Form 10-Q LEGGETT & PLATT INC For: Mar 31

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leg-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-07845

LEGGETT & PLATT, INCORPORATED

(Exact name of registrant as specified in its charter)


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)

(417) 358-8131

Registrant’s telephone number, including area code

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $.01 par value	LEG	New York Stock Exchange

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 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Common stock outstanding as of May 2, 2022: 133,560,254

LEGGETT & PLATT, INCORPORATED

FORM 10-Q

TABLE OF CONTENTS


		Page Number
	Forward-Looking Statements	1
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements.
	Consolidated Condensed Balance Sheets at March 31, 2022 and December 31, 2021	3
	Consolidated Condensed Statements of Operations for the three months ended March 31, 2022 and 2021	4
	Consolidated Condensed Statements of Comprehensive Income (Loss) for the three months ended March 31, 2022 and 2021	5
	Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 2022 and 2021	6
	Notes to Consolidated Condensed Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	35
Item 4.	Controls and Procedures.	36

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	37
Item 1A.	Risk Factors.	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	42

Item 6.	Exhibits.	43
SIGNATURES		44

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q and our other public disclosures, whether written or oral, may contain “forward-looking” statements including, but not limited to: projections of Company revenue, income, earnings, capital expenditures, dividends, capital structure, cash flows from operations, cash repatriation, restructuring-related costs, tax impacts, effective tax rate, maintenance of indebtedness under the commercial paper program, litigation exposure, acquisitions, industry demand projections, the amount of share repurchases, or other financial items; possible plans, goals, objectives, prospects, strategies or trends concerning future operations; statements concerning future economic performance; possible goodwill or other asset impairment, access to liquidity, compliance with debt covenant requirements, amount of fixed costs savings, raw material availability and pricing, supply chain disruptions, labor, semiconductor and chemical shortages, inventory levels, customer requirements, and the underlying assumptions relating to forward-looking statements. These statements are identified either by the context in which they appear or by use of words such as “anticipate,” “believe,” “estimate,” “expect,” “guidance,” “intend,” “may,” “plan,” “project,” “should,” or the like. All such forward-looking statements, whether written or oral, and whether made by us or on our behalf, are expressly qualified by the cautionary statements described in this provision.

Any forward-looking statement reflects only the beliefs of the Company or its management at the time the statement is made. 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, we do not have, and do 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.

Readers should review Item 1A Risk Factors in our Form 10-K filed February 22, 2022 and in this Form 10-Q for a description of important factors that could cause actual events or results to differ materially from forward-looking statements. It is not possible to anticipate and list all risks, uncertainties, and developments which may affect our future operations or our performance, or which otherwise may cause actual events or results to differ materially from forward-looking statements. However, the known, material risks and uncertainties include the following:

•the adverse impact on our supply chain and global inflationary impacts from the Russian invasion of Ukraine;

•the adverse impact of delays and non-delivery of raw materials, parts, and finished products in our supply chain from natural disaster, fire or explosion, terrorism, pandemics (such as COVID-19), government action, strikes or shutdowns at delivery ports, losses due to tampering, third-party vendor issues with quality, failure by our suppliers to comply with applicable laws and regulations, potential tariffs or other trade restrictions, or other reasons beyond our control;

•the adverse impact on our trade sales, earnings, liquidity, cash flow, and financial condition caused by the COVID-19 pandemic, which has had, and depending on the length and severity of the pandemic, the percentage of the population vaccinated, and the effectiveness of any vaccines against new variants, could, in varying degrees, negatively impact, among other things (i) the demand for our products and our customers’ products, growth rates in the industries in which we participate, and opportunities in those industries; (ii) our manufacturing facilities’ ability to remain open and fully operational, obtain necessary raw materials and parts, maintain appropriate labor levels, and ship finished products to customers due to supply chain disruptions or otherwise; (iii) our ability to collect trade and other notes receivables in accordance with their terms due to customer bankruptcy, financial difficulties, or insolvency; (iv) impairment of goodwill and long-lived assets; (v) restructuring and related costs; and (vi) our ability to borrow under our credit facility, including our ability to comply with the restrictive covenants in our credit facility that may limit our operational flexibility and our ability to pay our debt;

