SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
FORM 10-Q
(Mark One)

 x	 	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2007	
 	
OR	
 	
o	 	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.	
 	 	 	
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 Identification No.)	
incorporation or organization)	 	 	 	
 	 	 	
13925 Ballantyne Corporate Place, Suite 400, Charlotte, North Carolina 28277	 	( 704) 501-1100 	
(Address of principal executive office, including zip code)	 	(Telephone Number)	
 
Indicate by check mark whether 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  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

 Large accelerated filer x	 	Accelerated filer o	 	Non-accelerated filer o	
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o   No  x
Shares of common stock outstanding at August 1, 2007:  62,374,521

Part I. Financial Information
Item 1. Financial Statements
Carlisle Companies Incorporated
 Consolidated Statements of Earnings and Comprehensive Income
For the Three and Six Months ended June 30, 2007 and 2006
(In thousands, except per share amounts)
(Unaudited)

 	 	Three Months Ended	 	Six Months Ended	 	
 	 	June 30,	 	June 30,	 	
 	 	2007	 	2006 (1)	 	2007	 	2006 (1)	 	
 	 	 	 	(As adjusted)	 	 	 	(As adjusted)	 	
 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	793,860	 	$	688,111	 	$	1,422,758	 	$	1,305,448	 	
 	 	 	 	 	 	 	 	 	 	
Cost and expenses:	 	 	 	 	 	 	 	 	 	
Cost of goods sold	 	629,220	 	539,625	 	1,133,629	 	1,029,466	 	
Selling and administrative expenses	 	75,516	 	60,006	 	144,520	 	120,622	 	
Research and development expenses	 	4,275	 	3,703	 	8,674	 	7,590	 	
Other expense (income), net	 	4,891	 	(1,797	)	2,645	 	(2,260	)	
Earnings before interest and income taxes	 	79,958	 	86,574	 	133,290	 	150,030	 	
Interest (income) expense, net	 	(1,928	)	5,363	 	2,129	 	9,619	 	
Earnings before income taxes	 	81,886	 	81,211	 	131,161	 	140,411	 	
Income taxes	 	26,209	 	25,083	 	41,730	 	44,660	 	
Income from continuing operations, net of tax	 	55,677	 	56,128	 	89,431	 	95,751	 	
 	 	 	 	 	 	 	 	 	 	
Discontinued operations	 	 	 	 	 	 	 	 	 	
(Loss) income from operations of discontinued operations	 	(3,202	)	1,221	 	1,385	 	4,046	 	
Income tax (benefit) expense	 	(913	)	238	 	593	 	1,089	 	
(Loss) income from discontinued operations, net of tax	 	(2,289	)	983	 	792	 	2,957	 	
Net Income	 	53,388	 	57,111	 	90,223	 	98,708	 	
 	 	 	 	 	 	 	 	 	 	
Other comprehensive income	 	 	 	 	 	 	 	 	 	
Foreign currency translation, net of tax	 	4,137	 	5,199	 	5,454	 	7,032	 	
Minimum pension liability, net of tax	 	490	 	—	 	490	 	—	 	
Gain on hedging activities, net of tax	 	1,821	 	1,525	 	1,674	 	4,833	 	
Other comprehensive income	 	6,448	 	6,724	 	7,618	 	11,865	 	
Comprehensive income	 	$	59,836	 	$	63,835	 	$	97,841	 	$	110,573	 	
 	 	 	 	 	 	 	 	 	 	
Earnings per share - basic (2)	 	 	 	 	 	 	 	 	 	
Income from continuing operations, net of tax	 	$	0.90	 	$	0.92	 	$	1.45	 	$	1.57	 	
(Loss) income from discontinued operations, net of tax	 	(0.04	)	0.01	 	0.01	 	0.05	 	
Earnings per share - basic	 	$	0.86	 	$	0.93	 	$	1.46	 	$	1.62	 	
 	 	 	 	 	 	 	 	 	 	
Earnings per share - diluted (2)	 	 	 	 	 	 	 	 	 	
Income from continuing operations, net of tax	 	$	0.89	 	$	0.90	 	$	1.43	 	$	1.54	 	
(Loss) income from discontinued operations, net of tax	 	(0.04	)	0.02	 	0.01	 	0.05	 	
Earnings per share - diluted	 	$	0.85	 	$	0.92	 	$	1.44	 	$	1.59	 	
 	 	 	 	 	 	 	 	 	 	
Weighted average common shares outstanding (2)	 	 	 	 	 	 	 	 	 	
Basic	 	61,810	 	61,280	 	61,733	 	61,086	 	
Effect of dilutive stock options and restricted stock	 	815	 	838	 	862	 	934	 	
Diluted	 	62,625	 	62,118	 	62,595	 	62,020	 	
 	 	 	 	 	 	 	 	 	 	
Dividends declared and paid per share (2)	 	$	0.135	 	$	0.125	 	$	0.270	 	$	0.250	 	

(1)        2006 figures have been revised to reflect the change in accounting for inventory and discontinued operations. Refer to Notes 2, 3 and 7.
(2)        All share and per share information has been adjusted to reflect the two-for-one stock split. Refer to Note 2 for more information.
See accompanying notes to Unaudited Consolidated Financial Statements
2

Carlisle Companies Incorporated
Consolidated Balance Sheets
June 30, 2007 and December 31, 2006
(In thousands, except per share and share amounts)

 	 	June 30,	 	December 31,	 	
 	 	2007	 	2006  (1)	 	
 	 	(Unaudited)	 	(As adjusted)	 	
Assets	 	 	 	 	 	
Current assets:	 	 	 	 	 	
Cash and cash equivalents	 	$	24,701	 	$	144,029	 	
Trade receivables, less allowance of $9,764 in 2007 and $9,976 in 2006	 	338,644	 	353,108	 	
Inventories	 	470,886	 	450,005	 	
Deferred income taxes	 	24,069	 	23,805	 	
Prepaid expenses and other current assets	 	32,121	 	31,086	 	
Current assets held for sale	 	4,732	 	5,477	 	
Total current assets	 	895,153	 	1,007,510	 	
 	 	 	 	 	 	
Property, plant and equipment, net of accumulated depreciation of $507,988 in 2007 and $487,903 in 2006	 	530,501	 	458,480	 	
 	 	 	 	 	 	
Other assets:	 	 	 	 	 	
Goodwill, net	 	354,085	 	309,707	 	
Patents and other intangible assets, net	 	41,040	 	19,339	 	
Investments and advances to affiliates	 	102,152	 	100,687	 	
Notes receivable and other assets	 	12,696	 	7,136	 	
Non-current assets held for sale	 	2,926	 	4,227	 	
Total other assets	 	512,899	 	441,096	 	
 	 	 	 	 	 	
TOTAL ASSETS	 	$	1,938,553	 	$	1,907,086	 	
 	 	 	 	 	 	
Liabilities and Shareholders’ Equity	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	
Short-term debt, including current maturities	 	$	72,865	 	$	151,676	 	
Accounts payable	 	166,944	 	142,405	 	
Accrued expenses	 	146,535	 	159,803	 	
Deferred revenue	 	15,263	 	16,046	 	
Current liabilities associated with assets held for sale	 	613	 	912	 	
Total current liabilities	 	402,220	 	470,842	 	
 	 	 	 	 	 	
Long-term liabilities:	 	 	 	 	 	
Long-term debt	 	271,203	 	274,658	 	
Deferred revenue	 	86,995	 	82,631	 	
Other long-term liabilities	 	113,644	 	111,633	 	
Total long-term liabilities	 	471,842	 	468,922	 	
 	 	 	 	 	 	
Shareholders’ equity:	 	 	 	 	 	
Preferred stock, $1 par value. Authorized and unissued 5,000,000 shares	 	—	 	—	 	
Common stock, $1 par value. Authorized 100,000,000 shares; 78,661,248 shares issued; 61,810,109 outstanding in 2007 and 61,450,518 in 2006 (2)	 	78,661	 	78,661	 	
Additional paid-in capital (2)	 	51,495	 	30,508	 	
Unearned compensation - includes restricted shares of 340,720 in 2007 and 230,340 in 2006 (2)	 	(9,627	)	(3,437	)	
Cost of shares of treasury - 16,510,419 shares in 2007 and 16,980,390 in 2006 (2)	 	(164,230	)	(167,578	)	
Accumulated other comprehensive income	 	16,069	 	8,451	 	
Retained earnings	 	1,092,123	 	1,020,717	 	
Total shareholders’ equity	 	1,064,491	 	967,322	 	
 	 	 	 	 	 	
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	 	$	1,938,553	 	$	1,907,086	 	

(1)        2006 results have been revised to reflect the change in accounting for inventory and discontinued operations (refer to Notes 2,3 and 7). Retained earnings at January 1, 2007 has been adjusted for the adoption of FIN 48 (refer to Note 16).
(2)        All share and per share information has been adjusted to reflect the two-for-one stock split. Refer to Note 2 for more information.
See accompanying notes to Unaudited Consolidated Financial Statements
3

Carlisle Companies Incorporated
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2007 and 2006
(Dollars in thousands)
(Unaudited)

 	 	June 30,	 	
 	 	2007	 	2006 (1)	 	
 	 	 	 	(As adjusted)	 	
Operating activities	 	 	 	 	 	
Net income	 	$	90,223	 	$	98,708	 	
Reconciliation of net income to cash flows from operating activities:	 	 	 	 	 	
Depreciation	 	30,283	 	27,736	 	
Amortization	 	2,092	 	645	 	
Non-cash compensation	 	9,236	 	3,902	 	
Loss in equity investments	 	609	 	2,192	 	
(Gain) loss on sales of investments, property and equipment, net	 	(4,866	)	959	 	
Loss on writedown of assets	 	4,031	 	1,245	 	
Deferred taxes	 	1,372	 	2,611	 	
Excess tax benefits from stock-based compensation	 	(2,995	)	(3,768	)	
Foreign exchange (gain) loss	 	(273	)	551	 	
Changes in assets and liabilities, excluding effects of acquisitions and divestitures:	 	 	 	 	 	
Current and long-term receivables	 	(107,290	)	(80,553	)	
Receivables under securitization program	 	150,000	 	(4,900	)	
Inventories	 	13,987	 	(26,357	)	
Accounts payable and accrued expenses	 	(11,163	)	30,656	 	
Income taxes	 	16,772	 	585	 	
Long-term liabilities	 	(1,275	)	3,428	 	
Other operating activities	 	8	 	(1,519	)	
Net cash provided by operating activities	 	190,751	 	56,121	 	
 	 	 	 	 	 	
Investing activities	 	 	 	 	 	
Capital expenditures	 	(39,977	)	(51,632	)	
Acquisitions, net of cash acquired	 	(183,325	)	—	 	
Proceeds from investments, property and equipment	 	4,015	 	3,197	 	
Other investing activities	 	(169	)	1,086	 	
Net cash used in investing activities	 	(219,456	)	(47,349	)	
 	 	 	 	 	 	
Financing activities	 	 	 	 	 	
Net change in short-term borrowings and revolving credit lines	 	(83,298	)	(15,557	)	
Proceeds from long-term debt	 	485	 	—	 	
Reductions of long-term debt	 	—	 	(910	)	
Dividends	 	(16,759	)	(15,360	)	
Treasury shares and stock options, net	 	5,915	 	11,567	 	
Excess tax benefits from stock-based compensation	 	2,995	 	3,768	 	
Net cash used in financing activities	 	(90,662	)	(16,492	)	
 	 	 	 	 	 	
Effect of exchange rate changes on cash	 	39	 	(752	)	
Change in cash and cash equivalents	 	(119,328	)	(8,472	)	
Cash and cash equivalents	 	 	 	 	 	
Beginning of period	 	144,029	 	38,745	 	
End of period	 	$	24,701	 	$	30,273	 	

(1)        2006 figures have been revised to reflect the change in accounting for inventory and cash flows from discontinued operations. Refer to Notes 2, 3 and 7.
See accompanying notes to Unaudited Consolidated Financial Statements
4

Notes to Unaudited Consolidated Financial Statements
Three and Six Months Ended June 30, 2007 and 2006
(1)          Basis of Presentation
The accompanying unaudited consolidated financial statements include the accounts of Carlisle Companies Incorporated and its wholly-owned subsidiaries (together, the “Company” or “Carlisle”).  Intercompany transactions and balances have been eliminated in consolidation. The unaudited consolidated financial statements have been prepared in accordance with Article 10-01 of Regulation S-X of the Securities and Exchange Commission and, as such, do not include all information required by generally accepted accounting principles for annual financial statements. However, in the opinion of the Company, these financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial statements for the interim periods presented herein.  Results of operations for the three and six months ended June 30, 2007, are not necessarily indicative of the operating results for the full year.
While the Company believes that the disclosures presented are adequate to make the information not misleading, it is suggested that these financial statements be read in conjunction with the financial statements and notes included in the Company’s 2006 Form 10-K.
(2)          Reclassifications and Restatements
Certain reclassifications have been made to the three and six months ending June 30, 2006 information to conform to the current year’s presentation.
Consolidated Balance Sheets have been retrospectively adjusted to reflect the change in accounting method described in Note 3.  In addition, the adoption of Financial Interpretation No. 48 (“FIN 48”) Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109, resulted in a $2.1 million charge to opening retained earnings at January 1, 2007.
Consolidated Statements of Earnings and Comprehensive Income have been retrospectively adjusted to reflect the effects of discontinued operations and the change in accounting method described in Note 3.  Segment information presented in Note 15 has also been revised from prior year’s June 30, 2006 presentation to reflect the Company’s current segment reporting structure, discontinued operations and assets held for sale.  Refer to Note 7 for additional detail regarding discontinued operations.
In the third quarter of 2006, the Company combined the operating, investing and financing portions of the cash flows attributable to its discontinued operations with the cash flows attributable to its continuing operations.
The Company effected a two-for-one split of its $1 par value common stock, whereby one additional share of the Company’s stock was issued on March 19, 2007 for each share of common stock held by the shareholders of record as of the close of business on March 7, 2007 (the “stock split”).  Accordingly, all references to the number of shares and per share data, except shares authorized, for all periods presented have been adjusted to reflect this stock split.
(3)  Change in Accounting Method
Prior to January 1, 2007, inventories were valued using both the last-in, first-out (“LIFO”) and first-in, first-out (“FIFO”) methods.  Effective January 1, 2007, the Company changed its method of accounting
5

