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What changed in LEGGETT & PLATT INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of LEGGETT & PLATT INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+564 added−607 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-27)

Top changes in LEGGETT & PLATT INC's 2024 10-K

564 paragraphs added · 607 removed · 255 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

50 edited+13 added−25 removed21 unchanged
Biggest changeFor more information about the Restructuring Plan, please see the discussion under Operational Risk Factors beginning on page 16 in Item 1A Risk Factors, and on page 37 in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.
Biggest changeThe 2024 Plan was expanded in the second quarter of 2024 to include a restructuring opportunity within the Specialized Products segment and in the third quarter of 2024 to include general and administrative cost structure initiatives. For more information about the 2024 Restructuring Plan, please see the discussion under Operational Risk Factors beginning on page 15 in Item 1A.
Among the most important raw materials that we use are: • Various types of steel, including scrap, rod, wire, sheet, and stainless • Chemicals used in foam production • Foam scrap • Woven and nonwoven fabrics • Titanium and nickel-based alloys and other high strength metals • Electronic systems (including semiconductors) We supply our own raw materials for many of the products we make.
Among the most important raw materials we use are: • Various types of steel, including scrap, rod, wire, sheet, and stainless • Chemicals used in foam production • Foam scrap • Woven and nonwoven fabrics • Titanium and nickel-based alloys and other high strength metals • Electronic systems (including semiconductors) We supply our own raw materials for many of the products we make.
Also, our manufacturing employees receive new hire and annual refresher safety training, weekly “tool box” talks regarding safety and training, job-specific safety training based on the job hazards analysis developed from our SafeGuard program, and safety stand down training based on real-time identified and emerging risks, when needed.
Our manufacturing employees receive new hire and annual refresher safety training, weekly “tool box” talks regarding safety and training, job-specific safety training based on the job hazards analysis developed from our SafeGuard program, and safety stand-down training based on real-time identified and emerging risks, when needed.
In general, our competitors tend to be smaller, private companies. 13 Table of Contents PART I Based on certain industry data, we believe we are a leading supplier, in terms of revenue, of the following: • Bedding components and private label finished goods • Automotive seat comfort and convenience systems • Home and work furniture components • Geo components • Flooring underlayment • Hydraulic cylinders for material handling and heavy construction applications • Aerospace tubing and fabricated assemblies We continue to face pressure from foreign competitors, as some of our customers source a portion of their components and finished products offshore.
In general, our competitors tend to be smaller, private companies. 12 Table of Contents PART I Based on certain industry data, we believe we are a leading supplier, in terms of revenue, of the following: • Bedding components and private label finished goods • Automotive seat comfort and convenience systems • Home and work furniture components • Geo components • Flooring underlayment • Hydraulic cylinders for material handling and heavy construction applications • Aerospace tubing and fabricated assemblies We continue to face pressure from foreign competitors, as some of our customers source a portion of their components and finished products offshore.
Some of our most significant trademarks include: • ComfortCore ® , Quantum ® , Eco-Base ® , CombiCore TM , Nanocoil ® , Softech ® , Active Support Technology ® , Mira-Coil ® , and VertiCoil ® (mattress innersprings) • Energex ® , Coolflow ® , ThermaGel ® , EcoFlow TM , and Gorilla Foam TM (specialty foam products) • Semi-Flex ® (box spring components and foundations) • Spuhl ® and Fides ® (mattress innerspring manufacturing machines) • Wall Hugger ® (recliner chair mechanisms) • No-Sag ® (wire forms used in seating) • LPSense ® (capacitive sensing) • Hanes ® (fabric materials) • Schukra ® (automotive seating products) • Gribetz ® and Porter ® (quilting and sewing machines) Product Development One of our strongest performing product categories across the Company is ComfortCore ® , our fabric-encased innerspring coils used in hybrid and other mattresses.
Some of the most significant trademarks used in our businesses include: • ComfortCore ® , Quantum ® , Eco-Base ® , CombiCore TM , Nanocoil ® , Softech ® , Active Support Technology ® , Mira-Coil ® , and VertiCoil ® (mattress innersprings) • Energex ® , Coolflow ® , ThermaGel ® , EcoFlow TM , and Gorilla Foam TM (specialty foam products) • Semi-Flex ® (box spring components and foundations) • Spuhl ® (mattress innerspring manufacturing machines) • Wall Hugger ® (recliner chair mechanisms) • No-Sag ® (wire forms used in seating) • LPSense ® (capacitive sensing) • Hanes ® (fabric materials) • Schukra ® (automotive seating products) • Gribetz ® and Porter ® (quilting and sewing machines) Product Development One of our strongest performing product categories across the Company is ComfortCore ® , our fabric-encased innerspring coils used in hybrid mattresses.
