Leggett & Platt Inc.
), a manufacturer of diversified engineered products, has reached a
tentative settlement in one of the civil antitrust cases filed
against the company and many other defendants related to the sale
of polyurethane foam. The settlement partly relates to the
company's former Prime Foam Products business that was divested in
the first quarter of 2007.
Though Leggett denies all accusations, it has agreed to pay a sum
of $39.8 million to settle the antitrust claims related to the U.S.
direct purchaser class portion of the polyurethane foam in order to
counter the uncertainty, expense and distraction of litigation. The
settlement, which is subject to approval by Court, includes all
plaintiff attorneys' fees and costs.
To set out further details, the company revealed that it remains a
defendant in many other antitrust cases related to the sale of
polyurethane foam. The company said that it is currently not in a
position to ascertain the possible result or amount of loss related
to the remaining cases due to the complexities involved. However,
it clarified that the total sales of polyurethane foam from Leggett
in the remaining cases is comparatively lesser than the currently
Leggett stated that a pre-tax charge of $39.8 million will be
recorded in the third quarter of 2014 related to this settlement,
which will likely impact earnings per share by 18 cents. Throwing
further light on the matter, the company indicated that about
one-fourth of the said charge will be accounted under discontinued
operations as the settlement relates to the already sold off Prime
Foam Products business.
Despite the anticipated impact on third-quarter earnings, the
company has reiterated its full year 2014 earnings per share
forecast of $1.70-$1.85 per share issued during the second-quarter
Further, during the earnings release, the company projected sales
for 2014 to grow in the 4%-6% range and come in within $3.88-$3.98
billion driven by robust growth in majority of the company's
businesses, offset by decreased demand for store fixtures.
Apart from this, the company expects operating cash flows for 2014
to be over $350 million. Capital expenditure for the year will be
approximately $100 million, while the company hopes to spend $170
million toward dividend payout. Further, the company intends to buy
back 5-7 million shares and issue nearly 2 million shares under the
employee benefit plans in 2014.
Management seems impressed with its sound financials and
anticipates record earnings in 2014. Thereafter, Leggett remains
optimistic about its performance, given the strength of its various
businesses like Automotive, Aerospace, Bedding, Home Furniture and
Office Furniture. Also, the company strives to remain in the top 3
of the S&P 500 companies, on the basis of 3-year rolling period
Total Shareholder Return (TSR).
Other Stocks to Consider
Currently, Leggett carries a Zacks Rank #3 (Hold). Better-ranked
stocks in the consumer discretionary sector include Hanesbrands
), Perry Ellis International Inc. (
) and V.F. Corp. (
). While Hanesbrands and Perry Ellis sport a Zacks Rank #1 (Strong
Buy), V.F. Corp. carries a Zacks Rank #2 (Buy).
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