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, 1999
--------------
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, 1999 1-7845
----------------- ----------------------
LEGGETT & PLATT, INCORPORATED
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(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 May 1, 1999: 196,419,043
<PAGE>
PART I. FINANCIAL INFORMATION
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
(Amounts in millions) March 31, December 31,
1999 1998
--------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 23.3 $ 83.5
Accounts and notes receivable 575.8 516.6
Allowance for doubtful accounts (15.7) (13.5)
Inventories 487.8 486.2
Other current assets 65.2 64.3
--------- ---------
Total current assets 1,136.4 1,137.1
PROPERTY, PLANT & EQUIPMENT, NET 833.3 820.4
OTHER ASSETS
Excess cost of purchased companies over
net assets acquired, less accumulated
amortization of $54.4 in 1999
and $50.8 in 1998 518.7 498.9
Other intangibles, less accumulated
amortization of $26.5 in 1999
and $25.3 in 1998 29.8 29.7
Sundry 49.8 49.2
--------- ---------
Total other assets 598.3 577.8
--------- ---------
TOTAL ASSETS $2,568.0 $2,535.3
========= =========
CURRENT LIABILITIES
Accounts and notes payable $ 136.3 $ 134.8
Accrued expenses 180.8 168.8
Other current liabilities 61.7 97.8
--------- ---------
Total current liabilities 378.8 401.4
LONG-TERM DEBT 574.0 574.1
OTHER LIABILITIES 51.0 48.1
DEFERRED INCOME TAXES 78.3 74.9
SHAREHOLDERS' EQUITY
Common stock 2.0 2.0
Additional contributed capital 406.8 396.1
Retained earnings 1,107.1 1,058.7
Accumulated other comprehensive income (17.6) (18.2)
Treasury stock (12.4) (1.8)
--------- ---------
Total shareholders' equity 1,485.9 1,436.8
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,568.0 $2,535.3
========= =========
</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)
<TABLE>
<CAPTION>
(Amounts in millions, except per share data)
Three Months Ended
March 31,
------------------
1999 1998
------ ------
<S> <C> <C>
Net sales $887.6 $793.2
Cost of goods sold 655.2 590.9
------ ------
Gross profit 232.4 202.3
Selling, distribution and
administrative expenses 112.7 98.6
Other deductions (income), net 6.1 4.1
------ ------
Earnings before interest
and income taxes 113.6 99.6
Interest expense 9.4 8.8
Interest income .9 1.9
------ ------
Earnings before income taxes 105.1 92.7
Income taxes 39.0 34.8
------ ------
NET EARNINGS $ 66.1 $ 57.9
====== ======
Earnings Per Share
Basic $ .33 $ .29
Diluted $ .33 $ .29
Cash Dividends Declared
Per Share $ .09 $ .075
Average Shares Outstanding
Basic 199.1 196.3
Diluted 201.4 199.7
</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,
--------------------
1999 1998
------ ------
<S> <C> <C>
OPERATING ACTIVITIES
Net Earnings $ 66.1 $ 57.9
Adjustments to reconcile net earnings to net
cash provided by operating activities
Depreciation 31.4 25.0
Amortization 5.6 5.1
Other 4.6 2.1
Other changes, net of effects
from purchases of companies
Increase in accounts receivable, net (52.1) (50.9)
Decrease (increase) in inventories 4.9 (20.2)
Increase in other current assets (.8) (3.0)
Increase in current liabilities 4.9 14.2
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 64.6 30.2
INVESTING ACTIVITIES
Additions to property, plant and equipment (37.3) (36.5)
Purchases of companies, net of cash acquired (27.1) (52.2)
Other (2.4) 2.9
------- -------
NET CASH USED FOR INVESTING ACTIVITIES (66.8) (85.8)
FINANCING ACTIVITIES
Additions to debt 5.2 128.8
Payments on debt (6.1) (41.8)
Dividends paid (33.3) (28.1)
Issuances of common stock .7 1.5
Purchases of common stock (26.2) (2.2)
Other 1.7 (.4)
------- -------
NET CASH (USED FOR) PROVIDED BY
FINANCING ACTIVITIES (58.0) 57.8
------- -------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (60.2) 2.2
CASH AND CASH EQUIVALENTS - January 1, 83.5 7.7
------- -------
CASH AND CASH EQUIVALENTS - March 31, $ 23.3 $ 9.9
======= =======
</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").
