Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
--------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from ____________ to ________________
For Quarter Ended Commission File Number
March 31, 2001 1-7845
----------------- ------------------------
LEGGETT & PLATT, INCORPORATED
-----------------------------
(Exact name of registrant as specified in its charter)
Missouri 44-0324630
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
No. 1 Leggett Road
Carthage, Missouri 64836
- ---------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (417) 358-8131
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Common stock outstanding as of May 3, 2001: 196,252,476
PART I. FINANCIAL INFORMATION
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(Amounts in millions) March 31, December 31,
2001 2000
----------- ------------
CURRENT ASSETS
Cash and cash equivalents $ 12.2 $ 37.3
Accounts and notes receivable 701.7 650.5
Allowance for doubtful accounts (18.6) (16.3)
Inventories 654.4 671.8
Other current assets 67.9 62.0
---------- ----------
Total current assets 1,417.6 1,405.3
PROPERTY, PLANT & EQUIPMENT, NET 1,027.1 1,018.4
OTHER ASSETS
Excess cost of purchased companies over net
assets acquired, less accumulated amortization
of $94.3 in 2001 and $88.8 in 2000 853.0 846.0
Other intangibles, less accumulated amortization
of $35.9 in 2001 and $38.1 in 2000 54.5 49.3
Sundry 85.2 54.2
---------- ----------
Total other assets 992.7 949.5
---------- ----------
TOTAL ASSETS $ 3,437.4 $ 3,373.2
========== ==========
CURRENT LIABILITIES
Accounts and notes payable $ 180.2 $ 179.4
Accrued expenses 198.0 201.5
Other current liabilities 98.5 95.7
---------- ----------
Total current liabilities 476.7 476.6
LONG-TERM DEBT 1,038.3 988.4
OTHER LIABILITIES 41.7 42.5
DEFERRED INCOME TAXES 70.8 71.9
SHAREHOLDERS' EQUITY
Common stock 2.0 2.0
Additional contributed capital 417.6 423.5
Retained earnings 1,482.2 1,460.0
Accumulated other comprehensive income (46.5) (45.4)
Treasury stock (45.4) (46.3)
---------- ----------
Total shareholders' equity 1,809.9 1,793.8
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,437.4 $ 3,373.2
========== ==========
Items excluded are either not applicable or de minimis in amount and, therefore,
are not shown separately.
See accompanying notes to consolidated condensed financial statements.
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
(Amounts in millions, except per share data)
Three Months Ended
March 31,
---------------------------
2001 2000
----------- -----------
Net sales $ 1,053.3 $ 1,043.6
Cost of goods sold 802.2 772.1
----------- -----------
Gross profit 251.1 271.5
Distribution and handling expenses 44.9 42.0
Selling and administrative expenses 104.8 92.0
Amortization of excess cost of
purchased companies and other
intangibles 8.8 7.8
Other deductions (income), net 3.0 (.7)
----------- -----------
Earnings before interest
and income taxes 89.6 130.4
Interest expense 17.2 14.6
Interest income .5 1.5
----------- -----------
Earnings before income taxes 72.9 117.3
Income taxes 26.9 43.5
=========== ===========
NET EARNINGS $ 46.0 $ 73.8
=========== ===========
Earnings Per Share
Basic $ .23 $ .37
Diluted $ .23 $ .37
Cash Dividends Declared
Per Share $ .12 $ .10
Average Shares Outstanding
Basic 199.2 198.8
Diluted 200.4 200.3
See accompanying notes to consolidated condensed financial statements.
