Item 8.01 Other Events.
Leggett & Platt, Incorporated(the "Company") is making this filing to update the presentation of certain financial information and related disclosures contained in its Form 10-K for the year ended December 31, 2020(the "2020 Form 10-K") to reflect a change from last-in, first-out ("LIFO") to the first-in, first-out ("FIFO") inventory cost method.
Beginning with Q1 2021 Form 10-Q, we changed our method of valuing certain inventories (primarily domestic steel-related inventories, primarily in Bedding & Furniture, Flooring & Textile Products segments ) the FIFO cost method from the LIFO cost. method. We believe this change in accounting is preferable because it is more like the physical flow of inventory, is a more consistent method of valuing inventory across our businesses, and results in better comparability with industry peers. After this change, we no longer use the LIFO cost method; the majority of our stocks are now valued using the FIFO method, the rest being valued using the average cost method.
Prior to 2019, the LIFO inventories represented approximately 50% of our inventories. With the acquisition of
Elite Comfort Solutions, Inc.("ECS") in the first quarter of 2019, LIFO inventories decreased to roughly 40%, as ECS did not utilize the LIFO method. At December 31, 2020, our LIFO inventories were lower than historical levels and represented about one-third of our total inventories. This was due to the sharp increase in demand that began in the second quarter of 2020 and several divestitures and closures of operations using the LIFO cost method in the last three years. With the change from LIFO to FIFO, we expect to make tax payments of $21 million, in the aggregate, during the years 2021- 2023 based on current tax rates. This change will also increase our reported working capital. Our LIFO reserve at December 31, 2020was $55 millionand has averaged approximately $60 millionover the last four years. When the LIFO reserve is eliminated, the book value of our inventory will increase. Our days inventory outstanding ("DIO") under the LIFO cost method for the year ended December 31, 2020was 69 days compared to 74 days under the FIFO method. The exhibits to this Form 8-K supersede and replace the following items in the 2020 Form 10-K to reflect, retrospectively, the adjustments resulting from the elimination of LIFO for all periods presented. The retrospectively adjusted items are attached as Exhibits 99.1 , 99.2 and 99.3 and are incorporated herein by reference.
• Exhibit 99.1 – Revised item of selected financial data
• Exhibit 99.2 – Revised point of management’s analysis of the financial position and
7. Results of Operations
• Exhibit 99.3 – Item Revised Financial Statements and Schedule of Financial Statements
15(a). (including but not limited to
revisions to Note A – Summary of
Significant Accounting Policies; Note
C – Depreciation charges; Note E –
Charges related to restructuring; Note F – Segment
Information; Note G - Earnings Per
Share; Note H – Accounts and others
Receivables; Note N - Income Taxes;
Note O – Other charges (income);
Note R - Acquisitions; and the
Quarterly summary of income.
The information related to the elimination of the LIFO inventory methodology contained in this Form 8-K supersedes what was in the 2020 Form 10-K . All other information in the 2020 Form 10-K remains unchanged and has not been otherwise updated for transactions, events, or trends occurring, or risks and uncertainties arising after, the filing of the 2020 Form 10-K . For developments since the filing of the 2020 Form 10-K , please refer to the Company's Form 10-Q for the quarterly period ended March 31, 2021, as well as other filings the Company files with the
SEC. The information in this Current Report on Form 8-K should be read in conjunction with the 2020 Form 10-K
such subsequent filings. FORWARD LOOKING STATEMENTS This Current Report on Form 8-K, including the exhibits hereto, and our other public disclosures, whether written or oral, may contain "forward-looking" statements including, but not limited to: the profitable growth and operating performance of the Company; projections of Company revenue, income, earnings, capital expenditures, dividends, capital structure, cash from operations, cash repatriation, restructuring and related costs, tax impacts or other financial items, effective tax rate; maintenance of indebtedness under the commercial paper program; litigation exposure; our ability to deleverage; 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 the debt covenant requirements; amount of fixed cost savings; raw material availability and pricing; supply chain disruptions; labor, nonwoven fabric, microchips, and chemical shortages; employee termination costs; and the underlying assumptions relating to the 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 1 --------------------------------------------------------------------------------
statements, whether written or oral, and whether made by us or on our behalf, are expressly qualified by the caveats 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 consider the risk factors for Section 1A in our last filed form.
10-K and 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 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 and the timing and effectiveness of any vaccines, could continue, in varying degrees, to 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 fully operational, obtain necessary raw materials and parts, maintain appropriate labor levels, and ship finished products to customers; (iii) operating costs related to pay and benefits for our terminated employees; (iv) our ability to collect trade and other notes receivables in accordance with their terms due to customer bankruptcy, financial difficulties or insolvency; (v) impairment of goodwill and long-lived assets; (vi) restructuring and related costs; and (vii) our ability to borrow under our revolving 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 when it comes due; • inability to "deleverage" after the ECS acquisition, due to increases or decreases in our capital needs, which may vary depending on a variety of factors, including, without limitation, demand for our products, cash flow, any acquisition or divestiture activity, our working capital needs, and capital expenditures; • 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, nonwoven fabrics, microchips, 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 access the commercial paper market; • the speed at which vaccines for the COVID-19 virus are administered, the percentage of the population vaccinated, and the effectiveness of those vaccines; • 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 offshore 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, including our 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; 2
• 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, inconsistent interpretation, and enforcement of foreign laws; • risks relating to the
United Kingdom'sexit from the European Union(commonly known as "Brexit"); • the continued effectiveness and enforcement of anti-dumping 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. MARKET AND INDUSTRY DATA Unless we indicate otherwise, we base the information concerning our markets/industry contained herein on our general knowledge of and expectations concerning those markets/industry, on data from various industry analyses, on our internal research, and on adjustments and assumptions that we believe to be reasonable. However, we have not independently verified data from market/industry analyses and cannot guarantee their accuracy or completeness.
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