Executive Overview

We are a diversified manufacturing company focused on achieving profitable growth internally through new product development, product line extensions, and entering new markets, and externally through acquisitions that complement our existing technologies, products, and market channels. We

º •
º Carlisle Construction Materials ("CCM" or the "Construction Materials segment");

º •
º Carlisle Transportation Products ("CTP" or the "Transportation Products segment");

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

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

º •
º Carlisle FoodService Products ("CFSP" or the "FoodService Products segment").

We are a multi-national company with manufacturing operations located throughout North America, Western Europe, and the Asia Pacific region. Management focuses on maintaining a strong and flexible balance sheet, year-over-year improvement in sales, earnings before interest and income taxes ("EBIT") margins and net earnings, globalization, and reducing working capital (defined as receivables, inventories, net of accounts payable) as a percentage of net sales. Resources are allocated among the operating companies based on management's assessment of their ability to obtain leadership positions and competitive advantages in the markets they serve.

During 2008, we began the implementation of the Carlisle Operating System, a manufacturing structure and strategy deployment system based on lean enterprise and six sigma principles. The purpose of the Carlisle Operating System is to eliminate waste in all production and business processes, improve manufacturing efficiencies to increase productivity, and to increase EBIT margins and improve cash conversion.

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

We set a Company record with $3.63 billion in net sales in the year ended December 31, 2012, a 13% increase from net sales of $3.22 billion for the year ended December 31, 2011. Organic sales (defined as net sales excluding sales from acquisitions and divestitures within the last twelve months, as well as the impact of changes in foreign exchange rates) increased 8% for the year ended December 31, 2012 versus the prior year, reflecting higher demand primarily in the Interconnect Technologies and Construction Materials segments and strong selling price realization in the Construction Materials, Transportation Products, and Foodservice Products segments. Our Brake & Friction segment experienced a 5% decline in sales during 2012 due to softening conditions in the worldwide market for off-highway mining and construction applications. Acquisitions in the Construction Materials and Interconnect Technologies segments contributed $158.9 million to sales in 2012. The impact of foreign exchange rates had a negligible impact on the year-over-year change in sales.

For the year ended December 31, 2012, our EBIT grew 54% to a record $424.3 million, due to strong selling price realization, contribution from acquisitions, higher sales volumes, savings from the Carlisle Operating System, and operational performance improvements at our Transportation Products segment. For the full year 2012, selling price increases achieved by our segments significantly exceeded the impact of higher raw material costs. Pre-tax expense related to acquisitions, business development activity, and excess costs related to acquired inventory in 2012 were $8.1 million, versus pre-tax expense in 2011 of $6.4 million. See Note 3 in Item 8 for discussion of these acquisitions. In 2012, our EBIT margin (EBIT as a percent of net sales) rose by 320 basis points to 11.7% from 8.5% in 2011, reflecting strong price realization and operating performance.

As a result of our strong sales and operational performance, we achieved record income from continuing operations of $267.3 million, or $4.18 per diluted share, for the year ended December 31,

For the year ended December 31, 2011, net sales of $3.22 billion were 28% higher than net sales of $2.53 billion for the year ended December 31, 2010. Organic sales increased 14% for the year ended December 31, 2011 as compared to the prior year reflecting higher demand primarily in the Construction Materials, Brake & Friction, and Interconnect Technologies segments. Acquisitions in these same segments contributed $339.9 million of additional sales in the year ended December 31, 2011 as compared to the year ended December 31, 2010. The impact of foreign exchange rates had a negligible impact on the year-over-year change in sales.

For the year ended December 31, 2011, our EBIT grew 40% versus 2010 due to contributions from the Hawk acquisition, higher organic sales volume, and reduction in operating costs attributable to efficiencies gained through the Carlisle Operating System. Partially offsetting these impacts were higher raw materials costs incurred primarily in the Construction Materials and Interconnect Technologies segments, and production inefficiencies in the Transportation Products segment connected with the Jackson, TN facility. Costs incurred related to the acquisitions of Hawk, PDT, and Tri-Star, and other acquisition efforts during 2011 were $6.4 million compared to charges of $14.2 million in 2010 connected with the acquisition of Hawk. See Note 3 in Item 8 for discussion of these acquisitions. Our EBIT margin grew 70 basis points in 2011 to 8.5% primarily due to contribution from the Hawk acquisition, sales volume growth, and savings from the Carlisle Operating System.

For the year ended December 31, 2011, income from continuing operations was $181.9 million, or $2.88 per diluted share, a 39% increase compared to $130.6 million, or $2.10 per diluted share, for the year ended December 31, 2010. For more information regarding the change in income from continuing operations from 2010 to 2011, refer to the discussion below on "2011 Compared to 2010".