Depending on location, we offer health, dental, and vision benefits; flexible spending plans and health savings accounts; retirement savings; disability, life, critical illness, accident, and travel insurance; well-being and employee assistance programs; vacation, personal time, and holidays; and discount stock purchase plans. We also provide incentive programs for management employees based on performance.
Depending on location, we offer health, dental, and vision benefits; flexible spending plans and health savings accounts; retirement savings; disability, life, critical illness, accident, and travel insurance; well-being and employee assistance programs; vacation, personal time, and holidays; and a discount stock purchase plan. We also provide incentive programs for management employees based on performance.
For information about antidumping duty orders regarding innerspring, steel wire rod, and mattress imports, please see Competition in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations on page 39. Seasonality We generally experience some seasonality in our consolidated sales, earnings, and operating cash flows.
For information about antidumping duty orders regarding innerspring, steel wire rod, and mattress imports, please see Competition in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations on page 42. Seasonality We generally experience some seasonality in our consolidated sales, earnings, and operating cash flows.
We believe our reliable product development and launch capability, coupled with our global footprint, makes us a trusted partner for our Tier 1 and Original Equipment Manufacturer (OEM) customers. 4 Table of Contents PART I P RODUCTS Automotive Group • Mechanical and pneumatic lumbar support and massage systems for automotive seating • Seat suspension systems • Motors and actuators, used in a wide variety of vehicle power features • Cables Aerospace Products Group • Titanium, nickel, and stainless-steel tubing, formed tube, tube assemblies, and flexible joint components, primarily used in fluid conveyance systems Hydraulic Cylinders Group • Engineered hydraulic cylinders C USTOMERS • Automobile OEMs and Tier 1 suppliers • Aerospace OEMs and suppliers • Mobile equipment OEMs, primarily serving material handling and heavy construction markets Furniture, Flooring & Textile Products Segment HOME FURNITURE GROUP Home Furniture WORK FURNITURE GROUP Work Furniture FLOORING & TEXTILE PRODUCTS GROUP Flooring Products Fabric Converting Geo Components In our Furniture, Flooring & Textile Products segment, we design, manufacture, and distribute a wide range of components and finished products for residential and commercial markets, and select markets for structural fabrics and geo components.
We believe our reliable product development and launch capability, coupled with our global footprint, makes us a trusted supplier to our Tier 1 and Original Equipment Manufacturer (OEM) customers. 4 Table of Contents PART I P RODUCTS Automotive Group • Mechanical and pneumatic lumbar support and massage systems for automotive seating • Seat suspension systems • Motors and actuators, used in a wide variety of vehicle power features • Cables Aerospace Products Group • Titanium, nickel, and stainless-steel tubing, formed tube, tube assemblies, and flexible joint components, primarily used in fluid conveyance systems Hydraulic Cylinders Group • Engineered hydraulic cylinders C USTOMERS • Automobile Tier 1 suppliers and OEMs • Aerospace OEMs and suppliers • Mobile equipment OEMs, primarily serving material handling and heavy construction markets Furniture, Flooring & Textile Products Segment HOME FURNITURE GROUP Home Furniture WORK FURNITURE GROUP Work Furniture FLOORING & TEXTILE PRODUCTS GROUP Flooring Products Fabric Converting Geo Components In our Furniture, Flooring & Textile Products segment, we design, manufacture, and distribute a wide range of components and finished products for residential and commercial markets, and select structural fabric and geo component markets.
Our market share is based on estimates using our internal data, information 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. 15 Table of Contents PART I
Our market share is based on estimates using our internal data, information 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. 14 Table of Contents PART I
Information contained on our website does not constitute part of this Annual Report on Form 10-K. 14 Table of Contents PART I Industry and Market Data Unless indicated otherwise, the information concerning our industries contained in this Annual Report is based on our general knowledge of and expectations concerning the industries.
