ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Missouri | 44-0324630 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
No. 1 Leggett Road Carthage, Missouri | 64836 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ý | Accelerated filer | ¨ | ||
Non-accelerated filer | ¨ | Smaller reporting company | ¨ | ||
Emerging growth company | ¨ |
(Amounts in millions) | September 30, 2018 | December 31, 2017 | |||||
CURRENT ASSETS | |||||||
Cash and cash equivalents | $ | 363.5 | $ | 526.1 | |||
Trade receivables, net | 600.7 | 522.3 | |||||
Other receivables, net | 24.8 | 72.8 | |||||
Total receivables, net | 625.5 | 595.1 | |||||
Inventories | |||||||
Finished goods | 329.1 | 285.6 | |||||
Work in process | 48.2 | 53.0 | |||||
Raw materials and supplies | 332.3 | 283.4 | |||||
LIFO reserve | (75.6 | ) | (50.9 | ) | |||
Total inventories, net | 634.0 | 571.1 | |||||
Prepaid expenses and other current assets | 44.0 | 74.2 | |||||
Total current assets | 1,667.0 | 1,766.5 | |||||
PROPERTY, PLANT AND EQUIPMENT—AT COST | |||||||
Machinery and equipment | 1,277.0 | 1,210.6 | |||||
Buildings and other | 651.1 | 626.0 | |||||
Land | 43.0 | 40.6 | |||||
Total property, plant and equipment | 1,971.1 | 1,877.2 | |||||
Less accumulated depreciation | 1,248.1 | 1,213.3 | |||||
Net property, plant and equipment | 723.0 | 663.9 | |||||
OTHER ASSETS | |||||||
Goodwill | 840.3 | 822.2 | |||||
Other intangibles, less accumulated amortization of $162.9 and $151.7 as of September 30, 2018 and December 31, 2017, respectively | 188.4 | 169.1 | |||||
Sundry | 130.4 | 129.1 | |||||
Total other assets | 1,159.1 | 1,120.4 | |||||
TOTAL ASSETS | $ | 3,549.1 | $ | 3,550.8 | |||
CURRENT LIABILITIES | |||||||
Current maturities of long-term debt | $ | 3.6 | $ | 153.8 | |||
Accounts payable | 428.7 | 430.3 | |||||
Accrued expenses | 269.5 | 303.4 | |||||
Other current liabilities | 83.1 | 88.7 | |||||
Total current liabilities | 784.9 | 976.2 | |||||
LONG-TERM LIABILITIES | |||||||
Long-term debt | 1,353.2 | 1,097.9 | |||||
Other long-term liabilities | 157.4 | 202.9 | |||||
Deferred income taxes | 87.6 | 83.0 | |||||
Total long-term liabilities | 1,598.2 | 1,383.8 | |||||
COMMITMENTS AND CONTINGENCIES | |||||||
EQUITY | |||||||
Common stock | 2.0 | 2.0 | |||||
Additional contributed capital | 521.7 | 514.7 | |||||
Retained earnings | 2,611.7 | 2,511.3 | |||||
Accumulated other comprehensive income (loss) | (58.7 | ) | (9.5 | ) | |||
Treasury stock | (1,911.2 | ) | (1,828.3 | ) | |||
Total Leggett & Platt, Inc. equity | 1,165.5 | 1,190.2 | |||||
Noncontrolling interest | .5 | .6 | |||||
Total equity | 1,166.0 | 1,190.8 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 3,549.1 | $ | 3,550.8 |
Nine Months Ended | Three Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
(Amounts in millions, except per share data) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net sales | $ | 3,222.8 | $ | 2,959.3 | $ | 1,091.5 | $ | 1,009.7 | |||||||
Cost of goods sold | 2,547.3 | 2,285.4 | 864.4 | 793.2 | |||||||||||
Gross profit | 675.5 | 673.9 | 227.1 | 216.5 | |||||||||||
Selling and administrative expenses | 313.2 | 306.2 | 100.7 | 95.4 | |||||||||||
Amortization of intangibles | 15.3 | 16.0 | 5.2 | 6.2 | |||||||||||
Impairments | .3 | 4.6 | .1 | 4.5 | |||||||||||
Other (income) expense, net | (6.2 | ) | (.3 | ) | (3.3 | ) | 1.2 | ||||||||
Earnings from continuing operations before interest and income taxes | 352.9 | 347.4 | 124.4 | 109.2 | |||||||||||
Interest expense | 43.5 | 31.2 | 13.1 | 10.2 | |||||||||||
Interest income | 6.8 | 5.2 | 2.0 | 1.7 | |||||||||||
Earnings from continuing operations before income taxes | 316.2 | 321.4 | 113.3 | 100.7 | |||||||||||
Income taxes | 63.2 | 64.2 | 23.3 | 17.2 | |||||||||||
Earnings from continuing operations | 253.0 | 257.2 | 90.0 | 83.5 | |||||||||||
Earnings (loss) from discontinued operations, net of tax | — | (.9 | ) | — | (.9 | ) | |||||||||
Net earnings | 253.0 | 256.3 | 90.0 | 82.6 | |||||||||||
Earnings attributable to noncontrolling interest, net of tax | (.1 | ) | — | — | — | ||||||||||
Net earnings attributable to Leggett & Platt, Inc. common shareholders | $ | 252.9 | $ | 256.3 | $ | 90.0 | $ | 82.6 | |||||||
Earnings per share from continuing operations attributable to Leggett & Platt, Inc. common shareholders | |||||||||||||||
Basic | $ | 1.88 | $ | 1.89 | $ | .67 | $ | .62 | |||||||
Diluted | $ | 1.87 | $ | 1.87 | $ | .67 | $ | .61 | |||||||
Earnings (loss) per share from discontinued operations attributable to Leggett & Platt, Inc. common shareholders | |||||||||||||||
Basic | $ | — | $ | (.01 | ) | $ | — | $ | (.01 | ) | |||||
Diluted | $ | — | $ | (.01 | ) | $ | — | $ | (.01 | ) | |||||
Net earnings per share attributable to Leggett & Platt, Inc. common shareholders | |||||||||||||||
Basic | $ | 1.88 | $ | 1.88 | $ | .67 | $ | .61 | |||||||
Diluted | $ | 1.87 | $ | 1.86 | $ | .67 | $ | .60 | |||||||
Weighted average shares outstanding | |||||||||||||||
Basic | 134.4 | 136.1 | 133.8 | 135.7 | |||||||||||
Diluted | 135.4 | 137.5 | 134.7 | 136.9 |
Nine Months Ended | Three Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
(Amounts in millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net earnings | $ | 253.0 | $ | 256.3 | $ | 90.0 | $ | 82.6 | |||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Foreign currency translation adjustments, including acquisition of non-controlling interest | (50.0 | ) | 69.9 | (10.9 | ) | 25.8 | |||||||||
Cash flow hedges | (.7 | ) | 5.4 | .6 | .8 | ||||||||||
Defined benefit pension plans | 1.5 | 1.5 | .4 | .4 | |||||||||||
Other comprehensive income (loss) | (49.2 | ) | 76.8 | (9.9 | ) | 27.0 | |||||||||
Comprehensive income | 203.8 | 333.1 | 80.1 | 109.6 | |||||||||||
Less: comprehensive income attributable to noncontrolling interest | (.1 | ) | (.1 | ) | (.1 | ) | — | ||||||||
Comprehensive income attributable to Leggett & Platt, Inc. | $ | 203.7 | $ | 333.0 | $ | 80.0 | $ | 109.6 |
Nine Months Ended September 30, | |||||||
(Amounts in millions) | 2018 | 2017 | |||||
OPERATING ACTIVITIES | |||||||
Net earnings | $ | 253.0 | $ | 256.3 | |||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation | 77.4 | 71.2 | |||||
Amortization of intangibles and debt issuance costs | 23.6 | 23.2 | |||||
Long-lived asset impairments | .3 | 3.3 | |||||
Goodwill impairment | — | 1.3 | |||||
Provision for losses on accounts and notes receivable | 1.9 | .3 | |||||
Writedown of inventories | 4.9 | 2.9 | |||||
Net (gain) loss from sales of assets and businesses | (1.8 | ) | .2 | ||||
Deferred income tax expense | 2.0 | 6.0 | |||||
Stock-based compensation | 26.6 | 28.1 | |||||
Pension contributions, net of expense | (18.7 | ) | (7.9 | ) | |||
Other, net | 3.4 | (5.7 | ) | ||||
Increases/decreases in, excluding effects from acquisitions and divestitures: | |||||||
Accounts and other receivables | (76.2 | ) | (79.3 | ) | |||
Inventories | (45.8 | ) | (39.5 | ) | |||
Other current assets | .9 | (11.5 | ) | ||||
Accounts payable | (.6 | ) | 14.4 | ||||
Accrued expenses and other current liabilities | .2 | (1.8 | ) | ||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 251.1 | 261.5 | |||||
INVESTING ACTIVITIES | |||||||
Additions to property, plant and equipment | (122.6 | ) | (119.0 | ) | |||
Purchases of companies, net of cash acquired | (107.9 | ) | (39.0 | ) | |||
Proceeds from sales of assets and businesses | 3.7 | 12.6 | |||||
Other, net | (13.5 | ) | (10.1 | ) | |||
NET CASH USED FOR INVESTING ACTIVITIES | (240.3 | ) | (155.5 | ) | |||
FINANCING ACTIVITIES | |||||||
Additions to long-term debt | — | .6 | |||||
Payments on long-term debt | (152.3 | ) | (6.4 | ) | |||
Change in commercial paper and short-term debt | 251.8 | 234.2 | |||||
Dividends paid | (144.2 | ) | (138.0 | ) | |||
Issuances of common stock | 4.3 | 2.0 | |||||
Purchases of common stock | (112.2 | ) | (156.8 | ) | |||
Purchase of remaining interest in noncontrolling interest | — | (2.6 | ) | ||||
Additional consideration paid on prior year acquisitions | (8.6 | ) | (2.0 | ) | |||
Other, net | 9.0 | — | |||||
NET CASH USED FOR FINANCING ACTIVITIES | (152.2 | ) | (69.0 | ) | |||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (21.2 | ) | 24.0 | ||||
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (162.6 | ) | 61.0 | ||||
CASH AND CASH EQUIVALENTS—January 1, | 526.1 | 281.9 | |||||
CASH AND CASH EQUIVALENTS—September 30, | $ | 363.5 | $ | 342.9 |
• | On January 1, 2018, we adopted ASU 2014-09 "Revenue from Contracts with Customers" (Topic 606) as discussed in Note 3. |
• | ASU 2017-07 “Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost”: This ASU requires employers to disaggregate the service cost from other components of net periodic benefit costs and to disclose the income statement line item in which each component is included. This guidance requires service costs to be reported in the same line item as other compensation costs, and the other components of net periodic benefit costs (which include interest costs, expected return on plan assets and actuarial gains and losses) to be reported outside of operating income. We adopted this guidance on January 1, 2018. Application was required on a retrospective basis and resulted in a reclassification of $2.9 and $1.0 of expense from “Cost of goods sold” and “Selling and administrative expenses” into “Other (income) expense, net” for the nine months ended and three months ended September 30, 2017, respectively. Refer to Note 11 for further information. |
• | ASU 2018-05 “Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118” (SAB 118): This ASU allows SEC registrants to record provisional amounts in earnings due to the complexities involved in accounting for the enactment of the Tax Cuts and Jobs Act (TCJA). We recognized the estimated income tax effects of the TCJA in accordance with SAB 118. Refer to Note 15 for further information. |
• | ASU 2016-15 “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”: We adopted this guidance on January 1, 2018, and it did not materially impact our financial statements. |
• | ASU 2016-02 “Leases” (Topic 842): Requires an entity to recognize both assets and liabilities arising from financing and operating leases, along with additional qualitative and quantitative disclosures. In July 2018, the FASB issued ASU 2018-11, which provides entities with a new transition method where comparative periods presented in financial statements in the period of adoption will not need to be restated. Under the new transition method, an entity initially applies the provisions of Topic 842 at the adoption date, versus at the beginning of the earliest period presented, and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We expect to elect this transition method at our adoption date of January 1, 2019. We also intend to elect the available package of practical expedients not to reassess (1) whether a contract is or contains a lease, (2) lease classification, and (3) initial direct costs. We also intend to elect the practical expedient to use hindsight when determining lease term. |
• | ASU 2017-12 “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”: This ASU is intended to simplify and clarify the accounting and disclosure requirements for hedging activities by more closely aligning the results of cash flow and fair value hedge accounting with the risk management activities of an entity. The amendments in this ASU are effective January 1, 2019, with early adoption permitted. We are currently evaluating the effect of the ASU on our results of operations, financial condition and cash flows. |
• | ASU 2018-02 “Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”: This ASU provides financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income in each period in which the effect of the change in the U.S. federal corporate income tax rate in the TCJA is recorded. The ASU will be effective January 1, 2019. Early adoption is permitted and the provisions of the ASU should be applied in either the period of adoption or retrospectively to each period in which the effect of the change in federal corporate income tax rate in the TCJA is recognized. We are currently evaluating this guidance, and do not expect it to materially impact our future financial statements. |
• | ASU 2017-04 "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment": This ASU simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under this ASU, the annual goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value up to the total amount of goodwill for the reporting unit. This ASU will be effective January 1, 2020, with early adoption permitted. We are currently evaluating this guidance, and do not expect it to materially impact our future financial statements. |
• | ASU 2016-13 “Financial Instruments - Credit Losses” (Topic 326): This ASU is effective January 1, 2020 and amends the impairment model by requiring a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments including trade receivables. We are currently evaluating this guidance. However, we do not expect it to materially impact our future financial statements. |
• | ASU 2018-15 “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)”: This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This ASU will be effective January 1, 2020, with early adoption permitted. We are currently evaluating this guidance. |
Balance at December 31, 2017 as Previously Reported | Topic 606 Adjustments | Balance at January 1, 2018 | |||||||||
Current assets | $ | 1,766.5 | $ | — | $ | 1,766.5 | |||||
Net property, plant and equipment | 663.9 | — | 663.9 | ||||||||
Other assets 1 | 1,120.4 | .7 | 1,121.1 | ||||||||
Total assets | $ | 3,550.8 | $ | .7 | $ | 3,551.5 | |||||
Other current liabilities 2 | $ | 88.7 | $ | 3.0 | $ | 91.7 | |||||
All other current liabilities | 887.5 | — | 887.5 | ||||||||
Long-term liabilities | 1,383.8 | — | 1,383.8 | ||||||||
Retained earnings | 2,511.3 | (2.3 | ) | 2,509.0 | |||||||
Other equity | (1,320.5 | ) | — | (1,320.5 | ) | ||||||
Total liabilities and equity | $ | 3,550.8 | $ | .7 | $ | 3,551.5 |
For the nine months ended September 30, 2018 | For the three months ended September 30, 2018 | ||||||||||||||||||||||
Amounts as Reported | Topic 606 Adjustments | Amounts Without Adoption of Topic 606 | Amounts as Reported | Topic 606 Adjustments | Amounts Without Adoption of Topic 606 | ||||||||||||||||||
Net sales 3 | $ | 3,222.8 | $ | 10.4 | $ | 3,233.2 | $ | 1,091.5 | $ | 2.2 | $ | 1,093.7 | |||||||||||
Cost of goods sold 3 | 2,547.3 | 10.0 | 2,557.3 | 864.4 | 2.2 | 866.6 | |||||||||||||||||
Gross profit | 675.5 | .4 | 675.9 | 227.1 | — | 227.1 | |||||||||||||||||
Selling and administrative expenses | 313.2 | — | 313.2 | 100.7 | — | 100.7 | |||||||||||||||||
All other | 9.4 | — | 9.4 | 2.0 | — | 2.0 | |||||||||||||||||
Earnings from continuing operations before interest and income taxes | 352.9 | .4 | 353.3 | 124.4 | — | 124.4 | |||||||||||||||||
Net interest expense | 36.7 | — | 36.7 | 11.1 | — | 11.1 | |||||||||||||||||
Income taxes | 63.2 | .1 | 63.3 | 23.3 | — | 23.3 | |||||||||||||||||
(Earnings) attributable to noncontrolling interest, net of tax | (.1 | ) | — | (.1 | ) | — | — | — | |||||||||||||||
Net earnings | $ | 252.9 | $ | .3 | $ | 253.2 | $ | 90.0 | $ | — | $ | 90.0 |
September 30, 2018 | |||||||||||
Amounts as Reported | Topic 606 Adjustments | Amounts Without Adoption of Topic 606 | |||||||||
Current assets | $ | 1,667.0 | $ | — | $ | 1,667.0 | |||||
Net property, plant and equipment | 723.0 | — | 723.0 | ||||||||
Other assets | 1,159.1 | (.7 | ) | 1,158.4 | |||||||
Total assets | $ | 3,549.1 | $ | (.7 | ) | $ | 3,548.4 | ||||
