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CARLISLE COMPANIES INC - 10-K - Management's Discussion and Analysis of Financial Condition and Results of Operations.

Executive Overview


    We are a multi-national company that designs, manufactures and sells a wide
range of products throughout 
North America
, 
Western Europe
, and the 
Asia Pacific

region via the following segments:

º •

º Carlisle Construction Materials ("CCM" or the "Construction Materials

          segment");

        º •
        º Carlisle Interconnect Technologies ("CIT" or the "Interconnect
          Technologies segment");

        º •
        º Carlisle Fluid Technologies ("CFT" or the "Fluid Technologies
          segment");

        º •

º Carlisle Brake & Friction ("CBF" or the "Brake & Friction segment");

and

º •

º Carlisle FoodService Products ("CFSP" or the "FoodService Products

segment").

We are focused on achieving profitable growth in these segments both organically, through new product development, product line extensions, and entering new markets, and through acquisitions of businesses that complement our existing technologies, products, and market channels. We have approximately 12,000 employees. We focus on obtaining profitable growth through:

º •

        º Year-over-year improvement in sales, earnings before interest and
          income taxes ("EBIT") margins, net earnings and return on invested
          capital ("ROIC"),

º •

º Reduction of working capital (defined as receivables, inventories, net

          of accounts payable) as a percentage of net sales,

        º •
        º Globalization, and

        º •
        º Maintenance of a strong and flexible balance sheet.

Resources are allocated among the operating companies based on management's assessment of their ability to obtain leadership positions and competitive advantages in the markets they serve.


    A key philosophy in how we drive profitable growth organically is the
Carlisle Operating System ("COS"). COS is a manufacturing structure and strategy
deployment system based on lean enterprise and six sigma principles and is a
continuous improvement process that defines the way we do business. Waste is
eliminated and efficiencies improved enterprise wide. Improvements are not
limited to production areas, as COS also drives improvements in new product
innovation, engineering, supply chain management, warranty, and product
rationalization. COS has created a culture of continuous improvement across all
aspects of the Company's business operations.

    Another key strategy in driving profitable growth is through acquisitions.
We typically acquire businesses that are complementary to our existing segments
and can be integrated into them. However, from time to time we may acquire new
businesses that can operate independently from other segments. Factors we
consider in making an acquisition include the ability of the acquired businesses
to drive profitable growth in the future by increasing our EBIT margins,
operating cash flows, and net earnings. We have also pursued the sale of
businesses when it is determined they no longer fit within the Company's
long-term goals or strategy.

    In connection with our growth and acquisition strategy, on April 1, 2015,
the Company acquired the Finishing Brands business from Graco Inc. ("Graco") for
total cash consideration of $598.9 million. The Company added a reportable
segment, Fluid Technologies, to reflect the acquisition of Finishing Brands.
Fluid Technologies is a global manufacturer and supplier of finishing equipment
and systems serving diverse end markets for paints and coatings, including
original equipment ("OE") automotive, automotive refinishing, aerospace,
agriculture, construction, marine, rail, and other industrial applications. From
the period beginning April 1, 2015 through December 31, 2015, Fluid Technologies
has contributed net sales of $203.2 million and EBIT of $20.8 million to the
Company's 2015 results.

                                       16
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    For a more in-depth discussion of the results discussed in this "Executive
Overview", please refer to the discussion on "Financial Reporting Segments"
presented later in "Management's Discussion and Analysis of Financial Condition
and Results of Operations".

    For the year ended December 31, 2015, net sales increased 11% to
$3.54 billion, compared to $3.20 billion in the prior year, primarily reflecting
sales from the acquired Finishing Brands and LHi businesses of 8.8%. Our organic
net sales growth (defined as net sales excluding sales from acquired businesses
within the last twelve months, as well as the impact of changes in foreign
exchange rates) of 3.6% primarily reflected increased sales volumes at
Construction Materials and Interconnect Technologies, partially offset by lower
sales volume at Brake and Friction and lower selling price. Foreign currency
fluctuations had a negative impact to net sales of 1.8%.

    For the year ended December 31, 2015, EBIT rose 23% to $501.9 million,
primarily driven by lower raw material costs, particularly at Construction
Materials related to materials that are tied to crude oil as well as related
lower energy costs, lower labor and material usage costs from COS, lower per
unit costs resulting from higher capacity utilization driven by higher net sales
volume, and the aforementioned acquisitions. These positive impacts were
partially offset by lower selling price. 
Carlisle's
 overall EBIT margin in 2015
rose 150 basis points to 14.2%, primarily reflecting lower raw material costs
and lower labor and material usage costs from the Carlisle Operating System.
Included in EBIT in 2015 was $10.7 million in non-recurring costs related to the
acquisition of Finishing Brands. By comparison, included in EBIT in 2014 was
$9.0 million in plant startup costs at Construction Materials and $3.5 million
in costs related to the acquisition of LHi.

    For the year ended December 31, 2015, income from continuing operations, net
of tax, of $319.6 million, or $4.82 per diluted share, grew 27% in 2015 from
income of $251.7 million, or $3.83 per diluted share, in 2014. The increase was
due to higher EBIT driven by the aforementioned factors. For more information
regarding the change in income from continuing operations from 2014 to 2015,
refer to the discussion below on "2015 Compared to 2014".

    For the year ended December 31, 2014, net sales increased 8.9% to
$3.20 billion from net sales of $2.94 billion for the year ended December 31,
2013. Organic net sales in 2014 grew 7.9% primarily reflecting 11% organic net
sales growth at Interconnect Technologies, on strong demand for aerospace
applications, and organic net sales growth of 8.9% at Construction Materials, on
strong demand for commercial roofing. Overall net sales at Brake & Friction and
Foodservice Products grew modestly during 2014. The acquisition of LHi, that
occurred on October 1, 2014, contributed $26.1 million, or 0.9%, to net sales in
2014.

    For the year ended December 31, 2014, EBIT grew 11% and EBIT margin
increased 20 basis points to 12.7% reflecting lower per unit costs resulting
from higher capacity utilization driven by higher net sales volume as well as
lower labor and material usage costs from COS. These EBIT margin improvements
were partially offset by lower selling price, and, at Construction Materials,
higher plant startup and product line closing costs versus the prior year and
higher freight expense.

    For the year ended December 31, 2014, income from continuing operations, net
of tax increased 7.0% to $251.7 million, or $3.83 per diluted share, from income
of $235.2 million, or $3.61 per diluted share, for the year ended December 31,
2013. Included in income from continuing operations for the year ended
December 31, 2013 was a tax benefit of $11.8 million from the release of a
deferred tax liability from an election in a foreign jurisdiction that resulted
in an increase in the tax basis of an international operation. For more
information regarding the change in income from continuing operations from 2013
to 2014, refer to the discussion below on "2014 Compared to 2013".

In 2016, we expect total net sales growth to be in the mid-single digit percentage range. Net sales growth is expected to be primarily driven by growth at Interconnect Technologies, on higher demand for aerospace and medical connector applications, and growth at Fluid Technologies, reflecting new

                                       17

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products and sales penetration initiatives. Growth in 2016 at Construction Materials is expected to reflect moderate growth in the commercial roofing market. While raw material costs are currently at lower levels than prior periods, and may decline further, the Company faces pricing pressure in a number of its markets that could impact selling price.

2015 Compared to 2014

Net Sales

                                                   Acquisition     Volume     Price       Exchange
(in millions)     2015        2014      Change       Effect        Effect    Effect      Rate Effect
Net sales       $ 3,543.2   $ 3,204.0      10.6 %           8.8 %      5.0 

% (1.4 )% (1.8 )%



    Net sales in 2015 grew 11% over the prior year primarily reflecting
acquisition growth of 8.8% and organic net sales growth of 3.6%. The acquisition
of the Finishing Brands business, reported in the Fluid Technologies segment,
contributed $203.2 million, and the acquisition of LHi, reported in the
Interconnect Technologies segment, contributed $79.0 million. Organic net sales
growth of 3.6% in 2015 reflected 5.0% higher net sales volume, primarily at
Construction Materials, partially offset by 1.4% lower selling price also from
Construction Materials and within Interconnect Technologies. The negative 1.8%
impact from fluctuations in foreign exchange was primarily attributable to the
weaker Euro and Canadian Dollar versus the 
U.S.
 Dollar impacting the
Construction Materials segment and the weaker Euro and British pound versus the
U.S.
 Dollar impacting the Brake & Friction segment.

Net Sales by Geographic Area

              Country
              (in millions)                    2015               2014
              United States              $ 2,659.4     75 % $ 2,441.7     76 %
              International:
              Europe                         384.4              357.4
              Asia                           225.5              136.0
              Canada                         114.9              117.1
              Mexico and Latin America        81.6               82.0
              Middle East and Africa          55.7               48.7
              Other                           21.7               21.1

              Total International            883.8     25 %     762.3     24 %

              Net sales                  $ 3,543.2          $ 3,204.0





    We have a long-term goal of achieving 30% of total net sales from outside
the United States
. Total net sales to customers located outside 
the United States
 increased from $762.3 million in 2014, or 23.8% of net sales, to
$883.8 million in 2015, or 24.9% of net sales. The increase in global sales was
primarily driven by contribution from the acquisition of the Finishing Brands
business reported in the Fluid Technologies segment of $118.7 million. The
increase in net sales to customers outside 
the United States
 also reflected
higher sales volumes at Interconnect Technologies and contribution from the LHi
acquisition. These increases were partially offset by the negative impact of
foreign exchange fluctuations primarily at Construction Materials and Brake &
Friction and lower net sales volume at Brake & Friction and Foodservice
Products.

    The 66% increase in net sales into 
Asia
 in 2015 was primarily attributable
to the aforementioned acquisitions. Approximately 30% of Fluid Technologies' net
sales were to customers in 
Asia
 in 2015.

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Gross Margin

                     (in millions)     2015       2014     Change
                     Gross profit    $ 1,006.7   $ 819.5      22.8 %
                     Gross margin         28.4 %    25.6 %


    In 2015, the increase in gross margin (gross profit expressed as a
percentage of net sales) of 280 basis points was primarily driven by lower raw
material costs at Construction Materials, lower labor and material usage costs
from the Carlisle Operating System and lower per unit costs related to higher
capacity utilization driven by higher sales volume. These positive impacts were
partially offset by the aforementioned lower selling prices. Included in cost of
goods sold in 2015 was $8.6 million in additional cost of goods sold from the
acquisition of Finishing Brands reported in the Fluid Technologies segment
resulting from recording acquired inventory at fair value. Included in gross
profit and gross margin in 2014 was $1.6 million in cost of goods sold related
to recording acquired inventory at estimated fair value for the LHi acquisition
in the Interconnect Technologies segment, $9.0 million in plant startup and
product line closing costs at Construction Materials related to startup of its
PVC manufacturing operations and new TPO manufacturing facility, and
$0.9 million in expense to discontinue production of Construction Materials'
Insulfoam product line at its 
Smithfield, PA
 facility.

