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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) 
OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2018
 
Commission file number 1-9278
csl20160930x10q001a04.jpg 
www.carlisle.com 
 CARLISLE COMPANIES INCORPORATED
(Exact name of registrant as specified in its charter) 
Delaware
 
31-1168055
(State of incorporation)
 
(I.R.S. Employer Identification No.)
(480) 781-5000
(Telephone Number)
16430 North Scottsdale Road, Suite 400, Scottsdale, Arizona 85254
(Address of principal executive office, including zip code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  

Yes  ☒  No  ☐
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  ☒  No ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒
Accelerated filer ☐
 
 
Non-accelerated filer ☐
Smaller reporting company ☐
 
 
 
Emerging growth company ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Yes ☐ No ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ☐  No  ☒

On April 19, 2018 there were 60,946,851 shares of the registrant's common stock outstanding, par value $1.00 per share.


 

Table of Contents

Carlisle Companies Incorporated
Table of Contents
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


2

Table of Contents

PART I
Item 1. Financial Statements
Carlisle Companies Incorporated
Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)

 
 
Three Months Ended March 31,
(in millions except share and per share amounts)
 
2018
 
2017
Revenues
 
$
984.7

 
$
774.0

 
 
 
 
 
Cost of goods sold
 
735.3

 
547.9

Selling and administrative expenses
 
148.6

 
124.9

Research and development expenses
 
13.9

 
12.0

Other operating (income) expense, net
 
(7.8
)
 
(0.3
)
Operating income
 
94.7

 
89.5

Interest expense, net
 
14.5

 
6.6

Other non-operating (income) expense, net
 
1.9

 
(1.4
)
Income from continuing operations before income taxes
 
78.3

 
84.3

Provision for income taxes
 
20.4

 
26.4

Income from continuing operations
 
57.9

 
57.9

 
 
 
 
 
Discontinued operations:
 
 

 
 

Income before income taxes
 
299.0

 
6.2

Provision for income taxes
 
47.3

 
2.3

Income from discontinued operations
 
251.7

 
3.9

Net income
 
$
309.6

 
$
61.8

 
 
 
 
 
Basic earnings per share attributable to common shares:
 
 

 
 

Income from continuing operations
 
$
0.93

 
$
0.89

Income from discontinued operations
 
4.05

 
0.06

Basic earnings per share
 
$
4.98

 
$
0.95

 
 
 
 
 
Diluted earnings per share attributable to common shares:
 
 

 
 

Income from continuing operations
 
$
0.92

 
$
0.88

Income from discontinued operations
 
4.02

 
0.06

Diluted earnings per share
 
$
4.94

 
$
0.94

 
 
 
 
 
Average shares outstanding (in thousands):
 
 

 
 

Basic
 
61,684

 
64,353

Diluted
 
62,164

 
64,848

 
 
 
 
 
Dividends declared and paid per share
 
$
0.37

 
$
0.35

 
 
 
 
 
Comprehensive income:
 
 

 
 

Net income
 
$
309.6

 
$
61.8

Other comprehensive income (loss)
 
 

 
 

Foreign currency translation
 
22.2

 
11.4

Accrued post-retirement benefit liability, net of tax
 
0.9

 
0.4

Other, net of tax
 
0.2

 
(0.1
)
Other comprehensive income
 
23.3

 
11.7

Comprehensive income
 
$
332.9

 
$
73.5

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

3

Table of Contents

Carlisle Companies Incorporated
Condensed Consolidated Balance Sheets
(in millions except share and per share amounts)
 
March 31, 2018
 
December 31, 2017
ASSETS
 
(Unaudited)
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
979.1

 
$
378.3

Receivables, net of allowance of $6.0 million and $6.5 million, respectively
 
678.2

 
625.7

Inventories
 
490.1

 
448.8

Prepaid expenses
 
21.8

 
21.7

Other current assets
 
48.9

 
73.6

Discontinued operations
 

 
96.5

Total current assets
 
2,218.1

 
1,644.6

 
 
 
 
 
Property, plant, and equipment, net
 
746.0

 
731.1

Goodwill, net
 
1,456.8

 
1,452.1

Other intangible assets, net
 
1,044.8

 
1,065.0

Other long-term assets
 
38.1

 
34.9

Discontinued operations
 

 
372.1

Total assets
 
$
5,503.8

 
$
5,299.8

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
372.6

 
$
332.1

Accrued expenses
 
304.4

 
257.8

Deferred revenue
 
29.2

 
27.8

Discontinued operations
 

 
40.9

Total current liabilities
 
706.2

 
658.6

 
 
