Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from to
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For Quarter Ended Commission File Number
September 30, 1995 1-7845
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LEGGETT & PLATT, INCORPORATED
-----------------------------
(Exact name of registrant as specified in its charter)
Missouri 44-0324630
------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
No. 1 Leggett Road
Carthage, Missouri 64836
-------------------------------------- --------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (417) 358-8131
--------------
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 and
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 X No
--- ---
Common stock outstanding as of October 31, 1995: 84,002,511
<PAGE>
PART I. FINANCIAL INFORMATION
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
ITEM I. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(Amounts in millions)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 7.5 $ 2.7
Accounts and notes receivable 301.7 261.8
Allowance for doubtful accounts (10.7) (7.5)
Inventories 263.2 255.5
Other current assets 36.8 32.2
--------- ---------
Total current assets 598.5 544.7
PROPERTY, PLANT & EQUIPMENT, NET 430.9 396.0
OTHER ASSETS
Excess cost of purchased companies over
net assets acquired, less accumulated
amortization of $16.9 in 1995
and $14.4 in 1994 121.7 115.1
Other intangibles, less accumulated
amortization of $13.8 in 1995
and $12.5 in 1994 24.4 27.4
Sundry 34.4 36.7
--------- ---------
Total other assets 180.5 179.2
--------- ---------
TOTAL ASSETS $ 1,209.9 $ 1,119.9
========= =========
CURRENT LIABILITIES
Accounts and notes payable $ 106.2 $ 89.9
Accrued expenses 125.0 106.0
Other current liabilities 34.8 37.0
--------- ---------
Total current liabilities 266.0 232.9
LONG-TERM DEBT 170.7 204.9
OTHER LIABILITIES 14.0 14.7
DEFERRED INCOME TAXES 45.4 42.2
SHAREHOLDERS' EQUITY
Common stock 0.8 0.4
Additional contributed capital 153.2 134.7
Retained earnings 572.2 496.5
Cumulative translation adjustment (3.7) (6.1)
Treasury stock (8.7) (0.3)
--------- ---------
Total shareholders' equity 713.8 625.2
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,209.9 $ 1,119.9
========= =========
</TABLE>
Items excluded are either not applicable or de minimis in amount and,
therefore, are not shown separately.
See accompanying notes to consolidated condensed financial statements.
<PAGE>
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(Amounts in millions, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
-------------------- -------------------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net sales $ 1,564.4 $ 1,366.0 $ 523.6 $ 482.6
Cost of goods sold 1,195.4 1,052.5 399.7 372.0
--------- --------- -------- --------
Gross profit 369.0 313.5 123.9 110.6
Selling, distribution and
administrative expenses 190.8 165.3 62.9 58.0
Interest expense 9.3 6.6 2.7 2.8
Other deductions (income), net 3.4 2.3 1.2 (0.1)
--------- --------- -------- --------
Earnings before income taxes 165.5 139.3 57.1 49.9
Income taxes 64.8 54.9 22.3 19.7
--------- --------- -------- --------
NET EARNINGS $ 100.7 $ 84.4 $ 34.8 $ 30.2
========= ========= ======== ========
Earnings Per Share (Exhibit 11) $ 1.19 $ 1.02 $ 0.41 $ 0.36
Cash Dividends Declared
Per Share $ 0.28 $ 0.23 $ 0.10 $ 0.08
Average Common and Common
Equivalent Shares Outstanding 84.9 82.8 85.4 82.9
</TABLE>
Previously reported share and per share amounts have been restated to reflect
the effects of the September 15, 1995 two-for-one stock split.
See accompanying notes to consolidated condensed financial statements.
<PAGE>
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
(Amounts in millions) Nine Months Ended
September 30,
--------------------
1995 1994
------ ------
<S> <C> <C>
OPERATING ACTIVITIES
Net Earnings $ 100.7 $ 84.4
Adjustments to reconcile net earnings to net
cash provided by operating activities
Depreciation 42.3 35.2
Amortization 6.0 5.8
Deferred income tax benefit (3.2) (6.9)
Other (0.4) 2.8
Other changes, net of effects from
purchases of companies
Increase in accounts receivable, net (30.4) (41.3)
Increase in inventories (3.7) (6.2)
Increase in other current assets (2.9) (3.1)
Increase in current liabilities 44.4 59.1
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 152.8 129.8
INVESTING ACTIVITIES
Additions to property, plant and equipment (70.3) (63.1)
Purchases of companies, net of cash acquired (1.4) (75.1)
Other 2.0 1.1
-------- --------
NET CASH USED FOR INVESTING ACTIVITIES (69.7) (137.1)
FINANCING ACTIVITIES
Additions to debt 25.3 47.2
Payments on debt (68.4) (15.5)
Dividends paid (23.5) (18.8)
Net (purchases) sales of common stock (11.7) 0.7
-------- --------
NET CASH (USED FOR) PROVIDED
BY FINANCING ACTIVITIES (78.3) 13.6
-------- --------
INCREASE IN CASH AND CASH EQUIVALENTS 4.8 6.3
CASH AND CASH EQUIVALENTS - January 1, 2.7 0.4
-------- --------
CASH AND CASH EQUIVALENTS - September 30, $ 7.5 $ 6.7
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in millions)
1. STATEMENT
In the opinion of management, the accompanying consolidated condensed
financial statements contain all adjustments necessary for a fair statement
of results of operations and financial position of Leggett & Platt,
Incorporated and Consolidated Subsidiaries (the "Company"). The consolidated
condensed financial statements include accounts of the Company and its
majority-owned subsidiaries.