for those finished goods, work-in-progress and raw material inventories previously on the LIFO method to the FIFO method.  Had the Company not changed its policy for accounting for inventory, pre-tax income would have been reduced by $2.4 million ($1.5 million loss after-tax, or $0.02 per diluted share) for the quarter ended June 30, 2007, and a reduction to pre-tax income of $0.5 million ($0.3 million loss after-tax, or $0.01 loss per diluted share) would have been recorded for the six months ended June 30, 2007.
(4)  New Accounting Pronouncements
New accounting standards adopted
In January 2007, the Company adopted Statement of Financial Accounting Standard No. 155 (“SFAS 155”), Accounting for Certain Hybrid Financial Instruments, an amendment of FASB Statement No. 133 and 140.  SFAS 155 permits hybrid financial instruments that have embedded derivatives to be valued as a whole, eliminating the need to bifurcate the derivative from its host, as previously required under Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedge Accounting (“SFAS 133”). SFAS 155 also amends SFAS 133 by establishing a requirement to evaluate interests in securitized financial assets to determine whether they are free standing derivatives or whether they contain embedded derivatives that require bifurcation. SFAS 155 is effective for all hybrid financial instruments acquired or issued by the Company on or after January 1, 2007.  Adoption of this standard had no material effect on the Company’s statement of earnings or financial position.
In January 2007, the Company adopted FIN 48.  This interpretation clarifies the accounting and financial statement reporting for uncertainty in income taxes recognized by prescribing a recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return.  The cumulative effect of the change in principle of accounting for uncertain tax positions was a charge to retained earnings for $2.1 million.  Refer to Note 16 for more information on the adoption of this interpretation.
In January 2007, the Company adopted Staff Accounting Bulletin No. 108 (“SAB 108”).  SAB 108 expresses the staff’s views regarding the process of quantifying financial statement misstatements.  Based on SAB 108, prior year misstatements should be considered in quantifying misstatements in current year financial statements.  SAB 108 provides approaches to be used to quantify any misstatements.  Adoption of this standard had no material effect on the Company’s statement of earnings or financial position.
New accounting standards
In September 2006, the FASB issued SFAS No. 157 (“SFAS 157”), Fair Value Measurements.  SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements.  It will be effective for fiscal years beginning after November 15, 2007.  The Company is currently evaluating the requirements of this standard and has not yet determined the impact on the consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159 (“SFAS 159”), “The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115.” This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. The fair value option established by this Statement permits all entities to choose to measure eligible items at fair value at specified election dates and report unrealized gains and losses on
6

items for which the fair value option has been elected in earnings (loss) at each subsequent reporting date. It will be effective for fiscal years beginning after November 15, 2007.  The Company is currently evaluating the requirements of this standard and has not yet determined the impact on the consolidated financial statements.
(5)  Employee Stock-Based Compensation Arrangements
Stock Options
The Company uses the fair value method for accounting for employee stock-based compensation.  Compensation expense related to stock options of $4.6 million and $0.6 million was recognized for the three months ended June 30, 2007 and 2006, respectively, and $7.2 million and $2.4 million for the six months ended June 30, 2007 and 2006, respectively.  The 2007 compensation expense amounts include an award of 200,000 options granted to executive management in June 2007, and additional expense related to the modification of vesting and termination provisions of certain stock option awards.  The following table summarizes the stock option activity for the six months ended June 30, 2007.

	 	 	 	Weighted	 	
 	 	 	 	Average	 	
 	 	Shares	 	Exercise	 	
 	 	(In Thousands)	 	Price	 	
 	 	 	 	 	 	
Outstanding at January 1, 2007	 	1,965,090	 	$	27.43	 	
Granted	 	713,000	 	$	43.29	 	
Exercised	 	(331,130	)	$	22.28	 	
Forfeited	 	(6,000	)	$	33.21	 	
Outstanding at June 30, 2007	 	2,340,960	 	$	32.97	 	

* All share and exercise price information has been adjusted to reflect the two-for-one stock split. Refer to Note 2 for more information.
Restricted Stock
Restricted shares awarded are generally released to the recipient after a period of three years; however, 100,000 shares awarded to executive management in the second quarter of 2007 vest ratably over five years.  Compensation expense related to restricted stock awards of $1.3 million and $0.8 million was recognized for the three months ended June 30, 2007 and 2006, respectively, and $2.0 million and $1.5 million for the six months ended June 30, 2007 and 2006, respectively.
(6)  Acquisitions
On January 29, 2007, the Company purchased the assets of Dongguan Qiaotou Yichang Wire and Cable Assembly Factory, located in Guangdong, China, specializing in complex cable assemblies and wire harnesses for medical and industrial applications, for consideration of $3.1 million and contingent additional payments of up to $4.0 million based on the acquired company’s future earnings.  Operating results for this operation since the acquisition date are included in the General Industry segment.  Although the Company is continuing to evaluate the purchase price allocation, an initial allocation resulted in goodwill of approximately $1.5 million and identified intangible assets of $1.0 million with a weighted-average life of 5.7 years.  Identified intangible assets consist primarily of customer relationships valued at $0.7 million, with a weighted-average life of 4 years, and other agreements valued at $0.3 million with a weighted-average life of 9 years.
7

On February 2, 2007, the Company acquired 100% of the equity of Meixian Tengfei Tyre Co., Ltd., a tire manufacturer, located in Guandong, China, for consideration of approximately $19.6 million. Operating results for this operation since the acquisition date are included in the Industrial Components segment.  Although the Company is continuing to evaluate the purchase price allocation, the purchase price has been allocated to Property, plant and equipment, net, as it approximates the fair value of the assets purchased.
On May 1, 2007, the Company acquired 100% of the equity of Insulfoam LLC (“Insulfoam”) from Premier Industries, Inc., a privately held company, headquartered in Tacoma, Washington, for approximately $160.0 million, subject to a working capital adjustment to be determined in the third quarter of 2007.  Insulfoam is a leading manufacturer of block molded expanded polystyrene products used primarily as insulation in building and other construction applications.  Insulfoam is under the management direction of the construction materials business, which is included in the Construction Materials segment.
The following table summarizes the initial allocation of the purchase price to the estimated fair values of assets acquired and liabilities assumed at the date of the acquisition of Insulfoam:

	 	Purchase Price	 	
In thousands	 	Allocation	 	
 	 	 	 	
Trade receivables, net	 	$	24,533	 	
Inventories	 	31,781	 	
Prepaid expenses and other current assets	 	2,333	 	
Property, plant and equipment, net	 	44,669	 	
Intangibles	 	21,734	 	
Goodwill	 	42,645	 	
 	 	 	 	
Total assets acquired	 	167,695	 	
 	 	 	 	
Current liabilities	 	6,800	 	
Other long-term liabilities	 	240	 	
 	 	 	 	
Total liabilities assumed	 	7,040	 	
 	 	 	 	
Net assets acquired	 	$	160,655	 	
 
Of the $21.7 million of acquired intangible assets, $10.2 million was assigned to the trade name that is not subject to amortization, while the remaining acquired intangibles of $11.5 million were allocated primarily to customer related intangibles which are being amortized over the assets’ determinable useful life of 10 years.
The following unaudited pro forma consolidated financial information has been prepared as if the acquisition of Insulfoam had taken place at the beginning of each fiscal year presented. The following unaudited pro forma information is not necessarily indicative of the results of operations in future
8

periods or results that would have been achieved had the acquisition taken place at the beginning of the periods presented.

	 	Three Months Ended	 	Six Months Ended	 	
 	 	June 30,	 	June 30,	 	
In thousands, except per share data	 	2007	 	2006	 	2007	 	2006	 	
 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	809,004	 	$	743,475	 	$	1,479,553	 	$	1,411,985	 	
 	 	 	 	 	 	 	 	 	 	
Earnings before interest and income taxes	 	80,408	 	92,539	 	135,682	 	159,871	 	
 	 	 	 	 	 	 	 	 	 	
Income from continuing operations, net of tax	 	55,964	 	59,938	 	90,978	 	102,070	 	
 	 	 	 	 	 	 	 	 	 	
Net income	 	53,675	 	60,921	 	91,770	 	105,027	 	
 	 	 	 	 	 	 	 	 	 	
Earnings per share - diluted	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	
Income from continuing operations, net of tax	 	$	0.89	 	$	0.96	 	$	1.45	 	$	1.65	 	
 	 	 	 	 	 	 	 	 	 	
Earnings per diluted share	 	$	0.86	 	$	0.98	 	$	1.47	 	$	1.69	 	
 
(7)  Discontinued Operations and Assets Held for Sale
In the second quarter of 2007, as part of its commitment to concentrate on its core businesses, the Company announced plans to exit the custom thermoset products molding operation (“thermoset molding operation”) of the Specialty Products segment.  In September 2006, the Company announced plans to exit the giftware business of the foodservice products business.  The sale of the thermoset molding operation is expected to be completed by the second quarter of 2008 and the giftware business sale is expected to be completed by the third quarter of 2007.  In November of 2005, the Company announced plans to sell the systems and equipment businesses, and the sale of these businesses was completed by November 2006.  The assets of these operations have met the criteria for, and have been classified as “held for sale” in accordance with SFAS 144, “Accounting for the Impairment and Disposal of Long-Lived Assets.”  In addition, results of operations for these businesses, and any gains or losses recognized from their sale, are reported as “discontinued operations” in accordance with SFAS 144.
Total assets held for sale were as follows:   

	 	June 30,	 	December 31,	 	
In thousands	 	2007	 	2006	 	
Assets held for sale:	 	 	 	 	 	
Thermoset molding operation	 	$	6,548	 	$	8,408	 	
Giftware business of foodservice products	 	1,110	 	1,296	 	
Total assets held for sale	 	$	7,658	 	$	9,704	 	
 
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	 	June 30,	 	December 31,	 	
In thousands	 	2007	 	2006	 	
Assets held for sale:	 	 	 	 	 	
Receivables	 	$	2,646	 	$	2,442	 	
Inventories	 	1,814	 	2,667	 	
Prepaid expenses and other current assets	 	272	 	368	 	
Total current assets held for sale	 	4,732	 	5,477	 	
 	 	 	 	 	 	
Property, plant and equipment, net	 	2,526	 	3,827	 	
Notes receivable and other assets	 	400	 	400	 	
Total non-current assets held for sale	 	2,926	 	4,227	 	
Total assets held for sale	 	$	7,658	 	$	9,704	 	
 	 	 	 	 	 	
Liabilities associated with assets held for sale:	 	 	 	 	 	
Accounts payable	 	$	421	 	$	695	 	
Accrued expenses	 	192	 	217	 	
Total liabilities associated with assets held for sale	 	$	613	 	$	912	 	
 
Net sales and income (loss) before income taxes from discontinued operations were as follows:

	 	Three Months Ended	 	Six Months Ended	 	
 	 	June 30,	 	June 30,	 	
In thousands	 	2007	 	2006	 	2007	 	2006	 	
Net sales:	 	 	 	 	 	 	 	 	 	
Automotive components	 	$	—	 	$	—	 	$	—	 	$	370	 	
Systems and equipment	 	240	 	50,481	 	714	 	101,063	 	
Thermoset molding operation	 	2,915	 	3,944	 	5,878	 	7,096	 	
Giftware business of foodservice products	 	564	 	649	 	682	 	1,265	 	
Net sales for discontinued operations	 	$	3,719	 	$	55,074	 	$	7,274	 	$	109,794	 	
 	 	 	 	 	 	 	 	 	 	
Income (loss) from operations of discontinued operations:	 	 	 	 	 	 	 	 	 	
Automotive components	 	$	(1,530	)	$	222	 	$	(1,643	)	$	(443	)	
Systems and equipment	 	(24	)	1,669	 	4,805	 	5,345	 	
Thermoset molding operation	 	(1,610	)	(124	)	(1,759	)	17	 	
Giftware business of foodservice products	 	(38	)	(546	)	(18	)	(873	)	
Income (loss) before income taxes from discontinued operations	 	$	(3,202	)	$	1,221	 	$	1,385	 	$	4,046	 	
 
Results for the six months ended June 30, 2007 included additional proceeds related to purchase price adjustments from the sales of the systems and equipment businesses which occurred in the fourth quarter of 2006.
The Company sold substantially all of the assets of the automotive components business in 2005.
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(8)  Inventories
Carlisle is a diversified manufacturing entity comprised of multiple domestic and foreign companies that operate as distinct businesses manufacturing different products.  Although both the LIFO and FIFO methods were previously used to value inventory, effective January 1, 2007, the Company changed the accounting policy for those inventories previously valued using LIFO, to FIFO.  Refer to Note 3.
The components of inventories are as follows:

	 	June 30,	 	December 31,	 	
In thousands	 	2007	 	2006	 	
Finished goods	 	$	296,204	 	$	295,473	 	
Work-in-process	 	33,880	 	28,491	 	
Raw materials	 	150,901	 	124,487	 	
Reserves and variances, net	 	(8,285	)	4,221	 	
 	 	472,700	 	452,672	 	
Inventories associated with assets held for sale	 	(1,814	)	(2,667	)	
Inventories	 	$	470,886	 	$	450,005	 	
 
(9)  Goodwill and Other Intangible Assets
The changes in the carrying amount of goodwill for the six months ended June 30, 2007 are as follows:

	 	Industrial	 	Construction	 	General	 	Specialty	 	 	 	
In thousands	 	Components	 	Materials	 	Industry	 	Products	 	Total	 	
Balance as of January 1, 2007	 	$	155,245	 	$	32,784	 	$	79,544	 	$	42,134	 	$	309,707	 	
Goodwill acquired during year	 	—	 	42,645	 	1,521	 	—	 	44,166	 	
Currency translation	 	199	 	212	 	—	 	(199	)	212	 	
Balance at June 30, 2007	 	$	155,444	 	$	75,641	 	$	81,065	 	$	41,935	 	$	354,085	 	
 
The Company’s other intangible assets at June 30, 2007, are as follows:

