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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.
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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 |
|
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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.
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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.
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Note 5—Income 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.
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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 |
|
|
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 |
|
|
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 |
|
|
|
|
|
|
|
|
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.
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Note 11—Borrowings
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.
|
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.
|
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 |
|
|
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 |
|
|
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 |
|
|
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.
|
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 |
|
|
|
|
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 |
|
|
|
|
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 |
|
|
|
|
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 |
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
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 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 |
|
|
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 |
|
|
|
|
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 |
|
|
|
|
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|