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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED December 31, 2020
  CSL-20201231_G1.JPG
www.carlisle.com
 
Commission File Number 1-9278
CARLISLE COMPANIES INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 31-1168055
(State of incorporation) (I.R.S. Employer I.D. No)
16430 North Scottsdale Road, Suite 400, Scottsdale, Arizona 85254
(Address of principal executive office, including zip code) 
(480) 781-5000
(Telephone)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock, $1 par value CSL New York Stock Exchange
Preferred Stock Purchase Rights, $1 par value n/a New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐  No ☒
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 every Interactive Data File required to be submitted 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 such files). Yes ☒  No ☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒
The aggregate market value of the shares of common stock of the registrant held by non-affiliates was approximately $6.5 billion based upon the closing price of the common stock on the New York Stock Exchange on June 30, 2020.
As of February 5, 2021, 53,291,296 shares of common stock of the registrant were outstanding.
 
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the Annual Meeting of Shareholders to be held on May 5, 2021 are incorporated by reference in Part III.




TABLE OF CONTENTS
Page
3
3
Item 2.  Properties. 
   
   
   
   



PART I
Item 1.  Business.
Overview
Carlisle Companies Incorporated (“Carlisle”, the “Company”, “we”, “us” or “our”) is a diversified, global manufacturer of highly engineered products. Our Company website is www.carlisle.com, through which we make available, free of charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and all amendments to those reports, as soon as reasonably practicable after these reports are electronically filed with or furnished to the Securities and Exchange Commission (“SEC”). All references to "Notes" refer to our Notes to Consolidated Financial Statements in this Annual Report on Form 10-K. 
Business Strategy
We strive to be the market leader of highly engineered products in the various markets we serve. Under Vision 2025, our key pillars include: dedication to driving above market growth, utilizing the Carlisle Operating System (“COS”) consistently to drive efficiencies and operating leverage, building scale with synergistic acquisitions, continuing to invest in and develop exceptional talent, accommodate continued organic growth through capital expenditures, and return capital to shareholders through share repurchases and dividends.
We utilize COS, an operating structure and strategy deployment system based on lean enterprise and six sigma principles, to drive improving operational performance. COS is a continuous improvement process that defines the way we do business. Waste is eliminated and efficiencies are improved enterprise wide, allowing us to increase overall profitability. Improvements are not limited to production areas, as COS is also driving 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 our business operations.
While the coronavirus pandemic ("COVID-19") has affected our near-term results, we believe our proactive approach to cost reductions and continuous improvement initiatives will allow us to accelerate through the recovery by: further improving the efficiency of our businesses through COS, continuing to make the investments necessary to deliver a world-class Carlisle Experience, which delivers the right product, at the right place, at the right time, and ensuring we maintain discipline and rigor in our capital allocation process. Taken together, we believe these actions will drive us to achieve our goals outlined in Vision 2025. See Description of Business by Segment below for a more detailed discussion of our Vision 2025 strategy. 
As noted above, a significant part of our strategy is to build scale with synergistic acquisitions. Synergies considered in making an acquisition include consolidation opportunities (e.g., footprint, back office, technology, systems), supply chain savings and cross-sell opportunities. We acquired two businesses during 2020, which add to our existing Carlisle Construction Materials (“CCM”), Carlisle Interconnect Technologies (“CIT”) and Carlisle Fluid Technologies ("CFT") segments. For more details regarding acquisitions of the Company’s businesses during the past three years, refer to Note 3.
We also pursue the sale of a business when it is determined it no longer fits within the Company’s long-term goals or strategy. Accordingly, on March 20, 2018, we completed the sale of our Carlisle FoodService Products ("CFS") segment to The Jordan Company for $758.0 million (refer to Note 4).
Description of Business by Segment
Carlisle Construction Materials (“CCM”)
Products, Markets and Locations
The CCM segment has evolved from a supplier of the first single-ply ethylene propylene diene monomer (“EPDM”) roofing membranes in the early 1960s to today, where we deliver innovative, easy-to-install and energy-efficient solutions through the Carlisle Experience for customers who are creating the sustainable building of the future. CCM manufactures a complete range of building envelope products for commercial, industrial and residential buildings, including single-ply roofing, rigid foam insulations, spray polyurethane foam technologies, architectural metal, heating, ventilation and air conditioning ("HVAC") hardware and sealants, below-grade waterproofing, and air and vapor barrier systems focused on the weatherproofing and thermal performance of the building envelope. CCM is a leading North American and European building products manufacturer offering a complete set of solutions and systems to aid in the design of efficient building envelope construction projects, backed by industry-leading warranties and a focus on green principles.
3