Other current liabilities | $ | 83.1 | $ | (2.9 | ) | $ | 80.2 | ||||
All other current liabilities | 701.8 | — | 701.8 | ||||||||
Long-term liabilities | 1,598.2 | — | 1,598.2 | ||||||||
Retained earnings | 2,611.7 | 2.2 | 2,613.9 | ||||||||
Other equity | (1,445.7 | ) | — | (1,445.7 | ) | ||||||
Total liabilities and equity | $ | 3,549.1 | $ | (.7 | ) | $ | 3,548.4 |
• | An estimated refund liability and a corresponding reduction to revenue based on historical returns experience. |
• | An asset and a corresponding reduction to cost of sales for our right to recover products from customers upon settling the refund liability. We reduce the carrying amount of these assets by estimates of costs associated with the recovery and any additional expected reduction in value. |
• | The existence of a significant financing component—We expect that at contract inception, the time period between when we transfer a promised good to our customer and our receipt of payment from that customer for that good will be one year or less (our typical trade terms are 30 to 60 days for U.S. customers and up to 90 days for our international customers). |
• | Costs of obtaining a contract—We generally expense costs of obtaining a contract because the amortization period would be one year or less. |
Nine Months Ended September 30, 2018 | Three Months Ended September 30, 2018 | ||||||
Residential Products | |||||||
Bedding group | $ | 679.3 | $ | 236.9 | |||
Fabric & Flooring Products group 4 | 555.2 | 194.2 | |||||
Machinery group | 48.9 | 15.4 | |||||
1,283.4 | 446.5 | ||||||
Industrial Products | |||||||
Wire group | 275.8 | 97.4 | |||||
275.8 | 97.4 | ||||||
Furniture Products | |||||||
Home Furniture group | 291.9 | 91.9 | |||||
Work Furniture group | 217.5 | 71.6 | |||||
Consumer Products group | 357.4 | 130.6 | |||||
866.8 | 294.1 | ||||||
Specialized Products | |||||||
Automotive group | 623.5 | 195.7 | |||||
Aerospace Products group | 112.6 | 35.8 | |||||
Hydraulic Cylinders group | 60.7 | 22.0 | |||||
796.8 | 253.5 | ||||||
$ | 3,222.8 | $ | 1,091.5 |
• | Residential Products: This segment supplies a variety of components and machinery used by bedding manufacturers in the production and assembly of their finished products. We also produce or distribute flooring underlayment, fabric, and geo components. |
• | Industrial Products: These operations primarily supply steel rod and drawn steel wire to our other operations and to external customers. Our customers use this wire to make mechanical springs and many other end products. |
• | Furniture Products: Operations in this segment supply a wide range of components for residential and work furniture manufacturers, as well as select lines of private-label finished furniture, adjustable bed bases, fashion beds, and bed frames. |
• | Specialized Products: From this segment we supply lumbar support systems, seat suspension systems, motors and actuators, and control cables used by automotive manufacturers. We also produce and distribute tubing and tube assemblies for the aerospace industry and engineered hydraulic cylinders used in the material-handling and construction industries. |
Trade Sales | Inter- Segment Sales | Total Sales | EBIT | ||||||||||||
Three Months Ended September 30, 2018 | |||||||||||||||
Residential Products | $ | 446.5 | $ | 3.4 | $ | 449.9 | $ | 43.0 | |||||||
Industrial Products | 97.4 | 76.0 | 173.4 | 25.2 | |||||||||||
Furniture Products | 294.1 | 3.9 | 298.0 | 14.0 | |||||||||||
Specialized Products | 253.5 | .7 | 254.2 | 43.5 | |||||||||||
Intersegment eliminations and other | (1.3 | ) | |||||||||||||
$ | 1,091.5 | $ | 84.0 | $ | 1,175.5 | $ | 124.4 | ||||||||
Three Months Ended September 30, 2017 | |||||||||||||||
Residential Products | $ | 426.7 | $ | 4.5 | $ | 431.2 | $ | 50.5 | |||||||
Industrial Products | 71.2 | 63.8 | 135.0 | 1.1 | |||||||||||
Furniture Products | 284.0 | 3.7 | 287.7 | 24.5 | |||||||||||
Specialized Products | 227.8 | 1.9 | 229.7 | 34.2 | |||||||||||
Intersegment eliminations and other | (1.1 | ) | |||||||||||||
$ | 1,009.7 | $ | 73.9 | $ | 1,083.6 | $ | 109.2 |
Trade Sales | Inter- Segment Sales | Total Sales | EBIT | ||||||||||||
Nine Months Ended September 30, 2018 | |||||||||||||||
Residential Products | $ | 1,283.4 | $ | 12.7 | $ | 1,296.1 | $ | 118.0 | |||||||
Industrial Products | 275.8 | 220.5 | 496.3 | 47.6 | |||||||||||
Furniture Products | 866.8 | 10.4 | 877.2 | 48.3 | |||||||||||
Specialized Products | 796.8 | 2.0 | 798.8 | 141.5 | |||||||||||
Intersegment eliminations and other | (2.5 | ) | |||||||||||||
$ | 3,222.8 | $ | 245.6 | $ | 3,468.4 | $ | 352.9 | ||||||||
Nine Months Ended September 30, 2017 | |||||||||||||||
Residential Products | $ | 1,225.8 | $ | 13.5 | $ | 1,239.3 | $ | 143.2 | |||||||
Industrial Products | 216.9 | 192.7 | 409.6 | 17.0 | |||||||||||
Furniture Products | 816.0 | 14.4 | 830.4 | 65.1 | |||||||||||
Specialized Products | 700.6 | 5.5 | 706.1 | 121.3 | |||||||||||
Intersegment eliminations and other | .8 | ||||||||||||||
$ | 2,959.3 | $ | 226.1 | $ | 3,185.4 | $ | 347.4 |
September 30, 2018 | December 31, 2017 | ||||||
Residential Products | $ | 605.2 | $ | 554.6 | |||
Industrial Products | 164.4 | 150.0 | |||||
Furniture Products | 281.4 | 245.7 | |||||
Specialized Products | 340.3 | 271.7 | |||||
Average current liabilities included in segment numbers above | 641.7 | 557.0 | |||||
Unallocated assets 1 | 1,391.3 | 1,693.1 | |||||
Difference between average assets and period-end balance sheet | 124.8 | 78.7 | |||||
Total assets | $ | 3,549.1 | $ | 3,550.8 |
Nine Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||||||||||||||||||||||
Goodwill | Other Long-Lived Assets | Total | Goodwill | Other Long-Lived Assets | Total | Goodwill | Other Long-Lived Assets | Total | Goodwill | Other Long-Lived Assets | Total | ||||||||||||||||||||||||||||||||||||
Industrial Products - Drawn Wire Unit | $ | — | $ | .3 | $ | .3 | $ | 1.3 | $ | 3.3 | $ | 4.6 | $ | — | $ | .1 | $ | .1 | $ | 1.3 | $ | 3.3 | $ | 4.6 | |||||||||||||||||||||||
Furniture Products | — | — | — | — | — | — | — | — | — | — | (.1 | ) | (.1 | ) | |||||||||||||||||||||||||||||||||
Total impairment charges | $ | — | $ | .3 | $ | .3 | $ | 1.3 | $ | 3.3 | $ | 4.6 | $ | — | $ | .1 | $ | .1 | $ | 1.3 | $ | 3.2 | $ | 4.5 |
Fair Value over Carrying Value divided by Carrying Value | September 30, 2018 Goodwill Value | 10-year Compound Annual Growth Rate Range for Sales | Terminal Values Long-term Growth Rate for Debt-Free Cash Flow | Discount Rate Ranges | |||||||
Less than 100% 1 | $ | 180.9 | 4.7% - 5.2% | 3 | % | 9.0% - 9.5% | |||||
101% - 300% | 505.7 | 1.8% - 5.0% | 3 | % | 8.5% - 10.0% | ||||||
301% - 600% | 153.7 | 5.7% - 12.4% | 3 | % | 9.0% - 10.0% | ||||||
$ | 840.3 | 1.8% - 12.4% | 3 | % | 8.5% - 10.0% |
Nine Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Earnings: | |||||||||||||||
Earnings from continuing operations | $ | 253.0 | $ | 257.2 | $ | 90.0 | $ | 83.5 | |||||||
Earnings attributable to noncontrolling interest, net of tax | (.1 | ) | — | — | — | ||||||||||
Net earnings from continuing operations attributable to Leggett & Platt, Inc. common shareholders | 252.9 | 257.2 | 90.0 | 83.5 | |||||||||||
Earnings from discontinued operations, net of tax | — | (.9 | ) | — | (.9 | ) | |||||||||
Net earnings attributable to Leggett & Platt, Inc. common shareholders | $ | 252.9 | $ | 256.3 | $ | 90.0 | $ | 82.6 | |||||||
Weighted average number of shares (in millions): | |||||||||||||||
Weighted average number of common shares used in basic EPS | 134.4 | 136.1 | 133.8 | 135.7 | |||||||||||
Dilutive effect of stock-based compensation | 1.0 | 1.4 | .9 | 1.2 | |||||||||||
Weighted average number of common shares and dilutive potential common shares used in diluted EPS | 135.4 | 137.5 | 134.7 | 136.9 | |||||||||||
Basic and Diluted EPS: | |||||||||||||||
Basic EPS attributable to Leggett & Platt, Inc. common shareholders | |||||||||||||||
Continuing operations | $ | 1.88 | $ | 1.89 | $ | .67 | $ | .62 | |||||||
Discontinued operations | — | (.01 | ) | — | (.01 | ) | |||||||||
Basic EPS attributable to Leggett & Platt, Inc. common shareholders | $ | 1.88 | $ | 1.88 | $ | .67 | $ | .61 | |||||||
Diluted EPS attributable to Leggett & Platt, Inc. common shareholders | |||||||||||||||
Continuing operations | $ | 1.87 | $ | 1.87 | $ | .67 | $ | .61 | |||||||
Discontinued operations | — | (.01 | ) | — | (.01 | ) | |||||||||
Diluted EPS attributable to Leggett & Platt, Inc. common shareholders | $ | 1.87 | $ | 1.86 | $ | .67 | $ | .60 | |||||||
Other information: | |||||||||||||||
Anti-dilutive shares excluded from diluted EPS computation | .1 | — | — | .1 | |||||||||||
Cash dividends declared per share | $ | 1.12 | $ | 1.06 | $ | .38 | $ | .36 |
September 30, 2018 | December 31, 2017 | ||||||||||||||
Current | Long-term | Current | Long-term | ||||||||||||
Trade accounts receivable | $ | 604.7 | $ | — | $ | 526.1 | $ | — | |||||||
Trade notes receivable | 1.8 | 1.7 | 1.0 | 1.2 | |||||||||||
Total trade receivables | 606.5 | 1.7 | 527.1 | 1.2 | |||||||||||
Other notes receivable | — | 24.7 | — | 24.7 | |||||||||||
Insurance receivables 1 | 1.5 | — | 43.0 | — | |||||||||||
Taxes receivable, including income taxes | 12.3 | — | 15.0 | — | |||||||||||
Other receivables | 11.0 | — | 14.8 | — | |||||||||||
Subtotal other receivables | 24.8 | 24.7 | 72.8 | 24.7 | |||||||||||
Total trade and other receivables | 631.3 | 26.4 | 599.9 | 25.9 | |||||||||||
Allowance for doubtful accounts: | |||||||||||||||
Trade accounts receivable | (5.8 | ) | — | (4.7 | ) | — | |||||||||
Trade notes receivable | — | — | (.1 | ) | (.1 | ) | |||||||||
Total trade receivables | (5.8 | ) | — | (4.8 | ) | (.1 | ) | ||||||||
Other notes receivable | — | — | — | — | |||||||||||
Total allowance for doubtful accounts | (5.8 | ) | — | (4.8 | ) | (.1 | ) | ||||||||
Total net receivables | $ | 625.5 | $ | 26.4 | $ | 595.1 | $ | 25.8 |
Balance at December 31, 2017 | Add: Charges | Less: Net Charge-offs/ (Recoveries) | Balance at September 30, 2018 | ||||||||||||
Trade accounts receivable | $ | 4.7 | $ | 2.1 | $ | 1.0 | $ | 5.8 | |||||||
Trade notes receivable | .2 | (.2 | ) | — | — | ||||||||||
Total trade receivables | 4.9 | 1.9 | 1.0 | 5.8 | |||||||||||
Other notes receivable | — | — | — | — | |||||||||||
Total allowance for doubtful accounts | $ | 4.9 | $ | 1.9 | $ | 1.0 | $ | 5.8 |
Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | ||||||||||||||
To be settled with stock | To be settled in cash | To be settled with stock | To be settled in cash | ||||||||||||
Stock-based retirement plans contributions 1 | $ | 3.7 | $ | .9 | $ | 4.2 | $ | .9 | |||||||
Discounts on various stock awards: | |||||||||||||||
Deferred Stock Compensation Program | 1.4 | — | 1.6 | — | |||||||||||
Stock-based retirement plans | .9 | — | 1.0 | — | |||||||||||
Discount Stock Plan | .8 | — | .9 | — | |||||||||||
Performance Stock Unit (PSU) awards: 2 | |||||||||||||||
2018 PSU - TSR based 2A | .9 | .8 | — | — | |||||||||||
2018 PSU - EBIT CAGR based 2B | 2.3 | 2.5 | — | — | |||||||||||
2017 and prior PSU awards 2C | 2.8 | (.9 | ) | 4.0 | (.7 | ) | |||||||||
Restricted Stock Unit awards | 1.6 | — | 1.9 | — | |||||||||||
Profitable Growth Incentive (PGI) awards 3 | 1.4 | 1.4 | 1.1 | 1.1 | |||||||||||
Other, primarily non-employee directors restricted stock | .6 | — | .7 | — | |||||||||||
Total stock-based compensation expense | 16.4 | $ | 4.7 | 15.4 | $ | 1.3 | |||||||||
Employee contributions for above stock plans | 10.2 | 12.7 | |||||||||||||
Total stock-based compensation | $ | 26.6 | $ | 28.1 | |||||||||||
Tax benefits on stock-based compensation expense | $ | 3.9 | $ | 5.5 | |||||||||||
Tax benefits on stock-based compensation payments | 3.4 | 11.4 | |||||||||||||
Total tax benefits associated with stock-based compensation | $ | 7.3 | $ | 16.9 | |||||||||||
Three Months Ended | Three Months Ended | ||||||||||||||
September 30, 2018 | September 30, 2017 | ||||||||||||||
To be settled with stock | To be settled in cash | To be settled with stock | To be settled in cash | ||||||||||||
Stock-based retirement plans contributions 1 | $ | (.4 | ) | $ | .4 | $ | .6 | $ | .2 | ||||||
Discounts on various stock awards: | |||||||||||||||
Deferred Stock Compensation Program | .5 | — | .4 | — | |||||||||||
Stock-based retirement plans | .4 | — | .3 | — | |||||||||||
Discount Stock Plan | .2 | — | .3 | — | |||||||||||
Performance Stock Unit (PSU) awards: 2 | |||||||||||||||
2018 PSU - TSR based 2A | .3 | .2 | — | — | |||||||||||
2018 PSU - EBIT CAGR based 2B | .8 | .9 | — | — | |||||||||||
2017 and prior PSU awards 2C | .9 | (.9 | ) | 1.3 | (2.8 | ) | |||||||||
Restricted Stock Unit awards | .6 | — | .7 | — | |||||||||||
Profitable Growth Incentive (PGI) awards 3 | .2 | .2 | .3 | .2 | |||||||||||
Other, primarily non-employee directors restricted stock | .2 | — | .2 | — | |||||||||||
Total stock-based compensation expense | 3.7 | $ | .8 | 4.1 | $ | (2.4 | ) | ||||||||
Employee contributions for above stock plans | 3.7 | 3.8 | |||||||||||||
Total stock-based compensation | $ | 7.4 | $ | 7.9 | |||||||||||
Tax benefits on stock-based compensation expense | $ | .9 | $ | 1.4 | |||||||||||
Tax benefits on stock-based compensation payments | 2.5 | 1.3 | |||||||||||||
Total tax benefits associated with stock-based compensation | $ | 3.4 | $ | 2.7 | |||||||||||
• | A service requirement—awards generally “cliff” vest three years following the grant date; and |
• | A market condition—awards are based on our TSR [(Change in Stock Price + Dividends) / Beginning Stock Price] as compared to the TSR of a group of peer companies. The peer group consists of all the companies in the Industrial, Materials and Consumer Discretionary sectors of the S&P 500 and S&P Midcap 400 (approximately 320 companies). Participants will earn from 0% to 200% of the base award depending upon how our TSR ranks within the peer group at the end of the three-year performance period. |
• | A service requirement—Awards generally “cliff” vest three years following the grant date; and |
• | A performance condition—Awards are based on achieving specified EBIT CAGR performance targets for our or the applicable segment's EBIT during the third year of the performance period compared to the EBIT during the fiscal year immediately preceding the performance period. Participants will earn from 0% to 200% of the base award. |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
Total shares base award | .1 | .1 | |||||
Grant date per share fair value | $ | 42.60 | $ | 50.75 | |||
Risk-free interest rate | 2.4 | % | 1.5 | % | |||
Expected life in years | 3.0 | 3.0 | |||||
Expected volatility (over expected life) | 19.9 | % | 19.5 | % | |||
Expected dividend yield (over expected life) | 3.3 | % | 2.8 | % |
Three-Year Performance Cycle | ||||||||||||||
Award Year | Completion Date | TSR Performance Relative to the Peer Group (1%=Best) | Payout as a Percent of the Base Award | Number of Shares Distributed | Cash Portion | Distribution Date | ||||||||
2014 | December 31, 2016 | 10 | 175.0% | .4 million | $ | 9.8 | First quarter 2017 | |||||||
2015 | December 31, 2017 | 57 | 61.0% | — | $ | 6.9 | First quarter 2018 |
Nine Months Ended September 30, | |||
2018 | |||
Total shares base award | .1 | ||
Grant date per share fair value | $ | 40.92 | |
Vesting period in years | 2.5 |
Two-Year Performance Cycle | ||||||||||||
Award Year | Completion Date | Average Payout as a Percent of the Base Award | Number of Shares Distributed | Cash Portion | Distribution Date | |||||||
2015 | December 31, 2016 | 36.0% | <.1 million | $ | .8 | First quarter 2017 | ||||||