Selling and Administrative Expenses

           (in millions)                          2015      2014     Change
           Selling and administrative expenses   $ 461.9   $ 379.0      21.9 %
           As a percentage of net sales             13.0 %    11.8 %

    Selling and administrative expenses increased 22% versus the prior year
primarily due to $67.0 million of expense from the acquired Finishing Brands and
LHi businesses, higher selling costs primarily at Construction Materials on
higher net sales volume, higher expense from increased staffing and
performance-based incentive compensation costs at Construction Materials, and
increased Corporate expenses. These increased expenses were partially offset by
lower selling and administrative expense costs at Brake & Friction due to lower
net sales volume and cost reduction efforts. During 2015, the Company incurred
$2.1 million in transaction costs related to the Finishing Brands acquisition,
of which $0.7 million was allocated to the Fluid Technologies segment and the
remaining $1.4 million allocated to Corporate. By comparison, in 2014, the
Company incurred $1.9 million in transaction expenses for the acquisition of LHi
in the Interconnect Technologies segment.

    Selling and administrative expense as a percentage of Net sales increased
120 basis points to 13.0% as a result of the Fluid Technologies segment having a
higher ratio of selling and administrative expense to net sales versus the other
segments, in part due to the amortized cost of acquired intangible assets.

Research and Development Expenses

             (in millions)                        2015     2014    Change
             Research and development expenses   $ 42.8   $ 33.8      26.6 %
             As a percentage of net sales           1.2 %    1.1 %


    The increase in Research and development expenses in 2015 versus the prior
year reflected $4.3 of expense from acquired operations as well as increased
activities related to new product development primarily in the Interconnect
Technologies and Construction Materials segments.

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Other (Income) Expense, Net

                    (in millions)                 2015     2014
                    Other (income) expense, net   $ 0.1   $ (1.6 )


    The change in Other (income) expense, net from 2014 to 2015 primarily
reflected the non-recurrence of gains in 2014 consisting of final settlement
proceeds of $0.9 million at Interconnect Technologies, related to the Thermax
acquisition, and a $1.1 million gain at FoodService Products on the sale of its
property in 
the Netherlands
.

EBIT (Earnings Before Interest and Taxes)

                      (in millions)    2015      2014     Change
                      EBIT            $ 501.9   $ 408.3      22.9 %
                      EBIT Margin        14.2 %    12.7 %

The growth in EBIT of 23% in 2015 versus the prior year was primarily attributable to the aforementioned lower raw material costs primarily at Construction Materials, lower per unit cost resulting from higher capacity utilization, lower labor and material usage costs from the Carlisle Operating System, and contribution from acquisitions.

Interest Expense, Net

                   (in millions)            2015     2014     Change
                   Interest expense        $ 34.7   $ 33.7
                   Interest income           (0.7 )   (1.5 )

                   Interest expense, net   $ 34.0   $ 32.2        5.6 %





    The increase in net Interest expense, net in 2015 versus the prior year
primarily reflected a reduction in interest capitalized into property, plant and
equipment in 2015 versus 2014, due to lower capital projects in 2015, and lower
interest income as a result of lower cash on hand in 2015 versus 2014. During
2015, the Company used $598.9 million of its cash on hand to acquire Finishing
Brands. The Company's cash balance declined from $730.8 million as of
December 31, 2014, to $410.7 million as of December 31, 2015.

Income Taxes

                    (in millions)         2015      2014     Change
                    Income tax expense   $ 148.3   $ 124.4      19.2 %
                    Effective tax rate      31.7 %    33.1 %


    The 2015 effective income tax rate of 31.7% differs from the statutory rate
primarily due to foreign earnings taxed at rates lower than the 
U.S.
 federal tax
rate, the deduction for 
U.S.
 manufacturing activities, and the recognition of
certain state tax attributes. The recognition of the state tax attributes, which
is the primary driver of the decrease in the year over year tax rate, occurred
as a result of a change in judgment due to new facts regarding the expected
deferred tax asset realization from state tax loss and credit carryforwards for
which the Company previously held a valuation allowance. We estimate our
effective tax rate for 2016 will be approximately 33%.

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Income from Continuing Operations

            (in millions)                        2015      2014     Change
            Income from continuing operations   $ 319.6   $ 251.7      27.0 %
            EPS
            Basic                               $  4.89   $  3.89
            Diluted                                4.82      3.83


    Income from continuing operations increased 27% in 2015 versus the prior
year primarily due to higher EBIT as well as a lower effective tax rate in 2015
versus 2014.

Income (Loss) from Discontinued Operations

            (in millions)                                2015     2014
            Income (loss) from discontinued operations   $ 0.1   $  (2.1 )
            Tax benefit                                      -      (1.7 )

                                                         $ 0.1   $  (0.4 )



            EPS
            Basic                                        $   -   $     -
            Diluted                                          -     (0.01 )

Loss from discontinued operations for the year ended December 31, 2014 primarily reflected a net after-tax loss on the sale of the Transportation Products business arising from the final working capital adjustment.

Net Income

                      (in millions)    2015      2014     Change
                      Net income      $ 319.7   $ 251.3      27.2 %
                      EPS
                      Basic           $  4.89   $  3.89
                      Diluted            4.82      3.82


    The increase in net income during the year ended December 31, 2015 versus
the prior year was primarily attributable to higher income from continuing
operations.

2014 Compared to 2013

Net Sales

                                                    Acquisition     Volume     Price       Exchange
(in millions)     2014        2013       Change       Effect        Effect    Effect      Rate Effect
Net Sales       $ 3,204.0   $ 2,943.0        8.9 %           0.9 %      9.1 %    (1.2 )%           0.1 %


    Net sales in 2014 grew 8.9% over the prior year primarily reflecting organic
net sales growth of 7.9% and acquisition growth of 0.9%. Organic net sales
growth of 7.9% in 2014 reflected 9.1% higher net sales volume, partially offset
by 1.2% lower selling price from Construction Materials and Interconnect
Technologies. Overall organic net sales growth in 2014 was driven by 11% organic
sales growth at Interconnect Technologies on strong aerospace demand and 8.9%
net sales growth at Construction Materials driven by growth in commercial
construction and commercial re-roofing. Brake & Friction and Foodservice
Products both achieved modest increases in net sales volume in

                                       21

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2014. The acquisition of LHi on October 1, 2014 reported in the Interconnect
Technologies segment contributed $26.1 million to total net sales in 2014. Refer
to the discussion below on "Acquisitions".

Net Sales by Geographic Area

              Country
              (in millions)                    2014               2013
              United States              $ 2,441.7     76 % $ 2,260.8     77 %
              International:
              Europe                         357.4              330.4
              Asia                           136.0              126.3
              Canada                         117.1               90.1
              Mexico and Latin America        82.0               69.7
              Middle East and Africa          48.7               47.4
              Other                           21.1               18.3

              Total International            762.3     24 %     682.2     23 %

              Net sales                  $ 3,204.0          $ 2,943.0





    Total net sales to customers located outside 
the United States
 increased
from $682.2 million in 2013, or 23.2% of net sales, to $762.3 million in 2014,
or 23.8% of net sales. The 12% increase in net sales from outside 
the United States
 from 2013 to 2014 primarily reflected higher net sales by Construction
Materials into 
Canada
, 
Europe
 and 
Asia
 and by Interconnect Technologies into
Asia
, 
Europe
 and 
Mexico
.

Gross Margin

                      (in millions)    2014      2013      Change
                      Gross profit    $ 819.5   $ 745.6        9.9 %
                      Gross margin       25.6 %    25.3 %


    Gross margin in 2014 increased 30 basis points due to lower per unit costs
related to higher capacity utilization driven by higher sales volume and lower
labor and material usage costs from the Carlisle Operating System. These
positive impacts were partially offset by lower selling price at Construction
Materials, Interconnect Technologies and Brake & Friction, and higher costs at
Construction Materials for plant startup, product line closing, freight expense
and product warranty. Included in gross profit and gross margin in 2014 was
$9.0 million in plant startup and product line closing costs at Construction
Materials related to startup of its PVC manufacturing operations and new TPO
manufacturing facility and $0.9 million in expense to discontinue production of
its Insulfoam product line at its 
Smithfield, PA
 facility. These expenses in
2014 compared to $7.3 million in plant startup costs at Construction Materials
in the same prior year period. Also included in gross profit and gross margin in
2014 were $0.8 million in restructuring costs related to the closure of our
Akron
 plant in the Brake & Friction segment, as compared to restructuring costs
of $0.9 million in the prior year.

    During 2014, we incurred $1.6 million in additional cost of goods sold from
the acquisition of LHi reported in the Interconnect Technologies segment
resulting from the fair valuation of acquired inventory. By comparison, during
2013, we incurred $1.1 million in additional cost of goods sold from the
acquisition of Thermax reported in the Interconnect Technologies segment.

                                       22

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Selling and Administrative Expenses

              (in millions)                   2014      2013      Change
              Selling & Administrative       $ 379.0   $ 353.7        7.2 %
              As a percentage of net sales      11.8 %    12.0 %


    Selling and administrative expenses increased 7.2% versus the prior year
primarily reflecting higher selling and commission costs tied to higher sales,
higher acquisition costs, increased performance based incentive compensation
expense and investments in information security. Included in selling and
administrative expenses in 2014 was $3.5 million of expenses from the LHi
operations acquired in the Interconnect Technologies segment. During 2014,
Interconnect Technologies incurred $1.9 million in transaction expenses
connected to the acquisition of LHi.

Research and Development Expenses

                (in millions)                   2014     2013    Change
                Research and Development       $ 33.8   $ 29.3      15.3 %
                As a percentage of net sales      1.1 %    1.0 %

The increase in Research and development expenses during 2014 reflected increased product development costs primarily in the Brake & Friction segment.

Other (Income) Expense, Net

                    (in millions)                  2014     2013
                    Other (income) expense, net   $ (1.6 ) $ (4.2 )


    Other income in 2014 primarily reflected a $1.1 million gain on the sale of
property in the Foodservice Products segment for sale of its property in 
the Netherlands
, a $0.4 million gain in the Brake & Friction segment on the sale of
its plant in 
Akron, OH
, and a $0.9 million gain from final settlement of the
Thermax acquisition by Interconnect Technologies recognized in the first quarter
of 2014. These gains were partially offset by losses on the disposal of fixed
assets and foreign exchange losses.