 
 
 
Long-term liabilities:
 
 
 
 
Long-term debt
 
1,586.4

 
1,586.2

Deferred revenue
 
190.0

 
188.0

Other long-term liabilities
 
300.4

 
288.7

Discontinued operations
 

 
50.0

Total long-term liabilities
 
2,076.8

 
2,112.9

 
 
 
 
 
Shareholders' equity:
 
 
 
 
Preferred stock, $1 par value per share (5,000,000 shares authorized and unissued)
 

 

Common stock, $1 par value per share (200,000,000 shares; 60,759,416 and 61,839,734 shares outstanding, respectively)
 
78.7

 
78.7

Additional paid-in capital
 
357.6

 
353.7

Deferred compensation equity
 
11.1

 
10.4

Treasury shares, at cost (17,713,502 and 16,613,193 shares, respectively)
 
(778.0
)
 
(649.6
)
Accumulated other comprehensive loss
 
(68.9
)
 
(85.7
)
Retained earnings
 
3,120.3

 
2,820.8

Total shareholders' equity
 
2,720.8

 
2,528.3

Total liabilities and equity
 
$
5,503.8

 
$
5,299.8

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

4

Table of Contents

Carlisle Companies Incorporated
Condensed Consolidated Statements of Cash Flows (Unaudited)

 
 
Three Months Ended March 31,
(in millions)
 
2018
 
2017
Operating activities:
 
 
 
 
Net income

$
309.6

 
$
61.8

Reconciliation of net income to net cash provided by operating activities:

 


 

Depreciation

22.7


19.6

Amortization

28.3


19.2

Stock-based compensation, net of tax benefit

6.8


3.2

Deferred taxes
 
(2.3
)
 
(0.2
)
Gain on sale of discontinued operation, net of tax
 
(247.9
)
 

Other operating activities, net

(3.1
)

0.8

Changes in assets and liabilities, excluding effects of acquisitions:






Receivables

(26.8
)

(34.1
)
Inventories

(55.8
)

(33.8
)
Prepaid expenses and other assets

11.5


3.3

Accounts payable

27.2


31.2

Accrued expenses

(40.6
)

(46.6
)
Deferred revenues

3.3


7.8

Other long-term liabilities

0.3


(0.3
)
Net cash provided by operating activities

33.2


31.9

 
 
 
 
 
Investing activities:
 
 
 
 
Proceeds from sale of discontinued operation
 
754.6

 

Capital expenditures
 
(42.5
)
 
(30.4
)
Acquisitions, net of cash acquired
 
(0.7
)
 
(225.8
)
Other investing activities, net

3.6



Net cash provided by (used in) investing activities

715.0


(256.2
)
 
 
 
 
 
Financing activities:
 
 
 
 
Proceeds from revolving credit facility



50.0

Repayments of revolving credit facility



(50.0
)
Repurchases of common stock
 
(122.0
)
 

Dividends paid

(23.1
)
 
(22.7
)
Withholding tax paid related to stock-based compensation

(4.6
)
 
(7.0
)
Proceeds from exercise of stock options

1.7


1.6

Net cash used in financing activities

(148.0
)

(28.1
)
 
 
 
 
 
Effect of foreign currency exchange rate changes on cash and cash equivalents
 
1.9

 
1.1

Change in cash and cash equivalents
 
602.1

 
(251.3
)
Less: Change in cash and cash equivalents of discontinued operations
 
(1.3
)
 
(4.6
)
Cash and cash equivalents at beginning of period
 
378.3

 
385.3

Cash and cash equivalents at end of period
 
$
979.1

 
$
129.4

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

5

Table of Contents

Carlisle Companies Incorporated
Condensed Consolidated Statement of Shareholders’ Equity (Unaudited)
 
 
Common Stock
 
Additional Paid-In Capital
 
Deferred Compensation Equity
 
Accumulated Other Comprehensive Income (loss)
 
Retained Earnings
 
Shares in Treasury
 
Total Shareholders' Equity
(in millions, except per share amounts)
 
Shares
 
Amount
 
 
 
 
 
Shares
 
Cost
 
Balance as of December 31, 2016
 
64.3

 
$
78.7

 
$
335.3

 
$
10.3

 
$
(122.2
)
 
$
2,547.4

 
14.2

 
$
(382.6
)
 
$
2,466.9

Net income
 

 

 

 

 

 
61.8

 

 

