CARLISLE COMPANIES INC, 10-Q filed on 4/22/2014
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2014
Apr. 18, 2014
Document and Entity Information
 
 
Entity Registrant Name
CARLISLE COMPANIES INC 
 
Entity Central Index Key
0000790051 
 
Document Type
10-Q 
 
Document Period End Date
Mar. 31, 2014 
 
Amendment Flag
false 
 
Current Fiscal Year End Date
--12-31 
 
Entity Current Reporting Status
Yes 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
64,086,326 
Document Fiscal Year Focus
2014 
 
Document Fiscal Period Focus
Q1 
 
Condensed Consolidated Statements of Comprehensive Income (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Condensed Consolidated Statements of Comprehensive Income
 
 
Net sales
$ 650.4 
$ 629.6 
Costs and expenses:
 
 
Cost of goods sold
488.3 
477.2 
Selling and administrative expenses
92.2 
90.4 
Research and development expenses
8.0 
7.4 
Other Income, net
(1.1)
(0.8)
Earnings before interest and income taxes
63.0 
55.4 
Interest expense, net
8.0 
8.3 
Earnings before income taxes from continuing operations
55.0 
47.1 
Income tax expense (Note 5)
18.5 
2.8 
Income from continuing operations
36.5 
44.3 
Discontinued operations (Note 3)
 
 
Income (loss) before income taxes
(1.1)
14.4 
Income tax (benefit) expense
(0.4)
3.5 
Income (loss) from discontinued operations
(0.7)
10.9 
Net income
35.8 
55.2 
Basic earnings (loss) per share attributable to common shares
 
 
Income from continuing operations (in dollars per share)
$ 0.57 
$ 0.70 
Income (loss) from discontinued operations (in dollars per share)
$ (0.01)
$ 0.17 
Basic Earnings per share (in dollars per share)
$ 0.56 
$ 0.87 
Diluted earnings (loss) per share attributable to common shares
 
 
Income from continuing operations (in dollars per share)
$ 0.56 
$ 0.68 
Income (loss) from discontinued operations (in dollars per share)
$ (0.01)
$ 0.17 
Diluted earnings per share (in dollars per share)
$ 0.55 
$ 0.85 
Average shares outstanding
 
 
Basic (in shares)
63,878 
63,253 
Diluted (in shares)
65,089 
64,719 
Dividends declared and paid
14.2 
12.8 
Dividends declared and paid per share (in dollars per share)
$ 0.22 
$ 0.20 
Comprehensive Income
 
 
Net income
35.8 
55.2 
Other comprehensive income (loss)
 
 
Change in foreign currency translation, net of tax
3.0 
(10.3)
Change in accrued post-retirement benefit liability, net of tax
0.6 
1.4 
Loss on hedging activities, net of tax
(0.1)
(0.1)
Other comprehensive income (loss)
3.5 
(9.0)
Comprehensive income
$ 39.3 
$ 46.2 
Condensed Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Current assets:
 
 
Cash and cash equivalents
$ 779.7 
$ 754.5 
Receivables, less allowance of $2.7 in 2014 and $3.3 in 2013
412.1 
399.6 
Inventories (Note 7)
324.5 
298.8 
Deferred income taxes
35.6 
35.7 
Prepaid expenses and other current assets
35.0 
46.4 
Total current assets
1,586.9 
1,535.0 
Property, plant and equipment, net of accumulated depreciation of $477.0 in 2014 and $468.0 in 2013 (Note 8)
503.9 
497.2 
Other assets:
 
 
Goodwill, net (Note 9)
858.7 
858.7 
Other intangible assets, net (Note 9)
570.3 
579.8 
Other long-term assets
23.9 
22.0 
Non-current assets held for sale
2.2 
0.3 
Total other assets
1,455.1 
1,460.8 
TOTAL ASSETS
3,545.9 
3,493.0 
Current liabilities:
 
 
Accounts payable
223.6 
187.0 
Accrued expenses
141.9 
172.0 
Deferred revenue (Note 13)
17.5 
17.4 
Total current liabilities
383.0 
376.4 
Long-term liabilities:
 
 
Long-term debt (Note 11)
751.1 
751.0 
Deferred revenue (Note 13)
144.0 
143.6 
Other long-term liabilities (Note 15)
236.4 
235.9 
Total long-term liabilities
1,131.5 
1,130.5 
Shareholders' equity:
 
 
Preferred stock, $1 par value per share. Authorized and unissued 5,000,000 shares
   
   
Common stock, $1 par value per share. Authorized 100,000,000 shares; 78,661,248 shares issued; 64,086,326 outstanding in 2014 and 63,658,777 outstanding in 2013
78.7 
78.7 
Additional paid-in capital
216.5 
201.1 
Deferred Compensation - Equity
5.9 
3.0 
Cost of shares in treasury - 14,358,517 shares in 2014 and 14,761,481 shares in 2013
(207.6)
(209.5)
Accumulated other comprehensive loss
(28.0)
(31.5)
Retained earnings
1,965.9 
1,944.3 
Total shareholders' equity
2,031.4 
1,986.1 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$ 3,545.9 
$ 3,493.0 
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Condensed Consolidated Balance Sheets
 
 
Receivables, allowance (in dollars)
$ 2.7 
$ 3.3 
Property, plant and equipment, accumulated depreciation (in dollars)
$ 477.0 
$ 468.0 
Preferred stock, par value (in dollars per share)
$ 1 
$ 1 
Preferred stock, Authorized shares
5,000,000 
5,000,000 
Preferred stock, unissued shares
5,000,000 
5,000,000 
Common stock, par value (in dollars per share)
$ 1 
$ 1 
Common stock, Authorized shares
100,000,000 
100,000,000 
Common stock, shares issued
78,661,248 
78,661,248 
Common stock, shares outstanding
64,086,326 
63,658,777 
Treasury, shares
14,358,517 
14,761,481 
Condensed Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Operating activities
 
 
Net income
$ 35.8 
$ 55.2 
Reconciliation of net income to cash flows from operating activities:
 
 
Depreciation
15.5 
20.2 
Amortization
10.1 
9.5 
Non-cash compensation, net of tax benefit
4.2 
6.4 
(Gain) loss on divestiture of property and equipment, net
(0.6)
0.6 
Deferred taxes
2.1 
(13.2)
Foreign exchange (gain) loss
0.5 
(0.4)
Changes in assets and liabilities, excluding effects of acquisitions and divestitures:
 
 
Receivables
(12.2)
(34.8)
Inventories
(25.3)
22.2 
Prepaid expenses and other assets
11.7 
3.6 
Accounts payable
36.6 
4.9 
Accrued expenses and deferred revenues
(28.8)
(40.9)
Long-term liabilities
0.5 
4.0 
Other operating activities
1.2 
0.7 
Net cash provided by operating activities
51.3 
38.0 
Investing activities
 
 
Capital expenditures
(24.1)
(26.8)
Proceeds from sale of property and equipment
1.0 
0.3 
Net cash used in investing activities
(23.1)
(26.5)
Financing activities
 
 
Net change in short-term borrowings and revolving credit lines
 
0.6 
Dividends
(14.2)
(12.8)
Treasury shares and stock options, net
11.2 
4.7 
Net cash used in financing activities
(3.0)
(7.5)
Effect of exchange rate changes on cash
 
(0.5)
Change in cash and cash equivalents
25.2 
3.5 
Cash and cash equivalents
 
 
Beginning of period
754.5 
112.5 
End of period
$ 779.7 
$ 116.0 
Basis of Presentation
Basis of Presentation

Note 1—Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared by Carlisle Companies Incorporated (the “Company” or “Carlisle”) in accordance and consistent with the accounting policies stated in the Company’s Annual Report on Form 10-K and should be read in conjunction with the consolidated financial statements therein.  The unaudited condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States and, of necessity, include some amounts that are based upon management estimates and judgments.  Future actual results could differ from such current estimates.  The unaudited condensed consolidated financial statements include assets, liabilities, revenues, and expenses of all majority-owned subsidiaries.  Carlisle accounts for other investments in minority-owned companies where it exercises significant influence, but does not have control, on the equity basis.  Intercompany transactions and balances are eliminated in consolidation.

 

The Company has reclassified certain prior period amounts in the consolidated financial statements to be consistent with current period presentation.  See Note 3 regarding the divestiture of the Transportation Products business.

 

Segment Information
Segment Information

Note 2—Segment Information

 

The Company’s operations are reported in the following segments:

 

Carlisle Construction Materials (“CCM” or the “Construction Materials segment”)—the principal products of this segment are rubber (EPDM), thermoplastic polyolefin (TPO), and polyvinyl chloride (PVC) roofing membranes used predominantly on non-residential low-sloped roofs, related roofing accessories, including flashings, fasteners, sealing tapes, coatings and waterproofing, and insulation products. The markets served include new construction, re-roofing and maintenance of low-sloped roofs, water containment, HVAC sealants, and coatings and waterproofing.