    Other income in 2013 primarily reflected fair value adjustments related to
commodity swap agreements in the Interconnect Technologies segment and
contingent consideration for the PDT acquisition in the Construction Materials
segment as well as a gain on the sale of property in the Construction Materials
and Foodservice Products segments. During the third quarter of 2013, the
Construction Materials recorded a $1.3 million gain related to the settlement of
contingent consideration related to its 2011 acquisition of PDT based upon an
earn-out settlement agreement with the former owners, which was paid in the
fourth quarter of 2013. In addition, during the third quarter of 2013,
Foodservices Products sold its distribution facility in 
Reno, NV
 and recognized
a pre-tax gain of $1.0 million on the sale. During the third and fourth quarter
of 2013, Construction Materials sold property and fixed assets in 
Kingston, NY

and 
Kent, WA
 and recognized a gain of $1.0 million on the sale.

EBIT (Earnings Before Interest and Taxes)

                      (in millions)    2014      2013     Change
                      EBIT            $ 408.3   $ 366.8      11.3 %
                      EBIT Margin        12.7 %    12.5 %


                                       23
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    EBIT grew 11% in 2014 reflecting lower per unit costs from higher capacity
utilization driven by sales volume and lower labor and material usage from the
Carlisle Operating System, partially offset by lower selling price, the
aforementioned higher operating costs at Construction Materials and higher costs
in 2014 related to acquisitions and employee severance in 2014 versus 2013.

Interest Expense

                   (in millions)            2014     2013    Change
                   Interest expense        $ 33.7   $ 34.3
                   Interest income           (1.5 )   (0.5 )

                   Interest Expense, net   $ 32.2   $ 33.8      (4.7 )%




The reduction in net interest expense in 2014 versus the prior year primarily reflected an increase in capitalized interest and increased interest income for higher average cash on hand in 2014 versus 2013.


Income Taxes

                    (in millions)         2014      2013    Change
                    Income tax expense   $ 124.4   $ 97.8      27.2 %
                    Effective tax rate      33.1 %   29.4 %


    The 29.4% effective rate for 2013 reflected a tax benefit of $11.8 million
related to a tax election made in a foreign jurisdiction that resulted in the
release of deferred tax liabilities.

Income from Continuing Operations

      (in millions)                                    2014      2013     

Change

      Income from continuing operations, net of tax   $ 251.7   $ 235.2        7.0 %
      EPS
      Basic                                           $  3.89   $  3.69
      Diluted                                            3.83      3.61

Income from continuing operations increased 7.0% in 2014 versus the prior year primarily due to higher EBIT and lower net interest expense, partially offset by a higher effective tax rate in 2014 versus 2013.

Loss from Discontinued Operations

                (in millions)                        2014      2013
                Loss from discontinued operations   $  (2.1 ) $ (60.5 )
                Tax benefit                            (1.7 )   (35.0 )

                                                    $  (0.4 ) $ (25.5 )



                EPS
                Basic                               $     -   $ (0.40 )
                Diluted                               (0.01 )   (0.39 )

Loss from discontinued operations for the year ended December 31, 2014 primarily reflected a net after-tax loss on the sale of the Transportation Products business arising from the final working capital adjustment.

                                       24

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    Loss from Discontinued Operations for the year ended December 31, 2013
primarily reflected the results of the Transportation Products business, which
was sold on December 31, 2013 to American Industrial Partners ("AIP"). During
2013, the Transportation Products business had net sales of $767.9 million.
Included in loss from discontinued operations during 2013 was a pre-tax goodwill
impairment charge of $100.0 million due to a decline in the reporting unit's
estimated fair value relative to its carrying value. In addition, the Company
recorded a pre-tax loss of $12.3 million on the sale of the Transportation
Products business, which included charges of $8.4 million for curtailment and
settlement charges related to the transfer of all former Transportation Products
business employees and certain of the pension and other post employment
obligations to AIP as part of the sale. The after-tax loss from discontinued
operations for the full year 2013 reflected the aforementioned losses from
operations due to the goodwill impairment charge, offset by operating earnings
of the Transportation Products business and a net after-tax gain on the sale of
the Transportation Products business of $6.2 million.

Net Income

                      (in millions)    2014      2013     Change
                      Net income      $ 251.3   $ 209.7      19.8 %
                      EPS
                      Basic           $  3.89   $  3.29
                      Diluted            3.82      3.22

The increase in Net income during 2014 versus the prior year primarily reflected the increase in Income from Continuing Operations in 2014 versus 2013 and decrease in Loss from Discontinued Operations in 2014 versus 2013.

Acquisitions and Disposals


    The Company funded the aforementioned acquisition of Finishing Brands on
April 1, 2015 with cash on hand. The preliminary amount of goodwill recorded
related to the acquisition is $175.2 million as of December 31, 2015, reported
in the Fluid Technologies segment.

The goodwill recognized in the acquisition of Finishing Brands is attributable to the experienced workforce of Finishing Brands, the expected operational improvements through implementation of COS, opportunities for geographic and product line expansions in addition to supply chain efficiencies, and the significant strategic value of the business to

Carlisle
.

    On October 1, 2014, the Company completed the acquisition of LHi for
$194.0 million, utilizing cash on hand. LHi's manufacturing operations are
located in 
Shenzhen, China
. LHi provides world-class medical device
manufacturers with interconnect components used for patient monitoring,
electrosurgery, diagnostic imaging and surgical instrumentation. Results of
LHi's operations are reported within the Interconnect Technologies segment. The
acquisition of LHi complements Interconnect Technologies' existing medical
cabling product offerings, adds global presence, and provides further end market
diversification within the Interconnect Technologies segment. The final amount
of goodwill recorded related to the acquisition of LHi was $112.8 million.

                                       25

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Financial Reporting Segments

Carlisle Construction Materials ("CCM" or the "Construction Materials segment")

(in millions) 2015 2014 Change $ Change % 2014

     2013       Change $    Change %
Net sales       $ 2,002.6   $ 1,935.4   $     67.2          3.5 % $ 1,935.4   $ 1,776.5   $    158.9         8.9 %
EBIT            $   351.1   $   268.8   $     82.3         30.6 % $   268.8   $   264.0   $      4.8         1.8 %
EBIT Margin          17.5 %      13.9 %                                13.9 %      14.9 %


2015 Compared to 2014

    CCM's 3.5% net sales growth in 2015 primarily reflected higher sales volumes
of 6.5%, partially offset by a 2.0% negative impact from foreign exchange
fluctuations primarily from the stronger 
U.S.
 dollar versus the Euro and the
Canadian dollar, and 1.0% lower selling prices. CCM's net sales volume growth
was primarily driven by increased activity in both commercial construction and
re-roofing. CCM's net sales into 
Europe
 declined 13%, of which 16% related to
the negative impact of foreign exchange, partially offset by 3% organic net
sales growth. CCM's net sales into 
Canada
, declined 9%, of which 13% related to
the negative impact of foreign exchange, partially offset by 4% organic net
sales growth.

    CCM's EBIT grew 31% and EBIT margins expanded 360 basis points to 17.5% in
2015 due primarily to lower raw material costs, with additional contribution
from lower per unit cost from higher capacity utilization, lower labor and
material usage costs from COS, and the non-recurrence of $9.0 million in startup
expense in 2014 at its new PVC and TPO production facilities. CCM's raw material
costs were lower in 2015 versus 2014 primarily due to lower input costs driven
by the decline in crude oil and other energy commodity pricing. These positive
impacts were partially offset by unfavorable changes in mix, lower selling
price, and the negative impact of foreign exchange fluctuations related to the
U.S.
 Dollar versus the Canadian Dollar and versus the Euro.

    CCM's net sales and EBIT are generally higher in the second and third
quarters of the year due to increased construction activity during these
periods. CCM's commercial roofing business is comprised of approximately 70% of
net sales from re-roofing, which derives demand from a large base of installed
roofs requiring replacement in a given year, and 30% from roofing for new
commercial construction.

    Growth in demand for CCM's commercial roofing applications is driven in part
by growth in commercial construction in 
the United States
 and increased
enforcement of building codes related to energy efficiency driving demand for
commercial insulation products. Conditions for the commercial construction
market remain favorable due to lower energy prices and increasing availability
of credit. The commercial roofing outlook in 
Europe
 is expected to remain
relatively flat. Growth in demand in the commercial construction market can be
negatively impacted by changes in fiscal policy and increases in interest rates.
The availability of labor to fulfill installations may also be a near term
constraint on growth in the commercial roofing market. A reduction in the
economic outlook for the 
U.S.
 tied to slowing conditions in overseas markets
could also negatively impact growth in the commercial construction market.

    CCM's ability to maintain current selling price and volume levels is subject
to significant competition, in particular from competitors that have recently
added manufacturing capacity of commercial roofing and commercial insulation
products and as a result of lower raw material costs. Raw material input costs
are expected to decline moderately from current levels due to lower crude oil
and related commodity pricing, however selling price pressure may negatively
impact CCM's ability to maintain current EBIT margin levels or obtain
incremental EBIT margin from lower raw material costs.

                                       26

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2014 Compared to 2013


    CCM's net sales growth of 8.9% in 2014 versus 2013 reflected higher sales
volume, partially offset by lower selling price. CCM's sales volume growth in
2014 was primarily driven by increased demand from growth in the new commercial
construction and re-roofing markets. For the full year 2014, CCM's net sales of
its commercial roofing membrane and commercial polyiso insulation applications
overall grew by 10%. With respect to international sales, CCM's net sales
outside of the 
U.S.
 grew 17% during 2014 primarily reflecting increased net
sales into 
Canada
, where net sales grew by 33%. CCM's net sales into 
Europe
 grew
by 12% for the full year, reflecting strong double digit organic sales growth in
the first half of 2014 followed by slightly lower sales growth in the second
half of 2014 due to weakening economic conditions in 
Europe
 and weakening of the
Euro versus the 
U.S.
 dollar.