 
61.8

Other comprehensive loss, net of tax
 

 

 

 

 
11.7

 

 

 

 
11.7

Cash dividends - $0.35 per share
 

 

 

 

 

 
(22.7
)
 

 

 
(22.7
)
Issuances and deferrals, net for stock based compensation (1)
 
0.1

 

 
3.2

 
1.6

 

 

 
(0.1
)
 
(4.3
)
 
0.5

Balance as of March 31, 2017
 
64.4

 
$
78.7

 
$
338.5

 
$
11.9

 
$
(110.5
)
 
$
2,586.5

 
14.1

 
$
(386.9
)
 
$
2,518.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2017
 
61.8

 
$
78.7

 
$
353.7

 
$
10.4

 
$
(85.7
)
 
$
2,820.8

 
16.6

 
$
(649.6
)
 
$
2,528.3

Adoption of accounting standards (2)
 

 

 

 

 
(6.5
)
 
13.0

 

 

 
6.5

Net income
 

 

 

 

 

 
309.6

 

 

 
309.6

Other comprehensive income, net of tax
 

 

 

 

 
23.3

 

 

 

 
23.3

Cash dividends - $0.37 per share
 

 

 

 

 

 
(23.1
)
 

 

 
(23.1
)
Repurchases of common stock
 
(1.2
)
 

 

 

 

 

 
1.2

 
(129.3
)
 
(129.3
)
Issuances and deferrals, net for stock based compensation (1)
 
0.1

 

 
3.9

 
0.7

 

 

 
(0.1
)
 
0.9

 
5.5

Balance as of March 31, 2018
 
60.7

 
$
78.7

 
$
357.6

 
$
11.1

 
$
(68.9
)
 
$
3,120.3

 
17.7

 
$
(778.0
)
 
$
2,720.8

(1) 
Issuances and deferrals, net for stock based compensation reflects share activity related to option exercises, restricted and performance shares vested and net issuances and deferrals associated with deferred compensation equity.
(2) 
Refer to Note 2 for further information regarding new accounting standards adopted.
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)

6

Table of Contents


Carlisle Companies Incorporated
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by Carlisle Companies Incorporated (the "Company" or "Carlisle"). The accompanying unaudited Condensed Consolidated Financial Statements do not include all disclosures as required by accounting principles generally accepted in the United States of America ("United States" or "U.S."), and should be read in conjunction with the Company’s audited Consolidated Financial Statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2017.
The accompanying unaudited Condensed Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the U.S. and, of necessity, include some amounts that are based upon management estimates and judgments. The accompanying unaudited Condensed Consolidated Financial Statements include assets, liabilities, revenues and expenses of all majority-owned subsidiaries. Intercompany transactions and balances are eliminated in consolidation.
In the Company's opinion, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting solely of adjustments of a normal, recurring nature, except as disclosed in Note 2 for new accounting standards adopted, necessary to present fairly the financial position, results of operations and cash flows for the periods presented. During the fourth quarter of 2017, the Company revised (i) the Condensed Consolidated Statements of Income to include a subtotal of operating income, with other non-operating (income) expense, net reflected as a separate line item below interest expense, net and (ii) its segment measure of profit and loss to operating income (previously earnings before interest and taxes). The Company has reclassified certain prior period amounts to conform to the current period presentation of operating income, including other operating (income) expense, net, operating income and other non-operating (income) expense, net in the Condensed Consolidated Statements of Income and operating income in Note 3. These changes were made to better reflect the Company's results of operations and to be consistent with the change in the measure of operating performance evaluated by the Chief Operating Decision Maker, the Company's Chief Executive Officer.
Discontinued Operations
The results of operations for the Company's Carlisle FoodService Products ("CFS") segment have been classified as discontinued operations for all periods presented in the Condensed Consolidated Statements of Income. Assets and liabilities subject to the completed sale of CFS have been classified as discontinued operations for all periods presented in the Condensed Consolidated Balance Sheets. Refer to Note 5 for additional information.
Note 2New Accounting Pronouncements 
New Accounting Standards Adopted
In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 outlines a single, comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance issued by the FASB, including industry specific guidance. ASU 2014-09 provides accounting guidance for all revenue arising from contracts with customers and affects all entities that enter into contracts with customers to provide goods and services.
On January 1, 2018, the Company adopted ASU 2014-09 and all the related amendments ("ASC 606") to all uncompleted contracts using the modified retrospective method. The Company recognized the cumulative effect of initially applying ASC 606 as an adjustment to the opening balance of retained earnings totaling $6.5 million. The comparative information has not been adjusted and continues to be reported under the accounting standards in effect for those periods. The Company expects the impact of the adoption of ASC 606 to be immaterial to its reported revenue on an ongoing basis.
A majority of the Company's revenues continue to be recognized when products are shipped from its manufacturing facilities. For certain highly customized product contracts in the Carlisle Interconnect Technologies segment, revenue was previously recognized as billed at the point products were shipped and title and associated risk and rewards of ownership passed to the customer. In accordance with ASC 606, the Company now recognizes revenue over time, for those highly customized products, using the input method as products are manufactured.