For the full year of 2013, we expect sales growth to total in the mid- to high- single digit percentage range, reflecting contributions from acquisitions and organic sales growth. Demand in the aerospace industry should continue to favorably impact our Interconnect Technologies segment. Growth in demand in our other markets for the Construction Materials, Transportation Products, and Foodservice Products segments may be more measured. Softness in the off-highway construction and mining markets for the Brake & Friction segment is expected to continue through the first half of 2013. We are planning for continued margin improvement in 2013 based upon completed restructuring activities at our Transportation Products and Foodservice Products segments, leverage on our organic sales growth most notably from our Interconnect Technologies segment, and continued focus on the Carlisle Operating System.

     2012 Compared to 2011

Net Sales

                                                   Acquisition     Volume     Price       Product        Exchange
(in millions)     2012        2011      Change       Effect        Effect     Effect     Mix Effect     Rate Effect
Net Sales       $ 3,629.4   $ 3,224.5      12.6 %           4.9 %      4.1 %      3.7 %          0.2 %          -0.3 %

In 2012, we achieved record net sales of $3.63 billion and an overall increase in sales over 2011 of 13%. Acquisitions in the Construction Materials and Interconnect Technologies segments contributed a total of $158.9 million to net sales in 2012. Refer to the discussion below on "Acquisitions".

We achieved organic sales growth of 8.0% during 2012 primarily driven by sales volume growth in the Construction Materials and Interconnect Technologies segments and higher selling price in the Construction Materials, Transportation Products, and Foodservice Products segments. Sales in the Interconnect Technologies segment grew organically by 23%, reflecting robust demand in the

     Sales by Geographic Area

              Country                          2012               2011
              United States              $ 2,856.9     79 % $ 2,613.4     81 %
              International:
              Europe                         333.5              248.0
              Canada                         165.8              150.4
              Asia                           132.5              117.6
              Mexico and Latin America        72.0               37.4
              Middle East and Africa          47.3               43.9
              Other                           21.4               13.8
              Total International            772.5     21 %     611.1     19 %

              Net sales                  $ 3,629.4          $ 3,224.5

We have a long-term goal of achieving 30% of total net sales from outside the United States. Total sales to customers located outside the United States increased by 26% from $611.1 million in 2011 to $772.5 million in 2012. Of the growth in 2012, $156.9 million in sales came from the acquisitions of PDT, Hertalan, Tri-Star, and Thermax/Raydex. Sales from outside the United States as a percentage of total net sales grew from 19% in 2011 to 21% in 2012. The increase in sales to customers located outside the United States was primarily attributable to sales growth in the Europe as well as Mexico and Latin America. The growth in Europe was primarily attributable to sales and manufacturing presence in Germany and the Netherlands added as part of the PDT and Hertalan acquisitions in the Construction Materials segment as well as contributions from the Tri-Star and Thermax/Raydex acquisitions in the Interconnect Technologies segment.

Gross Margin

                      (in millions)    2012      2011     Change
                      Gross profit    $ 897.7   $ 677.1      32.6 %
                      Gross margin       24.7 %    21.0 %

We increased our gross margin (net sales less cost of goods sold, expressed as a percent of net sales) by 370 basis points in 2012 versus 2011. The increase in gross margin reflected selling price realization primarily in the Construction Materials and Transportation Products segments, strong sales volume growth in the Interconnect Technologies segment, improved operating performance in the Transportation Products segment, and efficiency gains from the Carlisle Operating System. These positive impacts were partially offset by higher raw material costs in the Construction Materials and Transportation Products segments and decline in sales volume in the Brake & Friction segment.

Selling and Administrative Expenses

               (in millions)                   2012      2011     Change
               Selling & Administrative       $ 427.7   $ 376.6      13.6 %
               As a percentage of net sales      11.8 %    11.7 %

The increase in our selling and administrative expenses in 2012 versus the prior year included $26.1 million of expenses from operations acquired in the Construction Materials and Interconnect Technologies segments. In addition, we incurred increased selling expense from organic growth and higher expense for incentive based compensation. Selling and administrative expenses during 2012 include costs totaling $4.5 million for acquisitions and business development activity and $5.6 million of non-cash expense related to the settlement of pension liabilities.

During the fourth quarter 2012, we offered certain former employees who participate in the Company's core pension plan the option to receive a one-time lump sum payment equal to the present value of the participant's pension benefit. A total of $15 million in lump sum distributions were paid under this offer, which ended during the fourth quarter of 2012. Under Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") 715, Compensation-Retirement Benefits, a portion of the unrecognized actuarial loss in Accumulated Other Comprehensive Income was recognized into earnings as the amount of total lump sum payments from the Company's core pension plan during 2012 exceeded the plan's service and interest cost during the year.

Selling and administrative expenses in 2011 included costs of $3.3 million for the acquisitions of PDT and Tri-Star, and acquisition opportunities that were not realized, $5.0 million in charges for organizational actions, including a management change within the Transportation Products segment to improve performance, and $1.6 million in severance and management change costs in the FoodService Products segment.

