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~~2023


☐			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~~April 25, 2023: 133,111,789

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~~2023 and December 31, ~~2021~~2022	3
	Consolidated Condensed Statements of Operations for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022	4
	Consolidated Condensed Statements of Comprehensive Income (Loss) for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022	5
	Consolidated Condensed Statements of Cash Flows for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022	6
	Notes to Consolidated Condensed Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	2118
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	35
Item 4.	Controls and Procedures.	3635

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	3736
Item 1A.	Risk Factors.	3736
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	4243

Item 6.	Exhibits.	4344
SIGNATURES		4445

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, product demand, capital structure, cash flows from operations, metal margins, cash repatriation, restructuring-related costs, tax impacts, effective tax rate, maintenance of indebtedness under the commercial paper program, litigation exposure, ~~acquisitions,~~acquisition or disposition activity, industry demand projections, the amount of share repurchases, impact of accounts receivable and payable programs, defined benefit plan contributions, collectability of receivables, cost of property insurance, possible goodwill or other asset impairment, access to liquidity, compliance with debt covenant requirements, raw material and parts availability and pricing, supply chain disruptions, labor, semiconductor and chemical shortages, inventory levels, customer requirements, climate-related effects, 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~~24, 2023 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 semiconductor, natural gas, titanium, and birch plywood supply ~~chain~~chains, energy availability and costs, softening demand 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 (including chemicals and semiconductors) from severe weather-related events, natural disaster, fire or explosion, terrorism, pandemics, ~~(such as COVID-19),~~ government action, labor strikes or shutdowns at delivery ports, trucking constraints, 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)~~ industries as impacted by macroeconomic factors;

•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)~~ customers;

•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~~

•our ability to maintain and ~~related costs; and (vi)~~ grow the profitability of acquired companies;

•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 timely pay our debt;

•our ability to manage working capital;

•our ability to comply with new climate change laws and regulations, the cost of such laws and regulations, and market, technological and reputational impacts from climate change;

•the direct and indirect physical effects of climate change, including severe weather-related events, natural disasters, and changes in climate patterns, on our markets, operations, supply chains and results;

•increases or decreases in our capital needs, which may vary depending on acquisition or divestiture activity;

•the timing and amount of share repurchases;

•adverse changes in consumer confidence, housing turnover, employment levels, interest rates, trends in capital spending, and the like;

•~~factors that could impact~~inflationary and other impacts on raw materials and other costs, including the availability and pricing of steel scrap and rod, chemicals, semiconductors, and the ~~availability~~adverse impact of an inadequate labor force, 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)~~changes and trade costs);

•cash generation or debt availability sufficient to pay the dividend;

•our ability to realize deferred tax assets on our balance ~~sheet;~~sheet and challenges to our tax positions pursuant to ongoing audits;

•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;

•the disruption of the semiconductor industry and our global operations generally from conflict between China and Taiwan;

•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, climate change, environmental, and workers’ compensation expense;

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

•business disruptions to our steel rod ~~mill;~~mill, including but not limited to, a lack of adequate supply of steel scrap, severe weather impacts, natural disasters, fire and flooding;

•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;

•restructuring and related costs;

•export controls regarding the ability of U.S. companies to export semiconductor chips and equipment to China; and

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

•~~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)	(Amounts in millions)	March 31, 2022		December 31, 2021		(Amounts in millions)	March 31, 2023		December 31, 2022
CURRENT ASSETS	CURRENT ASSETS					CURRENT ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	327.3	$	361.7	Cash and cash equivalents	$	344.5	$	316.5
Trade receivables, net	Trade receivables, net	666.5		620.0		Trade receivables, net	642.2		609.0
Other receivables, net	Other receivables, net	38.4		31.5		Other receivables, net	76.0		66.0
Total receivables, net		704.9		651.5
Inventories	Inventories	1,045.8		993.2		Inventories	892.7		907.5
Prepaid expenses and other current assets	Prepaid expenses and other current assets	60.0		58.9		Prepaid expenses and other current assets	59.4		59.0

Total current assets	Total current assets	2,138.0		2,065.3		Total current assets	2,014.8		1,958.0
PROPERTY, PLANT AND EQUIPMENT—AT COST	PROPERTY, PLANT AND EQUIPMENT—AT COST					PROPERTY, PLANT AND EQUIPMENT—AT COST
Machinery and equipment	Machinery and equipment	1,438.6		1,435.0		Machinery and equipment	1,456.6		1,434.0
Buildings and other	Buildings and other	766.5		772.1		Buildings and other	808.0		791.0
Land	Land	45.2		44.1		Land	43.9		43.5
Total property, plant and equipment	Total property, plant and equipment	2,250.3		2,251.2		Total property, plant and equipment	2,308.5		2,268.5
Less accumulated depreciation	Less accumulated depreciation	1,481.7		1,469.7		Less accumulated depreciation	1,521.9		1,496.1
Net property, plant and equipment	Net property, plant and equipment	768.6		781.5		Net property, plant and equipment	786.6		772.4
OTHER ASSETS	OTHER ASSETS					OTHER ASSETS
Goodwill	Goodwill	1,445.6		1,449.6		Goodwill	1,473.6		1,474.4
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
Other intangibles, less accumulated amortization of $367.6 and $356.4 as of March 31, 2023 and December 31, 2022, respectively						Other intangibles, less accumulated amortization of $367.6 and $356.4 as of March 31, 2023 and December 31, 2022, respectively	660.4		675.4
Operating lease right-of-use assets	Operating lease right-of-use assets	190.8		192.6		Operating lease right-of-use assets	221.1		195.0
Sundry	Sundry	110.7		110.5		Sundry	113.5		110.9

Total other assets	Total other assets	2,435.2		2,460.5		Total other assets	2,468.6		2,455.7
TOTAL ASSETS	TOTAL ASSETS	$	5,341.8	$	5,307.3	TOTAL ASSETS	$	5,270.0	$	5,186.1
CURRENT LIABILITIES	CURRENT LIABILITIES					CURRENT LIABILITIES
Current maturities of long-term debt		$	301.3	$	300.6
Short-term debt and current maturities of long-term debt						Short-term debt and current maturities of long-term debt	$	8.9	$	9.4
Current portion of operating lease liabilities	Current portion of operating lease liabilities	45.8		44.5		Current portion of operating lease liabilities	55.1		49.5
Accounts payable	Accounts payable	622.0		613.8		Accounts payable	552.2		518.4
Accrued expenses	Accrued expenses	279.3		284.6		Accrued expenses	237.8		261.7
Other current liabilities	Other current liabilities	102.8		92.2		Other current liabilities	114.6		129.1

Total current liabilities	Total current liabilities	1,351.2		1,335.7		Total current liabilities	968.6		968.1
LONG-TERM LIABILITIES	LONG-TERM LIABILITIES					LONG-TERM LIABILITIES
Long-term debt	Long-term debt	1,803.1		1,789.7		Long-term debt	2,108.9		2,074.2
Operating lease liabilities	Operating lease liabilities	150.0		153.0		Operating lease liabilities	175.9		153.6
Other long-term liabilities	Other long-term liabilities	146.4		162.9		Other long-term liabilities	129.8		126.1
Deferred income taxes	Deferred income taxes	219.7		217.4		Deferred income taxes	219.7		222.7
Total long-term liabilities	Total long-term liabilities	2,319.2		2,323.0		Total long-term liabilities	2,634.3		2,576.6
COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIES	0		0		COMMITMENTS AND CONTINGENCIES
EQUITY	EQUITY					EQUITY
Common stock	Common stock	2.0		2.0		Common stock	2.0		2.0
Additional contributed capital	Additional contributed capital	556.4		557.9		Additional contributed capital	565.9		568.5
Retained earnings	Retained earnings	3,006.0		2,973.0		Retained earnings	3,039.6		3,046.0
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(45.2)		(38.3)		Accumulated other comprehensive loss	(71.8)		(93.5)
Treasury stock	Treasury stock	(1,848.4)		(1,846.6)		Treasury stock	(1,869.2)		(1,882.3)
Total Leggett & Platt, Inc. equity	Total Leggett & Platt, Inc. equity	1,670.8		1,648.0		Total Leggett & Platt, Inc. equity	1,666.5		1,640.7
Noncontrolling interest	Noncontrolling interest	.6		.6		Noncontrolling interest	.6		.7
Total equity	Total equity	1,671.4		1,648.6		Total equity	1,667.1		1,641.4
TOTAL LIABILITIES AND EQUITY	TOTAL LIABILITIES AND EQUITY	$	5,341.8	$	5,307.3	TOTAL LIABILITIES AND EQUITY	$	5,270.0	$	5,186.1

See accompanying notes to consolidated condensed financial statements.

LEGGETT & PLATT, INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)


		Three Months Ended				Three Months Ended
		March 31,				March 31,
(Amounts in millions, except per share data)	(Amounts in millions, except per share data)	2022		2021			(Amounts in millions, except per share data)	2023		2022
Net trade sales	Net trade sales	$	1,322.3	$	1,150.9		Net trade sales	$	1,213.6	$	1,322.3
Cost of goods sold	Cost of goods sold	1,055.0		903.4			Cost of goods sold	995.0		1,055.0
Gross profit	Gross profit	267.3		247.5			Gross profit	218.6		267.3
Selling and administrative expenses	Selling and administrative expenses	111.7		106.3			Selling and administrative expenses	116.0		111.7
Amortization of intangibles	Amortization of intangibles	17.0		15.8			Amortization of intangibles	16.9		17.0

Net gain from sale of assets and businesses							Net gain from sale of assets and businesses	(.3)		(.6)
Other (income) expense, net	Other (income) expense, net	1.0		(2.3)			Other (income) expense, net	(3.3)		1.6
Earnings before interest and income taxes	Earnings before interest and income taxes	137.6		127.7			Earnings before interest and income taxes	89.3		137.6
Interest expense	Interest expense	20.7		19.3			Interest expense	22.1		20.7
Interest income	Interest income	1.2		.9			Interest income	1.1		1.2
Earnings before income taxes	Earnings before income taxes	118.1		109.3			Earnings before income taxes	68.3		118.1
Income taxes	Income taxes	27.7		21.8			Income taxes	14.8		27.7

Net earnings	Net earnings	90.4		87.5			Net earnings	53.5		90.4
(Earnings) attributable to noncontrolling interest, net of tax	(Earnings) attributable to noncontrolling interest, net of tax	—		—			(Earnings) attributable to noncontrolling interest, net of tax	—		—
Net earnings attributable to Leggett & Platt, Inc. common shareholders	Net earnings attributable to Leggett & Platt, Inc. common shareholders	$	90.4	$	87.5		Net earnings attributable to Leggett & Platt, Inc. common shareholders	$	53.5	$	90.4

Net earnings per share attributable to Leggett & Platt, Inc. common shareholders	Net earnings per share attributable to Leggett & Platt, Inc. common shareholders						Net earnings per share attributable to Leggett & Platt, Inc. common shareholders
Basic	Basic	$	.66	$	.64		Basic	$	.39	$	.66
Diluted	Diluted	$	.66	$	.64		Diluted	$	.39	$	.66

Weighted average shares outstanding	Weighted average shares outstanding						Weighted average shares outstanding
Basic	Basic	136.6		136.0			Basic	135.9		136.6
Diluted	Diluted	136.9		136.3			Diluted	136.3		136.9

See accompanying notes to consolidated condensed financial statements.

LEGGETT & PLATT, INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


		Three Months Ended				Three Months Ended
		March 31,				March 31,
(Amounts in millions)	(Amounts in millions)	2022		2021			(Amounts in millions)	2023		2022
Net earnings	Net earnings	$	90.4	$	87.5		Net earnings	$	53.5	$	90.4
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:						Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments	Foreign currency translation adjustments	(8.8)		(14.3)			Foreign currency translation adjustments	18.7		(8.8)
Cash flow hedges	Cash flow hedges	1.0		1.1			Cash flow hedges	2.7		1.0
Defined benefit pension plans	Defined benefit pension plans	.9		.8			Defined benefit pension plans	.2		.9
Other comprehensive income (loss)	Other comprehensive income (loss)	(6.9)		(12.4)			Other comprehensive income (loss)	21.6		(6.9)
Comprehensive income (loss)	Comprehensive income (loss)	83.5		75.1			Comprehensive income (loss)	75.1		83.5
Add: comprehensive loss attributable to noncontrolling interest	Add: comprehensive loss attributable to noncontrolling interest	—		—			Add: comprehensive loss attributable to noncontrolling interest	.1		—
Comprehensive income (loss) attributable to Leggett & Platt, Inc.	Comprehensive income (loss) attributable to Leggett & Platt, Inc.	$	83.5	$	75.1		Comprehensive income (loss) attributable to Leggett & Platt, Inc.	$	75.2	$	83.5

See accompanying notes to consolidated condensed financial statements.

LEGGETT & PLATT, INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)


		Three Months Ended March 31,					Three Months Ended March 31,
(Amounts in millions)	(Amounts in millions)	2022		2021		(Amounts in millions)	2023		2022
OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net earnings	Net earnings	$	90.4	$	87.5	Net earnings	$	53.5	$	90.4
Adjustments to reconcile net earnings to net cash provided by (used for) operating activities:
Adjustments to reconcile net earnings to net cash provided by operating activities:						Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation	Depreciation	28.2		29.1		Depreciation	27.4		28.2
Amortization of intangibles and supply agreements	Amortization of intangibles and supply agreements	17.5		17.0		Amortization of intangibles and supply agreements	18.0		17.5

Increase (decrease) in provision for losses on accounts and notes receivable		1.4		(3.3)
(Decrease) increase in provision for losses on accounts and notes receivable						(Decrease) increase in provision for losses on accounts and notes receivable	(2.3)		1.4
Writedown of inventories	Writedown of inventories	3.2		2.9		Writedown of inventories	4.7		3.2
Net gain from sales of assets and businesses	Net gain from sales of assets and businesses	(.7)		—		Net gain from sales of assets and businesses	(.3)		(.7)

Deferred income tax expense		2.0		.8
Deferred income tax (benefit) expense						Deferred income tax (benefit) expense	(1.2)		2.0
Stock-based compensation	Stock-based compensation	12.9		12.4		Stock-based compensation	9.7		12.9

Other, net	Other, net	(1.5)		(4.5)		Other, net	6.0		(1.5)
Increases/decreases in, excluding effects from acquisitions and divestitures:
Increases/(decreases) in, excluding effects from acquisitions and divestitures:						Increases/(decreases) in, excluding effects from acquisitions and divestitures:
Accounts and other receivables	Accounts and other receivables	(57.8)		(34.8)		Accounts and other receivables	(38.4)		(57.8)
Inventories	Inventories	(58.3)		(107.2)		Inventories	13.7		(58.3)
Other current assets	Other current assets	(1.2)		3.2		Other current assets	(.3)		(1.2)
Accounts payable	Accounts payable	11.4		(12.7)		Accounts payable	30.8		11.4
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	(8.5)		(1.0)		Accrued expenses and other current liabilities	(24.6)		(8.5)
NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES		39.0		(10.6)
NET CASH PROVIDED BY OPERATING ACTIVITIES						NET CASH PROVIDED BY OPERATING ACTIVITIES	96.7		39.0
INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Additions to property, plant and equipment	Additions to property, plant and equipment	(18.7)		(24.0)		Additions to property, plant and equipment	(37.7)		(18.7)
Purchases of companies, net of cash acquired		—		(27.3)

Proceeds from sales of assets and businesses	Proceeds from sales of assets and businesses	2.4		—		Proceeds from sales of assets and businesses	.5		2.4

Other, net	Other, net	—		1.4		Other, net	.8		—
NET CASH USED FOR INVESTING ACTIVITIES	NET CASH USED FOR INVESTING ACTIVITIES	(16.3)		(49.9)		NET CASH USED FOR INVESTING ACTIVITIES	(36.4)		(16.3)
FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES

Payments on long-term debt	Payments on long-term debt	(.1)		(12.6)		Payments on long-term debt	(.8)		(.1)
Change in commercial paper and short-term debt	Change in commercial paper and short-term debt	21.0		121.8		Change in commercial paper and short-term debt	29.3		21.0

Dividends paid	Dividends paid	(56.0)		(53.0)		Dividends paid	(58.3)		(56.0)
Issuances of common stock		—		2.0

Purchases of common stock	Purchases of common stock	(21.6)		(8.7)		Purchases of common stock	(5.2)		(21.6)

Other, net	Other, net	(.4)		(.4)		Other, net	(.6)		(.4)
NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES		(57.1)		49.1
NET CASH USED FOR FINANCING ACTIVITIES						NET CASH USED FOR FINANCING ACTIVITIES	(35.6)		(57.1)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	EFFECT OF EXCHANGE RATE CHANGES ON CASH	—		(3.7)		EFFECT OF EXCHANGE RATE CHANGES ON CASH	3.3		—
DECREASE IN CASH AND CASH EQUIVALENTS		(34.4)		(15.1)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS						INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	28.0		(34.4)
CASH AND CASH EQUIVALENTS—January 1,	CASH AND CASH EQUIVALENTS—January 1,	361.7		348.9		CASH AND CASH EQUIVALENTS—January 1,	316.5		361.7
CASH AND CASH EQUIVALENTS—March 31,	CASH AND CASH EQUIVALENTS—March 31,	$	327.3	$	333.8	CASH AND CASH EQUIVALENTS—March 31,	$	344.5	$	327.3

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~~2022 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~~$50.0 and ~~$35.0~~$55.0 of trade receivables that were sold and removed from our Consolidated Condensed Balance Sheets at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, 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~~$105.0 at ~~both~~ March 31, ~~2022~~2023 and $80.0 at December 31, ~~2021.~~2022.

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,				Three Months Ended March 31,
		2022		2021				2023		2022
Bedding Products	Bedding Products						Bedding Products
Bedding Group	Bedding Group	$	639.4	$	535.8		Bedding Group	$	528.5	$	639.4

Specialized Products	Specialized Products						Specialized Products
Automotive Group	Automotive Group	207.5		210.8			Automotive Group	214.3		207.5
Aerospace Products Group	Aerospace Products Group	29.0		23.7			Aerospace Products Group	37.9		29.0
Hydraulic Cylinders Group		27.6		23.1
Hydraulic Cylinders Group 1							Hydraulic Cylinders Group 1	68.5		27.6
		264.1		257.6				320.7		264.1

Furniture, Flooring & Textile Products	Furniture, Flooring & Textile Products						Furniture, Flooring & Textile Products
Home Furniture Group	Home Furniture Group	118.4		96.1			Home Furniture Group	80.3		118.4
Work Furniture Group	Work Furniture Group	83.7		63.7			Work Furniture Group	70.6		83.7
Flooring & Textile Products Group	Flooring & Textile Products Group	216.7		197.7			Flooring & Textile Products Group	213.5		216.7
		418.8		357.5				364.4		418.8
		$	1,322.3	$	1,150.9			$	1,213.6	$	1,322.3

1 In August 2022, we acquired a leading global manufacturer of hydraulic cylinders for heavy construction equipment.

4. SEGMENT INFORMATION

We have 3three 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 aan executive 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

LEGGETT & PLATT, INCORPORATED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

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, 2023												Three Months Ended March 31, 2023
Bedding Products												Bedding Products	$	528.5	$	9.6	$	538.1	$	33.3	$	25.6
Specialized Products												Specialized Products	320.7		.4		321.1		28.7		10.7
Furniture, Flooring & Textile Products												Furniture, Flooring & Textile Products	364.4		3.1		367.5		28.3		5.8
Intersegment eliminations and other 2												Intersegment eliminations and other 2							(1.0)		3.3
		Trade 1 Sales		Inter- Segment Sales		Total Sales		EBIT		Depreciation and Amortization			$	1,213.6	$	13.1	$	1,226.7	$	89.3	$	45.4
Three Months Ended March 31, 2022	Three Months Ended March 31, 2022											Three Months Ended March 31, 2022
Bedding Products	Bedding Products	$	639.4	$	12.0	$	651.4	$	76.2	$	26.2	Bedding Products	$	639.4	$	12.0	$	651.4	$	76.2	$	26.2
Specialized Products	Specialized Products	264.1		.9		265.0		20.3		10.8		Specialized Products	264.1		.9		265.0		20.3		10.8
Furniture, Flooring & Textile Products	Furniture, Flooring & Textile Products	418.8		4.3		423.1		42.7		5.9		Furniture, Flooring & Textile Products	418.8		4.3		423.1		42.7		5.9
Intersegment eliminations and other 2	Intersegment eliminations and other 2							(1.6)		2.8		Intersegment eliminations and other 2							(1.6)		2.8
		$	1,322.3	$	17.2	$	1,339.5	$	137.6	$	45.7		$	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			March 31, 2023		December 31, 2022
Bedding Products	Bedding Products	$	947.2	$	836.0	Bedding Products	$	833.6	$	931.2
Specialized Products	Specialized Products	335.5		316.7		Specialized Products	396.2		350.1
Furniture, Flooring & Textile Products	Furniture, Flooring & Textile Products	402.1		373.5		Furniture, Flooring & Textile Products	409.0		423.1

Average current liabilities included in segment numbers above	Average current liabilities included in segment numbers above	833.3		814.1		Average current liabilities included in segment numbers above	718.0		793.9
Unallocated assets 1	Unallocated assets 1	2,791.5		2,828.5		Unallocated assets 1	2,898.7		2,840.6
Difference between average assets and period-end balance sheet	Difference between average assets and period-end balance sheet	32.2		138.5		Difference between average assets and period-end balance sheet	14.5		(152.8)
Total assets	Total assets	$	5,341.8	$	5,307.3	Total assets	$	5,270.0	$	5,186.1

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,				Three Months Ended March 31,
		2022		2021				2023		2022
Net earnings	Net earnings						Net earnings
Net earnings	Net earnings	$	90.4	$	87.5		Net earnings	$	53.5	$	90.4
(Earnings) attributable to noncontrolling interest, net of tax	(Earnings) attributable to noncontrolling interest, net of tax	—		—			(Earnings) attributable to noncontrolling interest, net of tax	—		—

Net earnings attributable to Leggett & Platt, Inc. common shareholders	Net earnings attributable to Leggett & Platt, Inc. common shareholders	$	90.4	$	87.5		Net earnings attributable to Leggett & Platt, Inc. common shareholders	$	53.5	$	90.4

Weighted average number of shares (in millions):
Weighted average number of shares (in millions)							Weighted average number of shares (in millions)
Weighted average number of common shares used in basic EPS	Weighted average number of common shares used in basic EPS	136.6		136.0			Weighted average number of common shares used in basic EPS	135.9		136.6
Dilutive effect of stock-based compensation	Dilutive effect of stock-based compensation	.3		.3			Dilutive effect of stock-based compensation	.4		.3
Weighted average number of common shares and dilutive potential common shares used in diluted EPS	Weighted average number of common shares and dilutive potential common shares used in diluted EPS	136.9		136.3			Weighted average number of common shares and dilutive potential common shares used in diluted EPS	136.3		136.9

Basic and diluted EPS:
Basic and diluted EPS							Basic and diluted EPS

Basic EPS attributable to Leggett & Platt common shareholders	Basic EPS attributable to Leggett & Platt common shareholders	$	.66	$	.64		Basic EPS attributable to Leggett & Platt common shareholders	$	.39	$	.66

Diluted EPS attributable to Leggett & Platt common shareholders	Diluted EPS attributable to Leggett & Platt common shareholders	$	.66	$	.64		Diluted EPS attributable to Leggett & Platt common shareholders	$	.39	$	.66

Other information:
Other information							Other information
Anti-dilutive shares excluded from diluted EPS computation	Anti-dilutive shares excluded from diluted EPS computation	.4		.2			Anti-dilutive shares excluded from diluted EPS computation	.5		.4

Cash dividends declared per share	Cash dividends declared per share	$	.42	$	.40		Cash dividends declared per share	$	.44	$	.42

6. ACCOUNTS AND OTHER RECEIVABLES

Accounts and other receivables consisted of the following:


	March 31, 2023				December 31, 2022
	Current		Long-term		Current		Long-term
Total trade receivable	$	657.4	$	—	$	626.8	$	—
Allowance for doubtful accounts - trade receivables	(15.2)		—		(17.8)		—
Trade receivables, net	$	642.2	$	—	$	609.0	$	—

Other notes receivable	—		22.2		—		22.4
Taxes receivable, including income taxes	5.4		—		5.0		—
Value-added taxes (VAT) recoverable 1	58.1		—		45.4		—
Other receivables	12.5		—		15.6		—
Allowance for doubtful accounts - Other notes receivable	—		(21.0)		—		(21.2)
Other receivables, net	$	76.0	$	1.2	$	66.0	$	1.2

1We have experienced VAT refund delays from the Mexican government. These balances include $47.7 and $36.5 at March 31, 2023 and December 31, 2022, respectively, of Mexico VAT recoverable. We believe that these are fully collectible.