 

Carlisle Interconnect Technologies (“CIT” or the “Interconnect Technologies segment”)—the principal products of this segment are high-performance wire, cable, connectors, contacts, and cable assemblies for the transfer of power and data primarily for the aerospace, defense electronics, medical, test and measurement equipment, and select industrial markets.

 

Carlisle Brake & Friction (“CBF” or the “Brake & Friction segment”)—the principal products of this segment include high-performance brakes and friction material, and clutch and transmission friction material for the mining, construction, aerospace, agriculture, motor sports, and alternative energy markets.

 

Carlisle FoodService Products (“CFSP” or the “FoodService Products segment”)—the principal products of this segment include commercial and institutional foodservice permanentware, table coverings, cookware, catering equipment, fiberglass and composite material trays and dishes, industrial brooms, brushes, mops, and rotary brushes for commercial and non-commercial foodservice operators and sanitary maintenance professionals.

 

Corporate—includes other unallocated costs, primarily general corporate expenses. Corporate assets consist primarily of cash and cash equivalents, facilities, deferred taxes, and other invested assets.

 

On October 21, 2013, the Company entered into a definitive agreement to sell the Transportation Products business.  On December 31, 2013, the Company completed the divestiture of the Transportation Products business.  All prior period results of operations have been retrospectively adjusted to reflect the Transportation Products business as discontinued operations.  See Note 3 for further information related to the sale of the Transportation Products business.

 

Unaudited financial information for operations by reportable segment is included in the following summary:

 

Three Months Ended March 31,

 

2014

 

2013

 

In millions

 

Sales(1)

 

EBIT

 

Assets(2)

 

Sales(1)

 

EBIT

 

Assets(2)

 

Carlisle Construction Materials

 

$

347.4

 

$

31.9

 

$

897.0

 

$

339.6

 

$

35.8

 

875.0

 

Carlisle Interconnect Technologies

 

150.9

 

30.7

 

1,025.8

 

141.2

 

18.4

 

1,049.6

 

Carlisle Brake & Friction

 

92.2

 

9.2

 

609.8

 

90.8

 

11.0

 

614.7

 

Carlisle FoodService Products

 

59.9

 

7.1

 

204.1

 

58.0

 

5.1

 

195.2

 

Corporate

 

 

(15.9

)

807.0

 

 

(14.9

)

136.1

 

Total

 

$

650.4

 

$

63.0

 

$

3,543.7

 

$

629.6

 

$

55.4

 

$

2,870.6

 

 

 

(1) Excludes intersegment sales

(2) Corporate assets include assets of discontinued operations not classified as held for sale

 

A reconciliation of assets reported above to the amounts presented on the Consolidated Balance Sheet is as follows:

 

 

 

March 31,

 

March 31,

 

 

 

2014

 

2013

 

Assets per table above

 

$

3,543.7

 

$

2,870.6

 

Assets held for sale

 

2.2

 

587.7

 

Total Assets per Consolidated Balance Sheet

 

$

3,545.9

 

$

3,458.3

 

Discontinued Operations
Discontinued Operations

Note 3—Discontinued Operations

 

Sale of Transportation Products Business

 

On December 31, 2013, the Company sold its Transportation Products business for total net proceeds of $375.6 million, subject to the working capital adjustment component of the sales agreement.  The working capital adjustment has been finalized and resulted in a $1.0 million after-tax loss in the first quarter of 2014.

 

Income from Discontinued Operations for the three months ended March 31, 2013 primarily reflects $11.0 million after-tax income from the operations of the Transportation Products business.  For the three months ended March 31, 2013, the Transportation Products business had sales of $227.4 million.

 

Stock-Based Compensation
Stock-Based Compensation

Note 4—Stock-Based Compensation

 

Stock-based compensation cost is recognized over the requisite service period, which generally equals the stated vesting period, unless the stated vesting period exceeds the date upon which an employee reaches retirement eligibility.  Pre-tax stock-based compensation expense in continuing operations was $7.7 million for both of the three month periods ended March 31, 2014 and March 31, 2013.

 

2008 Executive Incentive Program

 

The Company maintains an Executive Incentive Program (the “Program”) for executives and certain other employees of the Company and its operating divisions and subsidiaries. The Program was approved by shareholders on April 20, 2004. The Program allows for awards to eligible employees of stock options, restricted stock, stock appreciation rights, performance shares and units or other awards based on Company common stock. At March 31, 2014, 2,648,265 shares were available for grant under this plan, of which 489,130 shares were available for the issuance of stock awards.

 

2005 Nonemployee Director Equity Plan

 

The Company also maintains the Nonemployee Director Equity Plan (the “Plan”) for members of its Board of Directors, with the same terms and conditions as the Program. At March 31, 2014, 257,366 stock options and  27,366 restricted shares were available for grant under this plan. Members of the Board of Directors that receive stock-based compensation are treated as employees for accounting purposes.

 

Grants

 

For the three months ended March 31, 2014, the Company awarded 259,035 stock options, 68,635 restricted stock awards, 67,970 performance share awards and 9,583 restricted stock units with an aggregate grant-date fair value of approximately $17.2 million to be expensed over the requisite service period for each award.

 

Stock Option Awards

 

Options issued under these plans vest one-third on the first anniversary of grant, one-third on the second anniversary of grant and the remaining one-third on the third anniversary of grant. All options have a maximum term life of 10 years. Shares issued to cover options under the Program and the Plan may be issued from shares held in treasury, from new issuances of shares, or a combination of the two.

 

Pre-tax share-based compensation expense related to stock options was $1.1 million for both of the three month periods ended March 31, 2014 and March 31, 2013.

 

The Company utilizes the Black-Scholes-Merton (“BSM”) option pricing model to determine the fair value of its stock option awards.  The BSM relies on certain assumptions to estimate an option’s fair value.  The weighted average assumptions used in the determination of fair value for stock option awards in 2014 and 2013 were as follows:

 

 

 

2014

 

2013

 

Expected dividend yield

 

1.2

%

1.2

%

Expected life in years

 

5.74

 

5.71

 

Expected volatility

 

29.3

%

32.2

%

Risk-free interest rate

 

1.7

%

1.0

%

Weighted average fair value

 

$

19.15

 

$

17.58

 

 

The expected life of options is based on the assumption that all outstanding options will be exercised at the midpoint of the valuation date and the option expiration date. The expected volatility is based on historical volatility as well as implied volatility of the Company’s options. The risk free interest rate is based on rates of U.S. Treasury issues with a remaining life equal to the expected life of the option. The expected dividend yield is based on the projected annual dividend payment per share, divided by the stock price at the date of grant.

 

Restricted Stock Awards

 

Restricted stock awarded under the Program is generally released to the recipient after a period of three years.  The $73.08 grant date fair value of the 2014 restricted stock awards, which are released to the recipient after a period of three years, is based on the closing market price of the stock on the date of grant.

 

Performance Share Awards

 

The performance shares vest based on the employee rendering three years of service to the Company, and the attainment of a market condition over the performance period, which is based on the Company’s relative total shareholder return versus the S&P Midcap 400 Index® over a pre-determined time period as determined by the Compensation Committee of the Board of Directors.  The grant date fair value of the 2014 performance shares of $95.72 was estimated using a Monte-Carlo simulation approach based on a three-year measurement period.  Such approach entails the use of assumptions regarding the future performance of the Company’s stock and those of the S&P Midcap 400 Index®.  Those assumptions include expected volatility, risk-free interest rates, correlation coefficients and dividend reinvestment.  Dividends accrue on the performance shares during the performance period and are to be paid in cash based upon the number of awards ultimately earned. The Company expenses the compensation cost associated with the performance awards on a straight-line basis over the vesting period of three years.

 

Restricted Stock Units

 

The restricted stock units awarded to eligible directors are fully vested and will be paid in shares of Company common stock after the director ceases to serve as a member of the Board, or if earlier, upon a change in control of the Company.   The $73.08 grant date fair value of the 2014 restricted stock units is based on the closing market price of the stock on February 5, 2014, the date of the grant.

 

Deferred Compensation - Equity

 

Certain employees are eligible to participate in the Company’s Non-qualified Deferred Compensation Plan (the “Deferred Compensation Plan”).  Participants may elect to defer all or part of their stock-based compensation.  Participants have elected to defer 200,954 shares of Company common stock as of March 31, 2014 and 201,060 shares as of December 31, 2013.

 

Income Taxes
Income Taxes

Note 5Income Taxes

 

The Company’s 2014 year to date provision for income taxes includes tax on ordinary earnings at an anticipated rate of approximately 33%. The 33.6% effective rate for the first quarter of 2014 also includes current quarter discrete tax expense of $0.4 million.

 

The Company’s first quarter 2013 effective tax rate of 5.9% reflected discrete tax benefits of $13.0 million primarily related to a tax election made in a foreign jurisdiction that resulted in the release of deferred tax liabilities.