	 	Acquired	 	Accumulated	 	Net Book	 	
In thousands	 	Cost	 	Amortization	 	Value	 	
Assets subject to amortization	 	 	 	 	 	 	 	
Patents	 	$	10,439	 	$	(8,179	)	$	2,260	 	
Software licenses	 	1,800	 	(1,500	)	300	 	
Customer Relationships	 	27,237	 	(4,608	)	22,629	 	
Other	 	4,368	 	(2,691	)	1,677	 	
Assets not subject to amortization	 	 	 	 	 	 	 	
Trademarks	 	4,000	 	—	 	4,000	 	
Trade names	 	10,174	 	—	 	10,174	 	
 	 	$	58,018	 	$	(16,978	)	$	41,040	 	
 
Estimated amortization expense over the next five years is as follows: $2.6 million remaining in 2007, $4.5 million in 2008, $4.4 million in 2009, $4.2 million in 2010 and $3.4 million in 2011.
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(10) Retirement Plans and Other Postretirement Benefits
Components of net periodic benefit cost are as follows:

	 	Pension Benefits	 	Pension Benefits	 	Post-retirement Benefits	 	Post-retirement Benefits	 	
 	 	Three Months Ended	 	Six Months Ended	 	Three Months Ended	 	Six Months Ended	 	
 	 	June 30,	 	June 30,	 	June 30,	 	June 30,	 	
In thousands	 	2007	 	2006	 	2007	 	2006	 	2007	 	2006	 	2007	 	2006	 	
Service costs	 	$	1,273	 	$	1,404	 	$	2,546	 	$	2,808	 	$	—	 	$	—	 	$	—	 	$	1	 	
Interest cost	 	2,391	 	2,357	 	4,782	 	4,715	 	39	 	140	 	78	 	306	 	
Expected return on plan assets	 	(2,542	)	(2,464	)	(5,084	)	(4,928	)	—	 	—	 	—	 	—	 	
Amortization of:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net actuarial costs	 	371	 	383	 	742	 	766	 	24	 	56	 	48	 	124	 	
Prior service costs	 	(25	)	(47	)	(50	)	(95	)	—	 	—	 	—	 	—	 	
Unrecognized net obligation	 	—	 	—	 	—	 	—	 	12	 	55	 	24	 	110	 	
Curtailment income	 	—	 	—	 	—	 	—	 	—	 	(5,654	)	—	 	(5,654	)	
Net periodic benefit costs	 	$	1,468	 	$	1,633	 	$	2,936	 	$	3,266	 	$	75	 	$	(5,403	)	$	150	 	$	(5,113	)	
 
The Company previously disclosed in its financial statements for the year ended December 31, 2006, that it expected to contribute $20.2 million to its pension plans in 2007 in order to qualify for transition relief under the Pension Protection Act of 2006.  The Company has contributed $20.2 million to the plans through June 30, 2007.
The Company maintains defined contribution plans to which it has contributed $5.0 million during the six months ended June 30, 2007.  Full year contributions are expected to approximate $10.0 million.
(11) Other Long-Term Liabilities
The components of other long-term liabilities are as follows:

	 	June 30,	 	December 31,	 	
In thousands	 	2007	 	2006	 	
Deferred taxes and other tax liabilities under FIN 48 *	 	$	85,566	 	$	64,872	 	
Pension and other post-retirement obligations	 	20,023	 	37,427	 	
Long-term warranty obligations	 	2,979	 	2,754	 	
Other	 	5,076	 	6,580	 	
Other long-term liabilities	 	$	113,644	 	$	111,633	 	
 
(12) Borrowings
The Company redeemed the 7.25% $150 million notes which matured on January 15, 2007 and were included in Short-term debt at December 31, 2006. The notes were repaid with cash on hand as well as funds from the Company’s uncommitted credit facilities.
Certain bonds payable held by the Company at June 30, 2007 mature on May 15, 2008. The Company, however, intends to refinance those bonds payable upon maturity or utilize its existing revolving credit facility until such refinancing is secured, thereby deferring the effective maturity of those bonds payable beyond the twelve-month period immediately following June 30, 2007. Because of the
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Company’s intent and ability to defer the effective maturity beyond a twelve-month period, these bonds payable are included in Long-term debt at June 30, 2007.
(13) Commitments and Contingencies
For its continuing and discontinued operations, the Company is obligated under various noncancelable operating leases for certain facilities and equipment.  Future minimum payments under its various noncancelable operating leases in each of the next five years are approximately $9.1 million in 2007, $15.8 million in 2008, $11.1 million in 2009, $8.5 million in 2010, $6.2 million in 2011 and $8.5 million thereafter.
At June 30, 2007, letters of credit amounting to $46.4 million were outstanding, primarily to provide security under insurance arrangements and certain borrowings.
The Company has financial guarantee lines in place for certain of its operations in Asia and Europe to facilitate working capital needs, customer performance and payment and warranty obligations.  At June 30, 2007, the Company had issued guarantees of $3.3 million, of which $1.4 million represents amounts recorded in current liabilities or Other long-term liabilities.  The fair value of these guarantees is estimated to equal the amount of the guarantees at June 30, 2007, due to their short-term nature.
During 2005, the Company sold certain assets and liabilities of its discontinued automotive components business which was part of a series of sales. Certain leases guaranteed by the Company expire in 2007 and 2011 and have total minimum lease payments of $2.1 million as of June 30, 2007. The Company believes that the purchaser will fulfill all obligations required by those lease agreements.
The Company offers various warranty programs on its installed roofing systems, braking products, truck trailers, and refrigerated truck bodies.  The change in the Company’s aggregate product warranty liabilities for the period ended June 30 is as follows:

 In thousands	 	2007	 	2006	 	
Beginning reserve at December 31	 	$	6,940	 	$	7,939	 	
Current year provision	 	3,059	 	6,119	 	
Current year claims	 	(3,240	)	(5,785	)	
Ending reserve at June 30	 	$	6,759	 	$	8,273	 	
 
The amount of extended product warranty revenues recognized was $3.6 million and $7.0 million for the three and six months ended June 30, 2007, respectively, and $3.5 million and $6.8 million for the three and six months ended June 30, 2006, respectively.
The Company has entered into long-term purchase agreements expiring December 31, 2009 for certain key raw materials in the Construction Materials segment.  Commitments are variable based on changes in commodity price indices. Based on prices at June 30, 2007, commitments under these agreements total approximately $56.3 million.
The Company maintains self retained liabilities for workers’ compensation, medical, general liability and property claims up to applicable retention limits. Retention limits are between $0.5 million and $1.0 million per occurrence for general liability, $0.5 million per occurrence for workers’ compensation, $0.1 million per occurrence for property and up to $0.5 million for medical claims. The Company is insured for losses in excess of these limits.
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The Company may be involved in various legal actions from time to time arising in the normal course of business. In the opinion of management, the ultimate outcome of such actions will not have a material adverse effect on the consolidated financial position of the Company, but may have a material impact on the Company’s results of operations for a particular period. As a result of the favorable resolution of certain legal actions, the Company recognized gains, net of legal fees, of $2.2 million and $6.6 million during the three and six months ended June 30, 2007, respectively, and $2.4 million and $7.1 million, respectively, during the three and six months ended June 30, 2006 that were included in Other (income) expense, net.
(14) Derivative Instruments and Hedging Activities
The Company is exposed to the impact of changes in interest rates and market values of its debt instruments, changes in raw material prices and foreign currency fluctuations. Management of interest rate exposure includes consideration of the use of treasury lock contracts and interest rate swaps to reduce volatility of cash flows, the impact on earnings and to lower its cost of capital.
On November 14, 2006, the Company entered into treasury lock contracts with a notional amount of $100.0 million to hedge the cash flow variability on forecasted debt interest payments associated with changes in interest rates. These contracts have been designated as cash flow hedges and were deemed effective at the origination date and as of June 30, 2007. The valuation of these contracts resulted in an asset of $3.4 million as of June 30, 2007.
On June 15, 2005, the Company entered into treasury lock contracts with a notional amount of $150.0 million to hedge the cash flow variability on forecasted debt interest payments associated with changes in interest rates.  These contracts were designated as cash flow hedges and were deemed effective at the origination date.  On August 15, 2006, the Company terminated the treasury lock contracts resulting in a gain of $5.6 million ($3.5 million, net of tax),  which will be amortized to reduce interest expense until August 2016, the term of the interest payments related to the $150 million in notes issued on August 18, 2006.  At June 30, 2007, the Company had a remaining unamortized gain of $5.2 million ($3.2 million, net of tax) which is reflected in Accumulated other comprehensive income on the Company’s Consolidated Balance Sheet.
On May 15, 2007, the Company executed forward exchange contracts with a total notional amount of $95.0 million to hedge the Company’s foreign currency exposure of its net investment in its European roofing joint venture (“Icopal”) denominated in Danish Kroner. These contracts were designated as economic hedges of a net investment and were deemed effective at the origination date and as of June 30, 2007. The value of these contracts was not material as of June 30, 2007.
(15) Segment Information
The Company manages its businesses under three operating groups, Construction Materials, Industrial Components and Diversified Components, represented by the following five financial reporting segments:
·       Construction Materials:   the “construction materials” business;
·       Industrial Components:   the “tire and wheel” business; and the “power transmission belt” business;
·       Specialty Products:   the “motion control systems” business;
·       Transportation Products:   the “specialty trailer” business;
·                   General Industry (“all other”):   the “high-performance wire and cable” business; the “refrigerated truck bodies” business; and the “foodservice products” business.
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The Diversified Components group consists of the Specialty Products, Transportation Products and General Industry segments.
Sales, earnings before interest and income taxes (“EBIT”) and assets for continuing operations by reportable segment are included in the following summary:

 Three Months Ended June 30,	 	2007	 	2006(2)	 	
In thousands	 	Sales(1)	 	EBIT	 	 	 	Sales(1)	 	EBIT(2)	 	 	 	
Construction Materials	 	$	383,135	 	$	60,141	 	 	 	$	292,852	 	$	48,020	 	 	 	
Industrial Components	 	222,605	 	15,034	 	 	 	214,706	 	23,149	 	 	 	
Specialty Products	 	48,788	 	651	 	 	 	48,975	 	7,570	 	 	 	
Transportation Products	 	49,013	 	7,641	 	 	 	48,337	 	9,398	 	 	 	
General Industry	 	90,319	 	10,436	 	 	 	83,241	 	5,725	 	 	 	
Corporate	 	—	 	(13,945	)	 	 	—	 	(7,288	)	 	 	
Total	 	$	793,860	 	$	79,958	 	 	 	$	688,111	 	$	86,574	 	 	 	

 Six Months Ended June 30,	 	2007	 	2006(2)	 	
In thousands	 	Sales(1)	 	EBIT	 	Assets	 	Sales(1)	 	EBIT(2)	 	Assets	 	
Construction Materials	 	$	609,370	 	$	81,050	 	$	772,613	 	$	520,838	 	$	83,020	 	$	524,009	 	
Industrial Components	 	452,179	 	39,588	 	561,010	 	438,806	 	44,393	 	542,522	 	
Specialty Products	 	95,484	 	3,009	 	201,282	 	92,810	 	8,890	 	178,538	 	
Transportation Products	 	95,595	 	14,439	 	63,548	 	92,591	 	16,547	 	53,967	 	
General Industry	 	170,130	 	17,587	 	259,044	 	160,403	 	13,645	 	248,175	 	
Corporate	 	—	 	(22,383	)	73,398	 	—	 	(16,465	)	64,412	 	
Total	 	$	1,422,758	 	$	133,290	 	$	1,930,895	 	$	1,305,448	 	$	150,030	 	$	1,611,623	 	

(1)           Excludes intersegment sales
(2)           2006 figures have been revised to reflect the change in accounting for inventory (refer to Note 3), discontinued operations and to conform with the 2007 segment presentation.
 
A reconciliation of assets reported above to total assets as presented on the Company’s Consolidated Balance Sheets is as follows:

	 	2007	 	
Assets per table above	 	$	1,930,895	 	
Assets held for sale of discontinued operations	 	7,658	 	
Total Assets per Consolidated Balance Sheets	 	$	1,938,553	 	
 
