-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, btBc4BpXS3Ii+my35doe/UdQdRGKqNzDxj92zc+k2uPANOA/4dd3wwxwy371zlui +WjDa56C4PKmCCSV+oPqqg== 0000912057-94-001187.txt : 19940404 0000912057-94-001187.hdr.sgml : 19940404 ACCESSION NUMBER: 0000912057-94-001187 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940331 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARLISLE COMPANIES INC CENTRAL INDEX KEY: 0000790051 STANDARD INDUSTRIAL CLASSIFICATION: 3060 IRS NUMBER: 311168055 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 001-09278 FILM NUMBER: 94519327 BUSINESS ADDRESS: STREET 1: 250 S CLINTON ST STREET 2: STE 201 CITY: SYRACUSE STATE: NY ZIP: 13202 BUSINESS PHONE: 3154742500 10-K 1 FORM 10-K, EXHIBIT 21 AND EXHIBIT 23 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended DECEMBER 31, 1993 ---------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from _________ to _________ Commission file number 1-9278 CARLISLE COMPANIES INCORPORATED - -------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 31-1168055 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. employer incorporation or organization identification no.) 250 SOUTH CLINTON STREET, SUITE 201, SYRACUSE, NEW YORK 13202-1258 - -------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (315) 474-2500 ----------------- Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered - ------------------- ----------------------------------------- COMMON STOCK, $1 PAR VALUE NEW YORK STOCK EXCHANGE - -------------------------- ----------------------- PREFERRED STOCK PURCHASE RIGHTS NEW YORK STOCK EXCHANGE - ------------------------------- ----------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] Aggregate market value of voting common stock held by non-affiliates at February 23, 1994 $454,621,413 Shares of common stock outstanding at February 23, 1994 15,267,965 Portions of the definitive Proxy Statement for the Annual Meeting of Shareholders on April 20, 1994 are incorporated by reference in Part III. 1 of 41 PART I ITEM 1. BUSINESS. Carlisle Companies Incorporated was incorporated in 1986 in Delaware as a holding company for Carlisle Corporation, whose operations began in 1917, and its wholly-owned subsidiaries. Unless the context of this report otherwise requires, the words "Company" and "registrant" refer to Carlisle Companies Incorporated and its wholly-owned subsidiaries and any divisions or subsidiaries they may have. The Company's diversified manufacturing operations are conducted through its subsidiaries. The Company manufactures and distributes a wide variety of products for industry, primarily of rubber, plastics and metal content. Its products include both components used by other companies in the manufacture of capital and consumer goods and those for the aftermarket. The Company is the leading producer, or among the leading producers, of many of its lines. Sales of the Company's products are reported by distribution to the following three industry segments: Construction Materials, Transportation Products and General Industry. The principal products produced and services rendered in each of the industry segments include: Construction Materials--elastomeric membranes, metal roofing components, adhesives and related products for roofing systems and water barrier applications and outdoor recreation tiles; Transportation Products--custom manufactured rubber and plastic products for the automotive market, brake linings and pads for heavy duty trucks, trailers and off-road vehicles, specialty friction products, brakes and actuation systems for construction equipment and insulated wire products; General Industry--molded plastic foodservice products, small pneumatic tires, stamped and roll-formed wheels, custom molded plastic components, system integration products and insulated wire products. The amount of total revenue contributed by the products or services in each industry segment for each of the last three fiscal years is as follows (in millions):
1993 1992 1991 ---- ---- ---- Construction Materials $ 247.6 $ 198.7 $ 197.6 Transportation Products 177.0 172.9 169.2 General Industry 186.7 156.5 134.0 -------- -------- -------- Total $ 611.3 $ 528.1 $ 500.8
In each industry segment, the Company's products are generally distributed either by Company-employed field sales personnel or manufacturers' representatives. In a few instances distribution is through dealers and independent distributors. Inasmuch as some of 2 the Company's customers are other manufacturers of relatively significant size, marketing methods in certain operations are designed to accommodate the requirements of a small group of high-volume producer-customers. In each industry segment, satisfactory supplies of raw materials and adequate sources of energy essential for operation of the Company's businesses have generally been available to date. Uncertain economic conditions, however, could cause shortages of some basic materials, particularly those which are petroleum derivatives (plastic resins, synthetic rubber, etc.) and used in the construction materials, and transportation products and general industry segments. The Company believes, though, that energy sources are secure and sufficient quantities of raw materials can be obtained through normal sources to avoid interruption of production in 1994. Patents, trademarks and licenses held by the Company generally are not considered significant to the successful conduct of most of the segments' businesses. In each industry segment, the Company is engaged in businesses, and its products serve markets, which generally are highly competitive. Product lines serving most markets tend to be price competitive; all lines compete not only on pricing, but also on service and product performance. No industry segment is dependent upon a single customer, or a few customers, the loss of any one or more of which would have a material adverse effect on the segment. Order Backlog, which is believed to be firm, was $86.4 million at December 31, 1993 and $91.5 million at December 31, 1992. Stronger backlog positions at the end of 1993 were evident in the Company's automotive rubber and plastics markets and for operations within the Construction Materials segment. Strong backlog levels continued to be recorded at the Company's specialty tires and wheels and aircraft wire and cable operations at the end of 1993 though below levels of a year ago as manufacturing capacity and productivity have increased. Company sponsored research and development expenses increased to $11.2 million in 1993 from $10.7 million in 1992 and $10.4 million in 1991. Increased research and development activities within the Company's automotive rubber and plastics operations, along with expenses incurred by new operations combined for the higher expense levels in 1993. All other major operations maintained a similar level of research and development projects and costs in 1993 and 1992. The average number of persons employed by the Company during 1993 was 4,440. The businesses of the Construction Materials and Transportation Products industry segments are not seasonal in nature. Within the General Industry segment, distribution of lawn and garden products generally reach peak sales volume during the first two quarters of the year. 3 In 1993, the Company acquired most of the assets of ECI Building Components, Inc., a metal roofing and panel manufacturer, and now operates a business with the assets under the name Carlisle Engineered Metals Incorporated. The Company also acquired the assets of Goodyear Tire & Rubber Company's Roofing Systems Division, and now operates a non-residential roofing systems business under the name Versico Incorporated. During 1993, the Company entered the market for services to the international perishable cargo transportation industry by establishing a partnership with Marubeni Corporation, a large Japanese trading firm, to provide specialty equipment leasing services to shippers of perishable cargo. Carlisle Container Manufacturing Corporation, formed in 1993, will manufacture insulated containers for transportation of perishable cargo. In each industry segment, the Company's compliance with Federal, State and local provisions which have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment is not anticipated to have a material effect upon the capital expenditures, earnings or the competitive position of the Company or its divisions and subsidiaries. Information on the Company's revenues, operating profit or loss and identifiable assets by industry segments for the last three fiscal years, the nature and effect of the restatement of such information as a result of changes made in the way the Company's products or services are grouped into industry segments and the principal products in each segment is as follows:
(In thousands) 1993 1992 1991 ------- ------- ------- Sales to Unaffiliated Customers(1) Construction Materials 247,573 198,737 197,627 Transportation Products 177,005 172,849 169,158 General Industry 186,692 156,466 133,986 Operating Profit or Loss Construction Materials 25,496 23,715 23,014 Transportation Products 11,622 11,603 8,015 General Industry 18,904 12,685 8,087 Restructuring Charge(2) - - (18,700) Interest, net (1,152) (528) (1,495) Corporate(3) (7,958) (7,755) (8,360) Identifiable Assets Construction Materials 139,990 99,034 102,532 Transportation Products 109,523 97,196 103,381 General Industry 90,534 78,116 87,164 Corporate(4) 80,316 108,904 31,643 - ------------- 1. Intersegment sales or transfers are not material. 2. In 1991, the Company accounted for certain of its operations as discontinued operations and also recorded a restructuring charge for continuing operations. The restructuring charge allocable to operating expenses would reduce Transportation
4 and General Industry segment earnings in 1991 before income tax by $1.8 million and $12.8 million, respectively. 3. Includes general corporate and idle property expenses. 4. Consists primarily of cash, leasing company assets and excess facilities.