2. INVENTORIES
Inventories, using principally the Last-In, First-Out (LIFO) cost method,
comprised the following:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------- ------------
<S> <C> <C>
At First-In, First-Out (FIFO) cost
Finished goods $ 257.5 $ 251.7
Work in process 61.0 56.2
Raw materials 176.3 185.5
------- -------
494.8 493.4
Excess of FIFO cost over LIFO cost 7.0 7.2
------- -------
$ 487.8 $ 486.2
======= =======
</TABLE>
3. PROPERTY, PLANT & EQUIPMENT
Property, plant and equipment comprised the following:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------- ------------
<S> <C> <C>
Property, plant and equipment, at cost $1,474.8 $1,435.0
Less accumulated depreciation 641.5 614.6
--------- ---------
$ 833.3 $ 820.4
========= =========
</TABLE>
4. COMPREHENSIVE INCOME
In accordance with the provisions of Financial Accounting Standard No. 130, the
Company has elected to report comprehensive income in its Statement of Changes
in Shareholders' Equity. For the three months ending March 31, 1999 and 1998,
comprehensive income was $66.7 and $57.9, respectively.
<PAGE>
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-CONTINUED
(Unaudited)
5. EARNINGS PER SHARE
Basic and diluted earnings per share were calculated as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1999 1998
------ ------
<S> <C> <C>
Basic
Weighted average shares outstanding,
including shares issuable
for little or no cash 199.1 196.3
======= =======
Net earnings $ 66.1 $ 57.9
======= =======
Earnings per share - basic $ .33 $ .29
======= =======
Diluted
Weighted average shares outstanding,
including shares issuable
for little or no cash 199.1 196.3
Additional dilutive shares principally
from the assumed exercise of
outstanding stock options 2.3 3.4
------- -------
201.4 199.7
======= =======
Net earnings $ 66.1 $ 57.9
======= =======
Earnings per share - diluted $ .33 $ .29
======= =======
</TABLE>
6. CONTINGENCIES
The Company is involved in various legal proceedings including matters which
involve claims against the Company under employment, intellectual property,
environmental and other laws. One of the Company's subsidiaries is involved
in an unfair labor complaint filed by the National Labor Relations Board prior
to the Company's acquisition of the subsidiary. An administrative decision has
been rendered against the subsidiary, which has been upheld by the courts. The
Company is currently pursuing actions to resolve this matter.
When it appears probable in management's judgement that the Company will incur
monetary damages or other costs in connection with claims and proceedings, and
the costs can be reasonably estimated, appropriate liabilities are recorded in
the financial statements and charges are made against earnings. No claim or
proceeding has resulted in a material charge against earnings, nor are the total
liabilities recorded material to the Company's financial position. While the
results of any ultimate resolution cannot be predicted, management believes the
possibility of a material adverse effect on the Company's consolidated financial
position, results of operations and cash flows from claims and proceedings is
remote.
<PAGE>
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-CONTINUED
(Unaudited)
7. SEGMENT INFORMATION
Reportable segments are primarily based upon Leggett's management and
organizational structure. This structure is generally focused on broad end-user
markets for the Company's diversified products. Residential Furnishings derives
its revenues from bedding, furniture, and other furnishings components and
related consumer products. Commercial Furnishings derives its revenues from
retail store fixtures, displays, storage, material handling systems, and office
and institutional furnishings components. Aluminum Products revenues are
derived from die castings, custom tooling, secondary machining and coating, and
smelting of aluminum ingot. Industrial Materials derives its revenues from
drawn steel wire, specialty wire products and welded steel tubing sold to trade
customers as well as other Leggett segments. Specialized Products is a
combination of non-reportable segments which derive their revenues from
machinery and manufacturing equipment, automotive seating suspension and lumbar
supports, and control cable systems.
