The combination of being the low-cost
producer and differentiating the service we
provide to our customers creates a significant
competitive advantage in the specialty markets
we serve.

Throughout 2001, our relentless drive
for low-cost production and our commitment
to manufacturing excellence improved all our
businesses while preserving our ability to
grow. Our aggressive global sourcing plans
continued and now include Carlisle-owned
manufacturing facilities in China, the West
Indies and Mexico. A global sourcing strategy
and production platform lowers cost of
production and reduces expenditures on
material purchases.

Sharing resources across businesses is
another key cost-cutting strategy we actively
employ. Our recently acquired Carlisle Power
Transmission division is expanding its manufacturing operations to China to share production capacity and raw material sources with Carlisle Tire & Wheel. These divisions will also combine some warehousing facilities and will cross-market to customers they have in common.

We constantly analyze our manufacturing resources to find operational innovations and technology upgrades to minimize costs, maximize productivity and enhance our service capabilities. During 2001 we closed six plants and restructured other facilities by integrating new technologies and manufacturing processes.

Operational innovations, technology upgrades and sharing resources across businesses have helped us become the low-cost producer in nearly every market we serve. We will continue to find innovative means to reduce costs while maintaining the reliability of our products and the superior service that our customers expect.

More than ever, customers are placing greater value on shorter lead times, fill rates, breadth of product, and other aspects of service. Carlisle businesses are focused on creating service advantage in our chosen markets. We believe that by differentiating service we can offer customers compelling value. For example, to provide the shortest lead time in the market, our FoodService division completed their second major distribution center in Oklahoma City, Oklahoma during the year, expanding its ability to provide same-day shipment of 10,000 foodservice items. Additionally, Carlisle Tire & Wheel installed a highly automated tire warehousing system in Carlisle, Pennsylvania, thereby reducing the time from order receipt to shipment by over 50%. Our Carlisle Power Transmission division has been developing new order-receipt technology and now processes over 40% of their orders over the Internet. These investments in logistics technology and infrastructure have resulted in significant improvements in service, which have translated into increased sales for Carlisle.

We believe that our commitment to be the low-cost producer and our ability to provide our customers with the service they have come to expect from Carlisle will enable us to achieve definitive leadership in the niche markets we serve. This, in turn, will result in exceptional returns to our shareowners.