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, 1994
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, 1994 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
---------------------------------------- ----------
(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 2, 1994: 40,776,088
-----------
PART I. FINANCIAL INFORMATION
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
ITEM I. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(Amounts in millions, except share March 31, December 31,
and per share data) 1994 1993
------------- ------------
CURRENT ASSETS
Cash and cash equivalents $ .8 $ .4
Accounts and notes receivable 242.2 211.9
Allowance for doubtful accounts (8.5) (7.2)
Inventories 210.5 209.1
Other current assets 23.5 21.4
------------- ------------
468.5 435.6
PROPERTY, PLANT & EQUIPMENT, NET 316.0 313.1
OTHER ASSETS
Goodwill, net 91.9 93.0
Other intangibles, net 24.5 25.7
Sundry 34.3 34.5
------------- ------------
TOTAL ASSETS $ 935.2 $ 901.9
============= ============
CURRENT LIABILITIES
Accounts and notes payable $ 83.3 $ 74.1
Accrued expenses 79.1 66.9
Other current liabilities 21.0 25.2
------------- ------------
183.4 166.2
LONG-TERM DEBT 154.5 165.8
OTHER LIABILITIES 11.8 11.1
DEFERRED INCOME TAXES 43.7 43.2
SHAREHOLDERS' EQUITY
Common stock - authorized, 300,000,000
shares of $.01 par value; issued
40,765,665 and 40,325,961 shares
in 1994 and 1993, respectively .4 .4
Additional contributed capital 125.9 117.3
Retained earnings 420.9 401.0
Cumulative translation adjustment (5.1) (2.8)
Treasury stock (6,821 and 7,578 shares
in 1994 and 1993, respectively) (.3) (.3)
------------- ------------
541.8 515.6
------------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 935.2 $ 901.9
============= ============
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.
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(Amounts in millions, except per share data)
Three Months Ended
March 31,
--------------------------
1994 1993
------------ ------------
Net sales $ 434.6 $ 363.0
Cost of goods sold 336.0 280.5
------------ ------------
Gross profit 98.6 82.5
Selling, distribution and
administrative expenses 52.7 46.0
Interest expense 1.9 3.0
Other deductions, net 1.2 1.4
------------ -------------
Earnings before income taxes 42.8 32.1
Income taxes 16.8 12.5
------------ -------------
NET EARNINGS $ 26.0 $ 19.6
============ =============
Earnings Per Share (Exhibit 11) $ .63 $ .48
Cash Dividends Declared Per Share $ .15 $ .13
Average Shares Outstanding 41.4 40.9
See accompanying notes to consolidated condensed financial statements.
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in millions) Three Months Ended
March 31,
---------------------------
1994 1993
---------- ----------
OPERATING ACTIVITIES
Net earnings $ 26.0 $ 19.6
Adjustments to reconcile net earnings to net
cash provided by operating activities
Depreciation and amortization 12.9 10.4
LIFO expense 1.4 .5
Deferred income taxes (.1) (3.8)
Pension income from defined benefit plans (.4) (.5)
Loss on sale of operating assets .5 .5
Other .6 1.3
Other changes, net of effects from acquisitions
of companies
Increase in accounts receivable, net (29.3) (20.1)
(Increase) Decrease in inventories
at FIFO cost (2.8) 7.5
Increase in other current assets (2.9) (2.8)
Increase in accounts payable, accrued
expenses and other current liabilities 27.8 20.2
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 33.7 32.8
INVESTING ACTIVITIES
Additions to property, plant and equipment (13.9) (8.1)
Proceeds from sales of property, plant and equipment .4 .4
Acquisitions of companies, net of cash acquired - (10.3)
(Increase) Decrease in other assets (.2) .8
---------- ----------
NET CASH USED FOR INVESTING ACTIVITIES (13.7) (17.2)
FINANCING ACTIVITIES
Additions to debt .1 1.0
Payments on debt (12.9) (16.0)
Dividends paid (6.1) (5.0)
Net sales of common stock .2 .4
Other (.9) 1.3
---------- ----------
NET CASH USED FOR FINANCING ACTIVITIES (19.6) (18.3)
---------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .4 (2.7)
CASH AND CASH EQUIVALENTS--January 1, .4 5.2
---------- ----------
CASH AND CASH EQUIVALENTS--March 31, $ .8 $ 2.5
========== ==========
Interest paid (net of amounts capitalized) $ 3.5 $ 4.8
Income taxes (refunded) paid $ (.3) $ 8.0
See accompanying notes to consolidated condensed financial statements.
