --------- --------- --------- Financing Activities Proceeds from long-term debt -- 8,000 2,500 Reductions of long-term debt (436) (50) (12,050) Dividends (12,928) (11,605) (10,705) Purchases of treasury shares ( 9,448) (10,904) (1,985) --------- --------- --------- Net cash used in financing activities (22,812) (14,559) (22,240) --------- --------- --------- Change in cash and cash equivalents (67,774) 19,170 (38,803) Cash and cash equivalents Beginning of year 70,972 51,802 90,605 --------- --------- --------- End of year $ 3,198 $ 70,972 $ 51,802 --------- --------- --------- --------- --------- --------- </TABLE> 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 AND OTHER INTANGIBLES. Patents and other intangibles, recorded at cost, amounted to $8.1 million and $10.1 million at December 31, 1995 and 1994, respectively (net of accumulated amortization of $11.0 million and $7.8 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 $29.0 million and $8.2 million at December 31, 1995 and 1994, respectively (net of accumulated amortization of $1.1 million and $0.6 million, 21
respectively), and is amortized on a straight-line basis over various periods not exceeding 40 years. PRODUCT WARRANTIES. The Company offers warranties on the sales of certain of its products and maintains reserves to provide for estimated future claims. Such reserves are established 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 $2.8 million, $2.6 million, and $2.3 million, in 1995, 1994 and 1993, 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 1995 presentation. INVENTORIES The components of inventories are: <TABLE> <CAPTION> IN THOUSANDS 1995 1994 --------- --------- <S> <C> <C> FIFO cost (approximates current costs): Finished goods $ 65,995 $ 47,885 Work in process 15,016 9,192 Raw materials 56,810 30,622 --------- --------- $137,821 $ 87,699 Excess of FIFO cost over LIFO value (16,085) (12,762) --------- --------- $121,736 $74,937 </TABLE> 22
PROPERTY, PLANT & EQUIPMENT The components of property, plant and equipment are: <TABLE> <CAPTION> IN THOUSANDS 1995 1994 --------- --------- <S> <C> <C> Land $ 5,283 $ 4,750 Buildings & leasehold improvements 97,725 88,218 Machinery & equipment 272,718 241,069 Projects in progress 17,836 7,908 --------- --------- 393,562 341,945 Accumulated depreciation (200,428) (183,707) --------- --------- $193,134 $158,238 </TABLE> BORROWINGS Long-term debt includes: <TABLE> <CAPTION> IN THOUSANDS 1995 1994 --------- --------- <S> <C> <C> 8.09% senior notes due 1998-2002 $ 48,000 $ 48,000 Industrial Development and Revenue Bonds due through 2014 21,760 19,000 Other, including capital lease obligations 3,732 2,568 --------- --------- $ 73,492 $ 69,568 Less current maturities ( 767) ( 420) --------- --------- $72,725 $69,148 </TABLE> The weighted average interest rates on the revenue bonds for 1995 and 1994 were 4.4% and 3.1%, respectively. The debt facilities contain various restrictive covenants and limitations, all of which were complied with in 1995 and 1994. The industrial development and revenue bonds are collateralized by the facilities and equipment acquired through the proceeds of the related bond issuances. 23
Cash payments for interest were $5.9 million in 1995, $4.4 million in 1994, and $4.9 million in 1993. At December 31, 1995, the Company had available unsecured lines of credit from banks of $40 million. At December 31, 1995, letters of credit amounting to $27.1 million were outstanding, primarily to provide security under insurance arrangements and certain borrowings. The aggregate amount of long-term debt maturing in each of the next five years is approximately $0.8 million in 1996 and 1997, and $10.1 million in 1998 through 2000. ACQUISITIONS Acquisitions completed by the Company in the last three years include: 1995- Trail King Industries, Inc., a manufacturer of specialized trailers used in the transportation of construction equipment, Ti-Brook, Inc., a manufacturer 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.; 1993-ECI Building Components, Inc., a metal roofing manufacturer and Goodyear Tire & Rubber Company's Roofing System Division, a distributor and seller of non-residential roofing systems. These acquisitions were completed for cash, assumptions of debt, and issuance of stock aggregating approximately $137.9 million and have been accounted for as purchases. The Sparta Brush Company acquisition included the issuance of treasury shares amounting to $11.0 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. 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. 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. 24