EPDM, thermoplastic polyolefin (“TPO”) and polyvinyl chloride (“PVC”) membrane and polyisocyanurate insulation are sold together in warranted systems or separately in non-warranted systems to the new construction, re-roofing and maintenance, general construction and industrial markets. These products are primarily sold under the SynTec, Versico, Weatherbond and Hunter Panels brands in the United States of America (“U.S.” or “United States”) and throughout the world, and EPDM membrane under the Resitrix and Hertalan brands primarily in Europe. The segment sells its expanded polystyrene for a variety of end markets, predominantly roofing and waterproofing through its Insulfoam brand.
CCM operates manufacturing facilities located throughout the United States, its primary market, and in Germany, the Netherlands, United Kingdom ("U.K.") and Romania. The majority of CCM’s products are sold through a network of authorized sales representatives and distributors in the United States.
Key Raw Materials
Key raw materials for this segment include methylene diphenyl diisocyanate (“MDI”), polyol, EPDM polymer, TPO polymer, carbon black and coated steel. These raw materials generally have at least two vendor sources to better assure adequate supply. The vendor typically has multiple processing facilities for key raw materials that are single sourced.
Seasonality
Revenues and earnings for CCM have historically been higher in the second and third quarters due to increased construction activity during those periods from favorable weather conditions.
Market Factors
CCM serves a large and diverse customer base; however, in 2020 CCM's two largest customers represented 32.1% of this segment’s revenues and 22.6% of the Company’s consolidated revenues. The loss of either of these customers could have a material adverse effect on this segment’s revenues and operating income and the Company's consolidated revenues and operating income.
This segment faces competition from numerous competitors that produce roofing, insulation and waterproofing products for commercial and residential applications. The level of competition within this market varies by product line and region. As one of four major manufacturers in the single-ply industry, CCM competes through innovative products, long-term warranties and customer service. CCM offers separately priced extended warranty contracts on certain of its products ranging from five to 40 years, the most significant being those offered on its installed single-ply roofing systems primarily in the United States, subject to certain exclusions, that covers leaks in the roofing system attributable to a problem with the particular product or the installation of the product. The building owner must have the roofing system installed by an independent authorized roofing contractor trained by CCM to install its roofing systems in order to qualify for the warranty.
Vision 2025 Strategy
Our strategy under Vision 2025 for the CCM segment is to:
Improve upon its above average margin profile;
Capture significant aftermarket opportunities as buildings in the U.S. approach “re-roofing” vintage;
Further expand our presence in niche high-growth and high-margin opportunities including spray foam insulation and architectural metals; and
Expand internationally, especially into Europe, where there is a market to displace traditional asphalt roofing with EPDM and other single-ply roofing.
Key growth initiatives:
Capture market share based on value created for labor and energy efficiency;
Leverage the Carlisle Experience to create the preferred choice through operational excellence;
Continued development of proprietary, differentiated products;
Utilize training to drive a culture of continuous learning that creates brand loyalty; and
Focus mergers and acquisitions on synergistic building envelope opportunities.
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Carlisle Interconnect Technologies (“CIT”)
Products, Markets and Locations
The CIT segment designs and manufactures high-performance wire and cable, including optical fiber, for the commercial aerospace, military and defense electronics, medical device, industrial, and test and measurement markets. CIT's product portfolio also includes sensors, connectors, contacts, cable assemblies, complex harnesses, racks, trays and installation kits, in addition to engineering and certification services. Offering both turnkey and custom solutions, CIT is also known as a single-source global provider for innovative medical device solutions and electromechanical technology. Leveraging our global presence, CIT continues to deliver a growing line of advanced solutions for emerging applications worldwide.
The aerospace and defense electronics products are primarily sold under the Carlisle, Thermax and Tri-Star brand names, with the medical products primarily sold under the Carlisle, LHi Technology and Providien brand names. This segment primarily operates manufacturing facilities in the United States, China and Mexico, with the United States, Europe and China being the primary target regions for sales. Sales are made by direct sales personnel and independent sales representatives. 
Key Raw Materials
Key raw materials for this segment include gold, copper conductors that are plated with tin, nickel or silver, polyimide tapes, polytetrafluoroethylene (“PTFE”) tapes, PTFE fine powder resin, thermoplastic resins, stainless steel, beryllium copper rod, machined metals, plastic parts, and various marking and identification materials. These raw materials are typically sourced worldwide and generally have at least two supplier sources to better assure adequate supply, except when prohibited by customer contracts, which represented less than 10% of purchases in 2020.
Market Factors
Backlog orders were $279.6 million and $306.8 million as of December 31, 2020 and 2019, respectively. Of the $279.6 million in backlog orders as of December 31, 2020, $27.9 million is not reasonably expected to be filled in 2021.
The CIT segment faces competition from numerous competitors within each of the markets it serves. While product specifications, certifications and life cycles vary by market, the CIT segment primarily positions itself to gain design specification for customer platforms or products with long life cycles and high barriers to entry, such as in the aerospace and medical markets. These markets generally have high standards for product certification as deemed by the Federal Aviation Administration (“FAA”) and European Union Aviation Safety Agency ("EASA"), and Food and Drug Administration (“FDA”), respectively. The CIT segment competes primarily on the basis of its product performance and its ability to meet its customers’ highly specific design, engineering and delivery needs on a timely basis.
Vision 2025 Strategy
Our strategy under Vision 2025 for the CIT segment is to focus on highly regulated industries that have the characteristics of high-performance, mission-critical products designed to operate in harsh environments with significant barriers to entry and attractive margins. The primary industries currently include commercial aerospace, defense, industrial and medical devices.
Our strategy under Vision 2025 for the CIT segment is to:
Increase its status as the wire and cable supplier of choice by meeting increased electrification needs of aircraft;
Broaden its breadth of product and geographic reach within aerospace and medical through both new product development and mergers and acquisitions;
Capitalize on increased investment on medical equipment and technology; and
Leverage core technologies to diversify into attractive, adjacent markets.
Key growth initiatives:
Increase content per aircraft across all product groups;
Build out and convert medical original equipment manufacturers ("OEM") project pipeline;
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Establish new OEM relationships and drive new product development in precision sensors;
Increase market share on defense electronics and space programs;
Ensure organization alignment is market focused to drive accelerated organic growth;
Focus merger and acquisition efforts on commercial aerospace, medical technologies, and test and measurement end markets; and
Leverage vertically integrated capabilities to support the medical device OEM strategy of consolidating supply chains across strategic end markets.
Carlisle Fluid Technologies (“CFT”)
Products, Markets and Locations
The CFT segment designs, manufactures and sells highly engineered liquid, powder, sealants and adhesives finishing equipment and integrated system solutions for spraying, pumping, mixing, metering and curing a variety of coatings used primarily in the automotive manufacture, general industrial, protective coating, wood, specialty and automotive refinish markets. The CFT segment manufactures and sells products that are sold under the brand names of Binks®, DeVilbiss®, Ransburg®, BGK® and MS Powder®. The segment operates manufacturing facilities primarily in the United States, the U.K., Switzerland and Sweden, and assembly and distribution facilities in China, Japan and South Korea, with approximately 55% of its revenues outside the United States. The majority of sales into CFT's industries are made through a worldwide network of distributors, integrators and some direct to end-user sales. These business relationships are managed primarily through direct sales personnel worldwide.
Key Raw Materials
Key raw materials for this segment include carbon and various grades of stainless steel, brass, aluminum, copper, machined metals, carbide, machined plastic parts and PTFE. These raw materials are typically sourced worldwide and have at least two vendor sources to better assure adequate supply.
Seasonality
Approximately 18% of CFT’s annual revenues are for the development, and in some cases assembly, of large fluid handling or other application systems projects. Timing of these system sales can result in revenues that are higher in certain quarters versus other quarters within the same calendar year, particularly the fourth quarter.
Market Factors
The CFT segment competes against both regional and international manufacturers. Major competitive factors include innovative designs, the ability to provide customers with lower cost of ownership, dependable performance and high quality at a competitive price. CFT’s products' ability to spray, mix or deliver a wide range of coatings, applied uniformly in exact increments, is critical to the overall appearance of the applied coatings and functionality. The segment’s installed base of global customers is supported by a worldwide distribution network with the ability to deliver critical spare parts and other services. Brands that are well recognized and respected internationally, combined with a diverse base of customers, applications and industries served, positions the CFT segment to continue designing patented, innovative equipment and solutions for customers across the globe.
Vision 2025 Strategy
Our strategy under Vision 2025 for the CFT segment is to focus on key end markets of automotive and automotive refinish, transportation and general industrial.
In the automotive and automotive refinish markets CFT is focused on:
Growing sales of core spray guns in automotive OEM and automotive refinishing markets by capitalizing on strong brand recognition and solid customer advocacy among key automotive OEMs; and
Further expanding in mixing, metering and dispensing viscous liquids or powder coating equipment through our energy efficient pumps, leveraging those pumps to support core spray gun sales and expanding in adjacent markets.
In the transportation and general industrial markets CFT is focused on:
Leveraging the CFT brand and distribution in Asia;
Scaling the powder business outside of Europe;
Expanding pump sales in the attractive reciprocating pumps market;
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Further penetrating the fast-set applications market, including spray foam insulation;
Launching innovative new products; and
Continuing to expand into sealants and adhesives.
Key growth initiatives:
Expand global distribution network by developing partners in growing regions and markets;
Expand product portfolio by launching new products in adjacent markets and filling gaps in existing product portfolio;
Increase market share by driving deep customer relationships and operational excellence; and
Focus merger and acquisition efforts on targets that deliver precision fluid management solutions.
Carlisle Brake & Friction (“CBF”)
Products, Markets and Locations
The CBF segment is a leading global solutions provider of high performance and severe duty brake, clutch and transmission applications for the construction, agriculture, mining, aircraft, on-highway and other industrial markets. CBF also includes the performance racing group which designs, manufactures and sells high-performance motorsport braking products. The CBF segment manufactures and sells products which are sold under several brand names, such as Carlisle, Hawk®, Wellman® and Velvetouch®. CBF’s products are sold by direct sales personnel to OEMs, mass merchandisers, and various wholesale and industrial distributors around the world, including North America, Europe, Asia and South America. Primary manufacturing facilities are located in the United States, Italy, China and the U.K. 
Key Raw Materials
The brake manufacturing operations require the use of various metal products such as castings, pistons, springs and bearings. With respect to friction products, key raw materials used are fiberglass, phenolic resin, metallic chips, copper and iron powders, steel, custom-fabricated cellulose sheet and various other organic materials. These raw materials are sourced worldwide to better assure adequate supply. Key raw materials generally have at least two vendor sources.
Market Factors
CBF serves a large and diverse customer base; however, in 2020 one customer represented 15.0% of this segment’s revenues but did not represent greater than 10% of the Company’s consolidated revenues. The loss of this customer could have a material adverse effect on this segment’s revenues and operating income. Backlog orders were $189.2 million and $155.3 million as of December 31, 2020 and 2019, respectively. All orders are reasonably expected to be filled in 2021. 
This segment strives to be a market leader by competing globally against regional and international manufacturers. Few competitors participate in all served markets. A majority of competitors participate in only a few of CBF’s served markets on a regional or global basis. Markets served are competitive and the major competitive factors include product performance, quality, product availability and price. The relative importance of these competitive factors varies by market segment and channel.
Vision 2025 Strategy
Our strategy under Vision 2025 for the CBF segment is to be the top brand in off-highway commercial transportation as the only supplier able to offer a complete “pedal to the wheel” solution and continue to participate in the mining and machinery equipment markets where demand remains supportive.
Key growth initiatives:
Product innovation by leveraging substantial research and development capabilities;
Increase differentiated technology via expansion of carbon technology;
Provide innovative, highly engineered vehicle solutions;
Increase presence through capitalizing on global acceleration of growth in served regions; and
Operational excellence through facility rationalization, COS and automation.
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Intellectual Property
We own or hold the right to use a variety of patents, trademarks, licenses, inventions, trade secrets and other intellectual property rights. We have adopted a variety of measures and programs to ensure the continued validity and enforceability of our various intellectual property rights.
Research and Development
Research and development activities include the development of new product lines, the modification of existing product lines to comply with regulatory changes, and the research of cost efficiencies through raw material substitution and process improvements. Our research and development expenses were $54.8 million, $60.9 million and $55.1 million, representing 1.3%, 1.3% and 1.2% of revenues in 2020, 2019 and 2018, respectively.
Compliance with Government Regulations
We are subject to various government regulations, including environmental regulations. To date, our costs of complying with these regulations have not had a material effect on our capital expenditures, earnings or competitive position or that of any business segment. We do not expect to incur any material capital expenditures for environmental control facilities for the current fiscal year or any other subsequent period.
Human Capital Resources
Investing in Our People
As of December 31, 2020, we employed approximately 12,000 people, excluding approximately 1,000 contractors.
Talent acquisition and retention are critical drivers to delivering the goals of Vision 2025. A trained, diverse and inspired workforce is integral to delivering value to our stakeholders. We begin with a recruiting process that reaches a wide array of potential employees and includes the engagement of specialized, diverse recruiting firms such as The Standard Diversity Network, Jobs4Women.net, Asian American Jobsite, African American Jobsite and many others.
We also partner with universities in the U.S. and outside the U.S., recruiting for functional talent in management, sales, finance, information technology and other functions from the communities in which we work. In addition, we engage certain of these universities in collaborative research and development, and training efforts. Each business segment works with high schools and trade schools in their respective locations to educate young people about and attract them to manufacturing careers.
We offer several training programs for current employees intended to develop talent, including:
The Carlisle Leadership Summit is intended to identify and prepare high-performing employees for senior leadership roles.
The Carlisle Leadership Program, developed in association with the Kelley School of Business, is a program for senior manager or director level employees who are leading teams and demonstrating future potential for senior leadership roles. This program develops business and leadership skills in both applied and classroom environments.
The Carlisle Leadership Foundation is a program designed for skilled functional or technical individual contributors who have recently advanced, or are expected to advance, to their first leadership roles. This program helps these employees to define their own leadership skills to enable their future success.
The Carlisle Management Development Program was established with several university MBA programs and is a one-year post-MBA rotational program designed to give an expedited experience for participants within business segments across functional areas.
Diversity, Equity & Inclusion
Carlisle has pledged to take action to cultivate a workplace where diverse perspectives and experiences are welcomed and respected. In May 2018, Carlisle joined the CEO Action for Diversity & Inclusion™, a growing coalition of more than 900 CEOs of major corporations pledging to advance diversity and inclusion in the workplace. By signing on to this commitment, Carlisle is pledging to take action to cultivate a workplace where diverse perspectives and experiences are welcomed and respected. CEO Action for Diversity & Inclusion™ is cultivating a new type of ecosystem centered around collaboration and sharing.
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Carlisle’s commitment to diversity and inclusion in the workforce includes a policy of non-discriminatory treatment and respect of human rights for all current and prospective employees. Discrimination on the basis of an individual’s race, religion, creed, color, sex, sexual orientation, age, marital status, disability, national origin or veteran’s status is not permitted by Carlisle and is illegal in many jurisdictions. Carlisle respects the human rights of all employees and strives to treat them with dignity consistent with standards and practices recognized by the international community. Carlisle is committed to respecting all human rights, as articulated in the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights, the International Covenant on Economic, Social and Cultural Rights, and the International Labor Organization’s Declaration on Fundamental Principles and Rights at Work.
In addition to policies for fair treatment, Carlisle also works to address unconscious bias in the workplace. Unconscious bias training is a key component of Carlisle’s leadership development programs. This training helps inform leaders of biases and provides a forum for them to explore how Carlisle can strengthen our culture of inclusion by addressing and breaking down biases. This has contributed to an effort to gain equal diversity representation throughout Carlisle.
Over a year ago, we began a significant initiative to ensure women and men are compensated fairly at Carlisle. As of the end of 2020, we achieved gender pay equity across the U.S. for executives, senior officers and management. In 2021, we will expand this initiative across the Company. This means compensating employees the same when they perform the same job duties, while accounting for other factors, such as their experience level, job performance and tenure with the company. In 2020, we raised Carlisle's minimum starting wage to $15 per hour for our entire U.S. workforce.
Below is a summary of our global employees diversity as of December 31, 2020 by gender and age:
CSL-20201231_G2.JPG
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CSL-20201231_G3.JPG
Health and Safety
Carlisle is continuously striving to provide safer, healthier work environments. From the onset of COVID-19, Carlisle formed an internal task force to monitor and implement at all locations all of the health and safety guidelines and requirements of national and local authorities to protect our workforce, including, but not limited to, providing a period of full pay for employees required to follow stay-at-home orders and implementing remote work plans for eligible employees. Our task force met weekly with division management to ensure health and safety compliance in the workplace.
Through COS, we have launched “The Path to Zero,” an initiative to drive our incident rate to zero. At Carlisle, safety is everyone’s responsibility. This includes our own employees, as well as contractors, suppliers, customers and others. Carlisle is committed to adhere to safety policies, procedures, and training to incorporate safety into all aspects of business operations. All safety incidents are investigated to reduce safety risks and share lessons learned. Carlisle measures and reviews safety performance and strives for continuous improvement along the Path to Zero.
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Labor Matters
Employees represented by unions, local work councils or collective bargaining agreements as of December 31, 2020, are listed below, with the number of employees represented and the expiration date of the applicable agreements:
Location Number of Agreements Number of Employees Represented Expiration Date
CIT - China 2 3,572 December 2022
CIT - Mexico 1 1,179 N/A
CBF - Italy 3 307 December 2019
December 2020
December 2023
(1)
CCM - Germany 2 153 March 2021
CCM - Netherlands 1 130 September 2021
CBF - United Kingdom 1 100 N/A
CIT - Switzerland 1 86 N/A
CCM - Romania 1 59 June 2021
CFT - Germany 5 26 N/A
(1)The agreements between CBF and its employees that expired in December 2020 and 2019 are currently in negotiation for renewal.
Item 1A.  Risk Factors.
The Company’s business, financial condition, results of operations and cash flows can be affected by a number of factors including but not limited to those material factors set forth below, those set forth in our “Forward Looking Statements” disclosure in Item 7 and those set forth elsewhere in this Annual Report on Form 10-K, any one of which could cause the Company’s actual results to vary materially from recent results or from anticipated future results and make an investment in the Company speculative or risky.
Strategic, Business and Operational Risks
The Company’s earnings growth strategy is partially dependent on the acquisition and successful integration of other businesses.
The Company has a history of acquiring businesses as part of its earnings growth strategy. Typically, the Company considers acquiring companies that can be integrated within an existing business. Acquisitions of this type involve numerous risks, which may include a failure to realize expected revenue growth and operating and cost synergies from integration initiatives, increasing dependency on the markets served by the combined businesses or increased debt to finance the acquisitions.
The Company also considers the acquisition of businesses that may operate independent of existing businesses that involve similar risks with respect to a failure to realize expected revenue growth or operating and cost reductions within the acquired business and could increase the possibility of diverting corporate management’s attention from its existing operations.
The successful realization of revenue growth, cost reductions and synergies with our existing businesses, and within acquired stand-alone businesses, and increases in profitability overall, are dependent upon successful integration initiatives. If these integration initiatives are not fully realized, there may be a negative effect on the Company’s business, financial condition, results of operations and cash flows.
See Note 3 for recent acquisition information.
The loss of, a significant decline in business with, or pricing pressure from, one or more of the Company’s key customers could adversely affect the Company’s business, financial condition, results of operations and cash flows.
The Company operates in several niche markets in which a large portion of the segment’s revenues are attributable to a few large customers. See “Item 1. Business—Overview—Description of Businesses by Segment” for a discussion of customer concentrations by segment. A significant reduction in purchases by one or more of these customers could have an adverse effect on the business, financial condition, results of operations or cash flows of one or more of the Company’s segments.
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Some of the Company’s key customers enjoy significant purchasing power that may be used to exert pricing pressure on the Company. Additionally, as many of the Company’s businesses are part of a long supply chain to the ultimate consumer, the Company’s business, financial condition, results of operations or cash flows could be adversely affected if one or more key customers elects to in-source or find alternative suppliers for the production of a product or products that the Company currently provides. 
Dispositions, failure to successfully complete dispositions or restructuring activities could negatively affect the Company.
From time to time, the Company, as part of its commitment to concentrate on its core business, may dispose of all or a portion of certain businesses. Such dispositions involve a number of risks and present financial, managerial and operational challenges, including diversion of management's attention from the Company’s core businesses, increased expense associated with the dispositions, potential disputes with the customers or suppliers of the disposed businesses, potential disputes with the acquirers of the disposed businesses and a potential dilutive effect on the Company’s earnings per share. If dispositions are not completed in a timely manner, there may be a negative effect on the Company’s cash flows and/or the Company’s ability to execute its strategy. 
Additionally, from time to time, the Company may undertake consolidation and other restructuring projects in an effort to reduce costs and streamline its operations. Such restructuring activities may divert management's attention from the Company’s core businesses, increase expenses on a short-term basis and lead to potential disputes with the employees, customers or suppliers of the affected businesses. If restructuring activities are not completed in a timely manner or if anticipated cost savings, synergies and efficiencies are not realized, there may be a negative effect on the Company’s business, financial condition, results of operations and cash flows.
Refer to Notes 4 and 8 for a discussion of disposition and restructuring matters.
Industry and Macroeconomic Risks
Several of the market segments that the Company serves are cyclical and sensitive to domestic and global economic conditions.
Several of the market segments in which the Company sells its products are, to varying degrees, cyclical and may experience periodic downturns in demand. For example, the CBF segment is susceptible to downturns in the construction, agriculture and mining industries. The CIT segment is susceptible to downturns in the commercial aerospace industry, the CCM segment is susceptible to downturns in the commercial construction industry and the CFT segment is susceptible to downturns in the automotive industry.
Uncertainty regarding global economic conditions may have an adverse effect on the businesses, results of operations and financial condition of the Company and its customers, distributors and suppliers. Among the economic factors which may affect performance are: manufacturing activity, commercial and residential construction, passenger airline travel, difficulties entering new markets and general economic conditions such as inflation, deflation, interest rates and credit availability. These effects may, among other things, negatively impact the level of purchases, capital expenditures and creditworthiness of the Company’s customers, distributors and suppliers, and therefore, the Company’s results of operations, margins and orders. The Company cannot predict if, when or how much worldwide economic conditions will fluctuate. These conditions are highly unpredictable and beyond the Company's control. If these conditions deteriorate, however, the Company’s business, financial condition, results of operations and cash flows could be adversely affected.
The Company is subject to risks arising from international economic, political, legal and business factors.
The Company operates in global markets. Approximately 19% of the Company’s revenues in 2020 were generated outside the United States. In addition, to compete globally, all of the Company’s segments have manufacturing facilities outside the United States. In 2020, approximately 28% of cost of goods sold is derived from facilities outside of the United States.
The Company’s reliance on international revenues and international manufacturing bases exposes its business, financial condition, operating results and cash flows to a number of risks, including price and currency controls; government embargoes or foreign trade restrictions, including import and export tariffs; extraterritorial effects of U.S. laws such as the Foreign Corrupt Practices Act; expropriation of assets; war, civil uprisings, acts of terror and riots; political instability; nationalization of private enterprises; hyperinflationary conditions; the necessity of obtaining governmental approval for new and continuing products and operations, currency conversion or repatriation of
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assets; legal systems of decrees, laws, taxes, regulations, interpretations and court decisions that are not always fully developed and that may be retroactively or arbitrarily applied; cost and availability of international labor, materials and shipping channels; and customer loyalty to local companies.
Additionally, there is uncertainty caused by the U.K.'s exit from the European Union commonly referred to as "Brexit." While the impacts of the E.U.-U.K. Trade and Cooperation Agreement recently enacted in connection with Brexit are not yet known, Brexit could adversely impact the U.K. and/or the European Union, and therefore the Company’s business, financial condition, results of operations and cash flows could be adversely affected.
The Company has significant concentrations in the domestic commercial construction market.
For the year ended December 31, 2020, approximately 71% of the Company’s revenues and approximately 120% of its operating income were generated by the CCM segment. Construction spending is affected by economic conditions, changes in interest rates, demographic and population shifts and changes in construction spending by federal, state and local governments. A decline in the commercial construction market could adversely affect the Company’s business, financial condition, results of operations and cash flows. Additionally, adverse weather conditions such as heavy or sustained rainfall, cold weather and snow can limit construction activity and reduce demand for roofing materials. Weather conditions can also be a positive factor, as demand for roofing materials may rise after harsh weather conditions due to the need for replacement materials. 
The CCM segment competes through pricing, among other factors. Competition in this segment may increase pricing pressure on the Company which may negatively affect operating results in future periods. 
Raw material costs are a significant component of the Company’s cost structure and are subject to volatility.
The Company utilizes petroleum-based products, steel and other commodities in its manufacturing processes. Raw materials, including inbound freight, accounted for approximately 61% of the Company’s cost of goods sold in 2020. Significant increases in the price of these materials may not be recovered through selling price increases and could adversely affect the Company’s business, financial condition, results of operations and cash flows. The Company also relies on global sources of raw materials, which could be adversely impacted by unfavorable shipping or trade arrangements, including import and export tariffs and global economic conditions. Refer to “Part II—Item 7A. Quantitative and Qualitative Disclosures About Market Risk” for additional information regarding commodity price risk.
Regulatory and Legal Risks
The Company and certain of its customers’ operations are subject to regulatory risks.
Certain products manufactured by our businesses and certain of our customers operating in the aerospace and medical markets are subject to extensive regulation by the FAA and EASA, and FDA, respectively. It can be costly and time-consuming for the Company and our customers to obtain and maintain regulatory approvals and certifications to operate in these markets. Delays in FAA or EASA approvals or certifications of the products of our aerospace customers may impact the requirements for our interconnect components. Product approvals subject to regulations might not be granted for new medical devices on a timely basis, if at all. Proposed new regulations or changes to regulations could result in the need to incur significant additional costs to comply. Continued government scrutiny, including reviews of the FDA medical device pre-market authorization and post-market surveillance processes, may impact the requirements for our medical device components. Failure of the Company or any of its customers operating in these markets to effectively respond to changes to applicable laws and regulations or comply with existing and future laws and regulations may have a negative effect on the Company’s business, financial condition, results of operations and cash flows.
We are also subject to increasingly stringent environmental laws and regulations, including those relating to air emissions, wastewater discharges, chemical and hazardous waste management, and disposal. Some of these environmental laws hold owners or operators of land or businesses liable for their own and for previous owners’ or operators’ releases of hazardous or toxic substances or wastes. Other environmental laws and regulations require the obtainment of, and compliance with, environmental permits. To date, costs of complying with environmental, health, and safety requirements have not been material, and the Company did not have any significant accruals related to potential future costs of environmental remediation as of December 31, 2020 and 2019, nor are any material asset retirement obligations recorded as of that date. However, the nature of the Company’s operations and its long history of industrial activities at certain of its current or former facilities, as well as those acquired, could potentially result in material environmental liabilities or asset retirement obligations. 
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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 the Company's business, capital expenditures or financial position. Future events, including those relating to climate change or greenhouse gas regulation, could require the Company to incur expenses related to the modification or curtailment of operations, installation of pollution control equipment, or investigation and cleanup of contaminated sites.
General Risk Factors
The Company is subject to risks arising from global pandemics including COVID-19.
The Company’s businesses operate in market segments currently being impacted by the COVID-19 pandemic. Operating during a global pandemic exposes the Company to a number of risks, including diminished demand for our products and our customers’ products, suspensions in the operations of our manufacturing facilities, maintenance of appropriate labor levels and our ability to ship products to our customers, interruptions in our supply chains and distribution systems, increases in operating costs related to pay and benefits for our employees, collection of trade receivables in accordance with their terms, potential impairment of goodwill and long-lived assets; all of which, in the aggregate, could have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows.
We have experienced, and expect to continue to experience, diminished demand for our products as a result of COVID-19. The decline in domestic and international passenger airline travel caused by COVID-19 is negatively impacting demand for our products sold to customers operating in the commercial aerospace industry. COVID-19 related delays in nonresidential replacement starts in certain regions are negatively impacting demand for our products sold to customers operating in the nonresidential construction materials industry. While these COVID-19 related impacts have not to date, in the aggregate, had a material adverse impact on the Company, we are unable to predict the extent or duration of these impacts as they will depend on future developments, which are highly uncertain and cannot be predicted at this time, such as the duration of the coronavirus outbreak, the timing and extent of increased passenger airline travel and nonresidential construction and construction repair and replacement activity, and the continued ability of our businesses to continue to operate within all applicable COVID-19 related government rules and regulations.
Security breaches or significant disruptions of our information technology systems or violations of data privacy laws could adversely affect our business.
We rely on information technology systems, some of which are managed by third-parties, to process, transmit and store electronic information, and to manage or support critical business processes. Security breaches of these systems could result in the unauthorized or inappropriate access to confidential information or personal data entrusted to us by our business partners. While we have experienced, and expect to continue to experience, security breaches to our information technology systems, none of them to date has had a material impact on the Company. Additionally, these systems may be disrupted as a result of attacks by computer hackers or viruses, human error or wrongdoing, operational failures or other catastrophic events. The Company leverages its internal information technology infrastructures, and those of its business partners, to enable, sustain and protect its global business interests, however, any of the aforementioned breaches or disruptions could result in legal claims, liability or penalties under privacy laws or damage to operations or to the Company's reputation, which could adversely affect our business.
We are subject to data privacy and security laws, regulations and customer-imposed controls as a result of having access to and processing confidential, personal and/or sensitive data in the course of business. If we are unable to maintain reliable information technology systems and appropriate controls with respect to privacy and security requirements, we may suffer regulatory consequences that could be costly or otherwise adversely affect our business.
Currency fluctuation could have a material impact on the Company’s reported results of business operations.
The Company’s global revenues and other activities are translated into U.S. Dollars ("USD") for reporting purposes. The strengthening or weakening of the USD could result in unfavorable translation effects as the results of transactions in foreign countries are translated into USD. In addition, sales and purchases in currencies other than our subsidiaries functional currencies (primarily the USD, Euro, Chinese Renminbi and British Pound) expose the Company to fluctuations in foreign currencies relative to those functional currencies. Increased strength of the functional currency will decrease the Company’s reported revenues or margins in respect of sales conducted in
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foreign currencies to the extent the Company is unable or determines not to increase local currency prices. Likewise, decreased strength of the functional currency could have a material adverse effect on the cost of materials and products. Many of the Company’s sales that are exported by its USD functional subsidiaries to foreign countries are denominated in USD, reducing currency exposure. However, increased strength of the USD may decrease the competitiveness of our U.S. subsidiaries’ products that are sold in USD within foreign locations. 
The Company has entered into foreign currency forward contracts to mitigate the exposure of certain of our results of operations and cash flows to such fluctuations. See “Part II—Item 7A. Quantitative and Qualitative Disclosures About Market Risk” for a discussion on foreign currency exchange risk.
Item 1B.  Unresolved Staff Comments.
None.
Item 2.  Properties. 
The number, location and size of the Company’s principal properties as of December 31, 2020, by segment follows: 
  Number of Facilities
Square Footage
(in millions)
North America Europe Asia Other Total Owned Leased
Carlisle Construction Materials 44  11  —  —  55  5.1  1.5 
Carlisle Interconnect Technologies 18  —  24  0.6  1.1 
Carlisle Fluid Technologies 14  0.5  0.2 
Carlisle Brake & Friction —  10  1.0  0.2 
Totals 74  18  10  103  7.2  3.0 
The Company considers its principal properties, as well as the related machinery and equipment, to be generally well maintained, and suitable and adequate for its intended purposes.
Item 3.  Legal Proceedings. 
The Company is a party to certain lawsuits in the ordinary course of business. Information about legal proceedings is included in Note 17.
Item 4.  Mine Safety Disclosures. 
Not applicable. 
PART II
Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Performance Graph
The table below shows how a $100 investment in Carlisle has grown over the five-year period ending December 31, 2020, as compared to a $100 investment in the S&P MidCap 400® Index, S&P 500® Index and the peer group. The peer group includes Crane Co., Danaher Corp., Dover Corp., Emerson Electric Co., General Electric Co., Harsco Corp., Illinois Tool Works Inc., Ingersoll-Rand plc, ITT Inc., Parker Hannifin Corp., Pentair plc, Roper Technologies, Inc., SPX Corp., Teleflex Inc., Textron Inc., and United Technologies Corp.
Carlisle S&P MidCap 400 S&P 500 Peer Group
2015 $100.00 $100.00 $100.00 $100.00
2016 124.43 119.21 110.05 130.06
2017 127.94 136.66 131.49 166.77
2018 112.04 117.78 121.77 140.90
2019 182.83 147.82 158.51 200.99
2020 176.10 164.93 183.77 211.51
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The graph below shows a five-year comparison of cumulative returns for a $100 investment in the Company as compared to the S&P MidCap 400® Index, S&P 500® Index and the peer group.
CSL-20201231_G4.JPG
Market Information
The Company’s common stock is traded on the New York Stock Exchange under the ticker symbol "CSL." As of December 31, 2020, there were 1,205 shareholders of record. The number of beneficial holders is substantially greater than the number of record holders because a significant portion of our common stock is held of record in broker “street names.”
Issuer Purchases of Equity Securities
The Company’s purchases of its common stock during the three months ended December 31, 2020 follows:
(in millions, except per share amounts) (a)
Total Number
of Shares
Purchased
(b)
Average Price
Paid Per Share
(c)
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
(d)
Maximum Number
(or Approximate
Dollar Value) of
Shares that May
Yet Be Purchased
Under the Plans or
Programs (1)
October 0.2  $ 123.86  0.2  2.1 
November 0.2  $ 132.18  0.2  1.9 
December —  $ —  —  1.9 
Total 0.4    0.4   
(1)Represents the remaining total number of shares that can be repurchased under the Company’s stock repurchase program. On February 5, 2019, the Board approved a 5 million share increase in the Company's stock repurchase program. On February 2, 2021, the Board approved an additional 5 million share increase in the Company's stock repurchase program.
The Company may also reacquire shares outside of the repurchase program from time to time in connection with the forfeiture of shares in satisfaction of tax withholding obligations from the vesting of share-based compensation. During the three months ended December 31, 2020, there were less than 0.1 million shares reacquired in transactions outside the repurchase program.
Item 6.  Selected Financial Data.
Not applicable.