(16) Income Taxes
The Company’s effective tax rate on continuing operations of 32.0% and 31.8% for the three and six months ended June 30, 2007, respectively, varies from the statutory rate within the United States of 35% due primarily to the deduction attributable to U.S. production activities, earnings in foreign jurisdictions taxed at rates different from the statutory U.S. federal rate, and tax credits.
The Company adopted the principles of FIN 48, effective January 1, 2007.  As a result of the implementation of FIN 48, the Company recorded the cumulative effect of the change in principle of accounting for uncertain tax positions as a charge to retained earnings of $2.1 million.  The total amount of unrecognized tax benefit as of June 30, 2007 was $14.4 million ($20.2 million less a benefit of $5.8 million).  The Company classifies and reports interest and penalties associated with uncertain tax positions as Income tax expense on the Consolidated Statements of Earnings and Comprehensive Income, and as other tax liabilities on the Consolidated Balance Sheets.  The total amount of interest
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and penalties accrued at June 30, 2007 was $3.8 million.  The entire balance accrued for uncertain tax positions at June 30, 2007, if recognized, would affect the Company’s effective tax rate.
The Company is subject to U.S. federal income tax as well as income tax in multiple state and foreign jurisdictions.  The Company has concluded all U.S. federal income tax examinations through 2005.  The 2006 IRS audit is now substantially concluded, subject only to a post filing review.   Similarly, a review of 2006 business sale transactions by the Inland Revenue in the United Kingdom should be completed within twelve months.  Substantially all material state and foreign tax matters have been concluded for tax years through 2001.  Within the next twelve months, state and foreign audits may conclude and affect the amount of unrecognized tax benefits.  The amount of the change in unrecognized tax benefits that may result from audits within the next twelve months is not known.
(17) Subsequent Events
On July 12, 2007, the Company replaced its $300.0 million revolving credit facility with a five-year $400.0 million revolving credit facility (the “2007 Facility”) in order to increase the facility size, extend tenor, reduce pricing and improve certain other provisions. The 2007 Facility provides for grid-based interest pricing based on the credit rating of the Company’s senior unsecured bank or other unsecured senior debt and the Company’s utilization of the 2007 Facility. The 2007 Facility requires the Company to meet various restrictive covenants and limitations including certain net worth, cash flow ratios and limits on outstanding debt balances held by certain subsidiaries.
The sale of Icopal closed on July 31, 2007.  The Company expects to receive approximately $137.0 million in proceeds during the last half of 2007, resulting in a pre-tax gain of approximately $53.5 million.  The ultimate amount of taxes payable on the gain is contingent on the repatriation of the proceeds received, of which the Company is currently evaluating its options.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Executive Overview
Carlisle Companies Incorporated (“Carlisle”, the “Company”, “we”, “our” or “management”) is a diversified manufacturing company focused on achieving profitable growth internally through new product development and product line extensions, and externally through acquisitions that complement the Company’s existing technologies, products and market channels.  Carlisle manages its businesses under three operating groups, Construction Materials, Industrial Components and Diversified Components, represented by five financial reporting segments:
·                   Construction Materials :  the “construction materials” business;
·                   Industrial Components:   the “tire and wheel” business; and the “power transmission belt” business;
·                   Specialty Products:   the “motion control systems” business;
·                   Transportation Products:   the “specialty trailer” business;
·                   General Industry (“all other”):   the “high-performance wire and cable” business; the “refrigerated truck bodies” business; and the “foodservice products” business.
The Diversified Components group consists of the Specialty Products, Transportation Products and General Industry segments.
While Carlisle has offshore manufacturing operations, the markets served by the Company are primarily in North America.  Management focuses on maintaining a strong and flexible balance sheet, continued year over year improvement in sales and earnings, return on invested capital and return on shareholders’ equity, and improving cash flow from operations.  Resources are allocated among the operating companies based on management’s assessment of their ability to obtain leadership positions and competitive advantages in the markets they serve.
For a more in-depth discussion of the results discussed in this “Executive Overview,” please refer to the discussion on “Financial Reporting Segments” presented later in “Management’s Discussion and Analysis.”
Net sales for the three months ended June 30, 2007 were 15.4% higher than in the three months ended June 30, 2006.  With the exception of the Specialty Products segment, sales growth was reported across all reporting segments.  Organic sales growth (defined as the increase in net sales excluding the impact of acquisitions and divestitures within the last twelve months as well as the impact of changes in foreign exchange rates) of 9.8% was primarily driven by increased sales volumes within the Construction Materials segment.  Acquisition growth of 5.2% in the second quarter of 2007 reflected the acquisition of Insulfoam LLC, a leading manufacturer of block molded polystyrene insulation (“Insulfoam”), acquired on May 1, 2007.  The impact of changes in foreign exchange rates was negligible.  Despite higher sales, income from continuing operations fell 0.8% from $56.1 million, or $0.90 per diluted share, in the second quarter of 2006 to $55.7 million, or $0.89 per diluted share, in the second quarter of 2007.  Earnings growth in the Construction Materials and General Industry segments was not enough to offset higher Corporate expenses and lower earnings in the Industrial Components, Specialty Products and Transportation Products segments.
Net sales for the six months ended June 30, 2007 were $1.4 billion, representing a 9.0% increase over net sales of $1.3 billion in the first six months of 2006, and reflected increased sales in each of the Company’s reporting segments.  Organic growth for the six-month period of 2007 was 6.0% as compared to the prior year.  The acquisition of Insulfoam in the second quarter of 2007 contributed $34.9 million to the three and six month results.  Income from continuing operations for the six months ended June 30, 2007 was $89.4 million or $1.43 per diluted share, a 6.6% decrease as compared with income from continuing operations of
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$95.8 million, or $1.54 per diluted share in the first half of 2006.  The decline reflected lower earnings in each of the Company’s segments, with the exception of the General Industry segment, which benefited from increased earnings in the Company’s high-performance wire and cable business, and included certain items discussed below.
Results for the three and six months ended June 30, 2007 included charges of $0.08 per diluted share related to the facility and management transition of an acquired U.K. off-highway braking business, and $0.05 per diluted share related to changes in executive management.  Partially offsetting these expenses was the recovery of previously reserved interest income of $0.07 per diluted share from the Company’s European roofing joint-venture.  The current year six-month period also included gains of $0.07 per diluted share resulting from proceeds received from certain legal proceedings initiated by the Company.  The three and six months ended 2006 included a gain of $0.06 per diluted share related to the curtailment of retiree medical benefits.  The six month period of 2006 also included gains of $0.08 per diluted share on proceeds received from certain legal proceedings.
Effective January 1, 2007, the Company changed its method of valuing certain inventories from the last-in, first-out (“LIFO”) method to the first-in, first-out (“FIFO”) method.  Prior year figures have been restated to conform to this change.  If the Company had determined the cost of its inventories by the LIFO method, income from continuing operations would have been $1.5 million lower for the quarter ended June 30, 2007, or $0.02 per diluted share, and $0.3 million lower, or $0.01 per diluted share, for the six months ended June 30, 2007.  The consolidated statements of earnings for the quarter and six months ended June 30, 2006 and the December 31, 2006 balance sheet have been revised to reflect this change, resulting in an increase in second quarter 2006 income from continuing operations of $1.1 million, or $0.02 per diluted share, an increase in income for the first half of 2006 of $1.5 million, or $0.02 per diluted share, an increase in 2006 inventories of $40.2 million, and an increase in 2006 retained earnings of $25.1 million.
The Company’s effective tax rate for continuing operations of 32.0% for the second quarter 2007 compares with an effective tax rate of 30.9% for the second quarter 2006.  The Company’s effective tax rate of 31.8% for continuing operations in the first half of 2007 compares with an effective tax rate of 31.8% for the same period in 2006.  The Company’s effective tax rate varies from the statutory rate within the United States of 35% due primarily to the deduction attributable to U.S. production activities, earnings in foreign jurisdictions taxed at rates different from the statutory U.S. federal rate, and tax credits.
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Sales and Earnings
Consolidated Results of Continuing Operations
Net sales for the three months ended June 30, 2007 increased by 15.4% to $793.9 million from $688.1 million for the three months ended June 30, 2006.  Increased sales in the Construction Materials segment accounted for the majority of the increase and included $34.9 million of net sales from Insulfoam.  Organic growth of 9.8% was primarily as a result of increased sales volumes over the prior year.  Net sales for the six months ended June 30, 2007 increased 9.0% over the prior year.  Organic growth was 6.0% for the first six months of 2007.  The impact of changes in foreign currency rates was negligible on both the three and six month periods.
Cost of Goods Sold of $629.2 million for the quarter ended June 30, 2007 increased $89.6 million, or 16.6% above $539.6 million in the second quarter of last year.  Cost of goods sold for the six months ended June 30, 2007 was $1.1 billion, up 10.1% from $1.0 billion for the six months ended June 30, 2006.  Increased raw material costs, primarily related to increased sales volume, and to a lesser extent, increased overhead expenses, accounted for the majority of the increase in both the three and six month periods as compared to the prior year.
Gross margin (net sales less cost of goods sold expressed as a percent of net sales) of 20.7% recognized in the second quarter 2007 decreased compared to gross margin of 21.6% in the second quarter 2006. For the six months ended June 30, 2007, gross margin was 20.3% as compared to 21.1% in the same period in 2006.  For the three month period, reductions in margins were reported in all segments with the exception of General Industry.  For the six month period, reductions were experienced in the Construction Materials and Transportation Products segments, while the Industrial Components, Specialty Products and General Industry segments reported increased margins as compared to the prior year.  The declines in the three and six month periods as compared to the prior year reflect competitive pricing pressures within the Construction Materials segment as well as increased material and overhead costs in several of the Company’s businesses.
Selling and administrative expenses of $75.5 million for the quarter ended June 30, 2007 were 25.8% above $60.0 million in the second quarter of 2006.  For the six months ended June 30, 2007, selling and administrative expenses of $144.5 million represented a 19.8% increase over $120.6 million in the prior year.  On June 12, 2007, the Company announced the resignation of Richmond McKinnish as President and Chief Executive Officer and the appointment of David A. Roberts as Chairman, President and Chief Executive Officer.  Mr. Roberts assumed his duties on June 21, 2007.  Contributing to the increase in selling and administrative expenses for the current year three and six month periods were $4.3 million of charges related to this management change. The addition of selling, administrative and executive personnel to sustain the Company’s growth as well as variable expenses associated with increased sales, also contributed to the increase.  As a percent of net sales, selling and administrative expenses were 9.5% and 8.7% for the three months ended June 30, 2007 and 2006, respectively.  For the six months ended June 30, 2007 and 2006, selling and administrative expenses were 10.2% and 9.2% of net sales, respectively.
Other expense, net of $4.9 million for the three months ended June 30, 2007 compared to other income, net of $1.8 million for the same period in 2006.  Results for the 2007 period included a gain of $2.2 million on certain legal actions initiated by the Company and $1.5 million of equity income from the Company’s European joint venture, “Icopal”.  The second quarter of 2007 also included a $4.7 million charge related to management and facilities transition of a braking business in the United Kingdom (“U.K.”), as well as asset charges related to closed facilities of $3.0 million, and $1.7 million in expenses related to the Company’s securitization program.  Results for the 2006 period included gains of $5.6 million related to the curtailment of certain retiree medical plans, $2.4 million on proceeds received from certain legal actions
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initiated by the Company, as well as income from Icopal of $0.7 million.  Also included in 2006 results were losses of $2.5 million related to an arbitration proceeding concerning the termination of a supply agreement, $1.8 million in expenses related to the Company’s securitization program, $2.4 million of asset charges and.$1.3 million of lease termination costs.
Other expense, net of $2.6 million for the six months ended June 30, 2007 compared to other income, net of $2.3 million in the prior year.  Results for the 2007 period included $6.6 million of proceeds received from legal actions initiated by the Company.  Offsetting this gain was the $4.7 million charge related to the U.K. braking business, asset charges of $3.0 million related to closed facilities, expenses of $2.3 million associated with the securitization program, and the Company’s share of losses at Icopal of $0.8 million.  Results for the 2006 period included $7.1 million of proceeds received from legal actions and $5.6 million related to the curtailment of certain retiree medical plans.  Offsetting these gains were expenses of $3.3 million associated with the securitization program, losses of $2.5 million related to an arbitration proceeding concerning the termination of a supply agreement, the Company’s share of losses at Icopal of $2.1 million, $2.4 million of asset charges and $1.3 million of lease termination costs.
Earnings before interest and income taxes (“EBIT” or “earnings”) for the quarter ended June 30, 2007 were $80.0 million, a 7.6% decline compared to $86.6 million recognized in 2006.   As a percent of sales, EBIT fell to 10.1% in the second quarter of 2007, from 12.6% last year.  For the six months ended June 30, 2007, EBIT was $133.3 million, an 11.2% decline from EBIT of $150.0 million reported in the 2006 period.  The decline in the three and six month periods reflects lower gross margins, higher selling and administrative expenses, and the change in other (income) expense, net as described above.
Interest income, net of $1.9 million for the three months ended June 30, 2007 compared to interest expense, net of $5.4 million for the same period in 2006.  Interest expense, net of $2.1 million for the six months ended June 30, 2007 compared to $9.6 million for the first six months of 2006.  Both the three and six month periods in 2007 included interest income of $6.6 million representing a recovery of interest receivable from Icopal.
Income from continuing operations, net of tax was $55.7 million, or $0.89 per diluted share, for the three months ended June 30, 2007, a slight decline compared to $56.1 million, or $0.90 per diluted share, for the three months ended June 30, 2006.  Income from continuing operations, net of tax for the first six months of 2007 was $89.4 million, or $1.43 per diluted share, representing a 6.6% decline compared to $95.8 million, or $1.54 per diluted share recognized in the first half of 2006.
Consolidated Results of Discontinued Operations
Income (loss) from discontinued operations, net of tax, for the three months ended June 30, 2007 was $(2.3) million, or $(0.04) per diluted share, which compared to income from discontinued operations, net of tax, of $1.0 million, or $0.02 per diluted share for the same period in 2006.  Income from discontinued operations, net of tax for the six months ended June 30, 2007 was $0.8 million, or $0.01 per diluted share, which compared to $3.0 million, or $0.05 per diluted share, for the six months ended June 30, 2006.  Results for both the three and six months periods include the custom thermoset products molding operation (“thermoset molding operation”), which was previously included in the Specialty Products segment.  Results for the six month period of 2007 included additional proceeds related to purchase price adjustments from the sales of the systems and equipment businesses which occurred in the fourth quarter of 2006.
Net Income of $53.4 million, or $0.85 per diluted share, for the quarter ended June 30, 2007 was 6.5% lower than $57.1 million, or $0.92 per diluted share, for the quarter ended June 30, 2006.  Net income for the six months ended June 30, 2007 was $90.2 million, or $1.44 per diluted share, an 8.6% decline from net income of $98.7 million, or $1.59 per diluted share, for the same period in 2006.
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Acquisitions
On January 29, 2007, the Company purchased the assets of Dongguan Qiaotou Yichang Wire and Cable Assembly Factory, specializing in complex cable assemblies and wire harnesses for medical and industrial applications, located in Guangdong, China, for approximately $3.1 million with an additional earnout payable of up to $4.0 million.  Operating results for this operation since the acquisition date are included in the General Industry segment.  On February 2, 2007, the Company acquired 100% of the equity of Meixian Tengfei Tyre Co., Ltd (“Meiyan”), a tire manufacturer located in Guandong, China, for consideration of approximately $19.6 million. Operating results for this operation since the acquisition date are included in the Industrial Components segment.
On May 1, 2007, the Company acquired the operations of Insulfoam from Premier Industries, Inc., a privately held company, headquartered in Tacoma, Washington, for approximately $160.0 million, subject to a working capital adjustment to be determined in the third quarter of 2007.  Insulfoam is a leading manufacturer of block molded expanded polystyrene products used primarily as insulation in building and other construction applications.  Insulfoam is under the management direction of the construction materials business, which is included in the Construction Materials segment.
Financial Reporting Segments
The following table summarizes segment net sales and EBIT.   The amounts for each segment should be referred to in conjunction with the applicable discussion below.