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 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 1995, 16,196 shares of restricted stock were issued and 4,537 shares were surrendered under the terms of the Program. At December 31, 1995 an additional 542,242 shares of the Company's common stock was available for issuance as restricted stock. The activity under the stock options plan is as follows: <TABLE> <CAPTION> Number Option of Shares Prices --------- ------------- <S> <C> <C> 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 Options granted 100,500 32.50-34.50 Options exercised (119,790) 16.13-24.63 Options surrendered ( 14,433) 24.63 --------- Outstanding at December 31, 1994 626,636 $16.13-34.50 Options granted 221,000 34.63-41.63 Options exercised (105,738) 16.81-24.63 25
<CAPTION> <S> <C> <C> Options surrendered ( 2,399) 24.63 --------- Outstanding at December 31, 1995 739,499 $16.13-41.63 --------- --------- Exercisable at December 31, 1995 558,663 $16.13-41.63 --------- --------- Available for grant at December 31, 1995 321,130 --------- --------- </TABLE> 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. Pension expense includes: <TABLE> <CAPTION> IN THOUSANDS 1995 1994 1993 ------- ------- ------- <S> <C> <C> <C> Service cost $2,335 $2,498 $2,396 Interest cost on projected benefit obligation 5,682 5,037 5,053 Actual return on plan assets (5,982) (5,757) (8,617) Net amortization and deferral (38) (57) 2,944 ------- ------- ------- Total pension expense $1,997 $1,721 $1,776 </TABLE> The funded status of the plans at December 31 was: <TABLE> <CAPTION> IN THOUSANDS 1995 1994 -------- -------- <S> <C> <C> Actuarial present value of Vested accumulated benefit obligation: Vested $67,529 $55,728 Non-vested 1,127 1,140 -------- -------- $68,656 $56,868 -------- -------- -------- -------- Plan assets at fair value $81,035 $68,992 Projected benefit obligation (80,304) (66,242) -------- -------- Plan assets in excess of projected benefit obligation 731 2,750 Unamortized transition asset ( 4,969) ( 5,658) Unrecognized prior service costs 5,198 5,657 Unrecognized net gains ( 8,080) ( 7,341) -------- -------- Accrued pension expense $( 7,120) $( 4,592) -------- -------- -------- -------- </TABLE> The projected benefit obligation was determined using an assumed discount rate of 7.75% in 1995, 8.25% in 1994, and 7.75% in 1993. The 26
assumed rate of compensation increase was 4.5% and the expected rate of return on plan assets was 8.75% in 1995, 1994 and 1993. Additionally, the Company maintains a retirement savings plan covering substantially all employees other than those employees under collective bargaining agreements. Plan expense was $2.7 million, $2.6 million, and $2.5 million, in 1995, 1994 and 1993, 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 1995, 1994 and 1993. 27
INCOME TAXES The provision for income taxes was as follows: <TABLE> <CAPTION> IN THOUSANDS 1995 1994 1993 -------- -------- -------- <S> <C> <C> <C> Currently payable Federal $24,828 $18,276 $15,981 State, local and other 7,742 8,046 4,272 -------- -------- -------- $32,570 $26,322 $20,253 -------- -------- -------- -------- -------- -------- Deferred (benefit) Federal $(3,563) $( 839) $(1,588) State, local and other ( 230) (2,260) ( 131) -------- -------- -------- $(3,793) $(3,099) $(1,719) -------- -------- -------- Total Provision $28,777 $23,223 $18,534 -------- -------- -------- -------- -------- -------- </TABLE> Deferred tax assets (liabilities) are comprised of the following at December 31: <TABLE> <CAPTION> IN THOUSANDS 1995 1994 ---------- ---------- <S> <C> <C> Product warranty $ 31,191 $ 26,737 Inventory reserves 1,944 1,822 Doubtful receivables 1,728 1,748 Employee benefits 6,489 5,162 Asset write-downs and relocation expense --- 1,386 Other, net 8,834 8,684 ---------- ---------- Deferred assets $ 50,186 $ 45,539 ---------- ---------- Depreciation $(22,732) $(21,433) Other, net ( 1,151) ( 1,596) ---------- ---------- Deferred liabilities $(23,883) $(23,029) ---------- ---------- Net deferred tax assets $ 26,303 $ 22,510 ---------- ---------- ---------- ---------- </TABLE> No valuation allowance is required for the deferred tax assets based on the Company's past tax payments and estimated future taxable income. 28