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Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Carlisle Companies Incorporated (“Carlisle”, the “Company”, “we”, “us” or “our”) is a diversified manufacturer of highly engineered products. Carlisle is committed to generating superior shareholder returns by combining a unique management style of decentralization, entrepreneurial spirit, active mergers and acquisitions, and a balanced and disciplined approach to capital deployment, all with a culture of continuous improvement as embodied in the Carlisle Operating System ("COS"). Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a reader of our financial statements with a narrative from the perspective of Company management. All references to “Notes” refer to our Notes to Consolidated Financial Statements in this Annual Report on Form 10-K. For more information regarding our consolidated results, segment results, and liquidity and capital resources for the year ended December 31, 2019 as compared to the year ended December 31, 2018, refer to "Part II—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 2019 Annual Report on Form 10-K, which information is incorporated herein by reference.
Executive Overview
2020 demonstrated yet again the strong earnings power of Carlisle's business model and our proven ability to deliver sustainable earnings even in significant downturns. Carlisle Construction Materials ("CCM") once again drove the majority of positives in Carlisle's results, supported by strong re-roofing trends, continued price discipline and management of raw material costs. CCM also made significant strides in integrating and improving our newer platforms of architectural metals and polyurethanes. CCM's sustainable cash generating abilities, combined with the Carlisle Experience, provide us with the financial and strategic flexibility that supports our conviction in achieving Vision 2025.
Our other business platforms made important improvements despite being impacted significantly in a challenging year. Carlisle Interconnect Technologies ("CIT") delivered results in line with our expectations in a year of record declines in the aerospace industry by focusing on delivering new products to increase our content per plane, rightsizing its manufacturing footprint, further integrating its medical platform, and continuing to invest in our test and measurement and sensors product lines. Carlisle Fluid Technologies ("CFT") exceeded expectations, leveraging a strong focus on execution while introducing exciting, innovative new products. Finally, Carlisle Brake & Friction ("CBF") enters 2021 looking to benefit from our recent restructuring activities and with solid end-market tailwinds in core markets of construction, mining and agriculture, further reinforced by an improved outlook for dealer inventory replenishment after reductions in the last several years.
We remain balanced in our capital deployment approach. We are increasing our capital expenditures in 2021 to drive future growth. We continue to manage an active merger and acquisition pipeline focused on synergistic businesses that complement our high-margin product lines. Finally, we will remain active in returning capital to shareholders. Notably, we raised our dividend in 2020 for the 44th consecutive year and returned $495 million to shareholders in the form of share repurchases and dividends.

