ITEM 1. BUSINESS.
Carlisle Companies Incorporated was incorporated in 1986 in Delaware as a holding company for Carlisle Corporation, whose operations began in 1917, and its wholly-owned subsidiaries. Unless the context of this report otherwise requires, the words "Company" and "registrant" refer to Carlisle Companies Incorporated and its wholly-owned subsidiaries and any divisions or subsidiaries they may have. The Company's diversified manufacturing operations are conducted through its subsidiaries.
The Company manufactures and distributes a wide variety of products for industry, primarily of rubber, plastics and metal content. Its products include both components used by other companies in the manufacture of capital and consumer goods and those for the aftermarket. The Company is the leading producer, or among the leading producers, of many of its lines.
Sales of the Company's products are reported by distribution to the following three industry segments: Construction Materials, Transportation Products and General Industry. The principal products produced and services rendered in each of the industry segments include:
Construction Materials--elastomeric membranes, metal roofing components, adhesives and related products for roofing systems and water barrier applications and outdoor recreation tiles;
Transportation Products--custom manufactured rubber and plastic products for the automotive market, brake linings and pads for heavy duty trucks, trailers and off-road vehicles, specialty friction products, brakes and actuation systems for construction equipment and insulated wire products;
General Industry--molded plastic foodservice products, small pneumatic tires, stamped and roll-formed wheels, custom molded plastic components, system integration products and insulated wire products.
The amount of total revenue contributed by the products or services in each industry segment for each of the last three fiscal years is as follows (in millions):
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, and transportation products and general industry segments. The Company believes, though, that energy sources are secure and sufficient quantities of raw materials can be obtained through normal sources to avoid interruption of production in 1994.
Patents, trademarks and licenses held by the Company generally are not considered significant to the successful conduct of most of the segments' businesses.
In each industry segment, the Company is engaged in businesses, and its products serve markets, which generally are highly competitive. Product lines serving most markets tend to be price competitive; all lines compete not only on pricing, but also on service and product performance. No industry segment is dependent upon a single customer, or a few customers, the loss of any one or more of which would have a material adverse effect on the segment.
Order Backlog, which is believed to be firm, was $86.4 million at December 31, 1993 and $91.5 million at December 31, 1992. Stronger backlog positions at the end of 1993 were evident in the Company's automotive rubber and plastics markets and for operations within the Construction Materials segment. Strong backlog levels continued to be recorded at the Company's specialty tires and wheels and aircraft wire and cable operations at the end of 1993 though below levels of a year ago as manufacturing capacity and productivity have increased.
Company sponsored research and development expenses increased to $11.2 million in 1993 from $10.7 million in 1992 and $10.4 million in 1991. Increased research and development activities within the Company's automotive rubber and plastics operations, along with expenses incurred by new operations combined for the higher expense levels in 1993. All other major operations maintained a similar level of research and development projects and costs in 1993 and 1992.
The average number of persons employed by the Company during 1993 was 4,440.
The businesses of the Construction Materials and Transportation Products industry segments are not seasonal in nature. Within the General Industry segment, distribution of lawn and garden products generally reach peak sales volume during the first two quarters of the year.
In 1993, the Company acquired most of the assets of ECI Building Components, Inc., a metal roofing and panel manufacturer, and now operates a business with the assets under the name Carlisle Engineered Metals Incorporated. The Company also acquired the assets of Goodyear Tire & Rubber Company's Roofing Systems Division, and now operates a non-residential roofing systems business under the name Versico Incorporated. During 1993, the Company entered the market for services to the international perishable cargo transportation industry by establishing a partnership with Marubeni Corporation, a large Japanese trading firm, to provide specialty equipment leasing services to shippers of perishable cargo. Carlisle Container Manufacturing Corporation, formed in 1993, will manufacture insulated containers for transportation of perishable cargo.
In each industry segment, the Company's compliance with Federal, State and local provisions which have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment is not anticipated to have a material effect upon the capital expenditures, earnings or the competitive position of the Company or its divisions and subsidiaries.
Information on the Company's revenues, operating profit or loss and identifiable assets by industry segments for the last three fiscal years, the nature and effect of the restatement of such information as a result of changes made in the way the Company's products or services are grouped into industry segments and the principal products in each segment is as follows:
ITEM 2.