A reconciliation of taxes computed at the statutory rate with the tax provision is as follows: <TABLE> <CAPTION> IN THOUSANDS 1995 1994 1993 -------- -------- --------- <S> <C> <C> <C> Federal income taxes at statutory rate $25,500 $20,577 $ 16,419 State income taxes, net of federal income tax benefit 2,706 2,881 2,051 Other, net 571 ( 235) 64 -------- -------- --------- $28,777 $23,223 $ 18,534 Effective income tax rate 39.5% 39.5% 39.5% </TABLE> Cash payments for income taxes were $28.7 million, $22.3 million and $23.6 million in 1995, 1994 and 1993, respectively. 29
SEGMENT INFORMATION The Company's 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, refrigerated containers, insulated wire products, specialized lowbed transport trailers and specialized dump bodies and trailers. GENERAL INDUSTRY--molded plastic foodservice products, small pneumatic tires, stamped and roll-formed wheels, medical monitoring devices, insulated wire products and stainless steel in-plant processing equipment. CORPORATE--includes general corporate and idle property expenses. Corporate assets consist primarily of cash and cash equivalents, facilities, and other invested assets. Financial information for operations by reportable business segment is included in the following summary: <TABLE> <CAPTION> (In thousands) Earnings Before Deprec. Income & Capital Sales Taxes Assets Amort. Spending --------- --------- --------- --------- --------- <S> <C> <C> <C> <C> <C> 1995 - ---- Construction Materials $308,327 $ 36,676 $169,476 $ 5,810 $ 9,622 Transportation Products 278,867 20,241 210,700 10,046 14,175 General Industry 235,340 29,627 143,606 7,347 13,404 Interest, net -- (4,055) -- -- -- Corporate -- (9,631) 18,641 27 266 --------- --------- --------- --------- --------- $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 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 30
<CAPTION> Earnings Before Deprec. Income & Capital Sales Taxes Assets Amort. Spending --------- --------- --------- --------- --------- <S> <C> <C> <C> <C> <C> 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 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- </TABLE> QUARTERLY FINANCIAL DATA <TABLE> <CAPTION> (In thousands except per share data) (unaudited) First Second Third Fourth Year ---------- -------- -------- -------- --------- <S> <C> <C> <C> <C> <C> 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: $ 0.55 0.79 0.80 0.68 $ 2.82 Dividends per share: $ 0.20 0.20 0.22 0.22 $ 0.84 Stock price: High $ 37 40 3/8 42 3/8 43 6/8 Low $ 34 1/2 36 3/8 38 1/2 39 7/8 1994 - ---- Net sales $ 154,700 183,767 184,131 170,032 $692,650 Gross margin $ 39,467 47,246 47,790 41,865 $176,368 Operating expenses $ 27,883 29,874 29,765 27,403 $114,925 Net earnings $ 6,758 10,105 10,235 8,470 $ 35,568 Net earnings per share: $ 0.44 0.65 0.66 0.55 $ 2.30 Dividends per share: $ 0.18 0.18 0.20 0.20 $ 0.76 Stock price: High $ 35 1/4 34 5/8 35 3/8 36 1/8 Low $ 30 1/4 31 1/4 31 1/4 31 3/8 </TABLE> 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, 1995 and 1994 and the related consolidated statements of earnings, shareholders' equity, and cash flows for the years then ended. These financial statements and the supplementary notes referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and supplementary notes based on our audits. The consolidated financial statements of Carlisle Companies Incorporated and subsidiaries as of December 31, 1993 were audited by other auditors whose report dated February 2, 1994 expressed an unqualified opinion on those statements. 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, 1995 and 1994, and the results of their operations and their cash flows for the years then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary notes to the consolidated financial statements listed in Item 14 are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. These supplementary notes have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. Arthur Andersen LLP /s/ Arthur Andersen LLP New York, New York January 29, 1996 32
