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, 2000
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
March 31, 2000 1-7845
LEGGETT & PLATT, INCORPORATED
(Exact name of registrant as specified in its charter)
Missouri 44-0324630
(State or other (I.R.S. Employer Identification
jurisdiction of No.)
incorporation or
organization)
No. 1 Leggett Road
Carthage, Missouri 64836
(Address of principal executive (Zip Code)
offices)
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, 2000: 196,451,520
<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,
2000 1999
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 111.4 $ 20.6
Accounts and notes receivable 669.4 572.7
Allowance for doubtful accounts (13.5) (13.3)
Inventories 636.5 605.8
Other current assets 68.0 70.4
- --------------------------------------------------------------------
Total current assets 1,471.8 1,256.2
PROPERTY, PLANT & EQUIPMENT, NET 934.2 915.0
OTHER ASSETS
Excess cost of purchased companies over
net assets acquired, less accumulated
amortization of $72.3 in 2000 and $67.3
in 1999 763.3 714.3
Other intangibles, less accumulated
amortization of $32.4 in 2000 and $32.6
in 1999 55.0 45.2
Sundry 49.7 46.8
- --------------------------------------------------------------------
Total other assets 868.0 806.3
- --------------------------------------------------------------------
TOTAL ASSETS $3,274.0 $2,977.5
====================================================================
CURRENT LIABILITIES
Accounts and notes payable $ 170.7 $ 146.1
Accrued expenses 233.4 194.2
Other current liabilities 80.4 91.2
- --------------------------------------------------------------------
Total current liabilities 484.5 431.5
LONG-TERM DEBT 993.6 787.4
OTHER LIABILITIES 42.5 43.9
DEFERRED INCOME TAXES 64.0 68.5
SHAREHOLDERS' EQUITY
Common stock 2.0 2.0
Additional contributed capital 423.2 424.8
Retained earnings 1,332.3 1,278.1
Accumulated other comprehensive income (21.2) (18.9)
Treasury stock (46.9) (39.8)
Total shareholders' equity 1,689.4 1,646.2
- --------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,274.0 $2,977.5
====================================================================
</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,
2000 1999
<S> <C> <C>
Net sales $1,043.6 $ 887.6
Cost of goods sold 772.1 655.2
- ------------------------------------------------------------------------
Gross profit 271.5 232.4
Selling, distribution and
administrative expenses 134.0 112.7
Other deductions (income), net 7.1 6.1
- ------------------------------------------------------------------------
Earnings before interest
and income taxes 130.4 113.6
Interest expense 14.6 9.4
Interest Income 1.5 0.9
- ------------------------------------------------------------------------
Earnings before income taxes 117.3 105.1
Income taxes 43.5 39.0
- ------------------------------------------------------------------------
NET EARNINGS $ 73.8 $ 66.1
Earnings Per Share
Basic $ 0.37 $ 0.33
Diluted $ 0.37 $ 0.33
Cash Dividends Declared
Per Share $ 0.10 $ 0.09
Average Shares Outstanding
Basic 198.8 199.1
Diluted 200.3 201.4
</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,
2000 1999
<S> <C> <C>
OPERATING ACTIVITIES
Net Earnings $ 73.8 $ 66.1
Adjustments to reconcile net earnings to net
cash provided by operating activities
Depreciation 31.1 31.4
Amortization 7.8 5.6
Other (1.0) 4.6
Other changes, net of effects from
purchase of companies
Increase in accounts receivable, net (78.8) (52.1)
(Increase) decrease in inventories (13.7) 4.9
Increase in other current assets (1.0) (0.8)
Increase in current liabilities 55.8 4.9
- -----------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 74.0 64.6
INVESTING ACTIVITIES
Additions to property, plant and equipment (41.4) (37.3)
Purchases of companies, net of cash acquired (70.8) (27.1)
Other (11.8) (2.4)
- -----------------------------------------------------------------------
NET CASH USED FOR INVESTING ACTIVITIES (124.0) (66.8)
FINANCING ACTIVITIES
Additions to debt 350.0 5.2
Payments on debt (159.3) (6.1)
Dividends paid (37.2) (33.3)
Issuances of common stock 1.1 0.7
Purchases of common stock (19.3) (26.2)
Other 5.5 1.7
- -----------------------------------------------------------------------
NET CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES 140.8 (58.0)
- -----------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 90.8 (60.2)
CASH AND CASH EQUIVALENTS - January 1, 20.6 83.5
- -----------------------------------------------------------------------
CASH AND CASH EQUIVALENTS - March 31, $ 111.4 $ 23.3
=======================================================================
</TABLE>
See accompanying notes to consolidated condensed financial statements.