 

Earnings Per Share
Earnings Per Share

Note 6—Earnings Per Share

 

The Company’s restricted shares and restricted stock units contain nonforfeitable rights to dividends and, therefore, are considered participating securities for purposes of computing earnings per share pursuant to the two-class method. The computation below of earnings per share excludes the income attributable to the restricted shares and restricted stock units from the numerator and excludes the dilutive impact of those underlying shares from the denominator.  Stock options are included in the calculation of diluted earnings per share utilizing the treasury stock method and performance share awards are included in the calculation of diluted earnings per share using the contingently issuable method.  Neither is considered to be a participating security as they do not contain non-forfeitable dividend rights.

 

The following reflects the Income from continuing operations and share data used in the basic and diluted earnings per share computations using the two-class method:

 

 

 

Three Months Ended March 31,

 

In millions, except share and per share amounts

 

2014

 

2013

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

36.5

 

$

44.3

 

Less: dividends declared - common stock outstanding, restricted shares and restricted stock units

 

(14.2

)

(12.8

)

Undistributed earnings

 

22.3

 

31.5

 

Percent allocated to common shareholders (1)

 

99.5

%

99.5

%

 

 

22.2

 

31.3

 

Add: dividends declared - common stock

 

14.1

 

12.7

 

Numerator for basic and diluted EPS

 

$

36.3

 

$

44.0

 

 

 

 

 

 

 

Denominator (in thousands):

 

 

 

 

 

Denominator for basic EPS: weighted-average common shares outstanding

 

63,878

 

63,253

 

Effect of dilutive securities:

 

 

 

 

 

Performance awards

 

280

 

473

 

Stock options

 

931

 

993

 

Denominator for diluted EPS: adjusted weighted average common shares outstanding and assumed conversion

 

65,089

 

64,719

 

 

 

 

 

 

 

Per share income from continuing operations:

 

 

 

 

 

Basic

 

$

0.57

 

$

0.70

 

Diluted

 

$

0.56

 

$

0.68

 

 

(1)   Basic weighted-average common shares outstanding

 

63,878

 

63,253

 

Basic weighted-average common shares outstanding, restricted shares expected to vest and restricted stock units

 

64,189

 

63,582

 

Percent allocated to common shareholders

 

99.5

%

99.5

%

 

To calculate earnings per share for Income from discontinued operations and for Net income, the denominator for both basic and diluted earnings per share is the same as used in the above table.  Income from discontinued operations and Net income were as follows:

 

 

 

Three Months Ended March 31,

 

In millions, except share amounts

 

2014

 

2013

 

 

 

 

 

 

 

Income (loss) from discontinued operations attributable to common shareholders for basic and diluted earnings per share

 

$

(0.7

)

$

10.9

 

 

 

 

 

 

 

Net income attributable to common shareholders for basic and diluted earnings per share

 

$

35.6

 

$

54.9

 

Inventories
Inventories

Note 7—Inventories

 

The components of inventories at March 31, 2014 and December 31, 2013 were as follows:

 

 

 

March 31,

 

December 31,

 

In millions

 

2014

 

2013

 

Finished goods

 

$

189.5

 

163.7

 

Work-in-process

 

42.2

 

40.2

 

Raw materials

 

121.3

 

121.3

 

Reserves

 

(28.5

)

(26.4

)

Inventories

 

$

324.5

 

$

298.8

 

Property, Plant and Equipment
Property, Plant and Equipment

Note 8—Property, Plant and Equipment

 

The components of property, plant and equipment at March 31, 2014 and December 31, 2013 were as follows:

 

 

 

March 31,

 

December 31,

 

In millions

 

2014

 

2013

 

Land

 

$

39.0

 

$

38.9

 

Buildings and leasehold improvements

 

259.8

 

259.1

 

Machinery and equipment

 

612.7

 

606.9

 

Projects in progress

 

69.4

 

60.3

 

 

 

980.9

 

965.2

 

Accumulated depreciation

 

(477.0

)

(468.0

)

Property, plant and equipment, net

 

$

503.9

 

$

497.2

 

Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets

Note 9—Goodwill and Other Intangible Assets

 

The changes in  the carrying amount of goodwill for the three months ended March 31, 2014 were as follows:

 

 

 

Construction

 

Interconnect

 

Brake and

 

FoodService

 

 

 

In millions

 

Materials

 

Technologies

 

Friction

 

Products

 

Total

 

Gross balance at January 1, 2014

 

$

129.1

 

$

442.6

 

$

226.7

 

$

60.3

 

$

858.7

 

Currency translation

 

 

 

 

 

 

Gross balance at March 31, 2014

 

129.1

 

442.6

 

226.7

 

60.3

 

858.7

 

Accumulated impairment losses

 

 

 

 

 

 

Net balance at March 31, 2014

 

$

129.1

 

$

442.6

 

$

226.7

 

$

60.3

 

$

858.7

 

 

The Company’s Other intangible assets, net at March 31, 2014, were as follows:

 

 

 

Acquired

 

Accumulated

 

Net Book

 

In millions

 

Cost

 

Amortization

 

Value

 

Assets subject to amortization:

 

 

 

 

 

 

 

Patents

 

$

134.6

 

$

(31.5

)

$

103.1

 

Customer Relationships

 

443.2

 

(102.5

)

340.7

 

Other

 

19.2

 

(10.7

)

8.5

 

Assets not subject to amortization:

 

 

 

 

 

 

 

Trade names

 

118.0

 

 

118.0

 

Other intangible assets, net

 

$

715.0

 

$

(144.7

)

$

570.3

 

 

The Company’s Other intangible assets, net at December 31, 2013, were as follows:

 

 

 

Acquired

 

Accumulated

 

Net Book

 

In millions

 

Cost

 

Amortization

 

Value

 

Assets subject to amortization:

 

 

 

 

 

 

 

Patents

 

$

134.6

 

$

(29.2

)

$

105.4

 

Customer Relationships

 

443.3

 

(95.8

)

347.5

 

Other

 

19.0

 

(10.1

)

8.9

 

Assets not subject to amortization:

 

 

 

 

 

 

 

Trade names

 

118.0

 

 

118.0

 

Other intangible assets, net

 

$

714.9

 

$

(135.1

)

$

579.8

 

 

Estimated amortization expense for the remainder of 2014 and the next four years is as follows: $26.6 million remaining in 2014, $36.6 million in 2015, $35.7 million in 2016, $34.9 million in 2017, and $34.8 million in 2018.

 

The net carrying values of the Company’s Other intangible assets by reportable segment were as follows:

 

 

 

March 31,

 

December 31,

 

In millions

 

2014

 

2013

 

 

 

 

 

 

 

Carlisle Construction Materials

 

$

85.3

 

$

86.9

 

Carlisle Interconnect Technologies

 

325.2

 

330.8

 

Carlisle Brake & Friction

 

128.5

 

130.1

 

Carlisle FoodService Products

 

31.3

 

32.0

 

Total

 

$

570.3

 

$

579.8

 

 

 

 

 

 

 

Commitments and Contingencies
Commitments and Contingencies

Note 10—Commitments and Contingencies

 

Leases

 

The Company currently leases a portion of its manufacturing facilities, distribution centers, and equipment, some of which include scheduled rent increases stated in the lease agreement generally expressed as a stated percentage increase of the minimum lease payment over the lease term.  The Company currently has no leases that require rent to be paid based on contingent events nor has it received any lease incentive payments.  Rent expense was $5.5 million and $5.9 million for the three months ended March 31, 2014 and 2013, respectively, inclusive of rent based on scheduled rent increases and rent holidays recognized on a straight-line basis.  Future minimum payments under the Company’s various non-cancelable operating leases are approximately $12.7 million for the remainder of 2014, $14.7 million in 2015, $11.8 million in 2016, $10.0 million in 2017, $8.2 million in 2018, and $11.4 million thereafter.

 

Purchase Obligations

 

Although the Company has entered into purchase agreements for certain key raw materials, there were no such contracts with a term exceeding one year in place at March 31, 2014.

 

Workers’ Compensation Claims and Related Losses

 

The Company has accrued approximately $26.5 million and $26.9 million related to workers’ compensation claims at March 31, 2014 and December 31, 2013, respectively.  At March 31, 2014, $8.7 million and $17.8 million are included in Accrued expenses and Other long-term liabilities, respectively, and at December 31, 2013, $9.1 million and $17.8 million were included in Accrued expenses and Other long-term liabilities, respectively in the condensed Consolidated Balance Sheet.  Workers’ compensation obligations related to former employees associated with the Transportation Products business and arising prior to the sale of the Transportation Products business have been retained by the Company and the Company is obligated to pay the related claims until they are extinguished or otherwise settled.  The Company will not be held liable for any workers’ compensation claims related to the former Transportation Products business incurred after December 31, 2013.  The liability related to workers’ compensation claims, both those reported to the Company and those incurred but not yet reported, is estimated based on actuarial estimates and loss development factors and the Company’s historical loss experience.