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

1The “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			Balance at December 31, 2022		Add: Charges		Less: Net Charge-offs/ (Recoveries) and Other		Balance at March 31, 2023
Trade accounts receivable		$	14.9	$	1.6	$	.1	$	16.4
Trade notes receivable		.1		—		—		.1

Total trade receivables	Total trade receivables	15.0		1.6		.1		16.5		Total trade receivables	17.8		(2.1)		.5		15.2
Other notes receivable	Other notes receivable	22.0		(.2)		—		21.8		Other notes receivable	21.2		(.2)		—		21.0
Total allowance for doubtful accounts	Total allowance for doubtful accounts	$	37.0	$	1.4	$	.1	$	38.3	Total allowance for doubtful accounts	$	39.0	$	(2.3)	$	.5	$	36.2

~~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


	Three Months Ended				Three Months Ended
	March 31, 2023				March 31, 2022
	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	$	.7	$	.1	$	1.2	$	.2
Discounts on various stock awards:
Deferred Stock Compensation Program	.3		—		.4		—
ESU program	.2		—		.4		—
Discount Stock Plan	.2		—		.2		—
Performance Stock Unit (PSU) awards: 1
2023 PSU awards 1A	.4		.4		—		—
2022 and prior PSU awards 1B	.7		.3		1.0		(.2)

Restricted Stock Unit (RSU) awards	5.3		—		6.7		—

Other, primarily non-employee directors restricted stock	.4		—		.5		—
Total stock-related compensation expense	8.2		$	.8	10.4		$	—
Employee contributions for above stock plans	1.5				2.5
Total stock-based compensation	$	9.7			$	12.9

Tax benefits on stock-based compensation expense	$	2.0			$	2.6
Tax benefits on stock-based compensation payments	.3				.6
Total tax benefits associated with stock-based compensation	$	2.3			$	3.2

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~~(subject to the Human Resources and Compensation ~~Committee approval,~~(HRC) Committee's 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 2023 PSU ~~- TSR based~~Awards

In February 2023, the HRC Committee amended the PSU award agreement. Following the amendment, the 2023 awards are based on two performance conditions as detailed below. The base payout percentage will be determined by the level of achievement of these performance conditions, and then adjusted by a payout multiplier based on our Total Shareholder Return (TSR) compared to a peer group. Participants will earn from 0% to 200% of the base award.

Grant date fair values are calculated based on the grant date stock price and a Monte Carlo simulation of stock and volatility data for Leggett and each of the peer companies for the payout multiplier. 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 PSU awards contain the following conditions:

•A service requirement—Awards general "cliff" vest three years following the grant date.

•Two performance conditions over the three-year performance period:

◦50% of the awards are based on Return on Invested Capital (ROIC). ROIC is calculated as our average annual net operating profit after tax divided by our average invested capital.

◦50% of the awards are based on achieving specified Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) performance targets.

•A market condition—The payout multiplier is based upon our relative TSR compared to a group of peer companies during the three-year performance period. 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). The multiplier will increase or decrease the payout by up to 25%, not to exceed the maximum 200% payout, and will also limit the payout to 100% if our TSR is negative.

1B2022 and Prior PSU Awards

TSR Based

Previous to 2023, PSU awards were based 50% upon our TSR compared to a peer group. A small number of PSU awards ~~are~~were based 100% upon relative TSR for certain business unit employees to complement their particular mix of incentive compensation. Grant date fair values ~~are~~were 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~~contained the following conditions:

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

•A market condition—Awards are based on our TSR as compared to the ~~TSR of a group of peer companies. The~~same 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).~~as noted above. 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~~Based

Previous to 2023, PSU awards ~~are~~were based 50% upon our, or the applicable ~~segment's,~~profit center's, EBIT CAGR. Grant date fair values ~~are~~were 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~~contained the following conditions:

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

•A performance condition—Awards are based on achieving specified EBIT CAGR ~~performance~~ targets for our or the applicable ~~segment's~~profit center'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.

LEGGETT & PLATT, INCORPORATED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

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


		Three Months Ended March 31,							Three Months Ended March 31,
		2022			2021				2023			2022
TSR based
2023 awards and 2022 TSR based award								2023 awards and 2022 TSR based award
Total shares base award	Total shares base award	.1			.1			Total shares base award	.1			.1
Grant date per share fair value	Grant date per share fair value	$	41.13		$	49.43		Grant date per share fair value	$	29.31		$	41.13
Risk-free interest rate	Risk-free interest rate	.2		%	.2		%	Risk-free interest rate	4.4		%	1.7		%
Vesting period in years	Vesting period in years	3.0			3.0			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		%
Expected volatility								Expected volatility	45.7		%	45.2		%
Expected dividend yield								Expected dividend yield	5.5		%	4.6		%

EBIT CAGR based
2022 EBIT CAGR based award								2022 EBIT CAGR based award
Total shares base award	Total shares base award	.1			.1			Total shares base award				.1
Grant date per share fair value	Grant date per share fair value	$	32.88		$	38.77		Grant date per share fair value				$	32.88
Vesting period in years	Vesting period in years	3.0			3.0			Vesting period in years				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)

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

2019

December 31, 2021

—%

— million

—

First quarter 2022

th percentile

2020

December 31, 2022

—%

— million

—

First quarter 2023

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 $ .4 First quarter 2021
2019 December 31, 2021 127.0% < .1 million $ 3.5 First quarter 2022

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

2019

December 31, 2021

127.0%

< .1 million

3.5

First quarter 2022

2020

December 31, 2022

—%

— million

—

First quarter 2023

~~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 1 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			March 31, 2023		December 31, 2022
Finished goods	Finished goods	$	462.9	$	429.1	Finished goods	$	397.0	$	389.9
Work in process	Work in process	91.9		66.9		Work in process	78.1		71.1
Raw materials and supplies	Raw materials and supplies	491.0		497.2		Raw materials and supplies	417.6		446.5

Inventories	Inventories	$	1,045.8	$	993.2	Inventories	$	892.7	$	907.5

All inventories are stated at the lower of cost or net realizable value. ~~We generally~~For the majority of our inventories, we use the first-in, first-out method which is representative of our standard costs ~~which include~~(includes materials, labor, and production overhead at normal production ~~capacity.~~capacity). Remaining inventories are valued using an average-cost method.

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.~~

LEGGETT & PLATT, INCORPORATED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

9. EMPLOYEE BENEFIT PLANS

~~Employer contributions for 2022 are expected~~We expect to ~~approximate $3.0.~~contribute approximately $5.0 to our defined benefit pension plans in 2023.

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


		Three Months Ended March 31,				Three Months Ended March 31,
		2022		2021				2023		2022
Components of net pension expense	Components of net pension expense						Components of net pension expense
Service cost	Service cost	$	1.3	$	1.2		Service cost	$	1.3	$	1.3
Interest cost	Interest cost	1.7		1.5			Interest cost	2.2		1.7
Expected return on plan assets	Expected return on plan assets	(3.3)		(3.1)			Expected return on plan assets	(2.7)		(3.3)
Recognized net actuarial loss	Recognized net actuarial loss	.7		1.3			Recognized net actuarial loss	.4		.7
Net pension expense	Net pension expense	$	.4	$	.9		Net pension expense	$	1.2	$	.4

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.~~10. 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 $ 1,671.4 $ 3,006.0 $ 558.4 $ (1,848.4) $ .6 $ (45.2)

Three Months Ended March 31, 2021
Total
Equity Retained
Earnings Common Stock
& Additional
Contributed
Capital Treasury
Stock Noncontrolling
Interest Accumulated
Other
Comprehensive
Income (Loss)
Beginning balance, January 1, 2021 $ 1,425.1 $ 2,797.2 $ 545.2 $ (1,865.4) $ .5 $ (52.4)
Net earnings 87.5 87.5 — — — —
Dividends declared (See Note 5)
(53.4) (54.8) 1.4 — — —
Treasury stock purchased (8.9) — — (8.9) — —
Treasury stock issued 3.3 — (19.6) 22.9 — —
Foreign currency translation adjustments (14.3) — — — — (14.3)
Cash flow hedges, net of tax 1.1 — — — — 1.1
Defined benefit pension plans, net of tax .8 — — — — .8
Stock-based compensation transactions, net of tax 15.0 — 15.0 — — —
Ending balance, March 31, 2021 $ 1,456.2 $ 2,829.9 $ 542.0 $ (1,851.4) $ .5 $ (64.8)


	Three Months Ended March 31, 2023
	Total Equity		Retained Earnings		Common Stock & Additional Contributed Capital		Treasury Stock		Noncontrolling Interest		Accumulated Other Comprehensive Income (Loss)
Beginning balance, January 1, 2023	$	1,641.4	$	3,046.0	$	570.5	$	(1,882.3)	$	.7	$	(93.5)


Net earnings	53.5		53.5		—		—		—		—

Dividends declared (See Note 5)	(58.5)		(59.9)		1.4		—		—		—

Treasury stock purchased	(5.2)		—		—		(5.2)		—		—
Treasury stock issued	2.0		—		(16.3)		18.3		—		—
Foreign currency translation adjustments	18.7		—		—		—		(.1)		18.8
Cash flow hedges, net of tax	2.7		—		—		—		—		2.7
Defined benefit pension plans, net of tax	.2		—		—		—		—		.2
Stock-based compensation transactions, net of tax	12.3		—		12.3		—		—		—

Ending balance, March 31, 2023	$	1,667.1	$	3,039.6	$	567.9	$	(1,869.2)	$	.6	$	(71.8)


	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	$	1,671.4	$	3,006.0	$	558.4	$	(1,848.4)	$	.6	$	(45.2)

1614

LEGGETT & PLATT, INCORPORATED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The following tables set forth the components of and changes in each component of accumulated other comprehensive income (loss) for each of the periods presented:


				Three Months Ended March 31,									Three Months Ended March 31,
				Foreign Currency Translation Adjustments		Cash Flow Hedges		Defined Benefit Pension Plans		Accumulated Other Comprehensive Income (Loss)			Foreign Currency Translation Adjustments		Cash Flow Hedges		Defined Benefit Pension Plans		Accumulated Other Comprehensive Income (Loss)
Balance, January 1, 2023												Balance, January 1, 2023	$	(83.5)	$	8.4	$	(18.4)	$	(93.5)
Other comprehensive income (loss)												Other comprehensive income (loss)	18.7		2.6		(.1)		21.2
Reclassifications, pretax												Reclassifications, pretax	—		.6		.4		1.0
Income tax effect												Income tax effect	—		(.5)		(.1)		(.6)
Attributable to noncontrolling interest												Attributable to noncontrolling interest	.1		—		—		.1
Balance, March 31, 2023												Balance, March 31, 2023	$	(64.7)	$	11.1	$	(18.2)	$	(71.8)

Balance, January 1, 2022	Balance, January 1, 2022			$	(11.7)	$	11.9	$	(38.5)	$	(38.3)	Balance, January 1, 2022	$	(11.7)	$	11.9	$	(38.5)	$	(38.3)
Other comprehensive income (loss)	Other comprehensive income (loss)			(8.8)		2.4		—		(6.4)		Other comprehensive income (loss)	(8.8)		2.4		—		(6.4)
Reclassifications, pretax 1				—		(1.2)		.7		(.5)
Reclassifications, pretax												Reclassifications, pretax	—		(1.2)		.7		(.5)
Income tax effect	Income tax effect			—		(.2)		.2		—		Income tax effect	—		(.2)		.2		—

Balance, March 31, 2022	Balance, March 31, 2022			$	(20.5)	$	12.9	$	(37.6)	$	(45.2)	Balance, March 31, 2022	$	(20.5)	$	12.9	$	(37.6)	$	(45.2)

Balance, January 1, 2021				$	6.4	$	1.4	$	(60.2)	$	(52.4)
Other comprehensive income (loss)				(14.3)		2.0		(.2)		(12.5)
Reclassifications, pretax 2				—		(.5)		1.3		.8
Income tax effect				—		(.4)		(.3)		(.7)

Balance, March 31, 2021				$	(7.9)	$	2.5	$	(59.4)	$	(64.8)

		1	2022 pretax reclassifications are comprised of:
			Net trade sales	$	—	$	(1.8)	$	—	$	(1.8)
			Cost of goods sold; selling and administrative expenses	—		(.3)		—		(.3)
			Interest expense	—		.9		—		.9
			Other income (expense), net	—		—		.7		.7

			Total reclassifications, pretax	$	—	$	(1.2)	$	.7	$	(.5)

		2	2021 pretax reclassifications are comprised of:
			Net trade sales	$	—	$	(1.8)	$	—	$	(1.8)
			Cost of goods sold; selling and administrative expenses	—		.2		—		.2
			Interest expense	—		1.1		—		1.1
			Other income (expense), net	—		—		1.3		1.3
			Total reclassifications, pretax	$	—	$	(.5)	$	1.3	$	.8

~~12.~~11. FAIR VALUE

We utilize fair value measures for both financial and non-financial assets and liabilities.

Items measured at fair value on a recurring basis

Fair value measurements are established using a three-level valuation hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into the following categories:

•Level 1: Quoted prices for identical assets or liabilities in active markets.

•Level 2: Inputs, other than quoted prices included in Level 1, that are observable for the asset or liability either directly or indirectly. Short-term investments in this category are valued using discounted cash flow techniques with all significant inputs derived from or supported by observable market data. Derivative assets and liabilities in this category are valued using models that consider various assumptions and information from market-corroborated sources. The models used are primarily industry-standard models that consider items such as quoted prices, market interest rate curves applicable to the instruments being valued as of the end of each period, discounted cash flows, volatility factors, current market, and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace.

•Level 3: Unobservable inputs that are not corroborated by market data.

1715

LEGGETT & PLATT, INCORPORATED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The areas in which we utilize fair value measures of financial assets and liabilities are presented in the table below.


		As of March 31, 2022									As of March 31, 2023
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets:	Assets:									Assets:
Cash equivalents:	Cash equivalents:									Cash equivalents:
Bank time deposits with original maturities of three months or less	Bank time deposits with original maturities of three months or less	$	—	$	147.8	$	—	$	147.8	Bank time deposits with original maturities of three months or less	$	—	$	152.0	$	—	$	152.0
Derivative assets 1 (Note 1 3)		—		6.2		—		6.2
Diversified investments associated with the ESU program 1		47.6		—		—		47.6
Derivative assets (Note 12)										Derivative assets (Note 12)	—		3.5		—		3.5
Diversified investments associated with the ESU program										Diversified investments associated with the ESU program	45.7		—		—		45.7
Total assets	Total assets	$	47.6	$	154.0	$	—	$	201.6	Total assets	$	45.7	$	155.5	$	—	$	201.2
Liabilities:	Liabilities:									Liabilities:
Derivative liabilities 1 (Note 1 3)		$	—	$	1.4	$	—	$	1.4
Liabilities associated with the ESU program 1		47.3		—		—		47.3
Derivative liabilities (Note 12)										Derivative liabilities (Note 12)	$	—	$	4.2	$	—	$	4.2
Liabilities associated with the ESU program										Liabilities associated with the ESU program	46.3		—		—		46.3
Total liabilities	Total liabilities	$	47.3	$	1.4	$	—	$	48.7	Total liabilities	$	46.3	$	4.2	$	—	$	50.5

As of December 31, 2021
Level 1 Level 2 Level 3 Total
Assets:
Cash equivalents:
Bank time deposits with original maturities of three months or less $ — $ 114.4 $ — $ 114.4
Derivative assets 1 (Note 1 3)
— 5.9 — 5.9
Diversified investments associated with the ESU program 1
51.0 — — 51.0
Total assets $ 51.0 $ 120.3 $ — $ 171.3
Liabilities:
Derivative liabilities 1 (Note 1 3)
$ — $ 1.2 $ — $ 1.2
Liabilities associated with the ESU program 1
50.9 — — 50.9
Total liabilities $ 50.9 $ 1.2 $ — $ 52.1

1~~Includes both current and long-term amounts.~~


	As of December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Bank time deposits with original maturities of three months or less	$	—	$	129.0	$	—	$	129.0
Derivative assets (Note 12)	—		2.9		—		2.9
Diversified investments associated with the ESU program	42.8		—		—		42.8
Total assets	$	42.8	$	131.9	$	—	$	174.7
Liabilities:
Derivative liabilities (Note 12)	$	—	$	5.9	$	—	$	5.9
Liabilities associated with the ESU program	44.0		—		—		44.0
Total liabilities	$	44.0	$	5.9	$	—	$	49.9

There were no transfers between Level 1 and Level 2 for any of the periods presented.

The fair value for fixed rate debt (Level 1) was approximately ~~$20.0~~$165.0 less than carrying value of ~~$2,082.9~~$1,784.9 at March 31, ~~2022~~2023 and was approximately ~~$130.0 greater~~$210.0 less than carrying value of ~~$2,082.3~~$1,784.4 at December 31, ~~2021.~~2022.

Items measured at fair value on a non-recurring basis

The primary areas in which we utilize fair value measurements of non-financial assets and liabilities are allocating purchase price to the assets and liabilities of acquired companies (~~Note~~ 8) and evaluating long-term assets (including goodwill) for potential impairment. Determining fair values for these items requires significant judgment and includes a variety of methods and models that utilize significant Level 3 inputs.

~~13. DERIVATIVE FINANCIAL INSTRUMENTS~~

~~Cash Flow Hedges~~

~~Derivative financial instruments that we use to hedge forecasted transactions and anticipated cash flows are as follows:~~

~~Currency Cash Flow Hedges—The foreign currency hedges manage risk associated with exchange rate volatility of various currencies.~~

~~Interest Rate Cash Flow Hedges—We have also occasionally used interest rate cash flow hedges to manage interest rate risks.~~

The effective changes in fair value of unexpired contracts are recorded in accumulated other comprehensive income and reclassified to income or expense in the period in which earnings are impacted. Cash flows from settled contracts are presented

1816

LEGGETT & PLATT, INCORPORATED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

in the category consistent with the nature of the item being hedged. (Settlements associated with the sale or production of product are presented in operating cash flows, and settlements associated with debt issuance are presented in financing cash flows.)

~~Fair Value Hedges and Derivatives not Designated as Hedging Instruments~~

These derivatives typically manage foreign currency risk associated with subsidiaries’ assets and liabilities, and gains or losses are recognized currently in earnings. Cash flows from settled contracts are presented in the category consistent with the nature of the item being hedged.12. DERIVATIVE FINANCIAL INSTRUMENTS

The following table presents assets and liabilities representing the fair value of our most significant derivative financial instruments. The fair values of the derivatives reflect the change in the market value of the derivative from the date of the trade execution and do not consider the offsetting underlying hedged item.