ITEM 2. PROPERTIES The following table sets forth certain information with respect to the principal properties and plants of the Company as of December 31, 1993:
_________________________________________________________________________________________________________________________________ O - OFFICE APPROXIMATE PRINCIPAL PRODUCT M - MANUFACTURING OWNED FLOOR SPACE OR ACTIVITY W - WAREHOUSING LOCATION OR LEASED (SQ. FT.) ACREAGE _________________________________________________________________________________________________________________________________ Corporate headquarters O Syracuse, NY Leased to 2005(1) 15,500 - _________________________________________________________________________________________________________________________________ High-performance O,M,W Burnsville, MN Owned 27,400 5 peripheral controllers and interfaces, cassettes, tape drives and hierarchical storage management _________________________________________________________________________________________________________________________________ Elastomeric membranes, O,M,W Carlisle, PA Owned 388,000 77 metal roofing components O,M,W Greenville, IL Owned 165,400 35 and related roofing O,M Stafford, TX Owned 108,500 8 products O,M Jemison, AL Owned 40,900 8 O,M Lodi, CA Leased to 1995 41,800 - O,M Tualatin, OR Leased to 1995 57,700 - O,M Stafford, TX Leased to 1995 56,840 - O,M,W Wylie, TX Owned 44,000 6 O,W Brussels, Belgium Leased to 1996(1) 11,000 - O Akron, OH Leased to 1996(1) 9,600 - ------- --- 764,400 134 _________________________________________________________________________________________________________________________________ Computer hardware systems integration and data O,M,W Englewood, CO Leased to 1996 25,000 - communications equipment _________________________________________________________________________________________________________________________________ Small pneumatic tires O,M,W Carlisle, PA Owned 483,800 29 and tubes; stamped and O,M,W Aiken, SC Owned 220,500 23 roll-formed wheels ------- -- 704,300 52 _________________________________________________________________________________________________________________________________ Molded plastics products O,M,W Oklahoma City, OK Owned 147,000 8 for commercial food O,M,W Lake City, PA Owned 103,000 30 service O,M,W Fredonia, WI Owned 192,500 12 O Northbrook, IL Leased to 1997(1) 7,300 - ------- -- 449,800 50 _________________________________________________________________________________________________________________________________ Custom-manufactured O,M,W Middlefield, OH Owned 200,600 28 rubber and plastics O,M,W Crestline, OH Owned 173,000 40 products O,M,W Canton, OH Owned 87,800 17 O,M,W Trenton, SC Owned 67,700 10 O Chardon, OH Leased to 1998(1) 7,500 - ------- -- 536,600 95 _________________________________________________________________________________________________________________________________ Brake lining for trucks O,M,W Ridgway, PA Owned 117,350 15 and trailers; brakes and O,M,W Fredericksburg, VA Owned 90,000 30 actuation systems; O,M,W Logansport, IN Owned 107,000 50 friction products O,M,W Bloomington, IN Owned 250,000 21 O,M,W Zevenaar, Holland Owned 26,000 1 O,M,W Sorocaba, Brazil Owned 31,100 11 ------- --- 621,450 128 _________________________________________________________________________________________________________________________________ High- and medium- O,M,W St. Augustine, FL Owned 166,750 17 temperature insulated wire and cable _________________________________________________________________________________________________________________________________ Products for passive O,M,W Graham, TX Leased to 1994(1) 20,600 - components in electronics
5
_________________________________________________________________________________________________________________________________ O - OFFICE APPROXIMATE PRINCIPAL PRODUCT M - MANUFACTURING OWNED FLOOR SPACE OR ACTIVITY W - WAREHOUSING LOCATION OR LEASED (SQ. FT.) ACREAGE _________________________________________________________________________________________________________________________________ Refrigerated marine O,M Green Cove Springs, Leased to 2003(1) 83,000 - containers FL _________________________________________________________________________________________________________________________________ 3,574,140 481 (1) Lease provides for renewal
Total plant space of 3,574,140 sq. ft. is used for
Owned Leased Total ----- ------ ----- Office 311,200 79,800 391,000 Manufacturing 1,993,400 225,540 2,218,940 Warehousing 933,700 30,500 964,200 --------- ------ --------- 3,238,300 335,840 3,574,140 ========= ======= =========
As of December 31, 1993, the Company owned three additional facilities. One is related to a wire and cable business sold in early 1988, one is a wire and cable operation relocated in 1989, and the other is related to a commercial foodservice business relocated in 1992. These facilities, totaling approximately 500,000 sq. ft., are being held for sale. An additional 523,000 sq. ft. is leased by the Company, under various agreements, principally for warehousing and distribution. All of the manufacturing and most of the office and warehousing space is of masonry and steel construction and most are equipped with automatic sprinkler systems. Approximately one- third of the owned office, manufacturing and warehousing space has been constructed within the last twenty years; the remaining buildings are from twenty to seventy years old and have been maintained in good condition. ITEM 3. LEGAL PROCEEDINGS As of December 31, 1993, other than ordinary routine litigation incidental to the business, which is being handled in the ordinary course of business, neither the Company nor any of its subsidiaries is a party to, nor are any of their properties subject to any material pending legal proceedings, nor are any such proceedings known to be contemplated by governmental authorities. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. 6 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS. The Company's common stock is traded on the New York Stock Exchange. As of December 31, 1993, there were 2,186 shareholders of record. Quarterly cash dividends paid and the high and low prices of the Company's stock on the New York Stock Exchange in 1993 and 1992 were as follows:
First Second Third Fourth ----- ------ ----- ------ 1993 ---- Dividends per share $ .17 $ .17 $ .18 $ .18 Stock Price(1) High $27.75 $29.88 $34.25 $34.50 Low $23.13 $26.38 $28.13 $28.50 1992 ---- Dividends per share $ .16 $ .16 $ .17 $ .17 Stock Price High $20.75 $22.88 $22.50 $23.75 Low $18.50 $17.63 $19.38 $20.25 (1) Reflects two-for-one stock split on June 1, 1993.
ITEM 6. SELECTED FINANCIAL DATA.
(In thousands except per share data) 1993 1992 1991(1) 1990 1989 ------ ------ ------ ----- ----- 1990 1989 Summary Of Operations - --------------------- Net Sales $611,270 528,052 500,771 498,473 436,384 Net earnings from continuing operations $ 28,378 24,228 6,554 24,408(3) 23,897 Per share $ 1.83 1.58 0.43 1.54(3) 1.48 Net earnings (loss) from discontinued operations $ - 471 (14,989) (2,650) 3,096(4) Per share(2) $ - 0.03 (0.98) (0.17) 0.19(4) Net earnings (loss) $ 28,378 24,699 (8,435) 21,758 26,993 Per share(2) $ 1.83 1.61 (0.55) 1.37 1.67 Financial Position - ------------------ Total assets $420,363 383,250 324,720 300,858 266,507 Long-term debt $ 59,548 69,098 48,623 44,501 17,417 Other Data - ---------- Dividends paid $ 10,705 10,076 9,597 9,675 9,511 Per share(2) $ 0.70 0.66 0.63 0.61 0.59
7 (1) In 1991, the operational restructuring of the Company resulted in certain of its business units being accounted for as discontinued operations. The information presented above reflects the activities and balances of continuing operations, unless otherwise noted. (2) All share and per share amounts have been restated to reflect a two-for- one stock split on June 1, 1993. (3) In 1992, SFAS No. 109 "Accounting for Income Taxes" was adopted retroactively in 1990. As a result, an additional charge of $1.0 million, ($0.06) a share, was recorded against net earnings from continuing operations in 1990, and shareholders' equity and total assets were restated in 1991 and 1990. (4) Includes a gain of $5.9 million, $0.37 a share, on the sale of Graham Japan Limited, a joint venture.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The Company's sales increased 16% and net earnings from continuing operations improved 17% in 1993 compared to 1992. Sales in 1993 were $611.3 million versus sales in 1992 of $528.1 million. Net earnings from continuing operations improved to $28.4 million, $1.83 a share, from $24.2 million, $1.58 a share in 1992. In 1992, discontinued operations contributed an additional $0.5 million, $0.03 a share, to net earnings resulting in total earnings of $24.7 million, $1.61 a share. In the second quarter of 1993, prompted by strong growth in the price of the Company's shares, the Company executed a two-for-one stock split. All share information has been adjusted in this report to reflect the split. The Company completed two acquisitions in 1993 to expand and strengthen its operations within its construction materials segment. Acquired in January 1993 were the assets of ECI Building Components, Inc. (now operating as Carlisle Engineered Metals Incorporated), an architectural metal roofing and panel manufacturer. In March 1993, the Company purchased the Roofing Systems division of Goodyear Tire & Rubber Company (now operating as Versico Incorporated), broadening its coverage of the non-residential EPDM roofing market. Sales in 1993 increased over 1992's levels as the result of record performances by operations within the Company's General Industry segment and the performance of the acquisitions made within the Construction Materials segment. A summary of sales by operating segment is presented below. 8
1993 1992 1991 _____ _____ _____ Construction Materials $247.6 $198.7 $197.6 Transportation Products $177.0 $172.9 $169.2 General Industry $186.7 $156.5 $134.0 ______ ______ ______ Total $611.3 $528.1 $500.8