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in millions) Three Months Ended
March 31,
---------------------------------------------
2001 2000
--------------------- --------------------
OPERATING ACTIVITIES
Net Earnings $ 46.0 $ 73.8
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation 37.0 31.1
Amortization 8.8 7.8
Other (1.9) (2.4)
Other changes, net of effects from
purchase of companies
Increase in accounts receivable, net (45.5) (78.8)
(Increase) decrease in inventories 25.2 (12.3)
Increase in other current assets (5.4) (1.0)
Increase in current liabilities 22.1 55.8
--------------------- --------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 86.3 74.0
INVESTING ACTIVITIES
Additions to property, plant and equipment (33.2) (41.4)
Purchases of companies, net of cash acquired (36.1) (70.8)
Other (0.3) (11.8)
--------------------- --------------------
NET CASH USED FOR INVESTING ACTIVITIES (69.6) (124.0)
FINANCING ACTIVITIES
Additions to debt 29.9 350.0
Payments on debt (11.3) (159.3)
Dividends paid (44.9) (37.2)
Issuances of common stock 7.0 1.1
Purchases of common stock (21.8) (19.3)
Other (0.7) 5.5
--------------------- --------------------
NET CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES (41.8) 140.8
--------------------- --------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (25.1) 90.8
CASH AND CASH EQUIVALENTS - January 1, 37.3 20.6
--------------------- --------------------
CASH AND CASH EQUIVALENTS - March 31, $ 12.2 $ 111.4
===================== ====================
See accompanying notes to consolidated condensed financial statements.
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Amounts in millions)
1. STATEMENT
In the opinion of management, the accompanying consolidated condensed
financial statements contain all adjustments necessary for a fair statement
of results of operations and financial positions of Leggett & Platt,
Incorporated and Consolidated Subsidiaries (the `Company').
2. INVENTORIES
Inventories, about 50% of which are valued using the Last-in, First-out
(LIFO) cost method and the remainder using the First-In, First-Out (FIFO)
cost method, comprised the following:
March 31, December 31,
2001 2000
------------ ------------
At First-In, First-Out (FIFO) cost
Finished goods $ 358.1 $ 336.8
Work in process 80.4 89.2
Raw materials and supplies 225.2 255.5
------------ ------------
663.7 681.5
Excess of FIFO cost over LIFO cost (9.3) (9.7)
------------ ------------
$ 654.4 $ 671.8
============ ============
3. PROPERTY, PLANT & EQUIPMENT
Property, plant and equipment comprised the following:
March 31, December 31,
2001 2000
----------- ------------
Property, plant and equipment, at cost $ 1,864.8 $ 1,822.8
Less accumulated depreciation 837.7 804.4
----------- ------------
$ 1,027.1 $ 1,018.4
=========== ============
4. COMPREHENSIVE INCOME
In accordance with the provisions of Financial Accounting Standard No. 130,
the Company has elected to report comprehensive income in its Statement of
Changes in Shareholders' Equity. For the three months ending March 31, 2001
and 2000, comprehensive income was $44.9 and $71.5, respectively.
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
5. EARNINGS PER SHARE
Basic and diluted earnings per share were calculated as follows:
Three Months Ended
March 31,
-----------------------------
2001 2000
-------------- -----------
Basic
Weighted average shares
outstanding, including
shares issuable for
little or no cash 199.2 198.8
============== ============
Net earnings $ 46.0 $ 73.8
============== ============
Earnings per share - basic $ .23 $ .37
============== ============
Diluted
Weighted average shares
outstanding, including
shares issuable for
little or no cash 199.2 198.8
Additional dilutive shares
principally from the
assumed exercise of
outstanding stock options 1.2 1.5
-------------- ------------
200.4 200.3
============== ============
Net earnings $ 46.0 $ 73.8
============== ============
Earnings per share - diluted $ .23 $ .37
============== ============
6. CONTINGENCIES
The Company is involved in various legal proceedings including matters
which involve claims against the Company under employment, intellectual
property, environmental and other laws. When it appears probable in
management's judgement that the Company will incur monetary damages or
other costs in connection with claims and proceedings, and the costs can be
reasonably estimated, appropriate liabilities are recorded in the financial
statements and charges are made against earnings. No claim or proceeding
has resulted in a material charge against earnings, nor are the total
liabilities recorded material to the Company's financial position. While
the results of any ultimate resolution cannot be predicted, management
believes the possibility of a material adverse effect on the Company's
consolidated financial position, results of operations and cash flows from
claims and proceedings is remote.