		Expiring at various dates through:	Total USD Equivalent Notional Amount	As of March 31, 2022																Expiring at various dates through:			Total USD Equivalent Notional Amount			As of March 31, 2023
Derivatives	Derivatives			Assets								Liabilities						Derivatives								Assets						Liabilities
								Sundry				Other Current Liabilities				Other Long-Term Liabilities													Sundry			Other Current Liabilities			Other Long-Term Liabilities
Designated as hedging instruments	Designated as hedging instruments															Designated as hedging instruments

Total cash flow hedges-currency hedges	Total cash flow hedges-currency hedges	Sep 2023	226.1			$	5.5			$	.2			$	1.0			$	.2		Total cash flow hedges-currency hedges	Sep 2024		$	268.6				$	2.8		$	.4		$	2.1		$	.1
Total fair value hedges	Total fair value hedges	Jul 2022	39.3			—				—				.1				—			Total fair value hedges	Jul 2023		65.4				.1			—			1.8			—
Not designated as hedging instruments	Not designated as hedging instruments	Mar 2023	70.8	.5				—				.1				—		Not designated as hedging instruments		Mar 2024			89.5			.2			—			.2			—
Total derivatives	Total derivatives			$	6.0			$	.2			$	1.2			$	.2	Total derivatives								$	3.1		$	.4		$	4.1		$	.1

Expiring at various dates through: Total USD
Equivalent
Notional
Amount As of December 31, 2021
Derivatives Assets Liabilities
Other Current
Assets Sundry Other Current
Liabilities Other Long-Term Liabilities
Designated as hedging instruments
Total cash flow hedges-currency hedges Jun 2023 260.6 $ 5.1 $ — $ .7 $ .1
Total fair value hedges Mar 2022 54.2 .4 — — —
Not designated as hedging instruments Dec 2022 40.1 .4 — .4 —
Total derivatives $ 5.9 $ — $ 1.1 $ .1


	Expiring at various dates through:	Total USD Equivalent Notional Amount		As of December 31, 2022
Derivatives				Assets				Liabilities
				Other Current Assets		Sundry		Other Current Liabilities		Other Long-Term Liabilities
Designated as hedging instruments
Total cash flow hedges-currency hedges	Jun 2024	$	263.4	$	1.9	$	.5	$	4.3	$	.4
Total fair value hedges	Apr 2023	65.5		.3		—		1.0		—
Not designated as hedging instruments	Dec 2023	86.0		.2		—		.2		—
Total derivatives				$	2.4	$	.5	$	5.5	$	.4

The following table sets forth the pretax (gains) losses for our hedging activities for the periods presented. This schedule includes reclassifications from accumulated other comprehensive income (see Note 1 110) as well as derivative settlements recorded directly to income or expense.

Derivatives Income Statement Caption Amount of (Gain) Loss Recorded in Income Three Months Ended March 31,
2022 2021
Designated as hedging instruments
Interest rate cash flow hedges Interest expense $ .9 $ 1.1
Currency cash flow hedges Net trade sales (1.8) (2.2)
Currency cash flow hedges Cost of goods sold (.4) .2
Currency cash flow hedges Other (income) expense, net .1 —
Total cash flow hedges (1.2) (.9)
Fair value hedges Other (income) expense, net (.5) (.5)
Not designated as hedging instruments Other (income) expense, net .1 .3
Total derivative instruments $ (1.6) $ (1.1)


Derivatives	Income Statement Caption	Amount of (Gain) Loss Recorded in Income Three Months Ended March 31,
		2023		2022
Designated as hedging instruments

Interest rate cash flow hedges	Interest expense	$	(.1)	$	.9
Currency cash flow hedges	Net trade sales	.7		(1.8)
Currency cash flow hedges	Cost of goods sold	(.7)		(.4)
Currency cash flow hedges	Other (income) expense, net	—		.1
Total cash flow hedges		(.1)		(1.2)
Fair value hedges	Other (income) expense, net	2.1		(.5)

Not designated as hedging instruments	Other (income) expense, net	—		.1

Total derivative instruments		$	2.0	$	(1.6)

~~LEGGETT & PLATT, INCORPORATED~~

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS—(Continued)~~

~~(Unaudited)~~

~~14.~~13. CONTINGENCIES

We are a party to various proceedings and matters involving employment, intellectual property, environmental, taxation, vehicle-related personal injury, antitrust, and other laws. When it is probable, in management's judgment, that we may incur monetary damages or other costs resulting from these proceedings or other claims, and we can reasonably estimate the amounts, we record appropriate accruals in the financial statements and make charges against earnings. For all periods presented, we have recorded no material charges against earnings. Also, when it is reasonably possible that we may incur additional loss in

LEGGETT & PLATT, INCORPORATED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

excess of recorded accruals, and we can reasonably estimate the additional losses or range of losses, we disclose such additional reasonably possible losses in these notes.

Accruals and Reasonably Possible Losses in Excess of Accruals

Accruals for Probable Losses

Although we deny liability in all threatened or pending litigation proceedings in which we are or may be a party, and believe that we have valid bases to contest all claims threatened or made against us, we have recorded a litigation contingency accrual for our reasonable estimate of probable loss for pending and threatened litigation proceedings, in the aggregate, of less than $3.0 for all periods presented. There were no material adjustments to the accrual, including cash payments and expense, for the ~~three month~~three-month periods ending March 31, ~~2022~~2023 and March 31, ~~2021.~~2022. The accruals do not include accrued expenses related to workers' compensation, vehicle-related personal injury, product and general liability claims, taxation issues and environmental matters, some of which may contain a portion of litigation expense. However, any litigation expense associated with these categories is not anticipated to have a material effect on our financial condition, results of operations, or cash flows.

Reasonably Possible Losses in Excess of Accruals

Although there are a number of uncertainties and potential outcomes associated with our pending or threatened litigation proceedings, we believe, based on current known facts, that additional losses, if any, are not expected to materially affect our consolidated financial position, results of operations, or cash flows. However, based upon current known facts, as of March 31, ~~2022,~~2023, aggregate reasonably possible (but not probable, and therefore, not accrued) losses in excess of the accruals noted above are estimated to be ~~$12.0~~$13.0. If our assumptions or analyses regarding any of our contingencies are incorrect, or if facts change or future litigation arises, we could realize losses in excess of the recorded accruals (and in excess of the ~~$12.0~~$13.0 referenced above), which could have a material negative impact on our financial condition, results of operations, and cash flows.

~~15. RISKS AND UNCERTAINTIES~~

~~Our Board of Directors oversees the identification, analysis, and mitigation of emerging risks, including the items discussed below.~~

The Russian invasion of Ukraine has caused supply chain disruptions and global inflationary impacts that have had, and could continue to have, a negative effect on the demand for our products and our results of operations. Although we do not have operations in Russia, Belarus,or Ukraine, and we have not had a material amount of sales into these countries, some of our operations have sourced, directly or indirectly, a portion of their supply chain requirements of nickel, titanium, and birch plywood from Russia. Also, our Automotive business purchases semiconductors, the production of which uses neon gas. A significant portion of neon gas is produced in the Ukraine. Since the invasion began, the prices of these materials have significantly increased. When we experience significant increases in costs, we are generally successful in recovering the costs by implementing price increases. If we are not able to pass through the increased costs to our customers, or if we are unable to obtain the necessary raw materials (or alternatives) in a timely manner, our results of operations could be negatively impacted. Also, if the conflict in Ukraine expands geographically or in intensity, this may have a negative impact on our operations, including access to energy and other raw materials. Furthermore, sanctions against the import of Russian oil have restricted global oil supply and further increased fuel and energy costs contributing to additional global inflationary impacts. This inflationary impact could reduce consumer spending and decrease demand for some of our products, negatively impacting our results of operations.

Because of the COVID-19 pandemic, various governments in North America, Europe, Asia, and elsewhere instituted, and some have reinstituted, quarantines, shelter-in-place or stay-at-home orders, or restrictions on public gatherings as well as limitations on social interactions, which have had, and could further have, an adverse effect on the demand for our products. All of our facilities are open and running at this time. However, some of our facilities in China, most notably in our Automotive and Home Furniture businesses, have been temporarily closed from time to time due to strict COVID-related lockdown requirements. If the lockdowns in China are imposed on a broader geographic scope, this could materially negatively impact our manufacturing capacity, our customers or vendors, and our ability to transport goods in our supply chain. We have also had, at various times, some capacity restrictions on our plants due to governmental orders in other parts of the world. We have been

~~LEGGETT & PLATT, INCORPORATED~~

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS—(Continued)~~

~~(Unaudited)~~

and could be further negatively affected by governmental action in any one or more of the countries in which we operate by the imposition, or re-imposition, of restrictive social measures, mandatory closures of retail establishments that sell our products or our customers’ products, travel restrictions, and restrictions on the import or export of products.

Depending on the length and severity of the COVID-19 pandemic, the percentage of the population vaccinated, and the effectiveness of the vaccines against new variants, our ability to keep our manufacturing operations open and fully operational, build and maintain appropriate labor levels, obtain necessary raw materials and parts, and ship finished products to customers may be partially or completely disrupted, either on a temporary or prolonged basis. A significant increase in COVID-19 cases among our employees may disrupt our ability to maintain necessary labor levels and produce and deliver products to our customers if we are unable to shift production to other manufacturing facilities. The continued realization of these risks to our manufacturing operations, labor force, and supply chain could also increase labor, commodity, and transportation costs.

~~Supply chain disruptions have continued into 2022, most notably in semiconductors, labor, and transportation, potentially constraining volume growth.~~

Currently there is a shortage of semiconductors in the automotive industry. Automotive OEMs and other suppliers have not been able to secure an adequate supply of semiconductors, and as a result have reduced or completely shut down their production of some automobiles or parts, which in turn has reduced our sale of products. Consumer demand remains strong, but the semiconductor shortage has pushed vehicle inventory to very low levels. Our Automotive Group uses the semiconductors in seat comfort products, and to a lesser extent in motors and actuators. Although our Automotive Group has been able to obtain an adequate supply of semiconductors, we are dependent on our suppliers to deliver these semiconductors in accordance with our production schedule. A shortage of the semiconductors, either to us, the automotive OEMs, or our suppliers, can disrupt our operations and our ability to deliver products to our customers. The shortage of semiconductors is also impacting our Adjustable Bed and Hydraulic Cylinders business units.

Because of shortages in the labor markets, several industries in which we operate have experienced challenges in hiring and maintaining adequate workforce levels, as well as increased labor costs. If this continues, our results of operations may be materially negatively impacted.

Some facilities have experienced disruptions in logistics necessary to import, export, or transfer raw materials or finished goods, which has generally resulted in increased transportation costs that are typically passed through to our customers. Our supply chains have also been hampered by congested ports and trucking constraints.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.


		Page No.
•	Highlights	2118
•	Introduction	2219
•	Results of Operations	2623
•	Liquidity and Capitalization	2825
•	Critical Accounting Policies and Estimates	3330
•	Contingencies	3331
•	New Accounting Standards	3534

HIGHLIGHTS

We had ~~record~~ first quarter trade sales ~~from continuing operations~~ of ~~$1,322~~$1,214 million for the three months ending March 31, ~~2022, an increase~~2023, a decrease of ~~15%~~8% versus the first quarter ~~2021.~~2022.

EPS ~~increased~~was $.39 for the three months ending March 31, 2023, compared to $.66 in the same period of 2022.

Earnings Before Interest and Taxes (EBIT) for the three months ending March 31, 2023 was $89 million. This is down $48 million compared to the same period in 2022.

Operating cash flow was $97 million in the first three months of ~~2022,~~2023, an increase of $58 million versus ~~$.64 in~~ the same period of ~~2021. This was a record for first quarter earnings.~~

~~First quarter 2022 EBIT was up $10 million versus first quarter of 2021, coming in at $138 million, a first quarter record for EBIT.~~

~~Operating cash flow was $39 million in the first quarter 2022, an increase of $50 million versus first quarter 2021.~~

2022.

In February ~~2022,~~2023, the Board of Directors declared a ~~$.42~~$.44 first quarter ~~2022~~2023 dividend, ~~two~~$.02 cents higher than last year’s first quarter dividend, making our annual indicated dividend yield one of the highest among the Dividend Kings and ~~extended~~extending our record of consecutive annual increases to over 5051 years.

Share repurchases in the first quarter of ~~2022~~2023 were .6.1 million shares at an average price of ~~$37.17.~~$34.04.

In February 2022, we sold our South African bedding innerspring operation for a cash purchase price of approximately $2 million. This business had annualized sales of approximately $8 million and was reported in our Bedding Products segment.

INTRODUCTION

What We Do

Leggett & Platt, Incorporated (the Company, we, or our) is a diversified manufacturer that conceives, designs, and produces a wide range of engineered components and products found in many homes, offices, and automobiles. We make components that are often hidden within, but integral to, our customers’ products.

We are the leading U.S.-based manufacturer of: a) bedding components; b) automotive seat support and lumbar systems; c) specialty bedding foams and private-label finished mattresses; d) components for home furniture and work furniture; e) flooring underlayment; f) adjustable beds; and g) bedding industry machinery.

Our Segments

Our operations are comprised of ~~130~~approximately 135 production facilities located in 1718 countries around the world. Our reportable segments are the same as our operating segments, which also correspond with our management organizational structure. Our segments are described below.

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. This segment ~~generated 48%~~contributed 44% of our trade sales during the first three months of ~~2022.~~2023.

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. This segment contributed ~~20%~~26% of our trade sales in the first three months of ~~2022.~~2023.

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. This segment contributed ~~32%~~30% of our trade sales in the first three months of ~~2022.~~2023.

Total Shareholder Return

Total Shareholder Return (TSR), relative to peer companies, is a primary financial measure that we use to assess long-term performance. TSR = (Change in Stock Price + Dividends) ÷/ Beginning Stock Price. We target average annual TSR of 11-14% through an approach that employs four TSR sources: revenue growth, margin expansion, dividends, and share repurchases.

We monitor our TSR performance on a rolling three-year basis. We believe our disciplined growth strategy, portfolio management, and prudent use of capital will support achievement of our goal over time.

The table below shows the components of our TSR targets.


						Current Targets
Revenue Growth						6-9%
Margin Increase						1%

Dividend Yield						3%
Stock Buyback						1%
Total Shareholder Return						11-14%

Senior executives participate in an incentive program with a three-year performance period based on two equal measures: (i) ~~our~~Company Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and (ii) Company Return on Invested Capital (ROIC). The combined EBITDA and ROIC results are subject to a payout multiplier based on the Company's TSR ~~performance~~ compared to ~~the~~a performance ~~of a~~ group of approximately 300 ~~peers, and (ii) the Company or segment Earnings Before Interest and Taxes (EBIT) Compound Annual Growth Rate (CAGR).~~peers.

Customers

We serve a broad suite of customers, with our largest customer representing ~~approximately~~less than 6% of our trade sales in ~~2021.~~2022. Many are companies whose names are widely recognized. They include bedding brands and manufacturers, residential and office furniture producers, automotive OEM and Tier 1 manufacturers, and a variety of other companies.

Organic Sales

We calculate organic sales as trade sales excluding sales attributable to acquisitions and divestitures consummated within the last twelve months. Management uses the ~~organic sales~~ metric, and it is useful to investors, as supplemental information to analyze our underlying sales performance from period to period in our legacy businesses.

Major Factors That Impact Our Business

Many factors impact our business, but those that generally have the greatest impact are discussed below.

~~Inflationary~~ Market Demand

Market demand (including product mix) is impacted by several economic factors, with consumer confidence being the most significant. Other important factors include disposable income levels, employment levels, housing turnover, and interest rates. All of these factors influence consumer spending on durable goods, and therefore affect demand for our products and components. Some of these factors also influence business spending on facilities and equipment, which impacts approximately 25% of our sales. As we moved through 2022 and the first quarter of 2023, the dynamic macroeconomic and geopolitical environment pressured our markets and affected our demand. We expect overall demand in 2023 to be slightly lower than levels experienced in 2022.

Trends in Cost of Goods Sold

Our costs ~~have increased~~can vary significantly as market prices for raw materials (many of which are commodities)~~, have been impacted by inflation.~~ fluctuate. We typically have short-term commitments from our suppliers; accordingly, our raw material costs generally move with the market. ~~Our costs~~We have also been impacted by ~~higher prices for~~fluctuations in transportation and energy costs (partially from the Russian invasion of Ukraine) as well as labor. Our ability to recover higher costs (through selling price increases) is crucial. When we experience significant increases in costs, ~~of goods sold,~~ we typically implement price increases to recover the higher costs. ~~While~~Conversely, when costs decrease significantly, we ~~have been~~ generally ~~successful in recovering the higher~~pass those lower costs ~~even during these volatile times, the~~through to our customers. The timing of our price increases or decreases is important; we typically experience a lag in recovering higher ~~costs.~~costs, and we also realize a lag as costs decline.

Steel is our principal raw material. At various times in past years, we have experienced significant cost fluctuations in this commodity. In most cases, the major changes (both increases and decreases) were passed through to customers with selling price adjustments. Over the past few years, we have seen varying degrees of inflation and deflation in U.S. steel pricing. ~~In 2021, steel~~Steel costs inflated ~~throughout~~ the ~~majority~~first half of 2022 but deflated in the ~~year and inflated further~~second half of 2022 as demand in the steel markets softened. While steel rod costs were relatively flat, steel scrap costs increased in the first quarter of ~~2022.~~2023 due to stronger demand for steel used in automotive manufacturing and construction.

As a producer of steel rod, we are also impacted by changes in metal margins (the difference in the cost of steel scrap and the market price for steel rod). In ~~2021,~~2022, steel rod price increases outpaced steel scrap price increases resulting in significantly expanded metal margins within the steel industry. Metal margins expanded ~~further~~ in the first half of 2022 but began to modestly compress in the second half of 2022 and through the first quarter of ~~2022. If these~~2023. These expanded metal margins ~~are sustained,~~were partially offset by increased energy and input costs in our ~~steel rod mill should continue to experience enhanced profitability.~~Steel Rod business. While uncertain, we currently expect lower metal margins in our Steel Rod business through 2023, which, if realized, would negatively impact our earnings.

We have exposure to the cost of chemicals, including TDI, MDI, and polyol. The cost of these chemicals has fluctuated at times, but we have generally passed the changes through to our customers. In ~~2021,~~2022, chemical ~~prices inflated due~~pricing was relatively stable at historically high levels. Pricing began to ~~robust demand~~soften in the latter part of 2022 and ~~shortages from severe weather, supplier production disruptions, port delays, and logistics challenges. The supply shortages~~continued in ~~2021 resulted in significant restrictions by producers. Late in 2021 and into~~ the first quarter of ~~2022, chemical prices leveled off as supply availability improved.~~2023.

Shortages in the labor markets in several industries in which we operate ~~have~~ created challenges in hiring and maintaining adequate workforce ~~levels. Because of these shortages, we have experienced~~levels in the last few years, which led to increased labor costs. Although this began to moderate in late 2022, labor costs remain at higher levels.

~~Some~~In 2022, some facilities ~~have~~ experienced disruptions in logistics necessary to import, export, or transfer raw materials or finished goods, which ~~has~~ generally resulted in increased ~~freight~~transportation costs. We typically pass through these increased costs ~~that are typically passed through~~ to our customers. ~~Our supply chains have also been hampered by congested ports.~~The issues began to moderate in late 2022 and returned to near pre-pandemic conditions in the first quarter of 2023.

Our other raw materials include woven and nonwoven ~~fabrics and foam scrap.~~fabrics. We have experienced changes in the cost of these materials and generally have been able to pass them through to our customers.

When we raise our prices to recover higher raw material costs, this sometimes causes customers to modify their product designs and replace higher cost components with lower cost components. We must continue providing product options to our customers that enable them to improve the functionality of their products and manage their costs, while providing higher profits for our operations.

Supply Chain Shortages and Disruptions

We have experienced ~~significant~~ supply chain disruptions related to ~~semiconductor shortages,~~ labor availability and freight challenges, as well as higher costs associated with each of these issues. ~~We have also~~In 2022, we experienced delays in delivery of raw materials, parts, and finished goods because of shutdown or congested delivery ports ~~inclement weather,~~ and ~~the invasion of Ukraine.~~trucking constraints. This ~~has~~ resulted in reduced volume and higher costs in many of our ~~businesses, including our Automotive business~~businesses. These issues began to moderate in late 2022 and ~~Bedding Products segment, primarily related~~returned to ~~negative impacts on component demand and finished goods production.~~near pre-pandemic conditions in the first quarter of 2023.

Currently, there is a shortage of semiconductors in the automotive industry. ~~Automotive~~As semiconductor demand elsewhere in the economy has increased over the past few years, automotive OEMs and other suppliers have not been able to secure an adequate supply ~~of semiconductors,~~ and as a result have reduced ~~or completely shut down their~~ production of some ~~automobiles~~ automobile models and/or ~~parts,~~eliminated certain features (some of which may be added later), which in turn has reduced our sale of products. Consumer demand remains strong, but the semiconductor shortage has ~~pushed~~caused new vehicle ~~inventory~~inventories to ~~very~~remain near historically low levels. Our Automotive Group uses the semiconductors in seat comfort products, and to a lesser extent in motors and actuators. Although our Automotive Group has been able to obtain an adequate supply of semiconductors, we are dependent on our suppliers to deliver these semiconductors in accordance with our production schedule. A shortage of the semiconductors, either to us, the automotive OEMs, or our suppliers, can disrupt our operations and our ability to deliver products to our customers. ~~The shortage~~If we, our customers, or our suppliers cannot secure an adequate supply of semiconductors, ~~is also impacting~~this may negatively impact our ~~Adjustable Bed~~sales, earnings, and ~~Hydraulic Cylinders business units.~~financial condition.