Construction Materials segment sales in 1993 of $247.6 million increased by $48.9 million when compared to 1992, as the acquisitions made in early 1993 recorded revenues of $43.3 million. Non-residential roofing demand was effectively flat in 1993 versus 1992's depressed levels, while pricing levels declined slightly. Continued market share improvements, including increased international shipments, contributed to 1993's record segment sales levels. The segment's sales comparisons were also impacted in 1993 by the decision to discontinue the sales of plenum cable. The elimination of this product line caused a $4.4 million reduction in 1993's sales compared to the prior year. Transportation Products segment sales improved 2% to $177.0 million in 1993 compared to 1992. Aircraft wire product sales in 1993 improved $4.2 million over 1992's levels as the Company's Tufflite wire products gained market acceptance during the year. Demand for the Company's braking system products declined while heavy-duty friction products sold to the original equipment tractor/trailer market were up over 25% in a strong market in 1993. Heavy duty friction aftermarket revenues improved 2% compared to 1992. Custom rubber and plastic sales to automobile equipment manufacturers finished strongly in the latter part of 1993 as automobile and truck production surpassed 1992 levels. This stronger market brought sales volume increases which were partially offset by lower prices throughout 1993 to net a 3% sales increase over 1992. General Industry segment sales were up 19% in 1993 over 1992 as the two primary operations in the segment achieved record high results. In 1993, the Company's specialty tires and wheels operations recorded a 22% sales increase over 1992, after achieving a similar improvement in 1992 over 1991. Increased sales from specialty tires and wheels operations were the result of higher volumes from market share gains, an extended lawn and garden season in 1993, expanded product offerings and successful penetration into new markets. The Company's foodservice plastics operations also achieved record sales levels in 1993 as revenues increased 11% over 1992. Market share gains, particularly in the Company's contract plastic molding operations, combined with expanded foodservice product offerings to achieve the successful 1993 results. Other operations within the general industry segment, including high speed data wire and cable and system integration products also improved their market positions in 1993 to produce higher sales. 9 Net earnings from continuing operations improved 17% in 1993 over 1992 on the strength of performances of operations within the Construction Materials and General Industry segments. Net earnings from continuing operations in 1993 were $28.4 million, $1.83 a share, compared to $24.2 million, $1.58 a share, in 1992. This compares to net earnings from continuing operations of $6.6 million, $0.43 a share, in 1991 after taking an $11.6 million after-tax charge, $0.76 a share, for operational restructuring. In 1991, the Company recorded losses associated with the operations and discontinuance of its operations engaged in the production, sale and maintenance of computer tape products and systems hardware. These operations were sold in 1992. A summary of after-tax results for the last three years is presented below.
1993 1992 1991 ---- ---- ---- Continuing Operations --------------------- Net earnings before restructuring charge $28.4 $24.2 $ 18.2 Per share $1.83 $1.58 $ 1.19 Restructuring charge -- -- $(11.6) Per share -- -- $(0.76) Net earnings $28.4 $24.2 $ 6.6 Per share $1.83 $1.58 $ 0.43 Discontinued Operations ----------------------- Loss from operations -- -- $ (2.4) Per share -- -- $(0.15) Gain (loss) on discontinuance -- $ 0.5 $(12.6) Per share -- $ 0.03 $(0.83) Net earnings (loss) -- $ 0.5 $(15.0) Per share -- $ 0.03 $(0.98) Total net earnings (loss) $28.4 $ 24.7 $ (8.4) Per share $1.83 $ 1.61 $(0.55)
Earnings by continuing operating segment, before income tax, interest, restructuring charge and corporate expense, are summarized below.
1993 1992 1991 ---- ---- ---- Construction Materials $25.5 $23.7 $23.0 Transportation Products $11.6 $11.6 $ 8.0 General Industry $18.9 $12.7 $ 8.1 ---- ---- ---- Total $56.0 $48.0 $39.1
10 Earnings from the Construction Materials segment improved 8% in 1993 versus 1992. Contributing to the earnings improvement was a favorable product mix and lower operating expenses within non-residential roofing systems operations. Partially offsetting these gains were initial year operating expenses absorbed in 1993 associated with the acquisition and establishment of Carlisle Engineered Metals Incorporated. The Company's initial year entry into the metal roofing market brought lower overall margins to this segment in 1993. Transportation Products segment earnings in 1993 were flat compared to 1992. Earnings improved significantly from aircraft wire operations on higher sales and improved operational margins. Heavy duty friction operations earnings were impacted by an unfavorable product mix, as a higher percentage of sales in 1993 originated from its lower margin original equipment business compared to a year ago. Lower sales of braking system products in 1993, particularly in international markets, also negatively impacted segment earnings compared to 1992. Earnings from sales of custom rubber and plastics products to the automotive industry declined as the result of a full year impact of price concessions in 1993, which partially impacted 1992. Lower overall administrative expenses helped offset some of the effect of reduced prices in this segment in 1993. Operations within the General Industry segment recorded earnings in 1993 at a level 49% higher than 1992. Earnings in this segment improved 57% in 1992 over 1991. The increased 1993 sales of specialty tires and wheels operations produced a gain in earnings of 25%. Competitive pricing actions pushed margins downward but lower expenses continued to have a favorable effect upon earnings. Foodservice plastics operations improved earnings by 20% in 1993 versus 1992, again primarily driven by higher revenues. Margin percentages were slightly lower in 1993 as the result of the product mix of foodservice plastics products sold. Administrative expenses in relation to foodservice plastics sales were at lower levels in 1993 contributing to the improved earnings performance over 1992. High speed data wire and cable and system integration operations also improved their profitability in 1993 on the strength of major cost reduction efforts and higher sales levels. Gross margins as a percent of sales were 25.9% in 1993, compared to 26.3% in 1992 and 26.0% in 1991. The reduction in gross margins as a percent of sales in 1993 was caused by unfavorable product mixes and the inability to pass through material cost increases in some markets. The economic conditions in the first half of 1993 produced competitive pricing pressures, particularly within the Transportation Products segment. A higher mix of sales in 1993 to lower margin original equipment manufacturers in proportion to sales into the aftermarket resulted in lower comparative margin ratios within the heavy-duty friction operation. Improved overhead absorption from increased sales and effective cost reduction and expense control programs in each operating segment in 1993 combined to help offset the lower margin levels. 11 Selling and administrative expenses continued to decline as a percent of sales to 16.1% in 1993, from 16.4% in 1992 and 17.2% in 1991. In the Construction Materials segment, excluding 1993 acquisitions, expense levels were reduced by approximately $1.0 million in 1993 compared to 1992. Higher expenses were required, however, in the first year of operations of the segment's 1993 acquisitions, resulting in an unfavorable effect upon the Company's overall expense ratios. Transportation Products segment operations reduced selling and administrative expenses by over $2.2 million in 1993 versus 1992. Higher sales levels and expense containment programs in place at operations within the general industry segment contributed to improved expense ratios for the segment. Research and development expenses increased to $11.2 million in 1993 from $10.7 million in 1992 and $10.4 million in 1991. Increased research and development activities within the Company's automotive rubber and plastics operations, along with expenses incurred by new Company operations combined for the higher expense levels in 1993. All other major operations maintained a similar level of research and development projects and costs in 1993 and 1992. Interest expense was $4.3 million in 1993 compared to $5.2 million in 1992 and $4.4 million in 1991. Two actions taken in 1993 resulted in lowering interest expense for the Company. The Company paid down $12.0 million of its 8% senior notes in March 1993 and refinanced its $8.5 million revenue bond issue to an adjustable rate bond in June 1993. The bond refinancing resulted in the average interest rate paid on the bonds after the refinancing to be 2.6% versus its previous 10.25% fixed rate. Income taxes were computed for financial statement purposes at a rate of 39.5% in 1993 compared to 39% in 1992 and 38% in 1991. The higher rate in 1993 is primarily the result of the increase in the corporate federal tax rate legislated in 1993. An analysis of the provision for income taxes for each of the years is included in the Notes to Consolidated Financial Statements. Order backlog was $86.4 million at December 31, 1993 and $91.5 million at December 31, 1992. Stronger backlog positions at the end of 1993 were evident in the Company's automotive rubber and plastics markets and for operations within the Construction Materials segment. Strong backlog levels continued to be recorded at the Company's specialty tires and wheels and aircraft wire and cable operations at the end of 1993 