Dear Shareowner:
The year 2001 was a year of challenge and change; challenge that provided opportunities and change that prompted a significant number of restructuring actions. A weakened economy brought a softening in many of the markets we serve. Though we were disappointed by our decline in earnings, we were encouraged by both record sales and record operating cash flow. Additionally, many of our businesses increased market share and a number of our product lines were enhanced. A substantial portion of 2001 was spent preparing our businesses to strategically take advantage of any upturn in economic conditions. Despite the challenges of a difficult year, Carlisle’s long history of rewarding shareowners continued with our 25th consecutive year of dividend increases.

Internal changes at Carlisle have also taken place in 2001. After 26 years with Carlisle, I am now completing my first year as CEO. Stephen P. Munn, who led Carlisle through twelve years of significant company and earnings growth, will remain as Chairman of the Board. Dennis Hall, Carlisle’s Vice Chairman and Chief Financial Officer, retired at the close of 2001, after working closely with new CFO Kirk Vincent over the last half of the year to ensure a seamless transition. Both Steve and Dennis are to be credited with much of the success Carlisle has experienced in recent years.

After several excellent years of performance prior to 2001, our diversified portfolio of companies could not sustain earnings growth due to softness in the majority of the markets served. We have initiated and have substantially completed a record number of major restructuring projects and enter 2002 with a lower cost position and a greater focus on our core capabilities. Throughout Carlisle our daily charter is to create competitive advantage. Improvement projects only matter if we accomplish more than our competition. This requires us to compete in markets where Carlisle has the resources and technology to create a sustainable advantage.

Carlisle has many strengths; one is our operating culture. We continue to take great pride in our exceptional team of operations-focused managers who are industry veterans committed to creating value for our shareowners. Our decentralized management structure encourages entrepreneurial action and affords an efficient and effective response to changing customer needs and market trends. Our management team is rewarded based on four key performance measurements:

1. Operating free cash flow as a percent of net assets employed,
2. Growth in earnings,
3. Organic sales growth; and
4. Improvement in sales per salaried employee.

Stock ownership is mandatory for Carlisle management in order to align management and shareowner interests and is embraced as an opportunity to succeed as the company succeeds.

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