Summaries of segment results for the three months ended March 31, 1999 and 1998
are shown in the following table:
<TABLE>
<CAPTION>
Inter-
External Segment Total
Sales Sales Sales EBIT
-------- ------- ------- -------
<S> <C> <C> <C> <C>
1999
Residential Furnishings $475.4 $2.9 $478.3 $52.7
Commercial Furnishings 160.0 .8 160.8 25.6
Aluminum Products 137.6 .3 137.9 12.1
Industrial Materials 66.0 55.1 121.1 17.1
Specialized Products 48.6 9.7 58.3 8.3
Intersegment eliminations - - - (2.4)
Adjustment to LIFO method - - - .2
------- ------- ------- -------
$887.6 $68.8 $956.4 $113.6
======= ======= ======= =======
1998
Residential Furnishings $430.3 $2.5 $432.8 $50.0
Commercial Furnishings 131.4 .3 131.7 21.2
Aluminum Products 136.8 - 136.8 11.6
Industrial Materials 61.8 50.0 111.8 11.7
Specialized Products 32.9 13.2 46.1 5.0
Intersegment eliminations - - - (.7)
Adjustment to LIFO method - - - .8
------- ------- ------- -------
$793.2 $66.0 $859.2 $99.6
======= ======= ======= =======
</TABLE>
<PAGE>
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-CONTINUED
(Unaudited)
7. SEGMENT INFORMATION - CONTINUED
Asset information for the Company's segments at March 31, 1999 and December 31,
1998 is shown in the following table:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------- ------------
<S> <C> <C>
Assets
Residential Furnishings $1,030.2 $983.1
Commercial Furnishings 479.5 469.8
Aluminum Products 424.9 404.4
Industrial Materials 196.1 204.5
Specialized Products 201.1 176.7
Unallocated assets 184.0 285.9
Adjustment to period-end
vs. average assets 52.2 10.9
--------- ---------
$2,568.0 $2,535.3
========= =========
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Capital Resources and Liquidity
- --------------------------------
The Company's total capitalization at March 31, 1999 and December 31, 1998 is
shown in the table below. Also, the table shows the amount of unused committed
credit available through the Company's revolving bank credit agreements and the
amount of cash and cash equivalents.
<TABLE>
<CAPTION>
(Dollar amounts in millions) March 31, December 31,
1999 1998
---------- ------------
<S> <C> <C>
Long-term debt outstanding:
Scheduled maturities $ 574.0 $ 574.1
Average interest rates 6.6% 6.6%
Average maturities in years 6.0 6.2
Deferred income taxes
and other liabilities 129.3 123.0
Shareholders' equity 1,485.9 1,436.8
--------- ---------
Total capitalization $2,189.2 $2,133.9
========= =========
Unused committed credit $ 300.0 $ 300.0
========= =========
Cash and cash equivalents $ 23.3 $ 83.5
========= =========
</TABLE>
The Company's internal investments to modernize and expand manufacturing
capacity were $37.3 million in the first quarter of 1999. The Company also
invested $27.1 million (net of cash acquired) and issued 846,136 shares of
common stock to acquire three businesses in transactions accounted for as
purchases. In addition, the Company repurchased approximately 1.3 million
shares of its common stock on the open market for $26.2 million cash, primarily
to replace shares issued in purchase acquisitions and employee benefit plans.
Cash provided by operating activities and temporary cash equivalent investments
provided funds required for these investments. The Company may also buy shares
issued in the future for acquisitions accounted for as purchases, or for use in
benefit plans.