though below levels of a year ago as manufacturing capacity and productivity have increased. Accounts receivable were $91.2 million at December 31, 1993 compared to $71.8 million at December 31, 1992. The acquisitions made in 1993 account for $6.1 million of the increase. Strong fourth quarter sales performances from the construction materials segment and from automotive rubber and plastics operations resulted in an increased 1993 year-end receivable balance compared to a year ago. 12 Inventories valued primarily by the last-in, first-out (LIFO) method were $65.0 million at December 31, 1993 compared to $50.0 million at December 31, 1992. The acquisitions made in 1993 account for $12.9 million of the inventory increase. Higher inventory levels at year end 1993, after historically low levels at the end of 1992 at the Company's specialty tires and wheels and aircraft wire and cable operations were partially offset by reductions from aggressive inventory management within foodservice plastics and friction operations. Working capital was $144.5 million at December 31, 1993 and $162.1 million at December 31, 1992. In 1993, the Company paid down $12.0 million of long-term debt and increased levels of internal investment through capital spending. These factors along with the effects of the 1993 acquisitions are the primary factors for the change in working capital. Capital expenditures totaled $28.5 million in 1993 and $19.9 million in 1992. Major projects in 1993 included the acquisition of machinery to expand and improve the Company's automotive rubber and plastics operations, add capacity to the specialty tire and wheels operations and provide advanced processing technology into construction material operations. In 1992, the major components of activity included adding capacity in the Company's foodservice plastics operations and purchasing assets to expand non-automotive plastic molding capabilities. Cash flows provided by operating activities were $32.8 million in 1993 compared to $49.8 million in 1992. The lower amount provided in 1993 results from higher levels of working capital employed by operations at year end 1993 versus 1992 and higher tax payments required during the course of 1993. Investing activities absorbed $49.4 million of cash flow in 1993 through capital spending, operational investments and company acquisitions. In 1992, net cash was provided from investing activities of $18.3 million as capital spending was exceeded by cash received from the sale of excess facilities and discontinued operations. Financing activities in 1993 were driven by the pay-down of senior long-term debt and higher dividend payments resulting in reductions in cash of $22.2 million. Financing activities in 1992 provided cash of $8.0 million as net proceeds from long-term debt exceeded dividend payments. The Company's primary liquidity and capital sources are its operations, bank lines of credit and long-term borrowings. The Company continues to have substantial borrowing capacity and financial flexibility. The Company recognizes the importance of its responsibilities toward matters of environmental concern. Programs are in place to monitor and test facilities and surrounding environments, as well as to recycle materials where practical. The Company has not incurred any material charges relating to environmental matters in 1993 or in prior years, and none are anticipated in the foreseeable future. 13 The 1994 outlook for the Company is good. Effective cost control has been an important factor in the earnings improvement of the Company. Continuation of this cost control with improving conditions in our markets should result in better performance as the year evolves. Non-residential roofing markets will continue to be dominated by repair and replacement demand in a slowly improving market. The effects of the 1993 acquisitions of a metal roofing business and a membrane roofing business, included for a full year in 1994, will have a favorable impact upon earnings. The Company's strong competitive position places us favorably to take advantage of opportunities presented by a strengthening market. The optimistic outlook for automobile and truck production will translate into stronger performance in our Transportation Products segment. The results of our custom-molded rubber and plastic products should improve at least as much as the overall market. We will continue the diversification of our customer base. The strength in original equipment markets for friction products is expected to continue. Improved financial performance, however, depends upon a rebound in the aftermarket. A strengthening economy is the primary stimulus to overall freight movement. Strong domestic growth and new products will result in a rebound in performance for the Company's friction business. The 1993 momentum in the high performance aircraft wire and cable business is expected to continue. Excellent acceptance by the major manufacturers in the industry will continue to allow us to overcome the weakness in the overall aviation market. The Company's leading position in specialty tires and wheels is expected to generate further gains in this well performing business. Growing participation in golf car and trailer tires combined with good results from the lawn and garden sector provide for an optimistic outlook. Similarly, the record performance of our foodservice plastics business is expected to continue in 1994. Added product lines, improved internal efficiency and attractive markets should produce another outstanding year. Overall, the outlook for the Company in 1994 and beyond is bright. The order backlog is good, financial resources are in place, domestic markets are improving and our international presence is growing. The Company expects to make further strategic investments that will blend with the positive momentum of our existing businesses to provide consistent and progressive long-term performance improvement that translates to value for our customers and our shareholders. 14 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
CONSOLIDATED STATEMENT OF EARNINGS FOR YEARS ENDED DECEMBER 31 (In thousands except per share data) 1993 1992 1991 ------ ------ ------ Net sales $611,270 $528,052 $500,771 ------- ------- ------- Cost and expenses: Cost of goods sold 452,792 389,191 370,747 Selling and administrative expenses 98,449 86,876 86,259 Research and development expenses 11,165 10,724 10,423 Restructuring charge - - 18,700 ------- ------- ------- 562,406 486,791 486,129 ------- ------- ------- Other income (deductions): Investment income 3,158 4,646 2,881 Interest expense (4,310) (5,174) (4,376) Other, net (800) (1,013) (2,586) ------- ------- ------- (1,952) (1,541) (4,081) ------- ------- ------- Earnings from continuing operations before income taxes 46,912 39,720 10,561 Income taxes 18,534 15,492 4,007 ------- ------- ------- Earnings from continuing operations 28,378 24,228 6,554 ------- ------- ------- Discontinued operations, net of tax: Loss from operations - - (2,387) Earnings (loss) on discontinuance - 471 (12,602) ------- ------- ------- Earnings (loss) from discontinued operations - 471 (14,989) ------- ------- -------- Net earnings (loss) $ 28,378 $ 24,699 $ (8,435) ======= ======= ======= Average shares and equivalents 15,478 15,337 15,268 Net earnings (loss) per share: Continuing operations $ 1.83 $ 1.58 $ 0.43 Discontinued operations - 0.03 (0.98) ------- ------- ------- $ 1.83 $ 1.61 $ (0.55)
15
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (In thousands except per share data) Additional Cost of Common Paid-in Retained Shares in Stock Capital Earnings Treasury ------ ---------- -------- --------- Balance at December 31, 1990 $ 9,833 $ 763 $252,938 $(57,043) Net loss - - (8,435) - Cash dividends - $0.63 a share - - (9,597) - Exercise of stock options & other - 276 - 1,192 Purchase of 44,456 treasury shares - - - (809) ------------------ ------------------- -------------------- ----------- Balance at December 31, 1991 9,833 1,039 234,906 (56,660) Net earnings - - 24,699 - Cash dividends - $0.66 a share - - (10,076) - Exercise of stock options & other - 397 - 1,084 Purchase of 46,566 treasury shares - - - (1,020) ------------------ ------------------- -------------------- ----------- Balance at December 31, 1992 9,833 1,436 249,529 (56,596) Net earnings - - 28,378 - Cash dividends - $0.70 a share - - (10,705) - Exercise of stock options & other - 282 - 351 Two-for-one stock split 9,832 (1,586) (8,246) - Purchase of 64,734 treasury shares - - - (1,985) ------------------ ------------------- -------------------- ----------- Balance at December 31, 1993 $19,665 $ 132 $258,956 $(58,230)
See accompanying Notes to Consolidated Financial Statements. 16
CONSOLIDATED BALANCE SHEET AT DECEMBER 31 (In thousands except per 1993 1992 share data) ------ ------ ASSETS Current assets Cash and cash equivalents $ 51,802 $ 90,605 Receivables, less allowances of $3,906 in 1993 and $4,785 in 1992 91,158 71,822 Inventories 64,976 49,973 Deferred income taxes 16,456 16,870 Prepaid expenses and other 12,287 7,956 ------- ------- Total current assets 236,679 237,226 ------- ------- Property, plant and equipment, net 142,229 122,051 ------- ------- Other assets Patents and other intangibles 15,831 9,403 Investments and advances to affiliates 14,780 8,695 Receivables and other assets 7,889 5,053 Deferred income taxes 2,955 822 Net non-current assets of discontinued - 278 operations ------- ------- Total other assets 41,455 24,251 ------- ------- $420,363 $383,528 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 28,681 $ 19,252 Accrued expenses 63,524 55,886 ------- ------- Total current liabilities 92,205 75,138 ------- ------- Long-term liabilities Long-term debt 59,548 69,098 Product warranties 46,803 32,266 Deferred compensation and other liabilities 1,284 2,824 ------- ------- Total long-term liabilities 107,635 104,188 ------- ------- Shareholders' equity Preferred stock, $1 par value. Authorized and unissued 5,000,000 shares Common stock, $1 par value. Authorized 25,000,000 shares; issued 19,665,312 shares 19,665 9,833 Additional paid-in capital 132 1,436 Retained earnings 258,956 249,529 Cost of shares in treasury - 4,412,188 shares in 1993 and 4,374,582 shares in 1992 (58,230) (56,596) ------- ------- Total shareholders' equity 220,523 204,202 ------- ------- $420,363 $383,528 ======= =======