 

The Company maintains occurrence-based insurance contracts with certain insurance carriers in accordance with its risk management practices that provides for reimbursement of worker’s compensation claims in excess of $0.5 million.  The Company records a recovery receivable from the insurance carriers when such recovery is deemed probable based on the nature of the claim and history of recoveries.  At March 31, 2014 the Company did not have any recovery receivables recorded for worker’s compensation claims.

 

Litigation

 

Over the years, the Company has been named as a defendant, along with numerous other defendants, in lawsuits in various state courts in which plaintiffs have alleged injury due to exposure to asbestos-containing brakes, which Carlisle manufactured in limited amounts between the late-1940’s and the mid-1980’s.  In addition to compensatory awards, these lawsuits may also seek punitive damages.

 

Generally, the Company has obtained dismissals or settlements of its asbestos-related lawsuits with no material effect on its financial condition, results of operations or cash flows.  The Company maintains insurance coverage that applies to the Company’s defense costs and payments of settlements or judgments in connection with asbestos-related lawsuits.

 

At this time, the amount of reasonably possible additional asbestos claims, if any, is not material to the Company’s financial position, results of operations or operating cash flows although these matters could result in the Company being subject to monetary damages, costs or expenses, and charges against earnings in particular periods.

 

From time-to-time the Company may be involved in various other legal actions arising in the normal course of business.  In the opinion of management, the ultimate outcome of such actions, either individually or in the aggregate, will not have a material adverse effect on the consolidated financial position, results of operations for a particular period or annual operating cash flows of the Company.

 

Environmental Matters

 

The Company is subject to increasingly stringent environmental laws and regulations, including those relating to air emissions, wastewater discharges, chemical and hazardous waste management and disposal. Some of these environmental laws hold owners or operators of land or businesses liable for their own and for previous owners’ or operators’ releases of hazardous or toxic substances or wastes. Other environmental laws and regulations require the obtainment of and compliance with environmental permits. To date, costs of complying with environmental, health, and safety requirements have not been material and we do not currently have any significant accruals related to potential future costs of environmental remediation at March 31, 2014, nor do we have an asset retirement obligations recorded at those dates.  However, the nature of the Company’s operations and its long history of industrial activities at certain of its current or former facilities, as well as those acquired, could potentially result in material environmental liabilities or asset retirement modifications.

 

While the Company must comply with existing and pending climate change legislation, regulation, international treaties or accords, current laws and regulations do not have a material impact on its business, capital expenditures or financial position. Future events, including those relating to climate change or greenhouse gas regulation, could require the Company to incur expenses related to the modification or curtailment of operations, installation of pollution control equipment, or investigation and cleanup of contaminated sites.

 

Borrowings
Borrowings

Note 11Borrowings

 

As of March 31, 2014 and December 31, 2013 the Company’s borrowings were as follows:

 

 

 

March 31,

 

December 31,

 

In millions

 

2014

 

2013

 

3.75% notes due 2022, net of unamortized discount of ($1.0) and ($1.0), respectively

 

$

349.0

 

$

349.0

 

5.125% notes due 2020, net of unamortized discount of ($0.7) and ($0.8) respectively

 

249.3

 

249.2

 

6.125% notes due 2016, net of unamortized discount of ($0.3) and ($0.3) respectively

 

149.7

 

149.7

 

Revolving credit facility

 

 

 

Industrial development and revenue bonds through 2018

 

3.0

 

3.0

 

Other, including capital lease obligations

 

0.1

 

0.1

 

Total long-term debt

 

751.1

 

751.0

 

Less current portion

 

 

 

Total long-term debt, net of current portion

 

$

751.1

 

$

751.0

 

 

Revolving Credit Facilities

 

As of March 31, 2014, the Company had $600.0 million available under its Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”) administered by JPMorgan Chase Bank, N.A.  During the three months ended March 31, 2014 and March 31, 2013 there was no interest on borrowings under the revolving credit facility.

 

Uncommitted Line of Credit

 

The Company also maintains an uncommitted line of credit of which $45.0 million was available for borrowing as of March 31, 2014 and December 31, 2013.  During the three months ended March 31, 2014 and March 31, 2013 there were no borrowings under the uncommitted line of credit.

 

Covenants and Limitations

 

Under the Company’s various debt and credit facilities, the Company is required 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 Company was in compliance with all covenants and limitations as of March 31, 2014 and December 31, 2013.

 

Other Matters

 

Cash payments for interest were $4.6 million for both of the three month periods ended March 31, 2014 and 2013.  Interest expense, net is presented net of interest income of $0.3 million and $0.1 million in the three months ended March 31, 2014 and 2013, respectively.

 

At March 31, 2014, the fair value of the Company’s par value $350 million, 3.75% senior notes due 2022, $250 million, 5.125% senior notes due 2020, and par value $150 million, 6.125% senior notes due 2016, using the Level 2 inputs, was approximately $332.9 million, $263.1 million and $162.2  million, respectively. Fair value is estimated based on current yield rates plus the Company’s estimated credit spread available for financings with similar terms and maturities.

Retirement Plans
Retirement Plans

Note 12—Retirement Plans

 

Defined Benefit Plans

 

The Company maintains defined benefit retirement plans for certain employees. Benefits are based primarily on years of service and earnings of the employee. The Company recognizes the funded status of its defined benefit plans in the condensed consolidated balance sheets. The funded status is the difference between the retirement plans’ projected benefit obligation and the fair value of the retirement plans’ assets as of the measurement date.

 

Components of net periodic benefit cost were as follows:

 

 

 

Pension Benefits

 

 

 

Three Months Ended

 

 

 

March 31,

 

In millions

 

2014

 

2013

 

Service cost

 

$

0.9

 

$

1.1

 

Interest cost

 

2.0

 

1.7

 

Expected return on plan assets

 

(2.7

)

(2.6

)

Amortization of unrecognized net loss

 

1.0

 

1.2

 

Net periodic benefit costs

 

$

1.2

 

$

1.4

 

 

The Company made no contributions to the pension plans during the three months ended March 31, 2014.  No minimum contributions to the pension plans are required in 2014.  However, during 2014 the Company expects to pay approximately $1.0 million in participant benefits under the executive supplemental and director plans.  In light of the plans’ funded status, the Company does not expect to make discretionary contributions to its other pension plans in 2014.

 

Defined Contribution Plans

 

The Company maintains defined contribution plans covering a significant portion of its employees. Expenses for the plans were $2.3 million and $2.5 million for the three months ended March 31, 2014 and 2013, respectively. Full year contributions in 2014 are expected to approximate $8 million.

 

ESOP Plan

 

The Company sponsors an employee stock ownership plan (“ESOP”) as part of one of its existing defined contribution plans. Costs for the ESOP are included in the previously discussed expenses. The ESOP is available to eligible domestic employees and includes a match of contributions made by plan participants to the savings plan up to a maximum of 4.0% of a participant’s eligible compensation, divided between cash and an employee-directed election of the Company’s common stock, not to exceed 50% of the total match.  Participants are not allowed to direct savings plan contributions to an investment in the Company’s common stock. Total shares held by the ESOP were 1.6 million and 1.7 million at March 31, 2014 and December 31, 2013, respectively.

Deferred Revenue and Extended Product Warranties
Deferred Revenue and Extended Product Warranties

Note 13—Deferred Revenue and Extended Product Warranties

 

Deferred revenue consists primarily of unearned revenue related to separately priced extended warranty contracts on sales of certain products, the most significant being those offered on its installed roofing systems within the Construction Materials segment.

 

Roofing Systems Deferred Revenue

 

The amount of revenue recognized related to extended product warranties covering roofing systems was $4.2 million for both of the three month periods ended March 31, 2014 and March 31, 2013.  Deferred revenue recognized in the condensed Consolidated Balance Sheets includes the following related to roofing systems extended product warranty contracts:

 

 

 

March 31,

 

December 31,

 

In millions

 

2014

 

2013

 

Deferred revenue

 

 

 

 

 

Current

 

$

17.1

 

$

17.0

 

Long-term

 

143.3

 

142.8

 

Deferred revenue liability

 

$

160.4

 

$

159.8

 

 

Expected costs of services to be performed under extended product warranty contracts are actuarially determined.  Any expected costs in excess of deferred revenue are recognized within Accrued expenses.