•our ability to manage working capital;

•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, chemicals, semiconductors, the availability of labor, wage rates, and energy costs;

•our ability and the ability of our customers and suppliers to retain an adequate labor force as a result of COVID-19 vaccination and testing mandates;

•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 access the commercial paper market;

•our ability to maintain and grow the profitability of acquired companies;

•adverse changes in political risk and U.S. or foreign laws, regulations, or legal systems (including tax law changes);

•cash generation sufficient to pay the dividend;

•our ability to realize deferred tax assets on our balance sheet;

•cash repatriation from foreign accounts;

•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 and industrial control systems through cybersecurity breaches;

•the loss of business with one or more of our significant customers;

•our ability to comply with environmental, social, and governance responsibilities;

•litigation risks related to various contingencies including antitrust, intellectual property, contract disputes, product liability and warranty, taxation, environmental, and workers’ compensation expense;

•our borrowing costs and access to liquidity resulting from credit rating changes;

•business disruptions to our steel rod mill;

•risks related to operating in foreign countries, including, without limitation, credit risks, ability to enforce intellectual property rights, currency exchange rate fluctuations, industry labor strikes, increased customs and shipping rates, and inconsistent interpretation and enforcement of foreign laws;

•risks relating to the United Kingdom’s exit from the European Union (commonly known as “Brexit”);

•the effectiveness and enforcement of antidumping and countervailing duties on the import of innersprings, steel wire rod, and finished mattresses;

•our ability to comply with privacy and data protection regulations; and

•our ability to comply with climate change laws and regulations.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

LEGGETT & PLATT, INCORPORATED

CONSOLIDATED CONDENSED BALANCE SHEETS

(Unaudited)


(Amounts in millions)	March 31, 2022		December 31, 2021
CURRENT ASSETS
Cash and cash equivalents	$	327.3	$	361.7
Trade receivables, net	666.5		620.0
Other receivables, net	38.4		31.5
Total receivables, net	704.9		651.5
Inventories	1,045.8		993.2
Prepaid expenses and other current assets	60.0		58.9

Total current assets	2,138.0		2,065.3
PROPERTY, PLANT AND EQUIPMENT—AT COST
Machinery and equipment	1,438.6		1,435.0
Buildings and other	766.5		772.1
Land	45.2		44.1
Total property, plant and equipment	2,250.3		2,251.2
Less accumulated depreciation	1,481.7		1,469.7
Net property, plant and equipment	768.6		781.5
OTHER ASSETS
Goodwill	1,445.6		1,449.6
Other intangibles, less accumulated amortization of $309.2 and $298.1 as of March 31, 2022 and December 31, 2021, respectively	688.1		707.8
Operating lease right-of-use assets	190.8		192.6
Sundry	110.7		110.5

Total other assets	2,435.2		2,460.5
TOTAL ASSETS	$	5,341.8	$	5,307.3
CURRENT LIABILITIES
Current maturities of long-term debt	$	301.3	$	300.6
Current portion of operating lease liabilities	45.8		44.5
Accounts payable	622.0		613.8
Accrued expenses	279.3		284.6
Other current liabilities	102.8		92.2

Total current liabilities	1,351.2		1,335.7
LONG-TERM LIABILITIES
Long-term debt	1,803.1		1,789.7
Operating lease liabilities	150.0		153.0
Other long-term liabilities	146.4		162.9
Deferred income taxes	219.7		217.4
Total long-term liabilities	2,319.2		2,323.0
COMMITMENTS AND CONTINGENCIES
EQUITY
Common stock	2.0		2.0
Additional contributed capital	556.4		557.9
Retained earnings	3,006.0		2,973.0
Accumulated other comprehensive loss	(45.2)		(38.3)
Treasury stock	(1,848.4)		(1,846.6)
Total Leggett & Platt, Inc. equity	1,670.8		1,648.0
Noncontrolling interest	.6		.6
Total equity	1,671.4		1,648.6
TOTAL LIABILITIES AND EQUITY	$	5,341.8	$	5,307.3

See accompanying notes to consolidated condensed financial statements.