<PAGE>
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED 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
positions of Leggett & Platt, Incorporated and Consolidated
Subsidiaries (the `Company').
2. INVENTORIES
Inventories, about 50% of which are valued using the Last-in,
First-out (LIFO) cost method and the remainder using the First-In,
First-Out (FIFO) cost method, comprised the following:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
<S> <C> <C>
At First-In, First-Out (FIFO) cost
Finished goods $ 326.1 $ 309.9
Work in process 71.5 63.2
Raw materials and supplies 245.8 238.2
- ------------------------------------------------------------------
643.4 611.3
Excess of FIFO cost over LIFO cost (6.9) (5.5)
- ------------------------------------------------------------------
$ 636.5 $ 605.8
==================================================================
</TABLE>
3. PROPERTY, PLANT & EQUIPMENT
Property, plant and equipment comprised the following:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
<S> <C> <C>
Property, plant and equipment, at cost $1,679.7 $1,628.7
Less accumulated depreciation 745.5 713.7
- -----------------------------------------------------------------------
$ 934.2 $ 915.0
=======================================================================
</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, 2000 and 1999, comprehensive income was
$71.5 and $66.7, respectively.
<PAGE>
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED 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,
2000 1999
<S> <C> <C>
Basic
Weighted average shares
outstanding, including
shares issuable for
little or no cash 198.8 199.1
=======================================================================
Net earnings $ 73.8 $ 66.1
=======================================================================
Earnings per share - basic $ .37 $ .33
=======================================================================
Diluted
Weighted average shares
outstanding, including
shares issuable for
little or no cash 198.8 199.1
Additional dilutive shares
principally from the
assumed exercise of
outstanding stock options 1.5 2.3
- -----------------------------------------------------------------------
200.3 201.4
=======================================================================
Net earnings $ 73.8 $ 66.1
=======================================================================
Earnings per share - diluted $ .37 $ .33
=======================================================================
</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.
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 FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
7. SEGMENT INFORMATION
The Company has primarily determined its reportable segments based
upon the internal organization, which is generally focused on
broad end-user markets for its diversified products. Residential
Furnishings derives its revenues from bedding, furniture and other
furnishings components and related consumer products. Commercial
Furnishings derives its revenues from office and institutional
furnishings components, retail store fixtures, displays and other
commercial products and systems. The Aluminum Products segment
derives its revenues from die castings, custom tooling and dies,
machining and coating and aluminum raw materials (ingot).
Industrial Materials derives its revenues from drawn wire,
specialty wire products and welded steel tubing materials.
Specialized Products is a combination of non-reportable segments
which derive their revenues from machinery and manufacturing
equipment and automotive seating suspension, lumbar support and
control cable systems.