2016 | December 31, 2017 | 44.0% | — | $ | 2.0 | First quarter 2018 |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
Accounts receivable | $ | 19.6 | $ | 10.0 | |||
Inventory | 26.1 | 6.3 | |||||
Property, plant and equipment | 28.2 | 14.6 | |||||
Goodwill | 27.7 | 12.8 | |||||
Other intangible assets, primarily customer-related intangibles | 28.9 | 19.5 | |||||
Other current and long-term assets | .8 | 1.1 | |||||
Current liabilities | (12.3 | ) | (4.6 | ) | |||
Long-term liabilities | (10.2 | ) | (5.6 | ) | |||
Non-controlling interest | — | (.5 | ) | ||||
Fair value of net identifiable assets | 108.8 | 53.6 | |||||
Less: Additional consideration payable | .9 | 2.8 | |||||
Less: Common stock issued for acquired companies | — | 11.8 | |||||
Net cash consideration | $ | 107.9 | $ | 39.0 |
Nine Months Ended | Number of Acquisitions | Segment | Product/Service | |||
September 30, 2018 | 3 | Residential Products; Specialized Products | Manufacturer/distributor of geo components; Manufacturer and distributor of silt fence; Global manufacturer of engineered hydraulic cylinders | |||
September 30, 2017 | 3 | Residential Products; Furniture Products | Distributor and installer of geosynthetic products; Carpet cushion; Surface-critical bent tube components |
• | A distributor and installer of geosynthetic products, expanding the geographic scope and capabilities of our Geo Components business. |
• | A manufacturer of surface-critical bent tube components in support of the private-label finished seating strategy in our Work Furniture business. |
• | A carpet underlay manufacturer, provides additional production capacity in our Flooring Products business. |
Nine Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Components of net pension expense | |||||||||||||||
Service cost | $ | 3.1 | $ | 3.8 | $ | 1.1 | $ | 1.3 | |||||||
Interest cost | 6.1 | 8.3 | 2.0 | 2.7 | |||||||||||
Expected return on plan assets | (8.8 | ) | (10.1 | ) | (3.0 | ) | (3.4 | ) | |||||||
Recognized net actuarial loss | 2.1 | 3.5 | .7 | 1.2 | |||||||||||
Net pension expense | $ | 2.5 | $ | 5.5 | $ | .8 | $ | 1.8 |
Nine Months Ended September 30, 2018 | |||||||||||||||||||||||
Total Equity | Retained Earnings | Common Stock & Additional Contributed Capital | Treasury Stock | Noncontrolling Interest | Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||
Beginning balance, January 1, 2018 | $ | 1,190.8 | $ | 2,511.3 | $ | 516.7 | $ | (1,828.3 | ) | $ | .6 | $ | (9.5 | ) | |||||||||
Effect of accounting change on prior years (Topic 606-See Note 3) | (2.3 | ) | (2.3 | ) | — | — | — | — | |||||||||||||||
Adjusted beginning balance, January 1, 2018 | 1,188.5 | 2,509.0 | 516.7 | (1,828.3 | ) | .6 | (9.5 | ) | |||||||||||||||
Net earnings | 253.0 | 253.0 | — | — | — | — | |||||||||||||||||
(Earnings) loss attributable to noncontrolling interest, net of tax | — | (.1 | ) | — | — | .1 | — | ||||||||||||||||
Dividends declared | (146.2 | ) | (150.2 | ) | 4.0 | — | — | — | |||||||||||||||
Dividends paid to noncontrolling interest | (.2 | ) | — | — | — | (.2 | ) | — | |||||||||||||||
Treasury stock purchased | (113.2 | ) | — | — | (113.2 | ) | — | — | |||||||||||||||
Treasury stock issued | 14.2 | — | (16.1 | ) | 30.3 | — | — | ||||||||||||||||
Foreign currency translation adjustments | (50.0 | ) | — | — | — | — | (50.0 | ) | |||||||||||||||
Cash flow hedges, net of tax | (.7 | ) | — | — | — | — | (.7 | ) | |||||||||||||||
Defined benefit pension plans, net of tax | 1.5 | — | — | — | — | 1.5 | |||||||||||||||||
Stock-based compensation transactions, net of tax | 19.1 | — | 19.1 | — | — | — | |||||||||||||||||
Ending balance, September 30, 2018 | $ | 1,166.0 | $ | 2,611.7 | $ | 523.7 | $ | (1,911.2 | ) | $ | .5 | $ | (58.7 | ) |
Nine Months Ended September 30, 2017 | |||||||||||||||||||||||
Total Equity | Retained Earnings | Common Stock & Additional Contributed Capital | Treasury Stock | Noncontrolling Interest | Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||
Beginning balance, January 1, 2017 | $ | 1,094.0 | $ | 2,410.5 | $ | 508.2 | $ | (1,713.5 | ) | $ | 2.4 | $ | (113.6 | ) | |||||||||
Effect of accounting change on prior years (Topic 740) | 1.2 | 1.2 | — | — | — | — | |||||||||||||||||
Adjusted beginning balance, January 1, 2017 | 1,095.2 | 2,411.7 | 508.2 | (1,713.5 | ) | 2.4 | (113.6 | ) | |||||||||||||||
Net earnings | 256.3 | 256.3 | — | — | — | — | |||||||||||||||||
Dividends declared | (140.2 | ) | (144.1 | ) | 3.9 | — | — | — | |||||||||||||||
Treasury stock purchased | (161.0 | ) | — | — | (161.0 | ) | — | — | |||||||||||||||
Treasury stock issued | 28.0 | — | (15.8 | ) | 43.8 | — | — | ||||||||||||||||
Foreign currency translation adjustments | 69.9 | — | — | — | .1 | 69.8 | |||||||||||||||||
Cash flow hedges, net of tax | 5.4 | — | — | — | — | 5.4 | |||||||||||||||||
Defined benefit pension plans, net of tax | 1.5 | — | — | — | — | 1.5 | |||||||||||||||||
Stock-based compensation transactions, net of tax | 20.3 | — | 20.3 | — | — | — | |||||||||||||||||
Purchase of remaining interest in noncontrolling interest, net of acquisitions | (2.6 | ) | — | (.7 | ) | — | (1.9 | ) | — | ||||||||||||||
Ending balance, September 30, 2017 | $ | 1,172.8 | $ | 2,523.9 | $ | 515.9 | $ | (1,830.7 | ) | $ | .6 | $ | (36.9 | ) |
Foreign Currency Translation Adjustments | Cash Flow Hedges | Defined Benefit Pension Plans | Accumulated Other Comprehensive Income (Loss) | ||||||||||||||
Balance, January 1, 2018 | $ | 40.5 | $ | (11.5 | ) | $ | (38.5 | ) | $ | (9.5 | ) | ||||||
Other comprehensive income (loss) | (50.0 | ) | (2.4 | ) | (.1 | ) | (52.5 | ) | |||||||||
Reclassifications, pretax 1 | — | 1.5 | 2.1 | 3.6 | |||||||||||||
Income tax effect | — | .2 | (.5 | ) | (.3 | ) | |||||||||||
Attributable to noncontrolling interest | — | — | — | — | |||||||||||||
Balance, September 30, 2018 | $ | (9.5 | ) | $ | (12.2 | ) | $ | (37.0 | ) | $ | (58.7 | ) | |||||
Balance, January 1, 2017 | $ | (38.6 | ) | $ | (17.8 | ) | $ | (57.2 | ) | $ | (113.6 | ) | |||||
Other comprehensive income (loss) | 69.8 | 1.7 | (.9 | ) | 70.6 | ||||||||||||
Reclassifications, pretax 2 | — | 5.7 | 3.5 | 9.2 | |||||||||||||
Income tax effect | — | (2.0 | ) | (1.1 | ) | (3.1 | ) | ||||||||||
Balance, September 30, 2017 | $ | 31.2 | $ | (12.4 | ) | $ | (55.7 | ) | $ | (36.9 | ) | ||||||
1 | 2018 pretax reclassifications are comprised of: | ||||||||||||||||
Net sales | $ | — | $ | (2.4 | ) | $ | — | $ | (2.4 | ) | |||||||
Cost of goods sold; selling and administrative expenses | — | .7 | — | .7 | |||||||||||||
Interest expense | — | 3.2 | — | 3.2 | |||||||||||||
Other income (expense), net | — | — | 2.1 | 2.1 | |||||||||||||
Total reclassifications, pretax | $ | — | $ | 1.5 | $ | 2.1 | $ | 3.6 | |||||||||
2 | 2017 pretax reclassifications are comprised of: | ||||||||||||||||
Net sales | $ | — | $ | 2.0 | $ | — | $ | 2.0 | |||||||||
Cost of goods sold; selling and administrative expenses | — | .5 | — | .5 | |||||||||||||
Interest expense | — | 3.2 | — | 3.2 | |||||||||||||
Other income (expense), net | — | — | 3.5 | 3.5 | |||||||||||||
Total reclassifications, pretax | $ | — | $ | 5.7 | $ | 3.5 | $ | 9.2 |
• | Level 1: Quoted prices for identical assets or liabilities in active markets. |
• | Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly. Short-term investments in this category are valued using discounted cash flow techniques with all significant inputs derived from or corroborated by observable market data. Derivative assets and liabilities in this category are valued using models that consider various assumptions and information from market-corroborated sources. The models used are primarily industry-standard models that consider items such as quoted prices, market interest rate curves applicable to the instruments being valued as of the end of each period, discounted cash flows, volatility factors, current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. |
• | Level 3: Unobservable inputs that are not corroborated by market data. |
As of September 30, 2018 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | |||||||||||||||
Cash equivalents: | |||||||||||||||
Bank time deposits with original maturities of three months or less | $ | — | $ | 239.9 | $ | — | $ | 239.9 | |||||||
Derivative assets (Note 14) | — | 1.0 | — | 1.0 | |||||||||||
Diversified investments associated with the Executive Stock Unit Program (ESUP) 1 | 37.1 | — | — | 37.1 | |||||||||||
Total assets | $ | 37.1 | $ | 240.9 | $ | — | $ | 278.0 | |||||||
Liabilities: | |||||||||||||||
Derivative liabilities 1 (Note 14) | $ | — | $ | 3.8 | $ | — | $ | 3.8 | |||||||
Liabilities associated with the ESUP 1 | 36.3 | — | — | 36.3 | |||||||||||
Total liabilities | $ | 36.3 | $ | 3.8 | $ | — | $ | 40.1 |
As of December 31, 2017 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | |||||||||||||||
Cash equivalents: | |||||||||||||||
Bank time deposits with original maturities of three months or less | $ | — | $ | 236.4 | $ | — | $ | 236.4 | |||||||
Derivative assets 1 (Note 14) | — | 3.9 | — | 3.9 | |||||||||||
Diversified investments associated with the ESUP 1 | 34.0 | — | — | 34.0 | |||||||||||
Total assets | $ | 34.0 | $ | 240.3 | $ | — | $ | 274.3 | |||||||
Liabilities: | |||||||||||||||
Derivative liabilities 1 (Note 14) | $ | — | $ | 1.9 | $ | — | $ | 1.9 | |||||||
Liabilities associated with the ESUP 1 | 34.4 | — | — | 34.4 | |||||||||||
Total liabilities | $ | 34.4 | $ | 1.9 | $ | — | $ | 36.3 |
Expiring at various dates through: | Total USD Equivalent Notional Amount | As of September 30, 2018 | |||||||||||||||
Assets | Liabilities | ||||||||||||||||
Other Current Assets | Other Current Liabilities | Other Long-Term Liabilities | |||||||||||||||
Derivatives designated as hedging instruments | |||||||||||||||||
Cash flow hedges: | |||||||||||||||||
Currency hedges: | |||||||||||||||||
Future USD sales/purchases of Canadian, Chinese, European, South Korean and Swiss subsidiaries | Dec 2019 | $ | 128.0 | $ | .3 | $ | 2.7 | $ | .1 | ||||||||
Future DKK sales of Polish subsidiary | Mar 2020 | 20.4 | — | .1 | — | ||||||||||||
Future EUR sales of UK, Chinese and Swiss subsidiaries | Mar 2020 | 32.5 | — | .3 | .1 | ||||||||||||
Future MXN purchases of a USD subsidiary | Jun 2019 | 7.4 | .3 | — | — | ||||||||||||
Total cash flow hedges | .6 | 3.1 | .2 | ||||||||||||||
Fair value hedges: | |||||||||||||||||
Intercompany and third party receivables and payables exposed to multiple currencies (DKK, EUR, MXN, USD and ZAR) in various countries (CAD, CHF, EUR, GBP, PLN and USD) | Apr 2019 | 35.6 | .4 | .1 | — | ||||||||||||
Derivatives not designated as hedging instruments | |||||||||||||||||
Non-deliverable hedges (EUR and USD) exposed to the CNY | Sep 2019 | 22.8 | — | .4 | — | ||||||||||||
$ | 1.0 | $ | 3.6 | $ | .2 |
Expiring at various dates through: | Total USD Equivalent Notional Amount | As of December 31, 2017 | |||||||||||||||||||
Assets | Liabilities | ||||||||||||||||||||
Other Current Assets | Sundry | Other Current Liabilities | Other Long-Term Liabilities | ||||||||||||||||||
Derivatives designated as hedging instruments | |||||||||||||||||||||
Cash flow hedges: | |||||||||||||||||||||
Currency hedges: | |||||||||||||||||||||
Future USD sales/purchases of Canadian, Chinese, European, South Korean and Swiss subsidiaries | Mar 2019 | $ | 158.1 | $ | 2.2 | $ | .2 | $ | .5 | $ | — | ||||||||||
Future MXN purchases of a USD subsidiary | Mar 2019 | 6.6 | — | — | .5 | — | |||||||||||||||
Future JPY sales of a Chinese subsidiary | Dec 2018 | 11.2 | .1 | — | — | — | |||||||||||||||
Future DKK sales of a Polish subsidiary | Dec 2018 | 16.0 | .6 | — | — | — | |||||||||||||||
Future EUR sales of Chinese, Swiss and UK subsidiaries | Mar 2019 | 38.8 | — | — | .3 | .1 | |||||||||||||||
Total cash flow hedges | 2.9 | .2 | 1.3 | .1 | |||||||||||||||||
Fair value hedges: | |||||||||||||||||||||
Intercompany and third party receivables and payables exposed to multiple currencies (DKK, EUR, USD and ZAR) in various countries (CAD, CHF, EUR and USD) | Dec 2018 | 35.9 | .2 | — | .5 | — | |||||||||||||||
Derivatives not designated as hedging instruments | |||||||||||||||||||||
Non-deliverable hedges (EUR, JPY and USD) exposed to the CNY | Nov 2018 | 17.0 | .3 | — | — | — | |||||||||||||||
USD receivable on a CAD subsidiary | Jan 2018 | 19.0 | .3 | — | — | — | |||||||||||||||
Total derivatives not designated as hedging instruments | .6 | — | — | — | |||||||||||||||||
$ | 3.7 | $ | .2 | $ | 1.8 | $ | .1 |
Caption in Consolidated Condensed Statements of Operations | Amount of (Gain) Loss Recorded in Income Nine Months Ended September 30, | Amount of (Gain) Loss Recorded in Income Three Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||
Derivatives designated as hedging instruments | |||||||||||||||||
Interest rate cash flow hedges | Interest expense | $ | 3.2 | $ | 3.2 | $ | 1.0 | $ | 1.1 | ||||||||
Currency cash flow hedges | Net sales | (2.7 | ) | (.1 | ) | .2 | (1.5 | ) | |||||||||
Currency cash flow hedges | Cost of goods sold | .4 | .2 | — | .1 | ||||||||||||
Currency cash flow hedges | Other (income) expense, net | — | .3 | — | .3 | ||||||||||||
Total cash flow hedges | .9 | 3.6 | 1.2 | — | |||||||||||||
Fair value hedges | Other (income) expense, net | .7 | (.5 | ) | .4 | (.1 | ) | ||||||||||
Derivatives not designated as hedging instruments | Other (income) expense, net | — | (1.1 | ) | (.2 | ) | (.4 | ) | |||||||||
Total derivative instruments | $ | 1.6 | $ | 2.0 | $ | 1.4 | $ | (.5 | ) |
Nine Months Ended September 30, | Three Months Ended September 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Statutory federal income tax rate | 21.0 | % | 35.0 | % | 21.0 | % | 35.0 | % | |||
Increases (decreases) in rate resulting from: | |||||||||||
Tax effect of foreign operations | (1.0 | ) | (7.0 | ) | (1.0 | ) | (7.0 | ) | |||
Foreign withholding taxes | 3.0 | — | 3.0 | — | |||||||
Stock-based compensation | (1.0 | ) | (3.0 | ) | (2.0 | ) | (1.0 | ) | |||
Tax on global intangible low-taxed income (GILTI) | 1.0 | — | 1.0 | — | |||||||
Domestic production activities deduction | — | (1.0 | ) | — | (1.0 | ) | |||||
Tax benefit for outside basis in subsidiary | — | (2.0 | ) | — | (7.0 | ) | |||||
Change in valuation allowance | (2.0 | ) | (1.0 | ) | — | — | |||||
Other, net | (1.0 | ) | (1.0 | ) | (1.0 | ) | (2.0 | ) | |||
Effective Tax Rate | 20.0 | % | 20.0 | % | 21.0 | % | 17.0 | % |
Nine Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
LIFO expense | $ | 24.8 | $ | 12.0 | $ | 6.0 | $ | 9.5 |
Nine Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Litigation contingency accrual - Beginning of period | $ | .4 | $ | 3.2 | $ | — | $ | 3.4 | |||||||
Adjustment to accruals - expense (income) | 2.2 | .2 | 2.3 | — | |||||||||||
Adjustment to accruals - expense (income) - Discontinued operations | — | 1.6 | — | 1.6 | |||||||||||
Cash payments | (.3 | ) | (5.0 | ) | — | (5.0 | ) | ||||||||
Litigation contingency accrual - End of period | $ | 2.3 | $ | — | $ | 2.3 | $ | — |
Nine Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
LIFO expense | $ | 24.8 | $ | 12.0 | $ | 6.0 | $ | 9.5 |
Nine Months Ended September 30, | Three Months Ended September 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Statutory federal income tax rate | 21.0 | % | 35.0 | % | 21.0 | % | 35.0 | % | |||
Increases (decreases) in rate resulting from: | |||||||||||
Tax effect of foreign operations | (1.0 | ) | (7.0 | ) | (1.0 | ) | (7.0 | ) | |||
Foreign withholding taxes | 3.0 | — | 3.0 | — | |||||||
Stock-based compensation | (1.0 | ) | (3.0 | ) | (2.0 | ) | (1.0 | ) | |||
Tax on global intangible low-taxed income | 1.0 | — | 1.0 | — | |||||||