LEGGETT & PLATT, INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended
	March 31,
(Amounts in millions, except per share data)	2022		2021
Net trade sales	$	1,322.3	$	1,150.9
Cost of goods sold	1,055.0		903.4
Gross profit	267.3		247.5
Selling and administrative expenses	111.7		106.3
Amortization of intangibles	17.0		15.8


Other (income) expense, net	1.0		(2.3)
Earnings before interest and income taxes	137.6		127.7
Interest expense	20.7		19.3
Interest income	1.2		.9
Earnings before income taxes	118.1		109.3
Income taxes	27.7		21.8


Net earnings	90.4		87.5
(Earnings) attributable to noncontrolling interest, net of tax	—		—
Net earnings attributable to Leggett & Platt, Inc. common shareholders	$	90.4	$	87.5






Net earnings per share attributable to Leggett & Platt, Inc. common shareholders
Basic	$	.66	$	.64
Diluted	$	.66	$	.64

Weighted average shares outstanding
Basic	136.6		136.0
Diluted	136.9		136.3

See accompanying notes to consolidated condensed financial statements.

LEGGETT & PLATT, INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Three Months Ended
	March 31,
(Amounts in millions)	2022		2021
Net earnings	$	90.4	$	87.5
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	(8.8)		(14.3)
Cash flow hedges	1.0		1.1
Defined benefit pension plans	.9		.8
Other comprehensive income (loss)	(6.9)		(12.4)
Comprehensive income (loss)	83.5		75.1
Add: comprehensive loss attributable to noncontrolling interest	—		—
Comprehensive income (loss) attributable to Leggett & Platt, Inc.	$	83.5	$	75.1

See accompanying notes to consolidated condensed financial statements.

LEGGETT & PLATT, INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(Amounts in millions)	2022		2021
OPERATING ACTIVITIES
Net earnings	$	90.4	$	87.5
Adjustments to reconcile net earnings to net cash provided by (used for) operating activities:
Depreciation	28.2		29.1
Amortization of intangibles and supply agreements	17.5		17.0


Increase (decrease) in provision for losses on accounts and notes receivable	1.4		(3.3)
Writedown of inventories	3.2		2.9
Net gain from sales of assets and businesses	(.7)		—

Deferred income tax expense	2.0		.8
Stock-based compensation	12.9		12.4


Other, net	(1.5)		(4.5)
Increases/decreases in, excluding effects from acquisitions and divestitures:
Accounts and other receivables	(57.8)		(34.8)
Inventories	(58.3)		(107.2)
Other current assets	(1.2)		3.2
Accounts payable	11.4		(12.7)
Accrued expenses and other current liabilities	(8.5)		(1.0)
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES	39.0		(10.6)
INVESTING ACTIVITIES
Additions to property, plant and equipment	(18.7)		(24.0)
Purchases of companies, net of cash acquired	—		(27.3)
Proceeds from sales of assets and businesses	2.4		—

Other, net	—		1.4
NET CASH USED FOR INVESTING ACTIVITIES	(16.3)		(49.9)
FINANCING ACTIVITIES

Payments on long-term debt	(.1)		(12.6)
Change in commercial paper and short-term debt	21.0		121.8

Dividends paid	(56.0)		(53.0)
Issuances of common stock	—		2.0
Purchases of common stock	(21.6)		(8.7)


Other, net	(.4)		(.4)
NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES	(57.1)		49.1
EFFECT OF EXCHANGE RATE CHANGES ON CASH	—		(3.7)
DECREASE IN CASH AND CASH EQUIVALENTS	(34.4)		(15.1)
CASH AND CASH EQUIVALENTS—January 1,	361.7		348.9
CASH AND CASH EQUIVALENTS—March 31,	$	327.3	$	333.8

See accompanying notes to consolidated condensed financial statements.