A summary of segment results for the quarters ended March 31, 2000
and 1999 are shown in the following tables:
<TABLE>
<CAPTION>
Inter-
External Segment Total
Sales Sales Sales EBIT
<S> <C> <C> <C> <C>
Quarter ended March 31, 2000
Residential Furnishings $ 532.3 $ 2.2 $ 534.5 $ 62.0
Commercial Furnishings 209.8 1.7 211.5 23.6
Aluminum Products 159.0 3.9 162.9 16.6
Industrial Materials 76.8 55.2 132.0 20.2
Specialized Products 65.7 12.6 78.3 12.1
Intersegment eliminations - - - (2.7)
Change in LIFO reserve - - - (1.4)
- -------------------------------------------------------------------------
$1,043.6 $ 75.6 $ 1,119.2 $ 130.4
=========================================================================
Quarter ended March 31,1999
Residential Furnishings $ 469.4 $ 2.3 $ 471.7 $ 51.7
Commercial Furnishings 160.0 0.8 160.8 25.6
Aluminum Products 137.6 4.2 141.8 12.1
Industrial Materials 66.0 55.1 121.1 17.1
Specialized Products 54.6 11.3 65.9 9.3
Intersegment eliminations - - - (2.4)
Change in LIFO reserve - - - .2
- -------------------------------------------------------------------------
$ 887.6 $ 73.7 $ 961.3 $ 113.6
=========================================================================
</TABLE>
<PAGE>
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
7. SEGMENT INFORMATION (continued)
Asset information for the Company's segments at March 31, 2000 and
December 31, 1999 is shown in the following table:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
<S> <C> <C>
Assets
Residential Furnishings $1,161.6 $1,173.4
Commercial Furnishings 763.9 721.4
Aluminum Products 484.5 441.1
Industrial Materials 242.9 204.8
Specialized Products 226.5 216.8
Unallocated assets 348.2 204.0
Adjustment to period-end
vs. average assets 46.4 16.0
- -------------------------------------------------------------------
$3,274.0 $2,977.5
===================================================================
</TABLE>
<PAGE>
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Capital Resources and Liquidity
The Company's financial position reflects management's capital
policy guidelines. These guidelines are intended to ensure that
corporate liquidity is adequate to support the Company's projected
growth rate. Also, liquidity is necessary to finance the Company's
ongoing operations in periods of economic downturn. In a normal
operating environment, management intends to direct capital to
ongoing operations, strategic acquisitions and other investments that
provide opportunities for expansion and enhanced profitability.
The expansion of capital resources - debt and equity - is
planned to allow the Company to take advantage of favorable capital
market conditions, rather than respond to short-term needs. Such
financial flexibility is considered more important than short-term
maximization of earnings per share through excessive leverage.
Therefore, management continuously provides for available credit in
excess of near-term projected cash needs and has maintained a
guideline for long-term debt as a percentage of total capitalization
in a range of 30% to 40%.
Total Capitalization
The following table shows the Company's total capitalization at
March 31, 2000 and December 31, 1999. 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,
2000 1999
<S> <C> <C>
Long-term debt outstanding:
Scheduled maturities $ 993.6 $ 642.7
Average interest rates 6.5% 6.7%
Average maturities in years 5.2 5.5
Revolving credit/commercial paper 0.0 144.7
- ----------------------------------------------------------------
Total long-term debt 993.6 787.4
Deferred income taxes and other
liabilities 106.5 112.4
Shareholders' equity 1,689.4 1,646.2
- ----------------------------------------------------------------
Total capitalization $2,789.5 $2,546.0
================================================================
Unused committed credit:
Long-term $ 227.5 $ 52.8
Short-term 112.5 97.5
- ----------------------------------------------------------------
Total unused committed credit $ 340.0 $ 150.3
================================================================
Cash and cash equivalents $ 111.4 $ 20.6
================================================================
</TABLE>
Cash provided by operating activities was $74.0 million in the
first quarter of 2000, compared to $64.6 million in the first quarter
of 1999. The increase in cash provided by operating activities
principally reflects earnings improvements.
Long-term debt outstanding increased to $993.6 million at the
end of the first quarter of 2000, while the Company's net debt-to-
total-capital ratio was 32.9%, up from 30.4% at the end of 1999. As
shown in the table above, obligations having scheduled maturities are
the base "layer" of the Company's debt capital. At the end of the
first quarter of 2000, these obligations consisted primarily of the
Company's privately placed medium-term notes and tax-exempt
industrial development bonds. In November 1999, the Company
completed a $500 million shelf registration of debt. In February
2000, $350 million of 7.65% five-year notes were issued under the
shelf registration. These notes were converted to variable rate
notes under an interest rate swap agreement. The proceeds of the
offering were used to pay down commercial paper, and to fund the
Company's capital expenditures and acquisition activity.
<PAGE>
The second "layer" of the Company's debt capital consists of
revolving bank credit agreements and commercial paper issuances.
Management has negotiated bank credit agreements and established a
commercial paper program to continuously support the Company's
projected growth and to maintain highly flexible sources of debt
capital. The majority of the credit under these arrangements is a
long-term obligation. If needed, however, the credit is available
for short-term borrowings and repayments.