Information contained on our website does not constitute part of this Annual Report on Form 10-K. 13 Table of Contents PART I Industry and Market Data Unless indicated otherwise, the information concerning our industries contained in this Annual Report is based on our general knowledge of and expectations concerning the industries.
To stay competitive with global steel costs, both contract and non-contract innerspring pricing was adjusted in the back half of 2023. We have also reacted to foreign competition in certain cases by developing new proprietary products that help our customers reduce total costs and shifting production offshore to take advantage of lower input costs.
To stay competitive with global steel costs, both contract and non-contract innerspring pricing was adjusted in the back half of 2023 and fully realized in 2024. We have also reacted to foreign competition in certain cases by developing new proprietary products that help our customers reduce total costs and by shifting production offshore to take advantage of lower input costs.
Spring Specialty Foam Adjustable Bed International Bedding Machinery Our Bedding Products segment has its roots in the Company's founding in 1883 with the manufacture of steel coil bedsprings. Today, we support our customers' needs from raw materials to components to finished mattresses and foundations to distribution and fulfillment.
Spring Specialty Foam Adjustable Bed International Bedding Machinery Our Bedding Products segment has its roots in the Company's founding in 1883 with the manufacture of steel coil bedsprings. Today, we support our customers' product needs from raw materials to components to finished mattresses and foundations and provide distribution and fulfillment capabilities.
Our internal promotion rate over the last three years for corporate officer positions was 91%. We are building on our success in these areas and continue to develop our succession processes to allow us to adapt and grow. Trends in Market Demand and Competition Demand Trends for our Products.
Our internal promotion rate over the last three years for corporate officer positions was 100%. We are building on our success in these areas and continue to develop our succession processes to allow us to adapt and grow. Trends in Market Demand and Competition Market Demand .
Bedding Products Specialized Products Furniture, Flooring & Textile Products North America Canada n n Mexico n n n United States n n n Europe Austria n Belgium n Croatia n Denmark n France n Germany n Hungary n Ireland n Poland n Switzerland n United Kingdom n n South America Brazil n Asia China n n n India n South Korea n Dependence on Market Demand for Key Product Families The following table shows our approximate percentage of trade sales by product family for the last three years, which indicates the degree of dependence upon market demand: Product Families 2023 2022 2021 Bedding Group 42 % 46 % 48 % Flooring & Textile Products Group 19 18 18 Automotive Group 19 17 16 Home Furniture Group 6 8 8 Work Furniture Group 6 6 6 Hydraulic Cylinders Group 5 3 2 Aerospace Products Group 3 2 2 We do not have a material amount of sales derived from government contracts subject to renegotiation of profits or termination at the election of any government.
Bedding Products Specialized Products Furniture, Flooring & Textile Products North America Canada n n Mexico n n n United States n n n Europe Austria n Belgium n Croatia n Denmark n France n Germany n Hungary n Ireland n Poland n Switzerland n United Kingdom n n South America Brazil n Asia China n n n India n South Korea n 8 Table of Contents PART I Dependence on Market Demand for Key Product Families The following table shows our approximate percentage of trade sales by product family for the last three years, which indicates the degree of dependence upon market demand: Product Families 2024 2023 2022 Bedding Group 40 % 42 % 46 % Flooring & Textile Products Group 20 19 18 Automotive Group 19 19 17 Home Furniture Group 6 6 8 Work Furniture Group 6 6 6 Hydraulic Cylinders Group 5 5 3 Aerospace Products Group 4 3 2 We do not have a material amount of sales derived from government contracts subject to renegotiation of profits or termination at the election of any government.
Also, at year-end 2023, 15% of our employees were represented by labor unions that collectively bargain for work conditions, wages, or other issues. We did not experience any material work stoppage related to labor contract negotiations during 2023, and we are not aware of circumstances likely to result in a material work stoppage during 2024.
Also, at year-end 2024, approximately 14% of our employees were represented by labor unions that collectively bargain for work conditions, wages, or other issues. We did not experience any material work stoppage related to labor contract negotiations during 2024, and we are not aware of circumstances likely to result in a material work stoppage during 2025.