Working capital at March 31, 1999 was $757.6 million, up from $735.7 million at
year-end. Total current assets were approximately the same at quarter-end and
year-end, as increases in accounts and notes receivable were offset by reduced
cash and cash equivalents. Total current liabilities decreased $22.6 million
due to a decrease in accrued liabilities.
In addition to unused committed credit, the Company has the availability of
short-term uncommitted credit from several banks. However, there was no short-
term bank debt outstanding on March 31, 1999, or at the end of 1998. Given this
strong financial position and the continuing strong coverage of interest
expense, the Company has substantial capital resources and flexibility for
projected internal cash needs and additional acquisitions consistent with
management's goals and objectives.
<PAGE>
Results of Operations
- -----------------------
Discussion of Consolidated Results
The Company had record sales and earnings in the first quarter of 1999. Sales
increased to $887.6 million (up 11.9%), net earnings increased to $66.1 million
(up 14.2%), and earnings per diluted share increased to $.33 (up 13.8%) all
compared with 1998 first quarter records.
Approximately two-thirds of the year-to-year sales growth was attributable to
acquisitions. Internal growth in unit volume was approximately 6%. When
coupled with reduced selling prices of approximately 2%, sales for the quarter
grew 4% internally, in line with the Company's internal growth rate for the full
year 1998. Residential Furnishings accounted for 47.8% of the 1999 increase in
consolidated sales, and Commercial Furnishings accounted for 30.3% of the 1999
increase. Reduced selling prices were concentrated in Residential Furnishings,
Aluminum Products and Industrial Materials.
The following table shows various measures of earnings as a percentage of sales
for the first quarter in both of the last two years. It also shows the
effective income tax rate and the coverage of interest expense by pre-tax
earnings plus interest.
<TABLE>
<CAPTION>
Quarter Ended
March 31,
1999 1998
------ ------
<S> <C> <C>
Gross profit margin 26.2% 25.5%
EBIT (earnings before interest
and taxes) margin 12.8 12.6
Net profit margin 7.4 7.3
Effective income tax rate 37.1 37.5
Interest coverage ratio 12.2x 11.5x
</TABLE>
The improvement in gross profit margin reflected continued increases in
production efficiencies on higher volume, lower material and other costs, and
generally better manufacturing overhead absorption. The EBIT margin also
increased due to these factors, offset in part primarily by higher total
selling, distribution and administrative expenses as a percentage of sales.
Discussion of Segment Results
A description of the products included in each segment, segment sales, segment
EBIT and other segment data appear in Note 7 of the Notes to Consolidated
Condensed Financial Statements. Following is a comparison of EBIT margins
(Segment EBIT divided by Total Segment Sales):
<TABLE>
<CAPTION>
Quarter Ended
March 31,
1999 1998
------ ------
<S> <C> <C>
Residential Furnishings 11.0% 11.6%
Commercial Furnishings 15.9 16.1
Aluminum Products 8.8 8.5
Industrial Materials 14.1 10.5
Specialized Products 14.2 10.8
</TABLE>
<PAGE>
Residential Furnishings sales increased 10.5% in the first quarter, with nearly
equal year-to-year internal and acquisition growth. EBIT increased 5.4% and
EBIT margin was slightly lower, as increased volume and efficiencies in many
operations were offset in part by temporary inefficiencies primarily in a major
plant producing furniture components.
Commercial Furnishings sales were up 22.1%, with just over two-thirds of the
growth attributable to acquisitions. EBIT increased 20.8% and EBIT margin was
slightly lower, as improved manufacturing efficiencies were reduced by costs to
consolidate commercial fixture facilities and somewhat lower volume in
operations producing office and institutional furniture components.
Aluminum Products sales increased almost 1%, with acquisition growth of
approximately 4%. The modest sales improvement reflects a major die casting
customer's restructuring and inventory reduction, and the Company's reduced
production in aluminum smelting facilities. EBIT increased 4.3%, reflecting a
slight increase in EBIT margin due to improved efficiencies in die casting
operations and acquisitions.