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in millions, except share and per share data)
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. As discussed in the Company's 1993 Annual Report on
Form 10-K, previously issued financial statements have been restated
to reflect pooling of interests acquisitions.
2. INVENTORIES
Inventories (principally LIFO method) comprised the following:
March 31, December 31,
1994 1993
---------- ------------
Finished goods $ 113.3 $ 113.3
Work in process 25.6 23.8
Raw materials 83.1 82.2
---------- ------------
222.0 219.3
Less LIFO Reserve 11.5 10.2
---------- ------------
$ 210.5 $ 209.1
========== ============
3. PROPERTY, PLANT & EQUIPMENT
Property, plant and equipment comprised the following:
March 31, December 31,
1994 1993
---------- ------------
Property, plant and
equipment, at cost $ 583.7 $ 571.2
Less accumulated depreciation 267.7 258.1
---------- ------------
$ 316.0 $ 313.1
========== ============
4. GOODWILL AND OTHER INTANGIBLES
Goodwill comprised the following:
March 31, December 31,
1994 1993
---------- ------------
Goodwill, at cost $ 104.0 $ 104.4
Less accumulated amortization 12.1 11.4
---------- ------------
$ 91.9 $ 93.0
========== ============
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
(Unaudited)
4. GOODWILL AND OTHER INTANGIBLES (continued)
Other Intangibles comprised the following:
March 31, December 31,
1994 1993
---------- ------------
Other Intangibles, at cost $ 35.6 $ 37.0
Less accumulated amortization 11.1 11.3
---------- ------------
$ 24.5 $ 25.7
========== ============
5. 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, 1994 were approximately $153.9.
Item 2. Management's Discussion and Analysis and Analysis of Financial
Condition and Results of Operations
The Company's previously issued financial statements have been restated to
reflect pooling of interests acquisitions completed in 1993. Therefore,
the following discussion and analysis reflects the Company's capital
resources and liquidity and results of operations as restated for these
acquisitions.
Capital Resources and Liquidity
-------------------------------
The Company's employment of debt and equity capital at March 31, 1994 and
December 31, 1993 is shown in millions of dollars in the table below.
March 31, December 31,
1994 1993
---------- ------------
Long-term debt outstanding:
Scheduled maturities $ 114.8 $ 122.3
Revolving credit 39.7 43.5
---------- -----------
Total long-term debt 154.5 165.8
Shareholders' equity 541.8 515.6
Unused committed credit 120.3 116.5
Cash and cash equivalents .8 .4
Capital investments to modernize and expand capacity internally were
$13.5 million, net of proceeds from sales of property, plant and equipment
in the first quarter of 1994. In addition, long-term debt outstanding
was reduced by $11.3 million during the quarter. Debt with scheduled
maturities was reduced by $7.5 million and revolving bank debt was reduced
by $3.8 million.
Working capital at March 31, 1994 was $285.1 million, up from $269.4
million at the end of 1993. Total current assets increased $32.9 million,
due primarily to an increase in accounts and notes receivable. This
increase primarily reflected higher first quarter sales. Total current
liabilities increased $17.2 million, which also primarily reflected
higher sales and production volumes. There was no short-term debt
outstanding at quarter-end or year-end.
Results of Operations
---------------------
The Company had record first quarter earnings of $.63 per share in 1994.