The Russian invasion of Ukraine has caused disruptions in our supply chain and negatively impacted our results of operations. Our Automotive business uses semiconductors, the production of which uses neon gas. Our Aerospace business uses titanium and nickel in the production of aerospace tubing. Several of our businesses use birch plywood in their products. Although we do not have operations in Russia, Belarus, or Ukraine, and we have not had a material amount of sales into these countries, some of our businesses, in the past, have indirectly sourced, ~~directly or~~and may continue to indirectly source subject to pricing and legal constraints, a portion of ~~their~~our supply chain requirements of ~~nickel,~~ titanium and birch plywood originating from Russia. Our Aerospace Products Group uses titanium in the production of aerospace tubing. Several of our businesses use birch plywood in their products. Also, a significant portion of neon gas is produced in Ukraine. Our Automotive Group uses semiconductors, the ~~Ukraine.~~production of which uses neon gas. Since the invasion began, the prices of these materials have significantly increased. ~~Also, several~~Several countries have imposed economic sanctions against Russia as a result of its military action. The European Union and the United Kingdom have banned timber imports from Russia. It is possible sanctions could be expanded, or additional measures taken, which could restrict the import of ~~nickel,~~ titanium, and further restrict the import of birch plywood originating from Russia or greatly increase the cost of procurement via further increased duties or otherwise. Also, if the conflict in Ukraine expands geographically or in intensity, this may have a negative impact on our operations, including access to energy and other raw materials.

A significant portion of global production of oil is refined and exported from Russia.The European Union and certain countries, including the United States, the United Kingdom, Canada, and Australia, have either partially or fully banned the import of Russian oil. With decreased supply availability, fuel costs have increased and may continue to increase. This has impacted, and may continue to impact, both our businesses and consumers. Also, there has been a reduction of natural gas exports from Russia to Europe from sanction-related impacts and disruption in pipeline delivery, resulting in shortages and higher prices.Higher energy prices have contributed to broader inflationary trends, which have resulted, in some cases, in reduced discretionary consumer spending and a softening of demand for our products. If this continues, the demand for our products may continue to be negatively impacted, which would have a negative impact on our sales.

For more information regarding supply chain disruptions, see ~~Inflationary~~ Trends in Cost of Goods Sold on page ~~23.~~20.

Competition

Many of our markets are highly competitive, with the number of competitors varying by product line. In general, our competitors tend to be smaller, private companies. Many of our competitors, both domestic and foreign, compete primarily on the basis of price. Our success has stemmed from the ability to remain price competitive, while delivering innovation, better product quality, and customer service.

We continue to face pressure from foreign competitors, as some of our customers source a portion of their components and finished products offshore. In addition to lower labor rates, foreign competitors benefit (at times) from lower raw material

costs. They may also benefit from currency factors and more lenient regulatory climates. We typically compete in market segments that value product differentiation. However, when we do compete on cost, we typically remain price competitive in most of our business units, even versus many foreign manufacturers, as a result of our ~~highly~~ efficient operations, automation, vertical integration in steel rod and wire, logistics and distribution efficiencies, and large-scale purchasing of raw materials and commodities. ~~However, we~~We have also reacted to foreign competition in certain cases by selectively adjusting prices, developing new proprietary products that help our customers reduce total costs, and shifting production offshore to take advantage of lower input costs.

Antidumping orders on innerspring imports.Since 2009, there have been antidumping duty orders on innerspring imports from China, South Africa, and Vietnam, ranging from 116% to 234%. In September 2019, the Department of Commerce (DOC) and the International Trade Commission (ITC) concluded a second sunset review extending the orders for an additional five years, through October 2024, at which time the DOC and ITC will conduct a third sunset review to determine whether to extend the orders for an additional five ~~years.~~years.

Antidumping and countervailing orders on steel wire rod imports.Antidumping and countervailing duty cases filed by major U.S. steel wire rod producers have resulted in the imposition of antidumping duties on imports of steel wire rod from Brazil, China, Belarus, Indonesia, Italy, Korea, Mexico, Moldova, Russia, South Africa, Spain, Trinidad & Tobago, Turkey, Ukraine, United Arab Emirates, and the United Kingdom, ranging from 1% to 757%, and countervailing duties on imports of steel wire rod from Brazil, China, Italy, and Turkey, ranging from 3% to 193%. In June 2020, the ITC and DOC concluded a first sunset review, extending the orders on China through June 2025, and in July 2020, the ITC and DOC concluded a third sunset review, determining to extend the orders on Brazil, Indonesia, Mexico, Moldova, and Trinidad & Tobago through August 2025. ~~Duties will continue through December 2022~~The ITC and DOC are currently conducting sunset reviews regarding duties for Belarus, Italy, Korea,

Russia, South Africa, Spain, Turkey, Ukraine, United Arab Emirates, and the United ~~Kingdom. At those times, the DOC and the ITC will conduct sunset reviews~~Kingdom to determine whether to extend those orders for an additional five years.

Antidumping and countervailing orders on mattress imports. Since 2019, there has been an antidumping duty order on mattress imports from China ranging from 57% to 1,732%. This order will remain in effect through December 2024, at which time the DOC and ITC will conduct a sunset review to determine whether to extend the order for an additional five years.

In March 2020, the Company, along with other domestic mattress producers and two labor unions representing workers at other mattress producers (collectively "Petitioners"), filed antidumping petitions with the DOC and the ITC alleging that manufacturers of mattresses in Cambodia, Indonesia, Malaysia, Serbia, Thailand, Turkey, and Vietnam were unfairly selling their products in the United States at less than fair value (dumping) and a countervailing duty petition alleging manufacturers of mattresses in China were benefiting from subsidies. In March 2021, the DOC made final determinations, assigning China a countervailing duty rate of 97.78% and antidumping duty rates on the other seven countries from 2.22% – 763.28%. In April 2021, the ITC made a unanimous affirmative final determination that domestic mattress producers were materially injured by reason of the unfairly priced or subsidized imported mattresses. Accordingly, the agencies instructed that final antidumping and countervailing duty orders will remain in effect for five years, through May 2026, at which time the DOC and ITC will conduct a sunset review to determine whether to extend the ~~order~~orders for an additional five years. Appeals ~~have been~~were filed with the U.S. Court of International Trade (CIT) by respondents as to the DOC’s final determinations on antidumping duty rates for Cambodia, Indonesia, and Vietnam and the ITC’s unanimous, final determination of material injury to the domestic industry. Petitioners separately appealed the DOC's final determinations ~~of margins~~on antidumping duty rates for Cambodia, Indonesia ~~Thailand,~~ and Thailand.

In November 2022, the CIT ruled partially in favor of the DOC and Petitioners on the calculations of rates for Vietnam, but also sent the case back to the DOC to explain the use of certain financial data in making its determination. The DOC filed its explanation in February 2023.

In February 2023, the CIT ruled partially in favor of Petitioners on the calculation of rates for Cambodia, but also sent the case back to the DOC to explain the use of certain financial data in making its determination. In March 2023, the CIT ruled partially in favor of Petitioners on the calculation of rates for Indonesia, but also sent the case back to the DOC to explain treatment of certain in-transit mattresses and selling expenses. These matters and the ~~ITC's final determination of injury.~~other appeals are ongoing with no timeline for decisions by the CIT. See Item 1 Legal Proceedings on page 3736 for more information.

~~COVID-19 Impacts on our Business~~

~~Below is a discussion of the various current impacts of COVID-19 on our business.~~

~~Demand for our Products.~~ Various governments in North America, Europe, Asia, and elsewhere instituted, and some have reinstituted, quarantines, shelter-in-place or stay-at-home orders, or restrictions on public gatherings as well as limitations on social interactions, which have had, and could further have, an adverse effect on the demand for our products.

~~Impact on our Manufacturing Operations~~. We have manufacturing facilities in 17 countries. All of these countries have been affected by the COVID-19 pandemic. All of our facilities are open and running at this time. However, some of our facilities in China, most notably in our Automotive and Home Furniture businesses, have been temporarily closed from time to time due to strict COVID-related lockdown requirements. If the lockdowns in China are imposed on a broader geographic scope, this could materially negatively impact our manufacturing capacity, our customers or vendors, and our ability to transport goods in our supply chain. We have also had, at various times, some capacity restrictions on our plants due to governmental orders in other parts of the world. We have been and could be further negatively affected by governmental action in any one or more of the countries in which we operate by the imposition, or re-imposition, of restrictive social measures, mandatory closures of retail establishments that sell our products or our customers’ products, travel restrictions, and restrictions on the import or export of products.

~~Collection of Trade and Notes Receivables~~. Some of our customers have been adversely affected by the COVID-19 pandemic. If these parties suffer financial difficulty, they may be unable to pay their debts to us. We are closely monitoring accounts receivable and collections. Although we experienced increased bad debt expense in the first quarter of 2020, we have had favorable customer payment trends and applied a lower qualitative risk for improved macroeconomic conditions which have allowed us to reduce our bad debt reserves in the last half of 2020 through 2021. While favorable customer payment trends continued in the first quarter of 2022, we recorded $1.4 million bad debt related to macro market uncertainties and ordinary customer credit reviews.

~~Impairment of Goodwill and Long-Lived Assets.~~ A significant portion of our assets consists of goodwill and other long-lived assets, the carrying value of which may be reduced if we determine that those assets are impaired. At March 31, 2022, goodwill and other intangible assets represented $2.1 billion, or 40% of our total assets. In addition, net property, plant and equipment, operating lease right-of-use assets, and sundry assets totaled $1.1 billion, or 20% of total assets.

Our annual goodwill impairment testing performed in the second quarter of 2021 indicated no goodwill impairments. However, fair value exceeded carrying value by less than 100% for two reporting units as summarized in the table below:

Fair value in excess of carrying value Goodwill
Goodwill impairment testing as performed in the second quarter 2021 As of March 31, 2022
Aerospace 28 % $67 million
Work Furniture 85 % $101 million

In our Aerospace reporting unit, demand for fabricated duct assemblies is at 2019 levels and demand for welded and seamless tube products is improving modestly but still below pre-pandemic levels. We expect the industry to return to 2019 demand levels in 2024. Sales in the Work Furniture reporting unit have recovered to pre-pandemic levels from strong demand for products sold for residential use and improvement in the contract market as companies redesign their footprints and invest in office space to attract and retain employees as more people return to the office. We are continuing to monitor all factors impacting these industries. If the adverse economic impact from the COVID-19 pandemic is longer than expected, we may not be able to achieve projected performance levels. If actual results of any of our reporting units materially differ from the assumptions and estimates used in the goodwill and long-lived asset valuation calculations, we could incur future impairment charges. These non-cash charges could have a material negative impact on our earnings.

Relief under the CARES ~~Act.~~Act

We deferred $19 million of our 2020 payment of employer's Social Security match as provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Approximately half was paid in January 2022 and the other half was paid in January 2023, all in accordance with the holiday ~~schedule~~schedules for the December 31, 2021 and December 31, 2022 deferral ~~date. The remaining~~dates. This deferral ~~is anticipated to be paid in January 2023.~~did not have a material impact on our short- or long-term financial condition, results of operations, liquidity, or capital resources and did not contain material restrictions on our operations, sources of funding, or otherwise.

RESULTS OF OPERATIONS

Discussion of Consolidated Results

Three Months:

Trade Sales were ~~$1,322~~$1,214 million in the first three months of ~~2022, a 15% increase~~2023, an 8% decrease versus the same period last year. Organic sales ~~increased 13%, with volume~~decreased 11%. Volume was down 4%7%, primarily from demand softness in ~~U.S. and European bedding~~residential end markets, partially offset by growth in our ~~Work Furniture,~~Automotive, Aerospace, and Hydraulic Cylinders businesses. ~~Inflation driven raw~~Raw material-related selling price ~~increases added 18% to~~decreases reduced sales 3%, and currency impact decreased sales by 1%. Acquisitions, net of divestitures, increased sales 2%3%.

EBIT ~~increased 8%~~decreased 35% to ~~$138~~$89 million, primarily from lower volume and lower metal margin ~~expansion~~ in our Steel Rod business and pricing discipline in the Furniture, Flooring & Textile Products segment, partially offset by lower volume primarily in the Bedding segment, higher raw materials and transportation costs in Automotive generally, and production inefficiencies and related premium freight costs in a North American Automotive facility.business.

EPS ~~increased~~decreased to ~~$.66~~$.39 for the first three months of ~~2022,~~2023, versus ~~$.64~~$.66 in the same period of ~~2021,~~2022, primarily from ~~higher~~lower EBIT as discussed ~~above, partially offset by higher tax rate ($.03/share) and interest expense ($.01/share).~~above.

Net Interest Expense and Income Taxes

~~Net~~2023 net interest expense ~~for the first quarter 2022~~ was $1$2 million higher than the ~~first quarter 2021.~~three months ended March 31, 2022 due to higher commercial paper borrowings and higher rates on those borrowing in 2023 versus 2022. The increase in commercial paper borrowings was a result of the repayment of our $300 million 3.4% Senior Notes that matured in August 2022 and an August 2022 acquisition.

Our worldwide effective tax rate was ~~23%~~22% for the first quarter of ~~2022,~~2023, compared to ~~20%~~23% for the same quarter last year. While the U.S. statutory federal income tax rate was 21% in both years, foreign withholding taxes, the impact of foreign earnings, Global Intangible Low-Taxed Income (GILTI), and other less significant items added ~~2% and 3%~~4% to our tax rate in ~~2022~~2023 and ~~2021, respectively.~~2% in 2022. In ~~2021,~~2023, our rate ~~also benefited~~was favorably impacted by 2%3% from a deferred tax benefit recorded for future distributions of post-retirement executive stock ~~compensation-related items and 2% from prior year tax adjustments related to amended tax returns we expected to file.~~compensation.

For the full year, we are anticipating an effective tax rate of approximately ~~23%~~24%, including the impact of discrete tax items that we expect to occur from quarter to quarter. We utilize prudent tax planning strategies for opportunities to optimize our tax rate, but other factors, such as our overall profitability, the mix and level of earnings among jurisdictions, the type of income earned, business acquisitions and dispositions, the impact of tax audits, and the effect of tax law changes can also influence our rate.

Discussion of Segment Results

Three Month Discussion

A description of the products included in each segment, along with segment financial data, ~~appear~~appears in Note 4 ~~Segment Information~~ to the Consolidated Condensed Financial Statements on page 8. A summary of segment results is shown in the following tables.


Trade Sales (Dollar amounts in millions)	Trade Sales (Dollar amounts in millions)	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021		Change in Sales				% Change in Organic Sales 1		Trade Sales (Dollar amounts in millions)	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022		Change in Sales				% Change in Organic Sales 1
						$		%									$		%
Bedding Products	Bedding Products	$	639.4	$	535.8	$	103.6	19.3	%	16.4	%	Bedding Products	$	528.5	$	639.4	$	(110.9)	(17.3)	%	(17.2)	%
Specialized Products	Specialized Products	264.1		257.6		6.5		2.4		2.4		Specialized Products	320.7		264.1		56.6		21.4		8.5
Furniture, Flooring & Textile Products	Furniture, Flooring & Textile Products	418.8		357.5		61.3		17.1		16.8		Furniture, Flooring & Textile Products	364.4		418.8		(54.4)		(13.0)		(14.7)

Total	Total	$	1,322.3	$	1,150.9	$	171.4	14.9	%	13.5	%	Total	$	1,213.6	$	1,322.3	$	(108.7)	(8.2)	%	(11.3)	%


		Three Months Ended March 31, 2022		Three Months Ended March 31, 2021		Change in EBIT				EBIT Margins					Three Months Ended March 31, 2023		Three Months Ended March 31, 2022		Change in EBIT				EBIT Margins
EBIT (Dollar amounts in millions)	EBIT (Dollar amounts in millions)					$		%		Three Months Ended March 31, 2022		Three Months Ended March 31, 2021		EBIT (Dollar amounts in millions)					$		%		Three Months Ended March 31, 2023		Three Months Ended March 31, 2022
Bedding Products	Bedding Products	$	76.2	$	63.8	$	12.4	19.4	%	11.9	%	11.9	%	Bedding Products	$	33.3	$	76.2	$	(42.9)	(56.3)	%	6.3	%	11.9	%
Specialized Products	Specialized Products	20.3		35.2		(14.9)		(42.3)		7.7		13.7		Specialized Products	28.7		20.3		8.4		41.4		8.9		7.7
Furniture, Flooring & Textile Products	Furniture, Flooring & Textile Products	42.7		28.3		14.4		50.9		10.2		7.9		Furniture, Flooring & Textile Products	28.3		42.7		(14.4)		(33.7)		7.8		10.2
Intersegment eliminations & other	Intersegment eliminations & other	(1.6)		.4		(2.0)								Intersegment eliminations & other	(1.0)		(1.6)		.6
Total	Total	$	137.6	$	127.7	$	9.9	7.8	%	10.4	%	11.1	%	Total	$	89.3	$	137.6	$	(48.3)	(35.1)	%	7.4	%	10.4	%

Three Months Ended
March 31, 2022 Three Months Ended
March 31, 2021
Depreciation and Amortization
(Dollar amounts in millions)
Bedding Products $ 26.2 $ 26.1
Specialized Products 10.8 11.1
Furniture, Flooring & Textile Products 5.9 6.1
Unallocated 2
2.8 2.8
Total $ 45.7 $ 46.1


Depreciation and Amortization (Dollar amounts in millions)	Three Months Ended March 31, 2023		Three Months Ended March 31, 2022
Bedding Products	$	25.6	$	26.2
Specialized Products	10.7		10.8
Furniture, Flooring & Textile Products	5.8		5.9
Unallocated 2	3.3		2.8
Total	$	45.4	$	45.7

1This is a change in trade sales not attributable to acquisitions or divestitures in the last 12 months. Refer to the ~~discussion~~respective segment discussions below ~~under Bedding Products and Furniture, Flooring & Textile Products~~ for a reconciliation of the change in total segment trade sales to organic sales.

2Unallocated consists primarily of depreciation and amortization on non-operating assets.

Bedding Products

Trade sales ~~increased $104~~decreased $111 million, or ~~19%~~17%. Organic sales ~~increased 16%~~decreased 17%. ~~Inflation driven raw~~Volume decreased 9% primarily due to demand softness in U.S. bedding markets and lower trade demand in our Steel Rod and Drawn Wire businesses. Raw material-related selling price ~~increases added 26% to~~decreases reduced sales ~~partially offset by volume declines of 9%~~7%, and currency impact ofdecreased sales 1%. ~~The Kayfoam acquisition completed~~A small divestiture in ~~June 2021, net of divestitures (small operations in Drawn Wire and International Bedding), added 3% to~~2022 reduced trade sales ~~growth.~~by less than 1%.

EBIT ~~increased $12~~decreased $43 million, primarily from ~~higher~~lower metal margin, ~~partially offset by~~ lower volume, and lower overhead ~~absorption as production and inventory levels were adjusted to meet reduced demand.~~recovery.

Specialized Products

Trade sales increased $7$57 million, or 2%21%. Organic sales ~~grew 2%~~increased 8%, driven by volume growth of 3%11% and raw material-related selling price increases of ~~1%,~~2% partially offset by currency impact of 2%5%. The Hydraulic Cylinders acquisition completed in August 2022 added 13% to trade sales growth.

EBIT ~~decreased $15~~increased $8 million, primarily from higher ~~raw material and transportation costs in Automotive generally, and production inefficiencies and related premium freight costs in~~volume. First quarter 2023 also benefited from a ~~North American Automotive facility.~~$4 million reduction to a contingent purchase price liability associated with a prior year acquisition, primarily offset by currency impact.

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Furniture, Flooring & Textile Products

Trade sales ~~increased $61~~decreased $54 million, or ~~17%~~13%. Organic sales ~~increased 17%~~decreased 15%, from ~~inflation driven raw~~volume declines of 15% across the segment. Raw material-related selling price ~~increases. A small Work Furniture acquisition completed~~increases of 1% were offset by currency impact of 1%. Textile acquisitions in ~~May 2021~~2022 added ~~less than 1%~~2% to trade sales.

EBIT ~~increased~~decreased $14 million, primarily from ~~pricing discipline.~~lower volume.

LIQUIDITY AND CAPITALIZATION

Liquidity

Sources of Cash

Cash on Hand

At March 31, ~~2022,~~2023, we had cash and cash equivalents of ~~$327~~$345 million primarily invested in interest-bearing bank accounts and in bank time deposits with original maturities of three months or less. Substantially all of these funds are held in the international accounts of our foreign operations.

If we were to immediately bring back all our foreign cash to the U.S. in the form of dividends, we would pay foreign withholding taxes of approximately ~~$21~~$18 million. Although there are capital requirements in various jurisdictions, none of this cash was inaccessible for repatriation at March 31, ~~2022.~~2023.

Cash from Operations

The primary source of funds for our short-term cash requirements is our cash generated from operating activities. Earnings and changes in working capital levels are the two factors that generally have the greatest impact on our cash from operations. Cash from operations for the three months ended March 31, ~~2022~~2023 was ~~$39.0~~$97 million, up ~~$49.6~~$58 million from the same period last ~~year. First quarter is normally our lowest~~year, reflecting a smaller use of cash ~~flow quarter of the year with increased~~for working capital ~~driven~~partially offset by the normal cadence of our business. Working capital increased significantly last year due to restocking efforts following inventory depletion in 2020 but increased to a lesser extent this year as we began to return to more normal levels of inventory.lower earnings.