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
7. SEGMENT INFORMATION
Reportable segments are primarily based upon the Company's management
organizational structure. This structure is generally focused on broad
end-user markets for the Company's diversified products. Residential
Furnishings derives its revenues from components for bedding, furniture and
other furnishings, as well as related consumer products. Commercial
Furnishings derives its revenues from retail store fixtures, displays,
storage, material handling systems, components for office and institutional
furnishings, and plastic components. The Aluminum Products revenues are
derived from die castings, custom tooling, secondary machining and coating,
and smelting of aluminum ingot. Industrial Materials derives its revenues
from drawn steel wire, specialty wire products and welded steel tubing sold
to trade customers as well as other Leggett segments. Specialized Products
is a combination of non-reportable segments which derive their revenues
from machinery, manufacturing equipment, automotive seating suspensions,
control cable systems and lumbar supports for automotive, office and
residential applications.
A summary of segment results for the quarters ended March 31, 2001 and 2000
are shown in the following tables. Segment figures for 2000 include the
reclassification of one operation from Commercial Furnishings to Industrial
Materials.
Inter-
External Segment Total
Sales Sales Sales EBIT
----------------- ---------------- --------------- ----------------
Quarter ended March 31, 2001
Residential Furnishings $ 518.4 $ 3.2 $ 521.6 $ 45.3
Commercial Furnishings 244.7 .8 245.5 14.7
Aluminum Products 129.9 4.1 134.0 9.4
Industrial Materials 71.8 54.8 126.6 13.1
Specialized Products 88.5 15.4 103.9 10.2
Intersegment eliminations - - - (3.5)
Change in LIFO reserve - - - .4
----------------- ---------------- --------------- ----------------
$ 1,053.3 $ 78.3 $ 1,131.6 $ 89.6
================= ================ =============== ================
Quarter ended March 31, 2000
Residential Furnishings $ 532.3 $ 2.2 $ 534.5 $ 62.0
Commercial Furnishings 207.8 1.0 208.8 23.2
Aluminum Products 159.0 3.9 162.9 16.6
Industrial Materials 78.8 56.6 135.4 20.6
Specialized Products 65.7 12.6 78.3 12.1
Intersegment eliminations - - - (2.7)
Change in LIFO reserve - - - (1.4)
----------------- ---------------- --------------- ----------------
$ 1,043.6 $ 76.3 $ 1,119.9 $ 130.4
================= ================ =============== ================
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
7. SEGMENT INFORMATION (continued)
Asset information for the Company's segments at March 31, 2001 and December
31, 2000 is shown in the following table:
March 31, December 31,
2001 2000
--------------------- ---------------------
Assets
Residential Furnishings $ 1,235.5 $ 1,223.2
Commercial Furnishings 914.6 896.5
Aluminum Products 461.3 478.7
Industrial Materials 252.1 264.9
Specialized Products 346.5 336.4
Unallocated assets 242.3 242.6
Adjustment to period-end
vs. average assets (14.9) (69.1)
--------------------- ---------------------
$ 3,437.4 $ 3,373.2
===================== =====================
8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Adoption of FAS 133
The Company adopted Statement of Financial Accounting Standards No. 133 (FAS
133), Accounting for Derivative Instruments and Hedging Activities, on January
1, 2001. FAS 133 requires that all derivative instruments be recorded on the
balance sheet at their fair value, with changes in the Fair Value of the
derivative instruments to be recorded in current earnings or deferred in equity.
Accordingly, during the first quarter of 2001, the Company increased its long-
term debt and other assets by $29 from year-end 2000 to reflect the fair market
value of its interest rate swap agreements and the related debt. It is the
opinion of the Company's management that, due to its limited use of significant
hedging or other activities involving derivative instruments, changes in the
fair value of derivatives will not have a significant effect on the Company's
results of operation or its financial position.