 	 	Three Months Ended	 	Increase	 	Six Months Ended	 	Increase	 	
In thousands,	 	June 30,	 	(Decrease)	 	June 30,	 	(Decrease)	 	
except percentages	 	2007	 	2006*	 	Amount	 	Percent	 	2007	 	2006*	 	Amount	 	Percent	 	
Net Sales	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Construction Materials	 	$	383,135	 	$	292,852	 	$	90,283	 	30.8	%	$	609,370	 	$	520,838	 	$	88,532	 	17.0	%	
Industrial Components	 	222,605	 	214,706	 	7,899	 	3.7	%	452,179	 	438,806	 	13,373	 	3.0	%	
Specialty Products	 	48,788	 	48,975	 	(187	)	-0.4	%	95,484	 	92,810	 	2,674	 	2.9	%	
Transportation Products	 	49,013	 	48,337	 	676	 	1.4	%	95,595	 	92,591	 	3,004	 	3.2	%	
General Industry	 	90,319	 	83,241	 	7,078	 	8.5	%	170,130	 	160,403	 	9,727	 	6.1	%	
 	 	$	793,860	 	$	688,111	 	$	105,749	 	15.4	%	$	1,422,758	 	$	1,305,448	 	$	117,310	 	9.0	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings Before Interest and Income Taxes	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Construction Materials	 	$	60,141	 	$	48,020	 	$	12,121	 	25.2	%	$	81,050	 	$	83,020	 	$	(1,970	)	-2.4	%	
Industrial Components	 	15,034	 	23,149	 	(8,115	)	-35.1	%	39,588	 	44,393	 	(4,805	)	-10.8	%	
Specialty Products	 	651	 	7,570	 	(6,919	)	-91.4	%	3,009	 	8,890	 	(5,881	)	-66.2	%	
Transportation Products	 	7,641	 	9,398	 	(1,757	)	-18.7	%	14,439	 	16,547	 	(2,108	)	-12.7	%	
General Industry	 	10,436	 	5,725	 	4,711	 	82.3	%	17,587	 	13,645	 	3,942	 	28.9	%	
Corporate	 	(13,945	)	(7,288	)	(6,657	)	-91.3	%	(22,383	)	(16,465	)	(5,918	)	-35.9	%	
 	 	$	79,958	 	$	86,574	 	$	(6,616	)	-7.6	%	$	133,290	 	$	150,030	 	$	(16,740	)	-11.2	%	

* 2006 figures have been revised for the change in accounting for inventory, to exclude discontinued operations and to conform with the 2007 segment presentation.
Construction Materials
Net sales in the Construction Materials segment grew 30.8% to $383.1 million for the quarter ended June 30, 2007, up from $292.9 million reported in the same period of 2006, on increased sales of thermoplastic polyolefin (TPO) roofing systems, synthetic rubber (EPDM) roofing systems and insulation.  Net sales for the six months ended June 30, 2007 were $609.4 million, an improvement of 17.0% from the first six months of 2006.  Sales in the six-month period were higher in all product lines as compared to the prior year, but were depressed by lower EPDM sales in the first quarter as compared to the prior year, reflecting
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a strong 2006 first quarter primarily driven by mild weather conditions.  The acquisition of Insulfoam in the second quarter of 2007 contributed $34.9 million to the improvement in both the three and six month periods.
Segment EBIT of $60.1 million in the second quarter of 2007 represented a $12.1 million, or 25.2% increase over the second quarter of 2006.  As a percent of sales, EBIT was 15.7% in 2007 as compared to 16.4% in 2006.  Increased sales volumes and the acquisition of Insulfoam contributed to the increase in earnings; however, competitive pricing issues and an unfavorable sales mix were the primary drivers in the decrease in earnings as a percent of sales.  Results in the second quarter of 2007 and 2006 included pre-tax gains of $2.1 million and $0.9 million, respectively, for proceeds received from the settlement of certain legal actions initiated by the Company.  Segment EBIT also reflects pre-tax earnings for the second quarter 2007 and 2006 related to the Company’s equity share of income at Icopal of $1.5 million and $0.7 million, respectively.  Also reflected in the second quarter of 2006 were $1.2 million of asset impairment charges.
For the six months ended June 30, 2007, EBIT decreased $1.9 million, or 2.4% from $83.0 million in the first half of 2006 to $81.1 million in the first half of 2007.  As a percent of sales, EBIT was 13.3% in the first half of 2007 as compared to 15.9% in the first half of 2006.  The decline was primarily due to competitive pricing issues in insulation, an unfavorable sales mix, and higher expenses associated with new plants and marketing programs.  Included in segment earnings for the six months ended June 30, 2007 and 2006 were pre-tax gains of $5.5 million and $5.6 million, respectively, for proceeds received from the settlement of legal actions initiated by the Company.  The 2006 period also included $1.2 million of asset impairment charges.  Losses related to Icopal were $0.8 million and $2.1 million, respectively, for the first half of 2007 and 2006.
Net sales and EBIT are generally higher for this segment in the second and third quarters of the year due to increased construction activity during these periods.  The Company expects favorable sales and earnings performance results for the balance of the year, but increased capacity, competitive pricing and raw material pressures may place negative pressure on earnings results in future periods.
Industrial Components
Net sales for the quarter ended June 30, 2007 were $222.6 million, an increase of $7.9 million, or 3.7% over $214.7 million for the prior-year period.  Net sales in the first half of 2007 were $452.2 million, representing a 3.0% increase over the prior year.  The increase in both the three and six month periods was primarily a result of increased sales volumes, and to a lesser extent increased selling prices.  The net sales growth in the second quarter and first half was primarily related to higher sales in the consumer outdoor power equipment market, followed by higher sales in the ATV and replacement markets.  Growth in these markets offset declines in the high-speed trailer market and lower styled wheel sales.
Segment EBIT for the current year quarter of $15.0 million represented a 35.1% decrease from $23.1 million reported in the second quarter of 2006.  For the six months ended June 30, 2007, EBIT was $39.6 million, which compared to $44.4 million in the first half of 2006.  Results for the three and six month periods of 2007 were negatively impacted by asset charges of $3.0 million related to the closure of certain tire and wheel and power transmission belt business operations.  Results for the 2006 three and six month periods were positively impacted by a $5.6 million gain resulting from the curtailment of certain retiree medical benefits, and a $1.5 million gain on the settlement of certain legal actions initiated by the Company.   Offsetting these gains in the 2006 periods were lease termination charges of $1.3 million and asset charges of $1.2 million on a closed power transmission belt facility.
Net sales and EBIT are generally higher in the first half of the year due to peak sales volumes in the outdoor power equipment market.  While sales and earnings are expected to be higher than the previous
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years, the Company anticipates continued softness in most markets included in this segment. The Company plans to take actions to contain costs, to combat potential lower demand and to increase sales in other markets; however, these trends may suppress earnings growth in subsequent quarters.
Specialty Products
Net sales of $48.8 million in the second quarter of 2007 were slightly lower than net sales of $49.0 million in the second quarter of last year.  Net sales for the six months ended June 30, 2007 were $95.5 million, slightly higher than net sales of $92.8 million in the first half of 2006.   Sales in the off-highway braking business improved 6.9% and 7.1% in the three and six month periods of 2007, respectively, as compared to the prior year on increased demand.  Sales were lower in the on-highway braking business, reflecting the negative impact on demand of certain legislation regarding changes in emission standards enacted by the Environmental Protection Agency (“EPA”) effective in 2007.
Segment EBIT of $0.7 million in the second quarter of 2007 was $6.9 million lower as compared to $7.6 million from the same period in 2006.  EBIT in the first half of 2007 was $3.0 million, a $5.9 million reduction as compared to the prior year.  Included in the current year three and six month periods was a $4.7 million charge related to the facility and management transition of an acquired U.K. off-highway braking business from the seller’s manufacturing location.  Also contributing to the decrease in EBIT, was higher amortization expense on valuation increases made in 2006 to certain acquisition-related intangibles.  The net sales decrease in the on-highway braking business also contributed to the negative comparisons in the second quarter and first half of this year.
The braking business’ off-highway products are usually not subject to seasonality while the sales and earnings for the on-highway products tend to be strongest in the second quarter to coincide with increased truck and trailer maintenance typically scheduled in the spring.  The recently enacted EPA legislation will most likely continue to have a negative impact on demand in subsequent periods.  The Company has secured and continues to aggressively pursue replacement business in the aftermarket to mitigate a portion of the decline in demand.  From time to time, the Company is subject to constraints in the availability of raw materials as well as to volatility in the costs of these raw materials.  While these businesses have not experienced significant raw material constraints, management has seen some price volatility in recent periods and anticipates further volatility for the remainder of 2007, which could negatively impact future earnings.  The Company could also be negatively impacted by cost and availability of shipping channels and the amount of time required to ship product manufactured in China.
Transportation Products
Net sales in the Transportation Products segment were $49.0 million in the second quarter of 2007, up 1.4% from $48.3 million as compared to the prior year.  Net sales in the first half of 2007 were $95.6 million, or 3.2% higher than net sales of $92.6 million in the prior year.  The growth in each period is primarily due to increased sales of specialized and commercial trailers.
Segment EBIT of $7.6 million for the three months ended June 30, 2007 represented an 18.7% reduction as compared to prior year reported EBIT of $9.4 million.  As a percent of sales, EBIT fell to 15.6% in the second quarter of 2007, down from 19.4% in the prior-year quarter.  EBIT for the six months ended June 30, 2007 of $14.4 million represented a 12.7% reduction as compared to the prior year.  As a percent of net sales, EBIT fell to 15.1% in the first half of 2007, from 17.9% in the first half of 2006.  The decline for the current-year quarter and year-to-date period reflects increased labor and overhead costs associated with the expansion of its facilities.
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The specialty trailer business utilizes aluminum and steel in its manufacturing process.  While the Company has been able to obtain sufficient supply of these raw materials, at times the Company may be subjected to limited availability as well as price volatility, which could have a significant impact on the profitability of this business.  The Company benefited from very favorable market cycle conditions in the prior year, and thus performance in the current year may not compare as favorably.
General Industry
Net sales of $90.3 million in the second quarter of 2007 for this segment improved 8.5% compared to prior year net sales of $83.2 million.  Net sales in the first six months of 2007 were $170.1 million, or 6.1% higher than the prior year.  The high-performance wire and cable businesses experienced significant growth in the three and six month periods, reflecting increased demand in the aerospace and RF/microwave markets.  Sales in the foodservice business were also higher for the quarter and first half of this year.  Net sales were down significantly in the refrigerated truck bodies business as compared to each period last year on decreased demand reflecting the EPA emissions legislation.
EBIT for this segment was $10.4 million for the three months ended June 30, 2007, up from $5.7 million reported in the second quarter of 2006.  For the six month period, EBIT increased $4.0 million, from $13.6 million in 2006 to $17.6 million in 2007.  The three and six month periods of 2006 included a $2.5 million charge related to an arbitration proceeding concerning the termination of a supply agreement in the high-performance wire and cable business.  Earnings in the high-performance wire and cable business grew significantly over the prior year, reflecting the increased activity in aerospace.  Earnings were also improved in the foodservice business on improved sales.  Improvements in these businesses were partially offset by earnings declines in the refrigerated truck bodies business, reflecting a soft market.
Market conditions generally remain favorable for the high-performance wire and cable and foodservice businesses.  Uncertainty as to general economic conditions and rising gas prices and their impact on consumer spending could place negative pressure on performance in the foodservice business.  In addition, continued softness in the refrigerated truck bodies business could negatively impact earnings performance in subsequent periods.
Corporate
Corporate expenses increased by $6.7 million in the second quarter of 2007, and $5.9 million in the first half of 2007, as compared to the same periods in the prior year.  Included in the results for the three and six month periods of 2007 were $4.3 million of expenses related to the change in executive management and $1.1 million of expenses related to a terminated acquisition initiative.  Second quarter and first half 2006 pre-tax expense was reduced by $2.0 million for the favorable resolution of certain legal matters.  Reducing expense for the first half of 2007 were $0.9 million in proceeds related to certain legal actions initiated by the Company.
Balance Sheet
Cash and cash equivalents decreased by $119.3 million, from $144.0 million at December 31, 2006 to $24.7 million at June 30, 2007.  The decrease relates to the redemption of the $150.0 million 7.25% senior notes and cash flows used in investing activities for capital expenditures and acquisitions.  These cash outflows were partially offset by an increase in the utilization of the accounts receivable facility and net cash provided by operating activities.
Trade receivables of $338.6 million at June 30, 2007 decreased $14.5 million as compared to receivables of $353.1 million at December 31, 2006.  The decrease primarily resulted from higher sales of accounts
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receivable in the Company’s securitization facility.  Partially offsetting this increase were higher receivables in the Construction Materials segment reflecting improved sales and the acquisition of Insulfoam.
Inventories increased $20.9 million, from $450.0 million at December 31, 2006 to $470.9 million at June 30, 2007.  The increase reflects the increase of inventory in the Construction Materials segment as a result of the Insulfoam acquisition which was partially offset by a decrease in inventory in the Industrial Components segment due to strong second quarter sales.
Property, plant and equipment, net of $530.5 million at June 30, 2007 increased $72.0 million compared to $458.5 million at December 31, 2006.  The increase reflects the acquisition of Insulfoam in the Constructions Materials segment and the acquisition of Meiyan in the Industrial Components segment. The increase also reflects the construction of a new plant in the Transportation Products segment.
Goodwill, net, of $354.1 million at June 30, 2007 increased $44.4 million from $309.7 million at December 31, 2006. The increase primarily relates to the acquisition of Insulfoam in the Construction Materials segment.
Patents and other intangible assets, net increased $21.7 million, from $19.3 million at December 31, 2006 to $41.0 million at June 30, 2007. The increase reflects the acquisition of Insulfoam.
Short-term debt, including current maturities, decreased $78.8 million from $151.7 million at December 31, 2006 to $72.9 million at June 30, 2007.  The decrease reflects the redemption of the Company’s 7.25% $150 million senior notes, which matured in January 2007. This decrease was partially offset by borrowings used to fund acquisitions.
Accounts payable increased by $24.5 million, from $142.4 million at December 31, 2006 to $166.9 million at June 30, 2007, mostly reflecting increases in the Construction Materials segment from increased production and sales activity.
Accrued expenses of $146.5 million at June 30, 2007 were $13.3 million lower than accrued expenses at December 31, 2006 of $159.8 million, primarily related to the payment of accrued rebates, bonuses and interest on the 7.25% $150 million senior notes in the first quarter of 2007.
Other long-term liabilities increased by $2.0 million, from $111.6 million at December 31, 2006 to $113.6 million at June 30, 2007.  The increase was primarily a result of higher net deferred tax liabilities and other tax liabilities reclassified under Financial Interpretation No. 48 (“FIN 48”), offset by a reduction in liabilities related to pension and other post-retirement obligations.
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Liquidity and Capital Resources
Sources and Uses of Cash

