ACQUISITIONS

3 Months Ended

Mar. 31, 2019

The following table contains the estimated fair values (using inputs as discussed in Note 14) of the assets acquired and liabilities assumed at the date of acquisition for all acquisitions during the periods presented. Of the goodwill included in the table below, $126.4 is expected to be deductible for tax purposes.



	Three Months Ended March 31,
	2019			2018
Accounts receivable	$	72.4		$	12.1
Inventory	60.1			14.9
Property, plant and equipment	80.2			26.2
Goodwill	558.8			23.3
Other intangible assets:
Customer relationships (10 to 15-year life)	372.7			17.8
Technology (5 to 14-year life)	173.3			2.2
Trademarks and trade names (15-year life)	65.8			6.5
Non-compete agreements and other (5-year life)	28.1			.8
Other current and long-term assets	27.4			.8
Current liabilities	(43.8		)	(9.3		)
Deferred income taxes	(129.0		)	(9.7		)
Other long-term liabilities	(21.6		)	(.8		)
Fair value of net identifiable assets	1,244.4			84.8
Additional consideration for prior years’ acquisitions	(.1		)	—
Less: Additional consideration payable (receivable)	—			(1.0		)
Net cash consideration	$	1,244.3		$	85.8

The following table summarizes acquisitions for the periods presented.

We are finalizing all the information required to complete the purchase price allocations related to recent acquisitions and do not anticipate any material modifications.

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 March 31, 2019 and December 31, 2018, our liability for these future payments was $10.7 ($10.7 current) and $10.8 ($.8 current and $10.0 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 $.1 for both three months ended March 31, 2019 and 2018.

A brief description of our acquisition activity by year for the periods presented is included below.

2019

In January 2019, we completed the acquisition of ECS, a leader in proprietary specialized foam technology, primarily for the bedding and furniture industries. Through this acquisition, we gained critical capabilities in proprietary foam technology, along with scale in the production of private-label finished mattresses. The purchase price was $1,244.4 and added $558.8 of goodwill. There was no contingent consideration associated with this acquisition.

2018

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 $87.4 and added $26.9 of goodwill. PHC serves a market of mainly large Original Equipment Manufacturer (OEM) customers utilizing highly engineered 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.

Pro forma Results

The following table summarizes, on a pro forma basis, the combined results of operations of Leggett and ECS as though the acquisition had occurred as of January 1, 2018. We have not provided pro forma results of operations of the first quarter 2018 acquisition of PHC as these results were not material.

The unaudited pro forma financial information below is not necessarily indicative of the results of operations that would have been realized had the ECS acquisition occurred as of January 1, 2018, nor is it meant to be indicative of any future results of operations. The unaudited pro forma financial information does not include benefits expected from revenue or product mix enhancements, operating synergies or cost savings that may be realized or any estimated future costs that may be incurred to integrate the ECS business.



	Three Months Ended
	March 31,
	2019		2018
Net sales	$	1,176.7	$	1,174.0
Net earnings	62.9		63.2
EPS basic	.47		.47
EPS diluted	.47		.46

The information above reflects pro forma adjustments based on available information and certain assumptions that we believe are reasonable, including:


•	Amortization and depreciation adjustments relating to fair value estimates of intangible and tangible assets;


•	Incremental interest expense on debt incurred in connection with the ECS acquisition;


•	Amortization of the fair value adjustment to inventory as though the transaction occurred on January 1, 2018;


•	Recognition of transaction costs as though the transaction occurred on January 1, 2018; and

•

Estimated tax impacts of the pro forma adjustments.

Three Months Ended

Number of Acquisitions

Product/Service

March 31, 2019

Residential Products

A leader in proprietary specialized foam technology, primarily for the bedding and furniture industries

March 31, 2018

Specialized Products

Global manufacturer of engineered hydraulic cylinders