Research and Development Expenses

                (in millions)                   2012     2011    Change
                Research and Development       $ 33.0   $ 28.7      14.9 %
                As a percentage of net sales      0.9 %    0.9 %

The increase in our research and development expenses during 2012 versus the prior year included expenses of $1.8 million related to acquisitions in the Construction Materials and Interconnect Technologies segments and increased investment in new product development.

Other Expense (Income), Net

                    (in millions)                  2012     2011
                    Other expense (income), net     12.7     (3.3 )

                                                  $ 12.7   $ (3.3 )

Other expense, net in 2012 of $12.7 million includes $6.0 million in fixed asset impairment charges incurred by the FoodService Products segment related to restructuring activity and its decision to exit the flameless chafer product line. In addition, the Construction Materials segment recorded $5 million in Other expense during 2012 for fair value adjustment to contingent consideration primarily reflecting higher expected earnings of the PDT acquired operations in 2014, as part of the PDT purchase agreement.

Other income, net in 2011 of $3.3 million includes a $1.7 million gain on the settlement of a legal matter within the Construction Materials segment.

EBIT (Earnings Before Interest and Taxes)

                      (in millions)    2012      2011     Change
                      EBIT            $ 424.3   $ 275.1      54.2 %
                      EBIT Margin        11.7 %     8.5 %

In 2012, we achieved record EBIT of $424.3 million. EBIT in 2012 grew 54% versus the prior year due to contributions from acquisitions, strong selling price realization, higher organic sales volume, operating improvements in the Transportation Products segment, and reduction in operating costs attributable to efficiencies gained through the Carlisle Operating System. We incurred total restructuring charges during 2012 of $8.8 million, which primarily reflected consolidation activities within the FoodService Products segment as part of its strategic improvement plan. By comparison, in 2011 we incurred restructuring costs of $5.5 million and management and organizational change costs of $6.6 million.

Costs incurred related to the acquisitions of Thermax/Raydex, Hertalan, and Tri-Star, and other acquisition and business development efforts during 2012 were $8.1 million, compared to charges of $6.4 million in 2011 for acquisitions. In addition, during 2012 we incurred $5.6 million of expense related to the settlement of pension liabilities under a lump sum offer elected by certain former employees under our core pension plan and recorded $5 million in Other expense to adjust contingent consideration for the PDT acquisition to fair value.

Interest Expense

                      (in millions)             2012     2011
                      Gross interest expense   $ 26.0   $ 21.7
                      Interest Income            (0.5 )   (0.5 )

                      Interest Expense, net    $ 25.5   $ 21.2

Interest expense, net for the year ended December 31, 2012 increased versus 2011 due to higher average borrowings in 2012 versus 2011. In December 2011, we borrowed $290 million to fund the acquisition of Tri-Star, which was subsequently repaid during 2012. In November 2012, we issued $350 million in 3.75% senior unsecured notes due 2022 to pay down outstanding borrowings under our revolving credit facility and fund the Thermax/Raydex acquisition.

Income Taxes

                        (in millions)         2012      2011
                        Income tax expense   $ 131.5   $ 72.0
                        Effective tax rate      33.0 %   28.4 %

Our effective tax rate varies from the statutory rate within the United States of 35% due primarily to the deduction attributable to U.S. production activities, state tax requirements, earnings in foreign jurisdictions taxed at rates different from the statutory U.S. federal rate, and tax credits. The effective income tax rate of 28.4% for 2011 was also reduced by excess tax credits generated as part of a repatriation of foreign earnings which occurred during 2011. During 2011, we repatriated substantially all of the unremitted earnings of our Italian subsidiary. At that time we provided for the associated tax expense and related tax benefits from foreign tax credits. The total dividend remitted was $79.3 million, and the net tax effect of the repatriation was a tax benefit of $4.2 million. During 2012, we repatriated $4.0 million of our Italian subsidiary's earnings and reflected the associated tax effects in our 2012 provisions.

Income from Continuing Operations

          (in millions)                                    2012      2011
          Income from continuing operations, net of tax   $ 267.3   $ 181.9
          EPS
          Basic                                           $  4.25   $  2.93
          Diluted                                            4.18      2.88

Our income from continuing operations of $267.3 million reported in 2012 reflected an earnings record for Carlisle. The increase in income from continuing operations, net of tax, in 2012 was attributable to the EBIT increase of 54%. Partially offsetting the positive impact of higher EBIT was higher interest expense due to increased borrowings levels to support acquisitions and a higher effective tax rate.