Domestic production activities deduction | — | (1.0 | ) | — | (1.0 | ) | |||||
Tax benefit for outside basis in subsidiary | — | (2.0 | ) | — | (7.0 | ) | |||||
Change in valuation allowance | (2.0 | ) | (1.0 | ) | — | — | |||||
Other, net | (1.0 | ) | (1.0 | ) | (1.0 | ) | (2.0 | ) | |||
Effective Tax Rate | 20.0 | % | 20.0 | % | 21.0 | % | 17.0 | % |
Sales (Dollar amounts in millions) | Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | Change in Sales | % Change in Same Location | |||||||||||||
$ | % | Sales 1 | |||||||||||||||
Residential Products | $ | 449.9 | $ | 431.2 | $ | 18.7 | 4.3 | % | 3.1 | % | |||||||
Industrial Products | 173.4 | 135.0 | 38.4 | 28.4 | 28.4 | ||||||||||||
Furniture Products | 298.0 | 287.7 | 10.3 | 3.6 | 3.6 | ||||||||||||
Specialized Products | 254.2 | 229.7 | 24.5 | 10.7 | 2.8 | ||||||||||||
Total | 1,175.5 | 1,083.6 | 91.9 | 8.5 | |||||||||||||
Intersegment sales | (84.0 | ) | (73.9 | ) | (10.1 | ) | |||||||||||
Trade sales | $ | 1,091.5 | $ | 1,009.7 | $ | 81.8 | 8.1 | % | 5.8 | % |
Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | Change in EBIT | EBIT Margins 2 | |||||||||||||||||
EBIT (Dollar amounts in millions) | $ | % | Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | ||||||||||||||||
Residential Products | $ | 43.0 | $ | 50.5 | $ | (7.5 | ) | (14.9 | )% | 9.6 | % | 11.7 | % | |||||||
Industrial Products | 25.2 | 1.1 | 24.1 | 2,190.9 | 14.5 | 0.8 | ||||||||||||||
Furniture Products | 14.0 | 24.5 | (10.5 | ) | (42.9 | ) | 4.7 | 8.5 | ||||||||||||
Specialized Products | 43.5 | 34.2 | 9.3 | 27.2 | 17.1 | 14.9 | ||||||||||||||
Intersegment eliminations & other | (1.3 | ) | (1.1 | ) | (.2 | ) | ||||||||||||||
Total | $ | 124.4 | $ | 109.2 | $ | 15.2 | 13.9 | % | 11.4 | % | 10.8 | % |
1 | The change in same location sales excludes the effect of acquisitions or divestitures. These are sales that come from the same plants and facilities that we owned one year earlier. |
2 | Segment margins are calculated on total sales. Overall company margin is calculated on trade sales. |
Sales (Dollar amounts in millions) | Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | Change in Sales | % Change in Same Location Sales 1 | |||||||||||||
$ | % | ||||||||||||||||
Residential Products | $ | 1,296.1 | $ | 1,239.3 | $ | 56.8 | 4.6 | % | 3.5 | % | |||||||
Industrial Products | 496.3 | 409.6 | 86.7 | 21.2 | 21.2 | ||||||||||||
Furniture Products | 877.2 | 830.4 | 46.8 | 5.6 | 5.1 | ||||||||||||
Specialized Products | 798.8 | 706.1 | 92.7 | 13.1 | 8.4 | ||||||||||||
Total | 3,468.4 | 3,185.4 | 283.0 | 8.9 | |||||||||||||
Intersegment sales | (245.6 | ) | (226.1 | ) | (19.5 | ) | |||||||||||
Trade sales | $ | 3,222.8 | $ | 2,959.3 | $ | 263.5 | 8.9 | % | 7.2 | % |
Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | Change in EBIT | EBIT Margins 2 | |||||||||||||||||
EBIT (Dollar amounts in millions) | $ | % | Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | ||||||||||||||||
Residential Products | $ | 118.0 | $ | 143.2 | $ | (25.2 | ) | (17.6 | )% | 9.1 | % | 11.6 | % | |||||||
Industrial Products | 47.6 | 17.0 | 30.6 | 180.0 | 9.6 | 4.2 | ||||||||||||||
Furniture Products | 48.3 | 65.1 | (16.8 | ) | (25.8 | ) | 5.5 | 7.8 | ||||||||||||
Specialized Products | 141.5 | 121.3 | 20.2 | 16.7 | 17.7 | 17.2 | ||||||||||||||
Intersegment eliminations & other | (2.5 | ) | .8 | (3.3 | ) | |||||||||||||||
Total | $ | 352.9 | $ | 347.4 | $ | 5.5 | 1.6 | % | 11.0 | % | 11.7 | % |
1 | The change in same location sales excludes the effect of acquisitions or divestitures. These are sales that come from the same plants and facilities that we owned one year earlier. |
2 | Segment margins are calculated on total sales. Overall company margin is calculated on trade sales. |
(Amounts in millions) | September 30, 2018 | December 31, 2017 | |||||
Current assets | $ | 1,667 | $ | 1,767 | |||
Current liabilities | 785 | 976 | |||||
Working capital | 882 | 791 | |||||
Cash and cash equivalents | 364 | 526 | |||||
Current debt maturities | 4 | 154 | |||||
Adjusted working capital | $ | 522 | $ | 419 | |||
Annualized sales 1 | $ | 4,368 | $ | 3,936 | |||
Working capital as a percent of annualized sales | 20.2 | % | 20.1 | % | |||
Adjusted working capital as a percent of annualized sales | 12.0 | % | 10.6 | % |
Amount (in millions) | Days | ||||||||||||||||||
Three Months Ended | Twelve Months Ended | Three Months Ended | |||||||||||||||||
September 30, 2018 | December 31, 2017 | September 30, 2017 | September 30, 2018 | December 31, 2017 | September 30, 2017 | ||||||||||||||
Trade Receivables | $ | 600.7 | $ | 522.3 | $ | 554.0 | DSO 1 | 51 | 45 | 50 | |||||||||
Inventories | $ | 634.0 | $ | 571.1 | $ | 558.0 | DIO 2, 4 | 67 | 65 | 65 | |||||||||
Accounts Payable | $ | 428.7 | $ | 430.3 | $ | 381.8 | DPO 3, 4 | 46 | 47 | 44 |
1 | Days sales outstanding |
2 | Days inventory on hand |
3 | Days payables outstanding |
4 | 2017 ratios have been retrospectively adjusted to reflect the adoption of ASU 2017-07 that resulted in reclassifications between "Cost of goods sold" and "Selling and administrative expenses" into "Other (income) expense, net". See Note 2 to the Consolidated Condensed Financial Statements on page 6. |
(Dollar amounts in millions) | September 30, 2018 | December 31, 2017 | |||||
Long-term debt outstanding: | |||||||
Scheduled maturities | $ | 1,098 | $ | 1,098 | |||
Average interest rates 1 | 3.6 | % | 3.6 | % | |||
Average maturities in years 1 | 7.0 | 6.9 | |||||
Revolving credit/commercial paper 2 | 255 | — | |||||
Average interest rate on period-end balance | 2.4 | % | — | % | |||
Average interest rate during the period | 2.3 | % | 1.4 | % | |||
Total long-term debt | 1,353 | 1,098 | |||||
Deferred income taxes and other liabilities | 245 | 286 | |||||
Shareholders’ equity and noncontrolling interest | 1,166 | 1,191 | |||||
Total capitalization | $ | 2,764 | $ | 2,575 | |||
Unused committed credit: | |||||||
Long-term | $ | 545 | $ | 800 | |||
Short-term | — | — | |||||
Total unused committed credit 2 | $ | 545 | $ | 800 | |||
Current maturities of long-term debt | $ | 4 | $ | 154 | |||
Cash and cash equivalents | $ | 364 | $ | 526 |
1 | These rates include current maturities, but exclude commercial paper to reflect the averages of outstanding debt with scheduled maturities. The rates also include amortization of interest rate swaps. |
2 | The unused committed credit amount is based on our revolving credit facility and commercial paper program which, at year end 2017 and the end of the third quarter of 2018 had a total authorized program amount of $800. |
• | Long-term debt to total capitalization as reported in the previous table. |
• | Long-term debt to total capitalization each reduced by total cash and increased by current maturities of long-term debt. |
(Amounts in millions) | September 30, 2018 | December 31, 2017 | |||||
Debt to total capitalization: | |||||||
Long-term debt | $ | 1,353 | $ | 1,098 | |||
Current debt maturities | 4 | 154 | |||||
Cash and cash equivalents | (364 | ) | (526 | ) | |||
Net debt | $ | 993 | $ | 726 | |||
Total capitalization | $ | 2,764 | $ | 2,575 | |||
Current debt maturities | 4 | 154 | |||||
Cash and cash equivalents | (364 | ) | (526 | ) | |||
Net capitalization | $ | 2,404 | $ | 2,203 | |||
Long-term debt to total capitalization | 49.0 | % | 42.6 | % | |||
Net debt to net capitalization | 41.3 | % | 33.0 | % |
(Amounts in millions) | September 30, 2018 | December 31, 2017 | |||||
Total authorized program | $ | 800 | $ | 800 | |||
Commercial paper outstanding (classified as long-term debt) | 255 | — | |||||
Letters of credit issued under the credit agreement | — | — | |||||
Total program usage | 255 | — | |||||
Total program available | $ | 545 | $ | 800 |
• | the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive agreement between the Company and ECS; |
• | that one or more closing conditions to the transaction to acquire ECS, including certain regulatory approvals, may not be satisfied or waived, on a timely basis or otherwise, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transaction, or may require conditions, limitations or restrictions in connection with such approvals; |
• | the risk that the transaction to acquire ECS may not be completed in the time frame expected by the Company, the seller, or at all; |
• | unexpected costs, charges or expenses resulting from the transaction to acquire ECS; |
• | uncertainty of the expected financial performance of ECS and the combined company following completion of the transaction; |
• | failure to realize the anticipated benefits of the transaction to acquire ECS, including as a result of delay in completing the transaction or integrating the businesses of ECS; |
• | difficulties and delays in achieving revenue and cost synergies of ECS; |
• | inability to retain and hire key personnel and maintain relationships with customers and suppliers of ECS; |
• | market and other factors that reduce the Company’s ability to obtain bank financing for the ECS transaction or obtain debt financing; |
• | inability to deleverage post-closing in the expected timeframe; |
• | factors that could affect the industries or markets in which we participate, such as growth rates and opportunities in those industries; |
• | adverse changes in consumer confidence, housing turnover, employment levels, interest rates, trends in capital spending and the like; |
• | factors that could impact raw materials and other costs, including the availability and pricing of steel scrap and rod and other raw materials, the availability of labor, wage rates and energy costs; |
• | our ability to pass along raw material cost increases through increased selling prices; |
• | price and product competition from foreign (particularly Asian and European) and domestic competitors; |
• | our ability to maintain profit margins if our customers change the quantity and mix of our components in their finished goods; |
• | our ability to achieve expected levels of cash flow; |
• | our ability to identify and consummate strategically-screened acquisitions; |
• | our ability to maintain and grow the profitability of acquired companies; |
• | adverse changes in foreign currency, customs, shipping rates, political risk, and U.S. or foreign laws, regulations or legal systems (including the Tax Cuts and Jobs Act and other tax laws); |
• | tariffs imposed by the U.S. government that result in increased costs of imported raw materials and products that we purchase; |
• | our ability to maintain the proper functioning of our internal business processes and information systems through technology failures or otherwise; |
• | our ability to avoid modification or interruption of our information systems through cybersecurity breaches; |
• | a decline in the long-term outlook for any of our reporting units that could result in asset impairment; |
• | the amount and timing of share repurchases; |
• | the loss of one or more of our significant customers; |
• | bankruptcy, financial difficulties or insolvency of our customers; and |
• | litigation accruals related to various contingencies including antitrust, intellectual property, product liability and warranty, taxation, environmental and workers’ compensation expense. |
Period | Total Number of Shares Purchased 1 | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 2 | Maximum Number of Shares that may yet be Purchased Under the Plans or Programs 2 | ||||||||
July 2018 | 33,984 | $ | 44.32 | 29,248 | 7,588,333 | |||||||
August 2018 | 31,614 | $ | 45.88 | 15,672 | 7,572,661 | |||||||
September 2018 | — | $ | — | — | 7,572,661 | |||||||
Total | 65,598 | $ | 45.07 | 44,920 |
1 | This number includes 20,678 shares which were not repurchased as part of a publicly announced plan or program, all of which were shares surrendered in transactions permitted under the Company's benefit plans. It does not include shares withheld for taxes in option exercises and stock unit conversions, all of which totaled 53,506 shares for the third quarter. |
2 | On August 4, 2004, the Board authorized management to repurchase up to 10 million shares each calendar year beginning January 1, 2005. This standing authorization was first reported in the quarterly report on Form 10-Q for the period ended June 30, 2004, filed August 5, 2004, and shall remain in force until repealed by the Board of Directors. |
ITEM 6. | EXHIBITS |
Exhibit No. | Description | |
2.1 | ||
10.1 | ||
10.2 | ||
10.3 | ||
31.1* | ||
31.2* | ||
32.1* | ||
32.2* | ||
101.INS** | XBRL Instance Document. | |
101.SCH** | XBRL Taxonomy Extension Schema. | |
101.CAL** | XBRL Taxonomy Extension Calculation Linkbase. | |
101.DEF** | XBRL Taxonomy Extension Definition Linkbase. | |
101.LAB** | XBRL Taxonomy Extension Label Linkbase. | |
101.PRE** | XBRL Taxonomy Extension Presentation Linkbase. |
* | Denotes filed herewith. |
** | Filed as Exhibit 101 to this report are the following formatted in XBRL (eXtensible Business Reporting Language): |
(i) Consolidated Condensed Balance Sheets at September 30, 2018 and December 31, 2017; (ii) Consolidated Condensed Statements of Operations for the three and nine months ended September 30, 2018 and September 30, 2017; (iii) Consolidated Condensed Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2018 and September 30, 2017; (iv) Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, 2018 and September 30, 2017; and (v) Notes to Consolidated Condensed Financial Statements. |
LEGGETT & PLATT, INCORPORATED | |||
DATE: November 7, 2018 | By: | /s/ KARL G. GLASSMAN | |
Karl G. Glassman President and Chief Executive Officer | |||
DATE: November 7, 2018 | By: | /s/ MATTHEW C. FLANIGAN | |
Matthew C. Flanigan Executive Vice President and Chief Financial Officer |
1. | I have reviewed this report on Form 10-Q of Leggett & Platt, Incorporated; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | November 7, 2018 | /s/ KARL G. GLASSMAN |
Karl G. Glassman | ||
President and Chief Executive Officer | ||
Leggett & Platt, Incorporated |
1. | I have reviewed this report on Form 10-Q of Leggett & Platt, Incorporated; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | November 7, 2018 | /s/ MATTHEW C. FLANIGAN |
Matthew C. Flanigan | ||
Executive Vice President and Chief Financial Officer | ||
Leggett & Platt, Incorporated |
/s/ KARL G. GLASSMAN |
Karl G. Glassman |
President and Chief Executive Officer |
/s/ MATTHEW C. FLANIGAN |
Matthew C. Flanigan |
Executive Vice President and Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Nov. 02, 2018 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | LEGGETT & PLATT INC | |
Entity Central Index Key | 0000058492 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Ticker Symbol | LEG | |
Amendment Flag | false | |
Emerging Growth Entity | false | |
Small Business Entity | false | |
Entity Common Stock, Shares Outstanding | 130,417,754 |
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Other intangibles, accumulated amortization | $ 162.9 | $ 151.7 |
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 90.0 | $ 82.6 | $ 253.0 | $ 256.3 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments, including acquisition of non-controlling interest | (10.9) | 25.8 | (50.0) | 69.9 |
Cash flow hedges | 0.6 | 0.8 | (0.7) | 5.4 |
Defined benefit pension plans | 0.4 | 0.4 | 1.5 | 1.5 |
Other comprehensive income (loss) | (9.9) | 27.0 | (49.2) | 76.8 |
Comprehensive income | 80.1 | 109.6 | 203.8 | 333.1 |
Less: comprehensive income attributable to noncontrolling interest | (0.1) | 0.0 | (0.1) | (0.1) |
Comprehensive income attributable to Leggett & Platt, Inc. | $ 80.0 | $ 109.6 | $ 203.7 | $ 333.0 |