7

Table of Contents


A summary of the effects of adopting ASC 606 on the Condensed Consolidated Financial Statements follows:
 
 
Three Months Ended March 31, 2018
(in millions)
 
As Reported
 
Balances Without Adoption of
ASC 606
 
Effect of Change Higher/(Lower)
Condensed Consolidated Statement of Income
 
 
 
 
 
 
Revenues
 
$
984.7

 
$
973.7

 
$
11.0

Cost of goods sold
 
735.3

 
728.4

 
6.9

Operating income
 
94.7

 
90.6

 
4.1

Provision for income taxes
 
20.4

 
19.4

 
1.0

Income from continuing operations
 
57.9

 
54.8

 
3.1

Net income
 
309.6

 
306.5

 
3.1

 
 
March 31, 2018
(in millions)
 
As Reported
 
Balances Without Adoption of
ASC 606
 
Effect of Change Higher/(Lower)
Condensed Consolidated Balance Sheet
 
 
 
 
 
 
Receivables
 
$
678.2

 
$
645.0

 
$
33.2

Inventories
 
490.1

 
511.4

 
(21.3
)
Other current assets
 
48.9

 
48.2

 
0.7

Accrued expenses
 
304.4

 
303.4

 
1.0

Other long-term liabilities
 
300.4

 
298.4

 
2.0

Retained earnings
 
3,120.3

 
3,113.8

 
6.5


In March 2017, the FASB issued ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost ("ASU 2017-07"), which requires employers to include only the service cost component of net periodic pension cost and net periodic postretirement benefit cost in operating income, if such measure is presented. The other components of net benefit cost, including amortization of prior service cost/credit, and settlement and curtailment effects, are to be included in non-operating income. ASU 2017-07 also stipulates that only the service cost component of net benefit cost is eligible for capitalization into inventory or other tangible assets.
On January 1, 2018, the Company adopted ASU 2017-07 using a retrospective approach for the presentation in the Condensed Consolidated Statement of Income to include only the service cost component of net periodic pension costs and net periodic postretirement benefit cost in operating income. The Company elected to use, as a practical expedient, the amounts disclosed in its defined benefit plan note for the prior comparative period as the estimation basis for applying the retrospective presentation requirements. As a result of adopting ASU 2017-07, net periodic benefit income for the non-service cost components of $(0.6) million was reclassified from other operating (income) expense, net to other non-operating (income) expense, net for the three months ended March 31, 2017.
In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income ("ASU 2018-02") which allows entities to reclassify from accumulated other comprehensive income to retained earnings for stranded tax effects related to the change in federal tax rate for all items accounted for in other comprehensive income. Entities can also elect to reclassify other stranded tax effects that relate to the Tax Cuts and Jobs Act, but do not directly relate to the change in the federal tax rate, including state taxes and changing from a worldwide tax system to a territorial system. Tax effects that are stranded in other comprehensive income for other reasons may not be reclassified.
Effective January 1, 2018, the Company early adopted ASU 2018-02 using a modified retrospective approach for the presentation in the Condensed Consolidated Balance Sheets to reclassify $6.5 million related to the change in federal tax rate from accumulated other comprehensive loss to retained earnings.