 	 	Six Months Ended June 30,	 	
In thousands	 	2007	 	2006*	 	
Net cash provided by operating activities	 	$	190,751	 	$	56,121	 	
Net cash used in investing activities	 	(219,456	)	(47,349	)	
Net cash used in financing activities	 	(90,662	)	(16,492	)	
Effect of exchange rate changes on cash	 	39	 	(752	)	
Change in cash and cash equivalents	 	$	(119,328	)	$	(8,472	)	

* 2006 figures have been revised to reflect the change in method of accounting for inventory and to reflect discontinued operations.
Net cash provided by operating activities was $190.8 million for the six months ended June 30, 2007 compared to net cash provided by operating activities of $56.1 million for the six months ended June 30, 2006. Net cash provided by operating activities in 2007 included an increase in operating cash flow of $150.0 million for the increase in the utilization of the accounts receivable facility.
Cash used in investing activities was $219.5 million for the six months ended June 30, 2007 compared to $47.3 million for the first half of 2006.  Capital expenditures of $40.0 million in the first half of this year were lower than capital expenditures of $51.6 million in the first six months of 2006. Cash used in investing activities in 2007 included $183.3 million used to fund the acquisition of Insulfoam and the acquisitions of manufacturing operations in China for the Company’s tire and wheel and high performance wire and cable businesses.
Cash used in financing activities was $90.7 million for the six months ended June 30, 2007 compared to cash used by financing activities of $16.5 million for the six months ended June 30, 2006.  Cash used in financing activities in 2007 reflects the redemption of the Company’s 7.25% $150 million notes which matured in January 2007.
Debt Instruments, Guarantees and Covenants
The following table quantifies certain contractual cash obligations and commercial commitments at June 30, 2007:

	 	 	 	Remaining in	 	 	 	 	 	 	 	 	 	 	 	
In thousands	 	Total	 	2007	 	2008	 	2009	 	2010	 	2011	 	Thereafter	 	
Short-term credit lines and long-term debt	 	$	345,095	 	$	68,634	 	$	104,254	 	$	8,512	 	$	13	 	$	14	 	$	163,668	 	
Interest on long-term debt (1)	 	114,039	 	8,820	 	13,154	 	10,540	 	10,546	 	10,551	 	60,428	 	
Noncancellable operating leases	 	59,175	 	9,155	 	15,761	 	11,126	 	8,480	 	6,169	 	8,484	 	
Purchase obligations	 	56,346	 	11,114	 	22,616	 	22,616	 	—	 	—	 	—	 	
Total Commitments	 	$	574,655	 	$	97,723	 	$	155,785	 	$	52,794	 	$	19,039	 	$	16,734	 	$	232,580	 	

(1) Future expected interest payments are calculated based on the stated rate for fixed rate debt and the effective interest rate as of June 30, 2007 for variable rate debt.
The above table does not include $113.6 million of other long-term liabilities.  Other long-term liabilities consist primarily of deferred income tax and other tax liabilities of $85.6 million, pension and post-retirement medical benefits of $20.0 million, and warranty and other obligations of $8.0 million.  Due to factors such as return on plan assets, disbursements, contributions, and timing of warranty claims, it is not estimable when the majority of these commitments will become due.  In April 2007, the Company contributed $17.3 million to its pension plans in order to qualify for transition relief under the Pension Protection Act of 2006.
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The Company has entered into long-term purchase agreements expiring December 31, 2009 for certain key raw materials in the Construction Materials segment.  Commitments are variable based on changes in commodity price indices. Based on prices at June 30, 2007, commitments under these agreements total approximately $56.3 million.
Carlisle maintains a $300.0 million revolving credit facility, of which $236.5 million was available at June 30, 2007.  On July 12, 2007, the Company replaced its $300.0 million revolving credit facility with a five-year $400.0 million revolving credit facility.  The Company also maintains a $55.0 million uncommitted line of credit of which $50.3 million was available as of June 30, 2007. The Company’s $150.0 million receivables securitization facility was fully utilized as of June 30, 2007.
At June 30, 2007, letters of credit amounting to $46.4 million were outstanding, primarily to provide security under insurance arrangements and certain borrowings.
The Company has financial guarantee lines in place for certain of its operations in Asia and Europe to facilitate working capital needs, customer performance and payment and warranty obligations.  At June 30, 2007, the Company had issued guarantees of $3.3 million, of which $1.4 million represents amounts recorded in current liabilities or Other long-term liabilities.
During 2005, the Company sold certain assets and liabilities of its discontinued automotive components business which was part of a series of sales.  Certain leases guaranteed by the Company expire in 2007 and 2011 and have total minimum lease payments of $2.1 million as of June 30, 2007. The Company believes that the current lessee will fulfill all obligations required by those lease agreements.
Discontinued Operations and Assets Held for Sale
During the second quarter of 2007, as part of its commitment to concentrate on its core businesses, the Company announced plans to exit the thermoset molding operation of the Specialty Products segment.  In September 2006, the Company announced plans to exit the giftware business of the foodservice products business.  The sale of the thermoset molding operation is expected to be completed by the second quarter of 2008 and the giftware business sale is expected to be completed by the third quarter of 2007.  In November of 2005, the Company announced plans to sell the systems and equipment businesses, and the sale of these businesses was completed by November 2006.  The assets of these operations have met the criteria for, and have been classified as “held for sale” in accordance with SFAS 144, “Accounting for the Impairment and Disposal of Long-Lived Assets.”  In addition, results of operations for these businesses, and any gains or losses recognized from their sale, are reported as “discontinued operations” in accordance with SFAS 144.
Total assets held for sale were as follows:   

	 	June 30,	 	December 31,	 	
In thousands	 	2007	 	2006	 	
Assets held for sale:	 	 	 	 	 	
Thermoset molding operation	 	$	6,548	 	$	8,408	 	
Giftware business of foodservice products	 	1,110	 	1,296	 	
Total assets held for sale	 	$	7,658	 	$	9,704	 	
 
27

 

	 	June 30,	 	December 31,	 	
In thousands	 	2007	 	2006	 	
Assets held for sale:	 	 	 	 	 	
Receivables	 	$	2,646	 	$	2,442	 	
Inventories	 	1,814	 	2,667	 	
Prepaid expenses and other current assets	 	272	 	368	 	
Total current assets held for sale	 	4,732	 	5,477	 	
 	 	 	 	 	 	
Property, plant and equipment, net	 	2,526	 	3,827	 	
Notes receivable and other assets	 	400	 	400	 	
Total non-current assets held for sale	 	2,926	 	4,227	 	
Total assets held for sale	 	$	7,658	 	$	9,704	 	
 	 	 	 	 	 	
Liabilities associated with assets held for sale:	 	 	 	 	 	
Accounts payable	 	$	421	 	$	695	 	
Accrued expenses	 	192	 	217	 	
Total liabilities associated with assets held for sale	 	$	613	 	$	912	 	
 
Net sales and income (loss) before income taxes from discontinued operations were as follows:

	 	Three Months Ended	 	Six Months Ended	 	
 	 	June 30,	 	June 30,	 	
In thousands	 	2007	 	2006	 	2007	 	2006	 	
Net sales:	 	 	 	 	 	 	 	 	 	
Automotive components	 	$	—	 	$	—	 	$	—	 	$	370	 	
Systems and equipment	 	240	 	50,481	 	714	 	101,063	 	
Thermoset molding operation	 	2,915	 	3,944	 	5,878	 	7,096	 	
Giftware business of foodservice products	 	564	 	649	 	682	 	1,265	 	
Net sales for discontinued operations	 	$	3,719	 	$	55,074	 	$	7,274	 	$	109,794	 	
 	 	 	 	 	 	 	 	 	 	
Income (loss) from operations of discontinued operations:	 	 	 	 	 	 	 	 	 	
Automotive components	 	$	(1,530	)	$	222	 	$	(1,643	)	$	(443	)	
Systems and equipment	 	(24	)	1,669	 	4,805	 	5,345	 	
Thermoset molding operation	 	(1,610	)	(124	)	(1,759	)	17	 	
Giftware business of foodservice products	 	(38	)	(546	)	(18	)	(873	)	
Income (loss) before income taxes from discontinued operations	 	$	(3,202	)	$	1,221	 	$	1,385	 	$	4,046	 	
 
Results for the six months ended June 30, 2007 included additional proceeds related to purchase price adjustments from the sales of the systems and equipment businesses which occurred in the fourth quarter of 2006.
The Company sold substantially all of the assets of the automotive components business in 2005.
28

Critical Accounting Policies
Prior to January 1, 2007, inventories were valued using both the last-in, first-out (“LIFO”) and first-in, first-out (“FIFO”) methods.  Effective January 1, 2007, the Company changed its method of accounting for those finished goods, work-in-progress and raw material inventories previously on the LIFO method to the FIFO method.  Had the Company not changed its policy for accounting for inventory, pre-tax income would have been reduced by $2.4 million ($1.5 million loss after-tax, or $0.02 loss per diluted share) for the quarter ended June 30, 2007, and a reduction to pre-tax income of $0.5 million ($0.3 million loss after-tax, or $0.01 loss per diluted share) would have been recorded for the six months ended June 30, 2007.
New Accounting Pronouncements
In January 2007, the Company adopted SFAS No. 155 (“SFAS 155”), Accounting for Certain Hybrid Financial Instruments, an amendment of FASB Statement No. 133 and 140.  SFAS 155 permits hybrid financial instruments that have embedded derivatives to be valued as a whole, eliminating the need to bifurcate the derivative from its host, as previously required under Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedge Accounting (“SFAS 133”). SFAS 155 also amends SFAS 133 by establishing a requirement to evaluate interests in securitized financial assets to determine whether they are free standing derivatives or whether they contain embedded derivatives that require bifurcation. SFAS 155 is effective for all hybrid financial instruments acquired or issued by the Company on or after January 1, 2007.  Adoption of this standard had no material effect on the Company’s statement of earnings or financial position.
In January 2007, the Company adopted Financial Interpretation No. 48 (“FIN 48”) Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109.  This interpretation clarifies the accounting and financial statement reporting for uncertainty in income taxes recognized by prescribing a recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return.  The cumulative effect of the change in principle of accounting for uncertain tax positions was a charge to retained earnings for $2.1 million.  Refer to Note 16 of the Company’s Unaudited Consolidated Financial Statements for more information on the adoption of this interpretation.
In January 2007, the Company adopted Staff Accounting Bulletin No. 108 (“SAB 108”).  SAB 108 expresses the staff’s views regarding the process of quantifying financial statement misstatements.  Based on SAB 108, prior year misstatements should be considered in quantifying misstatements in current year financial statements.  SAB 108 provides approaches to be used to quantify any misstatements.  Adoption of this standard had no material effect on the Company’s statement of earnings or financial position.
In September 2006, the FASB issued SFAS No. 157 (“SFAS 157”), Fair Value Measurements.  SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements.  It will be effective for fiscal years beginning after November 15, 2007.  The Company is currently evaluating the requirements of this standard and has not yet determined the impact on the consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159 (“SFAS 159”), “The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115.” This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. The fair value option established by this Statement permits all entities to choose to measure eligible items at fair value at specified election dates and report unrealized gains and losses on items for which the fair value option has been elected in earnings (loss) at each subsequent reporting date. It will be effective for fiscal years beginning after November 15, 2007.  The Company is currently evaluating the requirements of this standard and has not yet determined the impact on the consolidated financial statements.
29

Forward-Looking Statements
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such statements are made based on known events and circumstances at the time of publication, and as such, are subject in the future to unforeseen risks and uncertainties.  It is possible that the Company’s future performance may differ materially from current expectations expressed in these forward-looking statements, due to a variety of factors such as: increasing price and product/service competition by foreign and domestic competitors, including new entrants; technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost effective basis; the Company’s mix of products/services; increases in raw material costs which cannot be recovered in product pricing; domestic and foreign governmental and public policy changes including environmental regulations; threats associated with and efforts to combat terrorism; protection and validity of patent and other intellectual property rights; the successful integration and identification of the Company’s strategic acquisitions; the cyclical nature of the Company’s businesses; and the outcome of pending and future litigation and governmental proceedings.  In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions including interest rate and currency exchange rate fluctuations.  Further, any conflict in the international arena may adversely affect the general market conditions and the Company’s future performance.  The Company undertakes no duty to update forward-looking statements.
30