We also convert and distribute geo components used for erosion control, subgrade stabilization, and storm water management. 5 Table of Contents PART I P RODUCTS Home Furniture Group • Steel mechanisms and motion hardware (enabling furniture to recline, tilt, swivel, rock, and elevate) for reclining chairs, sofas, sleeper sofas, and lift chairs • Springs and seat suspensions for chairs, sofas, and loveseats Work Furniture Group • Components and private label finished goods for collaborative soft seating • Bases, columns, back rests, casters, and frames for office chairs, and control devices that allow chairs to tilt, swivel, and elevate Flooring & Textile Products Group • Carpet cushion and hard surface flooring underlayment (made from bonded scrap foam, fiber, rubber, and prime foam) • Structural fabrics for mattresses, residential furniture, and industrial uses • Geo components (synthetic fabrics and various other products used in ground stabilization, drainage protection, erosion, and weed control) C USTOMERS • Manufacturers of upholstered and office furniture • Flooring retailers and distributors, including big box retailers and home improvement centers • Contractors, landscapers, road construction companies, retailers, and government agencies using or selling geo components • Mattress and furniture producers and manufacturers of packaging, filtration, and draperies Restructuring Plan and Strategic Priorities In the first quarter of 2024, we committed to a restructuring plan, primarily associated with our Bedding Products segment and, to a lesser extent, our Furniture, Flooring & Textile Products segment (the "Restructuring Plan" or "Plan").
We also convert and distribute geo components for erosion control, subgrade stabilization, and storm water management. 5 Table of Contents PART I P RODUCTS Home Furniture Group • Steel mechanisms and motion hardware (enabling furniture to recline, tilt, swivel, rock, and elevate) for reclining chairs, sofas, sleeper sofas, and lift chairs • Springs and seat suspensions for chairs, sofas, and loveseats Work Furniture Group • Components and private-label finished goods for collaborative soft seating • Bases, columns, back rests, casters, and frames for office chairs, and control devices that allow chairs to tilt, swivel, and elevate Flooring & Textile Products Group • Carpet cushion and hard surface flooring underlayment (made from bonded scrap foam, fiber, rubber, and prime foam) • Structural fabrics for mattresses, residential furniture, and industrial uses • Geo components (synthetic fabrics and various other products used in ground stabilization, drainage protection, erosion, and weed control) C USTOMERS • Manufacturers of upholstered and office furniture • Flooring retailers and distributors, including big box retailers and home improvement centers • Contractors, landscapers, road construction companies, retailers, and government agencies using or selling geo components • Mattress and furniture producers • Manufacturers of draperies, specialty packaging, filtration, and automotive upholstery 2024 Restructuring Plan In the first quarter of 2024, we committed to a restructuring plan, primarily associated with our Bedding Products segment and, to a lesser extent, our Furniture, Flooring & Textile Products segment (the “2024 Restructuring Plan” or “2024 Plan”), which is expected to be substantially complete by the end of 2025.
We believe that worldwide supply sources are available for all the raw materials we use, except for semiconductors as explained below.
We believe that worldwide supply sources are available for all the raw materials we use, as explained below.
For more information regarding our acquisitions, please refer to Note Q on page 113 of the Notes to Consolidated Financial Statements. Divestitures 2023 We did not have any divestitures of businesses in 2023. 2022 In February 2022, we sold our South African bedding innerspring operation for a cash purchase price of approximately $2 million.
For more information regarding our acquisitions, please refer to Note R on page 119 of the Notes to Consolidated Financial Statements. Divestitures We did not have any divestitures of businesses in 2024 or 2023. In February 2022, we sold our South African bedding innerspring operation for a cash purchase price of approximately $2 million.
Sourcing components and finished products from us allows our customers to focus on designing, merchandising, and marketing their products. 3 Table of Contents PART I P RODUCTS Bedding Group • Steel rod • Drawn wire • Specialty foam chemicals and additives • Innersprings (sets of steel coils, bound together, that form the core of a mattress) • Proprietary specialty foam for use primarily in bedding and furniture • Private label finished mattresses, often sold compressed and boxed • Ready-to-assemble mattress foundations • Static foundations • Adjustable beds • Machines that we use to produce innersprings; industrial sewing and quilting machines; mattress-packaging and glue-drying equipment C USTOMERS • We used about 2/3 of our wire output to manufacture our own products in 2023, with the majority going to our U.S. innerspring operations • Various industrial users of steel rod and wire • Manufacturers of finished bedding (mattresses and foundations) • Bedding brands and mattress retailers • E-commerce retailers • Big box retailers, department stores, and home improvement centers Specialized Products Segment AUTOMOTIVE GROUP Automotive AEROSPACE PRODUCTS GROUP Aerospace Products HYDRAULIC CYLINDERS GROUP Hydraulic Cylinders Our Specialized Products segment designs, manufactures, and sells products including automotive comfort and convenience systems, tubing and fabricated assemblies for the aerospace industry, and hydraulic cylinders for the material handling and heavy construction industries.