 

Other Deferred Revenue

 

Other deferred revenue recognized in the Consolidated Balance Sheets as of March 31, 2014 and December 31, 2013, mainly related to contracts on brake pads, was as follows:

 

 

 

March 31,

 

December 31,

 

In millions

 

2014

 

2013

 

Deferred revenue

 

 

 

 

 

Current

 

$

0.4

 

$

0.4

 

Long-term

 

0.7

 

0.8

 

Deferred revenue liability

 

$

1.1

 

$

1.2

 

Standard Product Warranties
Standard Product Warranties

Note 14—Standard Product Warranties

 

The Company offers various warranty programs on its products included in the price of its products, primarily certain installed roofing systems, braking products, aerospace cables and assemblies, and foodservice equipment.  The Company’s liability for such warranty programs is included in Accrued expenses.  The change in the Company’s product warranty liabilities for the three months ended March 31, 2014 and March 31, 2013 was as follows:

 

 

In millions

 

2014

 

2013

 

Balance at January 1

 

$

14.3

 

$

16.3

 

Current year provision

 

3.5

 

4.6

 

Current year claims

 

(4.2

)

(4.5

)

Balance at March 31

 

$

13.6

 

$

16.4

 

Other Long-Term Liabilities
Other Long-Term Liabilities

Note 15—Other Long-Term Liabilities

 

The components of Other long-term liabilities were as follows:

 

 

 

March 31,

 

December 31,

 

In millions

 

2014

 

2013

 

Deferred taxes and other tax liabilities

 

$

179.6

 

$

177.6

 

Pension and other post-retirement obligations

 

18.8

 

18.9

 

Long-term workers compensation

 

17.8

 

17.8

 

Deferred compensation

 

13.4

 

11.3

 

Other

 

6.8

 

10.3

 

Other long-term liabilities

 

$

236.4

 

$

235.9

 

Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss)

Note 16—Accumulated Other Comprehensive Income (Loss)

 

The changes in Accumulated other comprehensive income by component for the three months ended March 31, 2014 were as follows:

 

 

 

Accrued

 

Foreign

 

 

 

 

 

 

 

post-retirement

 

currency

 

Hedging

 

 

 

(in millions)

 

benefit liability(1)

 

translation

 

activities(2)

 

Total

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2013

 

$

(28.2

)

$

(4.3

)

$

1.0

 

$

(31.5

)

Other comprehensive income (loss) before reclassifications

 

 

3.0

 

(0.2

)

2.8

 

Amounts reclassified from accumulated other comprehensive loss

 

1.0

 

 

 

1.0

 

Income tax expense

 

(0.4

)

 

0.1

 

(0.3

)

Net other comprehensive income (loss)

 

0.6

 

3.0

 

(0.1

)

3.5

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2014

 

$

(27.6

)

$

(1.3

)

$

0.9

 

$

(28.0

)

 

The changes in Accumulated other comprehensive loss by component for the three months ended March 31, 2013 were as follows:

 

 

 

Accrued

 

Foreign

 

 

 

 

 

 

 

post-retirement

 

currency

 

Hedging

 

 

 

(in millions)

 

benefit liability(1)

 

translation

 

activities(2)

 

Total

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2012

 

$

(34.1

)

$

(2.7

)

$

1.3

 

$

(35.5

)

Other comprehensive income (loss) before reclassifications

 

0.5

 

(10.3

)

 

(9.8

)

Amounts reclassified from accumulated other comprehensive loss

 

1.4

 

 

(0.1

)

1.3

 

Income tax expense

 

(0.5

)

 

 

(0.5

)

Net other comprehensive income (loss)

 

1.4

 

(10.3

)

(0.1

)

(9.0

)

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2013

 

$

(32.7

)

$

(13.0

)

$

1.2

 

$

(44.5

)

 

 

(1) Current period amounts related to accrued post-retirement benefit liability are related to amortization of unrecognized actuarial gains and losses which is included in net periodic benefit cost for pension and other post-retirement welfare plans.  See Note 12.

(2) Current period amounts related to hedging activities are a reduction to interest expense.  See Note 20 in the Company’s 2013 Annual Report on Form 10-K for more information.

Segment Information (Tables)

 

 

Three Months Ended March 31,

 

2014

 

2013

 

In millions

 

Sales(1)

 

EBIT

 

Assets(2)

 

Sales(1)

 

EBIT

 

Assets(2)

 

Carlisle Construction Materials

 

$

347.4

 

$

31.9

 

$

897.0

 

$

339.6

 

$

35.8

 

875.0

 

Carlisle Interconnect Technologies

 

150.9

 

30.7

 

1,025.8

 

141.2

 

18.4

 

1,049.6

 

Carlisle Brake & Friction

 

92.2

 

9.2

 

609.8

 

90.8

 

11.0

 

614.7

 

Carlisle FoodService Products

 

59.9

 

7.1

 

204.1

 

58.0

 

5.1

 

195.2

 

Corporate

 

 

(15.9

)

807.0

 

 

(14.9

)

136.1

 

Total

 

$

650.4

 

$

63.0

 

$

3,543.7

 

$

629.6

 

$

55.4

 

$

2,870.6

 

 

 

(1) Excludes intersegment sales

(2) Corporate assets include assets of discontinued operations not classified as held for sale

 

 

 

March 31,

 

March 31,

 

 

 

2014

 

2013

 

Assets per table above

 

$

3,543.7

 

$

2,870.6

 

Assets held for sale

 

2.2

 

587.7

 

Total Assets per Consolidated Balance Sheet

 

$

3,545.9

 

$

3,458.3

 

Stock-Based Compensation (Tables)
Schedule of weighted-average assumptions for stock options

 

 

 

2014

 

2013

 

Expected dividend yield

 

1.2

%

1.2

%

Expected life in years

 

5.74

 

5.71

 

Expected volatility

 

29.3

%

32.2

%

Risk-free interest rate

 

1.7

%

1.0

%

Weighted average fair value

 

$

19.15

 

$

17.58

 

Earnings Per Share (Tables)

 

 

 

 

Three Months Ended March 31,

 

In millions, except share and per share amounts

 

2014

 

2013

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

36.5

 

$

44.3

 

Less: dividends declared - common stock outstanding, restricted shares and restricted stock units

 

(14.2

)

(12.8

)

Undistributed earnings

 

22.3

 

31.5

 

Percent allocated to common shareholders (1)

 

99.5

%

99.5

%

 

 

22.2

 

31.3

 

Add: dividends declared - common stock

 

14.1

 

12.7

 

Numerator for basic and diluted EPS

 

$

36.3

 

$

44.0

 

 

 

 

 

 

 

Denominator (in thousands):

 

 

 

 

 

Denominator for basic EPS: weighted-average common shares outstanding

 

63,878

 

63,253

 

Effect of dilutive securities:

 

 

 

 

 

Performance awards

 

280

 

473

 

Stock options

 

931

 

993

 

Denominator for diluted EPS: adjusted weighted average common shares outstanding and assumed conversion

 

65,089

 

64,719

 

 

 

 

 

 

 

Per share income from continuing operations:

 

 

 

 

 

Basic

 

$

0.57

 

$

0.70

 

Diluted

 

$

0.56

 

$

0.68

 

 

(1)   Basic weighted-average common shares outstanding

 

63,878

 

63,253

 

Basic weighted-average common shares outstanding, restricted shares expected to vest and restricted stock units

 

64,189

 

63,582

 

Percent allocated to common shareholders

 

99.5

%

99.5

%

 

 

 

 

Three Months Ended March 31,

 

In millions, except share amounts

 

2014

 

2013

 

 

 

 

 

 

 

Income (loss) from discontinued operations attributable to common shareholders for basic and diluted earnings per share

 

$

(0.7

)

$

10.9

 

 

 

 

 

 

 

Net income attributable to common shareholders for basic and diluted earnings per share

 

$

35.6

 

$

54.9

 

Inventories (Tables)
Components of inventories

 

 

 

 

March 31,

 

December 31,

 

In millions

 

2014

 

2013

 

Finished goods

 

$

189.5

 

163.7

 

Work-in-process

 

42.2

 

40.2

 

Raw materials

 

121.3

 

121.3

 

Reserves

 

(28.5

)

(26.4

)

Inventories

 

$

324.5

 

$

298.8

 

Property, Plant and Equipment (Tables)
Components of property, plant and equipment

 

 

 

 

March 31,

 

December 31,

 

In millions

 

2014

 

2013

 

Land

 

$

39.0

 

$

38.9

 

Buildings and leasehold improvements

 

259.8

 

259.1

 

Machinery and equipment

 

612.7

 

606.9

 

Projects in progress

 

69.4

 

60.3

 

 

 

980.9

 

965.2

 

Accumulated depreciation

 

(477.0

)

(468.0

)

Property, plant and equipment, net

 

$

503.9

 

$

497.2

 

Goodwill and Other Intangible Assets (Tables)

 

 

 

 

Construction

 

Interconnect

 

Brake and

 

FoodService

 

 

 

In millions

 

Materials

 

Technologies

 

Friction

 

Products

 

Total

 

Gross balance at January 1, 2014

 

$

129.1

 

$

442.6

 

$

226.7

 

$

60.3

 

$

858.7

 

Currency translation

 

 

 

 

 

 

Gross balance at March 31, 2014

 

129.1

 

442.6

 

226.7

 

60.3

 

858.7

 

Accumulated impairment losses

 

 

 

 

 

 

Net balance at March 31, 2014

 

$

129.1

 

$

442.6

 

$

226.7

 

$

60.3

 

$

858.7

 