Vision 2025 gave us clear direction and consistency of mission during 2020 and will continue to guide our efforts as we accelerate into the expected economic recovery in 2021.

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Summary Financial Results
(in millions, except per share amounts) 2020 2019
Revenues $ 4,245.2  $ 4,811.6 
Operating income $ 483.6  $ 654.2 
Operating margin percentage 11.4  % 13.6  %
Income from continuing operations $ 324.2  $ 473.7 
Loss from discontinued operations
$ (4.1) $ (0.9)
Diluted earnings per share attributable to common shares:
Income from continuing operations
$ 5.88  $ 8.21 
Loss from discontinued operations
$ (0.08) $ (0.02)
Items affecting comparability:(1)
Impact to operating income
$ 44.3  $ 23.7 
Impact to income from continuing operations
$ 24.2  $ 4.3 
Impact to diluted EPS from continuing operations
$ 0.44  $ 0.08 
(1)Items affecting comparability primarily include exit and disposal and facility rationalization charges, costs of and related to acquisitions, idle capacity and labor costs, net of subsidies, asset impairments, litigation settlement costs, insurance settlements, (gains) losses from and costs related to divestitures, losses on debt extinguishment and non-comparable tax items. The tax effect is based on the rate of the jurisdiction where the expense is deductible. Refer to Items Affecting Comparability in this MD&A for further discussion.
Revenues decreased in 2020 primarily reflecting lower volumes in all of our segments, which have continued to be impacted by the global economic slowdown due to the coronavirus pandemic ("COVID-19"). Contributions from acquisitions, primarily Providien, LLC ("Providien"), partially offset the decrease in volume.
The decrease in operating income in 2020 primarily reflected lower volumes as well as lower production levels increasing per unit costs and wage inflation. The decrease in operating income was partially offset by raw material savings, particularly in our CCM segment, lower incentive compensation and travel costs, and savings from COS.
Diluted earnings per share from continuing operations decreased primarily from the above operating income performance ($2.27 per share) and higher interest expense ($0.14 per share), partially offset by reduced average shares outstanding ($0.26 per share) resulting from our share repurchase program.
We generated $696.7 million in operating cash flows during 2020 and utilized cash on hand and cash provided by operations to return capital to shareholders through dividends and share repurchases, and fund capital expenditures.
Consolidated Results of Operations
Revenues
(in millions) 2020 2019 Change % Acquisition
Effect
Price / Volume
Effect
Exchange
Rate Effect
Revenues $ 4,245.2  $ 4,811.6  $ (566.4) (11.8) % 2.1  % (14.0) % 0.1  %
The decrease in revenues in 2020 primarily reflected lower sales volumes in all segments, which continue to be impacted by the global economic slowdown due to COVID-19. CIT's volume decline was led by lower sales in the commercial aerospace market, and CCM, CBF and CFT experienced declines in sales volumes across all markets in which they operate. Partially offsetting the decline was a contribution from acquisitions of $101.4 million in 2020, primarily from Providien in the CIT segment.

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Revenues by Geographic Area

(in millions)
2020 2019
United States $ 3,430.3  81  % $ 3,847.1  80  %
International:    
Europe 395.0    428.3   
Asia 228.8    288.3   
Canada 89.6    104.7   
Mexico 51.3    70.0   
Middle East and Africa 29.3    39.4   
Other 20.9    33.8   
Total International 814.9  19  % 964.5  20  %
Revenues $ 4,245.2    $ 4,811.6   
Gross Margin
(in millions) 2020 2019 Change %
Gross margin $ 1,182.4  $ 1,371.7  $ (189.3) (13.8) %
Gross margin percentage 27.9  % 28.5  %  
Depreciation and amortization $ 120.8  $ 113.5 
Gross margin percentage (gross margin expressed as a percentage of revenues) declined in 2020, driven by lower sales volumes in all segments, as well as lower production levels increasing per unit costs and wage inflation, partially offset by favorable raw material pricing at CCM and purchase savings from COS. Also included in cost of goods sold were exit and disposal costs totaling $12.9 million in 2020, primarily at CIT, attributable to our restructuring initiatives, compared with $7.1 million in 2019. Refer to Note 8 for further information on exit and disposal activities.
Selling and Administrative Expenses
(in millions) 2020 2019 Change %
Selling and administrative expenses $ 641.5  $ 667.1  $ (25.6) (3.8) %
As a percentage of revenues 15.1  % 13.9  %  
Depreciation and amortization $ 100.9  $ 89.8 
The decrease in selling and administrative expenses in 2020 primarily reflected lower travel, incentive compensation and medical costs. The decreases were partially offset by higher legal and consulting fees, termination costs associated with the expiration of the agreement to acquire Draka Fileca SAS and wage inflation. Also included in selling and administrative expenses were exit and disposal costs totaling $9.5 million in 2020, primarily at CBF, CFT and CIT, attributable to our restructuring initiatives, compared with $5.6 million in 2019. Refer to Note 8 for further information on exit and disposal activities.
Research and Development Expenses
(in millions) 2020 2019 Change %
Research and development expenses $ 54.8  $ 60.9  $ (6.1) (10.0) %
As a percentage of revenues 1.3  % 1.3  %  
Depreciation and amortization $ 2.5  $ 2.1 
Research and development expenses were lower in 2020 primarily reflecting lower new product development at our CIT and CFT segments.
Other Operating Expense (Income), net
(in millions) 2020 2019 Change %
Other operating expense (income), net $ 2.5  $ (10.5) $ 13.0  (123.8) %
Items affecting comparability (1)
$ 4.5  $ (7.2)
(1)Items affecting comparability include impairment charges, (gains) losses from divestitures, insurance recoveries and gain from contingent consideration. Refer to Items Affecting Comparability.
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Other operating expense, net in 2020 primarily reflected $6.0 million of impairment charges and $4.0 million of losses on sales of fixed assets, primarily at CBF, CCM and CIT. Partially offsetting the expense was $2.5 million of rebates, $1.7 million of rental income, $1.4 million of royalty income and $0.7 million gain from insurance recoveries.
Other operating income, net in 2019 primarily reflected a $5.0 million gain on contingent consideration at CFT, $2.3 million of rebates and $1.9 million of gains on sales of assets.
Operating Income
(in millions) 2020 2019 Change %
Operating income $ 483.6  $ 654.2  $ (170.6) (26.1) %
Operating margin percentage 11.4  % 13.6  %  
Refer to Segment Results of Operations within this MD&A for further information related to segment operating income results.
Interest Expense, net
(in millions) 2020 2019 Change %
Interest expense, net $ 76.6  $ 66.1  $ 10.5  15.9  %
Interest expense, net of capitalized interest, during 2020 primarily reflected higher long-term debt balances associated with our public offering of $750.0 million of 2.75% unsecured senior notes completed in February 2020, and draws on our Revolving Credit Facility (the "Facility") in the first quarter of 2020, which were repaid in the second quarter of 2020. Refer to Note 14 for further information on our long-term debt.
Loss on Extinguishment of Debt
Loss on extinguishment of debt related to the early redemption in full of our $250.0 million aggregate principal amount of our outstanding 5.125% notes due December 15, 2020 (the “2020 Notes”). The 2020 Notes were redeemed on March 29, 2020 at the redemption price of $262.1 million. The redemption price included a premium of $8.4 million, along with $0.4 million of deferred issuance costs and resulted in a loss of $8.8 million. Refer to Note 14 for further discussion.
Interest Income
(in millions) 2020 2019 Change %
Interest income $ (4.8) $ (7.9) $ 3.1  (39.2) %
Interest income decreased during 2020 primarily related to lower yields.
Other Non-operating Expense, net
(in millions) 2020 2019 Change %
Other non-operating expense, net $ 1.7  $ 0.7  $ 1.0  NM
Items affecting comparability (1)
$ 4.8  $ 2.3 
(1)Items affecting comparability include income tax related indemnification losses and (gains) losses on divestitures. Refer to Items Affecting Comparability.
Other non-operating expense, net in 2020 primarily reflected the release of a portion of the indemnification asset related to the Petersen Aluminum Corporation ("Petersen") acquisition resulting from escrow expirations, and net impact of the resolution of certain tax uncertainties related to the Accella Holdings, LLC ("Accella") acquisition and release of the corresponding indemnification assets, partially offset by foreign exchange gains and a gain on sale of a business at CFT.
Other non-operating expense, net in 2019 primarily reflected the net impact of the resolution of certain tax uncertainties related to the Accella acquisition and release of the corresponding indemnification assets, and foreign exchange gains.
Income Taxes
(in millions) 2020 2019 Change %
Provision for income taxes $ 77.1  $ 121.6  $ (44.5) (36.6) %
Effective tax rate 19.2  % 20.4  %
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The provision for income taxes on continuing operations for 2020 is lower than 2019 primarily reflecting lower pre-tax income in the U.S., and to a lesser extent in foreign jurisdictions. This equated to lower taxes of $42.7 million, with approximately $1.8 million of net lower taxes related to other permanent differences and the impact of prior year taxes in the current year, primarily related to:
Favorable change of $8.7 million primarily related to the lapse of statutes on uncertain tax positions;
Unfavorable of $4.9 million related to reduction in return to provision adjustments; and
Unfavorable change of $2.1 million related to windfall tax benefits for current year stock-based compensation.