We closely monitor our working capital levels and ended the quarter with adjusted working capital at ~~15.2%~~15.8% of annualized trade sales. The table below explains this non-GAAP calculation. We eliminate cash, current debt maturities, and the current portion of operating lease liabilities from working capital to monitor our operating efficiency and performance related to trade receivables, inventories, and accounts payable. We believe this provides a more useful measurement to investors since cash and current maturities can fluctuate significantly from period to period. As discussed in Cash on Hand ~~on page 28,~~above, substantially all of these funds are held by international operations and may not be immediately available to reduce debt on a dollar-for-dollar basis.


(Dollar amounts in millions)	(Dollar amounts in millions)	March 31, 2022			December 31, 2021			(Dollar amounts in millions)	March 31, 2023			December 31, 2022
Current assets	Current assets	$	2,138.0		$	2,065.3		Current assets	$	2,014.8		$	1,958.0
Current liabilities	Current liabilities	1,351.2			1,335.7			Current liabilities	968.6			968.1
Working capital	Working capital	786.8			729.6			Working capital	1,046.2			989.9
Cash and cash equivalents	Cash and cash equivalents	327.3			361.7			Cash and cash equivalents	344.5			316.5
Current debt maturities and current portion of operating lease liabilities	Current debt maturities and current portion of operating lease liabilities	347.1			345.1			Current debt maturities and current portion of operating lease liabilities	64.0			58.9
Adjusted working capital	Adjusted working capital	$	806.6		$	713.0		Adjusted working capital	$	765.7		$	732.3
Annualized trade sales 1	Annualized trade sales 1	$	5,289.2		$	5,331.6		Annualized trade sales 1	$	4,854.4		$	4,783.2
Working capital as a percent of annualized trade sales	Working capital as a percent of annualized trade sales	14.9		%	13.7		%	Working capital as a percent of annualized trade sales	21.6		%	20.7		%
Adjusted working capital as a percent of annualized trade sales	Adjusted working capital as a percent of annualized trade sales	15.2		%	13.4		%	Adjusted working capital as a percent of annualized trade sales	15.8		%	15.3		%

1 Annualized trade sales ~~equal first~~is the respective quarter's trade sales multiplied by 4 (first quarter 2023 and fourth quarter 2022 trade sales ~~of $1,322.3~~were $1,213.6 million and ~~fourth quarter 2021 trade sales of $1,332.9~~$1,195.8 million, ~~multiplied by 4.~~respectively). We believe measuring our working capital against this sales metric is more useful, since efficient management of working capital includes adjusting those net asset levels to reflect current business volume.

2825

Three Primary Components of our Working Capital


		Amount (in millions)							Days				Amount (in millions)							Days
									Three Months Ended	Twelve Months Ended	Three Months Ended									Three Months Ended	Twelve Months Ended	Three Months Ended
		March 31, 2022		December 31, 2021		March 31, 2021			March 31, 2022	December 31, 2021	March 31, 2021		March 31, 2023		December 31, 2022		March 31, 2022			March 31, 2023	December 31, 2022	March 31, 2022
Trade Receivables	Trade Receivables	$	666.5	$	620.0	$	577.4	DSO 1	45	42	45	Trade Receivables	$	642.2	$	609.0	$	666.5	DSO 1	48	44	45

Inventories	Inventories	$	1,045.8	$	993.2	$	801.8	DIO 2	89	76	80	Inventories	$	892.7	$	907.5	$	1,045.8	DIO 2	81	83	89

Accounts Payable	Accounts Payable	$	622.0	$	613.8	$	536.3	DPO 3	53	53	53	Accounts Payable	$	552.2	$	518.4	$	622.0	DPO 3	50	50	53

1Days sales outstanding

a. Quarterly: end of period trade receivables ÷ (quarterly net trade sales ÷ number of days in the period)

b. Annually: ((beginning of year trade receivables + end of period trade receivables) ÷ 2) ÷ (net trade sales ÷ number of days in the period)

2Days inventory on hand

a. Quarterly: end of period inventory ÷ (quarterly cost of goods sold ÷ number of days in the period)

b. Annually: ((beginning of year inventory + end of period inventory) ÷ 2) ÷ (cost of goods sold ÷ number of days in the period)

3Days payables outstanding

a. Quarterly: end of period accounts payable ÷ (quarterly cost of goods sold ÷ number of days in the period)

b. Annually: ((beginning of year accounts payable + end of period accounts payable) ÷ 2) ÷ (cost of goods sold ÷ number of days in the period)

We continue to monitor all elements of working capital in order to optimize cash flow.

Trade Receivables - Our trade receivables and DSO increased at March 31, ~~2022~~2023 compared to ~~both~~ December 31, 2022. Accounts receivable increases were primarily associated with sales growth in the Specialized segment, whose customers generally have longer terms, and due to seasonality in the Fabric Converting and Geo Components businesses. Trade receivables decreased and DSO increased compared to March 31, ~~2021. Our DSO remained consistent versus March 31, 2021 but increased versus December 31, 2021. Increased trade receivables were primarily related~~2022 due to ~~raw material-related selling price increases.~~demand softness and timing of payments, partially offset by acquisitions. Our allowance for doubtful accounts ~~increased~~decreased by $1$2 million during the first ~~quarter~~three months of ~~2022~~2023 related to ~~macro market uncertainties and~~ ordinary customer credit risk reviews. ~~Favorable customer payment trends continue as we are~~We closely ~~monitoring~~monitor accounts receivable and ~~collections. We monitor all~~collections, including accounts for possible loss. We also monitor general macroeconomic conditions and other items that could impact the expected ~~collectibility~~collectability of all customers, or pools of customers with similar risk. We obtain credit applications, credit reports, bank and trade references, and periodic financial statements from our customers to establish credit limits and terms as appropriate. In cases where a customer’s payment performance or financial condition begins to deteriorate or in the event of a customer bankruptcy, we tighten our credit limits and terms and make appropriate reserves based upon the facts and circumstances for each individual customer, as well as pools of ~~customers with~~ similar ~~risk.~~customers.

Inventories - Our inventories and DIO ~~increased~~decreased at March 31, ~~2022~~2023 compared to both December 31, 2022 and March 31, 2021. Increased inventories versus December 31 were primarily driven by inflation and advance purchases of selected products to proactively address inflation, potential supply chain constraints, and to ensure consistent supply to our customers. Inventory levels increased significantly throughout 2021 (primarily in our Steel Rod, Drawn Wire, and U.S. Spring businesses) due to re-stocking efforts following severe depletion in 2020. Supply chain constraints have generally improved across2022. During the Bedding businesses, and we are making progress in reducing certain inventories built under higher demand expectations, but will still comfortably support near-term customer requirements and protect against future disruptions. We built additional safety stock in late 2021 and early 2022 as a precautionary measure before taking our steel rod mill out of operation late in the first quartersecond half of 2022, to replace the reheat furnace. We successfully completed the reheat furnace replacement, enabling us to begin reducing the extra inventory. Our normal seasonal cash flow cycle will continue to be altered to some degreeinventories decreased as we ~~continue~~reduced to ~~balance inventory levels. Our recent increased inventory~~ levels ~~are not indicative~~needed to support current demand, primarily in Bedding, while maintaining our ability to service customer requirements. These reductions were somewhat offset by acquisitions as compared to March 31, 2022. In 2023, chemical price deflation was partially offset by advanced chemical purchases in anticipation of ~~slow-moving or potential inventory obsolescence.~~ future inflation.

We continuously monitor our slower-moving and potentially obsolete inventory through reports on inventory quantities compared to usage within the previous 12 months. We also utilize cycle counting programs and complete physical counts of our inventory. When potential inventory obsolescence is indicated by these controls, we will take charges for write-downs to maintain an adequate level of reserves.

Accounts Payable - Our accounts payable increased while DPO remained flat at March 31, ~~2022~~2023 compared to ~~both~~ December 31, 2022 primarily due to the timing of steel scrap purchases. Accounts payable and DPO decreased compared to March 31, ~~2021. At March 31, 2022, our DPO has remained consistent across all periods presented.~~2022. The ~~increased~~decreased accounts payable balances were primarily related to the inventory factors discussed above. Our payment terms did not change meaningfully since last year, and we have continued to focus on optimizing payment terms with our vendors. We continue to look for ways to

establish and maintain favorable payment terms through our significant purchasing power and also utilize third-party services that offer flexibility to our vendors, which in turn helps us manage our DPO as discussed below.

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~~$50 million and ~~$35~~$55 million of trade receivables that were sold and removed from our Consolidated Condensed Balance Sheets at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. These sales reduced our quarterly DSO by roughly ~~three~~four days at March 31, 2023 and December 31, 2022, and the impact to year-to-date operating cash flow (used for) and provided ~~or (used),~~by was approximately ($5) million and $5 million for the three months ended March 31, 2023 and ~~($10) million, at~~ March 31, 2022, ~~and December 31, 2021,~~ respectively.

For accounts payable, we have historically looked for ways to optimize payment terms through utilizing 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. As such, there is no direct impact on our DPO, accounts payable, operating cash flows, or liquidity. The accounts payable associated with the third-party programs, which remain on our Consolidated Condensed Balance Sheets, were approximately ~~$130~~$105 million at ~~both~~ March 31, ~~2022~~2023 and $80 million at December 31, ~~2021.~~2022.

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.

Commercial Paper Program

Another source of funds for our short-term cash requirements is our $1.2 billion commercial paper program. As of March 31, ~~2022,~~2023, we had ~~$14~~$317 million of commercial paper outstanding. For more information on our commercial paper program, see Commercial Paper Program on page ~~32.~~29.

Credit Facility

Our credit facility is a ~~five-year~~ multi-currency facility providing us the ability, from time to time, to borrow, repay, and re-borrow up to $1.2 billion until the maturity date, at which time our ability to borrow under the facility will terminate. The credit facility matures in September 2026. Currently, there are no borrowings under the credit facility. For more information on our credit facility, see Credit Facility on page 30.

Capital Markets

We also believe that we have the ability to raise debt in the capital markets which acts as a source of funding of long-term cash requirements. Currently, we have $2.1 billion of total debt outstanding with ~~maturity dates ranging from 2022 to~~$9 million due within 12 months and the remaining maturing through 2051. For more information, please see Long-Term Debt (including Current Maturities) on page ~~33.~~30.

Uses of Cash

Our long-term priorities for uses of cash are: fund organic growth including capital expenditures, pay dividends, fund strategic acquisitions, and repurchase stock with available cash.

Capital Expenditures

We are making investments to support expansion in businesses and product lines where sales are profitably growing, for efficiency improvement and maintenance, and for system enhancements. We expect capital expenditures ~~to approximate $150~~of $100-$130 million in ~~2022~~2023 of which we have spent ~~$19~~$38 million as of March 31, ~~2022.~~2023. Our employee incentive plans emphasize ~~returns on~~cash flow, which includes changes in working capital ~~which include net fixed assets~~ and ~~working capital.~~capital expenditures. This emphasis focuses our management on ~~asset utilization and helps ensure that we are~~ investing additional capital dollars where attractive return potential exists.

Dividends

Dividends are one of the primary means by which we return cash to shareholders. In February, we declared a quarterly dividend of ~~$.42~~$.44 per share, which represented a $.02 or ~~5.0%~~4.8% increase versus first quarter of ~~2021.~~2022.

3027

~~Our~~Although our dividend payout ratio has been higher at times, our long-term targeted dividend payout ratio is approximately 50% of adjusted EPS (which excludes special items such as significant tax law impacts, impairment charges, restructuring-related charges, divestiture gains, litigation accruals, and settlement proceeds). Continuing our long track record of increasing the dividend remains a high priority. ~~2021~~2022 marked our ~~50th~~51st consecutive annual dividend increase. We are proud of our dividend record and plan to extend it.

Acquisitions

Our long-term, 6-9% annual revenue growth objective envisions periodic acquisitions. We ~~are seeking~~seek strategic acquisitions that complement our current products and capabilities.

We ~~have~~did not ~~acquired~~acquire any businesses in the first three months of 2023 or 2022. For the full year 2023 we currently expect acquisition activity to be minimal.

Stock Repurchases

~~With the deleveraging we accomplished over the past few years after acquiring ECS in January 2019, share~~Share repurchases ~~have returned as~~is one of our priorities for uses of cash. During the first quarter of ~~2022,~~2023, we repurchased .6.1 million shares of our stock (at an average price of ~~$37.17)~~$34.04) and issued .7.6 million shares through employee benefit plans. ~~For the full year, we currently expect share repurchases to offset share issuances.~~

We have been authorized by the Board to repurchase up to 10 million shares each year, but we have established no specific repurchase commitment or timetable. The level of repurchases will vary depending on various considerations, including cash from operations, alternative uses of cash, and opportunities to repurchase shares at an attractive price. For the full year 2023 we currently expect share repurchases to be minimal.

Short-Term and Long-Term Cash Requirements

In addition to the expected uses of cash discussed above, we have various material short-term (12 months or less) and long-term (more than 12 months) cash requirements. There have been no material changes in the first quarter ~~2022~~2023 to our short-term or long-term cash requirements as previously reported in our cash requirements table on page 48 of our Form 10-K filed February ~~22, 2022.~~

24, 2023.

3128

Capitalization

Capitalization Table

This table presents key debt and capitalization statistics for the periods presented:


(Dollar amounts in millions)	(Dollar amounts in millions)	March 31, 2022			December 31, 2021			(Dollar amounts in millions)	March 31, 2023			December 31, 2022

Total debt excluding revolving credit/commercial paper		$	2,090.4		$	2,090.3
Less: Current maturities of long-term debt		301.3			300.6
Total debt excluding commercial paper								Total debt excluding commercial paper	$	1,800.8		$	1,801.1
Less: Short-term debt and current maturities of long-term debt								Less: Short-term debt and current maturities of long-term debt	8.9			9.4
Scheduled maturities of long-term debt	Scheduled maturities of long-term debt	1,789.1			1,789.7			Scheduled maturities of long-term debt	1,791.9			1,791.7
Average interest rates 1	Average interest rates 1	3.7		%	3.7		%	Average interest rates 1	3.8		%	3.8		%
Average maturities in years 1	Average maturities in years 1	10.6			10.8			Average maturities in years 1	11.2			11.5
Revolving credit/commercial paper 2		14.0			—
Commercial paper 2								Commercial paper 2	317.0			282.5
Average interest rate on period-end balance outstanding	Average interest rate on period-end balance outstanding	.6		%	—		%	Average interest rate on period-end balance outstanding	5.3		%	4.8		%
Average interest rate during the period (2022-three months;2021-twelve months)		.3		%	.2		%
Average interest rate during the period (2023-three months;2022-twelve months)								Average interest rate during the period (2023-three months;2022-twelve months)	4.8		%	3.2		%
Total long-term debt	Total long-term debt	1,803.1			1,789.7			Total long-term debt	2,108.9			2,074.2
Deferred income taxes and other liabilities	Deferred income taxes and other liabilities	516.1			533.3			Deferred income taxes and other liabilities	525.4			502.4
Shareholders’ equity and noncontrolling interest	Shareholders’ equity and noncontrolling interest	1,671.4			1,648.6			Shareholders’ equity and noncontrolling interest	1,667.1			1,641.4
Total capitalization	Total capitalization	$	3,990.6		$	3,971.6		Total capitalization	$	4,301.4		$	4,218.0
Unused committed credit:	Unused committed credit:							Unused committed credit:
Long-term	Long-term	$	1,186.0		$	1,200.0		Long-term	$	883.0		$	917.5
Short-term	Short-term	—			—			Short-term	—			—
Total unused committed credit 2	Total unused committed credit 2	$	1,186.0		$	1,200.0		Total unused committed credit 2	$	883.0		$	917.5

Cash and cash equivalents	Cash and cash equivalents	$	327.3		$	361.7		Cash and cash equivalents	$	344.5		$	316.5


1			These rates include current maturities, but exclude commercial paper to reflect the averages of outstanding debt with scheduled maturities.
2			The unused committed credit amount is based on our revolving credit facility and commercial paper program which, at year end ~~2021~~2022 and at the end of the first quarter of ~~2022,~~2023, had a total authorized program amount of $1.2 billion. However, our borrowing capacity ~~may be~~is limited by covenants to our credit facility. Reference is made to the discussion under Commercial Paper Program below and Credit Facility on page 30 for more details about our borrowing capacity at March 31, 2023.

Commercial Paper Program

Amounts outstanding related to our commercial paper program were:


(Amounts in millions)	(Amounts in millions)	March 31, 2022		December 31, 2021		(Amounts in millions)	March 31, 2023		December 31, 2022
Total authorized program	Total authorized program	$	1,200.0	$	1,200.0	Total authorized program	$	1,200.0	$	1,200.0
Commercial paper outstanding (classified as long-term debt)	Commercial paper outstanding (classified as long-term debt)	14.0		—		Commercial paper outstanding (classified as long-term debt)	317.0		282.5
Letters of credit issued under the credit agreement	Letters of credit issued under the credit agreement	—		—		Letters of credit issued under the credit agreement	—		—
Total program usage		14.0		—
Amount limited by restrictive covenants of credit facility 1						Amount limited by restrictive covenants of credit facility 1	357.2		200.9
Total program available	Total program available	$	1,186.0	$	1,200.0	Total program available	$	525.8	$	716.6

1 Our borrowing capacity is limited by covenants to our credit facility. Reference is made to the discussion under Credit Facility on page 30 for more details about our borrowing capacity at March 31, 2023.

The average and maximum amounts of commercial paper outstanding during the first quarter of ~~2022~~2023 were ~~$24~~$358 million and ~~$53~~$387 million, respectively. At quarter end, we had no letters of credit outstanding under the credit facility, but we had issued ~~$48~~$46 million of stand-by letters of credit under other bank agreements to take advantage of better pricing. Over the long-term, and subject to our capital needs, market conditions, and alternative capital market opportunities, we expect to maintain the

indebtedness under the program by continuously repaying and reissuing the commercial ~~paper notes.~~paper. We view ~~the notes~~these borrowings as a source of long-term funds and have classified the borrowings under the commercial paper program as long-term borrowings on our balance sheet. We have the intent to roll over such obligations on a long-term basis and have the ability to refinance these borrowings on a long-term basis as evidenced by our $1.2 billion revolving credit facility maturing in 2026 discussed below.

Credit Facility

Our multi-currency credit facility ~~was amended September 2021 to create more financial flexibility and~~ matures in September 2026. It provides us the ability, from time to time subject to certain restrictive covenants and customary conditions, to borrow, repay, and re-borrow up to $1.2 billion.

Our credit facility contains restrictive covenants which (a) require us to maintain as of the last day of each fiscal quarter (i) Consolidated Funded Indebtedness minus the lesser of: (A) Unrestricted Cash, or (B) $750 million to (ii) Consolidated EBITDA for the four consecutive trailing quarters, such ratio not being greater than 3.50 to 1.00, provided, however, subject to certain limitations, if we have made a ~~material acquisition~~Material Acquisition in any fiscal quarter, at our election, the maximum ~~leverage ratio~~Leverage Ratio shall be 4.00 to 1.00 for the fiscal quarter during which such ~~material acquisition~~Material Acquisition is consummated and the next three consecutive fiscal quarters; (b) limit the amount of total secured ~~debt~~obligations to 15% of our total consolidated assets, and (c) limit our ability to sell, lease, transfer, or dispose of all or substantially all of our assets and the assets of our subsidiaries, taken as a whole (other than accounts receivable sold in a ~~permitted securitization~~Permitted Securitization transaction, products sold in the ordinary course of business, and our ability to sell, lease, transfer, or dispose of any of our assets or the assets of one of our subsidiaries to us or one of our subsidiaries, as applicable) at any given point in ~~time; each (a), (b), and (c) above as determined by the terms of our credit agreement, filed with the SEC on October 1, 2021 as~~ ~~Exhibit 10.1~~ ~~to our Current Report on Form 8-K.~~time. We were in compliance with all of our debt covenants at the end of first quarter ~~2022,~~2023, and expect to maintain compliance with the debt covenant requirements. In December 2022, we amended our credit facility to change the benchmark interest rate references from the London interbank offered rate to the secured overnight financing rate.

Our credit facility serves as back-up for our commercial paper program. At March 31, ~~2022,~~2023, we had ~~$14~~$317 million of commercial paper outstanding and had no borrowing under the credit facility. As our trailing 12-month ~~consolidated~~Consolidated EBITDA, unrestricted cash, and debt levels change, our borrowing capacity increases or decreases. Based on our trailing 12-month ~~consolidated~~Consolidated EBITDA, unrestricted cash, and debt levels at March 31, ~~2022,~~2023, our borrowing capacity under the credit facility was ~~$1.186 billion.~~$526 million. However, this may not be indicative of the actual borrowing capacity moving forward, which may be materially different depending on our ~~consolidated~~Consolidated EBITDA, unrestricted cash, debt levels, and leverage ratio requirements at that time.

Long-Term Debt (including Current Maturities)

We have total debt of ~~$2,104 million of which $300 million is due August 2022.~~$2.1 billion. The maturities of the long-term debt range from 2024 through 2051. For more ~~information~~details on ~~our~~ long-term debt, please refer to Footnote J to our Consolidated Financial Statements on page 9491 in our Form 10-K filed February ~~22, 2022.~~24, 2023.