Item 3. Quantitative and Qualitative Disclosure about Market Risk
Carlisle is exposed to the impact of changes in interest rates and market values of its debt instruments, changes in raw material prices and foreign currency fluctuations.
International operations are exposed to translation risk when the local currency financial statements are translated into U.S. Dollars. On May 15, 2007, the Company executed forward exchange contracts with a total notional amount of $95.0 million to hedge the Company’s foreign currency exposure of its net investment in Icopal, denominated in Danish Kroner. These contracts were designated as economic hedges of a net investment and were deemed effective at the origination date and as of June 30, 2007.  The value of these contracts was not material as of June 30, 2007.
The Company is also exposed to risks in the movements of foreign currency exchange rates for transactions denominated in foreign currencies. Revenues for sales of products manufactured in China for the North American market are generated predominately in U.S. Dollars. Many of the obligations incurred by these operations are settled in Chinese Renminbi or Hong Kong Dollars. Should the U.S. Dollar weaken significantly against the Renminbi or Hong Kong Dollar, the Company’s results of operations could be adversely affected. The Company continues to monitor developments in China that may affect its strategy and will hedge its currency risk exposure when deemed effective and prudent. While the Company is exposed to the exchange rates of other currencies including the Canadian Dollar, British Pound, Mexican Peso and European Euro, their risk is considered minimal. Less than 6% of the Company’s revenues from continuing operations for the quarter ended June 30, 2007 are in currencies other than the U.S. Dollar.
From time to time the Company may manage its interest rate exposure through the use of treasury locks and interest rate swaps to reduce volatility of cash flows, impact on earnings and to lower its cost of capital.  On November 14, 2006, the Company entered into treasury lock contracts with a notional amount of $100.0 million to hedge the cash flow variability on forecasted debt interest payments associated with changes in interest rates. These contracts have been designated as cash flow hedges and were deemed effective at the origination date and as of June 30, 2007. The valuation of these contracts resulted in an asset of $3.4 million as of June 30, 2007.
On June 15, 2005, the Company entered into treasury lock contracts with a notional amount of $150.0 million to hedge the cash flow variability on forecasted debt interest payments associated with changes in interest rates.  These contracts were designated as cash flow hedges and were deemed effective at the origination date.  On August 15, 2006, the Company terminated the treasury lock contracts resulting in a gain of $5.6 million ($3.5 million, net of tax) which will be amortized to reduce interest expense until August 2016, the term of the interest payments related to the $150 million in notes issued on August 18, 2006.  At June 30, 2007, the Company had a remaining unamortized gain of $5.2 million ($3.2 million, net of tax) which is reflected in Accumulated other comprehensive income on the Company’s Consolidated Balance Sheet.
There were no interest rate swaps in place as of June 30, 2007.
The Company’s operations use certain commodities such as plastics, carbon black, synthetic and natural rubber and steel.  As such, the Company’s cost of operations is subject to fluctuations as the markets for these commodities change.  The Company monitors these risks, but currently has no derivative contracts in place to hedge these risks.
31

Item 4. Controls and Procedures
(a) Under the supervision and with the participation of the Company’s management, including the Company’s chief executive officer and chief financial officer, the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15.  Based upon that evaluation and as of June 30, 2007, the chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures are effective.
(b) There were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
32

PART II.  OTHER INFORMATION
Item 4.                                                  Submission of Matters to a Vote of Security Holders
(a)           The Company’s 2007 Annual Meeting of Shareholders was held on April 20, 2007.
(b)          At the 2007 Annual Meeting of Shareholders, the election of three directors was approved as follows:

 Director	 	For	 	Against	 	Withheld	 	Non-Vote	 	
 	 	 	 	 	 	 	 	 	 	
Donald G. Calder	 	28,336,087	 	—	 	1,422,604	 	—	 	
Robin S. Callahan	 	28,261,188	 	—	 	1,497,503	 	—	 	
Eriberto R. Scocimara	 	28,234,202	 	—	 	1,524,488	 	—	 	
 
Item 6.                 Exhibits
(10.1)                                            Nonqualified Stock Option Agreement, dated as of June 21, 2007, between Carlisle Companies Incorporated and David A. Roberts.
(10.2)                                            Restricted Share Agreement, dated as of June 21, 2007, between Carlisle Companies Incorporated and David A. Roberts.
(10.3)                                            Executive Severance Agreement, dated as of June 21, 2007, between Carlisle Companies Incorporated and David A. Roberts.
(12)                                                     Ratio of Earnings to Fixed Charges
(31.1)                                            Rule 13a-14(a)/15d-14(a) Certifications
(31.2)                                            Rule 13a-14(a)/15d-14(a) Certifications
(32)                                                     Section 1350 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
33

SIGNATURE
Pursuant to the requirements 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	

August 6, 2007	 	 	
 	 	 	
 	By:	/s/ Carol P. Lowe	 	
 	Name: Carol P. Lowe	
 	Title: Vice President and Chief Financial Officer	
 
34

 
Exhibit 10.1
CARLISLE COMPANIES INCORPORATED
NONQUALIFIED STOCK OPTION AGREEMENT
This Agreement (the “Agreement”) is made as of June 21, 2007 (the “Date of Grant”) by and between Carlisle Companies Incorporated, a Delaware corporation (the “Company”) and  David A. Roberts (the “Optionee”).
1.                                        Grant of Option Right . Subject to and upon the terms, conditions and restrictions set forth in this Agreement and in the Company’s Executive Incentive Program (the “Program”), the Company hereby grants to the Optionee as of the Date of Grant an option (the “Option Right”) to purchase 200,000 Common Shares, at the price of $47.25 per share (the “Option Price”).  This Option Right is intended to be a nonqualified stock option and shall not be treated as an “incentive stock option” within the meaning of that term under Section 422 of the Code.
2.                                        Exercise of Option Right .
(a)                                   Unless and until terminated as hereinafter provided, the Option Right will become exercisable as set forth in Table I below:
TABLE I

 Option	 	Number of Shares	 	Number of Shares	 	
Vesting Dates	 	Vested - Installments	 	Vested - Total	 	
 	 	 	 	 	 	
June 21, 2007	 	66,667	 	66,667	 	
June 21, 2008	 	66,667	 	133,334	 	
June 21, 2009	 	66,666	 	200,000	 	
 
(b)                                  Notwithstanding the provisions of Section 2(a), the Option Right will become immediately exercisable in full if, prior to the date the Option Right becomes fully exercisable pursuant to Section 2(a), (i) the Optionee ceases to be an employee of the Company or any Subsidiary as a result of his death, Disability, Retirement, involuntary termination by the Company for other than gross or willful misconduct, or termination by Optionee for “Good Reason” (as defined in the Employment Agreement between the Company and the Optionee dated June 5, 2007), or (ii) a Change in Control occurs while the Optionee is in the employ of the Company and its Subsidiaries, subject to Section 15(n) of the Program.
3.                                        Forfeiture of Option Right .  The Option Right shall be forfeited (to the extent it has not become exercisable pursuant to Section 2) if the Optionee ceases to be continuously employed by the Company and its Subsidiaries.
1

4.                                        Payment of Option Price.  The Option Price is payable (a) in cash or by certified or cashier’s check or other cash equivalent acceptable to the Company payable to the order of the Company, or (b) any other method approved by the Company.
5.                                        Term of Option Right .  The Option Right will terminate on the earliest of the following dates:
(a) Ninety days after the Optionee ceases to be an employee of the Company or any Subsidiary unless the cessation is as a result of his death, Disability, Retirement, involuntary termination by the Company for other than gross or willful misconduct, or termination by Optionee for “Good Reason” (as defined in the Employment Agreement between the Company and the Optionee dated June 5, 2007) in which case the Option Right will terminate as provided in Section 5(b) below; or
(b) Ten years from the Date of Grant (i.e., June 20, 2017).
6.                                        Transferability .  Except with the consent of the Compensation Committee (the “Committee”), the Option Right may not be sold, exchanged, assigned, transferred, pledged, encumbered or otherwise disposed of by the Optionee; provided, however, that the Optionee’s rights with respect to such Option Right may be transferred by will or pursuant to the laws of descent and distribution.
7.                                        No Employment Contract .  Nothing contained in this Agreement shall confer upon the Optionee any right with respect to continuance of employment by the Company and its Subsidiaries, nor limit or affect in any manner the right of the Company and its Subsidiaries to terminate the employment or adjust the compensation of the Optionee.
8.                                        Taxes and Withholding .  To the extent that the Company shall be required to withhold any federal, state, local or other taxes in connection with Common Shares obtained upon the exercise of the Option Right, and the amounts available to the Company for such withholding are insufficient, it shall be a condition to the delivery of such Common Shares that the Optionee shall pay such taxes or make provisions that are satisfactory to the Company for the payment thereof.  The Optionee may elect to satisfy all or any part of any such withholding obligation by surrendering to the Company a portion of the Common Shares that are delivered to the Optionee upon the exercise of the Option Right, and the Common Shares so surrendered by the Optionee shall be credited against any such withholding obligation at the Market Value per Share of such shares on the date of such surrender.
9.                                        Amendments .  Subject to the terms of the Program, the Committee may modify this Agreement upon written notice to the Optionee.  Any amendment to the Program shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto.
10.                                  Severability .  In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.
11.                                  Relation to Program .  The Option Right granted under this Agreement and all the terms and conditions hereof are subject to the terms and conditions of the Program.  This Agreement and the Program contain the entire agreement and understanding of the parties with respect to the subject matter contained in this Agreement, and supersede all prior communications, representations and negotiations in respect thereto.  In the event of any inconsistency between the provisions of this Agreement and the Program, the Program shall govern.  Capitalized terms used herein without definition shall have the meanings assigned to them in the Program.  The Committee acting pursuant to the Program, as constituted
2

from time to time, shall, except as expressly provided otherwise herein, have the right to determine any questions which arise in connection with the grant or exercise of the Option Right.
12.                                  Successors and Assigns .  Without limiting Section 6 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of the Optionee, and the successors and assigns of the Company.
13.                                  Notices .  Any notice to the Company provided for herein shall be in writing to the Company and any notice to the Optionee shall be addressed to the Optionee at his or her address on file with the Company.  Except as otherwise provided herein, any written notice shall be deemed to be duly given if and when delivered personally or deposited in the United States mail, first class certified or registered mail, postage and fees prepaid, return receipt requested, and addressed as aforesaid.  Any party may change the address to which notices are to be given hereunder by written notice to the other party as herein specified (provided that for this purpose any mailed notice shall be deemed given on the third business day following deposit of the same in the United States mail).
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by its duly authorized officer and the Optionee has also executed this Agreement in duplicate, as of the day and year first above written.

	CARLISLE COMPANIES INCORPORATED	

 	By:	 	/s/ Steven J. Ford	 	
 	Name:	Steven J. Ford	
 	Title:	Vice President, Secretary and General Counsel	

The undersigned hereby acknowledges receipt of an executed original of this Agreement and accepts the award of the Option Right granted thereunder on the terms and conditions set forth herein and in the Program.

	 	/s/ David A. Roberts	 	
 	 	      David A. Roberts	
 	Date:	 	7/5/07	 	

3

 
Exhibit 10.2
CARLISLE COMPANIES INCORPORATED
RESTRICTED SHARE AGREEMENT
This Agreement (the “Agreement”) is made as of June 21, 2007 (the “Date of Grant”) by and between Carlisle Companies Incorporated (the “Company”) and David A. Roberts (the “Grantee”).
1.                                        Grant of Restricted Shares .  Subject to and upon the terms, conditions and restrictions set forth in this Agreement and in the Company’s Executive Incentive Program (the “Program”), the Company hereby grants to the Grantee as of the Date of Grant 100,000 Common Shares as Restricted Shares (the “Restricted Shares”).  The Restricted Shares shall be fully paid and nonassessable and shall be represented by a crtificate or certificates registered in the Grantee’s name, endorsed with an appropriate legend referring to the restrictions hereinafter set forth.
2.                                        Restrictions on Transfer of Restricted Shares .  The Restricted Shares may not be sold, exchanged, assigned, transferred, pledged, encumbered or otherwise disposed of by the Grantee, except to the Company, until the Restricted Shares have become nonforfeitable as provided in Section 3 hereof; provided , however , that the Grantee’s rights with respect to such Common Shares may be transferred by will or pursuant to the laws of descent and distribution.  Any purported transfer or encumbrance in violation of the provisions of this Section 2 shall be void, and the other party to any such purported transaction shall not obtain any rights to or interest in such Common Shares.
3.                                        Vesting of Restricted Shares .  The Restricted Shares shall become nonforfeitable as follows:  (i) 20,000 Restricted Shares on June 21, 2008, (ii) 20,000 Restricted Shares on June 21, 2009, (iii) 20,000 Restricted Shares on June 21, 2010, (iv) 20,000 Restricted Shares on June 21, 2011, and (v) 20,000 Restricted Shares on June 21, 2012; provided, in each case that the Grantee shall have remained in the continuous employ of the Company and its Subsidiaries until such dates.  Subject to the terms of the Program and notwithstanding the preceding sentence, all of the Restricted Shares shall immediately become nonforfeitable if, prior to the date the Restricted Shares become fully nonforfeitable pursuant to the preceding sentence, and while the Grantee is in the employ of the Company and its Subsidiaries, (a) the Grantee dies, (b) the Grantee’s Disability occurs, (c) the Grantee’s Retirement occurs, (d) the involuntary termination of the Grantee by the Company for other than gross or willful misconduct, (e) the termination by the Grantee for “Good Reason” (as defined in the Employment Agreement between the Company and the Grantee dated June 5, 2007), or (f) a Change in Control occurs.
4.                                        Forfeiture of Shares .  The Restricted Shares shall be forfeited if the Grantee ceases to be continuously employed by the Company and its Subsidiaries prior to the date the Restricted Shares become fully nonforfeitable pursuant to Section 3.  In the event of a forfeiture, the certificate(s) representing the Restricted Shares covered by this Agreement shall be canceled.
5.                                        Dividend, Voting and Other Rights .  Except as otherwise provided herein, from and after the Date of Grant, the Grantee shall have all of the rights of a stockholder with respect to the Restricted Shares, including the right to vote the Restricted Shares and receive any dividends that may be paid thereon; provided , however , that any additional Common Shares or other securities that the Grantee may become entitled to receive pursuant to a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, separation or reorganization or any other change in the capital structure of the Company shall be subject to the same restrictions as the Restricted Shares covered by this Agreement.  The Grantee acknowledges that the Restricted Shares are being acquired for investment and that the Grantee has no current intention to transfer, sell or otherwise dispose of such shares, except as permitted by the Program and in compliance with Applicable Laws.
1

6.                                        Retention of Stock Certificate(s) by the Company .  The certificate(s) representing the Restricted Shares shall be held in custody by the Company, together with a stock power endorsed in blank by the Grantee with respect thereto, until those shares have become nonforfeitable in accordance with Section 3 of this Agreement.  The Grantee hereby irrevocably appoints any officer of the Company as his or her attorney-in-fact to transfer the Restricted Shares to the Company in the event of the forfeiture of such shares.
7.                                        No Employment Contract .  Nothing contained in this Agreement shall confer upon the Grantee any right with respect to continuance of employment by the Company and its Subsidiaries, nor limit or affect in any manner the right of the Company and its Subsidiaries to terminate the employment or adjust the compensation of the Grantee.
8.                                        Taxes and Withholding .  To the extent that the Company shall be required to withhold any federal, state, local or other taxes in connection with the issuance or vesting of the Restricted Shares, and the amounts available to the Company for such withholding are insufficient, the Grantee shall pay such taxes or make provisions that are satisfactory to the Company for the payment thereof.
9.                                        Amendments .  Subject to the terms of the Program, the Board may modify this Agreement upon written notice to the Grantee.  Any amendment to the Program shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto.  Any waiver of any term or condition or breach of this Agreement shall not be a waiver of any other term or condition or of the same term or condition.
10.                                  Severability .  In the event that one or more of the provisions of this Agreement shall be invalidated for any reason by a court of competent jurisdiction, any provision so invalidated shall be deemed to be separable from the other provisions hereof, and the remaining provisions hereof shall continue to be valid and fully enforceable.
11.                                  Relation to Program .  This Agreement is subject to the terms and conditions of the Program.  This Agreement and the Program contain the entire agreement and understanding of the parties with respect to the subject matter contained in this Agreement, and supersede all prior communications, representations and negotiations in respect thereto.  In the event of any inconsistency between the provisions of this Agreement and the Program, the Program shall govern.  Capitalized terms used herein without definition shall have the meanings assigned to them in the Program.  The Compensation Committee acting pursuant to the Program, as constituted from time to time, shall, except as expressly provided otherwise herein, have the right to determine any questions which arise in connection with the grant of Restricted Shares.
12.                                  Successors and Assigns .  Without limiting Section 2 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of the Grantee, and the successors and assigns of the Company.
2

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf by its duly authorized officer and the Grantee has also executed this Agreement in duplicate, as of the day and year first above written.