Refer to Note 9 for further information related to income taxes.
Loss from Discontinued Operations
The loss from discontinued operations of $4.1 million in 2020 relates to workers' compensation accruals associated with a former business disposed of in 2005.
The loss from discontinued operations of $0.9 million in 2019 relates to an environmental remediation accrual associated with a former business disposed of in 2009, partially offset by the settlement of prior income tax positions in the current year related to the sale of Carlisle FoodService Products.
Refer to Note 4 for additional information related to discontinued operations.
Segment Results of Operations
We continue to operate our facilities as essential business operations, while adhering to all health and safety measures for onsite employees. We have taken several steps to address the overall effects of COVID-19 on Carlisle and continue to assess the risks and potential impacts on our businesses. We have developed plans and implemented actions to mitigate risks and enhance the performance of our businesses in an uncertain environment dependent largely on future developments, which are highly uncertain and cannot be predicted.
Carlisle Construction Materials (“CCM”)
CCM delivered 1.0% year-over-year improvement in operating income despite a 7.4% decline in revenue. Notably, there was sequential improvement in sales beginning in September, when sales increased year-over-year for the first time since the pandemic began that carried into the fourth quarter. CCM was able to expand operating margin through favorable raw materials pricing, maintained price discipline and improved operating efficiencies from COS.
We continue to invest in CCM Europe, evidenced by new regional leadership, expansion of our world-class facility in Waltershausen, Germany and several new product introductions planned for 2021. Within our architectural metals platform, we have set plans in motion for three new locations in underserved regions around the U.S. while making progress consolidating our teams to drive commercial synergies and operational efficiencies. Our polyurethane business is driving sustainable growth providing products and solutions with energy efficiency in both residential and commercial applications. The polyurethane team, in collaboration with CFT engineering, has introduced an industry-first integrated spray foam insulation equipment solution (IntelliSpray), which optimizes productivity and material savings when used with CCM's complete product portfolio of open and closed cell products.
(in millions) 2020 2019 Change % Acquisition
Effect
Price / Volume
Effect
Exchange
Rate Effect
Revenues $ 2,995.6  $ 3,233.3  $ (237.7) (7.4) % 0.1  % (7.5) % —  %
Operating income $ 581.6  $ 576.0  $ 5.6  1.0  %
Operating margin percentage 19.4  % 17.8  %
Depreciation and amortization $ 98.0  $ 93.9 
Items affecting comparability (1)
$ 3.3  $ 2.2 
(1)Items affecting comparability in 2020 include idle capacity and labor costs, net of subsidies, of $3.7 million, exit and disposal and facility rationalization costs of $1.0 million and acquisition related costs of $0.1 million, partially offset by a gain from divestiture of $0.8 million and a gain from insurance recoveries of $0.7 million. Items affecting comparability in 2019 include acquisition related costs of $2.6 million and exit and disposal and facility rationalization costs of $0.3 million, partially offset by a gain from divestiture of $0.7 million. Refer to Items Affecting Comparability.
CCM’s revenue decline in 2020 primarily reflected lower volumes across all of our product lines due to delays in customer demand and in new construction projects attributable to COVID-19.
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CCM’s operating margin percentage growth in 2020 was driven by favorable raw material pricing, lower travel and administrative costs and savings from COS, partially offset by lower volumes, unfavorable price and wage inflation.
Carlisle Interconnect Technologies (“CIT”)
CIT delivered results in line with our expectations in a year of record declines in the aerospace industry by focusing on delivering new products to increase our content per plane, rightsizing its manufacturing footprint, further integrating its medical platform, and continuing to invest in our test and measurement and sensors product lines.
In August 2020, as a result of the market declines caused by COVID-19, we announced the closure of our manufacturing operations in Kent, Washington, and the relocation of selected operations to our existing facilities primarily in North America. This project is estimated to take 12 to 18 months to complete. Total project costs are expected to approximate $18.3 million, with approximately $11.5 million remaining to be incurred.
In April 2020, we announced plans to exit our manufacturing operations in Mobile, Alabama, and relocate the majority of those operations to CIT's existing manufacturing facility in Franklin, Wisconsin. This project is substantially complete with cumulative costs of $1.6 million recognized through December 31, 2020.
In January 2019, we announced the relocation of our connectors manufacturing operations in El Segundo, California, and Riverside, California, to our existing lower cost facilities in North America. This project is complete with cumulative costs of $20.8 million recognized through December 31, 2020. Refer to Note 8 for further information regarding exit and disposal activities.
(in millions) 2020 2019 Change % Acquisition
Effect
Price / Volume
Effect
Exchange
Rate Effect
Revenues $ 731.6  $ 972.9  $ (241.3) (24.8) % 8.3  % (33.1) % —  %
Operating income $ (2.1) $ 131.6  $ (133.7) (101.6) %
Operating margin percentage (0.3) % 13.5  %
Depreciation and amortization $ 77.5  $ 63.0 
Items affecting comparability (1)
$ 26.7  $ 16.7 
(1)Items affecting comparability in 2020 include exit and disposal and facility rationalization costs of $16.4 million, an impairment charge of $6.0 million, idle capacity and labor costs, net of subsidies, of $3.9 million and acquisition related costs of $0.4 million. Items affecting comparability in 2019 include exit and disposal and facility rationalization costs of $13.6 million and acquisition related costs of $3.1 million. Refer to Items Affecting Comparability.
CIT's revenue decline in 2020 primarily reflected lower volumes, led by the commercial aerospace market as a result of continued delays in the 737 Max production and lower build rates on narrow and wide body aircraft by OEMs, given steep declines in airline travel and customer plant shutdowns. The decline was partially offset by acquired medical device product lines.
CIT’s operating margin percentage decrease in 2020 was driven by lower volumes, unfavorable mix, higher restructuring and facility rationalization costs, and wage and raw material inflation, partially offset by savings from COS and lower incentive compensation and travel costs.
Carlisle Fluid Technologies (“CFT”)
(in millions) 2020 2019 Change % Acquisition
Effect
Price / Volume
Effect
Exchange
Rate Effect
Revenues $ 242.7  $ 278.4  $ (35.7) (12.8) % 6.3  % (19.8) % 0.7  %
Operating income $ 5.3  $ 24.0  $ (18.7) (77.9) %
Operating margin percentage 2.2  % 8.6  %
Depreciation and amortization $ 23.4  $ 24.1 
Items affecting comparability (1)
$ 4.2  $ 0.8 
(1)Items affecting comparability in 2020 include exit and disposal and facility rationalization costs of $3.7 million and acquisition related costs of $0.5 million. Items affecting comparability in 2019 includes acquisition related costs of $3.1 million and exit and disposal and facility rationalization costs $2.7 million, partially offset by a contingent consideration gain of $5.0 million. Refer to Items Affecting Comparability.
CFT's revenue decline in 2020 primarily reflected volume declines due to COVID-19 across all markets in which they operate, partially offset by contributions from acquisitions and price realization.
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CFT’s operating margin percentage decrease in 2020 was driven by lower volumes and wage and raw material inflation, partially offset by lower incentive compensation and travel costs, savings from COS and price realization.
Carlisle Brake & Friction (“CBF”)
During the first quarter of 2020, we initiated plans to consolidate certain operations globally to reduce costs and streamline processes by consolidating certain positions within selling, general and administrative, and manufacturing functions and exited less profitable product lines that resulted in asset write-offs. This project is substantially complete with cumulative costs of $5.5 million recognized through December 31, 2020.
(in millions) 2020 2019 Change % Acquisition
Effect
Price / Volume
Effect
Exchange
Rate Effect
Revenues $ 275.3  $ 327.0  $ (51.7) (15.8) % —  % (16.0) % 0.2  %
Operating income (loss) $ (3.7) $ 21.3  $ (25.0) (117.4) %
Operating margin percentage (1.3) % 6.5  %
Depreciation and amortization $ 21.5  $ 21.7 
Items affecting comparability (1)
$ 6.7  $ 2.8 
(1)Items affecting comparability in 2020 include exit and disposal and facility rationalization costs of $5.5 million and idle capacity and labor costs, net of subsidies, of $1.2 million. Items affecting comparability in 2019 include exit and disposal and facility rationalization costs of $2.8 million. Refer to Items Affecting Comparability.
CBF's revenue decline in 2020 primarily reflected lower volumes due to plant closures from COVID-19 in the heavy equipment, aerospace and transportation markets.
CBF's operating margin percentage decrease in 2020 was driven by lower volumes, unfavorable mix, higher restructuring and facility rationalization costs, and wage inflation, partially offset by savings from COS.
Liquidity and Capital Resources
A summary of our cash and cash equivalents by region follows:
(in millions) December 31, 2020 December 31, 2019
Europe $ 114.8  $ 62.2 
North America (excluding U.S.) 50.8  43.4 
China 19.3  17.9 
Asia Pacific (excluding China) 30.1  69.1 
International cash and cash equivalents 215.0  192.6 
U.S. cash and cash equivalents 687.2  158.6 
Total cash and cash equivalents $ 902.2  $ 351.2 
We maintain liquidity sources primarily consisting of cash and cash equivalents as well as availability under our Facility. In the near term, cash on hand is our primary source of liquidity. The increase in cash and cash equivalents compared with December 31, 2019, was primarily related to cash generated from operations and proceeds from our public offering of $750.0 million of unsecured senior notes due in March 2030, partially offset by the early redemption of our $250.0 million notes due in December 2020. Additionally, during 2020 we utilized cash on hand to fund share repurchases, capital expenditures and pay dividends to shareholders.
In certain countries, primarily China, our cash is subject to local laws and regulations that require government approval for conversion of such cash to U.S. Dollars, as well as for transfer of such cash, both temporarily and permanently outside of that jurisdiction. In addition, upon permanent transfer of cash outside of certain jurisdictions, primarily in China, we may be subject to withholding taxes, and as such we have accrued $4.6 million in anticipation of those taxes as of December 31, 2020.
Despite the continued uncertainty in global markets resulting from COVID-19, we believe we have sufficient cash on hand, availability under the Facility and operating cash flows to meet our business requirements for at least the next 12 months. At the discretion of management, the Company may use available cash on capital expenditures, dividends, common stock repurchases, acquisitions and strategic investments.
We also anticipate we will have sufficient cash on hand, as well as available liquidity under the Facility, to pay outstanding principal balances of our existing notes by the respective maturity dates. Another potential source of liquidity is access to public capital markets, subject to market conditions. We may access the capital markets to
23

repay the outstanding balance, if our sources of liquidity have been used for other strategic purposes by the time of maturity. Refer to Debt Instruments below.
Sources and Uses of Cash and Cash Equivalents
(in millions) 2020 2019
Net cash provided by operating activities $ 696.7  $ 703.1 
Net cash used in investing activities (122.6) (694.9)
Net cash used in financing activities (24.7) (461.2)
Effect of foreign currency exchange rate changes on cash 1.6  0.6 
Change in cash and cash equivalents $ 551.0  $ (452.4)
Operating Activities
We generated operating cash flows totaling $696.7 million for 2020 (including working capital sources of $81.5 million), compared with $703.1 million for 2019 (including working capital uses of $9.5 million). Lower operating cash flows in 2020 primarily reflect lower cash earnings, partially offset by a decline in working capital, both as a result of a decline in volumes.
Investing Activities
Cash used in investing activities of $122.6 million for 2020 primarily reflected capital expenditures of $95.5 million and the acquisition of Motion Tech Automation, LLC ("MTA"), net of cash acquired, for $33.0 million. Cash used in investing activities of $694.9 million for 2019 primarily reflected the acquisitions, net of cash acquired, of Providien for $328.7 million, Petersen for $202.0 million, MicroConnex Corporation ("MicroConnex") for $45.4 million and other acquisitions for $40.3 million, and capital expenditures of $88.9 million.
Financing Activities
Cash used in financing activities was $24.7 million for 2020. Net proceeds from our February notes offering, partially offset by the early redemption of our senior notes due December 15, 2020, and financing costs associated with our February notes offering, totaled $458.0 million. Additionally, we used cash of $382.4 million for share repurchases and $112.4 million for cash dividend payments, reflecting the increased annual dividend of $2.05 per share. Cash used in financing activities of $461.2 million for 2019 primarily reflected $382.1 million of share repurchases and $102.9 million of cash dividend payments.
Share Repurchases
On February 5, 2019, the Board of Directors (the "Board") approved a 5 million share increase in the Company's stock repurchase program. We repurchased approximately 3.1 million shares in 2020 as part of our plan to return capital to shareholders, utilizing $382.4 million of our cash on hand. As of December 31, 2020, we had authority to repurchase 1.9 million shares.
On February 2, 2021, the Board approved an additional 5 million share increase in the Company's stock repurchase program. Purchases may occur from time to time in the open market and no maximum purchase price has been set. The decision to repurchase shares depends on price, availability and other corporate developments. The Company plans to continue to repurchase shares in 2021 on an opportunistic basis.
We intend to pay dividends to our shareholders and have increased our dividend rate annually for the past 44 years. On February 2, 2021, the Board declared a regular quarterly dividend of $0.525 per share, payable on March 1, 2021, to shareholders of record at the close of business on February 19, 2021.
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Debt Instruments
Senior Notes
On February 28, 2020, the Company completed a public offering of $750.0 million of unsecured senior notes with a stated interest rate of 2.75% due March 1, 2030 (the “2030 Notes”). The 2030 Notes were issued at a discount of $9.3 million, resulting in proceeds to the Company of $740.7 million. The Company incurred costs to issue the 2030 Notes of approximately $22.9 million, inclusive of underwriters’, credit rating agencies’ and attorneys’ fees, loss on treasury lock contracts and other costs. The discount, issuance costs and loss on treasury locks are amortized to interest expense over the life of the 2030 Notes. Interest is payable each March 1 and September 1, and commenced on September 1, 2020.
On February 28, 2020, we issued a notice for the redemption in full of our $250.0 million aggregate principal amount of our outstanding 5.125% notes due December 15, 2020 (the “2020 Notes”). The 2020 Notes were redeemed on March 29, 2020 at the redemption price of $262.1 million. We recognized a loss on extinguishment of debt totaling $8.8 million in the first quarter of 2020.
We also have senior unsecured notes outstanding of $350.0 million due November 15, 2022 (at a stated interest rate of 3.75%), $400.0 million due December 1, 2024 (at a stated interest rate of 3.5%) and $600.0 million due December 1, 2027 (at a stated interest rate of 3.75%) that are rated BBB by Standard & Poor’s and Baa2 by Moody’s.
Revolving Credit Facility
On February 5, 2020, we entered into our Fourth Amended and Restated Credit Agreement (the “Amendment”) administered by JPMorgan Chase Bank, N.A. Among other things, the Amendment extended the maturity date of the Facility from February 21, 2022, to February 5, 2025.
During 2020, borrowings under the Facility totaled $500.0 million with a weighted average interest rate of 1.9%, and repayments totaled $500.0 million. As of December 31, 2020, there were no borrowings under the Facility and $1.0 billion of availability. During the year ended and as of December 31, 2019 there were no borrowings under the Facility.
Debt Covenants
We are required to meet various restrictive covenants and limitations under our senior notes and revolving credit facility 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 as of December 31, 2020 and 2019.
Refer to Note 14 for further information on our debt instruments.
Critical Accounting Estimates
Our significant accounting policies are more fully described in Note 1. In preparing the Consolidated Financial Statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”), the Company’s management must make informed decisions which impact the reported amounts and related disclosures. Such decisions include the selection of the appropriate accounting principles to be applied and assumptions on which to base estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates, including those related to goodwill and indefinite-lived intangible assets, valuation of long-lived assets, revenue recognition, income taxes and extended product warranties on an ongoing basis. The Company bases its estimates on 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, that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.
Business Combinations
As noted in Executive Overview we have a history and a strategy of acquiring businesses. We account for these business combinations as required by GAAP under the acquisition method of accounting, which requires us to recognize the assets acquired and the liabilities assumed at their acquisition date fair values. Deferred taxes are recorded for any differences between fair value and tax basis of assets acquired and liabilities assumed and can
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vary based on the structure of the acquisition as to whether it is a taxable or non-taxable transaction. To the extent the purchase price of the acquired business exceeds the fair values of the assets acquired and liabilities assumed, including deferred income taxes recorded in connection with the transaction, such excess is recognized as goodwill (see further below for our critical accounting estimate regarding post-acquisition accounting for goodwill). The most critical areas of judgment in applying the acquisition method include selecting the appropriate valuation techniques and assumptions that are used to measure the acquired assets and assumed liabilities at fair value, particularly for intangible assets, contingent consideration, acquired tangible assets such as property, plant and equipment, and inventory.
The key techniques and assumptions utilized by type of major acquired asset or liability generally include:
Asset/Liability Typical Valuation Technique Key Assumptions
Technology-based intangible assets Relief from royalty method
Estimated future revenues from acquired technology
Royalty rates that would be paid if licensed from a third-party
Discount rates
Customer-based intangible assets Multiple-period excess earnings method
Estimated future revenues from existing customers
Rates of customer attrition
Discount rates
Contributory asset charges
Trademark/trade name intangible assets Relief from royalty method
Estimated future revenues from acquired trademark/trade name
Economic useful lives (definite vs. indefinite)
Royalty rates that would be paid if licensed from a third-party
Discount rates
Property, plant & equipment Market comparable transactions (real property) and replacement cost, new less economic deprecation (personal property)
Similarity of subject property to market comparable transactions
Costs of like equipment in new condition
Economic obsolescence rates
Inventory Net realizable value less (i) estimated costs of completion and disposal, and (ii) a reasonable profit allowance for the seller
Estimated percentage complete (WIP inventory)
Estimated selling prices
Estimated completion and disposal costs
Estimated profit allowance for the seller
Contingent consideration Discounted future cash flows
Future revenues and/or net earnings
Discount rates
In selecting techniques and assumptions noted above, we generally engage third-party, independent valuation professionals to assist us in developing the assumptions and applying the valuation techniques to a particular business combination transaction. In particular, the discount rates selected are compared to and evaluated with (i) the industry weighted-average cost of capital, (ii) the inherent risks associated with each type of asset and (iii) the level and timing of future cash flows appropriately reflecting market participant assumptions.
As noted above, goodwill represents a residual amount of purchase price. However, the primary items that generate goodwill include the value of the synergies between the acquired company and our existing businesses and the value of the acquired assembled workforce, neither of which qualifies for recognition as an intangible asset. Refer to Note 3 for more information regarding business combinations, specifically the items that generated goodwill in our recent acquisitions.
Subsequent Measurement of Goodwill
Goodwill is not amortized but is tested annually, or more often if impairment indicators are present, for impairment at a reporting unit level. Goodwill is tested for impairment via a one-step process by comparing the fair value of goodwill with its carrying value. We recognize an impairment for the amount by which the carrying amount exceeds the fair value. We estimate the fair value of our reporting units based on the income approach utilizing the
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discounted cash flow method ("DCF") and the market approach utilizing the public company market multiple method. The key techniques and assumptions generally include:
Valuation Technique Key Assumptions
Discounted future cash flows
Estimated future revenues
Earnings before interest, taxes, depreciation and amortization ("EBITDA") margins
Discount rates
Market multiple method
Peer public company group
Financial performance of reporting units relative to peer public company group