~~In November 2021, we issued $500 million aggregate principal amount~~Our next maturity of ~~notes that mature in 2051. The notes bear interest at a rate of 3.5% per year, with interest payable semi-annually beginning May 15, 2022. As part of this issuance, we also unwound~~public debt is our $300 million, of treasury lock agreements we had entered into during 2021 at a gain of approximately $10 million, which will be amortized over the life of the notes. The net proceeds of these notes were used to repay commercial paper, and therefore indirectly may be used, through future commercial paper issuances, to repay a portion of the $300 million 3.4%3.8% Senior Notes due ~~August 2022.~~in November 2024.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. To do so, we must make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and disclosures. If we used different estimates or judgments our financial statements could change, and some of those changes could be significant. Our estimates are frequently based upon historical experience and are considered by management, at the time they are made, to be reasonable and appropriate. Estimates are adjusted for actual events, as they occur.

Critical accounting estimates are those that are: (a) subject to uncertainty and change and (b) of material impact to our financial statements.There were no newly identified critical accounting policies or estimates in the first three months of 2023, and there have been no material changes to our critical accounting policies and estimates as previously disclosed beginning on page 5150 in our Form 10-K filed February ~~22, 2022.~~24, 2023.

CONTINGENCIES

~~For contingencies related to the impact of the COVID-19 pandemic on our business, please see~~ ~~COVID-19 Impacts on our Business~~ ~~on page 25.~~

Litigation

~~Accrual for~~ Litigation Contingencies ~~and Reasonably Possible Losses in Excess of Accruals~~

We are exposed to litigation contingencies that, if realized, could have a material negative impact on our financial condition, results of operations, and cash flows. We deny liability in all currently threatened or pending litigation proceedings and believe we have valid bases to contest all claims made against us. At March 31, ~~2022,~~2023, our litigation contingency accrual was immaterial (which does not include accrued expenses related to workers' compensation, vehicle-related personal injury, product and general liability claims, taxation issues and environmental matters). Based on current known facts, aggregate

reasonably possible (but not probable, and therefore, not ~~recorded)~~accrued) losses in excess of accruals for litigation contingencies are estimated to be ~~$12 million. If~~$13 million. If our assumptions or analyses regarding any of our contingencies are incorrect, or if facts change or future litigation arises, we could realize ~~loss~~losses in excess of the recorded accruals (and in excess of the ~~$12~~$13 million referenced above), which could have a material negative impact on our financial condition, results of operations, and cash flows. Also, we could be subject to future litigation of various types (including but not limited to litigation related to employment, intellectual property, environmental, taxation, vehicle-related personal injury, antitrust, climate change, and others) that could negatively impact our financial condition, results of operations, and cash flows. For more information regarding our litigation contingencies, see Item 1 L egal P roceedings on page 36 and Note 14 13 Contingencies on page 2017 of the Notes to Consolidated Condensed Financial Statements.

Climate Change

Transition Risks

Change in Laws, Policies, and ~~Regulations~~

Regulations.Many scientists, legislators, and others attribute global warming to increased levels of greenhouse gas (GHG) emissions, including carbon dioxide, which has led to significant legislative and regulatory efforts to limit such emissions. At March 31, ~~2022,~~2023, we had ~~130~~approximately 135 production facilities ~~worldwide. Most of our facilities are engaged~~ in ~~manufacturing processes that produce greenhouse gas emissions, including carbon dioxide.~~18 countries. We also maintain a fleet of over-the-road tractor trailers that emit ~~greenhouse gases.~~GHG. Our manufacturing facilities are primarily located in North America, Europe, and Asia. There are certain transition risks (meaning risks related to the process of reducing the Company’s carbon footprint) that could materially affect our business, capital expenditures, results of operations, financial condition, competitive position, and reputation. One of these transition risks is the change in treaties, laws, policies, and regulations that could impose significant operational and compliance burdens. For example, our operations are subject to certain governmental actions like the European Union’s (EU) “European Green Deal” (which provides for a 55% reduction in net GHG emissions by 2030 (compared to 1990 levels), and no net emissions of GHG by 2050), and the “Paris Agreement” (which is an international treaty on climate change designed to lower GHG emissions). In addition, specifically with respect to our Automotive Group, the EU is moving forward with an effective ban on the sale of new gas-powered automobiles (with the exception of CO2-neutral automobiles) in the EU from 2035 (with interim requirements by 2030), aiming to accelerate the conversion to zero-GHG emission automobiles as part of a broad package to combat global warming. Also, President Biden signed executive orders setting the goal of having zero-emission vehicles account for half of all new U.S. passenger cars and light trucks sales by 2030 and committing the Federal government to procuring only zero-emission light vehicles by 2035. Finally, some states, including California and New York, are also implementing similar provisions. The Company’s automotive products can be sold to manufacturers of either gas-powered or electric-powered vehicles. However, if our customers (who may be subject to any of these or other similarly proposed or newly enacted laws and regulations) incur additional costs to comply with such laws and regulations, which in turn, impact their ability to operate at similar levels in certain jurisdictions, the demand for our products could be adversely affected. Also, overall, there continues to be a lack of consistent climate legislation in the jurisdictions in which we operate, which creates economic and regulatory uncertainty. To the extent our customers are subject to any of these or other similarly proposed or newly enacted laws and regulations, additional costs by customers to comply with such laws and regulations could impact their ability to operate at similar levels in certain jurisdictions, which could adversely impact their demand for our products and services. Also, ifIf these laws or regulations (including the ~~Securities and Exchange Commission's~~SEC’s proposed rule regarding climate-related disclosures) impose significant operational restrictions and compliance requirements on us, they could increase costs associated with our operations, including costs for raw materials and transportation. Non-compliance with climate change treaties, legislative and regulatory requirements could also negatively impact our reputation. To date, however, we have not experienced a material impact from climate change legislative and regulatory efforts.

Market Transition. We are engaged in the manufacture of various automotive components including mechanical and pneumatic lumbar support and massage systems for seating, seat suspension systems, motors and actuators, and cables. For several decades, automotive manufacturers have sought lightweight components designed to increase fuel efficiency in the automobiles they manufacture. Replacing traditional steel components with high-strength steel, magnesium, aluminum alloys, carbon fiber, and polymer composites can directly reduce the weight of a vehicle's body and chassis, and therefore reduce a

vehicle’s fuel consumption. This increased fuel efficiency also indirectly reduces GHG emissions. Because of our technological competitiveness, this long-standing market transition has not had, and is not expected to have, a material negative impact on our share of the markets in which we compete. However, if we are unable to continue to produce comparatively lightweight components, our share in these automotive markets could be negatively impacted.

Physical Climate Change Risks

Direct Physical Effects. The acute and chronic physical effects of climate change, such as severe weather-related events, natural disasters and/or significant changes in climate patterns could have an increasingly adverse impact on our business and customers. As mentioned above, at March 31, 2023, we had approximately 135 manufacturing facilities in 18 different countries, primarily located in North America, Europe, and Asia. We serve thousands of customers worldwide. In 2022, our largest customer represented less than 6% of our sales, and our customers were located in approximately 100 countries. Although our diverse geographical manufacturing footprint and our broad geographical customer base mitigates the potential physical risks of any local or regional climate change weather-related event having a material effect on our operations and results, the increased frequency and severity of such weather-related events could pose a risk to our operations and results.

To continue improving our climate-related risk assessment processes, we use technology-based tools to evaluate our property portfolio’s exposure to certain natural catastrophic events. We also initiated integration of climate-related risk into our Enterprise Risk Management (ERM) process providing an opportunity to improve our internal processes for identifying, assessing, and managing climate-related risks. On April 1, 2023, we experienced damage to one of our Home Furniture and Bedding facilities in Mississippi due to tornadic activity. This event did not have a material impact on our physical properties as a whole, or our overall ability to manufacture and distribute our products to customers in a timely fashion, and it did not have a material effect on our business, financial condition, or results of operations. However, in the future, depending on whether severe weather-related events increase in frequency and severity, such events could result in potential damage to our physical assets, local infrastructure, transportation systems, water delivery systems, our customers’ or suppliers’ operations, as well as prolonged disruptions in our manufacturing operations (including but not limited to our steel rod mill), all of which could harm our business, results of operations, and financial condition.

Indirect ~~Consequences~~Physical Effects. The physical effects of ~~Climate-Related Business Trends~~

~~Also, in~~climate change could continue to have an adverse impact on our supply chain. In 2020 and 2021, we experienced (due, in part, to severe ~~weather~~weather-related impacts) supply shortages in chemicals which restricted foam supply. The restriction of foam supply constrained overall mattress production in the bedding industry and reduced our production levels. The cost of chemicals and foam also increased due to the shortages. ~~Also, severe~~Severe weather impacts could also reduce supply of other products in our supply chain that could result in higher prices for our products and the resources needed to produce them. If we are unable to secure an adequate and timely supply of raw materials or products in our supply chain, or the cost of these raw materials or products materially increases, it could have a negative ~~effect~~impact on our ~~customers' payments which could~~business, results of operations, and financial condition.

In addition, although the cost has not been, and is not expected to be, material to our business, results of operations, and financial condition, severe weather-related incidents may continue to result in increased ~~bad debt expense.~~costs of our property insurance.

~~Physical Effects of Climate Change~~

We have experienced increased property insurance premiums, in part, due to enhanced weather-related risks, but this increase in premiums has not had a material impact on our results of operations or financial condition.

Compliance Costs Related to ~~Climate Change~~GHG Emissions Inventory

To date, we have not experienced a material ~~increase in~~ climate-related compliance costs. However, evaluating opportunities to reduce our carbon footprint, setting goals for carbon reduction, and measuring performance in achieving those goals will be part of our environmental, sustainability, and governance strategy moving forward. We ~~are currently working on completing~~have completed our first ~~greenhouse gas~~GHG emissions inventory covering 2019 through 2021 and are in the process of completing the 2022 inventory. ~~Once~~To ensure our information is complete ~~this baseline measurement~~and accurate, we are engaging in a third party limited assurance process for all four years. Our emissions inventory will inform a long-term greenhouse gas (GHG) reduction strategy, including setting reduction targets and other key areas of performance. This inventory, with a base year of 2019, will cover three years of data and include Scope 1 and Scope 2 carbon dioxide equivalent emissions. ~~The~~We believe our inventory in each of the four years was, or will be, prepared consistent with the GHG Protocol Corporate Accounting and Reporting Standard.

Our baseline measurement will inform a long-term GHG reduction strategy, including setting reduction targets and other key performance areas. We expect to publish our ESG objectives, goals, and targets, including climate-related goals in 2023 or in the first half of 2024. As we continue to expand our understanding of our company’s emission sources, geographic distribution of emissions, and available carbon reduction and mitigation opportunities, we will work to develop a roadmap to reduce our carbon footprint. We currently do not have an estimate of the capital expenditures or operating costs that may be required to implement our GHG reduction strategies. However, we do not expect that such capital expenditures or operating costs will be material to our financial condition or results of operations.

Cybersecurity Risks

We rely on information systems to obtain, process, analyze, and manage data, as well as to facilitate the manufacture and distribution of inventory to and from our facilities. We receive, process, and ship orders, manage the billing of and collections

from our customers, and manage the accounting for and payment to our vendors. We also manage our production processes with certain industrial control systems. We have a formal process in place for both incident response and cybersecurity continuous improvement that includes a cross-functional Cybersecurity Oversight Committee. Members of the Cybersecurity Oversight Committee update the Board quarterly on ~~cyber~~cybersecurity activity, with procedures in place for interim reporting if necessary.

Our cybersecurity program, led by our Chief Information Security Officer, is based on industry recognized frameworks and takes a multifaceted approach to protecting our network, systems, and data, including personal information. We deploy a wide range of protective security technologies and tools including but not limited to encryption, firewalls, endpoint detection and response, security information and event management, multi-factor authentication, and threat intelligence feeds. In addition, we use an information security risk management approach that includes monitoring security threats and trends in the industry, analyzing potential security risks that could impact the business, partnering with industry recognized security organizations, and coordinating an appropriate response should the need arise.

Although we have not experienced any material cybersecurity incidents, we have enhanced our cybersecurity protection efforts over the last few years. We use a third party to periodically benchmark our information security program against the National Institute of Standards and Technology’s Cybersecurity Framework. We provide quarterly cybersecurity training for employees with access to our email and data systems, and we have purchased broad form cyber insurance coverage. ~~However, because of~~Although we believe that our cybersecurity protection systems are adequate, cybersecurity risk has increased due to ~~the COVID-19 pandemic regarding increased~~ remote access, remote work conditions, and associated strain on ~~employees,~~employees. As such, technology failures or cybersecurity breaches could still create system disruptions or unauthorized disclosure or alterations of confidential information. We cannot be certain that the attacker’s capabilities will not compromise our technology protecting information systems, including those resulting from ransomware attached to our industrial control systems. If these systems are interrupted or damaged by any incident or fail for any extended period of time, then our results of operations could be adversely affected. We may incur remediation costs, increased cybersecurity protection costs, lost revenues resulting from unauthorized use of proprietary information, litigation and legal costs, increased insurance premiums, reputational damage, damage to our competitiveness, and negative impact on our stock price and long-term shareholder value.

Finally, burdens associated with regulatory compliance, including any potential regulations adopted by the Securities and Exchange Commission (SEC) regarding cybersecurity disclosure, may increase the Company’s costs.

Goodwill Impairment Testing

A significant portion of our assets consists of goodwill and other long-lived assets, the carrying value of which may be reduced if we determine that those assets are impaired. At March 31, 2023, goodwill and other intangible assets represented $2.1 billion, or 40% of our total assets. In addition, net property, plant and equipment, operating lease right-of-use assets, and sundry assets totaled $1.1 billion, or 21% of total assets.

Our annual goodwill impairment testing performed in the second quarter of 2022 indicated no goodwill impairments. However, fair value exceeded carrying value by less than 100% for four reporting units as summarized in the table below:


	Fair value in excess of carrying value		Goodwill
	Goodwill impairment testing as performed in the second quarter 2022		As of March 31, 2023
Bedding	54	%	$902	million
Work Furniture	78	%	$99	million
Aerospace Products	40	%	$67	million
Hydraulic Cylinders	32	%	$37	million

The Bedding reporting unit’s market value decreased compared to the 2021 testing primarily because of lower comparable company multiples and higher discount rates. Although the long-term outlook for the Bedding reporting unit remains strong, macroeconomic factors also have negatively impacted consumer confidence and spending in the near term, which in turn has had an adverse impact on the bedding market's near-term forecast. Our Specialty Foam business has experienced difficulties as a result of low demand and material inefficiencies. About two-thirds of the earnings challenge is a result of low demand driven by the general bedding market decline, the outsized impact on digitally native brands from changes in consumer privacy laws and cash constraints, and share loss from a small number of customers, with some of those sales shifting from finished goods to components. The remaining challenges relate primarily to material inefficiency from practices that emerged during the pandemic as we prioritized servicing customers amid chemical shortages and surging demand. While it may take some time to see significant improvements in Specialty Foam, especially with a continuing weak demand environment, we are confident in our recovery plan and are making progress. Our team has a pipeline of opportunities supported by our specialty foam

technologies. We are also focused on driving improvement in material margins through both process and equipment changes. We remain confident that our Specialty Foam business will drive long-term, profitable growth for the Segment and are placing our highest level of attention on improvements in sales and material management.

Although the Work Furniture and Aerospace Products reporting units' forecasts used in the 2022 goodwill impairment testing improved as compared to the 2021 testing, their fair values were adversely impacted by lower comparable company multiples and higher discount rates. Work Furniture's long-term forecasts increased from improving demand in the contract market as companies redesign their office footprints, although demand for products sold for residential has remained soft. Aerospace’s long-term forecasts improved in 2022, as fabricated duct assemblies are at 2019 levels, and demand for welded and seamless tube products is improving modestly but still below pre-pandemic levels. We expect the aerospace industry to return to historical levels in the next few years.

The Hydraulic Cylinders reporting unit had no goodwill associated with it at the time of our annual goodwill impairment testing in both 2022 and 2021, but an August 2022 acquisition added goodwill.

We are continuing to monitor all factors impacting these reporting units. If actual results or the long-term outlook of any of our reporting units materially differ from the assumptions and estimates used in the goodwill valuation calculations, we could incur impairment charges. These non-cash charges could have a material negative impact on our earnings. We did not identify any triggering events subsequent to the annual goodwill impairment testing date indicating a potential impairment.

NEW ACCOUNTING STANDARDS

The FASB has issued accounting guidance effective for the current and future periods. See Note 2 Accounting Standards Updates to the Consolidated Condensed Financial Statements on page 7 for a more complete discussion.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rates

Substantially all of our debt is denominated in United States dollars. The fair value of fixed rate debt was approximately ~~$20~~$165 million less than carrying value of $1,785 million at March 31, ~~2022~~2023 and approximately ~~$130~~$210 million ~~greater~~less than carrying value of $1,784 million at December 31, ~~2021.~~2022. The fair value of fixed rate debt was based on quoted market prices in an active market. The fair value of variable rate debt is not significantly different from its recorded amount.

Investment in Foreign Subsidiaries

We view our investment in foreign subsidiaries as a long-term commitment. This investment may take the form of either permanent capital or notes. Our net investment (i.e., total assets less total liabilities subject to translation exposure) in foreign operations with functional currencies other than the U.S. dollar was ~~$1,171~~$1,221 million at March 31, ~~2022~~2023 compared to ~~$1,132~~$1,156 million at December 31, ~~2021.~~2022.

Derivative Financial Instruments

We are subject to market and financial risks related to interest rates and foreign currency. In the normal course of business, we utilize derivative instruments (individually or in combinations) to reduce or eliminate these risks. We seek to use derivative contracts that qualify for hedge accounting treatment; however, some instruments may not qualify for hedge accounting treatment. It is our policy not to speculate using derivative instruments. Information regarding cash flow hedges ~~(including interest rate hedges)~~ and fair value hedges is provided in Note A Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements in our Form 10-K filed February 24, 2023 and Note 1 3 12 Derivative Financial Instruments beginning on page 1817 of the Notes to Consolidated Condensed Financial Statements and is incorporated by reference into this section.

MARKET AND INDUSTRY DATA

Unless indicated otherwise, the information concerning our industries contained herein is based on our general knowledge of and expectations concerning the industries. Our market share is based on estimates using our internal data, data from various industry analyses, internal research, and adjustments and assumptions that we believe to be reasonable. We have not independently verified data from industry analyses and cannot guarantee their accuracy or completeness.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The “Quantitative and Qualitative Disclosures About Market Risk” section under Item 2,2. Management’s Discussion and Analysis of Financial Condition and Results of Operations is incorporated herein by reference.

ITEM 4. CONTROLS AND PROCEDURES.

Effectiveness of the Company's Disclosure Controls and Procedures

An evaluation as of March 31, ~~2022~~2023 was carried out by the Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)). Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded the Company’s disclosure controls and procedures were effective, as of March 31, ~~2022,~~2023, to provide assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified by the Securities and Exchange Commission’s (SEC) rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in the Company's Internal Control Over Financial Reporting

There were no changes during the quarter ended March 31, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3635

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The information in Note 1413 Contingencies beginning on page 2017 of our Notes to Consolidated Condensed Financial Statements is incorporated into this section by reference. Reference is made to Item 3. Legal Proceedings and Note T Contingencies in the Notes to Consolidated Financial Statements in our Form 10-K filed February ~~22, 2022.~~24, 2023.

Mattress Antidumping Matter

On March 31, 2020, the Company, along with six other domestic mattress producers, Brooklyn Bedding, Corsicana Mattress Company, Elite Comfort Solutions (a Leggett subsidiary), FXI, Inc., Innocor, Inc., and Kolcraft Enterprises, Inc., and two unions, the International Brotherhood of Teamsters and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO (collectively, ~~"Petitioners"~~“Petitioners”), filed petitions with the U.S. Department of Commerce (DOC) and the U.S. International Trade Commission (ITC) alleging that manufacturers of mattresses in Cambodia, Indonesia, Malaysia, Serbia, Thailand, Turkey, and Vietnam were unfairly selling their products in the United States at less than fair value (dumping) and manufacturers of mattresses in China were unfairly benefiting from subsidies, causing harm to the U.S. industry and seeking the imposition of duties on mattresses imported from these countries. On March 18, 2021, the DOC made final determinations on Chinese subsidies, assigning a duty rate of 97.78%, and on dumping, assigning duty rates on imports from Cambodia (52.41%, as amended), Indonesia (2.22%), Malaysia (42.92%), Serbia (112.11%), Thailand (37.48% – 763.28%), Turkey (20.03%), and Vietnam (144.92% - 668.38%). On April 21, 2021, the ITC made a unanimous, affirmative final determination that domestic mattress producers were materially injured by reason of the unfairly priced or subsidized imported mattresses. Accordingly, the agencies instructed that the U.S. government continue to impose duties on mattresses imported from China, Cambodia, Indonesia, Malaysia, Serbia, Thailand, Turkey, and Vietnam at the rate determined by the DOC for five years, through May 2026, at which time the DOC and ITC will conduct a sunset review to determine whether to extend the order for an additional five years.

In July 2021, respondents filed appeals with the U.S. Court of International Trade (CIT) as to the DOC’s final determinations on antidumping duty rates for Cambodia, Indonesia, and Vietnam and the ITC’s unanimous, final determination of material injury to the domestic industry. Petitioners separately appealed the DOC’s final determinations on antidumping duty rates for Cambodia, Indonesia, and Thailand.

On November 28, 2022, the CIT ruled partially in favor of the DOC and Petitioners on the calculations of rates for Vietnam, but also sent the case back to the DOC to explain the use of certain financial data in making its determination. The DOC filed its explanation on February 23, 2023.

On February 17, 2023, the CIT ruled partially in favor of Petitioners on the calculation of rates for Cambodia, but also sent the case back to the DOC to explain the use of certain financial data in making its determination. On March 20, 2023, the CIT ruled partially in favor of Petitioners on the calculation of rates for Indonesia, but also sent the case back to the DOC to explain treatment of certain in-transit mattresses and selling expenses. These matters and the other appeals are ongoing with no timeline for decisions by the CIT.