Sourcing components and finished products from us allows our customers to focus on designing, merchandising, and marketing their products. 3 Table of Contents PART I P RODUCTS Bedding Group • Steel rod • Drawn wire • Innersprings (sets of steel coils, bound together, that form the core of a mattress) • Specialty foam chemicals and additives • Specialty foam for use primarily in bedding and furniture • Semi-finished mattresses (a subassembly including innersprings and foam) • Private label finished mattresses, often sold compressed and boxed • Mattress accessories, such as pillows and toppers • Static foundations • Adjustable beds • Machines that we use to produce innersprings; industrial sewing and quilting machines; mattress-packaging and glue-drying equipment C USTOMERS • We used more than 60% of our wire mill output to manufacture our own products in 2024, with the majority going to our U.S. innerspring operations • Various industrial users of steel rod and wire • Manufacturers of finished bedding (mattresses and foundations) • Bedding brands and mattress retailers • E-commerce retailers • Big box retailers, department stores, and home improvement centers Specialized Products Segment AUTOMOTIVE GROUP Automotive AEROSPACE PRODUCTS GROUP Aerospace Products HYDRAULIC CYLINDERS GROUP Hydraulic Cylinders Our Specialized Products segment designs, manufactures, and sells products including automotive comfort and convenience systems, tubing and fabricated assemblies for the aerospace industry, and hydraulic cylinders for the material handling and heavy construction industries.
Acquisitions 2023 We did not acquire any businesses in 2023. 2022 In August 2022, we acquired two businesses. First, we acquired a small U.S. textiles business that converts and distributes construction fabrics for the furniture and bedding industries for a cash purchase price of $2 million. This acquisition became part of our Furniture, Flooring & Textile Products segment.
In August 2022, we acquired two businesses. First, we acquired a small U.S. textiles business that converts and distributes construction fabrics for the furniture and bedding industries for a cash purchase price of $2 million. This acquisition became part of our Furniture, Flooring & Textile Products segment.
As such, our business is not materially dependent upon governmental customers . 9 Table of Contents PART I Distribution of Products We sell and distribute our products primarily through our own personnel. However, many of our businesses have relationships and agreements with outside sales representatives and distributors.
As such, our business is not materially dependent upon governmental customers . Distribution of Products We sell and distribute our products primarily through our own personnel. However, many of our businesses have relationships and agreements with outside sales representatives and distributors.
We convert fabrics into components used by bedding and furniture manufacturers and other markets such as filtration, packaging, and automotive applications.
We convert fabrics into components used by bedding and furniture manufacturers and in other applications such as filtration, hospitality, automotive, and packaging.
Our products in these foreign locations primarily consist of: Europe • Innersprings and specialty foam for private label mattresses and mattress applications • Lumbar and seat suspension systems for automotive seating and actuators for automotive applications • Seamless and welded tubing and fabricated assemblies for aerospace applications • Select lines of private label finished furniture • Hydraulic cylinders for material handling and heavy construction equipment • Machinery and equipment designed to manufacture innersprings for mattresses China • Lumbar and seat suspension systems for automotive seating • Cables, motors, and actuators for automotive applications • Recliner mechanisms and bases for upholstered furniture • Work furniture components, including chair bases and casters • Innersprings for mattresses • Hydraulic cylinders for heavy construction equipment Canada • Lumbar and seat suspension systems for automotive seating • Fabricated wire for the furniture and automotive industries • Work furniture chair controls and bases • Geo components Mexico • Lumbar and seat suspension systems for automotive seating • Motors and actuators for automotive applications • Adjustable beds • Innersprings and fabricated wire for the bedding industry • Select lines of private label finished furniture 8 Table of Contents PART I Geographic Areas of Operation As of December 31, 2023, we had 135 manufacturing facilities in 18 countries; 85 located in the U.S. and 50 located in foreign countries, as shown below.
