2020 Annual Report
Annualize: To take a measurement covering a period of
less than one year and extrapolate it to cover a full year.
Basis Point: A unit of measure equal to 1/100th of 1%.
Bolt-on Acquisitions: Companies we acquire that produce, sell or distribute same or similar products in our same or adjacent markets. Often a small competitor.
Business Group or Unit: An organizational subset of Leggett & Platt’s operations; there are currently 7 business groups and 15 business units (BUs).
Capital Expenditure (Capex): Funds used to purchase physical assets including property, plant and equipment.
Cash Equivalents: Highly liquid assets; assets that can be readily converted into cash.
ComfortCore®: Our name for fabric-encased innerspring coils.
Commercial Paper: Unsecured (i.e. no collateral required), unregistered short-term debt that matures within 270 days.
Compressed Mattress: A mattress that is flattened, vacuum-sealed in plastic, folded, rolled, and boxed for warehousing and shipment to consumers. Often referred to as boxed beds.
Content Gains: Growing our sales by placing more of our components and features into our customers’ products.
Continuing Operations: The core businesses the company expects to continue to own and operate for the foreseeable future.
Critical Components: Highly engineered, co-designed components essential to end-product functionality, that make up a small percentage of its total cost.
Deverticalization: Leggett & Platt’s term for encouraging customers to cease making their own components. Leggett becomes their component supplier, freeing them to concentrate on retailing, marketing, and assembly.
Dividend: The portion of a company’s profit paid to shareholders, usually in cash.
Dividend Aristocrat: A company in the S&P 500 with a track record of increasing dividends for at least 25 consecutive years.
Dividend Yield: The portion of the stock price returned to shareholders annually as dividends (equal to dividends declared divided by stock price). For example, a stock selling for $20 that pays shareholders $1.00 in annual dividends has a dividend yield of 5.0% (= 1.00 / 20.00).
EBIT: Earnings Before Interest and Taxes.
EBIT, Adjusted: EBIT, adjusted to exclude items such as restructuring-related costs, impairments, gains or losses on sale, litigation accruals, etc. We make these adjustments to aid investors’ awareness of underlying operational profitability.
EBIT Margin: EBIT divided by sales; equal to the amount of EBIT earned per dollar of sales.
EBIT Margin, Adjusted: Adjusted EBIT divided by sales.
EBITDA: EBIT + Depreciation + Amortization.
EPS: Earnings Per Share. After-tax profit divided by the weighted average number of shares of stock. For instance, a company earning $6 million, with 3 million shares of stock, has an EPS of $2 per share.
EPS, Adjusted: EPS, adjusted to exclude items such as restructuring-related costs, impairments, gains or losses on sale, litigation accruals, unusual tax items, etc. We make these adjustments to aid investors’ awareness of underlying operational profitability.
Equity: Another term for net worth. A company’s total assets minus total liabilities.
Form 10-K: An annual report filed with the SEC by public companies.
Forward-Looking Statements: Comments a company makes regarding beliefs or expectations about the future.
Geo Components: Products used for ground stabilization and erosion control.
Goodwill: The premium paid for an acquisition; the amount paid in excess of the fair market value of the assets acquired.
Gross Margin: Gross profit (which is trade sales less cost of goods sold) divided by trade sales.
Hedge: An investment made specifically to reduce or eliminate risks related to items such as interest rates, foreign currency exchange rates, and commodity costs.
Hybrid Mattress: Mattresses that combine layers of specialty foam on top of innerspring cores.
Impairment: A reduction in the balance sheet value of assets to reflect current estimated fair value; typically a non-cash charge.
Innerspring: The set of steel coil springs, bound together to form the core of a mattress.
Intangible Asset: A non-financial asset lacking physical substance; examples include goodwill, patents, trademarks, and licenses.
Investment Grade Debt Rating: A designation published by credit rating agencies that indicates lower risk associated with investing in a company’s bonds or commercial paper.
Letter of Credit: A bank-issued “promise to pay” that ensures sellers that the buyer will pay.
LIFO: “Last In, First Out”; an inventory accounting method that assumes the products acquired last are the first ones sold.
Long-Term Debt: Liability, such as a bond or a note, that matures (i.e. must be repaid) more than one year into the future.
Maker/User: Leggett & Platt’s term for a customer that makes its own components for use in the assembly of a product it manufactures.
Metal Margin: The difference between the selling price of steel rod and the cost of steel scrap.
Motion Mechanism: The component that enables furniture to recline, tilt, swivel, and elevate; usually made from steel.
Net Debt to EBITDA, Adjusted: An indicator of financial leverage; the ratio of net debt (total debt less cash and cash equivalents) to adjusted EBITDA.
Organic Sales Growth: The amount of sales increase not attributable to acquisitions or divestitures; i.e. in the same plants and facilities the company operated one year earlier.
Payout Ratio: The percentage of earnings that is paid to shareholders; dividends declared divided by continuing operations adjusted EPS.
Quantum® Edge: Narrow-diameter, fabric-encased coils that form a perimeter around a ComfortCore® innerspring set, replacing a rigid foam perimeter in a finished mattress.
Return on Invested Capital (ROIC): Adjusted EBIT- taxes / average (debt + equity – cash); a measure of how efficiently a company uses investors’ funds to generate income.
Revolving Credit: Contractual agreement to loan up to a specified amount of money, for a specified period of time; any amounts repaid can be borrowed again.
S&P 500: An index of 500 widely held large-company stocks that reflects the general performance of the U.S. stock market.
Segment: A major subset of the company’s operations that contains business groups and units. Leggett reports results in three segments.
Steel Rod: Commodity product produced at steel mills. Rod looks like a coil of thick wire and is rolled (or formed) from a billet (which is a long bar of steel). Rod is commonly used to make wire, reinforcing mesh, bolts, and nails.
Styles of Competition: The fundamental traits of our businesses, or where and how we compete.
Total Shareholder Return (TSR): Total benefit investor realizes from owning our stock; equal to: (Change in Stock Price + Dividends) / Initial Stock Price.
Trade Sales: Overall sales to third parties net of discounts, rebates, and return of product. Also referred to as net trade sales.
Working Capital: Current assets less current liabilities. Sometimes modified to exclude cash and cash equivalents, as well as current maturities of long-term debt, to better analyze operating efficiency.