The Company’s Other intangible assets, net at March 31, 2014, were as follows:

 

 

 

Acquired

 

Accumulated

 

Net Book

 

In millions

 

Cost

 

Amortization

 

Value

 

Assets subject to amortization:

 

 

 

 

 

 

 

Patents

 

$

134.6

 

$

(31.5

)

$

103.1

 

Customer Relationships

 

443.2

 

(102.5

)

340.7

 

Other

 

19.2

 

(10.7

)

8.5

 

Assets not subject to amortization:

 

 

 

 

 

 

 

Trade names

 

118.0

 

 

118.0

 

Other intangible assets, net

 

$

715.0

 

$

(144.7

)

$

570.3

 

 

The Company’s Other intangible assets, net at December 31, 2013, were as follows:

 

 

 

Acquired

 

Accumulated

 

Net Book

 

In millions

 

Cost

 

Amortization

 

Value

 

Assets subject to amortization:

 

 

 

 

 

 

 

Patents

 

$

134.6

 

$

(29.2

)

$

105.4

 

Customer Relationships

 

443.3

 

(95.8

)

347.5

 

Other

 

19.0

 

(10.1

)

8.9

 

Assets not subject to amortization:

 

 

 

 

 

 

 

Trade names

 

118.0

 

 

118.0

 

Other intangible assets, net

 

$

714.9

 

$

(135.1

)

$

579.8

 

 

 

 

March 31,

 

December 31,

 

In millions

 

2014

 

2013

 

 

 

 

 

 

 

Carlisle Construction Materials

 

$

85.3

 

$

86.9

 

Carlisle Interconnect Technologies

 

325.2

 

330.8

 

Carlisle Brake & Friction

 

128.5

 

130.1

 

Carlisle FoodService Products

 

31.3

 

32.0

 

Total

 

$

570.3

 

$

579.8

 

 

 

 

 

 

 

Borrowings (Tables)
Schedule of the Company's borrowings

 

 

 

March 31,

 

December 31,

 

In millions

 

2014

 

2013

 

3.75% notes due 2022, net of unamortized discount of ($1.0) and ($1.0), respectively

 

$

349.0

 

$

349.0

 

5.125% notes due 2020, net of unamortized discount of ($0.7) and ($0.8) respectively

 

249.3

 

249.2

 

6.125% notes due 2016, net of unamortized discount of ($0.3) and ($0.3) respectively

 

149.7

 

149.7

 

Revolving credit facility

 

 

 

Industrial development and revenue bonds through 2018

 

3.0

 

3.0

 

Other, including capital lease obligations

 

0.1

 

0.1

 

Total long-term debt

 

751.1

 

751.0

 

Less current portion

 

 

 

Total long-term debt, net of current portion

 

$

751.1

 

$

751.0

 

Retirement Plans (Tables)
Components of net periodic benefit cost

 

 

 

Pension Benefits

 

 

 

Three Months Ended

 

 

 

March 31,

 

In millions

 

2014

 

2013

 

Service cost

 

$

0.9

 

$

1.1

 

Interest cost

 

2.0

 

1.7

 

Expected return on plan assets

 

(2.7

)

(2.6

)

Amortization of unrecognized net loss

 

1.0

 

1.2

 

Net periodic benefit costs

 

$

1.2

 

$

1.4

 

Deferred Revenue and Extended Product Warranties (Tables)
Schedule of product warranty deferred revenue liability

Deferred revenue recognized in the condensed Consolidated Balance Sheets includes the following related to roofing systems extended product warranty contracts:

 

 

 

March 31,

 

December 31,

 

In millions

 

2014

 

2013

 

Deferred revenue

 

 

 

 

 

Current

 

$

17.1

 

$

17.0

 

Long-term

 

143.3

 

142.8

 

Deferred revenue liability

 

$

160.4

 

$

159.8

 

 

 

Other deferred revenue recognized in the Consolidated Balance Sheets as of March 31, 2014 and December 31, 2013, mainly related to contracts on brake pads, was as follows:

 

 

 

March 31,

 

December 31,

 

In millions

 

2014

 

2013

 

Deferred revenue

 

 

 

 

 

Current

 

$

0.4

 

$

0.4

 

Long-term

 

0.7

 

0.8

 

Deferred revenue liability

 

$

1.1

 

$

1.2

 

Standard Product Warranties (Tables)
Schedule of change in aggregate product warranty liabilities

 

In millions

 

2014

 

2013

 

Balance at January 1

 

$

14.3

 

$

16.3

 

Current year provision

 

3.5

 

4.6

 

Current year claims

 

(4.2

)

(4.5

)

Balance at March 31

 

$

13.6

 

$

16.4

 

Other Long-Term Liabilities (Tables)
Components of other long-term liabilities

 

 

 

March 31,

 

December 31,

 

In millions

 

2014

 

2013

 

Deferred taxes and other tax liabilities

 

$

179.6

 

$

177.6

 

Pension and other post-retirement obligations

 

18.8

 

18.9

 

Long-term workers compensation

 

17.8

 

17.8

 

Deferred compensation

 

13.4

 

11.3

 

Other

 

6.8

 

10.3

 

Other long-term liabilities

 

$

236.4

 

$

235.9

 

Accumulated Other Comprehensive Income (Loss) (Tables)
Schedule of changes in Accumulated other comprehensive income (loss) by component

 

 

 

Accrued

 

Foreign

 

 

 

 

 

 

 

post-retirement

 

currency

 

Hedging

 

 

 

(in millions)

 

benefit liability(1)

 

translation

 

activities(2)

 

Total

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2013

 

$

(28.2

)

$

(4.3

)

$

1.0

 

$

(31.5

)

Other comprehensive income (loss) before reclassifications

 

 

3.0

 

(0.2

)

2.8

 

Amounts reclassified from accumulated other comprehensive loss

 

1.0

 

 

 

1.0

 

Income tax expense

 

(0.4

)

 

0.1

 

(0.3

)

Net other comprehensive income (loss)

 

0.6

 

3.0

 

(0.1

)

3.5

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2014

 

$

(27.6

)

$

(1.3

)

$

0.9

 

$

(28.0

)

 

 

 

 

Accrued

 

Foreign

 

 

 

 

 

 

 

post-retirement

 

currency

 

Hedging

 

 

 

(in millions)

 

benefit liability(1)

 

translation

 

activities(2)

 

Total

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2012

 

$

(34.1

)

$

(2.7

)

$

1.3

 

$

(35.5

)

Other comprehensive income (loss) before reclassifications

 

0.5

 

(10.3

)

 

(9.8

)

Amounts reclassified from accumulated other comprehensive loss

 

1.4

 

 

(0.1

)

1.3

 

Income tax expense

 

(0.5

)

 

 

(0.5

)

Net other comprehensive income (loss)

 

1.4

 

(10.3

)

(0.1

)

(9.0

)

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2013

 

$

(32.7

)

$

(13.0

)

$

1.2

 

$

(44.5

)

 

 

(1) Current period amounts related to accrued post-retirement benefit liability are related to amortization of unrecognized actuarial gains and losses which is included in net periodic benefit cost for pension and other post-retirement welfare plans.  See Note 12.

(2) Current period amounts related to hedging activities are a reduction to interest expense.  See Note 20 in the Company’s 2013 Annual Report on Form 10-K for more information.

Segment Information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Dec. 31, 2013
Sales, EBIT, assets of operations by reportable segment
 
 
 
Sales
$ 650.4 
$ 629.6 
 
EBIT
63.0 
55.4 
 
Assets
3,543.7 
2,870.6 
 
Reconciliation of segmental assets to total assets
 
 
 
Assets per table above
3,543.7 
2,870.6 
 
Assets held for sale
2.2 
587.7 
 
TOTAL ASSETS
3,545.9 
3,458.3 
3,493.0 
Corporate
 
 
 
Sales, EBIT, assets of operations by reportable segment
 
 
 
EBIT
(15.9)
(14.9)
 
Assets
807.0 
136.1 
 
Reconciliation of segmental assets to total assets
 
 
 
Assets per table above
807.0 
136.1 
 
Carlisle Construction Materials
 
 
 
Sales, EBIT, assets of operations by reportable segment
 
 
 
Sales
347.4 
339.6 
 
EBIT
31.9 
35.8 
 
Assets
897.0 
875.0 
 
Reconciliation of segmental assets to total assets
 
 
 
Assets per table above
897.0 
875.0 
 
Carlisle Interconnect Technologies
 
 
 
Sales, EBIT, assets of operations by reportable segment
 
 
 
Sales
150.9 
141.2 
 
EBIT
30.7 
18.4 
 
Assets
1,025.8 
1,049.6 
 
Reconciliation of segmental assets to total assets
 
 
 
Assets per table above
1,025.8 
1,049.6 
 
Carlisle Brake & Friction
 
 
 
Sales, EBIT, assets of operations by reportable segment
 
 
 