    CCM's EBIT margin declined 100 basis points versus the prior year primarily
due to lower selling price, higher plant startup and product line closing costs
versus the prior year and higher freight costs. These negative impacts were
partially offset by lower per unit costs resulting from higher capacity
utilization, and reduction in material usage and labor costs driven by the
Carlisle Operating System. During 2014, CCM incurred product line closing costs
of $0.9 million related to discontinuing production of its Insulfoam product
line at its 
Smithfield, PA
, facility. In addition, CCM incurred $9.0 million of
plant startup expense at its new PVC facility and new TPO manufacturing facility
in 2014. By comparison, CCM incurred $7.3 million of plant startup expense in
2013. Included in CCM's EBIT in 2013 were gains that did not recur in 2014
consisting of a $1.3 million gain related to the settlement of contingent
consideration related to its 2011 acquisition of PDT, a net pre-tax gain of
$1.0 million on the sale of property and fixed assets in 
Kingston, NY
, and 
Kent, WA
, and a gain of $1.9 million on the sale of solar roofing inventory that had
previously been determined to be obsolete.

Carlisle Interconnect Technologies ("CIT" or the "Interconnect Technologies segment")


(in millions)    2015      2014      Change $     Change %     2014      2013      Change $     Change %
Net sales       $ 784.6   $ 669.1   $    115.5         17.3 % $ 669.1   $ 577.7   $     91.4         15.8 %
EBIT            $ 141.6   $ 132.2   $      9.4          7.1 % $ 132.2   $  89.4   $     42.8         47.9 %
EBIT Margin        18.0 %    19.8 %                              19.8 %    15.5 %


2015 Compared to 2014

    CIT's net sales growth of 17% in 2015 primarily reflected acquisition growth
of 11.8%, from the acquisition of the LHi medical cabling business, and higher
sales volumes of 8.5%, primarily on higher demand for its in-flight
entertainment and connectivity (IFEC) applications sold into the commercial
aerospace markets and slightly higher volumes on higher demand for connectivity
applications sold into the defense and test and measurement markets. The
increase in net sales from acquisitions and higher sales volumes were partially
offset by 2.8% lower selling price.

    CIT's EBIT increased 7.1% in 2015 on higher net sales volume, lower labor
and material usage costs from COS, and $7.8 million in EBIT contribution from
the acquisition of LHi, partially offset by lower contractual selling price.
CIT's EBIT margin declined 180 basis points versus the prior year primarily due
to selling price reductions and the dilutive impact of the LHi acquisition on
margin. These negative impacts were partially offset by lower per unit costs
resulting from higher capacity utilization, lower labor and material usage costs
from COS and lower raw material costs. Included in CIT's EBIT in 2014 was
$3.5 million in costs related to the acquisition of LHi, including higher cost
of goods sold related to recording acquired inventory at estimated fair value as
of the acquisition date. Partially offsetting these costs in 2014 was a gain of
$0.9 million recognized upon the final settlement of the acquisition of Thermax
from Belden.

During 2014, CIT began construction on a new 216,000 sq. ft. manufacturing facility in

Nogales, Mexico
, to meet growing demand for its aerospace applications and to support growth in its medical
                                       27

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applications. The total cost of CIT's new facility was $23.4 million. Shipments
began in the first quarter 2015 and the project was completed in the second
quarter of 2015. In the third quarter of 2015, CIT announced a $13 million
project to expand its production facilities in 
Dongguan, China
 into a new
260,000 sq. ft. facility to meet expected demand in both the medical technology
and aerospace markets. This project is expected to be completed in 2017. CIT
expects to incur startup costs of approximately $1.5 million in 2016 on this
project and another $1.5 million in startup costs in 2017. Also in the fourth
quarter 2015, CIT announced a $13 million project to expand its existing
aerospace facility in 
Franklin, WI
 to increase manufacturing capacity by
30,000 sq. ft. to meet expected demand for its recently launched SatCom antenna
adaptor plate used as part of satellite-based IFEC applications. The 
Franklin, WI
 expansion is expected to be completed in 2016. CIT expects to incur startup
costs of approximately $3.0 million related to this project, primarily in the
first half of 2016.

    The longer term outlook in the commercial aerospace market remains favorable
with a strong delivery cycle for new commercial aircraft expected over the next
several years. The outlook for the market for IFEC applications also remains
positive on increasing demand for on board connectivity applications used in
both installed aircraft seating and through personal mobile devices using
wireless connectivity (Wi-Fi) access. One of CIT's customers, for which it
supplies IFEC interconnect components, comprises approximately 22% of CIT's net
sales. CIT has connectivity applications for use with grounded Wi-Fi providers,
and, with its newly developed SatCom antenna adaptor plate product, for use by
satellite Wi-Fi providers. Satellite based connectivity has higher bandwidth and
can be accessed in flight over water.

    As a result of the LHi acquisition, combined with CIT's base medical
business, net sales into the medical market comprise approximately 15% of CIT's
total net sales. CIT is actively pursuing new products, customers, and
complementary technologies to support its expansion into the growing healthcare
technology market. The medical technology markets in which CIT competes is
experiencing vendor consolidation trends among larger medical OEM's, to whom CIT
offers improved product verification capabilities and value-added vertical
integration through its multiple product offerings.

2014 Compared to 2013


    CIT's 16% net sales growth in 2014 primarily reflected organic sales growth
of 11% and net sales from acquisitions of 4.5%. CIT's 11% organic sales growth
primarily reflected higher sales volume driven by strong aerospace demand
slightly offset by lower selling price from contractual price reductions that
were in part tied to lower raw material commodity prices. CIT's net sales to the
aerospace market in 2014 were up 14% primarily on higher demand for IFEC
applications and increased sales for the Boeing 787 program. CIT net sales into
the test and measurement market increased by 20% in 2014. CIT's net sales to the
military market were relatively level to the prior year, reflecting lower demand
in the first half of 2014 offset by sales volume growth in the second half of
2014 from new program development. Partially offsetting this was a 7% decline in
net sales to the industrial market. The acquisition of LHi on October 1, 2014
contributed $26.1 million in net sales to CIT in 2014, all comprising sales to
the medical market.

    CIT's EBIT margin increased significantly by 430 basis points in 2014 versus
the prior year due to lower per unit costs resulting from higher capacity
utilization driven by higher sales volume, and reduction in material usage and
labor costs driven by the Carlisle Operating System. Included in CIT's EBIT was
$1.9 million in transaction expenses for the acquisition of LHi and $1.6 million
in cost of goods sold related to recording acquired inventory at estimated fair
value as of the acquisition date. Partially offsetting these costs in 2014 was a
gain of $0.9 million recognized upon the final settlement of the acquisition of
Thermax from Belden. By comparison, included in CIT's EBIT in 2013 was
$1.1 million in acquisition costs primarily due to additional costs of goods
sold resulting from recording the acquired Thermax inventory at estimated fair
value as of the acquisition date.

                                       28

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Carlisle Fluid Technologies ("CFT")

                 (in millions)    2015     2014     Change $    Change %
                 Net sales       $ 203.2   $   -   $    203.2           - %
                 EBIT            $  20.8   $   -   $     20.8           - %
                 EBIT Margin        10.2 %     - %


    On April 1, 2015, the Company completed the acquisition of the Finishing
Brands business from Graco Inc. Beginning in the second quarter 2015, the
Company added a reportable segment, CFT, to reflect the acquisition of Finishing
Brands.

    Through the nine month period from April 1, 2015 through December 31, 2015,
CFT's EBIT and EBIT margin includes acquisition related costs for Finishing
Brands of $8.6 million additional costs of goods sold related to recording
acquired inventory at fair value and $0.7 million allocated transaction costs.
These acquisition related costs were incurred in the second quarter of 2015.
CFT's EBIT in 2015 also included amortization expense of $13.2 million, or 6.5%
of CFT's net sales, resulting from recording the acquired intangible assets at
fair value.

Approximately 20% to 25% of CFT's annual net sales are for the development and assembly of large fluid handling or other application systems projects. Timing of these system sales can result in sales that are higher in certain quarters versus other quarters within the same calendar year. In addition, timing of system sales can cause significant year over year sales variances.

    In 2016, CFT is establishing global headquarters in 
Phoenix, Arizona
 to
streamline administrative functions and coordinate its global strategy. CFT may
experience additional costs related to integration and headquarter relocation
activities. CFT intends to hire additional sales, marketing and administrative
staff in 2016 to support its organizational and sales growth strategy.

    Approximately 60% of CFT's net sales are outside 
the United States
, a
significant amount of which represent net sales into 
Asia
 and 
Europe
. CFT's
ability to increase net sales could be impacted by slowing growth in 
Asia
 and
challenging economic conditions in 
Europe
. A significant portion of CFT's
operating earnings are generated by its subsidiaries in the 
United Kingdom
,
Japan
 and 
China
, operating in British pounds, Japanese Yen and Chinese Renminbi,
respectively. The results of these subsidiaries' operations are translated and
reported within our consolidated results in 
U.S.
 dollars. Consistent declines in
the currencies for these countries versus the 
U.S.
 dollar could negatively
impact CFT's 
U.S.
 dollar reported results for both net sales and EBIT. Overall,
CFT's results are subject to foreign exchange fluctuations of the 
U.S.
 Dollar
versus the British Pound, Japanese Yen, Chinese Renminbi, Euro, Mexican Peso,
Brazilian Real and Australian Dollar.

Carlisle Brake & Friction ("CBF" or the "Brake & Friction segment")


                                        Change    Change                    

Change Change

    (in millions)    2015      2014        $         %        2014      2013        $         %
    Net sales       $ 310.2   $ 355.3   $ (45.1 )   (12.7 )% $ 355.3   $ 350.0   $   5.3       1.5 %
    EBIT            $  17.3   $  26.8   $  (9.5 )   (35.4 )% $  26.8   $  33.5   $  (6.7 )   (20.0 )%
    EBIT Margin         5.6 %     7.5 %                          7.5 %     9.6 %


2015 Compared to 2014

    CBF's net sales declined 13% in 2015 reflecting a 7.6% decline from lower
net sales volume and a 5.1% negative impact from foreign exchange fluctuations
from the stronger 
U.S.
 Dollar versus the Euro, British pound and Yen in 2015
versus the prior year. CBF's primary markets of construction, mining, and
agriculture were negatively impacted by slower global conditions and depressed
conditions in the commodities markets. CBF's net sales of its off-highway
braking applications into the

                                       29

--------------------------------------------------------------------------------

construction market declined by 16%. CBF's net sales into the mining and agriculture markets declined by 14% and 20%, respectively.


    CBF's EBIT declined 35% and its EBIT margin declined 190 basis points to
5.6% in 2015, primarily reflecting lower net sales volume, higher per unit costs
resulting from lower capacity utilization, and the negative impact of foreign
exchange fluctuations of approximately $3.0 million. Also included in CBF's EBIT
in 2015 was $1.7 million in severance costs, $3.4 million in asset impairment
charges, and $0.5 million in closing costs for its 
Akron
 facility. By
comparison, in 2014 CBF incurred $1.2 million in severance costs from staff
reduction actions taken to align its cost structure with current demand levels
and $4.3 million in inventory impairments.