2. INVENTORIES
Inventories, using principally the Last-In, First-Out (LIFO) cost method,
comprised the following:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
At First-In, First-Out (FIFO) cost
Finished goods $ 141.2 $ 134.5
Work in process 33.6 32.1
Raw materials 110.7 103.1
-------- --------
285.5 269.7
Excess of FIFO cost over LIFO cost 22.3 14.2
-------- --------
$ 263.2 $ 255.5
======== ========
</TABLE>
3. PROPERTY, PLANT & EQUIPMENT
Property, plant and equipment comprised the following:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Property, plant and equipment, at cost $ 773.9 $ 699.5
Less accumulated depreciation 343.0 303.5
-------- --------
$ 430.9 $ 396.0
======== ========
</TABLE>
4. LOAN AGREEMENTS
In connection with various notes payable, the related loan agreements,
among other restrictions, limit the amount of additional debt, require
working capital to be maintained at specified amounts, and restrict payment
of dividends. Unrestricted retained earnings available for dividends at
September 30, 1995 were approximately $210.6.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Capital Resources and Liquidity
- --------------------------------
The Company's capitalization at September 30, 1995 and December 31, 1994 is
shown in millions of dollars in the table below. The amount of additional
capital available through the Company's revolving bank credit agreements is
also shown, along with the amount of cash and cash equivalents.
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Long-term debt outstanding:
Scheduled maturities $ 170.7 $ 146.6
Revolving credit/commercial paper - 58.3
-------- --------
Total long-term debt 170.7 204.9
Shareholders' equity 713.8 625.2
Unused committed credit 200.0 156.7
Cash and cash equivalents 7.5 2.7
</TABLE>
Capital investments to modernize and expand capacity internally were $70.3
million in the first nine months of 1995. The Company also paid $1.4 million
cash, net of cash acquired, and issued .7 million shares of common stock to
acquire five businesses during this period. Funds for these investments and
a $34.2 million reduction in long-term debt were provided by operating
activities.
Working capital at September 30, 1995 was $332.5 million, up from $311.8
million at the end of 1994. Total current assets increased $53.8 million,
due primarily to increases in accounts and notes receivable and inventories.
Total current liabilities increased $33.1 million, as increases in accounts
and notes payable and accrued expenses more than offset a slight decline in
other current liabilities. There was no short-term debt outstanding at the
end of the third quarter or at year-end.
With anticipated cash flows and additional debt capacity within management's
guidelines, the Company has substantial capital resources and flexibility for
acquisitions while continuing to pursue opportunities for growth and
profitability through improved operating efficiencies and internal expansion.
Results of Operations
- ----------------------
The Company had record sales and earnings in the first nine months of 1995.
Sales were $1.56 billion (up 15%) and earnings were $1.19 per share (up 17%)
- --- both compared with nine month records achieved in 1994. Third quarter
sales and earnings also set new highs. Sales were $523.6 million (up 8%)
and earnings were $.41 per share (up 14%) --- both compared with the third
quarter of 1994.
The Company's nine month and third quarter increases in sales (15% and 8%,
respectively) reflect the benefits of several acquisitions and continued
internal growth. Approximately two-thirds of the increase for each period
resulted from acquisitions, with the remainder coming from internal growth.
The third quarter sales increase was more moderate than increases in the first
two quarters of 1995. This moderation primarily reflected the Company's 1994
acquisitions, the largest of which closed in the third quarter of last year.
In addition, the Company's 1995 year-to-date growth in sales excluding
acquisitions continues to moderate.
<PAGE>
Demand in the markets the Company serves has been mixed this year. Industry
sales and shipments of office, institutional and commercial furnishings
generally have strengthened. By contrast, industry sales and shipments of
residential furniture weakened sharply early in the year and improved only
modestly in the third quarter. Recent reports of October retail activity
have also been weak. However, demand for bedding products has been better
than the demand for most kinds of residential furniture. The strongest
percentage increases in the Company's sales has continued to come from small
niche markets for specialized products.