Our products in these foreign locations primarily consist of: Europe • Innersprings, specialty foam, and finished mattresses • Lumbar and seat suspension systems for automotive seating and actuators for automotive applications • Seamless and welded tubing and fabricated assemblies for aerospace applications • Select lines of private-label finished furniture • Hydraulic cylinders for material handling and heavy construction equipment • Machinery and equipment designed to manufacture innersprings for mattresses China • Lumbar and seat suspension systems for automotive seating • Cables, motors, and actuators for automotive applications • Recliner mechanisms and bases for upholstered furniture • Work furniture components, including chair bases and casters • Innersprings for mattresses • Hydraulic cylinders for heavy construction equipment Canada • Lumbar and seat suspension systems for automotive seating • Fabricated wire for the furniture and automotive industries • Work furniture chair controls and bases • Geo components 7 Table of Contents PART I Mexico • Lumbar and seat suspension systems for automotive seating • Motors and actuators for automotive applications • Adjustable beds • Select lines of private-label finished furniture Geographic Areas of Operation As of December 31, 2024, we had 119 manufacturing facilities in 18 countries; 71 located in the United States and 48 located in foreign countries, as shown below.
In 2023, over 40% of our ComfortCore ® innersprings in the U.S. had the Quantum ® Edge feature. In 2022, we launched two new products called the Quantum ® Edge Enhanced Profile with Eco-Base ® and Caliber Edge ® Enhanced Profile with Eco-Base ® .
In 2024, over 40% of our ComfortCore ® innersprings in the United States had the Quantum ® Edge feature. In 2022, we launched two new products called the Quantum ® Edge Enhanced Profile with Eco-Base ® and Caliber Edge ® Enhanced Profile with Eco-Base ® .
For example, we produce steel rod that we make into steel wire, which we then use to manufacture innersprings and static foundations for mattresses. We supply a substantial majority of our domestic steel rod requirements through our own rod mill. Our wire drawing mills supply nearly all of our U.S. requirements for steel wire .
For example, we produce steel rod that we make into steel wire, which we then use to manufacture innersprings and static foundations for mattresses. Our domestic wire drawing mills purchase nearly all of their steel rod requirements from our rod mill. Our wire drawing mills supply nearly all of our U.S. requirements for steel wire .
We supply components used by home and work furniture manufacturers to provide comfort, motion, and style in their finished products, as well as select lines of private label finished furniture. We produce or distribute carpet cushion and hard surface flooring underlayment.
We supply components used by home and work furniture manufacturers to provide comfort, motion, and style in their finished products and manufacture select lines of private-label finished furniture. We produce carpet cushion and hard surface flooring underlayment for residential and commercial use.
Our Ability to Attract, Recruit, and Retain Employees We operate in competitive labor markets, and accordingly, we attract, recruit, and retain employees through competitive compensation and benefits, learning and development programs that support career growth, and employee engagement initiatives designed to foster a strong, inclusive culture. Compensation and Benefits .
At year-end 2023, we had approximately 19,300 employees. Our Ability to Attract, Recruit, and Retain Employees We operate in competitive labor markets, and accordingly, we attract, recruit, and retain employees through competitive compensation and benefits, training and development programs that support career growth, and employee engagement initiatives designed to foster a strong, inclusive culture. Compensation and Benefits .
Our Specialty Foam business formulates many of the chemicals and additives used in the production of specialty foams for the bedding and furniture industries. These branded, specialty polyols and additives enhance foam performance by reducing heat retention and improving mobility, support, and durability.
Our Specialty Foam business formulates many of the chemicals and additives used in the production of specialty foams for the bedding and furniture industries. These branded, specialty polyols and additives enhance foam performance by reducing heat retention and improving mobility, support, and durability. Our innovations enable us to produce high-quality, differentiated compressed mattresses.
Customer Concentration We serve thousands of customers worldwide, sustaining many long-term business relationships. In 2023, our largest customer accounted for less than 6% of our consolidated revenues. Our top 10 customers accounted for approxima tely 31% of t hese consolidated revenues.
Customer Concentration We serve thousands of customers worldwide, sustaining many long-term business relationships. Our largest customer represented less than 8% of our 2024 consolidated revenue. Our top 10 customers accounted for approxima tely 32% of t hese consolidated revenues.