ITEM 2. PROPERTIES
The following table sets forth certain information with respect to the principal properties and plants of the Company as of December 31, 1993:
Total plant space of 3,574,140 sq. ft. is used for
As of December 31, 1993, the Company owned three additional facilities. One is related to a wire and cable business sold in early 1988, one is a wire and cable operation relocated in 1989, and the other is related to a commercial foodservice business relocated in 1992. These facilities, totaling approximately 500,000 sq. ft., are being held for sale. An additional 523,000 sq. ft. is leased by the Company, under various agreements, principally for warehousing and distribution. All of the manufacturing and most of the office and warehousing space is of masonry and steel construction and most are equipped with automatic sprinkler systems. Approximately one- third of the owned office, manufacturing and warehousing space has been constructed within the last twenty years; the remaining buildings are from twenty to seventy years old and have been maintained in good condition.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
As of December 31, 1993, other than ordinary routine litigation incidental to the business, which is being handled in the ordinary course of business, neither the Company nor any of its subsidiaries is a party to, nor are any of their properties subject to any material pending legal proceedings, nor are any such proceedings known to be contemplated by governmental authorities.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.
The Company's common stock is traded on the New York Stock Exchange. As of December 31, 1993, there were 2,186 shareholders of record.
Quarterly cash dividends paid and the high and low prices of the Company's stock on the New York Stock Exchange in 1993 and 1992 were as follows:
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The Company's sales increased 16% and net earnings from continuing operations improved 17% in 1993 compared to 1992. Sales in 1993 were $611.3 million versus sales in 1992 of $528.1 million. Net earnings from continuing operations improved to $28.4 million, $1.83 a share, from $24.2 million, $1.58 a share in 1992. In 1992, discontinued operations contributed an additional $0.5 million, $0.03 a share, to net earnings resulting in total earnings of $24.7 million, $1.61 a share.
In the second quarter of 1993, prompted by strong growth in the price of the Company's shares, the Company executed a two-for-one stock split. All share information has been adjusted in this report to reflect the split.
The Company completed two acquisitions in 1993 to expand and strengthen its operations within its construction materials segment. Acquired in January 1993 were the assets of ECI Building Components, Inc. (now operating as Carlisle Engineered Metals Incorporated), an architectural metal roofing and panel manufacturer. In March 1993, the Company purchased the Roofing Systems division of Goodyear Tire & Rubber Company (now operating as Versico Incorporated), broadening its coverage of the non-residential EPDM roofing market.
Sales in 1993 increased over 1992's levels as the result of record performances by operations within the Company's General Industry segment and the performance of the acquisitions made within the Construction Materials segment. A summary of sales by operating segment is presented below.
Construction Materials segment sales in 1993 of $247.6 million increased by $48.9 million when compared to 1992, as the acquisitions made in early 1993 recorded revenues of $43.3 million. Non-residential roofing demand was effectively flat in 1993 versus 1992's depressed levels, while pricing levels declined slightly. Continued market share improvements, including increased international shipments, contributed to 1993's record segment sales levels. The segment's sales comparisons were also impacted in 1993 by the decision to discontinue the sales of plenum cable. The elimination of this product line caused a $4.4 million reduction in 1993's sales compared to the prior year.
Transportation Products segment sales improved 2% to $177.0 million in 1993 compared to 1992. Aircraft wire product sales in 1993 improved $4.2 million over 1992's levels as the Company's Tufflite wire products gained market acceptance during the year. Demand for the Company's braking system products declined while heavy-duty friction products sold to the original equipment tractor/trailer market were up over 25% in a strong market in 1993. Heavy duty friction aftermarket revenues improved 2% compared to 1992. Custom rubber and plastic sales to automobile equipment manufacturers finished strongly in the latter part of 1993 as automobile and truck production surpassed 1992 levels. This stronger market brought sales volume increases which were partially offset by lower prices throughout 1993 to net a 3% sales increase over 1992.
General Industry segment sales were up 19% in 1993 over 1992 as the two primary operations in the segment achieved record high results. In 1993, the Company's specialty tires and wheels operations recorded a 22% sales increase over 1992, after achieving a similar improvement in 1992 over 1991. Increased sales from specialty tires and wheels operations were the result of higher volumes from market share gains, an extended lawn and garden season in 1993, expanded product offerings and successful penetration into new markets. The Company's foodservice plastics operations also achieved record sales levels in 1993 as revenues increased 11% over 1992. Market share gains, particularly in the Company's contract plastic molding operations, combined with expanded foodservice product offerings to achieve the successful 1993 results. Other operations within the general industry segment, including high speed data wire and cable and system integration products also improved their market positions in 1993 to produce higher sales.
