CARLISLEDecember 7, 2010

Cardo MartinezLisandro TsaiTom Wang Antti Zhang

Company Overview Industry Overview Competitors SWOT Analysis Management Assessment Recent Financial Results Financial Valuations Recommendation

Presentation Outlines

Established in 1917 in Carlisle, Pennsylvania as Carlisle Tire & Rubber Company

Headquartered in Charlotte, NC In 1986, Carlisle was incorporated as a holding

company Fortune 1000 company with 10,000 employees A diversified global manufacturing company serving the

construction materials, commercial roofing, specialty tire and wheel, power transmission, heavy-duty brake and friction, food service, aerospace and test and measurement industries.

2009: Recorded Sales $2,370 million NYSE Ticker Symbol: CSL Currently trading at $38.79

Company Overview

Source: http://www.carlisle.com/

Carlisle Engineered Transportation Services Manufactures bias and radial tires, specialty wheels,

power transmission belts and off-highway braking and actuation systems

Carlisle Construction Materials (CCM) Manufactures a complete range of single-ply roofing and

water proofing systems focused on optimizing the performance of building envelope

Carlisle Food Services Products Produces a wide range of commercial and institutional

food service permanent ware, catering equipment, meal delivery system and disposable food containers

Business Segments

Source: 2009 Carlisle Annual Report pages 6 & 7

Carlisle Interconnect Technologies Designs and manufactures high performance

wire and cable, RF/microwave connectors, avionics trays, racks, intergraded subsystem and complex cable assemblies

Carlisle Specialty Products Trail King designs and builds specialized,

custom heavy-haul and bulk commodity trailers, truck and trailer dump bodies, and other specialty trailers

Business Segments

Source: 2009 Carlisle Annual Report pages 6 & 7

Business Segments

2009 Net Sales by business segments

Source: 2009 Carlisle Form 10K page 2

Recent Stock Performance

Source: http://finance.yahoo.com/q/bc?t=1y&s=CSL&l=on&z=l&q=l&c=&c=^GSPC&c=^DJI

Construction Material Industry In 2014, the global construction materials market

is forecast to have a value of $823.3 billion, an increase of 52.7% since 2009

Asia pacific accounts for 70.6% of global construction material market value

Recent decelerated growth intensified rivalry between market players in the construction materials market

The global construction materials market has experienced healthy growth in recent years. But in 2009 the growth rate dropped to 1.8 %. However, the outlook is positive with growth forecasted to accelerate over the coming years, beyond the rates from previous years.

Industry Overview

Source: http://library.marketlineinfo.com.proxy2.library.uiuc.edu/library/DisplayContent.aspx?N=4294854815

Industry Overview

Global construction materials market segmentation II: % share, by value, 2009

Source: http://library.marketlineinfo.com.proxy2.library.uiuc.edu/library/DisplayContent.aspx?N=4294854815

Industry OverviewThe global construction materials industry generated $539.3 billion in 2009 with a compound growth rate of 5% in the period 2005-09

The compound annual growth rate of the market in 2009-2014 is predicted to be 8.8%

Source: http://library.marketlineinfo.com.proxy2.library.uiuc.edu/library/DisplayContent.aspx?N=4294854815

Tires & Rubber Industry In 2014, the global tires & rubber market is forecast

to have a value of $131.4 billion, an increase of 15.1% since 2009

Passenger car & light truck segment is the largest within the global tire & rubber market, accounting for 60.5% of the market’s total value

Asia-pacific accounts for 34.4% of the global tires & rubber market value

Rivalry is intense with four leading companies holding more than 62% of market share by value

After a period of steady growth, the tires and rubber market fell in decline in 2008, which further deepened into 2009. Recovery is expected in 2010, followed by slowly accelerating growth towards 2014.

