Leggett & Platt Inc.
), the manufacturer of diverse engineered products and
components, declared that its GAAP results for the fourth quarter
of 2013 will include $60-$75 million of pre-tax non-cash
impairment charge due to writing down of goodwill, and possibly,
intangible assets associated with its Commercial Vehicle Products
(CVP) group business. This is expected to impact fourth-quarter
earnings per share in the range of 28-35 cents.
As of Sep 30, 2013, goodwill and other intangible assets related
with the CVP Group were recorded at $76 million and $20 million,
The impairment charges for the CVP group, a unit of the
Specialized Products Segment, stemmed from the company's ongoing
strategic review process, wherein it identified a sudden decline
in the division's sales, operating cash flows and earnings in the
past few months. This called for an interim evaluation of the
group's goodwill and other intangible assets that revealed a
decline in the market values of the division's assets compared to
the book values, mainly of goodwill. Market values were mainly
impacted by a fall in demand for the division's products -
including racks, shelving, and cabinets used in telecom, cable,
home service and delivery vans.
Per the norms, companies are required to evaluate goodwill for
identifying impairment, if any, at least once a year or when an
impacting event occurs. Similarly, long-lived assets including
other intangible assets are required to be reviewed at the end of
each year or when need be. As a practice, Leggett reviews
goodwill in the second quarter of every year and other intangible
assets at the end of every year.
Earlier, as part of the strategic review conducted, the company
had identified that divesting all or part of the CVP group is a
strategic option. However, the company has now changed course and
focuses on improving the unit's operating performance and cost
Other Stocks Worth Considering
Leggett & Platt currently has a Zacks Rank #4 (Sell).
Better-performing stocks in the furniture industry are
Hooker Furniture Corp.
Virco Mfg. Corporation
). Hooker and La-Z-Boy sport a Zacks Rank #1 (Strong Buy), while
Virco carries a Zacks Rank #2 (Buy).
HOOKER FURNITUR (HOFT): Free Stock Analysis
LEGGETT & PLATT (LEG): Free Stock Analysis
LA-Z-BOY INC (LZB): Free Stock Analysis
VIRCO MFG (VIRC): Get Free Report
To read this article on Zacks.com click here.