Sales for the quarter were a record $434.6 million. Compared with the
first quarter of 1993, earnings per share increased 31% on a 20% increase
in sales. This marked the ninth consecutive quarter the Company achieved
year-to-year new highs in earnings per share and sales.
Economic conditions continued to improve during this year's first quarter.
However, overall business activity was adversely affected early in 1994
by severe winter weather and the California earthquake. In some parts of
the country, businesses were closed or operated with shortened hours for
several days. Despite these temporary adversities, consumer demand for
durable goods, including furniture and bedding, generally improved. The
Company's sales growth reflected these economic conditions, plus a
continuing benefit from acquisitions. Excluding acquisitions accounted
for as purchases, first quarter sales increased 9% over the same period a
year earlier. This increase reflected higher unit volumes and modestly
higher prices on some products that were implemented in the second and
third quarters of 1993.
The Company's growth in earnings exceeded sales growth in all of the last
nine quarters, as year-to-year comparisons of net profit margins remained
favorable. In 1994, the net profit margin was 6.0% of first quarter
sales. This compares with 5.4% in the same quarter of 1993 and 5.6% for
the full year.
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 Company's effective income tax rate in both quarters.
Quarter Ended March 31,
------------------------
1994 1993
----------- -----------
Gross profit margin 22.7% 22.7%
Pre-tax profit margin 9.8 8.8
Net profit margin 6.0 5.4
Effective income tax rate 39.3 38.9
As shown above, the Company's gross profit margin was unchanged from the
first quarter of 1993. All of the cost increases for raw materials
experienced in 1993 have not been passed on by the Company in its selling
prices. Therefore, as anticipated, gross profit margins in affected
product lines continue to reflect some cost/price pressure. LIFO expense,
which is an indicator of inflation in cost of goods sold, reduced the
Company's gross profit margin by 0.3% in the first quarter of 1994. In
1993, LIFO expense reduced gross profit margins by 0.1% in the first
quarter and 0.2% for the full year.
The increase in the Company's pre-tax profit margin primarily reflected
improved operating expense ratios. Administrative, selling and
distribution expenses were kept under tight control and declined as a
percentage of first quarter sales. In addition, interest expense and
other deductions (net of other income) decreased as a percentage of sales.
These favorable factors were partially offset by a somewhat higher
effective income tax rate in 1994. The higher tax rate primarily
reflected the increase in corporate federal income tax rates in the third
quarter of 1993.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibit 11 - Computations of Earnings Per Share
(B) No reports on Form 8-K have been filed during the quarter
for which this report is filed.
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 12, 1994 By: /s/HARRY M. CORNELL, JR.
-------------------------
Harry M. Cornell, Jr.
Chairman of the Board
and Chief Executive Officer
DATE: May 12, 1994 By: /s/MICHAEL A. GLAUBER
----------------------
Michael A. Glauber
Senior Vice President,
Finance and Administration
EXHIBIT INDEX
Exhibit Page
----
11 Computations of Earnings Per Share 12
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES Exhibit 11
COMPUTATIONS OF EARNINGS PER SHARE
Three Months Ended
March 31,
----------------------
1994 1993
--------- ----------
(Amounts in millions, except per share data)
EARNINGS PER SHARE
Weighted average number of common
shares outstanding . . . . . . . . . . . . . . . 40.7 39.9
Dilution from outstanding stock
options-computed using the
"treasury stock" method . . . . . . . . . . . . . .7 .7
Dilution from shares issuable under
contingent earnout agreement . . . . . . . . . . - .3
--------- ---------
Weighted average number of common
shares outstanding as adjusted . . . . . . . . . 41.4 40.9
========= =========
Net Earnings . . . . . . . . . . . . . . . . . . . $ 26.0 $ 19.6
========= =========
Earnings Per Share . . . . . . . . . . . . . . . . $ .63 $ .48
========= =========
NOTE: Previously reported amounts have been restated to reflect
acquisitions accounted for as poolings of interests, as discussed
in Note 1 to the Consolidated Condensed Financial Statements.
