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 March 31, 1996
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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
March 31, 1996 1-7845
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LEGGETT & PLATT, INCORPORATED
-----------------------------
(Exact name of registrant as specified in its charter)
Missouri 44-0324630
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(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
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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
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Common stock outstanding as of April 23, 1996: 84,223,499
<PAGE>
PART I. FINANCIAL INFORMATION
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
ITEM I. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(Amounts in millions)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 3.9 $ 6.7
Accounts and notes receivable 292.1 261.7
Allowance for doubtful accounts (9.0) (7.5)
Inventories 278.3 276.8
Other current assets 38.2 34.2
--------- ---------
Total current assets 603.5 571.9
PROPERTY, PLANT & EQUIPMENT, NET 461.9 451.8
OTHER ASSETS
Excess cost of purchased companies over
net assets acquired, less accumulated
amortization of $18.8 in 1996
and $17.8 in 1995 138.5 133.6
Other intangibles, less accumulated
amortization of $15.5 in 1996
and $15.6 in 1995 21.4 22.2
Sundry 37.1 38.8
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Total other assets 197.0 194.6
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TOTAL ASSETS $ 1,262.4 $ 1,218.3
========= =========
CURRENT LIABILITIES
Accounts and notes payable $ 83.4 $ 90.4
Accrued expenses 135.7 112.6
Other current liabilities 33.5 23.8
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Total current liabilities 252.6 226.8
LONG-TERM DEBT 175.3 191.9
OTHER LIABILITIES 18.6 17.7
DEFERRED INCOME TAXES 49.4 47.8
SHAREHOLDERS' EQUITY
Common stock .8 .8
Additional contributed capital 152.2 155.0
Retained earnings 625.2 598.0
Cumulative translation adjustment (5.0) (5.0)
Treasury stock (6.7) (14.7)
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Total shareholders' equity 766.5 734.1
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,262.4 $ 1,218.3
========= =========
</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>
Three Months Ended
March 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Net sales $ 524.2 $ 523.1
Cost of goods sold 393.9 401.2
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Gross profit 130.3 121.9
Selling, distribution and
administrative expenses 66.8 63.5
Interest expense 2.6 3.0
Other deductions net of other income 1.3 1.2
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Earnings before income taxes 59.6 54.2
Income taxes 23.2 21.3
------- -------
NET EARNINGS $ 36.4 $ 32.9
======= =======
Earnings Per Share (Exhibit 11) $ .43 $ .39
Cash Dividends Declared Per Share $ .11 $ .09
Average Common and Common
Equivalent Shares Outstanding 85.2 84.4
</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) Three Months Ended
March 31,
------------------
1996 1995
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net Earnings $ 36.4 $ 32.9
Adjustments to reconcile net earnings to net
cash provided by operating activities
Depreciation 16.2 14.3
Amortization 2.0 2.1
Other .4 (.6)
Other changes, net of effects from
purchases of companies
Increase in accounts receivable, net (27.0) (20.8)
Increase in inventories (2.0) (20.3)
Increase in other current assets (2.2) (1.8)
Increase in current liabilities 28.8 28.7
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NET CASH PROVIDED BY OPERATING ACTIVITIES 52.6 34.5
INVESTING ACTIVITIES
Additions to property, plant and equipment (23.6) (26.5)
Purchases of companies, net of cash acquired (6.2) (1.6)
Other .3 1.0
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NET CASH USED FOR INVESTING ACTIVITIES (29.5) (27.1)
FINANCING ACTIVITIES
Additions to debt - 10.2
Payments on debt (18.0) (8.9)
Dividends paid (9.3) (7.5)
Other 1.4 (.8)
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NET CASH USED FOR FINANCING ACTIVITIES (25.9) (7.0)
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(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (2.8) .4
CASH AND CASH EQUIVALENTS - January 1, 6.7 2.7
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CASH AND CASH EQUIVALENTS - March 31, $ 3.9 $ 3.1
======= =======
</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>
March 31, December 31,
1996 1995
---------- ------------
<S> <C> <C>
At First-In, First-Out (FIFO) cost
Finished goods $ 159.8 $ 153.7
Work in process 33.9 32.2
Raw materials 103.5 110.7
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297.2 296.6
Excess of FIFO cost over LIFO cost 18.9 19.8
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$ 278.3 $ 276.8
======= =======
</TABLE>
3. PROPERTY, PLANT & EQUIPMENT
Property, plant and equipment comprised the following:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- ------------
<S> <C> <C>
Property, plant and equipment, at cost $ 831.4 $ 808.4
Less accumulated depreciation 369.5 356.6
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$ 461.9 $ 451.8
======= =======
</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 March 31, 1996 were approximately $218.
<PAGE>
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
(Unaudited)
5. CONTINGENCIES
With respect to the matter discussed in the following paragraph, there has
been no significant change from the prior period.
From time to time, the Company is involved in proceedings related to
environmental matters. In one instance, the United States Environmental
Protection Agency (EPA) ordered one of the Company's subsidiaries to
investigate potential releases into the environment and, if necessary, to
perform corrective action. The subsidiary successfully appealed the EPA's
order. On June 27, 1994, the EPA indicated it planned to issue a new,
similar order. The subsidiary, the EPA and the Florida Department of
Environmental Protection (FDEP) are negotiating an agreement to investigate
and, if necessary, take corrective action to resolve the dispute.
Estimated costs to perform an agreed upon investigation and any related
corrective actions are not material and have been provided for in the
financial statements as of March 31, 1996.