Net earnings from continuing operations improved 17% in 1993 over 1992 on the strength of performances of operations within the Construction Materials and General Industry segments. Net earnings from continuing operations in 1993 were $28.4 million, $1.83 a share, compared to $24.2 million, $1.58 a share, in 1992. This compares to net earnings from continuing operations of $6.6 million, $0.43 a share, in 1991 after taking an $11.6 million after-tax charge, $0.76 a share, for operational restructuring. In 1991, the Company recorded losses associated with the operations and discontinuance of its operations engaged in the production, sale and maintenance of computer tape products and systems hardware. These operations were sold in 1992.
A summary of after-tax results for the last three years is presented below.
Earnings by continuing operating segment, before income tax, interest, restructuring charge and corporate expense, are summarized below.
Earnings from the Construction Materials segment improved 8% in 1993 versus 1992. Contributing to the earnings improvement was a favorable product mix and lower operating expenses within non-residential roofing systems operations. Partially offsetting these gains were initial year operating expenses absorbed in 1993 associated with the acquisition and establishment of Carlisle Engineered Metals Incorporated. The Company's initial year entry into the metal roofing market brought lower overall margins to this segment in 1993.
Transportation Products segment earnings in 1993 were flat compared to 1992. Earnings improved significantly from aircraft wire operations on higher sales and improved operational margins. Heavy duty friction operations earnings were impacted by an unfavorable product mix, as a higher percentage of sales in 1993 originated from its lower margin original equipment business compared to a year ago. Lower sales of braking system products in 1993, particularly in international markets, also negatively impacted segment earnings compared to 1992. Earnings from sales of custom rubber and plastics products to the automotive industry declined as the result of a full year impact of price concessions in 1993, which partially impacted 1992. Lower overall administrative expenses helped offset some of the effect of reduced prices in this segment in 1993.
Operations within the General Industry segment recorded earnings in 1993 at a level 49% higher than 1992. Earnings in this segment improved 57% in 1992 over 1991. The increased 1993 sales of specialty tires and wheels operations produced a gain in earnings of 25%. Competitive pricing actions pushed margins downward but lower expenses continued to have a favorable effect upon earnings. Foodservice plastics operations improved earnings by 20% in 1993 versus 1992, again primarily driven by higher revenues. Margin percentages were slightly lower in 1993 as the result of the product mix of foodservice plastics products sold. Administrative expenses in relation to foodservice plastics sales were at lower levels in 1993 contributing to the improved earnings performance over 1992. High speed data wire and cable and system integration operations also improved their profitability in 1993 on the strength of major cost reduction efforts and higher sales levels.
Gross margins as a percent of sales were 25.9% in 1993, compared to 26.3% in 1992 and 26.0% in 1991. The reduction in gross margins as a percent of sales in 1993 was caused by unfavorable product mixes and the inability to pass through material cost increases in some markets. The economic conditions in the first half of 1993 produced competitive pricing pressures, particularly within the Transportation Products segment. A higher mix of sales in 1993 to lower margin original equipment manufacturers in proportion to sales into the aftermarket resulted in lower comparative margin ratios within the heavy-duty friction operation. Improved overhead absorption from increased sales and effective cost reduction and expense control programs in each operating segment in 1993 combined to help offset the lower margin levels.
Selling and administrative expenses continued to decline as a percent of sales to 16.1% in 1993, from 16.4% in 1992 and 17.2% in 1991. In the Construction Materials segment, excluding 1993 acquisitions, expense levels were reduced by approximately $1.0 million in 1993 compared to 1992. Higher expenses were required, however, in the first year of operations of the segment's 1993 acquisitions, resulting in an unfavorable effect upon the Company's overall expense ratios.
Transportation Products segment operations reduced selling and administrative expenses by over $2.2 million in 1993 versus 1992. Higher sales levels and expense containment programs in place at operations within the general industry segment contributed to improved expense ratios for the segment.