Sales
92.2 
90.8 
 
EBIT
9.2 
11.0 
 
Assets
609.8 
614.7 
 
Reconciliation of segmental assets to total assets
 
 
 
Assets per table above
609.8 
614.7 
 
Carlisle FoodService Products
 
 
 
Sales, EBIT, assets of operations by reportable segment
 
 
 
Sales
59.9 
58.0 
 
EBIT
7.1 
5.1 
 
Assets
204.1 
195.2 
 
Reconciliation of segmental assets to total assets
 
 
 
Assets per table above
$ 204.1 
$ 195.2 
 
Discontinued Operations (Details) (USD $)
In Millions, unless otherwise specified
0 Months Ended 3 Months Ended
Dec. 31, 2013
Mar. 31, 2014
Mar. 31, 2013
Discontinued operations
 
 
 
Income after-tax from discontinued operations
 
$ (0.7)
$ 10.9 
Carlisle Transportation Products
 
 
 
Discontinued operations
 
 
 
Proceeds from sale of business, including working capital adjustment
375.6 
 
 
After-tax loss on sale of business
 
(1.0)
 
Income after-tax from discontinued operations
 
 
11.0 
Net sales:
 
 
 
Sales from discontinued operations
 
 
$ 227.4 
Stock-Based Compensation (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Stock-based compensation
 
 
Aggregate grant-date fair value of stock options, restricted stock awards, performance share awards and restricted stock units
$ 17.2 
 
Stock-based compensation expense
 
 
Pre-tax compensation expense
7.7 
7.7 
2008 Executive Incentive Program
 
 
Stock-based compensation
 
 
Shares available for grant under the plan
2,648,265 
 
Shares available for issuance under the plan
489,130 
 
Stock options
 
 
Stock-based compensation
 
 
Stock options granted (in shares)
259,035 
 
Portion of stock options vesting on the first anniversary
0.3333 
 
Portion of stock options vesting on the second anniversary
0.3333 
 
Portion of stock options vesting on the third anniversary
0.3333 
 
Maximum term life
10 years 
 
Stock-based compensation expense
 
 
Pre-tax compensation expense
$ 1.1 
$ 1.1 
Weighted-average assumptions used to estimate grant date fair value of stock options
 
 
Expected dividend yield (as a percent)
1.20% 
1.20% 
Expected life in years
5 years 8 months 26 days 
5 years 8 months 16 days 
Expected volatility (as a percent)
29.30% 
32.20% 
Risk-free interest rate (as a percent)
1.70% 
1.00% 
Weighted average fair value (in dollars per share)
$ 19.15 
$ 17.58 
Stock options |
2005 Nonemployee Director Equity Plan
 
 
Stock-based compensation
 
 
Shares available for issuance under the plan
257,366 
 
Restricted stock awards
 
 
Stock-based compensation
 
 
Awards granted (in shares)
68,635 
 
Restricted stock awards |
2005 Nonemployee Director Equity Plan
 
 
Stock-based compensation
 
 
Shares available for issuance under the plan
27,366 
 
Performance share awards
 
 
Stock-based compensation
 
 
Awards granted (in shares)
67,970 
 
Restricted Stock Units
 
 
Stock-based compensation
 
 
Awards granted (in shares)
9,583 
 
Stock-Based Compensation (Details 2) (USD $)
3 Months Ended 12 Months Ended
Mar. 31, 2014
Dec. 31, 2013
Deferred Compensation Plan
 
 
Performance share awards
 
 
Number of common stock deferred (in shares)
200,954 
201,060 
Restricted stock awards
 
 
Stock-based compensation
 
 
Vesting period of shares awarded in 2008
3 years 
 
Award Activity
 
 
Units granted (in shares)
68,635 
 
Performance share awards
 
 
Weighted average grant date fair value (in dollars per share)
$ 73.08 
 
Performance share awards
 
 
Stock-based compensation
 
 
Vesting period of shares awarded in 2008
3 years 
 
Award Activity
 
 
Units granted (in shares)
67,970 
 
Performance share awards
 
 
Shares granted (in dollars per share)
$ 95.72 
 
2013 restricted stock units
 
 
Award Activity
 
 
Units granted (in shares)
9,583 
 
Performance share awards
 
 
Weighted average grant date fair value (in dollars per share)
$ 73.08 
 
Income Taxes (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Income Taxes
 
 
Anticipated effective tax rate for beginning of year to date (as a percent)
33.00% 
 
Reconciliation of taxes from continuing operations
 
 
Effective income tax rate on continuing operations (as a percent)
33.60% 
5.90% 
Expense (benefit) of discrete tax expense related to foreign jurisdiction
$ (0.4)
$ 13.0 
Earnings Per Share (Details) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Numerator:
 
 
Income from continuing operations
$ 36.5 
$ 44.3 
Less: dividends declared - common stock outstanding, restricted shares and restricted stock units
(14.2)
(12.8)
Undistributed earnings
22.3 
31.5 
Percent allocated to common shareholders
99.50% 
99.50% 
Undistributed earnings allocated to common shareholders
22.2 
31.3 
Add: dividends declared - common stock
14.1 
12.7 
Numerator for basic and diluted EPS
36.3 
44.0 
Denominator (in thousands):
 
 
Denominator for basic EPS: weighted-average common shares outstanding
63,878 
63,253 
Effect of dilutive securities:
 
 
Performance awards (in shares)
280 
473 
Stock options (in shares)
931 
993 
Denominator for diluted EPS: adjusted weighted average common shares outstanding and assumed conversion
65,089 
64,719 
Per share income from continuing operations:
 
 
Basic (in dollars per share)
$ 0.57 
$ 0.70 
Diluted (in dollars per share)
$ 0.56 
$ 0.68 
Basic weighted-average common shares outstanding
63,878 
63,253 
Basic weighted-average common shares outstanding, restricted shares expected to vest and restricted stock units
64,189 
63,582 
Percent allocated to common shareholders
99.50% 
99.50% 
Income from discontinued operations and net income
 
 
Income (loss) from discontinued operations attributable to common shareholders for basic and diluted earnings per share
(0.7)
10.9 
Net income attributable to common shareholders for basic and diluted earnings per share
$ 35.6 
$ 54.9 
Inventories (Details) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Inventories
 
 
Finished goods
$ 189.5 
$ 163.7 
Work-in-process
42.2 
40.2 
Raw materials
121.3 
121.3 
Reserves
(28.5)
(26.4)
Inventories
$ 324.5 
$ 298.8 
Property, Plant and Equipment (Details) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Property, Plant and Equipment
 
 
Property, plant and equipment, gross
$ 980.9 
$ 965.2 
Accumulated depreciation
(477.0)
(468.0)
Property, plant and equipment, net
503.9 
497.2 
Land
 
 
Property, Plant and Equipment
 
 
Property, plant and equipment, gross
39.0 
38.9 
Buildings and leasehold improvements
 
 
Property, Plant and Equipment
 
 
Property, plant and equipment, gross
259.8 
259.1 
Machinery and equipment
 
 
Property, Plant and Equipment
 
 
Property, plant and equipment, gross
612.7 
606.9 
Projects in progress
 
 
Property, Plant and Equipment
 
 
Property, plant and equipment, gross
$ 69.4 
$ 60.3 
Goodwill and Other Intangible Assets (Details) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Changes in the carrying amount of goodwill
 
 
Goodwill, gross
$ 858.7 
$ 858.7 
Goodwill, net
858.7 
858.7 
Carlisle Construction Materials
 
 
Changes in the carrying amount of goodwill
 
 
Goodwill, gross
129.1 
129.1 
Goodwill, net
129.1 
 
Carlisle Interconnect Technologies
 
 
Changes in the carrying amount of goodwill
 
 
Goodwill, gross
442.6 
442.6 
Goodwill, net
442.6 
 
Carlisle Brake & Friction
 
 
Changes in the carrying amount of goodwill
 
 
Goodwill, gross
226.7 
226.7 
Goodwill, net
226.7 
 
Carlisle FoodService Products
 
 
Changes in the carrying amount of goodwill
 
 
Goodwill, gross
60.3 
60.3 
Goodwill, net
$ 60.3 
 
Goodwill and Other Intangible Assets (Details 2) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Other intangible assets, net
 
 
Other intangible assets, Acquired Cost
$ 715.0 
$ 714.9 
Other intangible assets, Accumulated Amortization
(144.7)
(135.1)
Other intangible assets, net
570.3 
579.8 
Estimated amortization expense
 
 
Remainder of 2014
26.6 
 
2015
36.6 
 
2016
35.7 
 
2017
34.9 
 
2018
34.8 
 
Trade names
 
 
Assets not subject to amortization:
 
 
Acquired Cost
118.0 
118.0 
Net Book Value
118.0 
118.0 
Patents
 
 
Other intangible assets
 
 
Acquired Cost
134.6 
134.6 
Accumulated Amortization
(31.5)
(29.2)
Net Book Value
103.1 
105.4 
Customer Relationships
 