See accompanying Notes to Consolidated Financial Statements. 17
CONSOLIDATED STATEMENT OF CASH FLOWS FOR YEARS ENDED DECEMBER 31 (In thousands) 1993 1992 1991 ------ ------ ------ Operating Activities Net earnings (loss) $ 28,378 $ 24,699 $ (8,435) Reconciliation of net earnings (loss) to cash flows: Depreciation 18,125 17,159 17,532 Amortization 2,563 1,647 1,895 Restructuring charge -- -- 18,700 Estimated loss on discontinuance of operations -- -- 20,325 Loss (gain) on sales of property and equipment 25 (992) -- Changes in assets and liabilities excluding effects of acquisitions: Current and long-term receivables (15,107) 1,234 4,481 Inventories (5,792) 2,341 3,255 Accounts payable and accrued expenses 14,284 (3,517) (5,943) Prepaid, deferred and current income taxes (4,293) 6,943 (16,004) Long-term liabilities (1,621) 673 3,894 Other (4,048) 549 1,174 Net assets of discontinued operations 278 (906) 10,403 ------- ------- ------- Net cash provided by operating activities 32,792 49,830 51,277 ------- ------- ------- Investing Activities Capital expenditures (28,490) (19,924) (19,711) Acquisitions, net of cash (15,701) (997) (23,311) Sales of property and equipment 921 4,309 84 Other (6,085) 198 -- Net activities of discontinued operations -- 34,723 (1,059) ------- ------- ------- Net cash provided by (used in) investing activities (49,355) 18,309 (43,997) ------- ------- ------- Financing Activities Proceeds from long-term debt 2,500 23,000 6,500 Reductions of long-term debt (12,050) (3,850) (3,464) Short-term borrowings -- -- (3,121) Dividends (10,705) (10,076) (9,597) Purchases of treasury shares (1,985) (1,020) (809) ------- ------- ------- Net cash provided by (used in) financing activities (22,240) 8,054 (10,491) ------- ------- ------- Change in cash and cash equivalents (38,803) 76,193 (3,211) Cash and cash equivalents Beginning of year 90,605 14,412 17,623 ------- ------- ------- End of year $ 51,802 $ 90,605 $ 14,412 ======= ======= =======
See accompanying Notes to Consolidated Financial Statements. 18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SUMMARY OF ACCOUNTING POLICIES The consolidated financial statements include the accounts of the Company and its subsidiaries. Investments in less than majority owned affiliates, none of which are significant, are accounted for on the equity method. All material intercompany transactions and accounts have been eliminated. Cash and cash equivalents include all cash balances and highly liquid investments with original maturities of three months or less. Inventories are valued at lower of cost or market. Cost for inventories is determined for a majority of the Company's inventories by the last-in, first- out (LIFO) method with the remainder determined by the first-in, first-out (FIFO) method. Property, plant and equipment are stated at cost. Costs assigned to property, plant and equipment of acquired companies are based on estimated fair value at the date of acquisition. Depreciation is principally computed on the straight line basis over the estimated useful lives of the assets. Asset lives are 20 to 40 years for buildings, 5 to 15 years for machinery and equipment and 3 to 10 years for leasehold improvements. Patents and other intangibles, obtained through acquisitions, are recorded at cost (net of accumulated amortization of $5.4 million and $4.9 million at December 31, 1993 and 1992, respectively) and amortized over their remaining lives averaging six to eight years. Also included is the excess of acquisition cost over the value of assets acquired, $2.3 million and $2.4 million at December 31, 1993 and 1992, respectively, and is being amortized over various periods not exceeding 30 years. Amortization expense is recorded on the straight-line method. The Company maintains product warranties reserves to provide for future claims. Extended periods of coverage are available on certain products for a fee. Deferred tax assets and liabilities are recognized for the future tax consequences of the differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. These balances are measured using enacted tax rates expected to apply to taxable income in the years in which such temporary differences are expected to be recovered or settled. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. Net earnings per share of common stock are based on the weighted average number of common shares and common equivalent shares outstanding during the period, assuming the exercise of stock options. 19 Certain reclassifications have been made to prior years' information to conform to 1993 presentation. INVENTORIES The components of inventories are:
(In Thousands) 1993 1992 ------ ------ FIFO cost (approximates current costs): Finished goods $43,714 $39,126 Work in process 8,761 6,546 Raw materials 27,212 20,335 ------- ------- $79,687 $66,007 Excess of FIFO cost over LIFO value (14,711) (16,034) ------- ------- $64,976 $49,973
PROPERTY, PLANT & EQUIPMENT The components of property, plant and equipment are:
(In Thousands) 1993 1992 ------ ------ Land $ 5,109 $ 3,897 Buildings & leasehold improvements 87,268 84,332 Machinery & equipment 216,289 187,444 Projects in progress 10,128 7,323 -------- -------- 318,794 282,996 Accumulated depreciation (176,565) (160,945) -------- -------- $142,229 $122,051
20 BORROWINGS Long-term debt, all unsecured, includes:
(In Thousands) 1993 1992 ------ ------ 8% senior notes due 1998-2002 $48,000 $60,000 Variable rate revenue bonds due 2008 8,500 8,500 Variable rate revenue bonds due 2003 2,500 -- Other 598 648 ------ ------ $59,598 $69,148 Less: current maturities 50 50 ------ ------ $59,548 $69,098
In 1993, the Company paid down $12.0 million of its 8% notes and refinanced its previous 10.25% fixed rate revenue bonds to variable rate bonds. Additional variable rate industrial revenue bonds of $2.5 million were also secured in 1993. The interest rate on the revenue bonds at December 31, 1993 was 3.2%. The debt facilities contain various restrictive covenants and limitations, all of which were complied with in 1993 and 1992. Cash payments for interest were $4.9 million in 1993, $3.7 million in 1992, and $4.1 million in 1991. The Company had $10.1 million and $10.7 million of outstanding letters of credit issued against credit lines at December 31, 1993 and 1992, respectively. The aggregate amount of long-term debt maturing in each of the five years subsequent to December 31, 1993 is approximately $0.1 million a year through 1997 and $9.7 in 1998. 21 ACQUISITIONS Acquisitions completed by the Company in the last three years include: 1993- ECI Building Components Incorporated, a metal roofing and panel manufacturer and Goodyear Tire & Rubber Company's Roofing Systems Division, a distributor and seller of non-residential roofing systems; 1991-SiLite Incorporated, a manufacturer of plasticware products for the foodservice industry. These acquisitions were completed for cash and assumption of debt and certain other liabilities of approximately $52.6 million and have been accounted for as purchases. Results of operations, which have been included in the consolidated financial statements since their respective acquisition dates, did not have a material effect on consolidated operating results of the Company in the years of acquisition. OPERATIONAL RESTRUCTURING In the third quarter of 1991, the Company recorded a restructuring charge of $18.7 million for costs associated with the relocation and consolidation of operations and the elimination of product lines. The charge included provisions for personnel severance, relocation and training costs, equipment relocation and related facility costs, the write-down of assets and other costs associated with the repositioning and removal of product lines. The restructuring charge is separately identified in the Consolidated Statement of Earnings for 1991. DISCONTINUED OPERATIONS In September 1991, the Company announced its decision to sell its businesses engaged in the production, sale and maintenance of computer tape products and systems integration hardware. A provision was recorded in 1991 for anticipated disposal costs and the write-down of related assets to estimated realizable value totalling $20.3 million, $12.6 million after-tax. In 1992, the Company sold its quarter-inch tape business, as well as its half-inch tape business, to substantially eliminate the operations which are classified as discontinued operations. The Company recognized earnings in 1992 from discontinued operations of $0.9 million, $0.5 million after-tax, as it adjusted its estimates due to better than anticipated performance. In 1991, net sales from discontinued operations were $88.1 million through September 30, and $117.5 million for the year. Losses from discontinued operations before tax were $3.9 million in 1991. SHAREHOLDERS' EQUITY On April 20, 1993 the Company's Board of Directors authorized a two-for-one stock split which was issued on June 1, 1993, to shareholders of record on May 11, 1993. The split resulted in the issuance of 9,832,656 new shares of common stock and the reissuance of 2,175,479 shares of common stock held in treasury. 