Research and development expenses increased to $11.2 million in 1993 from $10.7 million in 1992 and $10.4 million in 1991. Increased research and development activities within the Company's automotive rubber and plastics operations, along with expenses incurred by new Company operations combined for the higher expense levels in 1993. All other major operations maintained a similar level of research and development projects and costs in 1993 and 1992.
Interest expense was $4.3 million in 1993 compared to $5.2 million in 1992 and $4.4 million in 1991. Two actions taken in 1993 resulted in lowering interest expense for the Company. The Company paid down $12.0 million of its 8% senior notes in March 1993 and refinanced its $8.5 million revenue bond issue to an adjustable rate bond in June 1993. The bond refinancing resulted in the average interest rate paid on the bonds after the refinancing to be 2.6% versus its previous 10.25% fixed rate.
Income taxes were computed for financial statement purposes at a rate of 39.5% in 1993 compared to 39% in 1992 and 38% in 1991. The higher rate in 1993 is primarily the result of the increase in the corporate federal tax rate legislated in 1993. An analysis of the provision for income taxes for each of the years is included in the Notes to Consolidated Financial Statements.
Order backlog was $86.4 million at December 31, 1993 and $91.5 million at December 31, 1992. Stronger backlog positions at the end of 1993 were evident in the Company's automotive rubber and plastics markets and for operations within the Construction Materials segment. Strong backlog levels continued to be recorded at the Company's specialty tires and wheels and aircraft wire and cable operations at the end of 1993 though below levels of a year ago as manufacturing capacity and productivity have increased.
Accounts receivable were $91.2 million at December 31, 1993 compared to $71.8 million at December 31, 1992. The acquisitions made in 1993 account for $6.1 million of the increase. Strong fourth quarter sales performances from the construction materials segment and from automotive rubber and plastics operations resulted in an increased 1993 year-end receivable balance compared to a year ago.
Inventories valued primarily by the last-in, first-out (LIFO) method were $65.0 million at December 31, 1993 compared to $50.0 million at December 31, 1992. The acquisitions made in 1993 account for $12.9 million of the inventory increase. Higher inventory levels at year end 1993, after historically low levels at the end of 1992 at the Company's specialty tires and wheels and aircraft wire and cable operations were partially offset by reductions from aggressive inventory management within foodservice plastics and friction operations.
Working capital was $144.5 million at December 31, 1993 and $162.1 million at December 31, 1992. In 1993, the Company paid down $12.0 million of long-term debt and increased levels of internal investment through capital spending. These factors along with the effects of the 1993 acquisitions are the primary factors for the change in working capital.
Capital expenditures totaled $28.5 million in 1993 and $19.9 million in 1992. Major projects in 1993 included the acquisition of machinery to expand and improve the Company's automotive rubber and plastics operations, add capacity to the specialty tire and wheels operations and provide advanced processing technology into construction material operations. In 1992, the major components of activity included adding capacity in the Company's foodservice plastics operations and purchasing assets to expand non-automotive plastic molding capabilities.
Cash flows provided by operating activities were $32.8 million in 1993 compared to $49.8 million in 1992. The lower amount provided in 1993 results from higher levels of working capital employed by operations at year end 1993 versus 1992 and higher tax payments required during the course of 1993. Investing activities absorbed $49.4 million of cash flow in 1993 through capital spending, operational investments and company acquisitions. In 1992, net cash was provided from investing activities of $18.3 million as capital spending was exceeded by cash received from the sale of excess facilities and discontinued operations. Financing activities in 1993 were driven by the pay-down of senior long-term debt and higher dividend payments resulting in reductions in cash of $22.2 million. Financing activities in 1992 provided cash of $8.0 million as net proceeds from long-term debt exceeded dividend payments.
The Company's primary liquidity and capital sources are its operations, bank lines of credit and long-term borrowings. The Company continues to have substantial borrowing capacity and financial flexibility.
The Company recognizes the importance of its responsibilities toward matters of environmental concern. Programs are in place to monitor and test facilities and surrounding environments, as well as to recycle materials where practical. The Company has not incurred any material charges relating to environmental matters in 1993 or in prior years, and none are anticipated in the foreseeable future.
The 1994 outlook for the Company is good. Effective cost control has been an important factor in the earnings improvement of the Company. Continuation of this cost control with improving conditions in our markets should result in better performance as the year evolves.