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New Accounting Standards Issued But Not Yet Adopted 
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02") which requires lessees to recognize a lease liability for the obligation to make lease payments, measured at the present value on a discounted basis, and a right-of-use ("ROU") asset for the right to use the underlying asset for the duration of the lease term, measured at the lease liability amount adjusted for lease prepayments, lease incentives received, and initial direct costs. The lease liability and ROU asset are recognized in the balance sheet at the commencement of the lease. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern. Classification will be based on criteria that are largely similar to those applied in current lease accounting. ASU 2016-02 is effective for the Company beginning January 1, 2019 and requires the use of a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period presented in the financial statements. Early application of the ASU is permitted; however, the Company plans to adopt on January 1, 2019. The Company has not yet determined the impact of adopting the standard on the Consolidated Financial Statements.
Note 3Segment Information 
The Company has organized its operations into four primary segments, based on the products it sells, each of which represent a reportable segment as follows:
Carlisle Construction Materials ("CCM")—the principal products of this segment are insulation materials, rubber (EPDM), thermoplastic polyolefin (TPO) and polyvinyl chloride (PVC) roofing membranes used predominantly on non-residential low-sloped roofs, related roofing accessories, including flashings, fasteners, sealing tapes and coatings and waterproofing products. CCM also manufactures and distributes energy-efficient rigid foam insulation panels for substantially all roofing applications. The markets served primarily include new construction, re-roofing and maintenance of low-sloped roofs, water containment, HVAC sealants and coatings and waterproofing. In addition, CCM offers a broad range of specialty polyurethane products and solutions across a broad diversity of markets and applications. 
Carlisle Interconnect Technologies ("CIT")—the principal products of this segment are high-performance wire, cable, connectors, contacts and cable assemblies for the transfer of power and data primarily for the aerospace, medical, defense electronics, test and measurement equipment and select industrial markets.
Carlisle Fluid Technologies ("CFT")—the principal products of this segment are industrial liquid and powder finishing equipment and integrated system solutions for spraying, pumping, mixing, metering and curing of a variety of coatings used in the general industrial, transportation, auto refinishing, protective coating, wood and specialty markets. 
Carlisle Brake & Friction ("CBF")—the principal products of this segment include high-performance brakes and friction material and clutch and transmission friction material for the construction, agriculture, mining, on-highway, aerospace and motor sports markets.
A summary of segment information follows:
 
 
Three Months Ended March 31,
 
 
2018
 
2017
(in millions)
 
Revenues
 
Operating Income
    
Revenues
 
Operating Income
Carlisle Construction Materials
 
$
598.6

 
$
75.8

 
$
446.1

 
$
80.7

Carlisle Interconnect Technologies
 
224.3

 
27.2

 
194.2

 
21.5

Carlisle Fluid Technologies
 
63.5

 
5.7

 
60.5

 
4.9

Carlisle Brake & Friction
 
98.3

 
4.5

 
73.2

 
1.2

Segment total
 
984.7

 
113.2

 
774.0

 
108.3

Corporate and unallocated (1)
 

 
(18.5
)
 

 
(18.8
)
Total
 
$
984.7

 
$
94.7

 
$
774.0

 
$
89.5

(1) 
Corporate operating income includes other unallocated costs, primarily general corporate expenses.

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Note 4Acquisitions 
Accella Holdings LLC 
On November 1, 2017, the Company acquired 100% of the equity of Accella Holdings LLC, the parent company to Accella Performance Materials Inc. (collectively "Accella"), a specialty polyurethane platform, from Accella Performance Materials LLC, a subsidiary of Arsenal Capital Partners, for total consideration of $671.4 million, including a cash, working capital and indebtedness settlement, which was finalized in the first quarter of 2018. Accella offers a wide range of polyurethane products and solutions across a broad diversity of markets and applications. The Company funded the acquisition with borrowings from the Revolving Credit Facility.
In the first quarter of 2018, Accella contributed revenues of $106.5 million and an operating loss of $1.6 million to the Company's consolidated results. The results of operations of the acquired business are reported as part of the CCM segment.
The Accella amounts included in the pro forma financial information below are based on Accella’s historical results and therefore may not be indicative of the actual results if owned by Carlisle. The pro forma adjustments represent management’s best estimates based on information available at the time the pro forma information was prepared and may differ from the adjustments that may actually have been required. Accordingly, pro forma information should not be relied upon as being indicative of the historical results that would have been realized had the acquisition occurred as of the date indicated or that may be achieved in the future.
The unaudited combined pro forma financial information presented below includes revenues and income from continuing operations, net of tax, of the Company as if the business combination had occurred on January 1, 2016, based on the purchase price allocation presented below:
 
 
Unaudited Pro Forma
 
 
Three Months Ended
March 31, 2017
(in millions)
 
Revenues
 
$
860.4

Income from continuing operations
 
50.6


The pro forma financial information reflects adjustments to Accella's historical financial information to apply the Company's accounting policies and to reflect the additional depreciation and amortization related to the preliminary fair value adjustments of the acquired net assets of $4.1 million in the first quarter of 2017, together with the associated tax effects. Also, the pro forma financial information reflects acquisition-related costs described above as if they occurred in 2016.