    Consistent with forecasts by large OEM's, demand for CBF's off-highway
applications for heavy industrial equipment in construction and mining is
expected to remain soft and may decline further due to slowing growth in 
China

and lower demand for commodities. CBF faces competitive pricing pressure in the
current demand environment and from competitors that manufacture and sell
products in Euros. CBF has taken cost reduction measures to align with net sales
demand.

    A significant portion of CBF's operating earnings are generated by its
subsidiaries in 
Italy
 and the 
United Kingdom
 selling and operating in Euros and
British pounds, respectively. The results of these subsidiaries' operations are
translated and reported within our consolidated results in 
U.S.
 dollars.
Consistent declines in the Euro or the British pound versus the 
U.S.
 dollar
could negatively impact CBF's 
U.S.
 dollar reported results for both net sales
and EBIT.

    As of December 31, 2015, the carrying value of the CBF reporting unit's
goodwill and other indefinite-lived intangible assets was $226.6 million and
$117.2 million, respectively. The most recent annual goodwill impairment test
was performed for all reporting units as of October 1, 2015. During this
testing, we estimated that CBF's fair value, utilizing the method discussed
above, exceeded its carrying value by approximately 15%. Further, based on our
estimates of fair value for specific indefinite-lived intangible assets utilized
by the CBF reporting unit, we concluded that no impairment exists at
December 31, 2015.

For additional information in regards to our policy with respect to testing goodwill and indefinite-lived intangible assets for impairment, refer to "Critical Accounting Policies".


    As noted above, the Company believes that the facts and circumstances as of
December 31, 2015 indicate that no impairment exists with respect to CBF's
goodwill and other indefinite-lived intangible assets. If the estimates of
recovery in CBF's end markets do not materialize as expected and/or the 
U.S.

Dollar continues to strengthen and therefore results are lower than anticipated,
an impairment loss may be recorded.

    While the Company believes its conclusions regarding the estimates of fair
value of the CBF reporting unit and its indefinite-lived intangible assets are
appropriate, the estimates of fair value of the CBF reporting unit and its
indefinite-lived intangible assets are subject to uncertainty and by nature
include judgments and estimates regarding various factors including the rate and
extent of recovery in the markets that CBF serves, the realization of future
sales price increases, fluctuations in exchange rates, fluctuation in price and
availability of key raw materials, future operating efficiencies, and discount
rates.

2014 Compared to 2013

    CBF's 1.5% net sales increase in 2014 reflected 1.0% organic sales growth
and a 0.5% positive impact on net sales from fluctuations in foreign exchange
rates primarily reflecting the increase in the British pound and Euro versus the
U.S.
 dollar that occurred in the first half of 2014. The positive impact from
foreign exchange fluctuations on CBF's net sales reversed significantly in the
latter part of 2014 when both the Euro and British Pound declined versus the
U.S.
 dollar. CBF's 1.0% organic sales

                                       30

--------------------------------------------------------------------------------
growth in 2014 reflected approximately 2% higher net sales volume offset by 1%
lower selling price. CBF's net sales to the construction market grew by 11% in
2014 reflecting recovering market conditions as well as new customer
initiatives. Offsetting this growth was 7% lower net sales to the agriculture
market, which declined due to lower crop prices and lower farm income reducing
equipment demand. Net sales to the mining market in 2014 declined by 11% versus
the prior year. Demand in the agriculture and mining markets were relatively
stable through the first half of 2014; however, declined more significantly in
the second half of 2014 reflecting significant weakening in the agriculture and
commodities markets and slowing global economic conditions.

    CBF's EBIT margin decreased 210 basis points in 2014 versus the prior year
primarily due to the impact of lower selling price that occurred in the first
half of 2014, partially offset by lower per unit costs resulting from higher
capacity utilization driven by higher sales volume. During 2014, CBF incurred
$1.2 million in severance costs from staff reduction actions taken to align its
cost structure with current demand levels. Also in 2014, CBF incurred
$4.3 million in charges to inventory, compared to $1.8 million in charges to
inventory in 2013. Partially offsetting these costs was a gain of $0.4 million
on the sale of its facility in 
Akron, OH
, during the fourth quarter of 2014.

    On October 11, 2013, to further streamline operations and reduce
manufacturing costs, CBF announced plans to close its manufacturing facility in
Akron, OH
, relocate manufacturing previously conducted at this facility to other
CBF facilities, and sell the facility's remaining assets. The project was
completed in the first half of 2015 with total costs of $2.2 million, including
employee termination, accelerated depreciation, impairment of long-lived assets
and equipment relocation costs. The Company incurred exit and disposal costs of
$0.9 million in 2013, $0.8 million in 2014 and $0.5 million in 2015.

Carlisle FoodService Products ("CFSP" or the "FoodService Products segment")

                                       Change    Change                          Change     Change
   (in millions)    2015      2014        $         %        2014      2013        $          %

Net sales $ 242.6 $ 244.2 $ (1.6 ) (0.7 )% $ 244.2 $ 238.8 $ 5.4 2.3 %

   EBIT            $  27.3   $  29.6   $  (2.3 )    (7.8 )% $  29.6   $  

27.0 $ 2.6 9.6 %

   EBIT Margin        11.3 %    12.1 %                         12.1 %    11.3 %


2015 Compared to 2014

    CFSP's net sales in 2015 declined 0.7% primarily due to lower net selling
price that was partially offset by higher net sales volume. Net sales to the
foodservice market were unchanged as compared to 2014 reflecting higher demand
in the domestic foodservice market, offset by changes in customer mix and lower
international demand in 
Europe
 and 
Asia
. Net sales to the janitorial/sanitation
market grew by 5% reflecting increased sales to retail supercenters. Net sales
to the healthcare market declined by 5% primarily due to the non-recurrence of a
large order with a customer in 2014 for rethermalization equipment.

    CFSP's EBIT declined 7.8% and EBIT margin declined 80 basis points primarily
due to lower selling price connected with selling incentives and higher cost of
capitalized inventory recognized in cost of goods sold. These negative impacts
were partially offset by lower raw material costs. Included in CFSP's results
for 2014 was a gain of $1.1 million on the sale of property in 
The Netherlands
.

    CFSP's primary markets of foodservice, healthcare and janitorial/sanitation
are expected to grow in line with low-single digit growth estimates for United
States Growth Domestic Product.

2014 Compared to 2013

CFSP's 2.3% net sales increase in 2014 primarily reflected higher sales volume and increased selling price realization. CFSP's net sales to the foodservice market increased by 1%. Net sales to the

                                       31

--------------------------------------------------------------------------------
healthcare market increased by 4% primarily driven by a large rethermalization
equipment order with a customer. Net sales to the janitorial/sanitation market
increased by 3%.

    CFSP's EBIT in 2014 grew 9.6% to $29.6 million, reflecting continued
progress on its performance improvement efforts that began in 2012. CFSP's EBIT
margin grew 80 basis points primarily due to lower freight expense from
initiatives to improve scheduling and shipment logistics and higher selling
price realization. Included in CFSP's EBIT in 2014 was a $1.1 million gain from
the sale of property in 
The Netherlands
 during the second quarter 2014. By
comparison, included in CFSP's EBIT in 2013 was a $1.0 million gain on the sale
of property in 
Reno, NV.


Corporate

                                             Change    Change                       Change     Change
(in millions)              2015     2014       $          %       2014     2013       $          %
Corporate expenses        $ 56.2   $ 49.1   $    7.1      14.5 % $ 49.1   $ 47.1   $    2.0        4.2 %
As a percentage of net
sales                        1.6 %    1.5 %                         1.5 %    1.6 %

    Corporate expenses are largely comprised of compensation, benefits, and
travel expense for the corporate office staff, business development costs, and
certain compliance costs not allocated to the segments. Corporate expense also
includes certain gains and losses related to employee benefit obligations that
are not allocated to the segments such as pension and post-employment benefit
obligation settlements and curtailment charges as well as gains and losses
associated with workers' compensation obligations.

    For the year ended December 31, 2015, Corporate expenses increased 14% from
the prior year primarily due to higher staffing costs, performance-based
incentive compensation expense and sponsorship of companywide management
programs. In addition, the company incurred $1.4 million in transaction costs
for the acquisition of the Finishing Brands business in the second quarter of
2015, which was reported in Corporate expenses.

For the year ended December 31, 2014, Corporate expenses increased 4.2% from the prior year period due to higher investments in information security, performance based incentive compensation expense, and increased business development expense.

Liquidity and Capital Resources


    We maintain liquidity sources primarily consisting of cash and cash
equivalents and our unused committed $600 million credit facility. As of
December 31, 2015, we had $410.7 million of cash on hand, of which
$122.0 million was located in wholly-owned subsidiaries of the Company outside
the United States
. Cash held by subsidiaries outside 
the United States
 is held
in 
U.S.
 Dollars or in the currency of the country in which it is located. It is
our intention to use cash held outside 
the United States
 to fund the operating
activities of our foreign subsidiaries, to make further investments in our
foreign operations, and to invest in additional growth opportunities for the
Company through acquisitions. Cash outside 
the United States
 is generally held
in deposit accounts with banking institutions that are parties to our credit
facility. The majority of these accounts are at bank subsidiaries that are owned
by 
U.S.
 corporate banks. Repatriation of cash held by foreign subsidiaries may
require the accrual and payment of taxes in 
the United States
; however,
consistent with our unremitted earnings, we consider such related cash to be
permanently reinvested in our foreign operations and our current plans do not
demonstrate a need, nor do we plan, to repatriate such cash to fund 
U.S.

operations and financing activities. We plan to continue to invest in our
international business and potential acquisitions to achieve our stated goal of
30% of net sales outside of 
the United States
.

    In addition, cash held by subsidiaries in 
China
 is subject to local laws and
regulations that require government approval for conversion of such cash to and
from 
U.S.
 Dollars as well as for transfer of such cash to entities that are
outside of 
China
. As of December 31, 2015, we had cash and cash equivalents of
$21.4 million located in wholly owned subsidiaries of the Company within 
China
.