Industrial Materials sales increased 8.3%, with just over three-quarters of the
growth accounted for by acquisitions. EBIT increased 46.2% and EBIT margin
recovered due primarily to reduced costs for raw materials and efficiencies
gained on higher production volume.
Specialized Products sales increased 26.5%, with about one-third of the growth
attributable to acquisitions. EBIT increased 66.0% and EBIT margin improved as
machinery and automotive operations both increased sales and efficiencies.
Year 2000 Readiness Disclosure
- ------------------------------
The "Year 2000" issue refers to older computer programs that used only two
digits to represent the year, rather than four digits. As a result, these older
computer programs may not process information or otherwise function properly
when using the year "2000", since that year will be indistinguishable from the
year "1900". These computer programs are found in information processing
applications and in timing devices for certain machinery and equipment.
To monitor Year 2000 issues, the Company implemented a Corporate level Year 2000
Steering Committee (the Steering Committee). The Steering Committee meets
regularly to review the Company's progress, and to consider other actions that
may be necessary for Year 2000 issues.
In addition, the Company has engaged a large, reputable consulting firm to
perform certain procedures to review the Company's planning, implementation
and readiness for the Year 2000 issues at certain major locations. The results
of the consulting firm's preliminary and follow-up studies have been reviewed
with the Company's Audit Committee of the Board of Directors. The Company has
responded, or is in the process of responding, to issues raised by the
consulting firm's studies.
<PAGE>
The Company recognized the Year 2000 issue several years ago, and has been
working since to correct this problem in its computer systems. The majority
of the Company's information processing is centralized at its Corporate Offices.
All of these critical central systems have been converted to Year 2000 compliant
software, and individual system testing is substantially complete.
Many of the Company's international and certain domestic operations do not use
some or any of the Corporate Offices' centralized systems. All of these non-
central system locations have active projects underway to convert their systems
to Year 2000 compliant software in 1999. Also, adequate testing of these non-
central system conversions is expected to be completed by year-end.
In total, combining both central system and non-central system locations,
management estimates that the Year 2000 systems conversion effort is 85%
complete as of March 31, 1999.
All locations of the Company have been instructed to review their facilities for
Year 2000 issues. Potential internal and third party risks were identified for
the operating locations to consider. Inventories of computer equipment,
communications with key suppliers, correspondence with customers, obtaining
machinery and equipment compliance certificates and other facility testing
related to Year 2000 issues are in various stages of completion at the Company's
approximately 300 locations around the world. These efforts are expected to be
complete at all significant locations prior to the year 2000.
Since the Company has been working on Year 2000 issues for several years, the
costs of mitigating these issues, which costs have not been material in the
past, were expensed in ongoing operations. No material costs are expected from
the remaining Year 2000 compliance efforts. Costs of all the Company's system
conversion and implementation efforts, which include those efforts related to
the Year 2000 issue, were less than $6 million in 1998. The overall magnitude
of these ongoing system conversion and implementation costs is not expected to
be significantly different for 1999. It is not practical to segregate past or
anticipated capital expenditures between Year 2000 compliance and expenditures
which occur normally to keep operations technologically competitive. However,
management believes that past or expected future capital requirements related
to Year 2000 compliance issues are not significant to its operations.
The Company manufactures a broad line of products in over 150 major
manufacturing sites around the world. Raw materials and critical outside
services are generally available from numerous supply sources including, in some
cases, the Company's own vertically integrated operations. The Company's
revenues are not dependent upon any single customer or any few customers.