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The following table summarizes the consideration transferred to acquire Accella and the preliminary allocation of the purchase price among the assets acquired and liabilities assumed. The acquisition has been accounted for using the acquisition method of accounting in accordance with ASC 805, Business Combinations, which requires that consideration be allocated to the acquired assets and assumed liabilities based upon their acquisition date fair values with the remainder allocated to goodwill. The fair values are preliminary and subject to change pending receipt of the final valuation for all acquired assets and liabilities.
 
 
Preliminary Allocation
 
Measurement Period Adjustments
 
Revised Preliminary Allocation
(in millions)
 
As of 11/1/2017
 
 
As of 3/31/2018
Total cash consideration transferred
 
$
670.7

 
$
0.7

 
$
671.4

Recognized amounts of identifiable assets acquired and liabilities assumed:
 
 
 
 
 
 
Cash and cash equivalents
 
$
16.5

 
$

 
$
16.5

Receivables, net
 
66.8

 

 
66.8

Inventories
 
48.5

 
(1.0
)
 
47.5

Prepaid expenses and other current assets
 
0.9

 

 
0.9

Property, plant and equipment
 
59.6

 

 
59.6

Definite-lived intangible assets
 
240.0

 

 
240.0

Other long-term assets
 
15.6

 

 
15.6

Accounts payable
 
(45.5
)
 

 
(45.5
)
Income tax payable
 
2.0

 

 
2.0

Accrued expenses
 
(23.2
)
 

 
(23.2
)
Other long-term liabilities
 
(15.6
)
 

 
(15.6
)
Deferred income taxes
 
(83.5
)
 

 
(83.5
)
Total identifiable net assets
 
282.1

 
(1.0
)
 
281.1

Goodwill
 
$
388.6

 
$
1.7

 
$
390.3


The goodwill recognized in the acquisition of Accella is attributable to its significant purchase synergies, other administrative synergies and the assembled workforce to Carlisle, in addition to opportunities for product line expansions. The Company acquired $68.5 million of gross contractual accounts receivable, of which $1.7 million was not expected to be collected at the date of acquisition. Goodwill of $38.5 million is tax deductible, primarily in the United States. All of the goodwill has been preliminarily assigned to the CCM reporting unit which aligns with the CCM reportable segment. The $240.0 million value allocated to definite-lived intangible assets consists of $146.0 million of customer relationships with useful lives ranging from 9 to 12 years, various acquired technologies of $66.0 million with useful lives ranging from 3 to 14 years and trade names of $28.0 million with useful lives ranging from 4 to 14 years. In accordance with the purchase agreement, Carlisle is indemnified for up to $25.0 million, and recorded an indemnification asset of $15.6 million in other long-term assets relating to the indemnification for a pre-acquisition income tax liability. The Company has also recorded, as part of the purchase price allocation, deferred tax liabilities related to intangible assets of approximately $83.5 million.
Excluding Accella, proforma results of operations for the 2017 acquisitions have not been presented because the effect of these acquisitions was not material to the Company's financial condition or results of operations for any of the periods presented.
Drexel Metals
On July 3, 2017, the Company acquired 100% of the equity of Drexel Metals, Inc., ("Drexel Metals") for cash consideration of $55.8 million. Drexel Metals is a leading provider of architectural standing seam metal roofing systems for commercial, institutional and residential applications.
In the first quarter of 2018, Drexel Metals contributed revenues of $12.0 million and operating income of $0.5 million to the Company's consolidated results. The results of operations of the acquired business are reported within the CCM segment.