22 All references in the financial statements to average number of shares outstanding and related prices, per share amounts, and stock option plan data have been restated to reflect the split. The Company has a Stockholders' Rights Plan which is designed to protect stockholder investment values. A dividend distribution of one Preferred Stock Purchase Right for each outstanding share of the Company's common stock was declared, payable to stockholders of record on March 3, 1989. The rights will become exercisable under certain circumstances, including the acquisition of 25% of the Company's common stock, or 40% of the voting power, in which case all rights holders except the acquiror may purchase the Company's common stock at a 50% discount. If the Company is acquired in a merger or other business combination, and the rights have not been redeemed, rights holders may purchase the acquiror's shares at a 50% discount. Common stockholders of record May 30, 1986 are entitled to five votes per share. Common stock acquired subsequent to that date entitles the holder to one vote per share until held four years, after which time the holder will be entitled to five votes. EMPLOYEE STOCK OPTIONS & INCENTIVE PLAN The Company maintains an Executive Incentive Program for executives and certain other employees of the Company and its operating divisions and subsidiaries. The Program contains a plan, for those who are eligible, to receive cash bonuses and/or shares of restricted stock. The Program also has a stock option plan available to certain employees who are not eligible to receive cash or restricted stock awards. The Program makes available up to 627,099 shares of the Company's common stock for issuance as restricted stock and up to 736,392 shares for stock option grants. In 1993, 23,116 shares of restricted stock were issued and 4,951 shares were surrendered under the terms of the Program. 23 The activity under the stock option plan, as restated, is as follows:
Number Option of shares Prices --------- ------ Outstanding at December 31, 1990 240,910 $13.88-18.00 Options granted 179,544 16.13-17.50 Options exercised (55,916) 15.06-18.00 Options surrendered (16,164) 16.38-18.00 ------- Outstanding at December 31, 1991 348,374 $13.88-18.00 Options granted 118,300 19.57 Options exercised (72,998) 15.00-19.57 Options surrendered (7,162) 13.88-19.57 ------- Outstanding at December 31, 1992 386,514 $13.88-19.57 Options granted 293,775 24.63-30.75 Options exercised (7,030) 13.88-19.56 Options surrendered (12,900) 19.56-24.63 ------- Outstanding at December 31, 1993 660,359 $16.13-30.75 ======= Exercisable at December 31, 1993 362,403 $16.13-30.75 ======= Available for grant at December 31, 1993 25,798 =======
RETIREMENT PLANS The Company maintains defined benefit retirement plans for the majority of its employees. Benefits are based primarily on years of service and earnings of the employee. Plan assets consist primarily of publicly-listed common stocks and corporate bonds. 24 Pension expense includes:
(In Thousands) 1993 1992 1991 ------ ------ ------ Service cost $2,396 $2,435 $2,776 Interest cost on projected benefit obligation 5,053 4,892 4,325 Actual return on plan assets (8,617) (4,488) (14,317) Net amortization and deferral 2,944 (1,000) 9,029 ----- ----- ----- Total pension expense $1,776 $1,839 $1,813
The funded status of the plans at December 31 was:
(In Thousands) 1993 1992 ---- ---- Actuarial present value of accumulated benefit obligation: Vested $56,680 $49,250 Non-vested 1,025 844 ------ ------ $57,705 $50,094 ====== ====== Plan assets at fair value $71,811 $66,772 Projected benefit obligation (68,548) (61,897) ------ ------ Plan assets in excess of projected benefit obligation 3,263 4,875 Unamortized transition asset (5,695) (7,034) Unrecognized prior service costs 4,413 5,146 Unrecognized net gains (6,830) (6,145) ------ ------ Accrued pension expense $(4,849) $(3,158) ====== ======
The projected benefit obligation was determined using an assumed discount rate of 7.75% in 1993 and 8.50% in 1992. The assumed rate of compensation increase was 4.5% in 1993 and 5.5% in 1992. The expected rate of return on plan assets was 8.75% in 1993, 1992 and 1991. In 1992, the sale of discontinued operations and the corresponding reduction in retirement plan participants resulted in a plan curtailment. The effects of the curtailment were to decrease the unamortized balance of unrecognized prior service costs and to decrease the projected benefit obligation of the retirement plan which resulted in a net gain of $1.2 million. This gain is included in the computation of the net loss on the disposal of discontinued operations as reported in the Consolidated Statement of Earnings. 25 In the first quarter of 1993, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 106, "Employers Accounting for Post- Retirement Benefits Other Than Pensions". The Company has a limited number of post-retirement benefit programs and participants. Accordingly, the Company has elected to record the previously unrecognized obligations arising from the adoption of SFAS No. 106 prospectively as a component of future years expense, amortized over a 20 year period. The annual SFAS No. 106 expense for the Company, inclusive of the components of service costs, interest costs and the amortization of the unrecognized transition obligation, is approximately $0.6 million, $0.4 million after tax. The resulting annual expense in 1993 is not materially different than the Company's post-retirement benefits expense in 1992 and 1991 and is not material to its Consolidated Statement of Earnings. INCOME TAXES The provision for income taxes was as follows:
1993 1992 1991 ---- ---- ---- (In Thousands) Continuing operations $18,534 $15,492 $ 4,007 Discontinued operations - 390 (9,187) ------ ------ ------ Total provision $18,534 $15,882 $ (5,180) ====== ====== ====== Currently payable Federal $15,981 $ 6,330 $ 3,492 State, local and other 4,272 3,003 1,546 ------ ------ ------ $20,253 $ 9,333 $ 5,038 ------ ------ ------ Deferred (benefit) Federal $(1,588) $ 5,661 $ (9,136) State, local and other (131) 888 (1,082) ------ ------ ------ $(1,719) $ 6,549 $(10,218) ------ ------ ------ Total provision $18,534 $15,882 $ (5,180) ====== ====== ======
26 Deferred tax assets (liabilities) are comprised of the following at December 31:
(In Thousands) 1993 1992 1991 ------ ------ ------ Product warranty $17,927 $14,216 $12,952 Inventory reserves 1,636 1,142 949 Doubtful receivables 2,000 1,894 1,789 Employee benefits 3,739 2,610 938 Asset write-downs and relocation expense 2,477 7,707 14,431 Other, net 8,369 4,524 4,821 ------ ------ ------ Deferred assets $ 36,148 $ 32,093 $35,880 ------- ------- ------ Depreciation $(13,901) $(12,923) $(12,301) Other, net (2,836) (1,478) (1,694) ------- ------- ------- Deferred liabilities $(16,737) $(14,401) $(13,995) ------- ------- ------- Net deferred tax assets $ 19,411 $ 17,692 $ 21,885 ======= ======= =======
A reconciliation of taxes computed at the statutory rate with the tax provision is as follows:
(In Thousands) 1993 1992 1991 ------ ------ ------ Federal income taxes at statutory rate $16,419 $13,798 $(4,629) State income taxes, net of federal income tax benefit 2,051 1,944 27 Other, net 64 140 (578) ------ ------ ------ $18,534 $15,882 $(5,180) Effective income tax rate 39.5% 39% 38%
The Company adopted SFAS No. 109 "Accounting for Income Taxes", in 1992 and applied its provisions retroactively to 1990. Cash payments for income taxes were $23.6 million, $9.6 million, and $12.3 million in 1993, 1992 and 1991, respectively. 27 SEGMENT INFORMATION The Company's continuing operations are classified into the following business segments: CONSTRUCTION MATERIALS--elastomeric membranes, metal roofing components, adhesives and related products for roofing systems and water barrier applications and outdoor recreation tiles. TRANSPORTATION PRODUCTS--custom manufactured rubber and plastic products for the automotive market, brake linings and pads for heavy-duty trucks, trailers and off-road vehicles, specialty friction products, brakes and actuation systems for construction equipment and insulated wire products. GENERAL INDUSTRY--molded plastic foodservice products, small pneumatic tires, stamped and roll-formed wheels, custom molded plastic components, system integration products and insulated wire products. CORPORATE--includes general corporate and idle property expenses. Corporate assets consist primarily of cash, leasing company assets and excess facilities. Financial information for continuing operations by reportable business segment is included in the following summary:
(In Thousands) Earnings Before Deprec. Income & Capital Sales Taxes(1) Assets Amort. Spending ----- --------- ------ ------- -------- 1993 - ---- Construction Materials $247,573 $ 25,496 $139,990 $ 5,762 $ 3,474 Transportation Products 177,005 11,622 109,523 7,220 10,887 General Industry 186,692 18,904 90,534 6,864 9,074 Interest, net -- (1,152) -- -- -- Corporate -- (7,958) 80,316 842 5,055 ------- ------- ------- ------- ------- $611,270 $ 46,912 $420,363 $ 20,688 $ 28,490 ======= ======= ======= ======= ======= 1992 - ---- Construction Materials $198,737 $ 23,715 $ 99,034 $ 5,098 $ 2,451 Transportation Products 172,849 11,603 97,196 7,026 7,830 General Industry 156,466 12,685 78,116 6,187 8,330 Interest, net -- (528) -- -- -- Corporate -- (7,755) 108,904 495 1,313 ------- ------- ------- ------- ------- $528,052 $ 39,720 $383,250 $ 18,806 $ 19,924 ======= ======= ======= ======= =======
28
Earnings Before Deprec. Income & Capital Sales Taxes(1) Assets Amort. Spending ----- --------- ------ ------- -------- 1991(1) - ---- Construction Materials $197,627 $ 23,014 $102,532 $ 5,289 $ 3,791 Transportation Products 169,158 8,015 103,381 7,745 6,193 General Industry 133,986 8,087 87,164 5,778 8,227 Restructuring charge -- (18,700) -- -- -- Interest, net -- (1,495) -- -- -- Corporate -- (8,360) 31,643 615 1,500 ------- ------- ------- ------- ------- $500,771 $ 10,561 $324,720 $ 19,427 $ 19,711 ======= ======= ======= ======= ======= (1) In 1991, the Company accounted for certain of its operations as discontinued operations and also recorded a restructuring charge for continuing operations. The restructuring charge allocable to operating expenses would reduce Transportation Products and General Industry segment earnings in 1991 before income tax by $1.8 million and $12.8 million respectively.