INTERIM PRESENTATION |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
INTERIM PRESENTATION | INTERIM PRESENTATION The interim financial statements of Leggett & Platt, Incorporated (we, us or our) included herein have not been audited by an independent registered public accounting firm. The statements include all adjustments, including normal recurring accruals, which management considers necessary for a fair statement of our financial position and operating results for the periods presented. We have prepared the statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to such rules and regulations. The operating results for interim periods are not necessarily indicative of results to be expected for an entire year. The December 31, 2017 financial position data included herein was derived from the audited consolidated financial statements included in Form 10-K, but does not include all disclosures required by GAAP. For further information, refer to the financial statements and footnotes included in our annual report on Form 10-K for the year ended December 31, 2017. Reclassifications Due to required retrospective application, certain reclassifications have been made to the prior period's information in the Consolidated Condensed Statements of Operations to conform to the 2018 presentation of "Cost of goods sold", "Selling and administrative expenses" and "Other (income) expense, net" for new accounting guidance associated with pension costs (see Note 2 - Accounting Standard Updates). |
ACCOUNTING STANDARD UPDATES |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||
Accounting Changes and Error Corrections [Abstract] | |||||||||||||||||||||||||||||||||||||||||
ACCOUNTING STANDARD UPDATES | ACCOUNTING STANDARD UPDATES The Financial Accounting Standards Board (FASB) regularly issues updates to the FASB Accounting Standards Codification that are communicated through issuance of an Accounting Standards Update (ASU). Below is a summary of the ASUs, effective for current or future periods, most relevant to our financial statements. The FASB has issued accounting guidance, in addition to the items discussed below, effective for future periods which we do not believe will have a material impact on our future financial statements. Adopted in 2018:
To be adopted in future years:
Our cross-functional implementation team continues to assess all potential impacts of the standard. The implementation team has gathered the data required to account for leases under the new standard and is in the process of implementing our selected third-party lease accounting software. In addition, we continue to identify and implement the appropriate changes to business processes and controls to support recognition and disclosure under the new standard. We believe our assets and liabilities will materially increase for the adoption of this standard through the recording of these right-of-use assets and corresponding lease liabilities. We continue to evaluate its impact on our statements of operations and cash flows.
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REVENUE |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE | REVENUE Initial adoption of new ASU On January 1, 2018, we adopted ASU 2014-09 “Revenue from Contracts with Customers” (Topic 606) and all the related amendments using the modified retrospective method. We recognized the cumulative effect of initially applying the new revenue standard as a $2.3 reduction to the opening balance of "Retained earnings". The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. We expect the impact of the new standard to be immaterial to our sales, net earnings, balance sheet and cash flows on an ongoing basis. Substantially all of our revenue continues to be recognized when products are shipped from our facilities or upon delivery to our customers' facilities. Topic 606 also provided clarity that resulted in reclassifications to or from "Net sales" and "Cost of goods sold". The cumulative effect of applying Topic 606 to our Consolidated Condensed Balance Sheet was as follows:
1 This adjustment represents the deferred tax impact related to Topic 606. 2 This adjustment is associated with constraint on the amount of variable consideration. The effect of applying Topic 606 on our Consolidated Condensed Statement of Operations and Balance Sheet was as follows:
3 Adjustments are primarily associated with a reclassification of customer reimbursements of tooling cost from "Net sales" to "Cost of goods sold" and adjustments for variable consideration.
Performance Obligations and Shipping and Handling Costs We recognize revenue when performance obligations under the terms of a contract with our customers are satisfied. For the nine and three months ended September 30, 2018, substantially all of our revenue was recognized upon transfer of control of our products to our customers, which was generally upon shipment from our facilities or upon delivery to our customers' facilities and was dependent on the terms of the specific contract. This conclusion considers the point at which our customers have the ability to direct the use of and obtain substantially all of the remaining benefits of the products that were transferred. Substantially all of any unsatisfied performance obligations as of September 30, 2018, will be satisfied within one year or less. Shipping and handling costs are included as a component of "Cost of goods sold". Sales, value added, and other taxes collected in connection with revenue-producing activities are excluded from revenue. Sales Allowances and Returns The amount of consideration we receive and revenue we recognize varies with changes in various sales allowances, discounts and rebates (variable consideration) that we offer to our customers. We reduce revenue by our estimates of variable consideration based on contract terms and historical experience. Changes in estimates of variable consideration for the nine and three months ended September 30, 2018 were not material. Some of our products transferred to customers can be returned, and we recognize the following for this right:
Our refund liability and the corresponding asset associated with our right to recover products from our customers were immaterial at September 30, 2018. Practical Expedients We have elected to apply the following practical expedients.
Revenue by Category We disaggregate revenue by customer group, which is the same as our product lines for each of our segments, as we believe this best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.
4 Name changed from Fabric & Carpet Cushion Group as of March 31, 2018 |
SEGMENT INFORMATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | SEGMENT INFORMATION We have four operating segments that supply a wide range of products:
Our reportable segments are the same as our operating segments, which also correspond with our management structure. Each reportable segment has an executive vice president that reports to the chief executive officer, who is the chief operating decision maker (CODM). The operating results and financial information reported through the segment structure are regularly reviewed and used by the CODM to evaluate segment performance, allocate overall resources and determine management incentive compensation. The accounting principles used in the preparation of the segment information are the same as those used for the consolidated financial statements. We evaluate performance based on Earnings Before Interest and Taxes (EBIT). Intersegment sales are made primarily at prices that approximate market-based selling prices. Centrally incurred costs are allocated to the segments based on estimates of services used by the segment. Certain of our general and administrative costs and miscellaneous corporate income and expenses are allocated to the segments based on sales or other appropriate metrics. These allocated corporate costs include depreciation and other costs and income related to assets that are not allocated or otherwise included in the segment assets. A summary of segment results from continuing operations are shown in the following tables.
Average assets for our segments are shown in the table below and reflect the basis for return measures used by management to evaluate segment performance. These segment totals include working capital (all current assets and current liabilities) plus net property, plant and equipment. Segment assets for all years are reflected at their estimated average for the periods presented.
1 Unallocated assets consist primarily of goodwill, other intangibles, cash, businesses sold and deferred tax assets. |
DIVESTITURES |
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Sep. 30, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DIVESTITURES | DIVESTITURES We divested our final Commercial Vehicle Products operation in the third quarter of 2017. It did not meet discontinued operations criteria, and was part of the Specialized Products Segment. We realized a pretax loss of $3.3 related to the sale of this business and also completed the sale of real estate associated with this operation, realizing a pretax gain of $23.4 in the fourth quarter of 2017. External sales for this business were $3.7 and EBIT was ($1.0) for the three months ended September 30, 2017. For the nine months ended September 30, 2017, external sales for this business were $25.1 and EBIT was ($2.3). |
IMPAIRMENT CHARGES |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
IMPAIRMENT CHARGES | IMPAIRMENT CHARGES Pretax impact of impairment charges is summarized in the following table. Other long-lived asset impairments are reported in "Other (income) expense, net."
Other Long-Lived Assets We test other long-lived assets for recoverability at year-end and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Fair value and the resulting impairment charges noted above were based primarily upon offers from potential buyers or third party estimates of fair value less selling costs. Goodwill Impairment Reviews We test goodwill for impairment at the reporting unit level (the business groups that are one level below the operating segments) when triggering events occur, or at least annually. We perform our annual goodwill impairment review in the second quarter. The 2018 and 2017 goodwill impairment reviews indicated no goodwill impairments. For the 2018 testing, we elected to test goodwill for all reporting units for impairment using a quantitative approach. The fair values of our reporting units in relation to their respective carrying values and significant assumptions used are presented in the table below:
1 All reporting units in this category exceeded 90%, except for the Hydraulic Cylinders reporting unit (acquired in the first quarter of 2018), to which carrying value approximates fair value. During the third quarter of 2017, two Drawn Wire operations within the Industrial Products segment reached held-for-sale status. Because fair value less costs to sell had fallen below the carrying amount, we fully impaired $1.3 of goodwill and also impaired $3.3 of other long-lived assets in the third quarter of 2017. |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | EARNINGS PER SHARE Basic and diluted earnings per share were calculated as follows:
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ACCOUNTS AND OTHER RECEIVABLES |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTS AND OTHER RECEIVABLES | ACCOUNTS AND OTHER RECEIVABLES Accounts and other receivables consisted of the following:
1 The December 31, 2017 amount was primarily associated with an insured vehicle-related personal injury claim that was fully resolved and paid in the second quarter of 2018. Notes that were past due more than 90 days or had been placed on non-accrual status were not significant for the periods presented. Activity related to the allowance for doubtful accounts is reflected below:
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STOCK-BASED COMPENSATION |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The following table recaps the components of stock-based and stock-related compensation for each period presented:
Included below is the activity in our most significant stock-based plans: 1 Stock-Based Retirement Plans We have two stock-based retirement plans: the tax-qualified Stock Bonus Plan (SBP) for non-highly compensated employees and the non-qualified Executive Stock Unit Program (ESUP) for highly compensated employees. We make matching contributions to both plans. In addition to the automatic 50% match, we will make another matching contribution of up to 50% of the employee’s contributions for the year if certain profitability levels, as defined in the SBP and the ESUP, are obtained. We plan to merge the SBP with our 401(k) plan on December 31, 2018. After the merger, our common stock will be added to the 401(k) plan as an investment option and participants may elect up to 20% of their contributions into our common stock beginning on January 1, 2019. Currently participants may contribute up to 100% of their contributions into our common stock. 2 PSU Awards In November 2017, the Compensation Committee approved changes to merge the PSU and PGI award programs for the 2018 award. The 2018 PSU awards have a component based on relative Total Shareholder Return (TSR) and another component based on Earnings Before Interest and Taxes (EBIT) Compound Annual Growth Rate (CAGR). These components are discussed below. For outstanding 2018 awards, we intend to pay 50% in shares of our common stock and 50% in cash; although, we reserve the right to pay up to 100% in cash. For outstanding 2016 and 2017 awards, we intend to pay 65% in shares of our common stock and 35% in cash; although, we reserve the right to pay up to 100% in cash. Cash settlements are recorded as a liability and adjusted to fair value at each reporting period. We elected to pay the 2015 award (paid in the first quarter 2018) in cash. 2A 2018 PSU - TSR based Most of the 2018 PSU awards are based 50% upon our TSR compared to a peer group. A small number of PSU awards are based 100% upon relative TSR for certain business unit employees to complement their particular mix of incentive compensation. Grant date fair values are calculated using a Monte Carlo simulation of stock and volatility data for Leggett and each of the peer companies. Grant date fair values are amortized using the straight-line method over the three-year vesting period. The relative TSR vesting condition of the 2018 PSU award contains the following conditions:
2B 2018 PSU - EBIT CAGR based 50% of each 2018 PSU award is based upon our or the applicable segment's EBIT CAGR. Grant date fair values are calculated using the grant date stock price discounted for dividends over the vesting period. Expense is adjusted every quarter over the three-year vesting period based on the number of shares expected to vest. The EBIT CAGR portion of this award contains the following conditions:
In connection with the decision to move a significant portion of the long-term incentive opportunity from a two-year to a three-year performance period by eliminating PGI awards, in January 2018, we also granted participants a one-time transition PSU award, based upon EBIT CAGR over a two-year performance period. 2C 2017 and Prior PSU Awards The 2017 and prior PSU awards are based solely on relative TSR. Vesting conditions are the same as (2A) above other than a maximum payout of 175% of the base award. Below is a summary of the number of shares and related grant date fair value of PSU’s based on TSR for the periods presented.