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Consideration has been preliminarily allocated to goodwill of $26.9 million, $19.0 million to definite-lived intangible assets, $10.4 million to indefinite-lived intangible assets, $8.8 million to inventory, $5.3 million to accounts receivable, $5.8 million to accounts payable and $10.8 million to deferred income and other taxes payable. Definite-lived intangible assets consist of customer relationships with an estimated useful life of nine years. Of the $26.9 million of goodwill, none is deductible for tax purposes. All of the goodwill was assigned to the CCM reporting unit, which aligns with the reportable segment.
Arbo
On January 31, 2017, the Company acquired 100% of the equity of Arbo Holdings Limited ("Arbo") for estimated consideration of GBP 9.1 million or $11.5 million, including the estimated fair value of contingent consideration of GBP 2.0 million or $2.5 million and a working capital settlement, which was finalized in the second quarter of 2017. Arbo is a provider of sealants, coatings, and membrane systems used for waterproofing and sealing buildings and other structures.
In the first quarter of 2018, Arbo contributed revenues of $4.5 million and operating income of $0.2 million to the Company's consolidated results. The results of operations of the acquired business are reported within the CCM segment.
Consideration has been allocated to goodwill of $4.7 million, $2.2 million to definite-lived intangible assets, $2.1 million to inventory, $1.6 million to indefinite-lived intangibles, $1.5 million to accounts receivable, $1.4 million to accounts payable, and $1.4 million to deferred income and other taxes payable. Definite-lived intangible assets consist of customer relationships with an estimated useful life of 15 years. Of the $4.7 million of goodwill, $1.3 million is deductible for tax purposes. All of the goodwill was assigned to the CCM reporting unit, which aligns with the reportable segment.
Note 5Discontinued Operations
As previously announced, the Company signed a definitive agreement to sell CFS to The Jordan Company of New York, NY. The sale was completed on March 20, 2018 for gross proceeds of $754.6 million, subject to a working capital adjustment. The sale of CFS is consistent with the Company's vision of operating a portfolio of businesses with highly engineered manufacturing products in strong growth markets.
A summary of the results from discontinued operations included in the Condensed Consolidated Statements of Income follows:
(in millions)
 
Three Months Ended March 31,
 
2018
 
2017
Revenues
 
$
69.5

 
$
83.2

 
 
 
 
 
Cost of goods sold
 
49.5

 
61.7

Other operating expenses, net
 
14.8

 
15.2

Operating income
 
5.2

 
6.3

Other non-operating (income) expense, net
 

 
0.1

Income from discontinued operations before income taxes
 
5.2


6.2

Gain on sale of discontinued operations
 
293.8

 

Provision for income taxes
 
47.3

 
2.3

Income from discontinued operations
 
$
251.7


$
3.9


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A summary of the carrying amounts of CFS's major assets and liabilities, which were classified as discontinued operations in the Condensed Consolidated Balance Sheet follows:
(in millions)
 
December 31, 2017
ASSETS
 
 
Cash and cash equivalents
 
$
1.3

Receivables, net
 
32.0

Inventories
 
59.0

Prepaid other current assets
 
4.2

Total current assets
 
$
96.5

 
 
 
Property, plant, and equipment, net
 
$
49.7

Goodwill, net
 
149.7

Other intangible assets, net
 
169.4

Other long-term assets
 
3.3

Total long-term assets
 
$
372.1

 
 
 
LIABILITIES
 
 
Accounts payable
 
$
20.4

Accrued expenses
 
20.5

Total current liabilities
 
$
40.9

 
 
 
Other long-term liabilities
 
$
50.0

Total long-term liabilities
 
$
50.0

A summary of cash flows from discontinued operations included in the Condensed Consolidated Statements of Cash Flows follows:
(in millions)
 
Three Months Ended March 31,
 
2018
 
2017
Net cash provided by operating activities
 
$
0.6

 
$
10.3

Net cash used in investing activities
 
(8.1
)
 
(215.2
)
Net cash provided by financing activities (1)
 
8.8

 
209.5

Change in cash and cash equivalents from discontinued operations
 
$
1.3

 
$
4.6

(1) 
Represents borrowings from the Carlisle cash pool to fund capital expenditures and acquisitions.
Note 6Earnings Per Share 
The Company’s restricted shares and restricted stock units contain non-forfeitable rights to dividends and are considered participating securities for purposes of computing earnings per share pursuant to the two-class method. The computation below of earnings per share includes the income attributable to the vested and deferred restricted shares in the numerator and includes the dilutive impact of those underlying shares in the denominator. The computation below of earnings per share excludes the income attributable to the unvested restricted shares and restricted stock units from the numerator and excludes the dilutive impact of those underlying shares from the denominator. Stock options are included in the calculation of diluted earnings per share utilizing the treasury stock method and performance share awards are included in the calculation of diluted earnings per share considering those are contingently issuable. Neither is considered to be a participating security as they do not contain non‑forfeitable dividend rights.