LEGGETT & PLATT, INCORPORATED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

(Amounts in millions, except per share data)

1. 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, 2021 financial position data included herein was derived from the audited consolidated financial statements, but does not include all disclosures required by GAAP.

Accounts Receivable and Accounts Payable Programs

We participate in trade receivables sales programs in combination with certain customers and third-party banking institutions. Under each of these programs, we sell our entire interest in the trade receivable for 100% of face value, less a discount. Because control of the sold receivable is transferred to the buyer at the time of sale, accounts receivable balances sold are removed from the Consolidated Condensed Balance Sheets and the related proceeds are reported as cash provided by operating activities in the Consolidated Condensed Statements of Cash Flows. We had approximately $40.0 and $35.0 of trade receivables that were sold and removed from our Consolidated Condensed Balance Sheets at March 31, 2022 and December 31, 2021, respectively.

We sometimes utilize third-party programs that allow our suppliers to be paid earlier at a discount. While these programs assist us in negotiating payment terms with our suppliers, we continue to make payments based on our customary terms. A vendor can elect to take payment from a third party earlier with a discount, and in that case, we pay the third party on the original due date of the invoice. Contracts with our suppliers are negotiated independently of supplier participation in the programs, and we cannot increase payment terms pursuant to the programs. The accounts payable associated with the third-party programs, which remain on our Consolidated Condensed Balance Sheets, were approximately $130.0 at both March 31, 2022 and December 31, 2021.

While we utilize the above items as tools in our cash flow management, and offer them as options to facilitate customer and vendor operating cycles, if there were to be a cessation of these programs, we do not expect it would materially impact our operating cash flows or liquidity.

2. ACCOUNTING STANDARDS 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). The FASB has issued accounting guidance effective for current and future periods that did not have a material impact on our current financial statements, and we do not believe it will have any material impact on our future financial statements.

LEGGETT & PLATT, INCORPORATED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

3. REVENUE

Revenue by Product Family

We disaggregate revenue by customer group, which is the same as our product families 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. For information on our segment structure, see Note 4.


	Three Months Ended March 31,
	2022		2021
Bedding Products
Bedding Group	$	639.4	$	535.8


Specialized Products
Automotive Group	207.5		210.8
Aerospace Products Group	29.0		23.7
Hydraulic Cylinders Group	27.6		23.1
	264.1		257.6

Furniture, Flooring & Textile Products
Home Furniture Group	118.4		96.1
Work Furniture Group	83.7		63.7
Flooring & Textile Products Group	216.7		197.7
	418.8		357.5
	$	1,322.3	$	1,150.9

4. SEGMENT INFORMATION

We have three operating segments that supply a wide range of products:

•Bedding Products: This segment supplies a variety of components and machinery used by bedding manufacturers in the production and assembly of their finished products, as well as produces private label finished mattresses for bedding brands and adjustable bed bases. This segment is also vertically integrated into the production and supply of specialty foam chemicals, steel rod, and drawn steel wire to our own operations and to external customers. Our trade customers for wire make mechanical springs and many other end products.

•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.

•Furniture, Flooring & Textile 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. We also produce or distribute carpet cushion, hard surface flooring underlayment, and textile and geo components.

Our reportable segments are the same as our operating segments, which also correspond with our management organizational structure. Each reportable segment has a vice president who has accountability to, and maintains regular contact with, our 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.

LEGGETT & PLATT, INCORPORATED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

A summary of segment results is shown in the following tables.