Fair-Value Hedges
The Company has debt obligations sensitive to changes in interest rates. The
Company has no other significant financial instruments sensitive to changes in
interest rates. In 2000, $350 of 7.65% fixed rate debt maturing in February 2005
and, in 1999, $14 of 6.90% fixed rate debt maturing in June 2004 were issued and
converted to variable rate debt by use of interest rate swap agreements. These
swap agreements, which contain the same payment dates as the original issues,
are used primarily by the Company to manage the fixed/variable interest rate mix
of its debt portfolio. The effective swap rate for the first quarter of 2001 was
6.24% for the $350 and 6.70% for the $14. The difference in interest paid or
received as a result of swap agreements is recorded as an adjustment to interest
expense during the period the related debt is outstanding. Substantially all of
the Company's debt is denominated in United States dollars (U.S.$). The fair
value of fixed rate debt not subject to the interest rate swaps exceeded its
carrying value by $9.8 as of March 31, 2001, and was not significantly different
from its carrying value as of December 31, 2000. The fair value of fixed rate
debt was
calculated using the U.S. Treasury Bond rate as of March 31, 2001 for similar
remaining maturities, plus an estimated "spread" over such Treasury securities
representing the Company's interest costs under its medium-term note or public
debt programs. The fair value of variable rate debt is not significantly
different from its recorded amount.
The Company does not generally use derivative commodity instruments to
hedge its exposures to changes in commodity prices. The principal commodity
price exposure is aluminum, of which the Company had an estimated $46 and
$50 (at cost) in inventory at March 31, 2001 and December 31, 2000,
respectively. The Company has purchasing procedures and arrangements with
customers to mitigate its exposure to aluminum price changes. No other
commodity exposures are significant to the Company.
Hedges of Net Investments in Foreign Operations
The Company has not typically hedged foreign currency exposures related to
transactions denominated in other than its functional currencies, although
such transactions have not been material in the past. The Company may
occasionally hedge firm commitments for certain machinery purchases, other
fixed expenses or amounts due in foreign currencies related to its
acquisition program. The decision by management to hedge any such
transactions is made on a case-by-case basis. The amount of forward
contracts outstanding at March 31, 2001 was not significant.
The Company views its investment in foreign subsidiaries as a long-term
commitment and does not hedge any translation exposures. The investment in
a foreign subsidiary may take the form of either permanent capital or
notes. The Company's net investment in foreign subsidiaries subject to
translation exposure was $392.9 at March 31, 2001, compared to $375.5 at
December 31, 2000. The increase in translation exposure was due primarily
to a broad strengthening of Western European currencies (versus the U.S.
dollar) and other factors.
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Capital Resources and Liquidity
The Company's financial position reflects management's capital policy
guidelines. These guidelines are intended to ensure that corporate liquidity is
adequate to support the Company's projected growth rate. Also, liquidity is
necessary to finance the Company's ongoing operations in periods of economic
downturn. In a normal operating environment, management intends to direct
capital to ongoing operations, strategic acquisitions and other investments that
provide opportunities for expansion and enhanced profitability.
The expansion of capital resources - debt and equity - is planned to
allow the Company to take advantage of favorable capital market conditions,
rather than respond to short-term needs. Such financial flexibility is
considered more important than short-term maximization of earnings per share
through excessive leverage. Therefore, management continuously provides for
available credit in excess of near-term projected cash needs and has maintained
a guideline for long-term debt as a percentage of total capitalization in a
range of 30% to 40%.
Total Capitalization
The following table shows the Company's total capitalization at March
31, 2001 and December 31, 2000. Also, the table shows the amount of unused
committed credit available through the Company's revolving bank credit
agreements and the amount of cash and cash equivalents.