Uses of Capital Resources
The Company's internal investments to modernize and expand
manufacturing capacity were $41.4 million in the first three months
of 2000. The Company also invested $70.8 million (net of cash
acquired) to acquire six businesses. In addition, the Company
assumed $13.6 million of acquisition companies' debt.
The Company repurchased approximately 1.1 million shares of its
common stock for $19.3 million in cash during the first quarter of 2000.
These purchases were made primarily for employee stock plans and to
replace shares issued in purchase acquisitions. In February 2000,
the Company's Board of Directors authorized management, at is
discretion, to buy up to 2,000,000 shares of Leggett stock for use in
employee benefit plans. The authorization is continuously
replenished as shares acquired are reissued for these benefit plans.
In addition, management is authorized, again at its discretion, to
repurchase any shares issued in acquisitions accounted for as
purchases.
Cash dividends paid on the Company's common stock were $37.2
million during the first quarter of 2000. As a percent of earnings
per share (diluted), cash dividends declared per share were 27.0%
during the period.
Short-term Liquidity
To gain additional flexibility in capital management and to
improve the return on shareholders' equity, the Company continuously
seeks efficient use of working capital. Working capital, including
working capital from acquired companies, at the end of the first
quarter was $987.3 million, up from $824.7 million at year-end. The
higher level of working capital resulted principally from increased
cash and cash equivalents due primarily to the Company's financing
activity, and working capital of businesses acquired during the first
quarter. There was no short-term bank debt outstanding at the end
of either period.
Results of Operations
Discussion of Consolidated Results
The Company achieved record 2000 first quarter sales and
earnings. Sales increased to $1.04 billion (up 17.6%), net earnings
increased to $73.8 million (up 11.6%), and earnings per diluted share
increased to $.37 (up 12.1%) - all compared with the first quarter
of 1999.
This performance reflects ongoing benefits from the Company's
active acquisition program. Approximately two-thirds of sales growth
resulted from numerous acquisitions completed during the past year.
Same location sales volume increased approximately 5% during the
first quarter of 2000, as many operations continued to expand product
offerings while improving customer service and sales. Residential
Furnishings accounted for 40% of the increase in consolidated sales
in the first quarter of 2000, while Commercial Furnishings accounted
for 32%.
During the first quarter of 2000, the Company acquired six
businesses with annualized sales of approximately $112 million. The
newly acquired companies have expanded annualized volume in the
Company's segments as follows: Commercial Furnishings - $60 million;
Industrial Materials - $20 million; Specialized Products - $18
million; Residential Furnishings - $14 million.
<PAGE>
Earnings growth in the first quarter of 2000 lagged sales
growth, reflecting modestly lower profit margins. Net earnings were
7.1% of 2000 sales compared with 7.4% in the first quarter of 1999.
Several factors, including inflation in costs for raw materials,
lower than expected results in some of the Company's store fixture
and display businesses, and higher interest expense, contributed to
the decline in margins. To offset the impact of inflation in costs,
the Company is implementing modest price increases expected to be
fully effective before mid-year. In addition, the Company expects
sales and earnings improvements in its store fixture and display
operations as they move toward their strongest business in the third
quarter. See below for a further discussion of the effect of
seasonality on the Company's operations. Interest expense should
continue to reflect the Company's higher debt levels.
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,
2000 1999
<S> <C> <C>
Gross profit margin 26.0% 26.2%
EBIT (earnings before
interest and taxes) margin 12.5 12.8
Net profit margin 7.1 7.4
Effective income tax rate 37.1 37.1
Ratio of earnings to fixed charges 7.8x 9.9x
</TABLE>
Seasonality
The Company does not experience significant seasonality,
however, quarter-to-quarter sales can vary to the total year by 1-2%.
Management estimates that this 1-2% sales impact can have, at current
average net margins and considering overhead absorption, an impact on
quarter-to-quarter net earnings of approximately 5-10%, plus or minus.
The timing of acquisitions in any year can distort the underlying
seasonality in certain of the Company's businesses. For the
Company's businesses in total, the second and third quarters have
proportionately greater sales, while the first and fourth quarters
are lower. Over the last three years, this small seasonality has
become somewhat more pronounced, with the first and fourth quarters
showing proportionately lower sales due to the growth of the store
fixtures business of Commercial Furnishings.
Residential Furnishings and Commercial Furnishings typically
have their strongest sales in the second and third quarters.