Non-residential roofing markets will continue to be dominated by repair and replacement demand in a slowly improving market. The effects of the 1993 acquisitions of a metal roofing business and a membrane roofing business, included for a full year in 1994, will have a favorable impact upon earnings. The Company's strong competitive position places us favorably to take advantage of opportunities presented by a strengthening market.
The optimistic outlook for automobile and truck production will translate into stronger performance in our Transportation Products segment. The results of our custom-molded rubber and plastic products should improve at least as much as the overall market. We will continue the diversification of our customer base. The strength in original equipment markets for friction products is expected to continue. Improved financial performance, however, depends upon a rebound in the aftermarket. A strengthening economy is the primary stimulus to overall freight movement. Strong domestic growth and new products will result in a rebound in performance for the Company's friction business. The 1993 momentum in the high performance aircraft wire and cable business is expected to continue. Excellent acceptance by the major manufacturers in the industry will continue to allow us to overcome the weakness in the overall aviation market.
The Company's leading position in specialty tires and wheels is expected to generate further gains in this well performing business. Growing participation in golf car and trailer tires combined with good results from the lawn and garden sector provide for an optimistic outlook. Similarly, the record performance of our foodservice plastics business is expected to continue in 1994. Added product lines, improved internal efficiency and attractive markets should produce another outstanding year.
Overall, the outlook for the Company in 1994 and beyond is bright. The order backlog is good, financial resources are in place, domestic markets are improving and our international presence is growing. The Company expects to make further strategic investments that will blend with the positive momentum of our existing businesses to provide consistent and progressive long-term performance improvement that translates to value for our customers and our shareholders.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See accompanying Notes to Consolidated Financial Statements.
See accompanying Notes to Consolidated Financial Statements.
See accompanying Notes to Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF ACCOUNTING POLICIES
The consolidated financial statements include the accounts of the Company and its subsidiaries. Investments in less than majority owned affiliates, none of which are significant, are accounted for on the equity method. All material intercompany transactions and accounts have been eliminated.
Cash and cash equivalents include all cash balances and highly liquid investments with original maturities of three months or less.
Inventories are valued at lower of cost or market. Cost for inventories is determined for a majority of the Company's inventories by the last-in, first- out (LIFO) method with the remainder determined by the first-in, first-out (FIFO) method.
Property, plant and equipment are stated at cost. Costs assigned to property, plant and equipment of acquired companies are based on estimated fair value at the date of acquisition. Depreciation is principally computed on the straight line basis over the estimated useful lives of the assets. Asset lives are 20 to 40 years for buildings, 5 to 15 years for machinery and equipment and 3 to 10 years for leasehold improvements.
Patents and other intangibles, obtained through acquisitions, are recorded at cost (net of accumulated amortization of $5.4 million and $4.9 million at December 31, 1993 and 1992, respectively) and amortized over their remaining lives averaging six to eight years. Also included is the excess of acquisition cost over the value of assets acquired, $2.3 million and $2.4 million at December 31, 1993 and 1992, respectively, and is being amortized over various periods not exceeding 30 years. Amortization expense is recorded on the straight-line method.
The Company maintains product warranties reserves to provide for future claims. Extended periods of coverage are available on certain products for a fee.
Deferred tax assets and liabilities are recognized for the future tax consequences of the differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. These balances are measured using enacted tax rates expected to apply to taxable income in the years in which such temporary differences are expected to be recovered or settled. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized.
Net earnings per share of common stock are based on the weighted average number of common shares and common equivalent shares outstanding during the period, assuming the exercise of stock options.
Certain reclassifications have been made to prior years' information to conform to 1993 presentation.
INVENTORIES
The components of inventories are:
PROPERTY, PLANT & EQUIPMENT
The components of property, plant and equipment are:
BORROWINGS
Long-term debt, all unsecured, includes:
In 1993, the Company paid down $12.0 million of its 8% notes and refinanced its previous 10.25% fixed rate revenue bonds to variable rate bonds. Additional variable rate industrial revenue bonds of $2.5 million were also secured in 1993. The interest rate on the revenue bonds at December 31, 1993 was 3.2%.
The debt facilities contain various restrictive covenants and limitations, all of which were complied with in 1993 and 1992.
Cash payments for interest were $4.9 million in 1993, $3.7 million in 1992, and $4.1 million in 1991.
The Company had $10.1 million and $10.7 million of outstanding letters of credit issued against credit lines at December 31, 1993 and 1992, respectively.