Also, historically, our operating cash flows have been stronger in the fourth quarter, primarily related to the timing of cash collections from customers and payments to vendors, and lower in the first quarter, when annual cash incentive payments are paid and as inventories typically increase.
Also, historically, our operating cash flows have been stronger in the fourth quarter, primarily related to the timing of cash collections from customers and payments to vendors, and lower in the first quarter, when annual cash incentive payments are paid and as inventories typically increase. However, supply chain disruptions, inflation, and other macroeconomic factors have impacted seasonality in prior years.
The loss of one or more of these customers could have a material adverse effect on the Company and respective segment in which the customer’s sales are reported. 10 Table of Contents PART I Patents and Trademarks As of December 31, 2023, we had 1,345 patents issued, 505 patents in process, 1,031 trademarks registered, and 38 trademarks in process.
The loss of one or more of these customers could have a material adverse effect on the Company and the respective segments in which the customer’s sales are reported. 9 Table of Contents PART I Patents and Trademarks As of December 31, 2024, we had 1,281 patents issued, 503 patents in process, 1,007 trademarks registered, and 57 trademarks in process.
Our Automotive business designs and engineers lightweight components that help reduce overall vehicle weight and improve fuel efficiency (and thus reduce noise and greenhouse gas emissions), while maintaining performance, safety, and functionality. These products help auto manufacturers meet emission standards and their environmental goals.
Our Automotive business designs and engineers lightweight components that help reduce overall vehicle weight and improve fuel efficiency (and thus reduce noise and greenhouse gas emissions), while maintaining performance, safety, and functionality.
A substantial majority of the rod mill's output has been used by our two U.S. wire mills that have supplied virtually all of the wire consumed by our other domestic businesses. We also supply steel rod and wire to trade customers that operate in a broad range of markets.
Approximately half of the rod mill's output is used internally by our wire mills to supply virtually all of the wire consumed by our domestic innerspring operations and other businesses. We also supply steel rod and wire to trade customers that operate in a broad range of markets.
Our Employees At year-end 2023, we had approximately 19,300 employees, of which 14,100 were engaged in production and 10,900 were international employees. Of these employees, 6,000 were in Bedding Products, 7,600 were in Specialized Products, and 4,900 were in Furniture, Flooring & Textile Products, with the remainder in other roles.
Our Employees At year-end 2024, we had approximately 17,700 employees, of which around 11,500 were engaged in production and around 10,200 were international employees. Of these employees, approximately 5,400 were in Bedding Products, 7,000 were in Specialized Products, and 4,500 were in Furniture, Flooring & Textile Products, with the remainder in other roles.
In early October and mid-December 2022, we acquired two Canadian distributors of products used for erosion control, stormwater management, and various other applications for a cash purchase price of $7 million and $13 million, respectively.
In early October and mid-December 2022, we acquired two Canadian distributors of products used for erosion control, stormwater management, and various other applications for a cash purchase price of $7 million and $13 million, respectively. These acquisitions became a part of our Furniture, Flooring & Textile Products segment and expanded the geographic scope of our Geo Components business unit.
However, the COVID-19 pandemic, supply chain disruptions, inflation, and other macroeconomic factors have impacted seasonality in prior years. Governmental Regulations Our operations are subject to various federal, state, local, and international laws and regulations, including environmental regulations. We have policies intended to ensure that our operations are conducted in compliance with applicable laws and regulations.
Governmental Regulations Our operations are subject to various federal, state, local, and international laws and regulations, including environmental regulations. We have policies intended to ensure that our operations are conducted in compliance with applicable laws and regulations.
ComfortCore ® represented over 65% of our U.S. innerspring units in 2023. A number of our ComfortCore ® innersprings contain a feature we call Quantum ® Edge. These are narrow-diameter, fabric-encased coils that form a perimeter around an innerspring set, replacing a rigid foam perimeter in a finished mattress.
ComfortCore ® represented 70% of our U.S. innerspring units in 2024. Our ComfortCore ® innersprings can be further enhanced with Quantum ® Edge and Eco-Base ® features. Quantum ® Edge units are narrow-diameter, fabric-encased coils that form a perimeter around an innerspring set, replacing a rigid foam perimeter in a finished mattress.