Therefore, the impact to the Company of any individual operating location or
third-party risk involving Year 2000 is relatively small. It is reasonable to
assume that the Company will experience a few, hopefully isolated, disturbances
to its operations early in the year 2000. While reasonable actions have been
taken, and will continue to be taken in the future, to mitigate such disruption,
the magnitude of all Year 2000 disturbances cannot be predicted. In addition,
any widespread Year 2000 failures, particularly in North America, in industries
such as financial services, communications, transportation and electrical or
other utilities could significantly and adversely impact the Company's
operations.
<PAGE>
Efforts to date have been concentrated on mitigating Year 2000 disturbances.
The Steering Committee plans in 1999 to discuss and evaluate the reasonable
potential risks, and determine the extent of contingency planning and resources
that are appropriate. Any such contingency actions and resources would be
planned to be in place in sufficient time for the year 2000.
Forward-Looking Statements
- --------------------------
This report and other public reports or statements made from time to time by the
Company or its management may contain forward-looking statements concerning
possible future events, objectives, strategies, trends or results. Such
statements are identified either by the context in which they appear or by use
of words such as anticipate, believe, estimate, expect, or the like.
Readers are cautioned that any forward-looking statement reflects only the
beliefs of the Company or its management at the time the statement is made.
In addition, readers should keep in mind that, because all forward-looking
statements deal with the future, they are subject to risks, uncertainties
and developments that might cause actual events or results to differ materially
from those envisioned or reflected in any forward-looking statement. Moreover,
the Company does not have and does not undertake any duty to update any forward-
looking statement to reflect events or circumstances after the date on which the
statement was made. For all of these reasons, forward-looking statements should
not be relied upon as a prediction of actual future events, objectives,
strategies, trends or results.
It is not possible to anticipate and list all of the risks, uncertainties and
developments which may affect the future operations or performance of the
Company, or which otherwise may cause actual events or results to differ from
forward-looking statements. However, some of these risks and uncertainties
include the following: general economic and market conditions and risks, such
as the rate of economic growth in the United States, inflation, government
regulation, interest rates, taxation, and the like; risks and uncertainties
which could affect industries or markets in which the Company participates,
such as growth rates and opportunities in those industries, or changes in demand
for certain products, etc.; and factors which could impact costs, including but
not limited to the availability and pricing of raw materials, the availability
of labor and wage rates, and fuel and energy costs. As indicated above, the
consequences of the Year 2000 issues cannot be accurately predicted; therefore,
actual consequences will remain at least to some extent uncertain.
<PAGE>
ITEM 3. DISCLOSURES ABOUT MARKET RISK
(Unaudited)
(Amounts in millions)
INTEREST RATE
The Company has debt obligations sensitive to changes in interest rates. The
Company has no other significant financial instruments sensitive to changes in
interest rates. The Company has not in the past used any derivative financial
instruments to hedge its exposure to interest rate changes. Substantially all
of the Company's debt is denominated in United States dollars. The fair value
of variable rate debt is not significantly different from its recorded amount.
The fair value of fixed rate debt is calculated using the U.S. Treasury Bond
rate as of March 31, 1999 for similar remaining maturities, plus an estimated
"spread" over such Treasury securities representing the Company's interest costs
under its medium-term note program. The fair value of fixed rate debt
approximated $530 at March 31, 1999, as compared to $539 at December 31, 1998.
EXCHANGE RATE
The Company has not typically hedged foreign currency exposures related to
transactions denominated in other than its functional currencies, although such
transactions have not been material in the past. The Company does hedge firm
commitments for certain machinery purchases, and occasionally may hedge amounts
due in foreign currencies related to its acquisition program. The decision by
management to hedge any such transactions is made on a case-by-case basis. The
amount of forward contracts outstanding at March 31, 1999 was not significant.
The Company views its investment in foreign subsidiaries as a long-term
commitment and does not hedge any translation exposures. The investment in a
foreign subsidiary may take the form of either permanent capital or notes. The
Company's net investment (excluding goodwill) in foreign subsidiaries subject to
translation exposure was $251.1 at March 31, 1999, as compared to $208.8 at
December 31, 1998. The increase in translation exposure was due primarily to
changing the functional currency of the Company's Mexican operations from the
US dollar to the Mexican peso.
