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 June 30, 1995
-------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from to
For Quarter Ended Commission File Number
June 30, 1995 1-7845
----------------- ----------------------
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
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(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 August 8, 1995: 83,987,436
(Adjusted for stock split-see Part I, Item I, Note 5)
<PAGE>
PART I. FINANCIAL INFORMATION
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
ITEM I. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(Amounts in millions)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
----------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 4.5 $ 2.7
Accounts and notes receivable 291.0 261.8
Allowance for doubtful accounts (9.9) (7.5)
Inventories 275.0 255.5
Other current assets 33.3 32.2
--------- ---------
Total current assets 593.9 544.7
PROPERTY, PLANT & EQUIPMENT, NET 428.3 396.0
OTHER ASSETS
Excess cost of purchased companies over
net assets acquired, less accumulated
amortization of $16.0 in 1995
and $14.4 in 1994 120.0 115.1
Other intangibles, less accumulated
amortization of $12.8 in 1995
and $12.5 in 1994 25.4 27.4
Sundry 36.0 36.7
--------- ---------
Total other assets 181.4 179.2
--------- ---------
TOTAL ASSETS $ 1,203.6 $ 1,119.9
========= =========
CURRENT LIABILITIES
Accounts and notes payable $ 89.8 $ 89.9
Accrued expenses 113.0 106.0
Other current liabilities 28.3 37.0
--------- ---------
Total current liabilities 231.1 232.9
LONG-TERM DEBT 224.3 204.9
OTHER LIABILITIES 13.6 14.7
DEFERRED INCOME TAXES 44.7 42.2
SHAREHOLDERS' EQUITY
Common stock 0.8 0.4
Additional contributed capital 153.0 134.7
Retained earnings 545.8 496.5
Cumulative translation adjustment (5.0) (6.1)
Less treasury stock (4.7) (0.3)
--------- ---------
Total shareholders' equity 689.9 625.2
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,203.6 $ 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>
Six Months Ended Three Months Ended
June 30, June 30,
-------------------- --------------------
1995 1994 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 1,040.8 $ 883.4 $ 517.7 $ 448.8
Cost of goods sold 795.7 680.5 394.5 344.5
--------- --------- --------- ---------
Gross profit 245.1 202.9 123.2 104.3
Selling, distribution and
administrative expenses 127.9 107.3 64.4 54.5
Interest expense 6.5 3.8 3.5 2.0
Other deductions, net 2.3 2.4 1.1 1.2
--------- --------- --------- ---------
Earnings before income taxes 108.4 89.4 54.2 46.6
Income taxes 42.5 35.2 21.2 18.4
--------- --------- --------- ---------
NET EARNINGS $ 65.9 $ 54.2 $ 33.0 $ 28.2
========= ========= ========= =========
Earnings Per Share (Exhibit 11) $ 0.78 $ 0.65 $ 0.39 $ 0.34
Cash Dividends Declared
Per Share $ 0.18 $ 0.15 $ 0.09 $ 0.075
Average Common and Common
Equivalent Shares Outstanding 84.7 82.8 84.9 82.8
</TABLE>
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) Six Months Ended
June 30,
------------------
1995 1994
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net Earnings $ 65.9 $ 54.2
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation 28.2 22.5
Amortization 4.0 3.8
Deferred income tax benefit (0.9) (3.2)
Other 0.5 0.6
Other changes, net of effects from purchases of
companies
Increase in accounts receivable, net (22.7) (34.1)
Increase in inventories (14.4) (8.0)
Increase in other current assets (2.4) (3.8)
Increase in current liabilities 8.1 34.3
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 66.3 66.3
INVESTING ACTIVITIES
Additions to property, plant and equipment (52.0) (37.6)
Purchases of companies, net of cash acquired (1.6) (33.8)
Other 0.9 0.6
------- -------
NET CASH USED FOR INVESTING ACTIVITIES (52.7) (70.8)
FINANCING ACTIVITIES
Additions to debt 25.3 35.9
Payments on debt (14.7) (11.0)
Dividends paid (15.0) (12.2)
Net (purchases) sales of common stock (6.1) 0.6
Other (1.3) (0.4)
------- -------
NET CASH (USED FOR) PROVIDED
BY FINANCING ACTIVITIES (11.8) 12.9
------- -------
INCREASE IN CASH AND CASH EQUIVALENTS 1.8 8.4
CASH AND CASH EQUIVALENTS - January 1, 2.7 0.4
------- -------
CASH AND CASH EQUIVALENTS - June 30, $ 4.5 $ 8.8
======= =======
</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>
June 30, December 31,
1995 1994
----------- ------------
<S> <C> <C>
At First-In, First-Out (FIFO) cost
Finished goods $ 142.8 $ 134.5
Work in process 34.0 32.1
Raw materials 120.2 103.1
-------- --------
297.0 269.7
Excess of FIFO cost over LIFO cost 22.0 14.2
-------- --------
$ 275.0 $ 255.5
======== ========
</TABLE>
3. PROPERTY, PLANT & EQUIPMENT
Property, plant and equipment comprised the following:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
----------- ------------
<S> <C> <C>
Property, plant and equipment, at cost $ 758.1 $ 699.5
Less accumulated depreciation 329.8 303.5
-------- --------
$ 428.3 $ 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
June 30, 1995 were approximately $203.1.