                                       32

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Sources and Uses of Cash

                                                              Twelve Months
                                                                  Ended
                                                              December 31,
(in millions)                                                2015       2014      2013
Net cash provided by operating activities                  $  529.2   $  295.9   $ 414.7
Net cash used in investing activities                        (670.8 )   (297.8 )   270.1
Net cash used in financing activities                        (173.0 )    

(20.2 ) (41.5 ) Effect of foreign currency exchange rate changes on cash (5.5 ) (1.6 ) (1.3 )


Change in cash and cash equivalents                        $ (320.1 ) $  (23.7 ) $ 642.0





2015 Compared to 2014

    The Company had net cash provided by operating activities of $529.2 million
for the year ended December 31, 2015 compared to cash provided of $295.9 million
in the prior year. The increase in net cash provided by operating activities was
attributable to increased cash income, resulting from lower raw material costs,
cash taxes paid, cash from acquired businesses and a difference of
$145.0 million between cash provided by working capital of $94.6 million in 2015
and cash used of $50.4 million in 2014. In 2015, cash provided by changes in
inventory of $23.0 million compared to cash used of $27.7 million in 2014. Cash
provided by changes in accrued expenses of $79.9 million in 2015 compared to
cash provided of $14.5 million in 2014, and includes differences in usage of
cash for tax payments in 2015 versus 2014.

    We use the ratio of our average working capital balances (defined as the
average of the quarter end balances, excluding current year acquisitions, of
trade receivables plus net inventory, less trade payables) as a percentage of
annualized sales (defined as year-to-date net sales, excluding current year
acquisitions, calculated on an annualized basis) to evaluate our effectiveness
in managing our cash requirements in relation to changes in sales activity. The
Company has a long term strategy is to reduce the ratio of working capital as a
percentage of net sales in order to generate strong cash flow from our
businesses and improve overall liquidity as our business activities grow.
However in 2015, average working capital as a percentage of annualized sales
increased 40 basis points to 18.2%, as compared to a percentage of 17.8% for
2014, primarily as a result of higher average working capital as a percentage of
net sales in the first half of 2015 on higher commercial roofing demand at
Construction Materials.

    Cash used in investing activities was $670.8 million in 2015 compared to
$297.8 million in 2014. In 2015, cash used in investing activities included
$598.9 million, net of $12.2 million cash acquired, used to acquire Finishing
Brands and $72.1 million in capital expenditures. In 2014, cash used in
investing activities included $118.8 million in capital expenditures and
$194.0 million, net of $6.7 million cash acquired, used to acquire LHi
Technologies. Also in 2014, we received $9.7 million as part of the final
working capital settlement from the sale of the Transportation Products
business.

    Capital expenditures of $72.1 million in 2015 declined by $46.7 million from
expenditures of $118.8 million in 2014. The decline was primarily attributable
to lower capital expenditures at Construction Materials in 2015 due to
completion of its new TPO and PVC production facilities in 2014. During 2015,
the Interconnect Technologies segment spent $34.5 million in capital
expenditures, including $7.0 million for the completion of its new manufacturing
facility in 
Nogales, Mexico
, as well as other projects tied to product or
capacity expansion.

    Cash used in financing activities was $173.0 million in 2015 compared to
$20.2 million in 2014. During 2015, cash used in financing activities primarily
reflected $137.2 in share repurchases, $72.3 million in dividends paid and
$2.9 million in debt repayments, partially offset by net cash inflows related to
the exercise of employee stock options of $39.4 million in 2015. The Company
started its

                                       33
--------------------------------------------------------------------------------
systematic share repurchase program in 2015 and repurchased 1,496,411 shares.
Also in 2015, we increased our dividends to shareholders by 17%, representing
the 39th consecutive year of dividend increases.

2014 Compared to 2013


    Net cash provided by operating activities, which includes continuing and
discontinued operations, was $295.9 million in the year ended December 31, 2014,
compared to $414.7 million in 2013. The decrease was primarily due to funds used
for working capital in 2014 versus cash provided by working capital in 2013 and
the disposition of the Transportation Products business on December 31, 2013. We
used cash for working capital in 2014 due to higher organic sales growth and
production activity from higher demand in the fourth quarter of 2014 compared to
the prior year. In addition, cash provided by working capital in 2013 benefited
from inventory reduction efforts at the divested Carlisle Transportation Product
segment.

    Cash used for working capital and other assets and liabilities of
$50.4 million in 2014 compared to cash provided by working capital of
$48.0 million in 2013, reflecting lower net cash flow related to working capital
of $98.4 million in 2014 versus 2013. Cash used for working capital in 2014
primarily consisted of a $27.7 million increase in inventories, an $18.1 million
increase in accounts receivable and a $13.6 million reduction in accounts
payable and long term liabilities, partially offset by a $14.5 million increase
in accrued expenses. Cash provided by working capital in 2013 primarily
consisted of a $35.6 million reduction in inventories and an $8.4 million
decrease in accounts receivable, partially offset by a $8.0 million decrease in
accounts payable and accrued expenses. For the full year 2014, average working
capital as a percentage of annualized sales declined by 90 basis points to
17.8%, as compared to a percentage of 18.7% for 2013.

    Cash used in investing activities was $297.8 million in 2014 compared to
$270.1 million provided by investing activities in 2013. In 2014, cash used in
investing activities included $118.8 million in capital expenditures and
$194.0 million, net of $6.7 million cash acquired, used to acquire LHi
Technologies. Also in 2014, we received $9.7 million as part of the final
working capital settlement from the sale of the Transportation Products
business. In 2013, cash provided by investing activities related to
$369.0 million in proceeds on the sale of the Transportation Products business,
net of cash on hand at the time of sale, and $11.9 million in proceeds on the
sale of equipment, partially offset by $110.8 million in capital expenditures.

    Capital expenditures of $118.8 million in 2014 compared to $110.8 million in
2013. The Construction Materials segment represented 43% of total capital
expenditures in 2014 as a result of projects to construct a new TPO plant in
Carlisle, PA
, and complete construction on a new PVC plant in 
Greenville, IL.

CCM's total capital expenditures were $51.4 million in 2014. During 2014, the
Interconnect Technologies segment spent $32.2 million in capital expenditures
primarily for the construction of a new manufacturing facility in 
Nogales, Mexico
.

    Cash used in financing activities was $20.2 million in 2014 compared to
$41.5 million in 2013. During 2014, cash used in financing activities related to
$61.2 million in dividends paid and $1.5 million in repayments on industrial and
revenue bonds, partially offset by net cash inflows related to the exercise of
employee stock options.

                                       34

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Debt Instruments, Guarantees and Covenants

The following table quantifies certain contractual cash obligations and commercial commitments at December 31, 2015:

(in millions)                 Total      2016      2017     2018     2019     2020      Thereafter
Short-term credit lines
and long-term debt          $   750.1   $ 150.1   $    -   $    -   $    -   $ 250.0   $      350.0
Interest on long-term
debt(1)                         165.0      35.1     25.9     25.9     25.9      25.9           26.3
Noncancelable operating
leases                           75.5      18.3     14.5     13.0     10.9       7.1           11.7
Estimated workers'
compensation claims              19.4       5.1      3.6      2.6      1.9       1.4            4.8
Estimated post-retirement
benefit payments                279.6      14.9     15.3     14.7     13.9      13.6          207.2

Total commitments           $ 1,289.6   $ 223.5   $ 59.3   $ 56.2   $ 52.6   $ 298.0   $      600.0




--------------------------------------------------------------------------------

º (1)

º Future expected interest payments are calculated based on the stated rate

for fixed rate debt and the effective interest rate at December 31, 2015

for variable rate debt.


    The above table does not include $159.7 million of long-term deferred
revenue and $202.7 million of other long-term liabilities, of which
$32.4 million relates to unrecognized income tax benefits. Excluded Other
long-term liabilities consist primarily of deferred income tax liabilities and
deferred compensation. Due to factors such as the timing of book-tax difference
reversals and retirement of employees, it is not reasonably possible to estimate
when these will become due.

    The amount of $19.4 million in obligations for workers compensation claims
reflected an estimate for discounted claims reported to the company and incurred
but not yet reported. The Company's estimate is based upon actuarial assumptions
and loss development factors and the Company's historical loss experience. See
Note 11 in the Notes to Consolidated Financial Statements.

    The amount of $279.6 million in post-retirement benefit payments primarily
reflected undiscounted estimated employee obligations under the Company's
qualified defined benefit pension plans, as well as obligations for the
Company's non-qualified executive supplemental and director plans and other
post-retirement welfare plans. The amount of estimated obligations is based upon
plan provisions, increases to compensation levels, actuarial assumptions and
health care cost trends. Of the $279.6 million in estimated obligations,
approximately $240.4 million reflect projected benefit obligations under the
Company's qualified defined benefit plans. The Company maintains a trust in
which plan assets of the trust, based upon their fair value measurement as of
December 31, 2015, and expected return on assets are expected to fully fund the
Company's projected benefit obligations for its qualified defined benefit plans.
See Note 1, Note 13, and Note 16 in the Notes to Consolidated Financial
Statements.

Although we have entered into purchase agreements for certain key raw materials, there were no such contracts with a term exceeding one year in place at December 31, 2015.


    Our $600 million senior unsecured revolving credit facility (the "Facility")
allows for borrowings of between one month and six month maturity at an interest
rate spread of 1.125 percentage points over Libor, based upon our current
investment grade credit rating. The Facility has an annual facility fee of
0.125 percentage points of the overall facility, or $750,000. We use the
facility for general working capital purposes and to provide additional
liquidity to pursue growth opportunities including acquisitions. The Facility
expires on December 12, 2018. At December 31, 2015, we had $600 million
available under the Facility. The Facility provides for grid-based interest
pricing based on the credit rating of our senior unsecured bank debt or other
unsecured senior debt and our utilization of the facility. Our senior unsecured
debt is rated BBB by Standard & Poor's and Baa2 by Moody's. The facility
requires us to meet various restrictive covenants and limitations including
certain leverage

                                       35

--------------------------------------------------------------------------------
ratios, interest coverage ratios, and limits on outstanding debt balances held
by certain subsidiaries. We had no borrowings on our facility during the year
ended December 31, 2015.

    On November 20, 2012, we completed a public offering of $350.0 million of
notes with a stated interest rate of 3.75% due November 15, 2022 (the "2022
Notes"). The 2022 Notes were issued at a discount of approximately $1.1 million,
resulting in proceeds of approximately $348.9 million. Interest on the 2022
Notes is paid each May 15 and November 15, which commenced on May 15, 2013. The
proceeds were utilized to re-pay borrowings under our $600 million revolving
credit facility and fund the acquisition of Thermax on December 17, 2012.