(Dollar amounts in millions) March 31, December 31,
2001 2000
---------------------- --------------------
Long-term debt outstanding:
Scheduled maturities $ 1,017.9 $ 988.4
Average interest rates 6.5% 6.8%
Average maturities in years 4.6 4.8
Revolving credit/commercial paper 20.4 -
---------------------- --------------------
Total long-term debt 1,038.3 988.4
Deferred income taxes and other
liabilities 112.5 114.4
Shareholders' equity 1,809.9 1,793.8
---------------------- --------------------
Total capitalization $2,960.7 $ 2,896.6
====================== ====================
Unused committed credit:
Long-term $ 194.6 $ 215.0
Short-term 112.5 112.5
---------------------- --------------------
Total unused committed credit $ 307.1 $ 327.5
====================== ====================
Cash and cash equivalents $ 12.2 $ 37.3
====================== ====================
Cash provided by operating activities was $86.3 million in the first
three months of 2001, compared to $74.0 million in the first three months of
2000. Lower earnings were more than offset by reduced working capital (excluding
acquisitions) and increased depreciation and amortization.
Long-term debt outstanding increased to $1,038.3 million, and was 35.1%
of total capitalization at March 31, 2001, up from 34.1% at the end of 2000. Due
to implementation of Financial Accounting Standard No. 133, long-term debt
increased $29 million from year-end 2000. The remainder of the increase was due
to commercial paper outstanding at March 31, 2001. As shown in the preceding
table, obligations having scheduled maturities are the primary source of the
Company's debt capital. At March 31, 2001, these obligations
consisted primarily of the Company's privately placed and publicly owned medium-
term notes and tax-exempt industrial development bonds.
The secondary source of the Company's debt capital consists of
revolving bank credit agreements and commercial paper issuances. Management has
negotiated bank credit agreements and established a commercial paper program to
continuously support the Company's projected growth and to maintain highly
flexible sources of debt capital. The majority of the credit under these
arrangements is a long-term obligation. If needed, however, the credit is
available for short-term borrowings and repayments. To further facilitate the
issuance of debt capital, the Company has in effect a $500 million shelf
registration of debt.
Uses of Capital Resources
The Company's internal investments to modernize and expand
manufacturing capacity were $33.2 million in the first three months of 2001. In
2001, management anticipates internal investments will approximate $150 million,
down from the nearly $170 million spent in 2000. During the first quarter of
2001, five businesses were acquired for $36.1 million in cash (net of cash
acquired). In addition, the Company assumed $9.6 million of acquisition
companies' debt and other liabilities. Two of the 2001 acquisitions were made in
Residential Furnishings, two in Commercial Furnishings, and one in Specialized
Products.
Cash dividends on the Company's common stock were $44.9 million
during the first three months of 2001. Company purchases of its common stock
(net of issuances) totaled $14.8 million in the first quarter of 2001. These
purchases were made primarily for employee stock plans.
The Board of Directors annually authorizes management, at its
discretion, to buy up to 2,000,000 shares of Leggett stock for use in employee
benefit plans. This authorization is continuously replenished as shares acquired
are reissued for these benefit plans. In addition, management is authorized,
again at its discretion, to repurchase any shares issued in acquisitions
accounted for as purchases.
At the end of the third quarter 2000, the Board of Directors authorized
management to buy up to an additional 10,000,000 shares of Leggett stock as part
of the Company's performance improvement plan also announced at that time. No
specific schedule of purchases has been established under this authorization.
The amount and timing of any purchases will depend on availability of cash,
economic and market conditions, acquisition activity and other factors.
Short-term Liquidity
Working capital, including working capital from acquired companies,
at March 31, 2001 was $940.9 million, up slightly from $928.7 million at
year-end. During the last half of 2000, the Company began concentrating on
reducing working capital levels. Due to the softening in market demand discussed
below, under "Results of Operations", the desired reduction in inventory has not
yet been achieved.
Results of Operations
- ---------------------
Discussion of Consolidated Results
The Company's first quarter earnings were $.23 per diluted share,
down 37.8% from last year's first quarter record earnings of $.37 per diluted
share. Sales were a first quarter record $1.05 billion, an increase of .9%
compared to the first quarter of 2000. Sales growth from numerous acquisitions
was more than offset by a 7.4% decline in same location sales, as weak market
demand continued to impact all five business segments.