5. STOCK SPLIT
On August 9, 1995, the Board of Directors of the Company declared a
two-for-one stock split in the form of a stock dividend for shareholders of
record on August 25, 1995. The shares will be distributed to shareholders on
September 15, 1995. Common Stock and Additional Contributed Capital as of
June 30, 1995, and all references to share and per share amounts in the
accompanying financial statements have been restated to reflect the split.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
All share and per share amounts have been adjusted for the stock split
discussed in Item I, Note 5.
Capital Resources and Liquidity
-------------------------------
The Company's capitalization at June 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 and
commercial paper program is also shown, along with the amount of cash and
cash equivalents.
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
----------- -----------
<S> <C> <C>
Long-term debt outstanding:
Scheduled maturities $172.2 $146.6
Revolving credit/commercial paper 52.1 58.3
------- -------
Total long-term debt 224.3 204.9
Deferred income taxes and other liabilities 58.3 56.9
Shareholders' equity 689.9 625.2
Unused committed credit 162.9 156.7
Cash and cash equivalents 4.5 2.7
</TABLE>
Capital investments to modernize and expand capacity internally were $52.0
million in the first six months of 1995. In addition, the Company paid $1.6
million cash, net of cash acquired, and issued .7 million shares of common
stock to acquire four businesses during this period. Funds for these
investments were largely provided by operating activities, as total long-term
debt outstanding increased $19.4 million since the end of 1994.
During the second quarter of 1995, the Company issued $25 million of medium
term notes with a 10 year maturity and a fixed interest rate of 7%. Proceeds
from these notes were used to repay debt outstanding under the Company's
revolving bank credit/commercial paper arrangements.
Working capital at June 30, 1995 was $362.8 million, up from $311.8 million
at the end of 1994. Total current assets increased $49.2 million, due
primarily to increases in accounts and notes receivable and inventories.
Total current liabilities decreased $1.8 million, as accounts and notes
payable were approximately unchanged and an increase in accrued expenses
was substantially offset by a decrease in other current liabilities. There
was no short-term debt outstanding at the end of the second quarter or at
year-end.
With anticipated cash flows, plus 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.
<PAGE>
Results of Operations
---------------------
The Company had record sales and earnings for the first six months of 1995.
Sales were $1.04 billion (up 18%) and earnings were $.78 per share (up 20%)
-- both compared with records for the first half of 1994. Second quarter
results also set new highs for the quarter. Earnings were $.39 per share
on sales of $517.7 million, both up 15% from the second quarter records
achieved in 1994.
Despite some further softening in the economy, the Company's second quarter
sales, when compared with last year's second quarter, continued to benefit
from internal growth and several acquisitions, most of which were completed
in the second and third quarters of 1994. Acquisitions contributed 11
percentage points to the increase in sales for the quarter and 13 percentage
points to the increase for the first half of 1995. Internal growth
contributed 4 and 5 percentage points, respectively, to the increases in
sales for each of these periods.
The Company's 1995 growth in earnings per share reflected a sustained
improvement in profit margins. The following table shows various measures
of earnings as a percentage of sales in the first six months and second
quarters of both of the last two years. It also shows the Company's effective
income tax rate in each respective period.
<TABLE>
<CAPTION>
Six Months Ended Quarter Ended
June 30, June 30,
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Gross profit margin 23.5% 23.0% 23.8% 23.2%
Pre-tax profit margin 10.4 10.1 10.5 10.4
Net profit margin 6.3 6.1 6.4 6.3
Effective income tax rate 39.2 39.4 39.1 39.5
</TABLE>
The year-to-year increases in net profit margins primarily reflected
improvements in gross profit margins. Efficiencies gained on increased
sales and production in many operations contributed to these improvements.