 
Other intangible assets
 
 
Acquired Cost
443.2 
443.3 
Accumulated Amortization
(102.5)
(95.8)
Net Book Value
340.7 
347.5 
Other
 
 
Other intangible assets
 
 
Acquired Cost
19.2 
19.0 
Accumulated Amortization
(10.7)
(10.1)
Net Book Value
$ 8.5 
$ 8.9 
Goodwill and Other Intangible Assets (Details 3) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Net book value of other intangible assets by the reportable segment
 
 
Other intangible assets, net
$ 570.3 
$ 579.8 
Carlisle Construction Materials
 
 
Net book value of other intangible assets by the reportable segment
 
 
Other intangible assets, net
85.3 
86.9 
Carlisle Interconnect Technologies
 
 
Net book value of other intangible assets by the reportable segment
 
 
Other intangible assets, net
325.2 
330.8 
Carlisle Brake & Friction
 
 
Net book value of other intangible assets by the reportable segment
 
 
Other intangible assets, net
128.5 
130.1 
Carlisle FoodService Products
 
 
Net book value of other intangible assets by the reportable segment
 
 
Other intangible assets, net
$ 31.3 
$ 32.0 
Commitments and Contingencies (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2014
item
Mar. 31, 2013
Dec. 31, 2013
Commitments and Contingencies
 
 
 
Number of leases that require rent to be paid based on contingent events
 
 
Rent expense
$ 5.5 
$ 5.9 
 
Future minimum payments
 
 
 
Remainder of 2014
12.7 
 
 
2015
14.7 
 
 
2016
11.8 
 
 
2017
10.0 
 
 
2018
8.2 
 
 
Thereafter
11.4 
 
 
Purchase Obligations
 
 
 
Number of purchase agreements with contractual term exceeding one year
 
 
Maximum term of purchase agreements for certain key raw materials
1 year 
 
 
Workers' Compensation Claims and Related Losses
 
 
 
Accrued workers compensation claims
26.5 
 
26.9 
Workers' compensation included in accrued expenses
8.7 
 
9.1 
Workers' compensation included in other long-term liabilities
17.8 
 
17.8 
Limits in excess of occurrence for reimbursement of workers' compensation
0.5 
 
 
Asbestos-related injury
 
 
 
Litigation
 
 
 
Accounting effect of dismissals or settlements
$ 0 
 
 
Borrowings (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Dec. 31, 2013
Borrowings
 
 
 
Total long-term debt
$ 751.1 
 
$ 751.0 
Total long-term debt, net of current portion
751.1 
 
751.0 
Cash payments for interest
4.6 
4.6 
 
Interest income
0.3 
0.1 
 
3.75% senior notes due 2022
 
 
 
Borrowings
 
 
 
Total long-term debt
349.0 
 
349.0 
Interest rate (as a percent)
3.75% 
 
 
Unamortized discount
(1.0)
 
(1.0)
Par value of senior notes
350 
 
 
3.75% senior notes due 2022 |
Significant Observable Inputs (Level 2)
 
 
 
Borrowings
 
 
 
Fair value of notes
332.9 
 
 
5.125% senior notes due 2020
 
 
 
Borrowings
 
 
 
Total long-term debt
249.3 
 
249.2 
Interest rate (as a percent)
5.125% 
 
 
Unamortized discount
(0.7)
 
(0.8)
Par value of senior notes
250 
 
 
5.125% senior notes due 2020 |
Significant Observable Inputs (Level 2)
 
 
 
Borrowings
 
 
 
Fair value of notes
263.1 
 
 
6.125% senior notes due 2016
 
 
 
Borrowings
 
 
 
Total long-term debt
149.7 
 
149.7 
Interest rate (as a percent)
6.125% 
 
 
Unamortized discount
(0.3)
 
(0.3)
Par value of senior notes
150 
 
 
6.125% senior notes due 2016 |
Significant Observable Inputs (Level 2)
 
 
 
Borrowings
 
 
 
Fair value of notes
162.2 
 
 
Revolving credit facility
 
 
 
Borrowings
 
 
 
Remaining borrowing capacity
600.0 
 
 
Interest on borrowings
 
Industrial development and revenue bonds through 2018
 
 
 
Borrowings
 
 
 
Total long-term debt
3.0 
 
3.0 
Other, including capital lease obligations
 
 
 
Borrowings
 
 
 
Total long-term debt
0.1 
 
0.1 
Uncommitted line of credit
 
 
 
Borrowings
 
 
 
Maximum borrowing capacity
45.0 
 
45.0 
Amount outstanding
$ 0 
$ 0 
 
Retirement Plans (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Dec. 31, 2013
Defined Contribution Plans
 
 
 
Defined contribution plan expense recognized
$ 2.3 
$ 2.5 
 
Expected amount of contribution to defined contribution plans in current fiscal year
0.8 
 
 
Maximum percentage of employee compensation match by employer to employee stock ownership plan
4.00% 
 
 
Maximum percentage of employee compensation match by employer to non union employee stock ownership plan
50.00% 
 
 
Shares held by the ESOP plan
1.6 
 
1.7 
Defined Benefit Plans
 
 
 
Components of net periodic benefit cost
 
 
 
Service cost
0.9 
1.1 
 
Interest cost
2.0 
1.7 
 
Expected return on plan assets
(2.7)
(2.6)
 
Amortization of unrecognized net loss
1.0 
1.2 
 
Net periodic benefit cost
1.2 
1.4 
 
Company's contribution to pension plan
 
 
Defined Benefit Plans |
Minimum |
Forecast
 
 
 
Components of net periodic benefit cost
 
 
 
Company's required contribution to pension plan
 
 
Executive supplemental and director defined benefit pension plans |
Forecast
 
 
 
Components of net periodic benefit cost
 
 
 
Company's contribution to pension plan
$ 1.0 
 
 
Deferred Revenue and Extended Product Warranties (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Mar. 31, 2014
Dec. 31, 2013
Roofing Systems Product
 
 
Product Warranties
 
 
Deferred revenue recognized related to extended product warranties
$ 4.2 
$ 4.2 
Deferred revenue
 
 
Current
17.1 
17.0 
Long-term
143.3 
142.8 
Deferred revenue liability
160.4 
159.8 
Brake pads
 
 
Deferred revenue
 
 
Current
0.4 
0.4 
Long-term
0.7 
0.8 
Deferred revenue liability
$ 1.1 
$ 1.2 
Standard Product Warranties (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Change in aggregate product warranty liabilities, including accrued costs and loss reserves in excess of deferred revenue
 
 
Beginning reserve
$ 14.3 
$ 16.3 
Current year provision
3.5 
4.6 
Current year claims
(4.2)
(4.5)
Ending reserve
$ 13.6 
$ 16.4 
Other Long-Term Liabilities (Details) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2014
Dec. 31, 2013
Other Long-Term Liabilities
 
 
Deferred taxes and other tax liabilities
$ 179.6 
$ 177.6 
Pension and other post-retirement obligations
18.8 
18.9 
Long-term workers compensation
17.8 
17.8 
Deferred compensation
13.4 
11.3 
Other
6.8 
10.3 
Other long-term liabilities
$ 236.4 
$ 235.9 
Accumulated Other Comprehensive Income (Loss) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Accumulated balances for each classification of comprehensive income (loss)
 
 
Balance at the beginning of the period
$ (31.5)
$ (35.5)
Other comprehensive income (loss) before reclassifications
2.8 
(9.8)
Amounts reclassified from accumulated other comprehensive loss
1.0 
1.3 
Income tax expense
(0.3)
(0.5)
Net Other comprehensive income (loss)
3.5 
(9.0)
Balance at the end of the period
(28.0)
(44.5)
Accrued post-retirement benefit liability
 
 
Accumulated balances for each classification of comprehensive income (loss)
 
 
Balance at the beginning of the period
(28.2)
(34.1)
Other comprehensive income (loss) before reclassifications
 
0.5 
Amounts reclassified from accumulated other comprehensive loss
1.0 
1.4 
Income tax expense
(0.4)
(0.5)
Net Other comprehensive income (loss)
0.6 
1.4 
Balance at the end of the period
(27.6)
(32.7)
Foreign currency translation
 
 
Accumulated balances for each classification of comprehensive income (loss)
 
 
Balance at the beginning of the period
(4.3)
(2.7)
Other comprehensive income (loss) before reclassifications
3.0 
(10.3)
Net Other comprehensive income (loss)
3.0 
(10.3)
Balance at the end of the period
(1.3)
(13.0)
Hedging activities
 
 
Accumulated balances for each classification of comprehensive income (loss)
 
 
Balance at the beginning of the period
1.0 
1.3 
Other comprehensive income (loss) before reclassifications
(0.2)
 
Amounts reclassified from accumulated other comprehensive loss
 
(0.1)
Income tax expense
0.1 
 
Net Other comprehensive income (loss)
(0.1)
(0.1)
Balance at the end of the period
$ 0.9 
$ 1.2