The aggregate amount of long-term debt maturing in each of the five years subsequent to December 31, 1993 is approximately $0.1 million a year through 1997 and $9.7 in 1998.
ACQUISITIONS
Acquisitions completed by the Company in the last three years include: 1993- ECI Building Components Incorporated, a metal roofing and panel manufacturer and Goodyear Tire & Rubber Company's Roofing Systems Division, a distributor and seller of non-residential roofing systems; 1991-SiLite Incorporated, a manufacturer of plasticware products for the foodservice industry. These acquisitions were completed for cash and assumption of debt and certain other liabilities of approximately $52.6 million and have been accounted for as purchases.
Results of operations, which have been included in the consolidated financial statements since their respective acquisition dates, did not have a material effect on consolidated operating results of the Company in the years of acquisition.
OPERATIONAL RESTRUCTURING
In the third quarter of 1991, the Company recorded a restructuring charge of $18.7 million for costs associated with the relocation and consolidation of operations and the elimination of product lines. The charge included provisions for personnel severance, relocation and training costs, equipment relocation and related facility costs, the write-down of assets and other costs associated with the repositioning and removal of product lines. The restructuring charge is separately identified in the Consolidated Statement of Earnings for 1991.
DISCONTINUED OPERATIONS
In September 1991, the Company announced its decision to sell its businesses engaged in the production, sale and maintenance of computer tape products and systems integration hardware. A provision was recorded in 1991 for anticipated disposal costs and the write-down of related assets to estimated realizable value totalling $20.3 million, $12.6 million after-tax.
In 1992, the Company sold its quarter-inch tape business, as well as its half-inch tape business, to substantially eliminate the operations which are classified as discontinued operations. The Company recognized earnings in 1992 from discontinued operations of $0.9 million, $0.5 million after-tax, as it adjusted its estimates due to better than anticipated performance.
In 1991, net sales from discontinued operations were $88.1 million through September 30, and $117.5 million for the year. Losses from discontinued operations before tax were $3.9 million in 1991.
SHAREHOLDERS' EQUITY
On April 20, 1993 the Company's Board of Directors authorized a two-for-one stock split which was issued on June 1, 1993, to shareholders of record on May 11, 1993. The split resulted in the issuance of 9,832,656 new shares of common stock and the reissuance of 2,175,479 shares of common stock held in treasury.
All references in the financial statements to average number of shares outstanding and related prices, per share amounts, and stock option plan data have been restated to reflect the split.
The Company has a Stockholders' Rights Plan which is designed to protect stockholder investment values. A dividend distribution of one Preferred Stock Purchase Right for each outstanding share of the Company's common stock was declared, payable to stockholders of record on March 3, 1989. The rights will become exercisable under certain circumstances, including the acquisition of 25% of the Company's common stock, or 40% of the voting power, in which case all rights holders except the acquiror may purchase the Company's common stock at a 50% discount. If the Company is acquired in a merger or other business combination, and the rights have not been redeemed, rights holders may purchase the acquiror's shares at a 50% discount.
Common stockholders of record May 30, 1986 are entitled to five votes per share. Common stock acquired subsequent to that date entitles the holder to one vote per share until held four years, after which time the holder will be entitled to five votes.
EMPLOYEE STOCK OPTIONS & INCENTIVE PLAN
The Company maintains an Executive Incentive Program for executives and certain other employees of the Company and its operating divisions and subsidiaries. The Program contains a plan, for those who are eligible, to receive cash bonuses and/or shares of restricted stock. The Program also has a stock option plan available to certain employees who are not eligible to receive cash or restricted stock awards.
The Program makes available up to 627,099 shares of the Company's common stock for issuance as restricted stock and up to 736,392 shares for stock option grants. In 1993, 23,116 shares of restricted stock were issued and 4,951 shares were surrendered under the terms of the Program.
The activity under the stock option plan, as restated, is as follows:
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:
The funded status of the plans at December 31 was:
The projected benefit obligation was determined using an assumed discount rate of 7.75% in 1993 and 8.50% in 1992. The assumed rate of compensation increase was 4.5% in 1993 and 5.5% in 1992. The expected rate of return on plan assets was 8.75% in 1993, 1992 and 1991.