	Trade 1 Sales		Inter- Segment Sales		Total Sales		EBIT		Depreciation and Amortization
Three Months Ended March 31, 2022
Bedding Products	$	639.4	$	12.0	$	651.4	$	76.2	$	26.2
Specialized Products	264.1		.9		265.0		20.3		10.8
Furniture, Flooring & Textile Products	418.8		4.3		423.1		42.7		5.9
Intersegment eliminations and other 2							(1.6)		2.8
	$	1,322.3	$	17.2	$	1,339.5	$	137.6	$	45.7
Three Months Ended March 31, 2021
Bedding Products	$	535.8	$	10.0	$	545.8	$	63.8	$	26.1
Specialized Products	257.6		.9		258.5		35.2		11.1
Furniture, Flooring & Textile Products	357.5		3.6		361.1		28.3		6.1
Intersegment eliminations and other 2							.4		2.8
	$	1,150.9	$	14.5	$	1,165.4	$	127.7	$	46.1

1 See Note 3 for revenue by product family.

2 Depreciation and Amortization: Other relates to non-operating assets (assets not included in segment assets) and is allocated to segment EBIT as discussed above.

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.


	March 31, 2022		December 31, 2021
Bedding Products	$	947.2	$	836.0
Specialized Products	335.5		316.7
Furniture, Flooring & Textile Products	402.1		373.5

Average current liabilities included in segment numbers above	833.3		814.1
Unallocated assets 1	2,791.5		2,828.5
Difference between average assets and period-end balance sheet	32.2		138.5
Total assets	$	5,341.8	$	5,307.3

1 Unallocated assets consist primarily of goodwill, other intangibles, cash and deferred tax assets.

LEGGETT & PLATT, INCORPORATED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

5. EARNINGS PER SHARE (EPS)

Basic and diluted earnings per share were calculated as follows:


	Three Months Ended March 31,
	2022		2021
Net earnings
Net earnings	$	90.4	$	87.5
(Earnings) attributable to noncontrolling interest, net of tax	—		—


Net earnings attributable to Leggett & Platt, Inc. common shareholders	$	90.4	$	87.5

Weighted average number of shares (in millions):
Weighted average number of common shares used in basic EPS	136.6		136.0
Dilutive effect of stock-based compensation	.3		.3
Weighted average number of common shares and dilutive potential common shares used in diluted EPS	136.9		136.3

Basic and diluted EPS:



Basic EPS attributable to Leggett & Platt common shareholders	$	.66	$	.64




Diluted EPS attributable to Leggett & Platt common shareholders	$	.66	$	.64

Other information:
Anti-dilutive shares excluded from diluted EPS computation	.4		.2

Cash dividends declared per share	$	.42	$	.40

LEGGETT & PLATT, INCORPORATED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

6. ACCOUNTS AND OTHER RECEIVABLES

Accounts and other receivables consisted of the following:


	March 31, 2022				December 31, 2021
	Current		Long-term		Current		Long-term
Trade accounts receivable 1	$	682.5	$	—	$	634.2	$	—
Trade notes receivable	.4		.1		.7		.2
Total trade receivables	682.9		.1		634.9		.2


Other notes receivable 1	—		23.0		.7		22.5

Taxes receivable, including income taxes	29.5		—		18.8		—
Other receivables	8.9		—		12.0		—
Subtotal other receivables	38.4		23.0		31.5		22.5
Total trade and other receivables	721.3		23.1		666.4		22.7
Allowance for doubtful accounts:
Trade accounts receivable 1	(16.4)		—		(14.9)		—
Trade notes receivable	—		(.1)		—		(.1)
Total trade receivables	(16.4)		(.1)		(14.9)		(.1)
Other notes receivable 1	—		(21.8)		—		(22.0)
Total allowance for doubtful accounts	(16.4)		(21.9)		(14.9)		(22.1)
Total net receivables	$	704.9	$	1.2	$	651.5	$	.6

1 The “Trade accounts receivable” and “Other notes receivable” line items above include an aggregate of $22.2 ($21.8 for the note and $.4 for the trade receivable) and $22.5 ($22.0 for the note and $.5 for the trade receivable) as of March 31, 2022 and December 31, 2021, respectively, from a customer that has experienced continued financial difficulty and liquidity problems. The balances for this customer were fully reserved for all periods presented.