    On December 9, 2010, we completed a public offering of $250.0 million of
notes with a stated interest rate of 5.125% due December 15, 2020 (the "2020
Notes"). The 2020 Notes were issued at a discount of approximately $1.1 million,
resulting in proceeds of approximately $248.9 million. Interest on the 2020
Notes is paid each June 15 and December 15, which commenced on June 15, 2011.
The proceeds were utilized to re-pay borrowings under our revolving credit
facility that were used to partially finance the acquisition of Hawk.

    We have outstanding senior notes for principal amount of $150.0 million that
mature on August 15, 2016 (the "2016 Notes"). Interest on the 2016 Notes is paid
each February 15 and August 15, which commenced on February 15, 2007.

    At December 31, 2015, the fair value of our $350 million 3.75% notes due
2022, $250 million 5.125% notes due 2020 and $150 million 6.125% notes due 2016,
using Level 2 inputs, is approximately $349.3 million, $268.6 million and
$152.9 million, respectively. Fair value is estimated based on current yield
rates plus our estimated credit spread available for financings with similar
terms and maturities.

We also maintain a $45.0 million uncommitted line of credit, of which $45.0 million was available for borrowing as of December 31, 2015. We had no borrowings under the uncommitted line of credit during 2015.

    As of December 31, 2015, we had outstanding letters of credit amounting to
$30.2 million. Letters of credit are issued primarily to provide security under
insurance arrangements and certain borrowings and are issued under a continuing
credit agreement with J.P. Morgan Chase Bank, N.A.

Under our various debt and credit facilities, we are required to meet various restrictive covenants and limitations, including certain leverage ratios, interest coverage ratios, and limits on outstanding debt balances held by certain subsidiaries. We were in compliance with all covenants and limitations in 2015 and 2014.


    We view our debt to capital ratio (defined as short-term debt plus long-term
debt divided by the sum of total Shareholders' equity, long-term debt and
short-term debt) as an important indicator of our ability to utilize debt in
financing acquisitions and capital investments. As of December 31, 2015, our
debt to capital ratio was 24%.

Cash Management


    Our priorities for the use of cash are to invest in growth and performance
improvement opportunities for our existing businesses and maintain assets
through capital expenditures, pursue strategic acquisitions that meet
shareholder return criteria, pay dividends to shareholders, and return value to
shareholders through share repurchases.

    Capital expenditures in 2016 are expected to be between $100 million and
$125 million. The amount of expenditures is higher than capital expenditures in
2015 due to planned expenditures for the Fluid Technologies segment as well as
investments by Interconnect Technologies to expand its manufacturing capacity in
Dongguan, China
 and 
Franklin, WI.
 Planned capital expenditures for 2016 include
business sustaining projects, cost reduction efforts, and new product expansion.

                                       36

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    No minimum contributions to our pension plans are required in 2016. However,
during 2016 we expect to pay approximately $1.0 million in participant benefits
under the executive supplemental and director plans. In light of our plans'
funded status, we do not expect to make any discretionary contributions to our
other pension plans in 2016. We did not make any contributions to the pension
plans during 2015.

We intend to pay dividends to our shareholders and have increased our dividend rate annually for the past 39 years.


    We repurchased 1,496,411 shares in 2015 as part of our plan to return
capital to shareholders, utilizing $137.2 million of our cash on hand. As of
December 31, 2015, we had authority to repurchase an additional 1,517,746
shares. Shares may be repurchased at management's direction. Purchases may occur
from time-to-time in the open market and no maximum purchase price has been set.
The Company plans to continue to repurchase shares in 2016 on a systematic basis
and may seek authorization from the Board of Directors to purchase additional
shares in 2016. The decision to repurchase shares will depend on price,
availability, and other corporate developments.

    We believe that our cash on hand, operating cash flows, credit facilities,
lines of credit, access to bank financing and capital markets, and leasing
programs provide adequate liquidity and capital resources to fund ongoing
operations, repay our $150 million 2016 notes due August 15, 2016, expand
existing lines of business, and make strategic acquisitions. In addition, we
believe that our liquidity and capital resources from 
U.S.
 operations are
adequate to fund our 
U.S.
 operations and corporate activities without a need to
repatriate funds held by subsidiaries outside 
the United States
. However, the
ability to maintain existing credit facilities and access the capital markets
can be impacted by economic conditions outside our control, specifically credit
market tightness or sustained market downturns. Our cost to borrow and capital
market access can be impacted by debt ratings assigned by independent rating
agencies, based on certain credit measures such as interest coverage, funds from
operations and various leverage ratios.

Environmental


    We are 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, businesses, or offsite disposal facilities 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 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 December 31, 2015 and
2014, nor do we have any asset retirement obligations recorded at those dates.
However, the nature of our operations and our long history of industrial
activities at certain of our current or former facilities, as well as those
acquired, could potentially result in material environmental liabilities or
asset retirement obligations.

    While we 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 our business, capital expenditures, or financial
position. Future events, including those relating to climate change or
greenhouse gas regulation, could require us to incur expenses related to the
modification or curtailment of operations, installation of pollution control
equipment, or investigation and cleanup of contaminated sites.

                                       37

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Critical Accounting Estimates


    Our significant accounting policies are more fully described in Note 1 in
Item 8. Certain of our accounting policies require the application of
significant judgment by management in selecting the appropriate assumptions for
calculating financial estimates. By their nature, these judgments are subject to
an inherent degree of uncertainty. These judgments are based on our historical
experience, terms of existing contracts, our observation of trends in the
industry, information provided by our customers, and information available from
other outside sources, as appropriate. We consider certain accounting policies
related to revenue recognition, inventory cost and valuation, deferred revenue
and extended product warranty, valuation of goodwill and indefinite-lived
intangible assets, valuation of long-lived assets and pensions and other
post-retirement plans to be critical policies due to the estimation processes
involved.

Revenue Recognition. We recognize revenue when all of the criteria under current

U.S.
GAAP are met. Those include:
        º •
        º pervasive evidence of an arrangement exists,

        º •
        º delivery has occurred,

        º •
        º the customer takes ownership and assumes risk of loss,

        º •
        º collection is probable at the time of sale, and

        º •
        º the sales price is fixed or determinable.

    The first four criteria are generally a matter of fact based on the terms
and conditions of sale along with estimates of delivery times for those sales
with delivery terms, and an assessment of customer credit risk at the time of
sale. The most critical judgments involved in revenue recognition are primarily
those related to concluding that the sales price is determinable. We offer
various early payment discounts, rebates, and other incentives to our customers
primarily for competitive reasons. We estimate the impact of these items at the
time of sale based on historical experience of the ultimate price collected for
similar transactions with similar customers, industries, and geographic markets,
adjusted based on any known events or conditions that would suggest a different
outcome. We believe that we have sufficient history and other information
available to produce a reliable estimate and conclude that the price is
determinable at the time of sale. We reflect the impact of these various
discounts and incentives as a reduction of revenue at the time of sale and
subsequently adjust the initial estimate as new information becomes available.

    Inventories.  Inventories are valued at the lower of cost or market with
cost determined primarily on an average cost basis. Cost of inventories includes
direct as well as certain indirect costs associated with the acquisition and
production process. These costs include raw materials, direct and indirect
labor, and manufacturing overhead. Manufacturing overhead includes materials,
depreciation and amortization related to property, plant, and equipment and
other intangible assets used directly and indirectly in the acquisition and
production of inventory, and costs related to our distribution network such as
inbound freight charges, purchasing and receiving costs, inspection costs,
warehousing costs, internal transfer costs, and other such costs associated with
preparing our products for sale.

    Under 
U.S.
 GAAP, market is defined as current replacement cost, subject to a
floor and a ceiling. The floor is net realizable value less an approximately
normal profit margin and the ceiling is net realizable value. Net realizable
value is defined as estimated selling price less costs of completion and
disposal. The estimates that are subject to uncertainty include estimates of
selling prices, costs of completion and disposal, and the levels of excess and
obsolete inventory. The Company regularly reviews inventory quantities on hand
for indicators that cost may exceed market. These indicators include excess and
obsolete inventory and trends in raw material costs or selling prices. The
Company utilizes historical write-off information as well as forecasted selling
prices to determine if market is

                                       38

--------------------------------------------------------------------------------
below cost. At year end, if any reserves are recorded they are not reversed and
market is established as the inventory's new cost basis. In general, the Company
performs the test described above at a product level.

    Deferred Revenue and Extended Product Warranty.  We offer extended warranty
contracts on sales of certain products; the most significant being those offered
on our installed roofing systems within the Construction Materials segment. The
lives of these warranties range from five to thirty years. All revenue from the
sale of these contracts is deferred and amortized on a straight-line basis over
the life of the contracts. Current costs of services performed under these
contracts are expensed as incurred. We also record an additional loss and a
corresponding reserve if the total expected costs of providing services under
the contract at a product line level exceed unearned revenues equal to such
excess. We estimate total expected warranty costs using quantitative measures
based on historical claims experience and management judgment.

    Goodwill and Indefinite-Lived Intangible Assets.  Indefinite-lived
intangible assets are recognized and recorded at their acquisition-date fair
values. Intangible assets with indefinite useful lives are not amortized but are
tested annually, or more often if impairment indicators are present, for
impairment via a one-step process by comparing the fair value of the intangible
asset with its carrying value. If the intangible asset's carrying value exceeds
its fair value, an impairment charge is recorded in current earnings for the
difference. We estimate the fair value of our indefinite-lived intangible assets
based on the income approach utilizing the discounted cash flow method. We
periodically re-assess indefinite-lived intangible assets as to whether their
useful lives can be determined and if so, we begin amortizing any applicable
intangible asset.

    Goodwill is not amortized but is tested annually, or more often if
impairment indicators are present, for impairment at a reporting unit level. We
have determined that our operating segments are our reporting units. We have
allocated goodwill to our reporting units as follows:

                                               December 31,    December 31,
         (in millions)                             2015            2014
         Carlisle Construction Materials      $        118.7   $       123.3
         Carlisle Interconnect Technologies            555.4           554.3
         Carlisle Fluid Technologies                   173.4               -
         Carlisle Brake & Friction                     226.6           226.6
         Carlisle FoodService Products                  60.3            60.3

         Total                                $      1,134.4   $       964.5





    For the 2015 impairment test, four reporting units were tested for
impairment using ASC 350's quantitative approach: Carlisle Construction
Materials, Carlisle Interconnect Technologies, Carlisle Brake & Friction, and
Carlisle FoodService Products. We estimate that all of our indefinite-lived
intangible assets' fair values exceeded their carrying values at these reporting
units. We estimated the fair value of our reporting units primarily based on the
income approach utilizing the discounted cash flow method. We also utilized fair
value estimates derived from the market approach utilizing the public company
market multiple method to validate the results of the discounted cash flow
method, which required us to make assumptions about the applicability of those
multiples to our reporting units. The discounted cash flow method required us to
estimate future cash flows and discount those amounts to present value. The key
assumptions that drove fair value included:

        º •
        º Industry weighted-average cost of capital ("WACC"): We utilized a WACC
          relative to each reporting unit's industry as the discount rate for
          estimated future cash flows. The WACC is intended to represent a rate
          of return that would be expected by a market place participant.