We have determined that we have four reporting units and have allocated goodwill to those reporting units as follows: 
(in millions) December 31, 2020 December 31, 2019
Carlisle Construction Materials $ 613.0  $ 597.1 
Carlisle Interconnect Technologies 835.6  835.2 
Carlisle Fluid Technologies 193.1  187.5 
Carlisle Brake & Friction 96.5  96.5 
Total $ 1,738.2  $ 1,716.3 
Annual Impairment Test
We test our goodwill for impairment annually as of October 1. For the 2020 impairment test, the CCM reporting unit was tested for impairment using a qualitative approach. Under this approach, an entity may assess qualitative factors as well as relevant events and circumstances to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Through the results of our analysis, we determined that it is not more likely than not that the fair value of the CCM reporting unit was less than its carrying value and thus, a quantitative analysis was not performed. The CIT, CFT and CBF reporting units were tested for impairment using the quantitative approach described above, resulting in fair value that substantially exceeded the carrying value for each of the reporting units.
We will continue to closely monitor actual results versus expectations as well as whether and to what extent any significant changes in current events or conditions, including changes to the impacts of COVID-19 on our business, result in corresponding changes to our expectations about future estimated cash flows, discount rates and market multiples. If our adjusted expectations of the operating results, both in size and timing, of CIT, CFT and CBF do not materialize, if the discount rate increases (based on increases in interest rates, market rates of return or market volatility) or if market multiples decline, we may be required to record goodwill impairment charges, which may be material.
While we believe our conclusions regarding the estimates of fair value of our reporting units are appropriate, these estimates are subject to uncertainty and by nature include judgments and estimates regarding various factors. These factors include the rate and extent of growth in the markets that our reporting units serve, the realization of future sales price and volume increases, fluctuations in exchange rates, fluctuations in price and availability of key raw materials, future operating efficiencies and, as it pertains to discount rates, the volatility in interest rates and costs of equity. 
Refer to Note 12 for more information regarding goodwill.
Subsequent Measurement of Indefinite-Lived Intangible Assets
As discussed above, indefinite-lived intangible assets are recognized and recorded at their acquisition-date fair value. Intangible assets with indefinite useful lives are not amortized but are tested annually at the appropriate unit of account, which generally equals the individual asset, or more often if impairment indicators are present. Indefinite-lived intangible assets are tested for impairment via a one-step process by comparing the fair value of the intangible asset with its carrying value. We recognize an impairment charge for the amount by which the carrying amount exceeds the intangible asset's fair value. We generally estimate the fair value of our indefinite-lived intangible assets consistent with the techniques noted above using our expectations about future cash flows, discount rates and royalty rates for purposes of the annual test. We monitor for significant changes in those
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assumptions during interim reporting periods. We also periodically re-assess indefinite-lived intangible assets as to whether its useful lives can be determined, and if so, we would begin amortizing any applicable intangible asset. 
Annual Impairment Test 
We test our indefinite-lived intangible assets for impairment annually as of October 1. For the 2020 impairment test, the CCM indefinite-lived intangible assets were tested for impairment using a qualitative approach. The CIT, CFT and CBF indefinite-lived intangible assets were tested for impairment using the quantitative approach described above, resulting in fair values that substantially exceeded the carrying values, with the exception of four trade names with an aggregate carrying value of $68.0 million that exceeded their carrying amounts by less than 5%.
We will continue to closely monitor actual results versus expectations as well as whether and to what extent any significant changes in current events or conditions, including changes to the impacts of COVID-19 on our business, result in corresponding changes to our expectations about future estimated revenues and discount rates. If our adjusted expectations of the revenues, both in size and timing, of CIT, CFT and CBF trade names do not materialize or if the discount rate increases (based on increases in interest rates, market rates of return or market volatility), we may be required to record trade name impairment charges, which may be material.
Refer to Note 12 for more information regarding intangible assets.
Valuation of Long-Lived Assets
Long-lived assets or asset groups, including amortizable intangible assets, are tested for recoverability whenever events or circumstances indicate that the undiscounted future cash flows do not exceed the carrying amount of the asset or asset group. 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, which means that in many cases multiple assets are tested for recovery as a group. Our asset groupings vary based on the related business in which the long-lived assets are 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 groupings reflect 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. Undiscounted estimated future cash flows are compared to the carrying value of the long-lived asset or asset group in the event indicators of impairment are identified. In developing our estimates of future undiscounted cash flows, we utilize our internal estimates of future revenues, costs and other net cash flows from operating the long-lived asset or asset group over the life of the asset or primary asset, if an asset group. This requires us to make judgments about future levels of sales volume, pricing, raw material costs and other operating expenses.
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 for like or similar assets in similar markets or a combination of both. All of our asset groups were recoverable as of December 31, 2020.
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 a loss on sale is recorded against the disposal group if fair value, less cost to sell, of the disposal group is less than its carrying value. If the disposal group’s fair value exceeds its carrying value, we record a gain, assuming all other criteria for a sale are met, when the transaction closes.
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 our 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
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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.
We receive 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 ranges from five to 40 years. The weighted average life of the contracts as of December 31, 2020, is approximately 20 years.
Additionally, critical judgments and estimates related to revenue recognition relative to certain customer contracts in our CIT and CFT segments, in which they are contract manufacturers or where they have entered into an agreement to provide both services (engineering and design) and products resulting from those services, include the following:
Determination of whether revenue is earned at a "point-in-time" or "over time": Where contracts provide for the manufacture of highly customized products with no alternative use and provide CIT or CFT the right to payment for work performed to date, including a normal margin for that effort, we have concluded those contracts require the recognition of revenue over time.
Measurement of revenue using the key inputs of expected gross margin and inventory in our possession. We utilize an estimate of expected gross margin based on historical margin patterns and management’s experience, which vary based on the customers and end markets being evaluated. There are multiple unique customer contracts at CIT or CFT. Accordingly, the estimate of expected margin is done for each customer discretely. We review the margins for these categories as contracts, customers and product profiles change over time to ensure that the margin expectations reflect the best available data for each category.
Income Taxes
Our income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management’s best estimate of current and future taxes to be paid. We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Significant judgments and estimates are required in the determination of the consolidated income tax expense.
Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and its reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. In evaluating our ability to recover our deferred tax assets in the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies and results of recent operations.
We believe that it is more likely than not that the benefit from certain U.S. federal, state and foreign net operating loss ("NOL"), and credit carryforwards will not be realized. In recognition of this risk, we have provided a valuation allowance of $7.1 million on the deferred tax assets related to these carryforwards.
We (1) record unrecognized tax benefits as liabilities in accordance with Accounting Standards Codification 740, Income Taxes ("ASC 740") and (2) adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available.
Extended Product Warranty Reserves
We offer extended warranty contracts on sales of certain products, the most significant being those offered on our installed roofing systems within the CCM segment. 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 exceed unamortized deferred revenues equal to such excess. We estimate total expected warranty costs using actuarially derived estimates of future costs of servicing the warranties. The key inputs that are utilized to develop these estimates include historical claims experience by type of roofing membrane, location, and labor and material costs. The estimates of the volume and severity of these claims and associated costs are dependent upon the above assumptions and future results could differ from our current expectations. We currently do not have any material loss reserves recorded associated with our extended product warranties.
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New Accounting Standards
Refer to Note 1 for information regarding new accounting standards.
Items Affecting Comparability
Items affecting comparability include costs, and losses or gains related to, among other things, growth and profitability improvement initiatives and other events outside of core business operations (such as exit and disposal and facility rationalization charges, costs of and related to acquisitions, idle capacity and labor costs, asset impairments, net of subsidies, litigation settlement costs, insurance settlements, gains and losses from and costs related to divestitures, losses on debt extinguishment, and non-comparable tax items). Because these items affect our, or any particular operating segment's, financial condition or results in a specific period in which they are recognized, we believe it is appropriate to present the total of these items to provide information regarding the comparability of results of operations period to period. The components of items affecting comparability follows:
2020
(in millions, except per share amounts) Impact to
Operating Income
Impact to Income from Continuing Operations Impact to Diluted EPS
Exit and disposal costs $ 24.5  $ 18.5  $ 0.34 
Other facility rationalization costs 2.1  1.6  0.03 
Acquisition related costs:
Inventory step-up amortization 0.7  0.5  0.01 
Other acquisition costs 3.7  2.9  0.05 
Idle capacity and labor costs, net of subsidies 8.8  6.7  0.12 
Impairment charges 6.0  4.6  0.08 
Gains from insurance recoveries (0.7) (0.6) (0.01)
Gains from divestitures (0.8) (2.9) (0.05)
Loss on debt extinguishment —  6.6  0.12 
Indemnification losses —  3.2  0.06 
Tax items —  (16.9)
(1)
(0.31)
Total items affecting comparability $ 44.3  $ 24.2  $ 0.44 
(1)Excludes $(4.6) million of tax items related to indemnification asset write-offs which had zero impact to income from continuing operations and diluted EPS from continuing operations.
2019
(in millions, except per share amounts) Impact to
Operating Income
Impact to Income from Continuing Operations Impact to Diluted EPS
Exit and disposal costs $ 13.7  $ 10.3  $ 0.18 
Other facility rationalization costs 5.7  4.4  0.08 
Acquisition related costs:
Inventory step-up amortization 3.1  2.4  0.04 
Other acquisition costs 8.3  6.9  0.12 
Gains from contingent consideration (5.0) (5.0) (0.09)
Gains from divestitures (2.1) (1.2) (0.02)
Gain from step acquisition, net —  (0.3) — 
Tax items —  (13.2)
(1)
(0.23)
Total items affecting comparability $ 23.7  $ 4.3  $ 0.08 
(1)Excludes $(1.9) million of tax items related to indemnification asset write-offs which had zero impact to income from continuing operations and diluted EPS from continuing operations.
The impact to income from continuing operations reflects the tax effect of items affecting comparability, which is based on the statutory rate in the jurisdiction in which the expense or income is deductible or taxable. The per share impact of items affecting comparability to each period is based on diluted shares outstanding using the two-class method (refer to Note 5).
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Outlook
Revenues
Our expectations for segment revenues in 2021 follows:
2021 Revenue Primary Drivers
Carlisle Construction Materials high-single
digit growth
Strong replacement roofing demand
Expansion into new platforms, primarily spray foam insulation, architectural metals and Europe
Carlisle Interconnect Technologies mid-to-high
single-digit decline
Longer-term recovery due to prolonged aerospace decline
Growth in medical
Carlisle Fluid Technologies low-double
digit growth
Product introductions
Markets signaling bottom and order books strengthening
Carlisle Brake & Friction low-double
digit growth
Product introductions
Markets signaling bottom and order books strengthening
Total Carlisle mid-single
digit growth
Cash Flows
Our priorities for the use of cash are to invest in growth and performance improvement opportunities for our existing businesses 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 2021 are expected to be between $150 million and $175 million, which primarily includes continued investments in CCM. Planned capital expenditures for 2021 include new product and capacity expansion, business sustaining projects, and cost reduction efforts.
Forward-Looking Statements
This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the potential or expected impacts of the global COVID-19 pandemic. Forward-looking statements generally use words such as "expect," "foresee," "anticipate," "believe," "project," "should," "estimate," "will," "plans," "intends," "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: risks from the global COVID-19 pandemic, including, for example, expectations regarding the impact of COVID-19 on our businesses, including on customer demand, supply chains and distribution systems, production, our ability to maintain appropriate labor levels, our ability to ship products to our customers, our future results, or our full-year financial outlook; 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 identification of strategic acquisition targets and our successful completion of any transaction and integration of our strategic acquisitions; the cyclical nature of our businesses; and the outcome of pending and future litigation and governmental proceedings; and the other factors discussed in the reports we file with or furnish to the Securities and Exchange Commission ("SEC") from time to time. 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 international arena may adversely affect general market conditions and our future performance. Any forward-looking statement speaks only as of the date on which that statement is made, and we undertake no duty to update any forward-looking statement to reflect events or circumstances, including unanticipated events, after the date on which that statement is made, unless otherwise required by law. New factors emerge from time to time and it is not possible for management to predict all of those factors, nor can it assess the impact of each of those factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.
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Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risk in the form of changes in interest rates, foreign currency exchange rates and commodity prices for raw materials. We may, from time to time, enter into derivative financial instruments to manage these risks; however, we do not utilize such instruments or contracts for speculative or trading purposes. In the event that we enter into a derivative financial instrument, it is possible that such future dated contracts could no longer serve as a hedge if the projected cash flow does not occur as anticipated at the time of contract initiation. 
Interest Rate Risk
We are exposed to interest rate risks as a result of our borrowing and investing activities, which principally includes long-term borrowings used to maintain liquidity and to fund our business operations and capital requirements. We may enter into interest rate swaps from time to time to manage our mix of fixed and variable interest rate debt effectively. We may enter into other interest rate derivatives such as treasury locks or zero cost collars to manage forecasted interest rates associated with bond offerings. As of December 31, 2020, and 2019, there were no interest rate swaps or other derivative instruments in place and, at both dates, all of our long-term debt was fixed-rate and U.S. Dollar denominated. We also have a $1.0 billion revolving credit facility that allows for borrowings at a variable interest rate. We had no outstanding borrowings under this facility as of December 31, 2020 and 2019. The nature and amount of our long-term debt may vary from time to time as a result of business requirements, market conditions and other factors. We consider the risk to our results of operations from changes in market rates of interest to be minimal as our interest bearing debt instruments are fixed-rate. 
Foreign Currency Exchange Risk
A portion of our operating cash flows are denominated in foreign currencies. As such we are exposed to market risk from changes in foreign currency exchange rates. We are primarily exposed to the exchange rates of currencies including the Chinese Renminbi, Euro, British Pound, Canadian Dollar and Japanese Yen. We continually evaluate our foreign currency exposure based on current market conditions and the locations in which we conduct our business. We manage most of our foreign currency exposure on a consolidated basis, which allows us to net certain exposures and take advantage of natural offsets. In order to mitigate foreign currency risk, we may, from time to time, enter into derivative financial instruments, generally foreign currency forward contracts, to hedge the cash flows related to certain foreign currency denominated sales and purchase transactions expected within one year and the related recognized trade receivable or payable. The gains and losses on these contracts offset changes in the value of the related exposures. It is our policy to enter into foreign currency derivative financial instruments only to the extent considered necessary to meet the objectives set forth above. We generally do not hedge the risk of foreign currency net investments into U.S. Dollars for financial reporting.
We had foreign exchange contracts with maturities less than one year for instruments that are designated and qualify as an accounting cash flow hedge with an aggregate U.S. Dollar equivalent notional value of $93.5 million and $108.1 million as of December 31, 2020 and 2019, respectively. The gross fair value was $5.0 million and $2.0 million as of December 31, 2020 and 2019, respectively. The effective portion of changes in the fair value of the contracts is recorded in accumulated other comprehensive income (loss) and is recognized in operating income when the underlying forecasted transaction impacts earnings. We also had foreign exchange contracts with maturities less than one year for instruments that are not designed as a cash flow hedge, but nonetheless are entered into as an economic hedge of certain foreign currency risk with an aggregate U.S. Dollar equivalent notional value of $65.4 million and $124.4 million as of December 31, 2020 and 2019, respectively. The gross fair value was $0.2 million and $0.6 million as of December 31, 2020 and 2019, respectively. The unrealized gains and losses resulting from these contracts are not significant and are recognized in other non-operating expense, net and partially offset corresponding foreign exchange gains and losses on the underlying items being economically hedged.
The near-term sensitivity of these contracts to changes in foreign currency exchange rates is also minimal as they are scheduled to mature within 12 months. Further, changes in the fair value of these contracts will be offset by changes in the cash flows of the underlying foreign currency denominated sales, purchases, assets and liabilities which the contracts are intended to mitigate (both accounting and economic hedges).
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Commodity Price Risk
We continually address the impact of changes in commodity prices on our results of operations and cash flow. Our exposure to changes in commodity prices is principally indirect as we do not directly purchase exchange-traded commodities, but rather purchase raw materials that are a result of further downstream processing (as noted in Item 1 of this Form 10-K), primarily inputs resulting from processing crude oil, natural gas, iron ore, gold, silver and copper. We generally manage the risk of changes in commodity prices that impact our raw material costs by seeking to (i) offset increased costs through increases in prices, (ii) alter the nature and mix of raw materials used to manufacture our finished goods or (iii) enter into commodity-linked sales or purchase contracts, all to the extent possible based on competitive and other economic factors. We may also from time to time enter into derivative financial instruments to mitigate such impact however, as of December 31, 2020 and 2019 we had no derivative financial instruments in place.
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Item 8.  Financial Statements and Supplementary Data.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 
To the shareholders and the Board of Directors of Carlisle Companies Incorporated
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Carlisle Companies Incorporated (the "Company") as of December 31, 2020 and 2019, and the related consolidated statements of income and comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 11, 2021, expressed an unqualified opinion on the Company’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Goodwill – CFT and CBF Reporting Units –Refer to Notes 1 and 12 to the financial statements
Critical Audit Matter Description
The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value. The Company determines the fair value of its reporting units using the income approach utilizing the discounted cash flow method and market approach utilizing the public company market multiple method. The determination of the fair value using the discounted cash flow method requires management to make significant estimates and assumptions related to forecasts of future revenues and earnings before interest, taxes, depreciation, and amortization (EBITDA) margins, and discount rates. The determination of the fair value using the market approach requires management to make significant assumptions related to market revenue multiples and EBITDA multiples from within a comparable industry group. The fair values of the CFT and CBF reporting units exceeded their carrying values and, therefore, no impairment was recognized.
Given the significant judgments management makes to estimate the fair value of the CFT and CBF reporting units, performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to forecasts of future revenues and operating unit EBITDA margins, selection of the discount rates, and the
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selection of multiples applied to revenue and EBITDA required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the forecasts of future revenues and operating unit EBITDA margins (“forecasts”), the selection of discount rates, and the selection of comparable market revenue and EBITDA multiples for the CFT and CBF reporting units included the following procedures:
We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of CFT and CBF, such as controls related to management’s forecasts and the selection of discount rates and comparable market revenue and EBITDA multiples.
We evaluated management’s ability to accurately forecast by comparing actual results to management’s historical forecasts.
We evaluated the reasonableness of management’s forecasts by comparing the forecasts to (1) historical results of the Company and its competitors, (2) internal communications to management, and (3) forecasted information included in industry reports of the Company and companies in its peer group.
With the assistance of our fair value specialists, we evaluated the discount rates, including testing the underlying source information and the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the discount rates selected by management.
With the assistance of our fair value specialists, we evaluated the revenue and EBITDA multiples, including testing the underlying source information and mathematical accuracy of the calculations, and evaluating the appropriateness of the Company’s selection of companies in its industry comparable groups.
/s/ DELOITTE & TOUCHE LLP
Phoenix, Arizona
February 11, 2021
We have served as the Company’s auditor since 2017.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 
To the shareholders and the Board of Directors of Carlisle Companies Incorporated
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Carlisle Companies Incorporated (the “Company”) as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020, of the Company and our report dated February 11, 2021, expressed an unqualified opinion on those financial statements.
As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Motion Tech Automation, LLC (“MTA”) which was acquired on July 22, 2020 and whose financial statements constitute less than 1% of total assets and net sales of the consolidated financial statement amounts as of and for the year ended December 31, 2020. Accordingly, our audit did not include the internal control over financial reporting of MTA.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
Phoenix, Arizona
February 11, 2021
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Carlisle Companies Incorporated
Consolidated Statements of Income and Comprehensive Income
  Years Ended December 31,
(in millions, except per share amounts) 2020 2019 2018
Revenues $ 4,245.2  $ 4,811.6  $ 4,479.5 
Cost of goods sold 3,062.8  3,439.9  3,304.8 
Selling and administrative expenses 641.5  667.1  625.4 
Research and development expenses 54.8  60.9  55.1 
Other operating expense (income), net 2.5  (10.5) (14.8)
Operating income 483.6  654.2  509.0 
Interest expense, net 76.6  66.1  64.7 
Loss on extinguishment of debt 8.8  —  — 
Interest income (4.8) (7.9) (11.2)
Other non-operating expense, net 1.7  0.7  9.6 
Income from continuing operations before income taxes 401.3  595.3  445.9 
Provision for income taxes 77.1  121.6  87.3 
Income from continuing operations 324.2  473.7  358.6 
Discontinued operations:      
(Loss) income before income taxes (5.4) (1.8) 300.1 
(Benefit from) provision for income taxes (1.3) (0.9) 47.6 
(Loss) income from discontinued operations (4.1) (0.9) 252.5 
Net income $ 320.1  $ 472.8  $ 611.1 
Basic earnings per share attributable to common shares:      
Income from continuing operations $ 5.93  $ 8.30  $ 5.92 
(Loss) income from discontinued operations (0.08) (0.02) 4.17 
Basic earnings per share $ 5.85  $ 8.28  $ 10.09 
Diluted earnings per share attributable to common shares:      
Income from continuing operations $ 5.88  $ 8.21  $ 5.88 
(Loss) income from discontinued operations (0.08) (0.02) 4.14 
Diluted earnings per share $ 5.80  $ 8.19  $ 10.02 
Average shares outstanding:
Basic 54.5  56.9  60.4 
Diluted 55.0  57.5  60.8 
Comprehensive income:      
Net income $ 320.1  $ 472.8  $ 611.1 
Other comprehensive income (loss):      
Foreign currency gains (losses) 39.4  (2.1) (30.3)
Amortization of unrecognized net periodic benefit costs, net of tax —  (2.0) (0.4)
Other, net of tax (12.3) 2.1  0.8 
Other comprehensive income (loss) 27.1  (2.0) (29.9)
Comprehensive income $ 347.2  $ 470.8  $ 581.2 
See accompanying Notes to Consolidated Financial Statements
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Carlisle Companies Incorporated
Consolidated Balance Sheets
(in millions, except par values) December 31,
2020
December 31,
2019
ASSETS    
Current assets:    
Cash and cash equivalents $ 902.2  $ 351.2 
Receivables, net 612.7  682.5 
Inventories, net 503.5  510.6 
Contract assets 84.5  100.5 
Prepaid expenses 37.0  30.5 
Other current assets 69.4  76.7 
Total current assets 2,209.3  1,752.0 
Property, plant and equipment, net 774.1  783.5 
Goodwill, net 1,738.2  1,716.3 
Other intangible assets, net 1,034.8  1,140.6 
Other long-term assets 110.0  103.6 
Total assets $ 5,866.4  $ 5,496.0 
LIABILITIES AND EQUITY    
Current liabilities:    
Accounts payable $ 317.6  $ 327.3 
Accrued and other current liabilities 295.0  294.5 
Contract liabilities 32.5  27.0 
Current portion of debt 1.1  250.2 
Total current liabilities 646.2  899.0 
Long-term liabilities:    
Long-term debt, less current portion 2,080.2  1,341.4 
Contract liabilities 235.8  220.4 
Other long-term liabilities 366.5  392.4 
Total long-term liabilities 2,682.5  1,954.2 
Shareholders' equity:    
Preferred stock, $1 par value per share (5.0 shares authorized and unissued)
—  — 
Common stock, $1 par value per share 200.0 shares authorized; 52.9 and 55.7 shares outstanding, respectively)
78.7  78.7 
Additional paid-in capital 441.7  416.6 
Treasury shares, at cost (25.5 and 22.7 shares, respectively)
(1,814.4) (1,449.7)
Accumulated other comprehensive loss (97.0) (124.1)
Retained earnings 3,928.7  3,721.3 
Total shareholders' equity 2,537.7  2,642.8 
Total liabilities and equity $ 5,866.4  $ 5,496.0 
See accompanying Notes to Consolidated Financial Statements
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Carlisle Companies Incorporated
Consolidated Statements of Cash Flows
  Years Ended December 31,
(in millions) 2020 2019 2018
Operating activities:      
Net income $ 320.1  $ 472.8  $ 611.1 
Reconciliation of net income to cash flows provided by operating activities:
     