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The following reflects income from continuing operations and share data used in the basic and diluted earnings per share computations using the two-class method:
 
 
Three Months Ended March 31,
(in millions except share and per share amounts)
 
2018
 
2017
Income from continuing operations
 
$
57.9

 
$
57.9

Less: dividends declared on common stock outstanding, restricted shares and restricted share units
 
(23.1
)
 
(22.7
)
Undistributed earnings
 
34.8

 
35.2

Percent allocated to common shareholders (1)
 
99.3
%
 
99.3
%
 
 
34.5

 
34.9

Add: dividends declared on common stock
 
22.8

 
22.5

Income from continuing operations attributable to common shares
 
$
57.3

 
$
57.4

 
 
 
 
 
Shares (in thousands):
 
 
 
 
Weighted-average common shares outstanding 
 
61,684

 
64,353

Effect of dilutive securities:
 
 
 
 
Performance awards
 
131

 
107

Stock options
 
349

 
388

Adjusted weighted-average common shares outstanding and assumed conversion
 
62,164

 
64,848

 
 
 
 
 
Per share income from continuing operations attributable to common shares:
 
 
 
 
Basic
 
$
0.93

 
$
0.89

Diluted
 
$
0.92

 
$
0.88

 
 
 
 
 
(1)    Basic weighted-average common shares outstanding
 
61,684

 
64,353

Basic weighted-average common shares outstanding, unvested restricted shares expected to vest and restricted share units
 
62,117

 
64,822

Percent allocated to common shareholders
 
99.3
%
 
99.3
%

To calculate earnings per share for income from discontinued operations and for net income, the denominator for both basic and diluted earnings per share is the same as used in the above table. Income from discontinued operations and net income used in the basic and diluted earnings per share computations follows:
 
 
Three Months Ended March 31,
(in millions except share amounts presented in thousands)
 
2018
 
2017
Income from discontinued operations attributable to common shareholders for basic and diluted earnings per share
 
$
250.0

 
$
3.9

Net income attributable to common shareholders for basic and diluted earnings per share
 
307.3

 
61.3

Anti-dilutive stock options excluded from EPS calculation (1)
 
564

 
210


(1) 
Represents stock options excluded from the calculation of diluted earnings per share, as such options’ assumed proceeds upon exercise would result in the repurchase of more shares than the underlying award.
Note 7—Revenue Recognition
Revenue is recognized when obligations under the terms of a contract with a customer are satisfied; generally this occurs with the transfer of control of the Company’s products or services. Revenue is measured as the amount of total consideration expected to be received in exchange for transferring goods or providing services. Total expected consideration, in certain cases, is estimated at each reporting period, including interim periods, and is subject to change with variability dependent on future events, such as customer behavior related to future purchase volumes, returns, early payment discounts and other customer allowances. Estimates for rights of return, discounts and rebates to customers and other adjustments for variable consideration are provided for at the time of sale as a deduction to revenue, based on an analysis of historical experience and actual sales data. Changes in these estimates are reflected as an adjustment to revenue in the period identified. Sales, value added and other taxes collected concurrently with revenue-producing activities are excluded from revenue.

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The Company receives payment at the inception of the contract for separately priced extended service warranties, and revenue is deferred and recognized on a straight-line basis over the life of the contracts. The term of these warranties range from five to 40 years. The weighted average life of the contracts as of March 31, 2018, is approximately 19 years.
Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer in exchange for payment and is the unit of account. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when or as the performance obligation is satisfied. The majority of the Company’s contracts have a single performance obligation to transfer individual goods or services. For contracts with multiple performance obligations, the contracts transaction price is allocated to each performance obligation using the Company’s best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is observable prices.
The Company’s performance obligations are satisfied, and control is transferred, either at a point in time or over time as work progresses. For the majority of the Company’s products, control is transferred and revenue is recognized when the product is shipped from the manufacturing facility to the customer.
Revenue is recognized over time primarily for separately priced extended service warranties in the CCM segment and certain highly customized product contracts in the CIT segment. Revenues for separately priced extended service warranties are recognized over the life of the contract. Revenues for highly customized product contracts are recognized based on the proportion of costs incurred to date, relative to total estimated costs to complete the contract and are generally incurred over twelve months or less. Highly customized product contract costs generally include labor, material and overhead.
A summary of the timing of revenue recognition and reconciliation of disaggregated revenue by reportable segment follows:
 
 
Three Months Ended March 31, 2018
(in millions)
 
CCM
 
CIT
 
CFT
 
CBF
 
Total
Products transferred at a point in time
 
$
593.4

 
$
195.4

 
$
63.5

 
$
98.3

 
$
950.6

Products and services transferred over time
 
5.2

 
28.9

 

 

 
34.1

Total revenues
 
$
598.6

 
$
224.3

 
$
63.5

 
$
98.3

 
$
984.7

 
 
Three Months Ended March 31, 2017
(in millions)
 
CCM
 
CIT
 
CFT
 
CBF