COMMODITY PRICE
The Company does not use derivative commodity instruments to hedge its exposures
to changes in commodity prices. The principal commodity price exposure is
aluminum, of which the Company had an estimated $42 (at cost) in inventory at
March 31, 1999. The Company has purchasing procedures and arrangements with
customers to mitigate its exposure to aluminum price changes. No other
commodity exposures are significant to the Company.
<PAGE>
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
During the first quarter of 1999 the Company issued 846,136 shares of its
common stock in a transaction which qualified for exemption from registration
under the Securities Act by virtue of Regulation D and Section 4(2) of the
Securities Act. These securities were issued on February 11, 1999 to acquire
Nagle Industries, Inc. from its shareholders.
ITEM 5. OTHER INFORMATION
Summaries of unaudited quarterly segment results for 1998 are shown in the
following table.
<TABLE>
<CAPTION>
Inter-
External Segment Total
Sales Sales Sales EBIT
-------- ------- ------- ------
<S> <C> <C> <C> <C>
Quarter ended March 31, 1998
Residential Furnishings $430.3 $2.5 $432.8 $50.0
Commercial Furnishings 131.4 .3 131.7 21.2
Aluminum Products 136.8 - 136.8 11.6
Industrial Materials 61.8 50.0 111.8 11.7
Specialized Products 32.9 13.2 46.1 5.0
Intersegment eliminations - - - (.7)
Adjustment to LIFO method - - - .8
------- ------ ------- ------
$793.2 $66.0 $859.2 $99.6
======= ====== ======= ======
Quarter ended June 30, 1998
Residential Furnishings $447.9 $2.5 $450.4 $47.0
Commercial Furnishings 160.0 .5 160.5 28.4
Aluminum Products 140.5 - 140.5 15.3
Industrial Materials 61.2 41.1 102.3 10.7
Specialized Products 45.8 8.1 53.9 6.6
Intersegment eliminations - - - (.2)
Adjustment to LIFO method - - - 2.3
------- ------ ------- -------
$855.4 $52.2 $907.6 $110.1
======= ====== ======= =======
Quarter ended September 30, 1998
Residential Furnishings $474.6 $3.2 $477.8 $55.5
Commercial Furnishings 182.9 .4 183.3 36.2
Aluminum Products 105.9 - 105.9 .9
Industrial Materials 75.8 37.8 113.6 14.0
Specialized Products 44.9 11.9 56.8 5.5
Intersegment eliminations - - - (.4)
Adjustment to LIFO method - - - 1.8
------- ------ ------- -------
$884.1 $53.3 $937.4 $113.5
======= ====== ======= =======
</TABLE>
<PAGE>
ITEM 5. OTHER INFORMATION - CONTINUED
<TABLE>
<CAPTION>
Inter-
External Segment Total
Sales Sales Sales EBIT
-------- ------- ------- ------
<S> <C> <C> <C> <C>
Quarter ended December 31, 1998
Residential Furnishings $447.7 $3.2 $450.9 $49.3
Commercial Furnishings 149.0 .5 149.5 25.3
Aluminum Products 117.9 - 117.9 4.8
Industrial Materials 70.8 46.0 116.8 15.5
Specialized Products 52.3 9.8 62.1 8.0
Intersegment eliminations - - - -
Adjustment to LIFO method - - - 3.0
------- ------ ------- -------
$837.7 $59.5 $897.2 $105.9
======= ====== ======= =======
Year ended December 31, 1998
Residential Furnishings $1,800.5 $ 11.4 $1,811.9 $201.8
Commercial Furnishings 623.3 1.7 625.0 111.1
Aluminum Products 501.1 - 501.1 32.6
Industrial Materials 269.6 174.9 444.5 51.9
Specialized Products 175.9 43.0 218.9 25.1
Intersegment eliminations - - - (1.3)
Adjustment to LIFO method - - - 7.9
--------- ------- --------- -------
$3,370.4 $231.0 $3,601.4 $429.1
========= ======= ========= =======
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibit 27 - Financial Data Schedule
Exhibit 99 - Power of Attorney executed by Jack D. Crusa appointing
attorneys-in-fact for purposes of filing reports under
Section 16(a) of the Securities Exchange Act of 1934.