Below is a summary of the number of shares and related grant date fair value of PSU’s based on EBIT CAGR for the periods presented.
3 PGI Awards In 2017 and prior years certain key management employees participated in a PGI program. The PGI awards were issued as growth performance stock units (GPSUs). The GPSUs vest (0% to 250%) at the end of a two-year performance period. Vesting is based on our or the applicable profit center's revenue growth (adjusted by a GDP factor when applicable) and EBITDA margin at the end of a two-year performance period. The 2017 base target PGI awards were less than .1 shares. If earned, we intend to pay half in shares of our common stock and half in cash; although, we reserve the right to pay up to 100% in cash. We elected to pay the 2016 award (paid in the first quarter of 2018) in cash. Both components are adjusted to fair value at each reporting period.
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ACQUISITIONS |
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ACQUISITIONS | ACQUISITIONS The following table contains the estimated fair values (using inputs as discussed in Note 13) of the assets acquired and liabilities assumed at the date of acquisition for all acquisitions during the periods presented. A portion of the goodwill included in the table below is expected to provide an income tax benefit.
The following table summarizes acquisitions for the periods presented.
We are finalizing all the information required to complete the purchase price allocations related to certain recent acquisitions and do not anticipate any material modifications. The results of operations of the above acquired companies have been included in the consolidated condensed financial statements since the dates of acquisition. The unaudited pro forma consolidated net sales, net earnings and earnings per share as though the 2018 and 2017 acquisitions had occurred on January 1 of the comparable prior annual reporting period are not materially different from the amounts reflected in the accompanying financial statements. Certain of our acquisition agreements provide for additional consideration to be paid in cash at a later date and are recorded as liabilities at the acquisition date. At September 30, 2018 and December 31, 2017, our liability for these future payments was $12.0 ($2.6 current and $9.4 long-term) and $16.5 ($8.9 current and $7.6 long-term), respectively. Components of the liability are based on estimates and contingent upon future events, therefore, the amounts may fluctuate materially until the payment dates. Additional consideration, including interest, paid on prior year acquisitions was $8.6 and $2.0 for the nine months ended September 30, 2018 and 2017, respectively. A brief description of our acquisition activity by year for the periods presented is included below. 2018 In September 2018, in our Geo Components business unit, we acquired a manufacturer and distributor of innovative home and garden products found at most major retailers for $19.3. This acquisition provides a solid foundation on which to continue growing our retail market presence in Geo Components. In May 2018, we acquired a manufacturer and distributor of silt fence, a core product for our Geo Components business unit, for $2.6. In January 2018, we acquired Precision Hydraulic Cylinders (PHC), a leading global manufacturer of engineered hydraulic cylinders primarily for the materials handling market. The purchase price was $86.9 and added $26.3 of goodwill. PHC serves a market of mainly large Original Equipment Manufacturer (OEM) customers utilizing highly engineered, co-designed components with long product life-cycles, yet representing a small percentage of the end product’s cost. PHC represents a new growth platform and forms a new business group entitled Hydraulic Cylinders within the Specialized Products segment. 2017 We acquired three businesses in the first nine months of 2017:
These businesses broaden our geographic scope, capabilities, and product offerings, and added $12.8 ($8.9 to Residential Products and $3.9 to Furniture Products) of goodwill. We also acquired the remaining 20% ownership in an Asian joint venture in our Work Furniture business for $2.6. Leggett Agrees to Purchase Elite Comfort Solutions, Inc. On November 6, 2018, we entered into a definitive agreement to purchase all of the capital stock of Elite Comfort Solutions, Inc. (ECS) for a cash purchase price of $1,250.0, subject to customary post closing adjustments. ECS, headquartered in Newnan, Georgia, is a leader in specialized foam technology, primarily for the bedding and furniture industries. Following the closing of the transaction, ECS is expected to become a separate business unit and operate within the Residential Products segment. The definitive agreement contains customary closing conditions and is subject to regulatory approvals. We expect to close the transaction in January 2019. For additional details on this transaction, please refer to the Management's Discussion and Analysis on page 36. |
EMPLOYEE BENEFIT PLANS |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS Employer contributions for 2018 are expected to approximate $22.0. This increase compared to our 2017 employer contributions of $14.9 is due to our current year funding strategy, which incorporates, among other things, Pension Benefit Guaranty Corporation premiums, tax planning, and expectations of future funding requirements. The following table provides interim information as to our domestic and foreign defined benefit pension plans:
The components of net pension expense other than the service cost component are included in the line item "Other (income) expense, net" in the Consolidated Condensed Statements of Operations. |
STATEMENT OF CHANGES IN EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STATEMENT OF CHANGES IN EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | STATEMENT OF CHANGES IN EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following tables set forth the components of and changes in each component of accumulated other comprehensive income (loss) for each of the periods presented:
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FAIR VALUE |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE | FAIR VALUE We utilize fair value measures for both financial and non-financial assets and liabilities. Items measured at fair value on a recurring basis Fair value measurements are established using a three level valuation hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into the following categories:
The areas in which we utilize fair value measures of financial assets and liabilities are presented in the table below.
1 Includes both current and long-term amounts. There were no transfers between Level 1 and Level 2 for any of the periods presented. The fair value for fixed rate debt (Level 2) was not materially different from its September 30, 2018 and December 31, 2017 carrying values of $1,100.0 and $1,250.0, respectively. Items measured at fair value on a non-recurring basis The primary areas in which we use fair value measurements of non-financial assets and liabilities are allocating purchase price to the assets and liabilities of acquired companies as discussed in Note 10, and evaluating long-term assets (including goodwill) for potential impairment. Determining fair values for these items requires significant judgment and includes a variety of methods and models that utilize significant Level 3 inputs. Long-lived assets, acquisitions and the second step (when necessary) of a goodwill impairment test utilize the following methodologies in determining fair value: (i) Buildings and machinery are valued at an estimated replacement cost for an asset of comparable age and condition. Market pricing of comparable assets is used to estimate replacement cost where available. (ii) The most common identified intangible assets are customer relationships and tradenames. Customer relationships are valued using an excess earnings method, using various inputs such as the estimated customer attrition rate, future earnings forecast, the amount of contributory asset charges, and a discount rate. Tradenames are valued using a relief from royalty method, which is based upon comparable market royalty rates for tradenames of similar value. (iii) Inventory is valued at current replacement cost for raw materials, with a step-up for work in process and finished goods items that reflects the amount of ultimate profit earned as of the valuation date. (iv) Other working capital items are generally recorded at face value, unless there are known conditions that would impact the ultimate settlement amount of the particular item. |
DERIVATIVE FINANCIAL INSTRUMENTS |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS Cash Flow Hedges Derivative financial instruments that we use to hedge forecasted transactions and anticipated cash flows are as follows: Currency Cash Flow Hedges—The foreign currency hedges manage risk associated with exchange rate volatility of various currencies. Interest Rate Cash Flow Hedges—We have also occasionally used interest rate cash flow hedges to manage interest rate risks. The effective changes in fair value of unexpired contracts are recorded in accumulated other comprehensive income and reclassified to income or expense in the period in which earnings are impacted. Cash flows from settled contracts are presented in the category consistent with the nature of the item being hedged. (Settlements associated with the sale or production of product are presented in operating cash flows, and settlements associated with debt issuance are presented in financing cash flows.) Fair Value Hedges and Derivatives not Designated as Hedging Instruments These derivatives typically manage foreign currency risk associated with subsidiaries’ assets and liabilities, and gains or losses are recognized currently in earnings. Cash flows from settled contracts are presented in the category consistent with the nature of the item being hedged. Hedge Effectiveness We have deemed ineffectiveness to be immaterial, and as a result, have not recorded any amounts for ineffectiveness. If a hedge was not highly effective, the portion of the change in fair value considered to be ineffective would be recognized immediately in the consolidated condensed statements of operations. The following table presents assets and liabilities representing the fair value of our most significant derivative financial instruments. The fair values of the derivatives reflect the change in the market value of the derivative from the date of the trade execution and do not consider the offsetting underlying hedged item.
The following table sets forth the pretax (gains) losses for our hedging activities for the years presented. This schedule includes reclassifications from accumulated other comprehensive income (see Note 12) as well as derivative settlements recorded directly to income or expense.
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INCOME TAXES |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES The U.S. statutory federal income tax rate was significantly impacted by the enactment of TCJA in the fourth quarter of 2017, which reduced our U.S. federal corporate income tax rate from 35% in 2017 to 21% in 2018. Our income tax expense from continuing operations, as a percentage of earnings before income taxes, differs from these statutory federal income tax rates as follows:
TCJA subjects a U.S. corporation to tax on GILTI. Under GAAP, we can make an accounting policy election to either treat taxes due on the GILTI inclusion as a current period expense, or factor such amounts into the measurement of our deferred taxes. In the third quarter, we completed our evaluation and finalized our accounting policy, electing to treat taxes due on the GILTI inclusion as a period expense. There was no impact to our Consolidated Condensed Statements of Operations or Consolidated Condensed Balance Sheets resulting from this policy election. At December 31, 2017, we recorded certain provisional amounts related to TCJA in accordance with SAB 118. We refined this estimate in the first quarter and recorded a $3.9 measurement period adjustment related to certain state deferred tax assets as a discrete tax benefit. Additionally, in the third quarter we recorded measurement period adjustments related to the deemed repatriation tax and our deferred tax revaluation of $1.3 and $.5, respectively, as discrete tax benefits. In aggregate, these items decreased our effective tax rate by 2% for both the nine and three months ended September 30, 2018. We continue to review our SAB 118 provisional amounts resulting from TCJA and will complete our accounting in the fourth quarter (see Note 2). |
INVENTORIES |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES | INVENTORIES Approximately 50% of our inventories are valued using the Last-In, First-Out (LIFO) cost method and the remainder using the First-In, First-Out (FIFO) cost method. We calculate our LIFO reserve on an annual basis. During interim periods, we estimate the current year annual change in the LIFO reserve (i.e., the annual LIFO expense or benefit) and allocate that change ratably to the four quarters. Because accurately predicting inventory prices for the year is difficult, the change in the LIFO reserve for the full year could be materially different from the amount currently estimated. In addition, a variation in expected ending inventory levels could also impact total change in the LIFO reserve for the year. The following table contains the LIFO expense included in continuing operations for each of the periods presented.