Potential Environmental Penalty

On March 16, 2023, the Company’s French subsidiary, Specitubes SAS, received a draft order issued by the French environmental authority (DREAL) threatening to impose penalties for non-compliance with a 2017 Notice of Violation regarding the registration, evaluation, authorization, and restriction of chemicals regulations (the REACH regulations). The DREAL alleged Specitubes had failed to implement protective measures required for a certain PCE-based solvent, Dowper. This matter has been referred to the public prosecutor. The prosecutor has the discretion to initiate proceedings against Specitubes. The allegations carry a possible fine of up to approximately $.4 million USD, but we believe any imposed penalty will not approach the maximum amount, particularly considering actions being taken by Specitubes to address open compliance items. As of the date of this filing, and to our knowledge, the DREAL has not imposed any penalties, and the prosecutor has not initiated any charges. Specitubes intends to defend this matter if pursued by the DREAL and/or prosecutor.

ITEM 1A. RISK FACTORS.

Our ~~2021~~2022 Annual Report on Form 10-K filed February ~~22, 2022~~24, 2023 includes a detailed discussion of our risk factors in Item 1A “Risk ~~Factors.~~Factors ” which is incorporated herein by reference. The information presented below updates and should be read in conjunction with the risk factors and information disclosed in that Form ~~10-K~~.10-K.

Investing in our securities involves risk. Set forth below and elsewhere in this report are risk factors that could cause actual results to differ materially from the results contemplated by the forward-looking statements contained in this report. We

may amend or supplement these Risk Factors from time to time by other reports we file with the Securities and Exchange Commission.

GEOPOLITICAL RISK FACTORS

Our Automotive ~~business~~Group uses semiconductors, the production of which uses neon gas. Our Aerospace ~~business~~Products Group uses titanium ~~and nickel~~ in the production of aerospace tubing. Several of our businesses use birch plywood in their products. All of our businesses are subject to energy costs that can be impacted by the supply of ~~oil.~~oil and natural gas.

Although we do not have operations in Russia, Belarus, or Ukraine, and we have not had a material amount of sales into these countries, some of our businesses, in the past, have indirectly sourced, ~~directly or~~and may continue to indirectly source subject to pricing and legal constraints, a portion of their supply chain requirements of ~~nickel,~~ titanium and birch plywood originating from Russia. Also, a significant portion of neon gas is produced in ~~the~~ Ukraine. Since the invasion began, the prices of these materials have significantly increased. Several countries have imposed economic sanctions against Russia as a result of its military action. The United States, the European Union, and G7 countries have also moved to revoke Russia’s “most favored nations” trade status, which has resulted or could result in higher duties on imported products. Also, the European Union and the United Kingdom have banned timber imports from Russia.

It is possible sanctions could be expanded, or additional measures taken, which could restrict the import of ~~nickel,~~ titanium, and further restrict the import of birch plywood originating from Russia or ~~greatly~~ increase the cost of procurement via further increased duties or otherwise. If sanctions are further imposed or duties are further increased on these materials, it could reduce global capacity, impact our ability to obtain them (or alternatives) in a timely manner, or further increase the price of these materials. Inability to obtain sufficient quantities

of these materials could disrupt our supply chain. Inability to pass through increased prices to our customers could have a negative impact on our results of operations.

A significant portion of global production of oil is refined and exported from Russia. ~~Certain~~The European Union and certain countries, including the United States, the United Kingdom, Canada, and ~~Canada~~Australia, have either partially or fully banned the import of Russian oil. With ~~less~~decreased supply availability, fuel costs have increased and may continue to increase. This has impacted, and may continue to impact, both our businesses and consumers. Also, there has been a reduction of natural gas exports from Russia to Europe from sanction-related impacts and disruption in pipeline delivery, resulting in shortages and higher prices.Higher energy prices have contributed to broader inflationary trends, which have resulted, in some cases, in reduced discretionary consumer ~~spending.~~spending and a softening of demand for our products. If this continues, the demand for our products may continue to be negatively impacted, which would have a negative impact on our sales.

Finally, ifthe North Atlantic Treaty Organization (NATO) membership has been expanded as Finland joined NATO on April 4, 2023. NATO is also considering adding Sweden to its alliance. Both Finland and Sweden are in close proximity to Russia. It is possible that the conflict in Ukraine could spread beyond the borders of Ukraine, eventually drawing NATO countries (including the United States) into the conflict. If the conflict in Ukraine expands geographically or in intensity, this may have a negative impact on our operations, including access to energy and other raw materials.

Conflict between China and Taiwan could lead to trade sanctions, technology disputes, or supply chain disruptions, which could, in particular, impact the semiconductor industry, and our operations globally.

Our Automotive Group uses semiconductors in seat comfort products, and to a lesser extent in motors and actuators. Currently, there is a global shortage of semiconductors. According to certain market reports, Taiwan is the leading manufacturer of the world’s most advanced semiconductor supply. Conflict between China and Taiwan might lead to trade sanctions, technology disputes, or supply chain disruptions, which could, in particular, affect the semiconductor industry. If this were to occur, our Automotive Group’s ability to source an adequate supply of semiconductors may be reduced, which could adversely harm our business, financial condition, and results of operations. Such a conflict also could negatively impact our OEM and Tier customers' supply chains and production schedules. In addition, any outbreak of hostilities or conflict between China and Taiwan could harm our operations globally, and the operations of our customers and suppliers.

OPERATIONAL RISK FACTORS

Supply chain disruptions and shortages impacting our ability to timely receive competitively-priced raw materials and parts used in our products, or impacting our ability to timely deliver our finished products to customers, may adversely affect our manufacturing processes, financial condition, results of operations, and cash flows.

We have manufacturing facilities in 1718 countries, primarily located in North America, Europe, and Asia. In our manufacturing processes, we source raw materials and parts from a global supply chain. We sell and deliver our finished

products to customers all over the world. We rely on third parties to supply certain raw materials, components, and packaging products, and to deliver our finished products. Any interruption or failure by our suppliers, distributors, and other contractors to meet their obligations on schedule or in accordance with our expectations could adversely affect our business and financial results. We have experienced supply chain disruptions related to ~~semiconductor~~foam chemical shortages, ~~foam chemical~~semiconductor shortages, labor availability, and freight challenges, as well as higher costs associated with each of these issues. We have also experienced delays in delivery of raw materials, parts, and finished goods because of shutdown or congested delivery ports, trucking constraints, inclement weather, and the invasion of Ukraine. This has resulted in reduced volume and higher costs in many of our businesses, including our Automotive ~~business~~Group and Bedding Products segment, primarily related to negative impacts on component demand and finished goods production.

We also bear the risk of delays or non-delivery because of natural disaster, fire or explosion, terrorism, pandemics, ~~(such as COVID-19),~~ government action, or other reasons beyond our control or the control of our suppliers, all of which could impair our ability to timely manufacture and deliver our products.

Strikes or shutdowns at delivery ports, or loss of or damage to our raw materials, parts, or finished products while they are in transit or storage, 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 similar problems, could restrict or delay the supply of our raw materials, parts, or delivery of our finished products resulting in harm to our business and reputation.

Currently, there is a shortage of semiconductors in the automotive industry. As semiconductor demand elsewhere in the economy has increased over the past few years, automotive OEMs and other suppliers have not been able to secure an adequate supply and as a result have reduced production of some automobile models and/or eliminated certain features (some of which may be added later), which in turn has reduced our sale of products. Consumer demand remains strong, but the semiconductor shortage has caused new vehicle inventories to remain near historically low levels. Our Automotive Group uses the semiconductors in seat comfort products, and to a lesser extent in motors and actuators. Although our Automotive Group has been able to obtain an adequate supply of semiconductors, we are dependent on our suppliers to deliver these semiconductors in accordance with our production schedule. A shortage of the semiconductors, either to us, the automotive OEMs, or our suppliers, can disrupt our operations and our ability to deliver products to our customers. If we, our customers, or our suppliers cannot secure an adequate supply of semiconductors, this may negatively impact our sales, earnings, and financial condition.

The aforementioned supply chain risks can materially adversely affect our manufacturing processes, financial condition, results of operations, and cash flows.

The ~~COVID-19 pandemic~~physical effects of climate change could adversely affect our business, results of operations, and financial condition.

Direct Physical Effects

The acute and chronic physical effects of climate change, such as severe weather-related events, natural disasters and/or significant changes in climate patterns, could have an increasingly adverse impact on our business and customers. At March 31, 2023, we had approximately 135 manufacturing facilities in 18 countries, primarily located in North America, Europe, and Asia. We serve thousands of customers worldwide. In 2022, our largest customer represented less than 6% of our sales, and our customers were located in approximately 100 countries. Although our diverse geographical manufacturing footprint and our broad geographical customer base mitigates the potential physical risks of any local or regional climate change weather-related event having a material effect on our operations and results, the increased frequency and severity of such weather-related events could pose a risk to our operations and results.

Indirect Physical Effects

The physical effects of climate change could continue to have an adverse impact on our supply chain. In 2020 and 2021, we experienced (due, in part, to severe weather-related impacts) supply shortages in chemicals which restricted foam supply. The restriction of foam supply constrained overall mattress production in the bedding industry and reduced our production

levels. The cost of chemicals and foam also increased due to the shortages. Severe weather impacts could also reduce supply of other products in our supply chain that could result in higher prices for our products and the resources needed to produce them. If we are unable to secure an adequate and timely supply of raw materials or products in our supply chain, or the cost of these raw materials or products materially increases, it could have a negative impact on our business, results of operations, and financial condition.

The market transition risks related to climate change could adversely affect our business, results of operations, and financial condition.

We are engaged in the manufacture of various automotive components, including mechanical and pneumatic lumbar support and massage systems for seating, seat suspension systems, motors and actuators, and cables. For several decades, automotive manufacturers have sought lightweight components designed to increase fuel efficiency in the automobiles they manufacture. Replacing traditional steel components with high-strength steel, magnesium, aluminum alloys, carbon fiber, and polymer composites can directly reduce the weight of a vehicle's body and chassis and therefore reduce a vehicle's fuel consumption. This increased fuel efficiency also indirectly reduces greenhouse gas (GHG) emissions. Because of our technological competitiveness, this long-standing market transition has not had, and is not expected to have, a material negative impact on our share of the markets in which we compete. However, if we are unable to continue to produce comparatively lightweight components, our share in these automotive markets could be negatively impacted.

FINANCIAL RISK FACTORS

Macroeconomic uncertainties have had, and could further have, an adverse impact ~~to (i) our manufacturing operations' ability to remain open~~on the collection of trade and ~~fully operational; and (ii) our ability to obtain necessary raw materials and parts, maintain appropriate labor levels, and ship finished products to customers~~other notes receivable in accordance with their terms due to ~~supply chain disruptions~~customer bankruptcy, financial difficulties, or ~~otherwise; all~~insolvency.

If our customers are adversely affected by macroeconomic uncertainties, they may suffer significant financial difficulty. Macroeconomic uncertainties may include, but are not limited to, rising interest rates, inflation, bank failures, increased geopolitical tensions, and political economic policy changes. As a result, our customers may be unable to pay their debts to us, they may reject their contractual obligations to us under bankruptcy laws or otherwise, or we may have to negotiate significant discounts and/or extend financing terms with these parties. We recorded $3 million bad debt expense in 2022 related to macroeconomic uncertainties and ordinary customer credit reviews. We recorded $2 million of ~~which,~~income due to a reduction in our allowance for doubtful accounts associated with ordinary customer credit reviews in the ~~aggregate, have had,~~three months ended March 31, 2023. As of March 31, 2023, our allowance for doubtful accounts for trade receivables was $15 million. If we are unable to collect trade receivables and ~~could further have,~~other notes receivable on a timely basis, larger provisions for bad debt may be required and may result in a negative impact on our ~~trade sales,~~ earnings, liquidity, cash flow, and financial ~~condition, and our stock price.~~

All of the countries in which we operate have been, and are continuing to be, affected by the COVID-19 pandemic. All of our facilities are open and running at this time. However, a few of our facilities in China, most notably in our Automotive and Home Furniture businesses, have been temporarily closed from time to time due to strict COVID-related lockdowns. If the lockdowns in China are imposed on a broader geographic scope, this could materially negatively impact our manufacturing capacity, our customers or vendors, and our ability to transport goods in our supply chain. We have also had, at various times, some capacity restrictions on our plants due to governmental orders in other parts of the world. We have been and could be further negatively affected by governmental action in any one or more of the countries in which we operate by the imposition, or re-imposition, of restrictive social measures, mandatory closures of retail establishments that sell our products or our customers’ products, travel restrictions, and restrictions on the import or export of products.

basis. A significant increase in COVID-19 cases among our employees may disrupt our ability to maintain necessary labor levels and produce and deliver products to our customers if we are unable to shift production to other manufacturing facilities. The continued realization of these risks to our manufacturing operations, labor force, and supply chain could also increase labor, commodity, and energy costs.

Some facilities have experienced supply chain problems delivering products to customers and disruptions in logistics necessary to import, export, or transfer products, which have generally resulted in increased freight costs that are typically passed through to our customers. Our supply chains have also been hampered by congested ports. More specifically, we have experienced supply chain disruptions related to semiconductor shortages, foam chemical shortages, labor availability, and freight challenges, as well as higher costs associated with each of these issues. This has resulted in reduced volume and higher costs in most of our businesses, including our Automotive business and Bedding Products segment, primarily related to negative impacts on component demand and finished goods production. If we are unable to obtain necessary raw materials or experience disruptions in delivering products to our customers, our results of operations may be negatively impacted.

~~FINANCIAL RISK FACTORS~~condition.

Our goodwill and other long-lived assets are subject to potential impairment which could negatively impact our earnings.

A significant portion of our assets consists of goodwill and other long-lived assets, the carrying value of which may be reduced if we determine that those assets are impaired. At March 31, ~~2022,~~2023, goodwill and other intangible assets represented $2.1 billion, or 40% of our total assets. In addition, net property, plant and equipment, operating lease right-of-use assets, and sundry assets totaled $1.1 billion, or ~~20%~~21% of total assets.

We review our reporting units for potential goodwill impairment in the second quarter as part of our annual goodwill impairment testing, and more often if an event or circumstance occurs making it likely that impairment exists. In addition, we test for the recoverability of long-lived assets at year end, and more often if an event or circumstance indicates the carrying value may not be recoverable. We conduct impairment testing based on our current business strategy in light of present industry and economic conditions, as well as future expectations.

Our annual goodwill impairment testing performed in the second quarter of ~~2021~~2022 indicated no goodwill impairments. However, fair value exceeded carrying value by less than 100% for ~~two~~four reporting units as summarized in the table below:


		Fair value in excess of carrying value		Goodwill			Fair value in excess of carrying value		Goodwill
		Goodwill impairment testing as performed in the second quarter 2021		As of March 31, 2022			Goodwill impairment testing as performed in the second quarter 2022		As of March 31, 2023
Aerospace		28	%	$67	million
Bedding						Bedding	54	%	$902	million
Work Furniture	Work Furniture	85	%	$101	million	Work Furniture	78	%	$99	million
Aerospace Products						Aerospace Products	40	%	$67	million
Hydraulic Cylinders						Hydraulic Cylinders	32	%	$37	million

~~In our Aerospace~~

Although the Work Furniture and Aerospace Products reporting units' forecasts used in the 2022 goodwill impairment testing improved as compared to the 2021 testing, their fair values were adversely impacted by lower comparable company multiples and higher discount rates. Work Furniture's long-term forecasts increased from improving demand in the contract market as companies redesign their office footprints, although demand for products sold for residential has remained soft. Aerospace’s long-term forecasts improved in 2022, as fabricated duct assemblies isare at 2019 levels, and demand for welded and seamless tube products is improving modestly but still below pre-pandemic levels. We expect the aerospace industry to return to ~~2019 demand~~historical levels in ~~2024. Sales in~~ the ~~Work Furniture~~next few years.

The Hydraulic Cylinders reporting unit ~~have recovered to pre-pandemic levels from strong demand for products sold for residential use~~had no goodwill associated with it at the time of our annual goodwill impairment testing in both 2022 and ~~improvement in the contract market as companies redesign their footprints and invest in office space to attract and retain employees as more people return to the office.~~ 2021, but an August 2022 acquisition added goodwill.

We are continuing to monitor all factors impacting these ~~industries. If the adverse economic impact from the COVID-19 pandemic is longer than expected, we may not be able to achieve projected performance levels.~~reporting units. If actual results or the long-term outlook of any of our reporting units materially differ from the assumptions and estimates used in the goodwill ~~and long-lived asset~~ valuation calculations, we could incur ~~future~~ impairment charges. These non-cash charges could have a material negative impact on our earnings. We did not identify any triggering events subsequent to the annual goodwill impairment testing date indicating a potential impairment.

We may not be able to realize deferred tax assets on our balance sheet depending upon the amount and source of future taxable income.

Our ability to realize deferred tax assets on our balance sheet is dependent upon the amount and source of future taxable income. As of March 31, ~~2022,~~2023, we had ~~$112~~$113 million of deferred tax assets ($~~128~~129 million less a $16 million valuation allowance). After netting of deferred tax liabilities, the net amount presented within Sundry assets on our Consolidated Condensed Balance Sheet is $8$9 million. It is possible the amount and source of our taxable income could materially change in the future. Particularly, our mix of earnings by taxing jurisdiction may materially change in that we may have more or less taxable income generated in North America, Europe, or Asia as compared to prior years. This change may impact our underlying assumptions on which valuation allowances are established and negatively affect future period earnings and balance sheets. As a result, we may not be able to realize deferred tax assets on our balance sheet.

MARKET RISK FACTORS

~~Inflation-impacted~~Costs of raw material and labor ~~costs~~ have negatively affected, and could continue to negatively affect, our profit margins and earnings.

Raw material cost increases ~~impacted by inflationary pressures or otherwise~~ (and our ability to respond to cost increases through selling price increases) can significantly impact our earnings. We typically have short-term commitments from our suppliers; accordingly, our raw material costs generally move with the market. When we experience significant increases in raw material costs, we typically implement price increases to recover the higher costs. Inability to recover cost increases (or a delay in the recovery time) can negatively impact our earnings. Conversely, if raw material costs decrease, we generally pass through reduced selling prices to our customers. Reduced selling prices combined with higher cost inventory can reduce our profit margins and earnings.

Steel is our principal raw material. The global steel markets are cyclical in nature and have been volatile in recent years. This volatility can result in large swings in pricing and margins from year to year.

As a producer of steel rod, we are also impacted by volatility in metal margins (the difference between the cost of steel scrap and the market price for steel rod). If market conditions cause scrap costs and rod pricing to change at different rates (both in terms of timing and amount), metal margins could be compressed, and this would negatively impact our results of operations.

We have exposure to the cost of chemicals, including TDI, MDI, and polyol. The cost of these chemicals has fluctuated at times, but we have generally passed the changes through to our customers. In 2021, chemical prices inflated due to robust demand and shortages from severe weather, supplier production disruptions, port delays, and logistics challenges. The supply shortages in 2021 resulted in significant restrictions by producers. Late in 2021 and into the first quarter of 2022, chemical prices leveled off as supply availability improved. We import certain chemicals to supplement domestic supply, but port delays and logistics issues could limit access to those products. If we are unable to obtain the chemicals or pass the increased cost along to our customers, our results of operations may be negatively impacted.

Some facilities have experienced disruptions in logistics necessary to import or transfer raw materials, which has generally resulted in increased transportation costs that are typically passed through to our customers. Our supply chains have also been hampered by congested ports and trucking constraints. This could impact the availability of certain raw materials and parts that we use in our manufacturing process.

Higher raw material costs could lead some of our customers to modify their product designs, ~~changing~~causing a change in the quantity and mix of our components in their finished goods ~~and replacing~~(replacing higher-cost ~~components~~ with lower-cost ~~components.~~components). If this were to occur, it could negatively impact our results of operations.

~~TECHNOLOGY AND CYBERSECURITY RISK FACTORS~~We are exposed to foreign currency exchange rate risk which may negatively impact our competitiveness, profit margins, and earnings.

~~Technology failures~~International sales have represented a significant percentage of our total sales, which exposes us to currency exchange rate fluctuations. In 2022, 35% of our sales were generated by international operations, primarily in Europe, China, Canada, and Mexico. We expect that a significant amount of our sales will continue to come from outside the United States in the future. Approximately 50 of our manufacturing facilities are located outside the United States. We are also exposed to currency exchange rate fluctuations by our purchase of raw materials and component parts from suppliers in multiple countries. We experience currency-related gains and losses where sales or ~~cybersecurity breaches could~~purchases are denominated in currencies other than the functional currency. As of March 31, 2023, we had foreign exchange rate risk associated with the U.S. Dollar, Danish Krone, Euro, British Pound Sterling, and Mexican Peso. If these exchange rates devalue the currency we receive for the sale of our products, or the currency we use to purchase raw materials or component parts from our suppliers, it may have a material adverse effect on our ~~operations.~~competitiveness, profit margins, and earnings.

~~We have 130~~For more information regarding currency exchange rate risk, please refer to Note 12 on page 17 of the Notes to Consolidated Condensed Financial Statements.

TRADE RISK FACTORS

U.S. export controls against China could exacerbate the global semiconductor shortage and negatively impact (i) our ability to manufacture and timely deliver our products, (ii) our OEM and Tier customers’ production ~~facilities~~schedules, and (iii) the demand for our products.