QUARTERLY FINANCIAL DATA (In thousands except per share data) (unaudited) First Second Third Fourth Year ----- ------ ----- ------ ---- 1993 Net sales $ 138,420 160,785 160,615 151,450 $611,270 Gross margin $ 35,174 41,953 41,623 39,728 $158,478 Operating expenses $ 24,855 29,049 28,054 27,656 $109,614 Earnings from continuing operations $ 5,901 7,483 8,061 6,933 $ 28,378 Net earnings $ 5,901 7,483 8,061 6,933 $ 28,378 Net earnings per share: $ 0.38 0.48 0.52 0.45 $ 1.83 1992 Net sales $ 132,561 142,157 134,027 119,307 $528,052 Gross margin $ 34,941 35,788 35,586 32,546 $138,861 Operating expenses $ 25,892 24,743 24,400 22,565 $ 97,600 Earnings from continuing operations $ 5,351 6,504 6,605 5,768 $ 24,228 Net earnings $ 5,598 6,651 6,682 5,768 $ 24,699 Net earnings per share: Continuing operations $ 0.35 0.42 0.43 0.38 $ 1.58 Net earnings $ 0.37 0.43 0.43 0.38 $ 1.61
All per share amounts have been restated to reflect the two-for-one stock split on June 1, 1993. 29 INDEPENDENT AUDITORS' REPORT The Board of Directors Carlisle Companies Incorporated: We have audited the accompanying consolidated balance sheet of Carlisle Companies Incorporated and subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of earnings, shareholders' equity, and cash flows for each of the years in the three-year period ending December 31, 1993. These consolidated financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Carlisle Companies Incorporated and subsidiaries as of December 31, 1993 and 1992, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1993, in conformity with generally accepted accounting principles. KPMG Peat Marwick /s/ KPMG Peat Marwick Syracuse, New York February 2, 1994 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable. 30 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The following table sets forth certain information relating to each executive officer of the Company as of December 31, 1993, as furnished to the Company by the executive officers. Except as otherwise indicated each executive officer has had the same principal occupation or employment during the past five years.
Name Age Positions With Company Period of Service - ---- --- ---------------------- ----------------- E. Douglas Kenna(a) 69 Chairman of the Board April, 1975 of the Company to January, 1994 Stephen P. Munn 51 President and Chief September, 1988 Executive Officer of the to date Company, since September, 1988, and Chairman of the Board of the Company, since January, 1994. Dennis J. Hall 52 Executive Vice President, August, 1989 Treasurer and Chief to date Financial Officer of the Company. President, 1988- 1989, Carrier Transicold, a division of United Tech- nologies Corporation. John W. Altmeyer 35 Vice President, Corporate August, 1989 Development of the to date Company. Previously held various financial positions with Carrier Corporation, a division of United Technolo- gies Corporation, since 1981. John S. Barsanti 42 Vice President, Planning April, 1991 and Administration of the to date Company. Chief Financial Officer, 1989-1991, Legrand SA, North American operations. James B. Pineau 36 Vice President, Controller May, 1989 and Assistant Treasurer to date of the Company. Previously held various financial management positions with Continental Information Systems, Inc., since 1987.
31 Scott C. Selbach 38 Vice President, Secretary July, 1989 and General Counsel of to date the Company. Associate, 1984-1989, Bond, Schoeneck & King, Syracuse, New York. (a) Mr. Kenna retired as Chairman of the Board of the Company on January 1, 1994.
The officers have been elected to serve at the pleasure of the Board of Directors of the Company. There are no family relationships between any of the above officers, and there is no arrangement or understanding between any officer and any other person pursuant to which he was selected an officer. Information required by Item 10 with respect to directors of the Company is incorporated by reference to the Company's definitive proxy statement filed with the Securities and Exchange Commission on March 9, 1994. ITEM 11. EXECUTIVE COMPENSATION. Information required by Item 11 is incorporated by reference to the Company's definitive proxy statement filed with the Securities and Exchange Commission on March 9, 1994. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Information required by Item 12 is incorporated by reference to the Company's definitive proxy statement filed with the Securities and Exchange Commission on March 9, 1994. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Not Applicable 32 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. Financial statements required by Item 8 are as follows: Consolidated Statement of Earnings, years ended December 31, 1993, 1992 and 1991 Consolidated Statement of Shareholders' Equity, years ended December 31, 1993, 1992 and 1991 Consolidated Balance Sheet, December 31, 1993 and 1992 Consolidated Statement of Cash Flows, years ended December 31, 1993, 1992 and 1991 Notes to Consolidated Financial Statements Financial statement supplementary notes applicable to the filing of this report are as follows: Page 1. Other current liabilities 37 2. Maintenance and repair costs 37 3. Discontinued operations 37 Financial statement schedules applicable to the filing of this report are as follows: Page V - Property, Plant and Equipment 38 VI - Accumulated Depreciation of Property, Plant and Equipment 38 All other schedules are omitted because the required information is inapplicable or the information is presented in the financial statements or related notes. Exhibits applicable to the filing of this report are as follows: (3) By-laws of the Company * (3.1) Restated Certificate of Incorporation as amended April 22, 1991*** (4) Shareholders' Rights Agreement, February 8, 1989.* (10.1) 1988 Executive Long-Term Incentive Program.* (10.2) Representative copy of Executive Severance Agreement, dated December 19, 1990, between the Company and certain individuals, including the five most highly compensated executive officers of the Company.** (10.3) Summary Plan Description of Carlisle Companies Incorporated Director Retirement Program, effective November 6, 1991.*** (21) Subsidiaries of the Registrant. (23) Consent of Independent Auditors. 33 * Filed as an Exhibit to the Company's annual report on Form 10-K for the year ended December 31, 1988 and incorporated herein by reference. ** Filed as an Exhibit to the Company's annual report on Form 10-K for the year ended December 31, 1990 and incorporated herein by reference. *** Filed as an Exhibit to the Company's annual report on Form 10-K for the year ended December 31, 1991 and incorporated herein by reference. No reports on Form 8-K were filed during the last quarter of the period covered by this report. The Company will furnish to the Commission upon request its long-term debt instruments not listed in this Item. 34 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CARLISLE COMPANIES INCORPORATED /s/ Dennis J. Hall By: Dennis J. Hall, Executive Vice President and Treasurer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. /s/ Stephen P. Munn /s/ Magalen O. Bryant Stephen P. Munn, Chairman, Magalen O. Bryant, Director President and Chief Executive Officer and a Director (Principal Executive Officer) /s/ Donald G. Calder /s/ Dennis J. Hall Donald G. Calder, Director Dennis J. Hall, Executive Vice President, Treasurer and Chief Financial Officer /s/ Paul J. Choquette, Jr. (Principal Financial Officer) Paul J. Choquette, Jr., Director /s/ James B. Pineau James B. Pineau, Vice President /s/ Henry J. Forrest and Controller (Principal Accounting Officer) Henry J. Forrest, Director /s/ David G. Thomas David G. Thomas, Director March 28, 1994 35 INDEPENDENT AUDITORS' REPORT The Board of Directors Carlisle Companies Incorporated Under date of February 2, 1994, we reported on the consolidated