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CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONTINGENCIES | CONTINGENCIES We are a party to various proceedings and matters involving employment, intellectual property, environmental, taxation, vehicle-related personal injury and other laws. When it is probable, in management's judgment, that we may incur monetary damages or other costs resulting from these proceedings or other claims, and we can reasonably estimate the amounts, we record appropriate accruals in the financial statements and make charges against earnings. For all periods presented, we have recorded no material charges against earnings. Also, when it is reasonably possible that we may incur additional loss in excess of recorded accruals and we can reasonably estimate the additional losses or range of losses, we disclose such additional reasonably possible losses in these notes. Reference is made to Footnote S "Contingencies" in our Form 10-K filed February 22, 2018 and Note 16 “Contingencies” in our Form 10-Qs filed May 8, 2018 and August 3, 2018 for prior disclosure of the below contingencies. For specific information regarding accruals, cash payments to settle litigation contingencies, and reasonably possible losses in excess of accruals, please see “Accruals and Reasonably Possible Losses in Excess of Accruals” below. Brazilian Value-Added Tax Matters All dollar amounts (in millions) presented in this section have been updated since our last filing to reflect the U.S. Dollar (USD) equivalent of Brazilian Real (BRL). We deny all allegations in the below Brazilian actions. We believe that we have valid bases to contest such actions and will vigorously defend ourselves. However, these contingencies are subject to uncertainties, and based on current facts, we believe that it is reasonably possible (but not probable) that we may incur losses of $19.0 including interest and attorney fees with respect to these assessments. Therefore, because it is not probable we will incur a loss, no accrual has been recorded for Brazilian VAT matters. For specific information regarding accruals, and reasonably possible losses in excess of accruals, please see "Accruals and Reasonably Possible Losses in Excess of Accruals" below. As of September 30, 2018, we have $10.2 on deposit with the Brazilian government to partially mitigate interest and penalties that may accrue while we work through these matters. If we are successful in our defense of these assessments, the deposits are refundable with interest. These deposits are recorded as a long-term asset on our balance sheet. Brazilian Federal Cases. On December 22 and December 29, 2011, and December 17, 2012, the Brazilian Finance Ministry, Federal Revenue Office issued a notice of violation against our wholly-owned subsidiary, Leggett & Platt do Brasil Ltda. (“L&P Brazil”) in the amount of $2.0, $.1 and $3.5, respectively. The Federal Revenue Office claimed that for the periods beginning November 2006 and continuing through 2011, L&P Brazil used an incorrect tariff code for the collection and payment of value-added tax primarily on the sale of mattress innerspring units in Brazil. L&P Brazil has denied the violations. On December 4, 2015, we filed an Annulment Action related to the $3.5 assessment (for which a $4.1 cash bond was posted, accounting for updated interest), in Sorocaba Federal Court seeking to annul the entire assessment. We are awaiting the first level decision with regard to the $3.5 assessment. On June 20, 2018, the Administrative Court of Appeals held a hearing related to the $2.0 assessment and announced their decision to maintain the assessment against L&P Brazil. The written decision was formalized on July 18, 2018. On October 15, 2018, we filed an Annulment Action related to the $2.0 assessment (for which a $3.0 cash bond was posted, accounting for updated interest) in Federal District Court seeking to annul the entire assessment. In addition, L&P Brazil received assessments on December 22, 2011, and June 26, July 2 and November 5, 2012, and September 13, 2013, from the Brazilian Federal Revenue Office where the Federal Revenue Office challenged L&P Brazil’s use of tax credits in years 2005 through 2010. Such credits are generated based upon the tariff classification and rate used by L&P Brazil for value-added tax on the sale of mattress innersprings. On September 4, 2014, the Federal Revenue Office issued five additional assessments regarding this same issue (use of credits), covering certain periods of 2011 and 2012. L&P Brazil filed its defense denying these assessments. Combined with the prior assessments, L&P Brazil has received assessments and penalties totaling $2.3 on the same or similar denial of tax credit matters. L&P Brazil has denied the violations. On September 11, 2017, L&P Brazil received an "isolated penalty" from the Federal Revenue Office in the amount of $.2 regarding the use of certain of these credits. L&P Brazil has filed its defense disputing the penalty. Of the offsetting request assessments, $.3 of the cases were closed administratively and included in the new $2.0 Annulment Action and $.4 of the cases were closed administratively and included in the $3.5 Annulment Action referenced above. The other cases remain pending at the administrative level. On February 1, 2013, the Brazilian Finance Ministry filed a Tax Collection action against L&P Brazil in the Camanducaia Judicial District Court, alleging the untimely payment of $.1 of social contributions (social security and social assistance payments) for the period September to October 2010. L&P Brazil argued the payments were not required to be made because of the application of tax credits that were generated by L&P Brazil's use of a correct tariff code for the classification of value-added tax on the sale of mattress innersprings (i.e., the same underlying issue at stake in the other Brazilian matters). On June 26, 2014, the Brazilian Revenue Office issued a new notice of violation against L&P Brazil in the amount of $.7 covering the period from 2011 through 2012 on the same subject matter. L&P Brazil has filed its defense denying the assessments. On July 1, 2014, the Brazilian Finance Ministry rendered a preliminary decision to reject certain offsetting requests presented by L&P Brazil. The Brazilian Finance Ministry alleges that L&P Brazil improperly offset $.1 of social contributions otherwise due in 2011. L&P Brazil filed its response denying the allegations. L&P Brazil is defending on the basis that the social contribution debts were correctly offset with tax credits generated by L&P Brazil's use of a correct tariff code classification for value-added tax on the sale of mattress innersprings (i.e., the same underlying issue at stake in the other Federal Brazilian matters). On December 15, 2015, the Brazilian Federal Revenue issued an assessment against L&P Brazil in the amount of $.1 for the period of August 2010 through May 2011, as a penalty for L&P Brazil's requests to offset tax credits. We filed our defense denying the assessment. State of São Paulo, Brazil Cases. The State of São Paulo, Brazil, on April 16, 2009, issued a Notice of Tax Assessment and Imposition of Fine to L&P Brazil originally seeking $1.5 for the tax years 2006 and 2007. The State of São Paulo argued that L&P Brazil was using an incorrect tariff code for the collection and payment of value-added tax on sales of mattress innerspring units in the State of São Paulo. L&P Brazil denied the allegations. On April 17, 2014, the Court of Tax and Fees ruled in the State's favor upholding the original assessment of $1.5. On July 31, 2014, L&P Brazil filed an annulment action in the Sorocaba State Court, seeking to have the Court of Tax and Fees ruling annulled for an updated assessment amount of $3.1 (which included interest from the original assessment date). The Court issued a ruling in our favor on October 27, 2017, nullifying the $3.1 in assessments against L&P Brazil. On April 4, 2018, the State appealed the ruling to the second judicial level. On July 24, 2018, the Sao Paulo State Court of Appeals held a hearing related to the $3.1 assessment and announced their decision to uphold the favorable ruling nullifying the assessment against L&P Brazil. On September 13, 2018, the State filed a Special Appeal to the Superior Court of Justice, which remains pending. On October 4, 2012, the State of São Paulo issued a Tax Assessment against L&P Brazil in the amount of $1.3 for the tax years 2009 through 2011. Similar to the 2009 assessment (referenced above), the State of São Paulo argues that L&P Brazil was using an incorrect tax rate for the collection and payment of value-added tax on sales of mattress innerspring units in the State of São Paulo. On June 21, 2013, the State of São Paulo converted the Tax Assessment to a tax collection action against L&P Brazil in the amount of $2.1 in Sorocaba Judicial District Court. L&P Brazil has denied all allegations. L&P Brazil also received a Notice of Tax Assessment and Imposition of a Fine from the State of São Paulo dated March 27, 2014, in the amount of $.8 (currently secured with a $.9 bond to update for interest) for tax years January 2011 through August 2012 regarding the same subject matter (i.e., the correct tax rate for the collection and payment of value-added tax on mattress innerspring units). L&P Brazil filed its response denying the allegations, but the tax assessment was maintained at the administrative level. On June 9, 2016, L&P Brazil filed an annulment action in Sorocaba State Court to annul the entire $.8 assessment. The Court ruled against L&P Brazil on the assessment, but lowered the interest amount. We filed a motion for clarification. The Court upheld its ruling, and we filed an appeal to the Court of Appeals on May 15, 2017. The Court of Appeals upheld the unfavorable Sorocaba State Court ruling, and we filed a Special and Extraordinary appeal to the High Court on October 10, 2017, and this final appeal remains pending. State of Minas Gerais, Brazil Cases. On December 18, 2012, the State of Minas Gerais, Brazil issued a tax assessment to L&P Brazil relating to L&P Brazil's classifications of innersprings for the collection and payment of value-added tax on the sale of mattress innersprings in Minas Gerais from March 2008 through August 2012 in the amount of $.4. L&P Brazil filed its response denying any violation. The Minas Gerais Taxpayer's Council ruled against us, and on June 5, 2014, L&P Brazil filed a Motion to Stay the Execution of the Judgment in Camanducaia Judicial District Court alleging the same tax assessment in the amount of $.5, which remains pending. Accruals and Reasonably Possible Losses in Excess of Accruals Accruals for Probable Losses Although we deny liability in all currently threatened or pending litigation proceedings in which we are or may be a party and believe that we have valid bases to contest all claims threatened or made against us, we have recorded a litigation contingency accrual for our reasonable estimate of probable loss for pending and threatened litigation proceedings, in aggregate, in millions, as follows:
The above litigation contingency accruals do not include accrued expenses related to workers compensation, vehicle-related personal injury, product and general liability claims, taxation issues and environmental matters, some of which may contain a portion of litigation expense. However, any litigation expense associated with these categories is not anticipated to have a material effect on our financial condition, results of operations or cash flows. For more information regarding accrued expenses, see Note H - Supplemental Balance Sheet Information under "Accrued expenses" on page 90 of our Form 10-K filed February 22, 2018. We have relied on several facts and circumstances to conclude that some loss is probable with respect to certain proceedings and matters, and to arrive at a reasonable estimate of loss or range of loss and record the accruals, including: the maturation of the pending proceedings and matters; our experience in settlement negotiations and mediation; comparative settlements of other companies in similar proceedings; discovery becoming or being substantially complete in certain proceedings; certain quantitative metrics used to value probable loss contingencies; and our willingness to settle certain proceedings to forgo the cost and risk of litigation and distraction to our senior executives. Reasonably Possible Losses in Excess of Accruals Although there are a number of uncertainties and potential outcomes associated with all of our pending or threatened litigation proceedings, we believe, based on current known facts, that additional losses, if any, are not expected to materially affect our consolidated financial position, results of operations or cash flows. However, based upon current known facts, as of September 30, 2018, aggregate reasonably possible (but not probable, and therefore not accrued) losses in excess of the accruals noted above are estimated to be $20.0, including $19.0 for Brazilian VAT matters disclosed above and $1.0 for other matters. If our assumptions or analyses regarding these contingencies are incorrect, or if facts change, we could realize loss in excess of the recorded accruals, and even greater than our estimate of reasonably possible losses in excess of recorded accruals. |
INTERIM PRESENTATION (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Interim Presentation | The interim financial statements of Leggett & Platt, Incorporated (we, us or our) included herein have not been audited by an independent registered public accounting firm. The statements include all adjustments, including normal recurring accruals, which management considers necessary for a fair statement of our financial position and operating results for the periods presented. We have prepared the statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to such rules and regulations. The operating results for interim periods are not necessarily indicative of results to be expected for an entire year. The December 31, 2017 financial position data included herein was derived from the audited consolidated financial statements included in Form 10-K, but does not include all disclosures required by GAAP. For further information, refer to the financial statements and footnotes included in our annual report on Form 10-K for the year ended December 31, 2017. |
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New Accounting Guidance | The Financial Accounting Standards Board (FASB) regularly issues updates to the FASB Accounting Standards Codification that are communicated through issuance of an Accounting Standards Update (ASU). Below is a summary of the ASUs, effective for current or future periods, most relevant to our financial statements. The FASB has issued accounting guidance, in addition to the items discussed below, effective for future periods which we do not believe will have a material impact on our future financial statements. Adopted in 2018:
To be adopted in future years:
Our cross-functional implementation team continues to assess all potential impacts of the standard. The implementation team has gathered the data required to account for leases under the new standard and is in the process of implementing our selected third-party lease accounting software. In addition, we continue to identify and implement the appropriate changes to business processes and controls to support recognition and disclosure under the new standard. We believe our assets and liabilities will materially increase for the adoption of this standard through the recording of these right-of-use assets and corresponding lease liabilities. We continue to evaluate its impact on our statements of operations and cash flows.
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Revenue Recognition | Initial adoption of new ASU On January 1, 2018, we adopted ASU 2014-09 “Revenue from Contracts with Customers” (Topic 606) and all the related amendments using the modified retrospective method. We recognized the cumulative effect of initially applying the new revenue standard as a $2.3 reduction to the opening balance of "Retained earnings". The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. We expect the impact of the new standard to be immaterial to our sales, net earnings, balance sheet and cash flows on an ongoing basis. Substantially all of our revenue continues to be recognized when products are shipped from our facilities or upon delivery to our customers' facilities. Topic 606 also provided clarity that resulted in reclassifications to or from "Net sales" and "Cost of goods sold". We recognize revenue when performance obligations under the terms of a contract with our customers are satisfied. For the nine and three months ended September 30, 2018, substantially all of our revenue was recognized upon transfer of control of our products to our customers, which was generally upon shipment from our facilities or upon delivery to our customers' facilities and was dependent on the terms of the specific contract. This conclusion considers the point at which our customers have the ability to direct the use of and obtain substantially all of the remaining benefits of the products that were transferred. Substantially all of any unsatisfied performance obligations as of September 30, 2018, will be satisfied within one year or less. Shipping and handling costs are included as a component of "Cost of goods sold". Sales, value added, and other taxes collected in connection with revenue-producing activities are excluded from revenue. Sales Allowances and Returns The amount of consideration we receive and revenue we recognize varies with changes in various sales allowances, discounts and rebates (variable consideration) that we offer to our customers. We reduce revenue by our estimates of variable consideration based on contract terms and historical experience. Changes in estimates of variable consideration for the nine and three months ended September 30, 2018 were not material. Some of our products transferred to customers can be returned, and we recognize the following for this right:
Our refund liability and the corresponding asset associated with our right to recover products from our customers were immaterial at September 30, 2018. Practical Expedients We have elected to apply the following practical expedients.
Revenue by Category We disaggregate revenue by customer group, which is the same as our product lines for each of our segments, as we believe this best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. |
REVENUE (Tables) |
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Effect of Applying Topic 606 | The cumulative effect of applying Topic 606 to our Consolidated Condensed Balance Sheet was as follows:
1 This adjustment represents the deferred tax impact related to Topic 606. 2 This adjustment is associated with constraint on the amount of variable consideration. The effect of applying Topic 606 on our Consolidated Condensed Statement of Operations and Balance Sheet was as follows:
3 Adjustments are primarily associated with a reclassification of customer reimbursements of tooling cost from "Net sales" to "Cost of goods sold" and adjustments for variable consideration.
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Disaggregation of Revenue by Major Source | We disaggregate revenue by customer group, which is the same as our product lines for each of our segments, as we believe this best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.
4 Name changed from Fabric & Carpet Cushion Group as of March 31, 2018 |
SEGMENT INFORMATION (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Segment Results from Continuing Operations | A summary of segment results from continuing operations are shown in the following tables.
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Average Assets for Segments | Average assets for our segments are shown in the table below and reflect the basis for return measures used by management to evaluate segment performance. These segment totals include working capital (all current assets and current liabilities) plus net property, plant and equipment. Segment assets for all years are reflected at their estimated average for the periods presented.
1 Unallocated assets consist primarily of goodwill, other intangibles, cash, businesses sold and deferred tax assets. |
IMPAIRMENT CHARGES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Of Impairment Charges On Continued And Discontinued Operations | Pretax impact of impairment charges is summarized in the following table. Other long-lived asset impairments are reported in "Other (income) expense, net."
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Schedule Of Goodwill Impairment Test Assumptions | For the 2018 testing, we elected to test goodwill for all reporting units for impairment using a quantitative approach. The fair values of our reporting units in relation to their respective carrying values and significant assumptions used are presented in the table below:
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EARNINGS PER SHARE (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Calculation of Basic and Diluted Earnings Per Share | Basic and diluted earnings per share were calculated as follows:
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ACCOUNTS AND OTHER RECEIVABLES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Accounts and Other Receivables | Accounts and other receivables consisted of the following:
1 The December 31, 2017 amount was primarily associated with an insured vehicle-related personal injury claim that was fully resolved and paid in the second quarter of 2018. |
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Allowance for Doubtful Accounts | Activity related to the allowance for doubtful accounts is reflected below:
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STOCK-BASED COMPENSATION (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Stock-Based and Stock-Related Compensation | The following table recaps the components of stock-based and stock-related compensation for each period presented:
Included below is the activity in our most significant stock-based plans: 1 Stock-Based Retirement Plans We have two stock-based retirement plans: the tax-qualified Stock Bonus Plan (SBP) for non-highly compensated employees and the non-qualified Executive Stock Unit Program (ESUP) for highly compensated employees. We make matching contributions to both plans. In addition to the automatic 50% match, we will make another matching contribution of up to 50% of the employee’s contributions for the year if certain profitability levels, as defined in the SBP and the ESUP, are obtained. We plan to merge the SBP with our 401(k) plan on December 31, 2018. After the merger, our common stock will be added to the 401(k) plan as an investment option and participants may elect up to 20% of their contributions into our common stock beginning on January 1, 2019. Currently participants may contribute up to 100% of their contributions into our common stock. 2 PSU Awards In November 2017, the Compensation Committee approved changes to merge the PSU and PGI award programs for the 2018 award. The 2018 PSU awards have a component based on relative Total Shareholder Return (TSR) and another component based on Earnings Before Interest and Taxes (EBIT) Compound Annual Growth Rate (CAGR). These components are discussed below. For outstanding 2018 awards, we intend to pay 50% in shares of our common stock and 50% in cash; although, we reserve the right to pay up to 100% in cash. For outstanding 2016 and 2017 awards, we intend to pay 65% in shares of our common stock and 35% in cash; although, we reserve the right to pay up to 100% in cash. Cash settlements are recorded as a liability and adjusted to fair value at each reporting period. We elected to pay the 2015 award (paid in the first quarter 2018) in cash. 2A 2018 PSU - TSR based Most of the 2018 PSU awards are based 50% upon our TSR compared to a peer group. A small number of PSU awards are based 100% upon relative TSR for certain business unit employees to complement their particular mix of incentive compensation. Grant date fair values are calculated using a Monte Carlo simulation of stock and volatility data for Leggett and each of the peer companies. Grant date fair values are amortized using the straight-line method over the three-year vesting period. The relative TSR vesting condition of the 2018 PSU award contains the following conditions:
2B 2018 PSU - EBIT CAGR based 50% of each 2018 PSU award is based upon our or the applicable segment's EBIT CAGR. Grant date fair values are calculated using the grant date stock price discounted for dividends over the vesting period. Expense is adjusted every quarter over the three-year vesting period based on the number of shares expected to vest. The EBIT CAGR portion of this award contains the following conditions:
In connection with the decision to move a significant portion of the long-term incentive opportunity from a two-year to a three-year performance period by eliminating PGI awards, in January 2018, we also granted participants a one-time transition PSU award, based upon EBIT CAGR over a two-year performance period. 2C 2017 and Prior PSU Awards The 2017 and prior PSU awards are based solely on relative TSR. Vesting conditions are the same as (2A) above other than a maximum payout of 175% of the base award. Below is a summary of the number of shares and related grant date fair value of PSU’s based on TSR for the periods presented.
Below is a summary of the number of shares and related grant date fair value of PSU’s based on EBIT CAGR for the periods presented.