During the first quarter, the Company acquired five businesses with
estimated annualized sales of approximately $61 million. The newly acquired
companies have expanded annualized volume in the Company's segments as follows:
Residential Furnishings - $24 million; Commercial Furnishings - $36 million;
Specialized Products - $1 million.
The following table shows various measures of earnings as a
percentage of sales for the first quarter in both of the last two years. It also
shows the effective income tax rate and the ratio of earnings to fixed charges.
Quarter Ended
March 31,
2001 2000
-------------- ---------------
Gross profit margin 23.8% 26.0%
EBIT (earnings before interest and taxes)
margin 8.5 12.5
Net profit margin 4.4 7.1
Effective income tax rate 36.9 37.1
Ratio of earnings to fixed charges 4.6x 7.8x
The Company's gross profit margin declined during the first three
months of 2001, primarily reflecting weak market demand in all of the Company's
business segments. Production cutbacks contributed to reduced plant utilization
and lower overhead absorption, which significantly impacted gross profit and
EBIT margins. Margins were also reduced by higher energy costs, increased
medical and other costs, and higher interest expense, offset by a lower
effective tax rate.
The Company is making progress on its tactical plan announced in
September 2000, aimed at improving performance, margins and shareholder return.
The Company has sold, closed, or consolidated nine plants; reduced full time
equivalent headcount by approximately 1,700 (excluding acquisitions);
reorganized the management structure of the Commercial Fixtures and Displays
group; reduced Aluminum Products overhead by $7 million annually; slowed the
pace of acquisitions to about half of what it was in the prior year; and
continued efforts to reduce working capital levels. The Company expects to
continue this tactical course for several quarters and possibly longer, as
conditions warrant. Once performance improves, the Company expects to return to
its traditional level of acquisition activity. The Company's strategic,
long-term growth plans remain unchanged.
Discussion of Segment Results
A description of the products included in each segment, segment sales,
segment earnings before interest and taxes (EBIT) and other segment data appear
in Note 7 of the Notes to Consolidated Condensed Financial Statements.
Residential Furnishings sales decreased 2.4%. Same location sales,
which were partially offset by acquisitions, decreased 4.2%, and accounted for
over half of the EBIT decline of 26.9%. Soft industry demand and efforts to
reduce inventories resulted in lower production. Lower plant utilization rates,
reduced overhead absorption, and higher costs for petroleum based raw materials
in fiber and foam operations yielded lower margins.
Commercial Furnishings sales increased 17.6% due to numerous
acquisitions. Same location sales declined .2% for the period, as a small
increase in sales of store fixtures, displays and storage products was offset by
reduced sales of components for office and contract furniture. EBIT decreased
36.6%, reflecting reduced margins attributable to changing product mix and
softness in the telecom and van fixtures business.
Aluminum Products sales decreased 17.7%. Same location sales were down
19.8%, and were slightly offset by one acquisition. Reduced die cast component
sales reflect weak market demand for a variety of consumer and industrial
products, including castings for barbecue grills, diesel truck engine
components, and castings for small gasoline engines, outdoor lighting and
electrical products, and the telecom industry. EBIT decreased 43.4% due to
reduced volumes, decreased efficiencies, and higher natural gas costs. Partially
offsetting these items were lower costs from reduced overhead and the
elimination of one smelter operation.
Industrial Materials sales decreased 6.5%. Same location sales were
down 10.6%, and were partially offset by acquisitions. EBIT declined 36.4%,
mainly as a result of reduced
sales and lower utilization. Non-recurring costs, including the closure of a
wire mill, accounted for about two-fifths of the decline in EBIT.
Specialized Product sales increased 32.7% due to acquisitions. Same
location sales declined 7.9%, due primarily to slowing production in automotive
markets. EBIT was down 15.7% due to reduced sales and changing product mix.
