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Adjusted EPS: Earnings per fully diluted share from
continuing operations, adjusted to exclude unusual
or non-recurring items such as restructuring-related
costs, impairments, customer-related reserves, gains
or losses on sale, one-time tax items, etc. We make
these adjustments to aid the investor in seeing the
underlying trend of earnings without all the 'noise'.
Annualize: To take a measurement covering a
period of less than one year, and extrapolate it
to cover a full year.
Basis Point: A unit of measure equal to 1/100th
of 1%.
Book Value Per Share: Another term for per share
equity, or net worth. A company's total assets minus
total liabilities, divided by the number of shares of
stock outstanding.
Business Group or Unit: An organizational subset
of Leggett & Platt's operations; there are currently
10 business groups and 19 business units (BUs)
in continuing operations.
Capital Expenditure (Capex): Funds used to purchase
physical assets including property, plant and
equipment.
Cash Equivalents: Highly liquid assets; assets that
can be readily converted into cash.
Credit Rating: An evaluation of a company's ability
to repay debt. Ratings are issued by Moody's, S&P,
and Fitch. Investors and analysts use these ratings
to assess the risk of an investment.
Commercial Paper: Unsecured (i.e. no collateral
required), unregistered short-term debt that comes
due within 270 days.
De-Contenting: Modifying product design to
replace higher cost components with lower
cost components.
Debt to Cap: An indicator of financial leverage;
the ratio of long-term debt to total capitalization.
Deverticalization: Leggett & Platt's term for
encouraging customers to cease making their
own components. Leggett & Platt becomes their
component supplier, freeing them to concentrate
on retailing, marketing and assembly.
Dividend: The portion of a company's profit paid
to shareholders, usually in cash.
Dividend Yield: The fraction of the stock price
returned to shareholders annually as dividends
(equal to dividends paid divided by stock price).
For example, a stock selling for $20 that pays
shareholders $1.00 in annual dividends has a
dividend yield of 5.0% (= 1.00 / 20.00).
EBIT: Earnings before interest and taxes.
EBIT Margin: EBIT divided by sales; equal to the
amount of EBIT earned per dollar of sales.
EBITA: EBIT + amortization.
EBITDA: EBIT + depreciation + amortization.
EPS: Earnings per share. A company's after-tax
profit divided by the weighted average number of
shares of stock. For instance, if a company earning
$6 million had 3 million shares of stock, its EPS
would be $2 per share.
Equity: Another term for net worth. A company's
total assets minus total liabilities.
Form 10-K: An annual report filed with the SEC
by public corporations.
Forward-Looking Statements: Comments a
company makes regarding beliefs or expectations
about the future.
Free Cash Flow: Amount of cash the BU returns
to corporate; equal to: EBITDA – Taxes – Capex –
Change in Working Capital – Acquisitions + Sales
Proceeds.
Geo Components: Product group that includes
geotextiles, ground stabilization, geogrids, and silt
fencing.
Gondola Shelving: Standard form of upright steel
shelving used by large retailers. Typically has a
pegboard backing and allows for varied shelf height;
can be used to create end caps, wall units, and
center aisles.
Goodwill: The premium paid for an acquisition;
the amount paid in excess of the fair market value
of the assets acquired.
Gross Margin: Gross profit (which is net sales less
cost of goods sold) divided by net sales.
Hedge: An investment made specifically to reduce
or eliminate risks related to items such as interest
rates, foreign currency exchange rates, and
commodity costs.
Innerspring: The set of steel coil springs, bound
together, that form the core of more than 90% of
mattresses in North America.
Intangible Asset: A non-financial asset lacking
physical substance; examples include goodwill,
patents, trademarks and licenses.
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Inter-Segment Sales: Sales of product from one
segment of the company to another (e.g. sales of
wire from Leggett & Platt's Industrial Materials
segment to the Residential Furnishings segment).
Letter of Credit: A bank-issued "promise to pay"
that ensures sellers that the buyer will pay.
LIFO: "Last In, First Out;" an inventory accounting
method that assumes the products acquired last
are the first ones sold.
Long-Term Debt: Liability, such as a bond or a note,
that comes due (i.e. must be repaid) more than one
year into the future.
Maker/User: Leggett & Platt's term for a customer
that makes its own components for use in the
assembly of a product it manufactures.
Motion Mechanism: The highly-engineered
component that enables furniture to recline, tilt,
swivel, elevate, etc; usually made from steel.
Net Debt: The amount of debt remaining if all cash
and cash equivalents are used to pay off debt.
Net Debt to Net Capital: A measure of financial
leverage that allows meaningful comparison across
periods during which cash fluctuates significantly;
equal to: (Long Term Debt + Current Debt Maturities
- Cash & Equivalents) / (Total Capitalization + Current
Debt Maturities - Cash & Equivalents).
Net Margin: Net earnings divided by net sales; a
measure of after-tax profitability per dollar of sales.
Also called net earnings margin.
Net Sales: Overall sales to third parties adjusted
for discounts and/or return of product. Excludes
inter-segment sales.
Organic Sales Growth: Also called "same location
sales growth" or "internal sales growth." The amount
of sales increase not attributable to acquisitions;
sales growth that comes from the same plants and
facilities that the company owned one year earlier.
Payout Ratio: The percentage of earnings that is
paid to shareholders in the form of dividends.
Point-of-Purchase Display: Temporary or semipermanent,
brand-specific, promotional exhibit
located in a retail store.
Portfolio Roles: Grow = Profitably grow competitively
advantaged positions; Core = Maximize cash in
stable, competitive positions; Fix = Rapidly improve
(< 12 months), or Divest.
Revolving Credit: Contractual agreement to loan up
to a specified amount of money, for a specified period
of time; any amounts repaid can be borrowed again.
Return on Equity: Net earnings divided by equity;
a measure of the amount earned on the investment
of the stockholders.
ROGI: After-tax return on gross investment; equal to:
(EBITA – Taxes) / (Working Capital + Gross PP&E)
S&P 500: An index of 500 widely-held large-company
stocks that reflects the general performance of the
U.S. stock market. Leggett & Platt is a member.
Same Location Sales Growth: See Organic Sales
Growth.
Segment: A major subset of the company's
operations that contains business groups and units.
Leggett & Platt reports results in four segments.
Store Fixture: Shelving, display case, rack, cart,
kiosk, partition, or cabinet used to hold or present
a product in a retail environment.
Steel Rod: Commodity product produced at steel
mills. Rod looks like a coil of thick wire and is rolled
(or formed) from a billet (which is a long bar of steel).
Rod is commonly used to make wire, reinforcing
mesh, bolts and nails. Leggett & Platt is the largest
consumer of steel rod in the U.S.
Total Business Unit Return (TBR): Analogous
to TSR, but at the BU Level; equal to: (Change in
BU Market Value + Free Cash Flow) / Initial BU
Market Value.
Total Capitalization: The sum of four balance sheet
items: long-term debt, other liabilities, deferred income
taxes and equity. A measure of the total amount
invested in the firm by both shareholders and lenders.
Total Sales: Net sales plus inter-segment sales.
Total Shareholder Return (TSR): Total benefit investor
realizes from owning our stock; equal to: (Change
in Stock Price + Dividends) / Initial Stock Price.
Working Capital: The strict accounting definition
is: current assets less current liabilities. Many
companies, including Leggett & Platt, exclude cash
and equivalents, as well as current maturities of
long term debt, when analyzing how efficiently
working capital is being utilized.
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