Earnings per share growth in the first nine months and third quarter of 1995
continued to exceed sales growth as profit margins improved modestly. The
following table shows various measures of earnings as a percentage of sales in
the first nine months and third quarters of both of the last two years. It
also shows the Company's effective income tax rate in each respective period.
<TABLE>
<CAPTION>
Nine Months Ended Quarter Ended
September 30, September 30,
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Gross profit margin 23.6% 23.0% 23.7% 22.9%
Pre-tax profit margin 10.6 10.2 10.9 10.3
Net profit margin 6.4 6.2 6.6 6.3
Effective income tax rate 39.2 39.4 39.1 39.5
</TABLE>
Net profit margins were 6.4% of sales in the first nine months of this year
and 6.6% in the third quarter. In 1994, net margins for the same periods
were 6.2% and 6.3%, respectively. These improvements, as shown above,
primarily reflected higher gross profit margins on increased sales and
production. Also, in the third quarter of 1994, the gross profit margin
reflected some unusual costs that reduced the margin for the quarter by 0.3%
of sales.
Selling, general and administrative expenses were 12.2% and 12.1% of sales in
the first nine months of 1995 and 1994, respectively. In the third quarter of
both years, these expenses were 12.0% of sales. Interest expense in the first
nine months of this year increased to $9.3 million, up from $6.6 million in the
same period of 1994. The increase reflected higher interest expense in the
first and second quarters of 1995 due to borrowing for acquisitions. However,
interest expense for the third quarter declined slightly this year, to $2.7
million from $2.8 million in 1994 as total debt outstanding was reduced.
The cash dividend on the Company's common stock was $.10 per share in this
year's third quarter, 25% higher than the 1994 third quarter dividend and 11%
higher than the dividends declared in the first two quarters of 1995. The
dividend rate on the stock has been increased twice in 1995 and for 24
consecutive years.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The EPA previously alleged that two of the Company's facilities in Grafton,
Wisconsin violated wastewater pretreatment requirements under the Clean Water
Act. In August 1995, the Company agreed to pay the EPA a civil penalty of
$450,000 to settle this matter.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibit 11 - Computations of Earnings Per Share
(B) Exhibit 27 - Financial Data Schedule
(C) No reports on Form 8-K have been filed during the quarter for which
this report is filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LEGGETT & PLATT, INCORPORATED
DATE: November 10, 1995 By: /s/ HARRY M. CORNELL, JR.
-------------------------
Harry M. Cornell, Jr.
Chairman of the Board
and Chief Executive Officer
DATE: November 10, 1995 By: /s/ MICHAEL A. GLAUBER
-----------------------
Michael A. Glauber
Senior Vice President,
Finance and Administration
<PAGE>
EXHIBIT INDEX
Exhibit Page
- -------- ----
11 Computations of Earnings Per Share 11
27 Financial Data Schedule 12
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES Exhibit 11
COMPUTATIONS OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
(Amounts in millions, except
per share data)
Nine Months Ended Three Months Ended
September 30, September 30,
----------------- ------------------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
EARNINGS PER SHARE
Weighted average number of
common shares outstanding 83.7 81.6 84.0 81.9
Dilution from outstanding stock
options-computed using the
"treasury stock" method 1.2 1.2 1.4 1.0
------- ------- ------- -------
Weighted average number of
common shares outstanding
as adjusted 84.9 82.8 85.4 82.9
======= ======= ======= =======
Net Earnings $ 100.7 $ 84.4 $ 34.8 $ 30.2
======= ======= ======= =======
Earnings Per Share $ 1.19 $ 1.02 $ 0.41 $ 0.36
======= ======= ======= =======
</TABLE>
Previously reported share and per share amounts have been restated to reflect
the effects of the September 15, 1995 two-for-one stock split.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 7500
<SECURITIES> 0
<RECEIVABLES> 301700
<ALLOWANCES> 10700
<INVENTORY> 263200
<CURRENT-ASSETS> 598500
<PP&E> 773900
<DEPRECIATION> 343000
<TOTAL-ASSETS> 1209900
<CURRENT-LIABILITIES> 266000
<BONDS> 170700
<COMMON> 800
0
0
<OTHER-SE> 713000
<TOTAL-LIABILITY-AND-EQUITY> 1209900
<SALES> 1564400
<TOTAL-REVENUES> 1564400
<CGS> 1195400
<TOTAL-COSTS> 1195400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9300
<INCOME-PRETAX> 165500
<INCOME-TAX> 64800
<INCOME-CONTINUING> 100700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 100700
<EPS-PRIMARY> 1.19
<EPS-DILUTED> 0
</TABLE>