Depreciation 97.4  88.4  86.4 
Amortization 126.8  117.0  104.2 
Lease expense 28.1  27.5  — 
Stock-based compensation 29.9  26.1  23.9 
Loss on extinguishment of debt 8.8  —  — 
Deferred taxes (27.0) (8.9) (0.8)
Gain on sale of discontinued operations, net of tax —  —  (250.4)
Other operating activities, net 21.9  5.4  (18.8)
Changes in assets and liabilities, excluding effects of acquisitions:      
Receivables 78.9  1.0  (32.6)
Inventories 16.4  (1.9) (29.0)
Contract assets 13.3  (26.7) (21.9)
Prepaid expenses and other assets (6.6) (3.6) (2.0)
Accounts payable (15.2) 16.5  (39.5)
Accrued and other current liabilities (5.3) 5.2  (99.9)
Contract Liabilities 20.5  18.5  11.8 
Other long-term liabilities (11.3) (34.2) (3.3)
Net cash provided by operating activities 696.7  703.1  339.2 
Investing activities:      
Capital expenditures (95.5) (88.9) (120.7)
Acquisitions, net of cash acquired (35.4) (616.4) (19.5)
Proceed from sale of discontinued operation —  —  758.0 
Other investing activities, net 8.3  10.4  11.4 
Net cash (used in) provided by investing activities (122.6) (694.9) 629.2 
Financing activities:      
Borrowings from revolving credit facility 500.0  —  — 
Repayments of revolving credit facility (500.0) —  — 
Proceeds from notes 740.7  —  — 
Repayments of notes (258.5) —  — 
Repurchases of common stock (382.4) (382.1) (459.8)
Dividends paid (112.4) (102.9) (93.5)
Financing costs (24.2) —  — 
Proceeds from exercise of stock options 21.3  37.0  22.7 
Withholding tax paid related to stock-based compensation (8.3) (10.4) (10.1)
Other financing activities, net (0.9) (2.8) — 
Net cash used in financing activities (24.7) (461.2) (540.7)
Effect of foreign currency exchange rate changes on cash and cash equivalents
1.6  0.6  (1.1)
Change in cash and cash equivalents 551.0  (452.4) 426.6 
Less: change in cash and cash equivalents of discontinued operations —  —  1.3 
Cash and cash equivalents at beginning of period 351.2  803.6  378.3 
Cash and cash equivalents at end of period $ 902.2  $ 351.2  $ 803.6 
 See accompanying Notes to Consolidated Financial Statements