In 1992, the sale of discontinued operations and the corresponding reduction in retirement plan participants resulted in a plan curtailment. The effects of the curtailment were to decrease the unamortized balance of unrecognized prior service costs and to decrease the projected benefit obligation of the retirement plan which resulted in a net gain of $1.2 million. This gain is included in the computation of the net loss on the disposal of discontinued operations as reported in the Consolidated Statement of Earnings.
In the first quarter of 1993, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 106, "Employers Accounting for Post- Retirement Benefits Other Than Pensions". The Company has a limited number of post-retirement benefit programs and participants. Accordingly, the Company has elected to record the previously unrecognized obligations arising from the adoption of SFAS No. 106 prospectively as a component of future years expense, amortized over a 20 year period. The annual SFAS No. 106 expense for the Company, inclusive of the components of service costs, interest costs and the amortization of the unrecognized transition obligation, is approximately $0.6 million, $0.4 million after tax. The resulting annual expense in 1993 is not materially different than the Company's post-retirement benefits expense in 1992 and 1991 and is not material to its Consolidated Statement of Earnings.
INCOME TAXES
The provision for income taxes was as follows:
Deferred tax assets (liabilities) are comprised of the following at December 31:
A reconciliation of taxes computed at the statutory rate with the tax provision is as follows:
The Company adopted SFAS No. 109 "Accounting for Income Taxes", in 1992 and applied its provisions retroactively to 1990.
Cash payments for income taxes were $23.6 million, $9.6 million, and $12.3 million in 1993, 1992 and 1991, respectively.
SEGMENT INFORMATION
The Company's continuing operations are classified into the following business segments:
CONSTRUCTION MATERIALS--elastomeric membranes, metal roofing components, adhesives and related products for roofing systems and water barrier applications and outdoor recreation tiles.
TRANSPORTATION PRODUCTS--custom manufactured rubber and plastic products for the automotive market, brake linings and pads for heavy-duty trucks, trailers and off-road vehicles, specialty friction products, brakes and actuation systems for construction equipment and insulated wire products.
GENERAL INDUSTRY--molded plastic foodservice products, small pneumatic tires, stamped and roll-formed wheels, custom molded plastic components, system integration products and insulated wire products.
CORPORATE--includes general corporate and idle property expenses. Corporate assets consist primarily of cash, leasing company assets and excess facilities.
Financial information for continuing operations by reportable business segment is included in the following summary:
All per share amounts have been restated to reflect the two-for-one stock split on June 1, 1993.
INDEPENDENT AUDITORS' REPORT
The Board of Directors Carlisle Companies Incorporated:
We have audited the accompanying consolidated balance sheet of Carlisle Companies Incorporated and subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of earnings, shareholders' equity, and cash flows for each of the years in the three-year period ending December 31, 1993. These consolidated financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Carlisle Companies Incorporated and subsidiaries as of December 31, 1993 and 1992, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1993, in conformity with generally accepted accounting principles.
KPMG Peat Marwick
/s/ KPMG Peat Marwick
Syracuse, New York February 2, 1994
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth certain information relating to each executive officer of the Company as of December 31, 1993, as furnished to the Company by the executive officers. Except as otherwise indicated each executive officer has had the same principal occupation or employment during the past five years.
The officers have been elected to serve at the pleasure of the Board of Directors of the Company. There are no family relationships between any of the above officers, and there is no arrangement or understanding between any officer and any other person pursuant to which he was selected an officer.
Information required by Item 10 with respect to directors of the Company is incorporated by reference to the Company's definitive proxy statement filed with the Securities and Exchange Commission on March 9, 1994.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
Information required by Item 11 is incorporated by reference to the Company's definitive proxy statement filed with the Securities and Exchange Commission on March 9, 1994.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required by Item 12 is incorporated by reference to the Company's definitive proxy statement filed with the Securities and Exchange Commission on March 9, 1994.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not Applicable
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
Financial statements required by Item 8 are as follows:
Consolidated Statement of Earnings, years ended December 31, 1993, 1992 and 1991 Consolidated Statement of Shareholders' Equity, years ended December 31, 1993, 1992 and 1991 Consolidated Balance Sheet, December 31, 1993 and 1992 Consolidated Statement of Cash Flows, years ended December 31, 1993, 1992 and 1991 Notes to Consolidated Financial Statements
Financial statement supplementary notes applicable to the filing of this report are as follows:
Page
1. Other current liabilities 37 2. Maintenance and repair costs 37 3. Discontinued operations 37
Financial statement schedules applicable to the filing of this report are as follows:
Page
V - Property, Plant and Equipment 38 VI - Accumulated Depreciation of Property, Plant and Equipment 38
All other schedules are omitted because the required information is inapplicable or the information is presented in the financial statements or related notes.