Although the Company experienced increasing prices for raw materials, these
higher costs have been approximately offset by modest increases in the
Company's selling prices.
Selling, distribution and administrative expenses were 12.3% of sales in the
first half of 1995 and 12.1% in the same period of 1994. In the second
quarter, these expenses were 12.4% of sales in 1995 and 12.1% in 1994.
These increases reflected somewhat higher selling expense.
Interest expense increased to $6.5 million in the first half of 1995, up from
$3.8 million in the first half of 1994. In the second quarter, interest
expense was $3.5 million this year and $2.0 million in 1994. These increases
primarily reflected increased borrowings for acquisitions and partially
offset some of the improvements in operating profit margins.
Cash dividends declared on the Company's common stock were $.09 per share in
both of the first two quarters of 1995. These dividends were 20% higher than
the dividends for the same 1994 periods. Dividends on the stock have been
increased for 24 consecutive years.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The EPA has alleged that two of the Company's facilities in Grafton, Wisconsin
violated wastewater pretreatment requirements under the Clean Water Act. No
action is pending. However, on August 8, 1995, the EPA proposed to settle
this matter if the Company pays a civil penalty of $495,000. The Company has
not yet responded to the EPA's offer. If this matter cannot be settled, the
EPA has indicated it intends to bring an action. Management believes the cost
to resolve this matter will not have a material adverse effect on the
consolidated financial condition or results of operations of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its annual meeting of shareholders on May 10, 1995. Matters
voted upon were (1) election of directors, and (2) ratification of Price
Waterhouse as the Company's independent auditors.
The number of votes cast (not adjusted for the stock split discussed in
Part I, Item I, Note 5) for, against or withheld, as well as abstentions,
with respect to each matter are set out below.
1. Election of Directors
DIRECTOR FOR WITHHELD
Raymond F. Bentele 34,576,465 267,484
Harry M. Cornell, Jr. 34,471,407 372,542
R. Ted Enloe, III 34,556,229 277,720
Richard T. Fisher 34,579,362 264,587
Frank E. Ford, Jr. 34,467,998 375,951
Robert A. Jefferies, Jr. 34,472,826 371,123
Alexander M. Levine 33,925,329 918,620
Richard L. Pearsall 34,578,712 265,237
Maurice E. Purnell, Jr. 34,460,890 383,059
Felix E. Wright 34,472,440 371,509
2. Ratification of Independent Auditors
FOR AGAINST ABSTAIN
34,810,305 13,788 19,856
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: August 9, 1995 By: /s/ HARRY M. CORNELL, JR.
---------------------------
Harry M. Cornell, Jr.
Chairman of the Board
and Chief Executive Officer
DATE: August 9, 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)
Six Months Ended Three Months Ended
June 30, June 30,
------------------ --------------------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
EARNINGS PER SHARE
Weighted average number of
common shares outstanding 83.5 81.5 83.7 81.6
Dilution from outstanding stock
options-computed using the
"treasury stock" method 1.2 1.3 1.2 1.2
------ ------ ------ ------
Weighted average number of
common shares outstanding as
adjusted 84.7 82.8 84.9 82.8
====== ====== ====== ======
Net Earnings $ 65.9 $ 54.2 $ 33.0 $ 28.2
====== ====== ====== ======
Earnings Per Share $ 0.78 $ 0.65 $ 0.39 $ 0.34
====== ====== ====== ======
</TABLE>
All share and per share amounts in this schedule have been adjusted for the
stock split discussed in Part I, Item I, Note 5.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 4500
<SECURITIES> 0
<RECEIVABLES> 291000
<ALLOWANCES> 9900
<INVENTORY> 275000
<CURRENT-ASSETS> 593900
<PP&E> 758100
<DEPRECIATION> 329800
<TOTAL-ASSETS> 1203600
<CURRENT-LIABILITIES> 231100
<BONDS> 224300
<COMMON> 800<F1>
0
0
<OTHER-SE> 689100<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1203600
<SALES> 1040800
<TOTAL-REVENUES> 1040800
<CGS> 795700
<TOTAL-COSTS> 795700
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6500
<INCOME-PRETAX> 108400
<INCOME-TAX> 42500
<INCOME-CONTINUING> 65900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 65900
<EPS-PRIMARY> .78<F1>
<EPS-DILUTED> 0
<FN>
<F1>Amounts reflect the stock split discussed in Part I, Item I, Note 5.
</FN>
</TABLE>
