Carlisle Companies Reports a 34% Increase in 2004 Income from Continuing Operations

Business Wire, Feb 3, 2005

CHARLOTTE, N.C. -- Carlisle Companies Incorporated (NYSE:CSL) reported income from continuing operations of $21.4 million, or $0.69 per diluted share in the fourth quarter 2004, compared to $19.6 million or $0.63 per diluted share from continuing operations in the fourth quarter 2003.

Net sales of $549.1 million in the fourth quarter 2004 were 16% over fourth quarter 2003 net sales of $474.1 million. Organic net sales growth of $70.0 million, or 15% in the fourth quarter 2004, accounted for most of the increase over the fourth quarter 2003 and included $3.6 million of favorable changes in foreign currency rates. The impact of foreign currency rates on income was negligible. The growth in organic net sales was primarily attributable to the Construction Materials and Industrial Components segments. Acquisitions contributed $7.0 million of the growth in the fourth quarter 2004 net sales, partially offset by $2.0 million in divestitures.

Net sales of $2.23 billion in 2004 were 18% above 2003 net sales of $1.89 billion. Organic sales growth of $326.4 million, or 17%, included $17.1 million of favorable changes in foreign currency rates. The impact of foreign currency rates on income was negligible. Acquisition growth of $23.8 million in the Industrial Components and General Industry segments was partially offset by $10.1 million for the divestiture of the spring brake business in the Specialty Products segment. Income of $118.3 million, or $3.77 per diluted share from continuing operations in 2004 was 34% above $88.5 million or $2.87 per diluted share from continuing operations in 2003.

Income from continuing operations in the fourth quarter 2004 included a $0.02 per diluted share charge related to exit and disposal activities, compared to a $0.03 per diluted share charge in the fourth quarter 2003. Income from continuing operations for the full year 2004 included a $0.06 per diluted share charge for exit and disposal activities, compared to an $0.11 per diluted share charge for the full year 2003.

The fourth quarter and full year 2004 income from continuing operations were negatively impacted by unrecovered raw material costs of $0.03 and $0.29, respectively, in excess of selling price increases. The fourth quarter 2004 income from continuing operations also included a $0.06 per diluted share charge for the write-off of assets associated with the sale of the spring brake business. In addition, the Company incurred $0.07 per diluted share of external Sarbanes-Oxley compliance charges in the fourth quarter 2004. For the full year 2004 the total external cost of Sarbanes-Oxley compliance was $0.10 per diluted share. Partially offsetting these charges was a one-time tax adjustment for continuing operations of $0.09 per diluted share in the fourth quarter 2004. The adjustment was the result of favorable state and federal tax settlements.

Richmond McKinnish, Carlisle's President and CEO said, "Our 2004 earnings showed improvement over 2003 in spite of the unprecedented increase in raw material costs throughout 2004 and the high fees paid for Sarbanes-Oxley compliance. Though we could have acted a little more quickly to pass the raw material cost increases along to our customers, we continue to focus on recovering these costs in 2005. We expect earnings from continuing operations in 2005 to be in the range of $4.10 to $4.25 per diluted share."

Fourth Quarter and Full Year Segment Results

The following segment discussion excludes the impact of discontinued operations.

Industrial Components net sales in the fourth quarter 2004 of $161.6 million were 18% above $137.3 million in the fourth quarter 2003. Fourth quarter 2004 segment earnings before interest and income taxes ("EBIT") of $5.2 million were 35% below $8.0 million in the fourth quarter 2003 due primarily to the continued rise in raw material costs. Net sales of $727.2 million in 2004 were 17% above $622.4 million in 2003, and segment EBIT of $61.1 million was 5% above $58.3 million in 2003. Net sales at Carlisle Tire & Wheel Company in 2004 were 19% above 2003 net sales on growth in all product lines, with most of the increase in sales in commercial and consumer power equipment lawn care products and ATV tires and wheels. The acquisition of Trintex, the leading manufacturer of specialty semi-pneumatic tires and wheels for the lawn and garden and industrial markets, in June 2004 also contributed to the increase in sales. Carlisle Power Transmission net sales were 10% above the full year 2003 with most of the sales improvement in the lawn and grounds care and agricultural markets. Segment earnings in 2004 did not keep pace with the sales increase due to the dramatic rise in raw material costs throughout 2004 for steel in the wheel business and oil-based commodities used in the tire manufacturing process. The unrecovered raw material cost increases in the Industrial Components segment were approximately $7.8 million in 2004. Selling price increases implemented in 2004 at Carlisle Tire & Wheel were not sufficient to fully offset the rise in raw material costs.