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Carlisle Companies Incorporated
Consolidated Statements of Shareholders’ Equity
(in millions, except per share amounts) Common Stock Outstanding Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Shares in Treasury Total Shareholders' Equity
Shares Amount Shares Cost
Balance as of January 1, 2018 61.8  $ 78.7  $ 364.1  $ (85.7) $ 2,820.8  16.6  $ (649.6) $ 2,528.3 
Adoption of accounting standards
—  —  —  (6.5) 13.0  —  —  6.5 
Net income —  —  —  —  611.1  —  —  611.1 
Other comprehensive loss, net of tax —  —  —  (29.9) —  —  —  (29.9)
Dividends - $1.54 per share
—  —  —  —  (93.5) —  —  (93.5)
Repurchases of common stock (4.4) —  —  —  —  4.4  (467.0) (467.0)
Issuances and deferrals, net for stock-based compensation (1)
0.5  —  27.7  —  —  (0.5) 14.2  41.9 
Balance as of December 31, 2018 57.9  $ 78.7  $ 391.8  $ (122.1) $ 3,351.4  20.5  $ (1,102.4) $ 2,597.4 
Net income —  —  —  —  472.8  —  —  472.8 
Other comprehensive loss, net of tax —  —  —  (2.0) —  —  —  (2.0)
Dividends - $1.80 per share
—  —  —  —  (102.9) —  —  (102.9)
Repurchases of common stock (2.8) —  —  —  —  2.8  (374.9) (374.9)
Issuances and deferrals, net for stock-based compensation (1)
0.6  —  24.8  —  —  (0.6) 27.6  52.4 
Balance as of December 31, 2019 55.7  $ 78.7  $ 416.6  $ (124.1) $ 3,721.3  22.7  $ (1,449.7) $ 2,642.8 
Net income —  —  —  —  320.1  —  —  320.1 
Other comprehensive income, net of tax —  —  —  27.1  —  —  —  27.1 
Dividends - $2.05 per share
—  —  —  —  (112.7) —  —  (112.7)
Repurchases of common stock (3.1) —  —  —  —  3.1  (382.4) (382.4)
Issuances and deferrals, net for stock-based compensation (1)
0.3  —  25.1  —  —  (0.3) 17.7  42.8 
Balance as of December 31, 2020 52.9  $ 78.7  $ 441.7  $ (97.0) $ 3,928.7  25.5  $ (1,814.4) $ 2,537.7 
(1)Issuances and deferrals, net for stock-based compensation reflects share activity related to option exercises, net of tax, restricted and performance shares vested, and net issuances and deferrals associated with deferred compensation equity.
 See accompanying Notes to Consolidated Financial Statements
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Notes to Consolidated Financial Statements
Note 1—Summary of Accounting Policies
Nature of Business
Carlisle Companies Incorporated, its wholly owned subsidiaries and their subsidiaries, referred to herein as the “Company” or “Carlisle,” is a global diversified company that designs, manufactures and markets a wide range of products that serve a broad range of markets including commercial roofing, energy, agriculture, mining, construction, aerospace and defense electronics, medical technology, transportation, general industrial, protective coatings, wood and auto refinishing. The Company markets its products as a component supplier to original equipment manufacturers, distributors and directly to end-users. 
Basis of Presentation 
The consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany transactions and accounts have been eliminated. The Company has reclassified certain prior periods' amounts to conform with the current period presentation on the Consolidated Balance Sheets and Consolidated Statements of Cash Flows to reclassify contract assets from accounts receivable, net to a separately disclosed line item and on the Consolidated Balance Sheets and Consolidated Statement of Shareholders' Equity to combine the presentation of deferred compensation equity into additional paid-in capital.
Use of Estimates 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“United States” or “U.S.”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 
Foreign Currency Matters 
The functional currency of the Company’s subsidiaries outside the United States is the currency of the primary economic environment in which the subsidiary operates. Assets and liabilities of these operations are translated to the U.S. Dollar at the exchange rate in effect at each balance sheet date. Income statement accounts are translated at the average rate of exchange prevailing during the year. Translation adjustments arising from the use of differing exchange rates from period to period are included as a component of shareholders’ equity in accumulated other comprehensive income (loss). Gains and losses from foreign currency transactions and from the remeasurement of monetary assets and liabilities and associated income statement activity of foreign subsidiaries where the functional currency is the U.S. Dollar and the records are maintained in the local currency are included in other non-operating expense, net.
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 Consolidated Statements of Income. Refer to Note 4 for additional information. 
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 ranges from five to 40 years. The weighted average life of the contracts as of December 31, 2020, is approximately 20 years.
The Company recognizes revenue over-time for certain contracts that provide for the manufacture of highly customized products with no alternative use and provide the Company the right to payment for work performed to date, including a normal margin for that effort.
Refer to Note 6 for further information on revenue recognition. 
Costs to Obtain a Contract
Costs of obtaining or fulfilling a contract are recognized as expense as incurred, as the amortization period of these costs would be one year or less. These costs generally include sales commissions and are included in selling, general and administrative costs.
Shipping and Handling Costs 
Costs incurred to physically transfer product to customer locations are recorded as a component of cost of goods sold. Charges passed on to customers are recorded into revenues.
Other Non-operating Expense, net 
Other non-operating expense, net primarily includes foreign currency exchange (gains) losses, indemnification (gains) losses associated with acquired businesses, (income) loss from equity method investments and (gains) losses on sales of a business.
Stock-Based Compensation 
The Company accounts for stock-based compensation under the fair-value method. Accordingly, equity-classified stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as compensation cost over the requisite service period. The requisite service period generally matches the stated vesting period of the award but may be shorter if the employee is retirement-eligible and, under the award’s terms, may fully vest upon retirement from the Company. The Company recognizes compensation cost for awards that have graded vesting features under the graded vesting method, which considers each separately vesting tranche as though they were, in substance, multiple awards.
Additionally, the Company accounts for liability-classified stock-based compensation cost under the fair value method, with the fair value of the award remeasured as of the date of the financial position. The Company recognizes compensation cost over the requisite service period based on the remeasured fair value of the award. The requisite service period generally matches the stated vesting period of the award but may be shorter if the employee is retirement-eligible and, under the award’s terms, may fully vest upon retirement from the Company.
The Company also accounts for forfeitures of stock-based awards as they occur. Refer to Note 7 for additional information regarding stock-based compensation.
Income Taxes 
Income taxes are recorded in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“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 the Company’s 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. 
Cash Equivalents 
Highly liquid investments with a maturity of three months or less when acquired are considered cash equivalents.
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Receivables and Allowance for Credit Losses 
Receivables are stated at amortized cost net of allowance for credit losses. The Company performs ongoing evaluations of its customers’ current creditworthiness, as determined by the review of their credit information to determine if events have occurred subsequent to the recognition of revenue and the related receivable that provides evidence that such receivable will be realized in an amount less than that recognized at the time of sale. Estimates of credit losses are based on historical losses, current economic conditions, geographic considerations, and in some cases, evaluating specific customer accounts for risk of loss.
Changes in the Company's allowance for credit losses by segment follows:
(in millions) CCM CIT CFT CBF Corporate Total
Balance as of December 31, 2018 $ 2.4  $ 1.0  $ 0.5  $ 1.2  $ —  $ 5.1 
Current period provision —  0.8  0.1  —  0.5  1.4 
Amounts acquired 0.1  —  0.5  —  —  0.6 
Amounts written off (0.3) (0.2) —  —  —  (0.5)
Balance as of December 31, 2019 $ 2.2  $ 1.6  $ 1.1  $ 1.2  $ 0.5  $ 6.6 
Current period provision 0.8  0.1  0.1  0.6  —  1.6 
Amounts written off (0.6) (0.4) (0.4) —  —  (1.4)
Balance as of December 31, 2020 $ 2.4  $ 1.3  $ 0.8  $ 1.8  $ 0.5  $ 6.8 
Inventories 
Inventories are valued at lower of cost and net realizable value 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 the Company’s 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 the Company’s products for sale. Refer to Note 10 for further information regarding inventories.
Property, Plant and Equipment 
Property, plant and equipment are stated at cost including interest costs associated with qualifying capital additions. Costs allocated to property, plant and equipment of acquired companies are based on estimated fair value at the date of acquisition. Depreciation is principally computed on a straight-line basis over the estimated useful lives of the assets. Asset lives are generally 20 to 40 years for buildings, five to 15 years for machinery and equipment and two to 20 years for leasehold improvements. Leasehold improvements are amortized based on the shorter of the underlying lease term or the asset’s estimated useful life. Refer to Note 11 for further information regarding property, plant and equipment. 
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. The Company groups its 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 for purposes of testing for impairment. The Company’s asset groupings vary based on the related business in which the long-lived assets are 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. The Company utilizes its long-lived assets in multiple industries and economic environments and its asset groupings reflect these various factors. 
The Company monitors the operating and cash flow results of its 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. Undiscounted estimated future cash flows are compared with the carrying value of the long-lived asset or asset group in the event indicators of impairment are identified. If the undiscounted estimated future cash flows are less than the carrying amount, the Company determines the fair value of the asset or asset group and records an impairment charge in current
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earnings to the extent carrying value exceeds fair value. Fair values may be determined based on estimated discounted cash flows by prices for like or similar assets in similar markets or a combination of both. 
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 a loss is recorded against the disposal group if fair value, less cost to sell, of the disposal group is less than its carrying value.
Goodwill and Other Intangible Assets 
Intangible assets are recognized and recorded at their acquisition date fair values. Intangible assets that are subject to amortization are amortized on a straight-line basis over their useful lives. Definite-lived intangible assets consist primarily of acquired customer relationships, patents and technology, certain trade names and non-compete agreements. The Company determines the useful life of its definite-lived intangible assets based on multiple factors including the size and make-up of the acquired customer base, the expected dissipation of those customers over time, the Company’s own experience in the particular industry, the impact of known trends such as technological obsolescence, product demand or other factors and the period over which expected cash flows are used to measure the fair value of the intangible asset at acquisition. The Company periodically re-assesses the useful lives of its definite-lived intangible assets when events or circumstances indicate that useful lives have significantly changed from the previous estimate. 
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 excess. The Company estimates the fair value of its indefinite-lived intangible assets based on the income approach utilizing the discounted cash flow method. The Company’s annual testing date for indefinite-lived intangible assets is October 1st. The Company periodically re-assesses indefinite-lived intangible assets as to whether their useful lives can be determined and, if so, begins 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. The Company’s annual testing date for goodwill is October 1st. The Company has four reporting units, that align with its reportable segments. 
Refer to Note 12 for additional information regarding goodwill and other intangible assets.
Extended Product Warranty Reserves 
The Company offers extended warranty contracts on sales of certain products; the most significant being those offered on its installed roofing systems within the CCM segment. Current costs of services performed under these contracts are expensed as incurred and included in cost of goods sold. The Company would record a reserve within accrued expenses if the total expected costs of providing services at a product line level exceed unamortized deferred revenues. Total expected costs of providing extended product warranty services are actuarially determined using standard quantitative measures based on historical claims experience and management judgment. Refer to Notes 6 and 13 for additional information regarding deferred revenue and extended product warranties.
Pension 
The Company maintains defined benefit pension plans primarily for certain domestic employees. The annual net periodic benefit cost and projected benefit obligations related to these plans are determined on an actuarial basis annually on December 31, unless a remeasurement event occurs in an interim period. This determination requires assumptions to be made concerning general economic conditions (particularly interest rates), expected return on plan assets, increases to compensation levels and mortality rate trends. Changes in the assumptions to reflect actual experience can result in a change in the net periodic benefit cost and projected benefit obligations. 
The defined benefit pension plans’ assets are measured at fair value annually on December 31, unless a remeasurement event occurs in an interim period. The Company uses the market related valuation method to determine the value of plan assets for purposes of determining the expected return on plan assets component of net periodic benefit cost. The market related valuation method 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 actuarial gain (loss) and amortized into earnings over a period of time based on the average future service period,
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which may cause the expense related to providing these benefits to increase or decrease. Refer to Note 15 for additional information regarding these plans and the associated plan assets.