Leggett & Platt to record non-cash impairment in fixtures

16 Jul '14

2 min read

Leggett & Platt expects to record a $108 million pre-tax, non-cash goodwill impairment charge for the second quarter. This charge reflects the complete write off of the goodwill associated with the Store Fixtures group, which is part of the Commercial Fixturing & Components segment. The EPS impact of the non-cash charge is expected to be 65 cents per share. Apart from this impairment, the company has made no update to the underlying full year EPS guidance issued in April.

Highlights:

-2Q non-cash goodwill impairment charge of $108 million (pre-tax)

-2Q EPS impact of $.65 per share

-Apart from this charge, underlying guidance for 2014 was not updated

-Company has engaged an investment banker to help explore strategic alternatives for its Store Fixtures business, including possible divestiture

As previously disclosed, the Store Fixtures group's 2013 performance fell short of expectations. Performance did not rebound during the second quarter of 2014 as expected, with the deterioration of revenue and profitability most pronounced in May and June. Consequently, it has become apparent that the current market value of the Store Fixtures unit has fallen below its recorded book value.

This stems from lower current expectations of future revenue and profitability, reflecting reduced market demand for the shelving, counters, showcases and garment racks the company supplies to major retailers.

The company has engaged an investment banker and is exploring strategic alternatives, including the possible divestiture of this business unit.

Leggett & Platt

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