Activity related to the allowance for doubtful accounts is reflected below:


	Balance at December 31, 2021		Add: Charges		Less: Net Charge-offs/ (Recoveries) and Other		Balance at March 31, 2022
Trade accounts receivable	$	14.9	$	1.6	$	.1	$	16.4
Trade notes receivable	.1		—		—		.1
Total trade receivables	15.0		1.6		.1		16.5
Other notes receivable	22.0		(.2)		—		21.8
Total allowance for doubtful accounts	$	37.0	$	1.4	$	.1	$	38.3

LEGGETT & PLATT, INCORPORATED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

7. STOCK-BASED COMPENSATION

The following table recaps the impact of stock-based compensation on the results of operations for each of the periods presented:


	Three Months Ended March 31, 2022				Three Months Ended March 31, 2021
	To be settled with stock		To be settled in cash		To be settled with stock		To be settled in cash


Executive Stock Unit (ESU) program contributions	$	1.2	$	.2	$	1.4	$	.1
Discounts on various stock awards:
Deferred Stock Compensation Program	.4		—		.4		—
ESU program	.4		—		.3		—
Discount Stock Plan	.2		—		.2		—
Performance Stock Unit (PSU) awards: 1
PSU - TSR based 1A	.6		—		.8		.3
PSU - EBIT CAGR based 1B	.4		(.2)		1.7		2.2

Restricted Stock Unit (RSU) awards	6.7		—		5.3		—

Other, primarily non-employee directors restricted stock	.5		—		—		—
Total stock-related compensation expense	10.4		$	—	10.1		$	2.6
Employee contributions for above stock plans	2.5				2.3
Total stock-based compensation	$	12.9			$	12.4

Tax benefits on stock-based compensation expense	$	2.6			$	2.5
Tax benefits on stock-based compensation payments	.6				2.6
Total tax benefits associated with stock-based compensation	$	3.2			$	5.1

1 PSU Awards

For the following programs, we intend to pay 50% in shares of our common stock and 50% in cash, although we reserve the right, subject to Compensation Committee approval, to pay up to 100% in cash. Cash settlements are recorded as a liability and adjusted to fair value at each reporting period.

1A PSU - TSR based

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 component of the PSU awards contain the following conditions:

•A service requirement—Awards generally “cliff” vest three years following the grant date; and

•A market condition—Awards are based on our TSR 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 300 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.

1B PSU - EBIT CAGR based

PSU awards are based 50% 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.

LEGGETT & PLATT, INCORPORATED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The EBIT CAGR component of the PSU awards contain the following conditions:

•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 EBIT during the fiscal year immediately preceding the performance period. Participants will earn from 0% to 200% of the base award.

Below is a summary of shares and grant date fair value related to PSU awards for the periods presented:


	Three Months Ended March 31,
	2022			2021
TSR based
Total shares base award	.1			.1
Grant date per share fair value	$	41.13		$	49.43
Risk-free interest rate	.2		%	.2		%
Vesting period in years	3.0			3.0
Expected volatility (over expected life)	45.2		%	44.3		%
Expected dividend yield (over expected life)	4.6		%	3.7		%

EBIT CAGR based
Total shares base award	.1			.1
Grant date per share fair value	$	32.88		$	38.77
Vesting period in years	3.0			3.0

Three-Year Performance Cycle for PSU - TSR Based

Award Year

Completion Date

Payout as a
Percent of the
Base Award

Number of Shares
Distributed

Cash Portion

Distribution Date

TSR Performance
Relative to the Peer Group (1%=Best)

2018

December 31, 2020

56.0%

<.1 million

2.0

First quarter 2021

th percentile

2019

December 31, 2021

—%

— million

—

First quarter 2022

th percentile

Three-Year Performance Cycle for PSU - EBIT CAGR Based

Award Year

Completion Date

Payout as a
Percent of the
Base Award

Number of Shares
Distributed

Cash Portion

Distribution Date

2018

December 31, 2020

16.0%

< .1 million

First quarter 2021

2019

December 31, 2021

127.0%

< .1 million

3.5

First quarter 2022

LEGGETT & PLATT, INCORPORATED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

8. ACQUISITIONS

The following table contains the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for all acquisitions during the periods presented (using inputs as discussed in Note 1 2). Of the goodwill included in the table below, none is expected to be deductible for tax purposes.