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 the related consolidated statements of earnings, shareholders' equity, and cash flows for the year then ended. 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 audit. 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 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 the results of their operations and their cash flows for the year ended December 31, 1993, in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP /s/ KPMG Peat Marwick LLP Syracuse, New York February 2, 1994 33
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, 1995, 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 53 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 54 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. John W. Altmeyer 37 Vice President, Corporate August, 1989 Development of the to date Company. Scott C. Selbach 40 Vice President, Europe, July, 1989 since August, 1995, and to date Vice President, Secretary and General Counsel, from July 1989 to July, 1995, of the Company. Steven J. Ford 36 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. 34
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 15, 1996. 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 15, 1996. 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 15, 1996. 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, 1995, 1994 and 1993 Consolidated Statement of Shareholders' Equity, years ended December 31, 1995, 1994 and 1993 Consolidated Balance Sheet, December 31, 1995 and 1994 Consolidated Statement of Cash Flows, years ended December 31, 1995, 1994 and 1993 Notes to Consolidated Financial Statements Financial statement supplementary notes applicable to the filing of this report are as follows: Page 1. Other current liabilities 39 35
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) 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.*** (21) Subsidiaries of the Registrant. (23) Consent of Independent Public Accountants. (27) Financial Data Schedule as of December 31, 1995 and for the twelve months ended December 31 1995. * 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. 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. 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/ Magalen O. Bryant Stephen P. Munn, Chairman Magalen O. Bryant, 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) /s/ David G. Thomas David G. Thomas, Director March 15, 1996 37
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES SUPPLEMENTARY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1995 Note 1. OTHER CURRENT LIABILITIES - Other current liabilities at December 31 consist of the following: <TABLE> <CAPTION> (000's) 1995 1994 ------- ------ <S> <C> <C> Employee compensation and benefits $21,044 16,038 Product warranties 27,675 26,639 Insurance 7,727 7,433 Other accrued expenses 26,595 24,341 ------- ------ 83,041 74,451 ------- ------ ------- ------ </TABLE> 38
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 the related consolidated statements of earnings, stockholders' equity, and cash flows for the year then ended as contained in the annual report on Form 10-K for the year ended December 31, 1993. In connection with our audit of the aforementioned consolidated financial statements, we also have audited the related supplementary notes and financial statement schedules as listed in Item 14 of the 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 a whole, present fairly, in all material respects, the information set forth therein. KPMG Peat Marwick LLP /S/ KPMG Peat Marwick LLP Syracuse, New York March 11, 1996 39
CARLISLE COMPANIES INCORPORATED COMMISSION FILE NUMBER 1-9278 FORM 10-K FOR FISCAL YEAR ENDED DECEMBER 31, 1995 EXHIBIT LIST Page (21) Subsidiaries of the Registrant 41 (23) Consent of Independent Public Accountants 42 (23.1) Independent Auditors' Consent 43 (27) Financial Data Schedule as of December 31, 1995 and for the twelve months ended December 31, 1995 44 40