Commercial Furnishings particularly has heavy third quarter sales of
its store fixture products, with the first and fourth quarters
significantly lower. Aluminum Products sales are proportionately
greater in the first two calendar quarters due to gas barbecue grill
castings. Industrial Materials sales peak in the third and fourth
quarters from wire products used for baling cotton. Specialized
Products has relatively little quarter-to-quarter variation in sales,
although the automotive business is somewhat heavier in the first two
quarters of the year, and somewhat lower in the third quarter, due to
model changeovers and plant shutdowns in the automobile industry
during the summer.
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.
Residential Furnishings sales increased 13.3%, with same location
growth of 4.2%. Numerous acquisitions accounted for the balance of
sales growth. EBIT increased 19.9%. EBIT margin increased from
11.0% to 11.6% reflecting acquisitions along with volume increases
and improved efficiencies in operations producing wood products and
furniture hardware. These improvements were partially offset by
increasing costs for raw materials in bedding operations. The
Company expects to implement price adjustments during the second
quarter of this year to compensate for the increased cost of raw
materials.
<PAGE>
Commercial Furnishings sales increased 31.5%, due primarily to
numerous acquisitions. In this seasonally slow quarter for store
fixtures and display business, same location volume was down
approximately 1%. This comparison primarily reflected the absence of
some blocks of store fixture business obtained early in 1999, plus
the impact of supplier disruptions at a fixture company acquired at
the end of last year's second quarter. In addition, there was a
large block of non-recurring store fixture and storage product sales
during the first quarter of 1999 which had a positive effect on
overhead absorption and margins last year. EBIT decreased 7.8%, and
EBIT margins moved from 15.9% last year to 11.2%, as these factors
more than offset improved performance in several existing and
recently acquired operations.
Aluminum Products sales increased 14.9% due to same location
growth and improved aluminum market conditions. EBIT increased
37.2%, while EBIT margin improved from 8.5% last year to 10.2% this
year, reflecting significantly better performance at two of the
Company's die-casting facilities. In the Company's smelting
operations, lower scrap costs and higher availability, as well as
improved ingot demand, have resulted in increased production and
improved overhead absorption.
Industrial Materials sales increased 9%, with same location
growth of 3%. Acquisitions accounted for the balance of the sales
growth. EBIT increased 18.1%, and EBIT margins were up by 1.2%, to
15.3%. The majority of these improvements reflect the recovery of one
of the Company's major wire producing mills, which experienced
extensive fire damage and is now back on-line with additional
capacity and more efficient production equipment. The Company has
also added substantial capacity in another wire mill facility to meet
internal needs and growing demand from trade customers.
Specialized Products sales increased 18.8%, with same location
growth of 8%. Acquisitions accounted for the balance of the sales
growth. EBIT increased 30.1%, and EBIT margin improved from 14.1%
last year to 15.5% this year, as both production efficiency and
volume increased. The majority of the sales increase came from the
acquisition of a major cable manufacturer, along with stronger
shipments from the Company's automotive seat suspension plant and its
machinery and equipment division.
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.
<PAGE>
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.
<PAGE>
ITEM 3. DISCLOSURES ABOUT MARKET RISK
(Unaudited)
(Amounts in millions)
INTEREST RATE
The Company has debt obligations sensitive to changes in interest rates.
In the first quarter of 2000, $350 of 7.65% fixed rate debt maturing in
February 2005 and, in the second quarter of 1999, $14 of 6.90% fixed rate
debt maturing in June 2004 was issued and converted to variable rate debt
by use of interest rate swap agreements. These swap agreements, which
contain the same payment dates as the original issues, are used primarily
by the Company to manage the fixed/variable interest rate mix of its debt
portfolio. The effective swap rate for the first quarter of 2000 was 6.26%
for the $350 and 6.30% for the $14. The difference in interest paid or
received as a result of swap agreements is recorded as an adjustment to
interest expense during the related debt period.
Substantially all of the Company's debt is denominated in United States
dollars (U.S.$). The fair value of fixed rate debt was less than its carrying
value by $20.2 and $11.2 at March 31, 2000 and December 31, 1999,
respectively. The fair value of fixed rate debt was calculated using the
U.S. Treasury Bond rate as of March 31, 2000 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 variable rate debt is not significantly
different from its recorded amount.