Income (Loss) from Discontinued Operations

            (in millions)                                 2012     2011
            Income (loss) from discontinued operations   $  2.9   $  (2.5 )
            Tax expense (benefit)                             -      (0.9 )

                                                         $  2.9   $  (1.6 )

            EPS
            Basic                                        $ 0.05   $ (0.02 )
            Diluted                                        0.04     (0.02 )

Income from Discontinued Operations for the year ended December 31, 2012 primarily reflects a $3.75 million gain recognized in April 2012 upon final settlement of earn-out income from the 2010 sale of our specialty trailer business.

Results from discontinued operations for the year ended December 31, 2011 primarily reflect operating losses of the PDT Profiles business. We completed the sale of the PDT Profiles business on January 2, 2012 for $22.1 million with no pre-tax gain or loss recognized upon the sale.

Net Income

                          (in millions)    2012      2011
                          Net Income      $ 270.2   $ 180.3
                          EPS
                          Basic           $  4.30   $  2.91
                          Diluted            4.22      2.86

The improvement in net income from 2011 to 2012 was due to increased net earnings from our continuing operations from improved sales and earnings performance, as well as earnings from discontinued operations in 2012 versus losses in the prior year period.

     2011 Compared to 2010

Net Sales

                                                   Acquisition     Volume     Price       Product        Exchange
(in millions)     2011        2010      Change       Effect        Effect     Effect     Mix Effect     Rate Effect
Net Sales       $ 3,224.5   $ 2,527.7      27.6 %          13.4 %      9.0 %      4.9 %          0.0 %           0.3 %

In 2011, we achieved overall sales growth of 28%. The acquisitions of Hawk by the Brake & Friction segment in December 2010, PDT by the Construction Materials segment in August 2011, and Tri-Star by the Interconnect Technologies segment in December 2011 contributed a total of $339.9 million to net sales in 2011.

Our organic sales growth of 14% during 2011 was primarily driven by growth in the Construction Materials, Brake & Friction and Interconnect Technologies segments. We achieved organic growth in the Brake & Friction and Interconnect Technologies segments of 29.9% and 16.2%, respectively, reflecting overseas growth in construction and mining markets and continued growth in the global aerospace market. The Construction Materials segment achieved organic growth of 18.8%, reflecting higher demand for re-roofing products and increased selling prices implemented during the year to address rising raw material costs. Pricing actions taken by the Transportation Products and FoodService Products segments during 2011 in response to higher raw material costs also contributed to higher net sales in 2011.

     Sales by Geographic Area

              Country                          2011               2010
              United States              $ 2,613.4     81 % $ 2,162.2     86 %
              International:
              Europe                         248.0              107.1
              Canada                         150.4              110.8
              Asia                           117.6               55.7
              Mexico and Latin America        37.4               39.0
              Middle East and Africa          43.9               41.2
              Other                           13.8               11.7
              Total International            611.1     19 %     365.5     14 %

              Net sales                  $ 3,224.5          $ 2,527.7

Total sales to customers located outside the United States increased by 67% from $365.5 million in 2010 to $611.1 million in 2011. Of the growth in 2011, $137 million in sales came from the acquisitions of Hawk, PDT, and Tri-Star. Sales from outside the United States as a percentage of total net sales increased from 14% in 2010 to 19% in 2011. The increase in sales to customers located outside the United States was primarily attributable to sales growth in Europe, Asia, and Canada. The growth in Europe was primarily attributable to sales and manufacturing presence in Italy and Germany added as part of the Hawk and PDT acquisitions in the Brake & Friction and Construction Materials segments, respectively. The growth in Asia was primarily attributable to our efforts to build sales and distribution channels in this region, and higher demand for our products in the Brake & Friction and Interconnect Technologies segments. The growth in Canada was primarily attributable to higher demand for our products in the Construction Materials and Transportation Products segments.

Gross Margin

                      (in millions)    2011      2010     Change
                      Gross profit    $ 677.1   $ 528.7      28.1 %
                      Gross margin       21.0 %    20.9 %

Gross margin was relatively level during 2011 versus 2010. Positive contributions to margin from the Hawk acquisition, organic sales growth, and efficiency gains from the Carlisle Operating System were offset by the negative impact of higher raw material costs, net of selling price increases, and production inefficiencies from plant start-up activities at the Transportation Products segment's tire facility in Jackson, TN. During 2011, we experienced significant increases in the cost of some of our key raw materials, notably natural and synthetic rubber, steel, resin applied in our TPO product line, and carbon black. Within the Construction Materials and Interconnect Technologies segments, selling price increases did not fully offset the impact of higher raw material costs until the latter part of 2011.

Selling and Administrative Expenses

               (in millions)                   2011      2010     Change
               Selling & Administrative       $ 376.6   $ 310.5      21.3 %
               As a percentage of net sales      11.7 %    12.3 %

Our increase in selling and administrative expenses in 2011 included $33.9 million of expenses from operations acquired in the Brake & Friction, Construction Materials, and Interconnect Technologies segments. Selling and . . .