If current negotiations with the EPA and the FDEP are unsuccessful, and
the EPA issues a new order, the subsidiary expects it would appeal the
new order. If this appeal is unsuccessful, the costs to perform any
required investigation and, if necessary, corrective action cannot be
reasonably estimated. One-half of any costs, including the costs of
voluntary actions, would be reimbursed to the Company under a contractual
obligation of a former joint owner of the subsidiary. No provision for
the costs of performing investigation and corrective action beyond any
agreed upon investigation and remediation mentioned above has been recorded
in the Company's financial statements. If any such additional
investigation and corrective action is required, management believes the
possibility of a material adverse effect on the Company's consolidated
financial condition or results of operations is remote.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Capital Resources and Liquidity
- -------------------------------
The Company's capitalization at March 31, 1996 and December 31, 1995 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>
March 31, December 31,
1996 1995
----------- ------------
<S> <C> <C>
Long-term debt outstanding:
Scheduled maturities $ 173.9 $ 174.4
Revolving credit/commercial paper 1.4 17.5
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Total long-term debt 175.3 191.9
Shareholders' equity 766.5 734.1
Unused committed credit 250.0 200.0
Cash and cash equivalents 3.9 6.7
</TABLE>
Capital investments to modernize and expand capacity internally were $23.6
million in the first quarter of 1996. The Company also invested $6.2 million
(net of cash acquired) in acquisitions. Funds for these investments and a
$16.6 million reduction in long-term debt outstanding were provided by
operating activities.
Working capital at March 31, 1996 was $350.9 million, up from $345.1 million
at year end. Total current assets increased $31.6 million, due primarily to
increases in accounts and notes receivable attributable to higher sales than
the preceding quarter. Total current liabilities increased $25.8 million, due
primarily to increases in accrued taxes and other current liabilities that
offset a decrease in accounts and notes payable.
During the quarter, the Company increased the total amount of committed credit
available through its revolving bank credit agreements to $250 million, up from
$200 million at year end. The Company has substantial capital resources to
support projected internal cash needs and acquisitions consistent with
management's goals and objectives. The Company also has the availability of
short-term uncommitted credit from several banks. However, there was no short-
term debt outstanding at quarter end or at year end.
<PAGE>
Results of Operations
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The Company had record sales of $524.2 million in the first quarter of 1996.
Compared with the first quarter of 1995, sales increased slightly due to a
continuing benefit from acquisitions. In January and early February of this
year, severe weather impacted business throughout much of the country. Since
then, the Company's sales have shown modest, but steady improvement. First
quarter 1996 sales also showed an encouraging 6% increase over the fourth
quarter of 1995. Management continues to expect more positive business
developments in the months ahead.
Earnings of $.43 per share in this year's first quarter were also a record.
Compared with the first quarter of 1995, earnings per share increased 10% as
profit margins reflected sustained improvements. The following table shows
various measures of earnings as a percentage of sales in the first quarter of
the last two years. It also shows the Company's effective income tax rate in
each respective period.
<TABLE>
<CAPTION>
Quarter Ended
March 31,
1996 1995
------ ------
<S> <C> <C>
Gross profit margin 24.9% 23.3%
Pre-tax profit margin 11.4 10.4
Net profit margin 6.9 6.3
Effective income tax rate 38.9 39.3
</TABLE>
The net profit margin of 6.9% in the first quarter of 1996 compares favorably
with 1995 net margins of 6.3% for the first quarter and 6.6% for the full year.
Several factors are reflected in the sustained improvement in net profit
margins. These include the Company's continuing growth in several niche markets
with above-average margins, increases in production efficiencies, and cost and
expense containment. Lower costs resulted in a smaller LIFO effect on gross
profit in 1996 compared to the prior year.
Cash dividends declared were $.11 per share in the first quarter of 1996, up
from $.09 per share in the first two quarters of 1995 and $.10 per share in
the third and fourth quarters. The first quarter increase makes 1996 the 25th
consecutive year that dividends on the Company's stock have been increased.
Since 1971, the quarterly rate has increased 33 fold, or 15% compounded
annually.
<PAGE>
PART II. OTHER INFORMATION
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: April 25, 1996 By: /s/ HARRY M. CORNELL, JR.
----------------------------
Harry M. Cornell, Jr.
Chairman of the Board
and Chief Executive Officer
DATE: April 25, 1996 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 12
27 Financial Data Schedule 13
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES Exhibit 11
COMPUTATIONS OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
(Amounts in millions, except
per share data)
Three Months Ended
March 31,
------------------
1996 1995
------ ------
<S> <C> <C>
EARNINGS PER SHARE
Weighted average number of
common shares outstanding 83.9 83.2
Dilution from outstanding stock
options-computed using the
"treasury stock" method 1.3 1.2
------ ------
Weighted average number of
common shares outstanding as
adjusted 85.2 84.4
====== ======
Net Earnings $ 36.4 $ 32.9
====== ======
Earnings Per Share $ .43 $ .39
====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 3900
<SECURITIES> 0
<RECEIVABLES> 292100
<ALLOWANCES> 9000
<INVENTORY> 278300
<CURRENT-ASSETS> 603500
<PP&E> 831400
<DEPRECIATION> 369500
<TOTAL-ASSETS> 1262400
<CURRENT-LIABILITIES> 252600
<BONDS> 175300
0
0
<COMMON> 800
<OTHER-SE> 765700
<TOTAL-LIABILITY-AND-EQUITY> 1262400
<SALES> 524200
<TOTAL-REVENUES> 524200
<CGS> 393900
<TOTAL-COSTS> 393900
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2600
<INCOME-PRETAX> 59600
<INCOME-TAX> 23200
<INCOME-CONTINUING> 36400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36400
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0
</TABLE>