                                       39

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        º •
        º EBIT margins: We utilized historical and expected EBIT margins, which
          varied based on the projections of each reporting unit being
          evaluated.

    Fair value exceeded carrying value for the above reporting units at
December, 31, 2015. While we believe these assumptions are appropriate, they are
subject to uncertainty and by nature include judgments and estimates regarding
various factors including the realization of sales price increases, fluctuation
in price and availability in key raw materials, and operating efficiencies.

    The Carlisle Fluid Technologies reporting unit was tested for impairment
using ASC 350's qualitative approach due to the fact that the business that
comprises the CFT reporting unit was acquired April 1, 2015 and based on our
comparison of estimates of future performance at December 31, 2015 versus our
estimates at the time of the acquisition we concluded that there were no
significant changes and therefore no indicators of impairment at December 31,
2015. Our estimates of future performance considered factors such as sales
growth, expected raw materials pricing, and the business environment of the
industries CFT serves. We will continue to evaluate the CFT reporting unit for
indicators of impairment on an interim basis and expect to perform a
quantitative analysis at the next annual impairment test.

    As discussed in Item 2 of the Company's September 30, 2015 Quarterly Report
on 10-Q under Financial Reporting Segments, we performed an interim goodwill
impairment test for the Carlisle Brake & Friction reporting unit as of
September 30, 2015 and concluded that its fair value exceeded its carrying
value. During the annual impairment testing performed as of October 1, 2015, we
estimated that CBF's fair value, utilizing the method discussed above, similarly
continued to exceed its carrying value by approximately 15%. Further, based on
our estimates of fair value for specific indefinite-lived intangible assets
utilized by the CBF reporting unit we concluded that no impairment exists at
December 31, 2015. We have and will continue to monitor EBIT margins versus
forecasted performance for this reporting unit given the economic conditions in
its industry as to whether there are any indicators of impairment. Consequently,
if our current estimates of recovery in CBF's end markets do not materialize as
expected and/or the 
U.S.
 Dollar continues to strengthen, and therefore results
continue to be lower than anticipated, or if interest rates and other factors
affecting the industry WACC adversely change, an impairment loss may be
recorded.

See Note 10 to the Consolidated Financial Statements in Item 8 for more information regarding goodwill.


    Valuation of Long-Lived Assets.  Long-lived assets or asset groups,
including amortizable intangible assets, are tested for impairment whenever
events or circumstances indicate that the carrying amount of the asset or asset
group may not be recoverable. For purposes of testing for impairment, we group
our long-lived assets classified as held and used at the lowest level for which
identifiable cash flows are largely independent of the cash flows from other
assets and liabilities. Our asset groupings vary based on the related business
in which the long-lived asset is employed and the interrelationship between
those long-lived assets in producing net cash flows; for example, multiple
manufacturing facilities may work in concert with one another or may work on a
stand-alone basis to produce net cash flows. We utilize our long-lived assets in
multiple industries and economic environments and our asset grouping reflects
these various factors

    We monitor the operating and cash flow results of our long-lived assets or
asset groups classified as held and used to identify whether events and
circumstances indicate the remaining useful lives of those assets should be
adjusted, or if the carrying value of those assets or asset groups may not be
recoverable. In the event indicators of impairment are identified, undiscounted
estimated future cash flows are compared to the carrying value of the long-lived
asset or asset group. If the undiscounted estimated future cash flows are less
than the carrying amount, we determine the fair value of the asset or asset
group and record an impairment charge in current earnings to the extent carrying
value exceeds fair value. Fair values may be determined based on estimated
discounted cash flows, by prices

                                       40

--------------------------------------------------------------------------------
for like or similar assets in similar markets, or a combination of both. There
are currently no long-lived assets or asset groups classified as held and used
for which the related undiscounted cash flows do not substantially exceed their
carrying amounts.

    Long-lived assets or asset groups that are part of a disposal group that
meets the criteria to be classified as held for sale are not assessed for
impairment but rather if fair value, less cost to sell, of the disposal group is
less than its carrying value a loss on sale is recorded against the disposal
group.

    Pensions.  We maintain defined benefit retirement plans for certain
employees. The annual net periodic expense and benefit obligations related to
these plans are determined on an actuarial basis. This determination requires
assumptions to be made concerning general economic conditions (particularly
interest rates), expected return on plan assets, increases to compensation
levels, and health care cost trends. These assumptions are reviewed periodically
by management in consultation with our independent actuary and investment
manager. Changes in the assumptions to reflect actual experience can result in a
change in the net periodic expense and accrued benefit obligations. Beginning in
2016, we will move from utilizing a weighted-average discount rate, which was
derived from the yield curve used to measure the benefit obligation at the
beginning of the period, to a spot yield rate curve to estimate the pension
benefit obligation and net periodic benefit costs. The change in estimate
provides a more accurate measurement of service and interest costs by applying
the spot rate that could be used to settle each projected cash flow
individually. This change in estimate is not expected to have a material effect
on net periodic benefit costs for 2016.

    The defined benefit pension plans' assets consist primarily of fixed-income
and equity mutual funds, which are considered Level 1 assets under the fair
value hierarchy as their fair value is derived from market-observable data. We
use the market related valuation method to determine the value of plan assets,
which recognizes the change of the fair value of the plan assets over five
years. If actual experience differs from these long-term assumptions, the
difference is recorded as an unrecognized actuarial gain (loss) and then
amortized into earnings over a period of time based on the average future
service period, which may cause the expense related to providing these benefits
to increase or decrease. The weighted-average expected rate of return on plan
assets was 6.20% for the 2015 valuation. While we believe 6.20% is a reasonable
expectation based on the plan assets' mix of fixed income and equity
investments, significant differences in actual experience or significant changes
in the assumptions used may materially affect the pension obligations and future
expense. The effects of a 0.25% increase or decrease in the expected rate of
return would cause our estimated 2015 pension expense to be approximately
$0.4 million lower or $0.4 million higher, respectively. The assumed
weighted-average discount rate was 4.15% for the 2015 valuation. The effects of
a 0.25% increase or decrease in the assumed discount rate would cause our
projected benefit obligation at December 31, 2015 to be approximately
$3.8 million lower or $3.7 million higher, respectively. We used a
weighted-average assumed rate of compensation increase of 4.29% for the 2015
valuation. This rate is not expected to change in the foreseeable future and is
based on our actual rate of compensation increase over the past several years,
adjusted to reflect management's expectations regarding future labor costs.

    We also have a limited number of unfunded post-retirement benefit programs
that provide certain retirees with life insurance, medical and prescription drug
coverage. The annual net periodic expense and benefit obligations of these
programs are also determined on an actuarial basis and are subject to
assumptions on the discount rate and increases in compensation levels. The
discount rate used for the 2015 valuation was 3.99%. The effects of a 1%
increase or decrease in either the discount rate or the assumed health care cost
trend rates would not be material. Similar to the defined benefit retirement
plans, these plans' assumptions are reviewed periodically by management in
consultation with our independent actuary. Changes in the assumptions can result
in a change in the net periodic expense and accrued benefit obligations.

                                       41

--------------------------------------------------------------------------------
    Income Taxes.  We record income taxes in accordance with ASC 740, Income
Taxes, which includes an estimate of taxes payable or refundable for the current
year and deferred tax liabilities and assets for the future tax consequences of
events that have been recognized in our financial statements or tax returns.

    Deferred tax assets and liabilities reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. We periodically
assess the realizability of deferred tax assets and the adequacy of deferred tax
liabilities.

    Realization of deferred tax assets involves estimates regarding (1) the
timing and amount of the reversal of taxable temporary differences, (2) expected
future taxable income, and (3) the impact of tax planning strategies. We believe
that it is more likely than not that we may not realize the benefit of certain
deferred tax assets and, accordingly, have established a valuation allowance
against them. In assessing the need for a valuation allowance, we consider all
available positive and negative evidence, including past operating results,
projections of future taxable income and the feasibility of and potential
changes to ongoing tax planning strategies. Although realization is not assured
for the remaining deferred tax assets, we believe it is more likely than not
that the remaining deferred tax assets will be realized. However, deferred tax
assets could be reduced in the near term if our estimates of taxable income
during the carryforward period are significantly reduced or tax planning
strategies are no longer viable.

    The amount of income tax that we pay annually is dependent on various
factors, including the timing of certain deductions and ongoing audits by
federal, state and foreign tax authorities, which may result in proposed
adjustments. We perform reviews of our income tax positions on a quarterly basis
and accrue for potential uncertain tax positions. We believe we have adequately
provided for any reasonably foreseeable outcome related to these matters.

New Accounting Standards Not Yet Effective

See Note 1 to the Consolidated Financial Statements in Item 8 for more information regarding new accounting standards which are not yet effective.

Forward-Looking Statements


    This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
generally use words such as "expect," "foresee," "anticipate," "believe,"
"project," "should," "estimate," "will," "plans", "forecast" and similar
expressions, and reflect our expectations concerning the future. Such statements
are made based on known events and circumstances at the time of publication, and
as such, are subject in the future to unforeseen risks and uncertainties. It is
possible that our future performance may differ materially from current
expectations expressed in these forward-looking statements, due to a variety of
factors such as: increasing price and product/service competition by foreign and
domestic competitors, including new entrants; technological developments and
changes; the ability to continue to introduce competitive new products and
services on a timely, cost-effective basis; our mix of products/services;
increases in raw material costs which cannot be recovered in product pricing;
domestic and foreign governmental and public policy changes including
environmental and industry regulations; threats associated with and efforts to
combat terrorism; protection and validity of patent and other intellectual
property rights; the successful integration and identification of our strategic
acquisitions; the cyclical nature of our businesses; and the outcome of pending
and future litigation and governmental proceedings. In addition, such statements
could be affected by general industry and market conditions and growth rates,
the condition of the financial and credit markets, and general domestic and
international economic conditions including interest rate and currency exchange
rate fluctuations. Further, any conflict in the

                                       42

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international arena may adversely affect general market conditions and our future performance. We undertake no duty to update forward-looking statements.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


Source: Equities.com News (February 8, 2016 - 4:35 AM EST)

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