	Three Months Ended March 31,
	2021
Accounts receivable	$	4.7
Inventory	8.8
Property, plant and equipment	1.8
Goodwill	6.3
Other intangible assets:
Customer relationships (1 to 15-year life)	11.8


Noncompete agreements (1-year life)	.2
Other current and long-term assets	1.8
Current liabilities	(4.2)
Deferred income taxes	(2.7)
Other long-term liabilities	(1.2)







Net cash consideration	$	27.3

The following table summarizes acquisitions for the periods presented.

Three Months Ended

Number of Acquisitions

Segment

Product/Service

March 31, 2022

None

March 31, 2021

Specialized Products

Manufacturer of high-pressure and high-temperature ducting, flexible joints and components

The results of operations of the above acquired company have been included in the consolidated financial statements since the date of acquisition. The unaudited pro forma consolidated net sales, net earnings and earnings per share as though this acquisition had occurred on January 1 of each year presented is not materially different from the amounts reflected in the accompanying financial statements.

A brief description of our acquisition activity during the periods presented is included below.

2022

No businesses were acquired during the first three months of 2022.

2021

We acquired one business:

•A UK manufacturer specializing in metallic ducting systems, flexible joints, and components for space, military, and commercial applications. This acquisition expands the capabilities of our aerospace products business to include flexible joint fabrication and operates within our Specialized Products segment. The acquisition date was January 30. Following the recording of measurement period adjustments subsequent to first quarter 2021 shown above, the final purchase price was $27.7, with total goodwill of $8.5.

LEGGETT & PLATT, INCORPORATED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

9. INVENTORIES

The following table recaps the components of inventory for each period presented:


	March 31, 2022		December 31, 2021
Finished goods	$	462.9	$	429.1
Work in process	91.9		66.9
Raw materials and supplies	491.0		497.2

Inventories	$	1,045.8	$	993.2

All inventories are stated at the lower of cost or net realizable value. We generally use standard costs which include materials, labor, and production overhead at normal production capacity.

Inventories are reviewed at least quarterly for slow-moving and potentially obsolete items using actual inventory turnover and, if necessary, are written down to estimated net realizable value. We have had no material changes in inventory writedowns or slow-moving and obsolete inventory reserves in any of the periods presented.

10. EMPLOYEE BENEFIT PLANS

Employer contributions for 2022 are expected to approximate $3.0.

The following table provides interim information as to our domestic and foreign defined benefit pension plans:


	Three Months Ended March 31,
	2022		2021
Components of net pension expense
Service cost	$	1.3	$	1.2
Interest cost	1.7		1.5
Expected return on plan assets	(3.3)		(3.1)
Recognized net actuarial loss	.7		1.3
Net pension expense	$	.4	$	.9

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.

LEGGETT & PLATT, INCORPORATED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

11. STATEMENT OF CHANGES IN EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)


	Three Months Ended March 31, 2022
	Total Equity		Retained Earnings		Common Stock & Additional Contributed Capital		Treasury Stock		Noncontrolling Interest		Accumulated Other Comprehensive Income (Loss)
Beginning balance, January 1, 2022	$	1,648.6	$	2,973.0	$	559.9	$	(1,846.6)	$	.6	$	(38.3)


Net earnings	90.4		90.4		—		—		—		—

Dividends declared (See Note 5)	(56.1)		(57.4)		1.3		—		—		—

Treasury stock purchased	(21.6)		—		—		(21.6)		—		—
Treasury stock issued	5.7		—		(14.1)		19.8		—		—
Foreign currency translation adjustments	(8.8)		—		—		—		—		(8.8)
Cash flow hedges, net of tax	1.0		—		—		—		—		1.0
Defined benefit pension plans, net of tax	.9		—		—		—		—		.9
Stock-based compensation transactions, net of tax	11.3		—		11.3		—		—		—

Ending balance, March 31, 2022