	 CARLISLE COMPANIES INCORPORATED	

 	By:	 	/s/  Steven J. Ford	 	
 	Name:	Steven J. Ford	
 	Title:	Vice President, Secretary and General Counsel	

The undersigned hereby acknowledges receipt of an executed original of this Agreement and accepts the award of Restricted Shares granted thereunder on the terms and conditions set forth herein and in the Program.

	 	/s/ David A. Roberts	 	
 	 	David A. Roberts	
 	 	 	
 	 	Date:	 	7/5/07	 	

3

 
Exhibit 10.3
EXECUTIVE SEVERANCE AGREEMENT
This Executive Severance Agreement (“Agreement”) is between Carlisle Companies Incorporated, a Delaware corporation (“Corporation”) and David A. Roberts (“Executive”).
RECITALS
The Board of Directors of the Corporation has approved the execution of severance agreements with certain key executives of the Corporation and its subsidiaries.
Should the Corporation receive any proposal from a third person concerning a possible business combination with, or acquisition of equity securities of the Corporation, the Board believes it imperative that the Corporation and the Board be able to rely upon the Executive to continue in his position and rely upon his advice without concern that he might be distracted by the personal uncertainties and risks created by such a proposal.
Should the Corporation receive any such proposals, in addition to the Executive’s regular duties, he may be called upon to assist in the assessment of such proposals, advise management and the Board as to whether such proposals would be in the best interests of the Corporation and its shareholders, and take such other actions as the Board might determine to be appropriate.
To assure the Corporation that it will have the continued dedication of the Executive and the availability of his advice and counsel notwithstanding the possibility, threat or occurrence of a bid to take over control of the Corporation, and to induce the Executive to remain in the employ of the Corporation, and for other good and valuable consideration, the Corporation and the Executive agree as follows:
In the event a third person begins a tender or exchange offer, circulates a proxy to shareholders, or takes other steps to effect a Change of Control of the Corporation (as defined below), the Executive agrees that he will not voluntarily leave the employ of the Corporation, and will render the services contemplated in the recitals to this Agreement until the third person has abandoned or terminated his efforts to effect a Change of Control or until a Change of Control has occurred.
In the event the Executive’s employment with the Corporation (including its subsidiaries) terminates for any reason (either voluntary or involuntary, other than as a consequence of his death or disability, or of his retirement at or after his normal retirement date under the Corporation’s pension plans) within three (3) years after a Change of Control of the Corporation (as defined below) the Corporation will provide:
A.                                    Cash Payments .  On or before the Executive’s last day of employment with the Corporation, the Corporation will pay to the Executive as compensation for services rendered to the Corporation a lump sum cash amount (subject to any applicable payroll or other taxes required to be withheld) equal to the excess of the amount specified in clause (i) over that in clause (ii) below:
(i) three times the highest annual compensation (including base salary and annual cash bonus) paid or payable to the Executive by the Corporation for any of the three (3) years ending with the date of the Executive’s termination;
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(ii) the amount of any separation pay payable to the Executive pursuant to Paragraph 6 of the employment letter agreement between the Executive and the Corporation dated June 5, 2007 (the “Executive’s Employment Agreement”).
Provided , however , in the event there are fewer than thirty-six (36) whole or partial months remaining from the date of the Executive’s termination to his normal retirement date, the amount calculated in clause (i) of the immediately preceding sentence will be reduced by multiplying it by a fraction the numerator of which is the number of whole or partial months so remaining to his normal retirement date and the denominator of which is thirty-six (36).
B.                                      Stock Options and Restricted Stock .  Any outstanding but unexercised stock options held by the Executive under any of the Corporation’s equity compensation plans and programs will be immediately exercisable, and any unvested restricted stock held by the Executive under any of the Corporation’s equity compensation plans and programs will be immediately vested and free of all restrictions.  In addition, all such stock options will continue to be exercisable for the remaining term thereof.
C.                                      Special Retirement Benefits .  The Executive will be eligible to receive “Special Retirement Benefits” so that the total retirement benefits he receives will approximate the retirement benefits he would have received had he continued in the employ of the Corporation for at least three (3) years following his termination (or until his normal retirement date, whichever is earlier).  These benefits will include all ancillary benefits, such as early retirement, supplemental retirement and survivor rights and benefits available at retirement.  If the Executive’s credited service with the Corporation plus three (3) years would result in vested benefits and/or eligibility for ancillary benefits under the Corporation’s supplemental pension plan (as amended as required by Paragraph 9 of the Executive’s Employment Agreement), the amount payable to the Executive or his beneficiaries shall equal the excess of the amount specified in clause (i) over that in clause (ii) below:
(i)                                      The benefits that would be paid to the Executive or his beneficiaries, if the three (3) years (or period to his normal retirement age, if less) following his termination are added to his credited service under the Corporation’s supplemental pension plan (as amended as required by Paragraph 9 of the Executive’s Employment Agreement), and his final average earnings are the same as his actual average earnings (including the amount specified in Paragraph A as compensation for services rendered to the Corporation in the year of his termination);
(ii)                                   The benefit that is payable to the Executive or his beneficiaries under the Corporation’s supplemental pension plan (as amended as required by Paragraph 9 of the Executive’s Employment Agreement).
All these Special Retirement Benefits are provided on an unfunded basis and are not intended to meet the qualification requirements of Section 401 of the Internal Revenue Code of 1986 (the “Code”).  All Special Retirement Benefits shall be payable solely from the general assets of the Corporation or its appropriate affiliate.
D.                                     Other Benefits .
(i)                                      Insurance and Other Special Benefits .  The Executive’s participation in the life, accident and health insurance plans of the Corporation, and in fringe benefits provided the Executive prior to the Change of Control or his termination, shall be continued, or equivalent benefits provided, by the Corporation, at no direct cost to him, for a period of three (3) years from the date his employment terminates (or until his normal retirement date, whichever is sooner).
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(ii)                                   Relocation Assistance .  Should the Executive move his residence in order to pursue other business opportunities within two (2) years of his termination, he will be reimbursed for any expenses incurred in that relocation (including taxes payable on the reimbursement) which are not reimbursed by another employer.  Benefits under this provision will include the assistance in selling the Executive’s home which was customarily provided by the Corporation to transferred executives prior to the Change of Control.
(iii)                                Incentive Compensation .  Any awards previously made to the Executive under any long-term incentive programs of the Corporation and not previously paid shall immediately vest on the date of his termination and shall be paid on that date and included as compensation in the year paid.
(iv)                               Savings and Other Plans .  The Executive’s participation in any applicable savings, retirement, profit sharing, stock option, and/or restricted stock plan of the Corporation or any of its subsidiaries shall continue only through the last day of his employment.  Any terminating distribution and/or vested rights under such Plans shall be governed by the terms of those respective plans.
(v)                                  Continuing Obligations .  The Executive shall retain in confidence any confidential information known to him concerning the Corporation and its business so long as such information is not publicly disclosed.
E.                                       Definition Change of Control .  For the purpose of this Agreement, a “Change of Control” shall be deemed to have taken place if:
(i)                                      any third person, including a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, acquires shares of the Corporation having 20% or more of the total number of votes that may be cast for the election of Directors of the Corporation; or
(ii)                                   as the result of any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions, the persons who were directors of the Corporation before the transaction shall cease to constitute a majority of the Board of Directors of the Corporation or any successor to the Corporation.
F.                                       Compliance with Code Section 409A .  Notwithstanding anything in this Agreement to the contrary, if any amount or benefit that the Company determines would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code would otherwise be payable or distributable under this Agreement by reason of the Executive’s separation from service, then to the extent necessary to comply with Code Section 409A:
(i)                                      if the payment or distribution is payable in a lump sum, the Executive’s right to receive payment or distribution of such non-exempt deferred compensation will be delayed until the earlier of the Executive’s death or the first day of the seventh month following the Executive’s separation from service; and
(ii)                                   if the payment or distribution is payable over time, the amount of such non-exempt deferred compensation that would otherwise be payable during the six-month period immediately following the Executive’s separation from service will be accumulated and the Executive’s right to receive payment or distribution of such accumulated amount will be delayed until the earlier of the
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Executive’s death or the first day of the seventh month following the Executive’s separation from service and paid on the earlier of such dates, without interest, and the normal payment or distribution schedule for any remaining payments or distributions will commence.
G.                                      General .
(i)                                      Indemnification .  If litigation shall be brought to enforce or interpret any provision contained in this Agreement, the Corporation indemnifies the Executive for his reasonable attorney fees and disbursements incurred in such litigation, and agrees to pay pre-judgement interest on any money judgment obtained by the Executive calculated at the prime interest rate in effect from time to time from the date that payment(s) to him should have been made under this Agreement.
(ii)                                   Payment Obligations Absolute .  Except as provided in paragraph F(vi), upon the occurrence of a Change of Control, the Corporation’s obligation to pay the Executive the compensation and to make the arrangements provided in this Agreement shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Corporation may have against him or anyone else.  All amounts payable by the Corporation under this Agreement shall be paid without notice or demand.  Except as expressly provided in this Agreement, the Corporation waives all rights which it may now have or may hereafter have conferred upon it, by statute or otherwise, to terminate, cancel or rescind this Agreement in whole or in part.  Every payment made under this Agreement by the Corporation shall be final and the Corporation will not seek to recover all or any part of such payment from the Executive or anyone else who may be entitled to the payments for any reason whatsoever.
(iii)                                Successors .  This Agreement shall be binding upon and inure to the benefit of the Executive and his estate, and the Corporation and any successor of the Corporation, but neither this Agreement nor any rights arising hereunder may be assigned or pledged by the Executive.
(iv)                               Severability .  Any provision in this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
(v)                                  Controlling Law .  This Agreement shall in all respects be governed by, and construed in accordance with, the laws of the State of Delaware.
(vi)                               Modification or Termination .  At any time prior to a Change of Control, the Board of Directors of the Corporation may, in its absolute discretion, and without the consent of the Executive, amend, modify or terminate this Agreement upon written notice tot he Executive.  The Board may also terminate this Agreement at any time with respect to the Executive if the Executive is directly or indirectly affiliated (as defined in Rule 12b-2 of the Securities Exchange Act of 1934) with the “group” which has consummated a Change of Control under paragraph F(i)
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The parties have executed this Agreement as of June 21, 2007.

	 CARLISLE COMPANIES INCORPORATED	

 	By:	/s/ Steven J. Ford	
 	 	Steven J. Ford, Vice President,	
 	 	Secretary and General Counsel	

 	 	/s/ David A. Roberts	
 	David A. Roberts	
 
5

 
Exhibit 12
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company’s ratio of earnings to fixed charges for the six months ended June 30, 2007 and the years ended December 31 as indicated:

 	 	Six Months	 	 	 	 	 	 	 	 	 	
 	 	Ended	 	Year Ended December 31,	 	
 	 	6/30/2007	 	2006	 	2005	 	2004	 	2003	 	
Ratio of earnings to fixed charges	 	11.17	 	9.95	 	9.69	 	9.40	 	7.88	 	
 
For purposes of computing the ratio of earnings to fixed charges, earnings are defined as earnings before income taxes from continuing operations, less interest on FIN 48 liabilities, add-back fixed charges.  Fixed charges consist of interest expense (including capitalized interest, but excluding interest on FIN 48 liabilities) and the portion of rental expense that is representative of the interest factor.
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Exhibit 31.1
Rule 13a-14(a)/15d-14(a) Certifications
I, David A. Roberts, certify that:
1.                I have reviewed this quarterly report on Form 10-Q of Carlisle Companies Incorporated;
2.                Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.                Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.                The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)          Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)         Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)          Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
(d)         Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.                The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)          All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)         Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 August 6, 2007	 	

 	/s/ David A. Roberts	 	
 	Name: David A. Roberts	
 	Title: Chairman, President and Chief
Executive Officer	
 
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Exhibit 31.2
Rule 13a-14(a)/15d-14(a) Certifications
I, Carol P. Lowe, certify that:
1.                I have reviewed this quarterly report on Form 10-Q of Carlisle Companies Incorporated;
2.                Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.                Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.                The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)          Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)          Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
(d)         Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5 .                The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)          All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 August 6, 2007	 	

 	  /s/ Carol P. Lowe	
 	Name: Carol P. Lowe	
 	Title: Vice President and Chief Financial	
 	Officer	
 
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Exhibit 32
Section 1350 Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of Carlisle Companies Incorporated, a Delaware corporation (the “Company”), does hereby certify that:
 
The Quarterly Report on Form 10-Q for the period ended June 30, 2007 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 Dated:	August 6, 2007	By:	/s/ David A. Roberts	 	
 	Name: David A. Roberts	
 	Title: Chairman, President and Chief	
 	Executive Officer	

Dated:	August 6, 2007	By:	/s/ Carol P. Lowe	 	
 	Name: Carol P. Lowe	
 	Title: Vice President and Chief Financial	
 	Officer	
 
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