3 PGI Awards In 2017 and prior years certain key management employees participated in a PGI program. The PGI awards were issued as growth performance stock units (GPSUs). The GPSUs vest (0% to 250%) at the end of a two-year performance period. Vesting is based on our or the applicable profit center's revenue growth (adjusted by a GDP factor when applicable) and EBITDA margin at the end of a two-year performance period. The 2017 base target PGI awards were less than .1 shares. If earned, we intend to pay half in shares of our common stock and half in cash; although, we reserve the right to pay up to 100% in cash. We elected to pay the 2016 award (paid in the first quarter of 2018) in cash. Both components are adjusted to fair value at each reporting period.
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Summary of Shares and Related Grant Date Fair Value | Below is a summary of the number of shares and related grant date fair value of PSU’s based on TSR for the periods presented.
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Summary of Shares and Related Grant Date Fair Value | Below is a summary of the number of shares and related grant date fair value of PSU’s based on EBIT CAGR for the periods presented.
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Summary of Performance Cycle |
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ACQUISITIONS (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Fair Values of the Assets Acquired and Liabilities Assumed | The following table contains the estimated fair values (using inputs as discussed in Note 13) of the assets acquired and liabilities assumed at the date of acquisition for all acquisitions during the periods presented. A portion of the goodwill included in the table below is expected to provide an income tax benefit.
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Summary of Acquisitions | The following table summarizes acquisitions for the periods presented.
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EMPLOYEE BENEFIT PLANS (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Pension Expense | The following table provides interim information as to our domestic and foreign defined benefit pension plans:
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STATEMENT OF CHANGES IN EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Statement of Changes in Equity and Accumulated Other Comprehensive Income |
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Changes in Each Component of Accumulated Other Comprehensive Income (Loss) | The following tables set forth the components of and changes in each component of accumulated other comprehensive income (loss) for each of the periods presented:
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FAIR VALUE (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Fair Value Measurements of Financial Assets and Liabilities | The areas in which we utilize fair value measures of financial assets and liabilities are presented in the table below.
1 Includes both current and long-term amounts. |
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments at Fair Value | The following table presents assets and liabilities representing the fair value of our most significant derivative financial instruments. The fair values of the derivatives reflect the change in the market value of the derivative from the date of the trade execution and do not consider the offsetting underlying hedged item.
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Pre-Tax (Gains) Losses of Hedging Activities | The following table sets forth the pretax (gains) losses for our hedging activities for the years presented. This schedule includes reclassifications from accumulated other comprehensive income (see Note 12) as well as derivative settlements recorded directly to income or expense.
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INCOME TAXES (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Effective Income Tax Rate Reconciliation | Our income tax expense from continuing operations, as a percentage of earnings before income taxes, differs from these statutory federal income tax rates as follows:
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INVENTORIES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LIFO Expense | The following table contains the LIFO expense included in continuing operations for each of the periods presented.
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CONTINGENCIES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Litigation Contingency Accruals | Although we deny liability in all currently threatened or pending litigation proceedings in which we are or may be a party and believe that we have valid bases to contest all claims threatened or made against us, we have recorded a litigation contingency accrual for our reasonable estimate of probable loss for pending and threatened litigation proceedings, in aggregate, in millions, as follows:
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ACCOUNTING STANDARD UPDATES (Details) - Accounting Standards Update 2017-07 - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | 9 Months Ended | |
---|---|---|---|---|
Sep. 30, 2017 |
Jun. 30, 2017 |
Jun. 30, 2017 |
Sep. 30, 2017 |
|
Other (Income) Expense | ||||
Item Effected [Line Items] | ||||
Effect of accounting change on prior years | $ 1.0 | $ 2.9 | ||
Cost of Goods Sold and Selling and Administrative Expenses | ||||
Item Effected [Line Items] | ||||
Effect of accounting change on prior years | $ 0.9 | $ 1.9 |
REVENUE - Narrative (Details) |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, typical trade terms, days | We expect that at contract inception, the time period between when we transfer a promised good to our customer and our receipt of payment from that customer for that good will be one year or less (our typical trade terms are 30 to 60 days for U.S. customers and up to 90 days for our international customers). |
SEGMENT INFORMATION - Average Assets for Segments (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Segment Reporting Information [Line Items] | |||
Assets | $ 3,549.1 | $ 3,551.5 | $ 3,550.8 |
Operating segments | Residential Products | |||
Segment Reporting Information [Line Items] | |||
Assets | 605.2 | 554.6 | |
Operating segments | Industrial Products | |||
Segment Reporting Information [Line Items] | |||
Assets | 164.4 | 150.0 | |
Operating segments | Furniture Products | |||
Segment Reporting Information [Line Items] | |||
Assets | 281.4 | 245.7 | |
Operating segments | Specialized Products | |||
Segment Reporting Information [Line Items] | |||
Assets | 340.3 | 271.7 | |
Operating segments | Average current liabilities included in segment numbers above | |||
Segment Reporting Information [Line Items] | |||
Assets | 641.7 | 557.0 | |
Unallocated assets | |||
Segment Reporting Information [Line Items] | |||
Assets | 1,391.3 | 1,693.1 | |
Difference between average assets and period-end balance sheet | |||
Segment Reporting Information [Line Items] | |||
Assets | $ 124.8 | $ 78.7 |
DIVESTITURES (Details) - Specialized Products - Trade Sales - Disposal Group, Disposed of by Sale, Not Discontinued Operations - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Sep. 30, 2017 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Pretax gains (losses) | $ (3.3) | ||
Pretax gain (loss) on the sale of real estate | $ 23.4 | ||
External sales | 3.7 | $ 25.1 | |
EBIT | $ (1.0) | $ (2.3) |
IMPAIRMENT CHARGES - Summary of Impairment Charges On Continued and Discontinued Operations (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Goodwill [Line Items] | ||||
Goodwill | $ 0.0 | $ 1.3 | $ 0.0 | $ 1.3 |
Other Long-Lived Assets | 0.1 | 3.2 | 0.3 | 3.3 |
Total | 0.1 | 4.5 | 0.3 | 4.6 |
Furniture Products | ||||
Goodwill [Line Items] | ||||
Goodwill | 0.0 | 0.0 | 0.0 | 0.0 |
Other Long-Lived Assets | 0.0 | (0.1) | 0.0 | 0.0 |
Total | 0.0 | (0.1) | 0.0 | 0.0 |
Drawn Wire Unit | Industrial Products | ||||
Goodwill [Line Items] | ||||
Goodwill | 0.0 | 1.3 | 0.0 | 1.3 |
Other Long-Lived Assets | 0.1 | 3.3 | 0.3 | 3.3 |
Total | $ 0.1 | $ 4.6 | $ 0.3 | $ 4.6 |
IMPAIRMENT CHARGES - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Goodwill [Line Items] | ||||
Goodwill impairment | $ 0.0 | $ 1.3 | $ 0.0 | $ 1.3 |
Other asset impairment charges | 0.1 | 3.2 | 0.3 | 3.3 |
Drawn Wire Unit | Industrial Products | ||||
Goodwill [Line Items] | ||||
Goodwill impairment | 0.0 | 1.3 | 0.0 | 1.3 |
Other asset impairment charges | $ 0.1 | $ 3.3 | $ 0.3 | $ 3.3 |
STOCK-BASED COMPENSATION - Summary of Performance Stock Units (Details) - Performance Stock Unit - $ / shares shares in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
TSR | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total shares base award (in shares) | 0.1 | 0.1 |
Grant date per share fair value (in dollars per share) | $ 42.60 | $ 50.75 |
Risk-free interest rate | 2.40% | 1.50% |
Expected life in years | 3 years | 3 years |
Expected volatility (over expected life) | 19.90% | 19.50% |
Expected dividend yield (over expected life) | 3.30% | 2.80% |
EBIT CAGR | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total shares base award (in shares) | 0.1 | |
Grant date per share fair value (in dollars per share) | $ 40.92 | |
Vesting period | 2 years 6 months |
ACQUISITIONS - Estimated Fair Values Of The Assets Acquired And Liabilities Assumed (Details) - USD ($) $ in Millions |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Business Acquisition [Line Items] | |||
Goodwill | $ 840.3 | $ 822.2 | |
Series of Individually Immaterial Business Acquisitions | |||
Business Acquisition [Line Items] | |||
Accounts receivable | 19.6 | $ 10.0 | |
Inventory | 26.1 | 6.3 | |
Property, plant and equipment | 28.2 | 14.6 | |
Goodwill | 27.7 | 12.8 | |
Other intangible assets, primarily customer-related intangibles | 28.9 | 19.5 | |
Other current and long-term assets | 0.8 | 1.1 | |
Current liabilities | (12.3) | (4.6) | |
Long-term liabilities | (10.2) | (5.6) | |
Non-controlling interest | 0.0 | (0.5) | |
Fair value of net identifiable assets | 108.8 | 53.6 | |
Less: Additional consideration payable | 0.9 | 2.8 | |
Less: Common stock issued for acquired companies | 0.0 | 11.8 | |
Net cash consideration | $ 107.9 | $ 39.0 |
ACQUISITIONS - Purchase Price Allocations Related To Acquisitions (Details) - acquisition |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Business Acquisition [Line Items] | ||
Number of Acquisitions | 3 | |
Residential Products and Specialized Products | Manufacturer/distributor of geo components; Manufacturer and distributor of silt fence; Global manufacturer of engineered hydraulic cylinders | ||
Business Acquisition [Line Items] | ||
Number of Acquisitions | 3 | |
Residential Products and Furniture Products | Distributor and installer of geosynthetic products; Carpet cushion; Surface-critical bent tube components | ||
Business Acquisition [Line Items] | ||
Number of Acquisitions | 3 |
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Retirement Benefits [Abstract] | ||||
Expected employer contribution | $ 22.0 | $ 22.0 | ||
Increase from prior year employer contributions | 14.9 | 14.9 | ||
Components of net pension expense | ||||
Service cost | 1.1 | $ 1.3 | 3.1 | $ 3.8 |
Interest cost | 2.0 | 2.7 | 6.1 | 8.3 |
Expected return on plan assets | (3.0) | (3.4) | (8.8) | (10.1) |
Recognized net actuarial loss | 0.7 | 1.2 | 2.1 | 3.5 |
Net pension expense | $ 0.8 | $ 1.8 | $ 2.5 | $ 5.5 |
FAIR VALUE - Additional Information (Details) - USD ($) |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Amount of transfers between Level 1 and Level 2 | $ 0 | $ 0 |
Fixed rate debt carrying value | $ 1,100,000,000 | $ 1,250,000,000 |
INCOME TAXES (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Mar. 31, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Income Tax Disclosure [Abstract] | |||||
Statutory federal income tax rate | 21.00% | 35.00% | 21.00% | 35.00% | |
Tax effect of foreign operations | (1.00%) | (7.00%) | (1.00%) | (7.00%) | |
Foreign withholding taxes | 3.00% | 0.00% | 3.00% | 0.00% | |
Stock-based compensation | (2.00%) | (1.00%) | (1.00%) | (3.00%) | |
Tax on global intangible low-taxed income (GILTI) | 1.00% | 0.00% | 1.00% | 0.00% | |
Domestic production activities deduction | 0.00% | (1.00%) | 0.00% | (1.00%) | |
Tax benefit for outside basis in subsidiary | 0.000 | (0.070) | 0.000 | (0.020) | |
Change in valuation allowance | 0.00% | 0.00% | (2.00%) | (1.00%) | |
Other, net | (1.00%) | (2.00%) | (1.00%) | (1.00%) | |
Effective Tax Rate | 21.00% | 17.00% | 20.00% | 20.00% | |
Measurement period adjustment from change in tax rate, amount | $ 0.5 | $ 3.9 | |||
Measurement period adjustment, repatriation tax, amount | $ 1.3 | ||||
Measurement period adjustment from change in tax rate, percent | 2.00% | 2.00% |
INVENTORIES (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Inventory Disclosure [Abstract] | ||||
Percentage of LIFO inventory | 50.00% | 50.00% | ||
LIFO expense | $ 6.0 | $ 9.5 | $ 24.8 | $ 12.0 |
CONTINGENCIES - Additional Information (Details) |
Oct. 15, 2018
USD ($)
|
Sep. 11, 2017
USD ($)
|
Jun. 09, 2016
USD ($)
|
Dec. 15, 2015
USD ($)
|
Dec. 04, 2015
USD ($)
|
Sep. 04, 2014
USD ($)
assessment
|
Jul. 31, 2014
USD ($)
|
Jul. 01, 2014
USD ($)
|
Jun. 26, 2014
USD ($)
|
Jun. 05, 2014
USD ($)
|
Apr. 17, 2014
USD ($)
|
Mar. 27, 2014
USD ($)
|
Jun. 21, 2013
USD ($)
|
Feb. 01, 2013
USD ($)
|
Dec. 18, 2012
USD ($)
|
Dec. 17, 2012
USD ($)
|
Oct. 04, 2012
USD ($)
|
Dec. 30, 2011
USD ($)
|
Dec. 22, 2011
USD ($)
|
Apr. 16, 2009
USD ($)
|
Sep. 30, 2018
USD ($)
|
Jun. 30, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
Sep. 30, 2017
USD ($)
|
Jun. 30, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
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Loss Contingencies [Line Items] | ||||||||||||||||||||||||||
Insurance receivables | $ 1,500,000 | $ 43,000,000 | ||||||||||||||||||||||||
Accrual | 2,300,000 | $ 0 | $ 400,000 | $ 0 | $ 3,400,000 | $ 3,200,000 | ||||||||||||||||||||
Loss contingency, range of possible loss, portion not accrued | 20,000,000 | |||||||||||||||||||||||||
Brazilian VAT matters | ||||||||||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||||||||||
Litigation, amount awarded to other party | $ 500,000 | |||||||||||||||||||||||||
Damages | $ 800,000 | $ 3,500,000 | $ 3,100,000 | $ 700,000 | $ 1,500,000 | $ 800,000 | $ 2,100,000 | $ 100,000 | $ 400,000 | $ 3,500,000 | $ 1,300,000 | $ 100,000 | $ 2,000,000 | $ 1,500,000 | ||||||||||||
Cases closed administratively, amount | $ 400,000 | $ 300,000 | ||||||||||||||||||||||||
Improperly offset social contribution | $ 100,000 | $ 100,000 | ||||||||||||||||||||||||
Brazilian VAT matters | Bonds | ||||||||||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||||||||||
Damages | $ 4,100,000 | |||||||||||||||||||||||||
Amount secured with a bond | $ 900,000 | |||||||||||||||||||||||||
Brazilian VAT matters | Pending litigation | ||||||||||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||||||||||
Estimate of possible loss | 19,000,000 | |||||||||||||||||||||||||
Accrual | 0 | |||||||||||||||||||||||||
Estimate of possible loss, offsetting deposit asset | 10,200,000 | |||||||||||||||||||||||||
Tax credit matters | ||||||||||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||||||||||
Damages | $ 200,000 | $ 2,300,000 | ||||||||||||||||||||||||
Tax credit matters | Pending litigation | ||||||||||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||||||||||
Additional assessments issued | assessment | 5 | |||||||||||||||||||||||||
Other matters | Pending litigation | ||||||||||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||||||||||
Estimate of possible loss | $ 1,000,000 | |||||||||||||||||||||||||
Subsequent Event | Brazilian VAT matters | ||||||||||||||||||||||||||
Loss Contingencies [Line Items] | ||||||||||||||||||||||||||
Loss Contingency, Damages Sought, Cash Bond Posted, Value | $ 3,000,000 |
CONTINGENCIES - Litigation Contingency Accrual (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Loss Contingency Accrual [Roll Forward] | ||||
Litigation contingency accrual - Beginning of period | $ 0.0 | $ 3.4 | $ 0.4 | $ 3.2 |
Adjustment to accruals - expense (income) | 2.3 | 0.0 | 2.2 | 0.2 |
Cash payments | 0.0 | (5.0) | (0.3) | (5.0) |
Litigation contingency accrual - End of period | 2.3 | 0.0 | 2.3 | 0.0 |
Discontinued Operations | ||||
Loss Contingency Accrual [Roll Forward] | ||||
Adjustment to accruals - expense (income) | $ 0.0 | $ 1.6 | $ 0.0 | $ 1.6 |
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