Exhibits applicable to the filing of this report are as follows:
(3) By-laws of the Company * (3.1) Restated Certificate of Incorporation as amended April 22, 1991*** (4) Shareholders' Rights Agreement, February 8, 1989.* (10.1) 1988 Executive Long-Term Incentive Program.* (10.2) Representative copy of Executive Severance Agreement, dated December 19, 1990, between the Company and certain individuals, including the five most highly compensated executive officers of the Company.** (10.3) Summary Plan Description of Carlisle Companies Incorporated Director Retirement Program, effective November 6, 1991.*** (21) Subsidiaries of the Registrant. (23) Consent of Independent Auditors.
* Filed as an Exhibit to the Company's annual report on Form 10-K for the year ended December 31, 1988 and incorporated herein by reference.
** Filed as an Exhibit to the Company's annual report on Form 10-K for the year ended December 31, 1990 and incorporated herein by reference.
*** Filed as an Exhibit to the Company's annual report on Form 10-K for the year ended December 31, 1991 and incorporated herein by reference.
No reports on Form 8-K were filed during the last quarter of the period covered by this report.
The Company will furnish to the Commission upon request its long-term debt instruments not listed in this Item.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CARLISLE COMPANIES INCORPORATED
/s/ Dennis J. Hall
By: Dennis J. Hall, Executive Vice President and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
/s/ Stephen P. Munn /s/ Magalen O. Bryant
Stephen P. Munn, Chairman, Magalen O. Bryant, Director President and Chief Executive Officer and a Director (Principal Executive Officer) /s/ Donald G. Calder
/s/ Dennis J. Hall Donald G. Calder, Director
Dennis J. Hall, Executive Vice President, Treasurer and Chief Financial Officer /s/ Paul J. Choquette, Jr. (Principal Financial Officer) Paul J. Choquette, Jr., Director
/s/ James B. Pineau
James B. Pineau, Vice President /s/ Henry J. Forrest and Controller (Principal Accounting Officer) Henry J. Forrest, Director
/s/ David G. Thomas
David G. Thomas, Director
March 28, 1994
INDEPENDENT AUDITORS' REPORT
The Board of Directors Carlisle Companies Incorporated
Under date of February 2, 1994, we reported on the consolidated balance sheet of Carlisle Companies Incorporated and subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1993, as contained in this annual report on Form 10-K for the year ended December 31, 1993. These consolidated financial statements and our report thereon are incorporated by reference to this Form 10-K for the year ended December 31, 1993. In connection with our audits of the aforementioned consolidated financial statements, we also have audited the related supplementary notes and financial statement schedules as listed in Item 14 of this Form 10-K. These supplementary notes and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these supplementary notes and financial statement schedules based on our audits.
In our opinion, such supplementary notes and financial statement schedules, when considered in relation to the basic consolidated financial statements taken as whole, present fairly, in all material respects, the information set forth therein.
KPMG Peat Marwick
Syracuse, New York /s/ KPMG Peat Marwick February 2, 1994
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES SUPPLEMENTARY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
Note 1. Other Current Liabilities - Other current liabilities at December ------------------------- 31 consist of the following:
Note 2. Maintenance and Repair Costs ---------------------------- Maintenance and repair costs of $11.2 million, $11.1 million and $8.7 million in 1993, 1992, and 1991 respectively, have been charged to earnings as cost of goods sold or selling and administrative expenses.
Note 3. Discontinued Operations ----------------------- Net sales from discontinued operations were $58.4 million and $117.5 million in 1992 and 1991 respectively.
Schedules V and VI should be read in conjunction with the Notes to Consolidated Financial Statements.
CARLISLE COMPANIES INCORPORATED COMMISSION FILE NUMBER 1-9278 FORM 10-K FOR FISCAL YEAR ENDED DECEMBER 31, 1993
EXHIBIT LIST
Page ----
(21) Subsidiaries of the Registrant 40
(23) Consent of Independent Auditors 41