Industry Overview

Source: http://library.marketlineinfo.com.proxy2.library.uiuc.edu/library/DisplayContent.aspx?N=210+4294854950

Industry Overview

Global tires & rubber market segmentation I:% share, by value, 2009

Global tires & rubber market segmentation II: % share, by value, 2009

Source: http://library.marketlineinfo.com.proxy2.library.uiuc.edu/library/DisplayContent.aspx?N=210+4294854950

Industry Overview

Source: http://library.marketlineinfo.com.proxy2.library.uiuc.edu/library/DisplayContent.aspx?N=210+4294854950

The global tire and rubber market generated a market value of 114.2 billion in 2009, a decrease of 6.7% from previous year. The compound annual growth rate is 0.9% from 2005 to 2009.

The compound annual growth rate of the global tire and rubber market in 2009-2014 period is expected to be 2.9%

Cooper Industries plc Crane Co. Illinois Tool Works Inc. Westlake Chemical Corp. Eastman Chemical Co.

Competitors

  CSL CBE CR ITW WLK EMNConstruction materials X X X X X X

Transportation X X X X    Interconnect technologies X X       X

Food service products X     X    

Specialty products X

Competitors

Strengths Diversified product

portfolio High quality products Intellectual Property

SWOT Analysis

Weaknesses Sluggish performance in

certain segments Growth is dependent on

acquisitions Sales primarily from US

market

Sources: MarketLine and 2009 Carlisle Annual Report

Opportunities Renewable energy

source materials Growth in global

aerospace and defense market

SWOT Analysis

Threats Rising raw materials

prices Intense competition Products might become

obsolete due to technology changes

Sources: MarketLine and 2009 Carlisle Annual Report

Management is dedicated to achieving low cost positions and providing service excellence based on superior quality, on-time delivery and short cycle times.

Management Assessment

Carlisle Operating System (COS) Deployed enterprise-wide in 2009 Eliminates waste and improves efficiencies Quickly becoming part of the company’s

culture

Cost savings for 2009 is over $20 million. Similar savings are forecasted for 2010.

Management Assessment

“ 5-15-30-15-100 Vision” Introduced in 2007

Management Assessment

Comps Analysis

Comps Analysis

Recent Financial Results

Taxes (Quality of Earning)

Note on taxes from 2007-2009

The average actual return (not geomean) has been 2.4% The long term return is now 7% however they use moving thus the

12.15% expected return in 2009 The Pension is a liability, however its actual effects are not reflected

on the income statement. Only the net is reflected on the balance sheet

Pension

Note on Pension 2006-2009

Their strategy has evolved. Now they are simply pursuing returns!! (unfortunately we do not know what junk bonds they are invested in specifically). They label them as sovereign and corporate

Pensions

The continuous breakdown of goodwill has made it difficult to have a better understanding of it. The largest goodwill is applied technologies

Goodwill

Notes on Goodwill 2005-2008

Management says its due to “Strong Cash Flows”. There is more!!!! That may be a reason, however; we believe its due them being offered approximately 60 cents on the dollar.

The market believes that receivables are risky. Company was dependent on this for acquisition thus acquisition may slow down unless leverage increases.

Allowance is 7.9 on 292.5 thus (7.9/(292.5+7.9)= .0263 or 2.63%

Write-off of $4.9 million in 2009 Allowance was $11.3 million in 2008 then dropped to $7.9

million. We can then infer that $11.3-4.9= $6.4 which then results in $7.9-6.4= $1.5 million bad debt expense.

When we look at the write off in comparison to the remaining allowance then 4.9/7.9= .6203 or 60% (is remaining).

Why Securitization Ended?

Financial Valuations Sales Projection

5 Segments with different growth rate The growth rate comes from industrial

report, GDP forecast and personal adjustment

COGS Projection

0

500

1000

1500

2000

2500

3000

3500

1 2 3 4 5

Sal esCOGS

2005 2006 2007 2008 2009

Financial Valuations

WACC Cost of Debt

Fair Value=>YTM BBB Rating Spread+10 Years T notes

Cost of Equity CAPM

Historical Beta Unlevered Industry Beta=>CSL’s Beta

LTM ROE Stock Market Return for 20 Years

Financial Valuations

FCF

TEV Share

Price

Financial Valuations

The key question is if the transition from growth by acquisition to organic growth achievable. Looking at the past information as above mentioned we believe the metrics are difficult to achieve

However, if they achieve their target, their share value is about 59.13

We recommend to put this company on the watch list

Recommendations