balance sheet of Carlisle Companies Incorporated and subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1993, as contained in this annual report on Form 10-K for the year ended December 31, 1993. These consolidated financial statements and our report thereon are incorporated by reference to this Form 10-K for the year ended December 31, 1993. In connection with our audits of the aforementioned consolidated financial statements, we also have audited the related supplementary notes and financial statement schedules as listed in Item 14 of this Form 10-K. These supplementary notes and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these supplementary notes and financial statement schedules based on our audits. In our opinion, such supplementary notes and financial statement schedules, when considered in relation to the basic consolidated financial statements taken as whole, present fairly, in all material respects, the information set forth therein. KPMG Peat Marwick Syracuse, New York /s/ KPMG Peat Marwick February 2, 1994 36 CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES SUPPLEMENTARY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1993 Note 1. Other Current Liabilities - Other current liabilities at December ------------------------- 31 consist of the following:
(000's) 1993 1992 ---- ---- Employee compensation and benefits $14,676 12,361 Product warranties 21,404 16,469 Insurance 5,867 6,001 Other accrued expenses 21,577 21,055 ------ ------ 63,524 55,886 ====== ======
Note 2. Maintenance and Repair Costs ---------------------------- Maintenance and repair costs of $11.2 million, $11.1 million and $8.7 million in 1993, 1992, and 1991 respectively, have been charged to earnings as cost of goods sold or selling and administrative expenses. Note 3. Discontinued Operations ----------------------- Net sales from discontinued operations were $58.4 million and $117.5 million in 1992 and 1991 respectively. 37
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES SCHEDULE V PROPERTY, PLANT AND EQUIPMENT (AMOUNTS IN THOUSANDS) Balance at Balance beginning Additions Retirements Other at end of year (at cost) & sales changes(1) of year - --------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1993 Buildings $ 82,769 $ 1,580 $ (180) $ 1,683 $ 85,852 Machinery and equipment 187,444 23,789 (3,783) 8,839 216,289 Leasehold improvements 1,563 158 (102) (203) 1,416 Projects in progress 7,323 2,963 0 (158) 10,128 ------------------------------------------------------------------- 279,099 28,490 (4,065) 10,161 313,685 Land 3,897 0 (55) 1,267 5,109 ------------------------------------------------------------------- $ 282,996 $28,490 $(4,120) $ 11,428 $318,794 ------------------------------------------------------------------- ------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1992 Buildings $ 85,171 $ 4,160 $(5,155) $ (1,407) $ 82,769 Machinery and equipment 184,514 13,241 (7,466) (2,845) 187,444 Leasehold improvements 1,058 57 (25) 473 1,563 Projects in progress 4,874 2,466 0 (17) 7,323 ------------------------------------------------------------------- 275,617 19,924 (12,646) (3,796) 279,099 Land 4,736 0 (397) (442) 3,897 ------------------------------------------------------------------- $ 280,353 $19,924 $(13,043) $ (4,238) $282,996 ------------------------------------------------------------------- ------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1991 Buildings $ 78,739 $ 3,187 $ (23) $ 3,268 $ 85,171 Machinery and equipment 160,170 13,491 (8,071) 18,924 184,514 Leasehold improvements 1,459 738 (747) (392) 1,058 Projects in progress 5,462 2,295 (302) (2,581) 4,874 ------------------------------------------------------------------- 245,830 19,711 (9,143) 19,219 275,617 Land 4,692 0 (228) 272 4,736 ------------------------------------------------------------------- $ 250,522 $19,711 $(9,371) $ 19,491 $280,353 ------------------------------------------------------------------- ------------------------------------------------------------------- (1) Includes amounts related to companies acquired in 1993, 1992 and 1991 of $9,727, $266 and $14,227, respectively.
CARLISLE COMPANIES INCORPORATED AND SUBSIDIARIES SCHEDULE VI ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT (AMOUNTS IN THOUSANDS) Balance at Balance beginning Additions Retirements Other at end of year (at cost) & sales changes(1) of year - -------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1993 Buildings $ 38,894 $ 2,567 $ (145) $ 4 $ 41,320 Machinery and equipment 121,290 15,467 (2,917) 668 134,508 Leasehold improvements 761 91 (111) (4) 737 ------------------------------------------------------------------- $ 160,945 $18,125 $(3,173) $ 668 $176,565 ------------------------------------------------------------------- ------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1992 Buildings $ 39,299 $ 2,662 $ (2,558) $ (509) $ 38,894 Machinery and equipment 115,063 14,391 (6,595) (1,569) 121,290 Leasehold improvements 999 107 (25) (320) 761 ------------------------------------------------------------------- $155,361 $17,160 $ (9,178) $ (2,398) $160,945 ------------------------------------------------------------------- ------------------------------------------------------------------- YEAR ENDED DECEMBER 31, 1991 Buildings $ 36,328 $ 3,738 $ (42) $ (725) $ 39,299 Machinery and equipment 104,007 13,686 (1,683) (947) 115,063 Leasehold improvements 789 108 0 102 999 ------------------------------------------------------------------- $141,124 $17,532 $(1,725) $ (1,570) $155,361 ------------------------------------------------------------------- ------------------------------------------------------------------- Amounts on Schedules V and VI have been restated to reflect operational restructuring and discontinued operations.
Schedules V and VI should be read in conjunction with the Notes to Consolidated Financial Statements. 38 CARLISLE COMPANIES INCORPORATED COMMISSION FILE NUMBER 1-9278 FORM 10-K FOR FISCAL YEAR ENDED DECEMBER 31, 1993 EXHIBIT LIST Page ---- (21) Subsidiaries of the Registrant 40 (23) Consent of Independent Auditors 41 39 EX-21 2 EXHIBIT 21 Exhibit 21 CARLISLE COMPANIES INCORPORATED Subsidiaries of the Registrant Jurisdiction of Incorporation ------------- Carlisle Companies Incorporated (Registrant) Delaware Subsidiaries: Carlisle Corporation - Carlisle SynTec Systems, Division Delaware (Roofing Systems) Four wholly-owned foreign subsidiaries Four wholly-owned domestic subsidiaries Braemar, Inc. Minnesota Carlisle Corporation of Canada, Ltd. Canada (Roofing Systems, Braking Systems and Friction Materials) Carlisle Systems Group Incorporated Delaware Carlisle Tire & Rubber Company Delaware Continental Carlisle Incorporated Delaware (Plastic Foodservice and Giftware Products d/b/a Continental/SiLite International) Three wholly-owned domestic subsidiaries Geauga Company Delaware Motion Control Industries, Inc. Delaware (Braking Systems and Friction Materials) Two wholly-owned foreign subsidiaries One wholly-owned domestic subsidiary Netstor, Inc. Minnesota Tensolite Company Delaware Vistatech Corporation Delaware 40 EX-23 3 EXHIBIT 23 Exhibit 23 INDEPENDENT AUDITORS' CONSENT The Board of Directors Carlisle Companies Incorporated We consent to incorporation by reference in the (i) Registration Statement No. 33-66932 on Form S-8; (ii) Registration Statement No. 33-66934 on Form S-3; and (iii) Registration Statement No. 33-28052 on Form S-8 of Carlisle Companies Incorporated of our reports dated February 2, 1994, relating to 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 and related schedules for each of the years in the three-year period ended December 31, 1993, which reports appear in the 1993 annual report on Form 10-K of Carlisle Companies Incorporated. KPMG Peat Marwick /s/ KPMG Peat Marwick Syracuse, New York March 28, 1994 41 -----END PRIVACY-ENHANCED MESSAGE-----