Exhibit 99 - Power of Attorney executed by Karl G. Glassman appointing
attorneys-in-fact for purposes of filing reports under
Section 16(a) of the Securities Exchange Act of 1934.
(B) 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: May 14, 1999 By: /s/ FELIX E. WRIGHT
--------------------------
Felix E. Wright
President and
Chief Executive Officer
DATE: May 14, 1999 By: /s/ MICHAEL A. GLAUBER
--------------------------
Michael A. Glauber
Senior Vice President,
Finance and Administration
<PAGE>
EXHIBIT INDEX
Exhibit Page
- ------- ----
27 Financial Data Schedule 19
99 Power of Attorney executed by Jack D. Crusa
appointing attorneys-in-fact for purposes of
filing reports under Section 16(a) of the
Securities Exchange Act of 1934. 20
99 Power of Attorney executed by Karl G. Glassman
appointing attorneys-in-fact for purposes of
filing reports under Section 16(a) of the
Securities Exchange Act of 1934. 21
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 23300
<SECURITIES> 0
<RECEIVABLES> 575800
<ALLOWANCES> 15700
<INVENTORY> 487800
<CURRENT-ASSETS> 1136400
<PP&E> 1474800
<DEPRECIATION> 641500
<TOTAL-ASSETS> 2568000
<CURRENT-LIABILITIES> 378800
<BONDS> 574000
0
0
<COMMON> 2000
<OTHER-SE> 1483900
<TOTAL-LIABILITY-AND-EQUITY> 2568000
<SALES> 887600
<TOTAL-REVENUES> 887600
<CGS> 655200
<TOTAL-COSTS> 655200
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9400
<INCOME-PRETAX> 105100
<INCOME-TAX> 39000
<INCOME-CONTINUING> 66100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 66100
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
</TABLE>
POWER OF ATTORNEY EXHIBIT 99
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby
nominate, constitute and appoint Ernest C. Jett, John A. Lyckman and John G.
Moore or the designee of any one of them, his true and lawful attorneys-in-fact,
to sign in the name of and on behalf of the undersigned and to file with
the Securities & Exchange Commission Initial Statement of Beneficial Ownership
on Form 3 and Statements of Change in Beneficial Ownership on Form 4 or Form 5
or any similar form promulgated by the Securities and Exchange Commission and
any other action, all as said attorneys-in-fact, or any one of them, deem
necessary or advisable to the end that such forms or amendments thereto be
properly and timely filed. This power of attorney shall be effective for a
period of ten years from the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of the 18th day of January, 1999.
/s/ JACK D. CRUSA
-------------------
Jack D. Crusa
POWER OF ATTORNEY EXHIBIT 99
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby
nominate, constitute and appoint Ernest C. Jett, John A. Lyckman and John G.
Moore or the designee of any one of them, his true and lawful attorneys-in-fact,
to sign in the name of and on behalf of the undersigned and to file with
the Securities & Exchange Commission Initial Statement of Beneficial Ownership
on Form 3 and Statements of Change in Beneficial Ownership on Form 4 or Form 5
or any similar form promulgated by the Securities and Exchange Commission and
any other action, all as said attorneys-in-fact, or any one of them, deem
necessary or advisable to the end that such forms or amendments thereto be
properly and timely filed. This power of attorney shall be effective for a
period of ten years from the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of the 17th day of January, 1999.
/s/ KARL G. GLASSMAN
---------------------
Karl G. Glassman