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 may
occasionally hedge firm commitments for certain machinery purchases, other
fixed expenses or 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, 2000 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 in foreign subsidiaries subject to
translation exposure was $321.2 at March 31, 2000, as compared to $301.8 at
December 31, 1999. The increase in translation exposure was due primarily
to the Company's acquisition activity in Western Europe and increases in
Canadian dollar exposure from the strengthening of this currency (versus
the US dollar) and other factors.
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 $66 (at cost)
in inventory at March 31, 2000. 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 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibit 12 - Computation of Ratio of Earnings to Fixed Charges
Exhibit 27 - Financial Data Schedule
Exhibit 99 - Power of Attorney (Ralph W. Clark)
(B) 1. A report on Form 8-K was filed on February 2, 2000, presenting
earnings data, unaudited results of operations and segment results for
the fourth quarters and years ended December 31, 1999 and 1998. This
information was released in connection with the Company's issuance in
February 2000 of $350 million of 7.65% five-year public notes.
<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 8, 2000 By: /s/ FELIX E. WRIGHT
-------------------
Felix E. Wright
President and
Chief Executive Officer
DATE: May 8, 2000 By: /s/ MICHAEL A. GLAUBER
----------------------
Michael A. Glauber
Senior Vice President,
Finance and Administration
<PAGE>
EXHIBIT INDEX
Exhibit Page
12 Computation of Ratio of Earnings to Fixed Charges 18
27 Financial Data Schedule 19
99 Power of Attorney (Ralph W. Clark) 20
EXHIBIT 12
LEGGETT AND PLATT INCORPORATED AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Amounts in millions of dollars)
<TABLE>
<CAPTION>
Year
Qtr. Qtr. Ended
Ended Ended 12/31
3/31/00 3/31/99 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings
Income from continuing
operations before
income tax $117.3 $105.1 $462.6 $395.6 $333.3 $249.7 $220.6
Interest expense
(excluding amount
capitalized) 14.6 9.4 43.0 38.5 31.8 30.0 30.4
Portion of rental
expense under
operating leases
representative
of an interest factor 2.4 2.1 8.2 6.7 6.1 5.5 5.1
- ------------------------------------------------------------------------------
Total earnings $134.3 $116.6 $513.8 $440.8 $371.2 $285.2 $256.1
==============================================================================
Fixed charges
Interest expense
(including amount
capitalized) $14.8 $9.7 $44.0 $39.2 $32.7 $31.0 $31.4
Portion of rental expense
under operating leases
representative
of an interest factor 2.4 2.1 8.2 6.7 6.1 5.5 5.1
- ------------------------------------------------------------------------------
Total fixed charges $17.2 $11.8 $52.2 $45.9 $38.8 $36.5 $36.5
==============================================================================
Ratio of earnings to
fixed charges 7.8 9.9 9.8 9.6 9.6 7.8 7.0
==============================================================================
</TABLE>
Earnings consist principally of income from continuing operations before
income taxes, plus fixed charges. Fixed charges consist principally
of interest costs.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 111,400
<SECURITIES> 0
<RECEIVABLES> 669,400
<ALLOWANCES> 13,500
<INVENTORY> 636,500
<CURRENT-ASSETS> 1,471,800
<PP&E> 1,679,700
<DEPRECIATION> 745,500
<TOTAL-ASSETS> 3,274,000
<CURRENT-LIABILITIES> 484,500
<BONDS> 993,600
0
0
<COMMON> 2,000
<OTHER-SE> 1,687,400
<TOTAL-LIABILITY-AND-EQUITY> 3,274,000
<SALES> 1,043,600
<TOTAL-REVENUES> 1,043,600
<CGS> 772,100
<TOTAL-COSTS> 772,100
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,600
<INCOME-PRETAX> 117,300
<INCOME-TAX> 43,500
<INCOME-CONTINUING> 73,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 73,800
<EPS-BASIC> .37
<EPS-DILUTED> .37
</TABLE>
POWER OF ATTORNEY
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 documents or amendments to any said statement or form, and to take
such 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 2nd day of May, 2000.
/s/ RALPH W. CLARK
------------------
Ralph W. Clark