Seasonality
The Company does not experience significant seasonality, however,
quarter-to-quarter sales can vary in proportion to the total year by 1-2%.
Management estimates that this 1-2% sales impact can have, at current average
net margins and considering overhead absorption, an approximately 5-10% plus or
minus impact on quarter-to-quarter earnings. The timing of acquisitions and
economic factors in any year can distort the underlying seasonality in certain
of the Company's businesses. For the Company's businesses in total, the second
and third quarters have proportionately greater sales, while the first and
fourth quarters are lower. This small seasonality has become somewhat more
pronounced, with the fourth quarter particularly showing proportionately lower
sales due to the growth of the store fixtures business of Commercial
Furnishings.
Residential Furnishings and Commercial Furnishings typically have their
strongest sales in the second and third quarters. Commercial Furnishings
particularly has heavy third quarter sales of its store fixtures products, with
the first and fourth quarters generally lower. Aluminum Products sales are
proportionately greater in the first two calendar quarters due to gas barbecue
grill castings. Industrial Materials sales peak in the third and fourth quarters
from wire products used for baling cotton. Specialized Products has relatively
little quarter-to-quarter variation in sales, although the automotive business
is somewhat heavier in the first two quarters of the year, and somewhat lower in
the third quarter, due to model changeovers and plant shutdowns in the
automobile industry during the summer.
Forward-Looking Statements
This report and other public reports or statements made from time to
time by the Company or its management may contain "forward-looking" statements
concerning possible future events, objectives, strategies, trends or results.
Such statements are identified either by the context in which they appear or by
use of words such as "anticipate," "believe," "estimate," "expect," or the like.
Readers are cautioned that any forward-looking statement reflects only
the beliefs of the Company or its management at the time the statement is made.
In addition, readers should keep in mind that, because all forward-looking
statements deal with the future, they are subject to risks, uncertainties and
developments which might cause actual events or results to differ materially
from those envisioned or reflected in any forward-looking statement. Moreover,
the Company does not have and does not undertake any duty to update or revise
any forward-looking statement to reflect events or circumstances after the date
on which the statement was made. For all of these reasons, forward-looking
statements should not be relied upon as a prediction of actual future events,
objectives, strategies, trends or results.
It is not possible to anticipate and list all of the risks,
uncertainties and developments which may affect the future operations or
performance of the Company, or which otherwise may cause actual events or
results to differ from forward-looking statements. However, some of these risks
and uncertainties include the following: the Company's ability to improve
operations and realize cost savings, future growth of acquired companies,
competitive and general economic and market conditions and risks, such as the
rate of economic growth in the United States, inflation, government regulation,
interest rates, taxation, and the like; risks and uncertainties which could
affect industries or markets in which the Company participates, such as growth
rates and opportunities in those industries, or changes in demand for certain
products, etc.; and factors which could impact costs, including but not limited
to the availability and pricing of raw materials, the availability of labor and
wage rates, and fuel and energy costs.
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
During the first quarter of 2001 the Company issued 1,961 shares of its common
stock in a transaction which qualified for exemption from registration under the
Securities Act by virtue of Regulation D and Section 4(2) of the Securities Act.
The common stock was issued on February 22, 2001 to satisfy contractual
obligations in connection with the 2000 acquisition of Southern Bedding, Inc.
from its shareholders.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibit 12 - Computation of Ratio of Earnings to Fixed Charges
(B) No reports on Form 8-K have been filed during the quarter for which
this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LEGGETT & PLATT, INCORPORATED
DATE: May 9, 2001 By: /s/ FELIX E. WRIGHT
-------------------------
Felix E. Wright
President and
Chief Executive Officer
DATE: May 9, 2001 By: /s/ MICHAEL A. GLAUBER
-------------------------
Michael A. Glauber
Senior Vice President,
Finance and Administration
EXHIBIT INDEX
Exhibit Page
- ------- ----
12 Computation of Ratio of Earnings to Fixed Charges 17