Our Automotive Group uses semiconductors in ~~17 different countries, primarily~~seat comfort products, and to a lesser extent in ~~North America, Europe,~~motors and ~~Asia. We rely on several on-premise~~actuators. According to certain market reports, China is a significant manufacturer of semiconductors. The U.S. government has imposed export controls regarding certain advanced semiconductor chips and ~~cloud-based computerized systems and networks~~semiconductor manufacturing equipment which restrict U.S. companies’ ability to ~~obtain, secure, process, analyze, and manage data, as well as~~export these products to ~~facilitate~~China without a license. The Netherlands is also moving toward more restrictive export controls related to specific equipment used for the manufacture of semiconductors. The new controls may exacerbate the global semiconductor shortage and ~~distribution~~negatively impact our ability to source an adequate supply of ~~inventory~~semiconductors used in our manufacturing processes. If so, the resulting shortage could endanger our ability to ~~and from our production facilities. We receive, process,~~ manufacture and ~~ship orders, manage~~timely deliver our products. It also could negatively impact our OEM and Tier customers’ production schedules and the ~~billing~~demand for our products. Additionally, China may adopt retaliatory trade restrictions against U.S. companies. If this occurs, our Chinese-based operations may be negatively impacted. Any of these risks, if realized, could negatively impact our business, results of operations and ~~collections~~financial condition.

REGULATORY RISK FACTORS

Privacy and data protection regulations are complex and could harm our business, reputation, financial condition, and operating results.

Governments around the world have adopted legislative and regulatory proposals concerning the collection and use of personal data. As a multi-national company with employee personal data and business contact information from ~~our customers,~~individuals in many countries, we are subject to many different data protection laws, including those in the U.S., and ~~manage~~ the ~~accounting for~~laws of other jurisdictions in which we operate, such as those in Europe, China, and ~~payment~~Brazil. For example, the EU’s General Data Protection Regulation (GDPR) and United Kingdom (UK) GDPR applies to our ~~vendors. We also~~operations that collect or process personal data of EU individuals and UK individuals, respectively. If our operations are found to violate GDPR or the UK GDPR, we may incur substantial fines, face reputational harm, and be required to change our business practices, any of which could have ~~risk associated with~~an adverse effect on our business.

As a U.S. company, the ~~network connectivity~~ability to centrally manage aspects of our operation and ~~systems for consolidated reporting. Technology failures or security breaches~~workforce and the ability to make decisions based on complete and accurate global data are important and require the ability to transfer and access personal data. The adequacy of ~~a new or existing infrastructure,~~the laws of the data-importing country are of increasing importance under various laws, including ~~our industrial control systems, could impede normal operations, create system disruptions, or create unauthorized disclosure~~the GDPR, the UK GDPR, and Brazil’s general data protection law. The validity of ~~confidential information.~~data transfer mechanisms remains subject to legal,

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~~We have a formal process~~regulatory, and political developments in ~~place for both incident response~~many countries, including Brazil, Europe, China, and ~~cybersecurity continuous improvement that includes a cross-functional Cybersecurity Oversight Committee. Members~~the U.S. The continued uncertainty over the adequacy of the ~~Cybersecurity Oversight Committee update~~EU-US Trans-Atlantic Data Privacy Framework, the ~~Board of Directors quarterly on cyber activity, with procedures in place for interim reporting if necessary.~~

~~Although we~~complex assessment and documentation requirements under the EU’s Standard Contractual Clauses, the recent documentation and filing requirements under China’s PIPL (Personal Information Protection Law), as well as the still evolving guidance from Brazil, could have not experienced any material technology failures or cybersecurity breaches, we have enhanced our cybersecurity protection efforts over the last few years and continue to do so. We use a third party to periodically benchmark our information security program against the National Institute of Standards and Technology’s Cybersecurity Framework. We provide quarterly cybersecurity training for employees with access to our email and data systems, and we have purchased broad-form cyber insurance coverage. However, in part, because of the risk due to the COVID-19 pandemic regarding increased remote access, remote work conditions, and associated strain on employees, technology failures or cybersecurity breaches could still create system disruptions or unauthorized disclosure of confidential information. We cannot be certain that the attacker’s capabilities will not compromise our technology protecting information systems. We could still experience material technology failures or cybersecurity breaches, including those resulting from ransomware attached to our industrial control systems. If this occurs, our operations could be disrupted, or we may suffer financial loss because of lost or misappropriated information. Also, we may incur remediation costs, increased cybersecurity protection costs, lost revenues resulting from unauthorized use of proprietary information, litigation and legal costs, increased insurance premiums, reputational damages, proprietary and confidentiality impacts, damage to our competitiveness, and negativean adverse impact on our ~~stock price~~ability to process and ~~long-term shareholder value.~~

~~REGULATORY RISK FACTORS~~transfer personal data. This may inhibit our ability to transfer our employee personal data from our other operations, such as in Europe, China, and Brazil, to the Company’s headquarters in the U.S. or elsewhere, making it much more difficult to effectively manage our global human capital. These evolving privacy and data protection requirements create uncertainty and added compliance obligations that could harm our business, reputation, financial condition, and operating results.

Climate change transition risks, including new treaties, laws, ~~regulations,~~ and ~~impacts~~regulations, could negatively impact ~~the Company’s~~our business, capital expenditures, compliance costs, results of operations, financial condition, competitive position, and reputation.

AsMany scientists, legislators, and others attribute global warming to increased levels of ~~March 31, 2022, we had 130 production~~GHG emissions, including carbon dioxide. We have approximately 135 manufacturing facilities ~~worldwide.~~in 18 countries. Most of our facilities are engaged in manufacturing processes that produce ~~greenhouse gas emissions,~~GHG, including carbon dioxide. We also maintain a fleet of over-the-road tractor trailers that emit ~~greenhouse gases. Climate change has received increased attention worldwide. Many scientists, legislators, and others attribute global warming~~GHG when providing freight services to ~~increased levels~~many of greenhouse gas emissions, including carbon dioxide, which has led to significant legislative and regulatory efforts to limit such emissions. Either the enactment of, or change to existing laws and regulations, could mandate more restrictive standards or require such changes on a more accelerated time frame.our U.S.-based manufacturing locations. Our manufacturing facilities are primarily located in North America, Europe, and Asia. There are certain transition risks (meaning risks related to the process of reducing the Company’s carbon footprint) that could materially affect our business, capital expenditures, results of operations, financial condition, competitive position, and reputation. One of these transition risks is the change in treaties, laws, policies, and regulations that could impose significant operational and compliance burdens. For example, our operations are subject to certain governmental actions like the European Union’s (EU) “European Green Deal” (which provides for a 55% reduction in net GHG emissions by 2030 (compared to 1990 levels), and no net emissions of GHG by 2050), and the “Paris Agreement” (which is an international treaty on climate change designed to lower GHG emissions). In addition, specifically with respect to our Automotive Group, the EU is moving forward with an effective ban on the sale of new gas-powered automobiles (with the exception of CO2-neutral automobiles) in the EU from 2035 (with interim requirements by 2030), aiming to accelerate the conversion to zero-GHG emission automobiles as part of a broad package to combat global warming. Also, President Biden signed executive orders setting the goal of having zero-emission vehicles account for half of all new U.S. passenger cars and light trucks sales by 2030 and committing the Federal government to procuring only zero-emission light vehicles by 2035. Finally, some states, including California and New York, are also implementing similar provisions. The Company’s automotive products can be sold to manufacturers of either gas-powered or electric-powered vehicles. However, if our customers (who may be subject to any of these or other similarly proposed or newly enacted laws and regulations) incur additional costs to comply with such laws and regulations, which in turn, impact their ability to operate at similar levels in certain jurisdictions, the demand for our products could be adversely affected.

Also, overall, there continues to be a lack of consistent climate legislation in the jurisdictions in which we operate, which creates economic and regulatory uncertainty. ~~To the extent our customers are subject to any of~~If these or other similar proposed or newly enacted laws and regulations, additional costs by customers to comply with such laws and regulations could impact their ability to operate at similar levels in certain jurisdictions, which could adversely impact their demand for our products and services. Also, if these existing or proposed laws or regulations (including the ~~Securities Exchange Commission’s~~SEC's proposed rule regarding climate-related disclosures) impose significant operational restrictions and compliance requirements on us, they could increase costs associated with our operations, including costs for raw materials and transportation. ~~In either event, they could negatively impact our business, capital expenditures, results of operations, financial condition, and competitive position.~~ Non-compliance with climate change treaties, or legislative and regulatory requirements could also negatively impact our reputation. To date, however, we have not experienced a material impact from climate change legislative and regulatory efforts.

~~Also, in 2020~~Increased scrutiny from investors, lenders, market participants, and ~~2021, we experienced, in part due~~other stakeholders regarding our environmental, social, and governance, or sustainability responsibilities, could expose us to ~~severe weather impacts, supply shortages in chemicals, which restricted foam supply. The restriction~~additional costs or risks and adversely impact our liquidity, results of ~~foam supply constrained overall mattress production in~~operations, reputation, employee retention, and stock price.

Investor advocacy groups, certain institutional investors, investment funds, lenders, market participants, shareholders, customers, and other stakeholders have focused increasingly on the ~~bedding industry~~environmental, social, and ~~reduced our production levels. The~~governance (ESG) or “sustainability” practices of companies. These parties have placed increased importance on the implications of the social cost of ~~chemicals~~their investments. If our ESG practices do not meet investor, lender, or other industry stakeholder expectations and ~~foam also increased due~~standards, which continue to evolve, our access to capital may be negatively impacted based on an assessment of our ESG practices. These limitations, in both the ~~shortages. However, supply availability improved in late fourth quarter 2021. Nevertheless, if we are unable~~debt and equity markets, may materially negatively affect our ability to ~~secure an adequate supply of chemicals~~manage our liquidity, refinance existing debt, grow our businesses, and ~~foam, or the cost of these raw materials materially increases, it could have a negative~~implement our strategies, as well as adversely impact on our ~~business,~~ results of operations and ~~financial condition.~~the price of our common stock.

Our sustainability report details how we seek to manage our operations responsibly and ethically. The sustainability report includes our ESG policies and practices on a variety of matters, including, but not limited to, Board and management sustainability oversight, governance and ethics, environmental sustainability, climate change and greenhouse gas emissions reduction, employee health, safety, inclusion and diversity, product stewardship, quality and safety management, and supply chain social standards and compliance. In the past few years, we broadened the scope of the Board’s Nominating, Governance

and Sustainability Committee to include oversight of our ESG programs and related risks. We ~~have~~ also ~~experienced increased property insurance premiums,~~added positions, including our first Chief Human Resources Officer, Vice President-Inclusion, Diversity and Equity, and Sustainability Director to help lead and evaluate our ESG practices. Also, in ~~part, due~~2022, we conducted our first materiality assessment to ~~enhanced weather-related risks, but~~identify ESG-related opportunities that will drive the most value for our company and those we serve. We engaged a broad variety of our stakeholders to get their input on which ESG topics were of the highest importance to them. We also assessed our ability to make a positive business impact in these same ESG areas. Together, this ~~increase in premiums has not had a material impact on~~information is helping to better inform us as we prioritize and advance our ESG strategies. We expect to share the results of ~~operations~~the materiality assessment and key ESG objectives, goals, and targets later in 2023 or ~~financial condition.~~in the first half of 2024. However, ~~a more severe~~it is possible that stakeholders may not be satisfied with our ESG practices or the speed of their adoption. In addition to the costs associated with the above mentioned positions, we could also incur additional costs and require additional resources to monitor, report, and comply with various ESG practices. Also, our failure, or perceived failure, to meet the standards set forth in the sustainability report could negatively impact ~~is possible.~~our reputation, employee retention, and the willingness of our customers and suppliers to do business with us. Our sustainability report can be found at www.leggett.com. Our website does not constitute part of this Form 10-Q.

LITIGATION RISK FACTORS

We are exposed to litigation contingencies that, if realized, could have a material negative impact on our financial condition, results of operations, and cash flows.

Although we deny liability in all currently threatened or pending litigation proceedings and believe that we have valid bases to contest all claims made against us, we have recorded an immaterial aggregate litigation contingency accrual at March 31, ~~2022.~~2023. Based on current facts and circumstances, aggregate reasonably possible (but not probable) losses in excess of the recorded accruals for litigation contingencies are estimated to be ~~$12~~$13 million. If our assumptions or analyses regarding any

of our contingencies are incorrect, or if facts and circumstances change, or if future litigation arises, we could realize ~~loss~~losses in excess of the recorded accruals (and in excess of the ~~$12~~$13 million referenced above) which could have a material negative impact on our financial condition, results of operations, and cash flows. For more information regarding our legal contingencies, please see Item 1 Legal Proceedings on page 36 and Note 1413 Contingencies on page 2017 of the Notes to Consolidated Condensed Financial Statements.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Issuer Purchases of Equity Securities

The table below is a listing of our purchases of the Company’s common stock by calendar month for the periods presented.
Period
Total
Number of
Shares
Purchased 1
Average
Price
Paid
per
Share
Total
Number of
Shares
Purchased
as Part of
Publicly
Announced
Plans or
Programs 2
Maximum
Number of
Shares that
may yet be
Purchased
Under the
Plans or
Programs 2
January 2022 — $ — — 10,000,000
February 2022 — $ — — 10,000,000
March 2022 407,252 $ 36.68 407,252 9,592,748
Total 407,252 $ 36.68 407,252


Period	Total Number of Shares Purchased 1	Average Price Paid per Share 1		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 2	Maximum Number of Shares that may yet be Purchased Under the Plans or Programs 2
January 2023	—	$	—	—	10,000,000
February 2023	—	$	—	—	10,000,000
March 2023	—	$	—	—	10,000,000
Total	—	$	—	—

1 This number does not include shares withheld for taxes on stock unit conversions, as well as forfeitures of stock units, all of which totaled ~~173,512~~152,409 shares ~~for~~in the first quarter of ~~2022.~~2023. The average price paid per share for these shares was $34.04.

2 On ~~August 4, 2004,~~February 22, 2022, the Board authorized management to repurchase up to 10 million shares each calendar ~~year beginning January 1, 2005.~~year. This standing authorization was ~~first reported~~announced in the ~~quarterly~~annual report on ~~Form 10-Q~~ for the period ended June 30, 2004, filed August 5, 2004, and remained in force until repealed by the Board of Directors. On February 22, 2022, the Board repealed the August 4, 2004 resolution but re-adopted the resolutions with minor administrative changes providing for the same authority, which will remain in force until repealed by the Board. This standing authorization was first reported in the Annual Report on Form 10-K for the year ended December 31, 2021, filed February 22, ~~2022. As such, effective January 1,~~ 2022, ~~the Company was authorized~~and will remain in force until repealed by the Board of ~~Directors~~Directors. This standing Board authorization updated a prior Board authorization in 2004 which provided the same repurchase authority to the Company with only minor administrative differences. As such, the Company has had substantively the same share repurchase ~~up to 10 million shares in 2022.~~authority since 2004, and this authority includes the 2023 calendar year. No specific repurchase schedule has been established.

4243


ITEM 6.			EXHIBITS.

EXHIBIT INDEX


Exhibit No.						Description

2.1 ***3.1						~~Stock Purchase Agreement by~~Restated Articles of Incorporation of the Company as of May 13, 1987, with Amendments dated May 12, 1993 and ~~among Leggett & Platt, Incorporated, Elite Comfort Solutions, Inc. and Elite Comfort Solutions LP, dated November 6, 2018,~~May 20, 1999; filed ~~November 7, 2018,~~March 11, 2004 as Exhibit ~~2.1~~3.1 to the Company’s Form 10-K, are incorporated herein by reference. (SEC File No. 001-07845)

3.2						Bylaws of the Company as amended through February 22, 2023, filed February 23, 2023 as Exhibit 3.2.1 to the Company’s Form 8-K, is incorporated herein by reference. (SEC File No. 001-07845) Schedules to the Stock Purchase Agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Stock Purchase Agreement contains a list briefly identifying the omitted schedules. Leggett agrees to furnish, supplementally, a copy of any omitted schedule to the SEC upon request.

10.1						~~Time Sharing Agreement between the Company and J. Mitchell Dolloff, datedApril 6, 2022,~~Summary Sheet of Director Compensation, filed ~~April 8, 2022~~February 23, 2023 as Exhibit 10.1 to the Company’s Form 8-K, is incorporated herein by reference. (SEC File No. 001-07845)

10.2						Summary Sheet of Executive Cash Compensation, filed February ~~24, 2022~~23, 2023 as Exhibit ~~10.1~~10.2 to the Company’s Form 8-K, is incorporated herein by reference. (SEC File No. 001-07845)

10.3						~~2022 Key Officers Incentive Plan Award Formula~~Severance Benefit Agreement between the Company and J. Tyson Hagale, filed February ~~24, 2022~~23, 2023 as Exhibit ~~10.2~~10.5 to the Company’s Form 8-K, is incorporated herein by reference. (SEC File No. 001-07845)

10.4						~~Summary Sheet of Director Compensation~~2023 Award Formula under the Key Officers Incentive Plan, filed ~~February 22, 2022~~March 10, 2023 as Exhibit ~~10.10~~10.1 to the Company’s Form ~~10-K,~~8-K, is incorporated herein by reference. (SEC File No. 001-07845)

10.5						2023 Form of Performance Stock Unit Award Agreement, filed March 10, 2023 as Exhibit 10.4 to the Company’s Form 8-K, is incorporated herein by reference.~~(SEC~~ (SEC File No. 001-07845)

31.1*						Certification of J. Mitchell Dolloff, pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated May ~~5, 2022~~4 , 202 3

31.2*						Certification of Jeffrey L. Tate, pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated May 4 5,, 202 23

32.1**						Certification of J. Mitchell Dolloff, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated ~~May 5, 2022~~M ay 4 , 202 3

32.2**						Certification of Jeffrey L. Tate, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated May 4 5,, 202 23

101.INS***						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH,**						Inline XBRL Taxonomy Extension Schema

101.CAL,**						Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF,**						Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB,**						Inline XBRL Taxonomy Extension Label Linkbase

101.PRE,**						Inline XBRL Taxonomy Extension Presentation Linkbase

104						Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.


*			Denotes filed herewith.
**			Denotes furnished herewith.
***			Filed as Exhibit 101 to this report are the following formatted in inline XBRL (eXtensible Business Reporting Language):
			(i) Consolidated Condensed Balance Sheets at March 31, ~~2022~~2023 and December 31, ~~2021;~~2022; (ii) Consolidated Condensed Statements of Operations for the three months ended March 31, ~~2022~~2023 and March 31, ~~2021;~~2022; (iii) Consolidated Condensed Statements of Comprehensive Income (Loss) for the three months ended March 31, ~~2022~~2023 and March 31, ~~2021;~~2022; (iv) Consolidated Condensed Statements of Cash Flows for the three months ended March 31, ~~2022~~2023 and March 31, ~~2021;~~2022; and (v) Notes to Consolidated Condensed Financial Statements.
~~***~~			The assertions embodied in the representations and warranties made in the Stock Purchase Agreement are solely for the benefit of the parties to the Stock Purchase Agreement, and are qualified by information in confidential disclosure schedules that we have exchanged in connection with signing the Stock Purchase Agreement. While Leggett does not believe the schedules contain information required to be publicly disclosed, the schedules do contain information that modifies, qualifies, and creates exceptions to the representations and warranties in the Stock Purchase Agreement. You are not a third party beneficiary to the Stock Purchase Agreement and should not rely on the representations and warranties as characterizations of the actual state of facts, since (i) they are modified in part by the disclosure schedules; (ii) they may have changed since the date of the Stock Purchase Agreement; (iii) they may represent only the parties’ risk allocation in this particular transaction; and (iv) they may be qualified by materiality standards that differ from what may be viewed as material for securities law purposes. The Stock Purchase Agreement has been included to provide you with information regarding its terms. It is not intended to provide any other factual information about Leggett or ECS. Such information about Leggett can be found in other public filings we make with the SEC.

4344

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 ~~5, 2022~~4, 2023	By:	/s/ J. MITCHELL DOLLOFF
		J. Mitchell Dolloff President and Chief Executive Officer

DATE: May ~~5, 2022~~4, 2023	By:	/s/ JEFFREY L. TATE
		Jeffrey L. Tate Executive Vice President and Chief Financial Officer

4445


	As of December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Bank time deposits with original maturities of three months or less	$	—	$	114.4	$	—	$	114.4
Derivative assets 1 (Note 1 3)	—		5.9		—		5.9
Diversified investments associated with the ESU program 1	51.0		—		—		51.0
Total assets	$	51.0	$	120.3	$	—	$	171.3
Liabilities:
Derivative liabilities 1 (Note 1 3)	$	—	$	1.2	$	—	$	1.2
Liabilities associated with the ESU program 1	50.9		—		—		50.9
Total liabilities	$	50.9	$	1.2	$	—	$	52.1


Derivatives	Income Statement Caption	Amount of (Gain) Loss Recorded in Income Three Months Ended March 31,
		2022		2021
Designated as hedging instruments

Interest rate cash flow hedges	Interest expense	$	.9	$	1.1
Currency cash flow hedges	Net trade sales	(1.8)		(2.2)
Currency cash flow hedges	Cost of goods sold	(.4)		.2
Currency cash flow hedges	Other (income) expense, net	.1		—
Total cash flow hedges		(1.2)		(.9)
Fair value hedges	Other (income) expense, net	(.5)		(.5)

Not designated as hedging instruments	Other (income) expense, net	.1		.3

Total derivative instruments		$	(1.6)	$	(1.1)


Period	Total Number of Shares Purchased 1	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 2	Maximum Number of Shares that may yet be Purchased Under the Plans or Programs 2
January 2022	—	$	—	—	10,000,000
February 2022	—	$	—	—	10,000,000
March 2022	407,252	$	36.68	407,252	9,592,748
Total	407,252	$	36.68	407,252