We also will continue to prioritize our people, promote employee resource groups, increase communication to our stakeholder groups, and focus on supplier diversity. Our Workforce Health and Safety We are dedicated to the health and safety of our employees through prevention, education, and awareness with the objective of mitigating workplace injuries through accident investigation and process safety.
Our Workforce Health and Safety We are dedicated to the health and safety of our employees through prevention, education, and awareness with the objective of mitigating workplace injuries through accident investigation and process safety.
Our innerspring, specialty foam, and finished product development and production capabilities allow us to create value at each point, from raw materials to private label finished goods and delivery to the consumer. We operate a steel rod mill in the U.S. with annual capacity of approximately 500,000 tons.
Our industry-leading innerspring and specialty foam technologies, innovative product development, and vertical integration allow us to create value for our customers at each step, from raw material to end consumer. We operate a steel rod mill in the United States with annual capacity of approximately 500,000 tons.
The business was sold for a cash purchase price of approximately $7 million. 7 Table of Contents PART I Foreign Operations The percentages of our trade sales related to products manufactured outside the United States were 36%, 35%, and 39% in 2021, 2022, and 2023, respectively.
This business was reported in our Bedding Products segment. Foreign Operations The percentages of our trade sales related to products manufactured outside the United States were 35%, 39%, and 40% in 2022, 2023, and 2024, respectively.
We believe we attain a cost advantage from efficient manufacturing methods, internal production of certain raw materials, large-scale production, and purchasing leverage.
We strive to understand what drives consumer purchases in our markets and focus our product development activities on meeting end-consumer needs. We believe we attain a cost advantage from efficient manufacturing methods, internal production of certain raw materials, large-scale production, and purchasing leverage.
We are a major supplier of adjustable beds, with North American manufacturing and distribution, and global sourcing capabilities. We also produce machinery used by bedding manufacturers in the production and assembly of their finished products. Our range of products offers our customers a single source for many of their component and finished product needs.
We also produce machinery used by bedding manufacturers in the production and assembly of their finished products. Our range of products offers our customers a single source for many of their component and finished product needs. These innovative proprietary products and our efficient vertical integration have made us one of the largest U.S.-based manufacturers in many of these businesses.
Second, we acquired a leading global manufacturer of hydraulic cylinders for heavy construction equipment for a cash purchase price of $61 million (and 6 Table of Contents PART I $29 million of additional contingent consideration to be paid in cash at a later date).
Second, we acquired a global manufacturer of hydraulic cylinders for heavy construction equipment for a final purchase price of $88 million ($61 million cash plus additional contingent consideration). This business has manufacturing 6 Table of Contents PART I locations in Germany and China and a distribution facility in the United States, and operates within the Specialized Products segment.
Continuing Education and Training Developing our talent continues to be part of our ongoing, long-term strategy, which is focused on growing talent, including technical/skilled positions, supervisory and management levels, and other future leaders. We believe that the first step toward achieving our long-term strategic business goals is to maintain a culture of employee development at all levels of the Company.
Finally, we offer part-time jobs, flexible hours, and remote and hybrid working, where applicable. Training and Development Programs . Developing our talent continues to be part of our ongoing, long-term strategy, which is focused on growing talent, including technical/skilled positions, supervisory and management levels, and other future leaders.
Many of our other businesses are engaged in product development activities to protect our market position, support ongoing growth, and help our customers achieve their sustainability goals. 11 Table of Contents PART I Human Capital Management Our success depends on our ability to attract and retain diverse talent, foster a culture of inclusion, diversity, and equity, provide a safe and healthy work environment, train and develop our employees, and ensure productive succession planning efforts.
Human Capital Management Our success depends on our ability to attract and retain talent, foster a culture of inclusion, respect, and equal opportunity, provide a safe and healthy work environment, train and develop our employees, and ensure productive succession planning efforts.
Finally, we offer part-time jobs, flexible hours, and remote and hybrid working, where applicable. Employee Engagement and Satisfaction . We analyze employee satisfaction to better enhance engagement. At many of our locations, we collect data on employee satisfaction, feedback, and turnover through surveys, employee focus groups, and turnover analysis.
Employee Engagement and Satisfaction. We analyze employee satisfaction to better enhance engagement. At many of our locations, we collect data on employee satisfaction, feedback, and turnover through surveys, employee focus groups, and turnover analysis. From this data, we develop plans designed to improve engagement and reduce turnover. We rely on a stable workforce to deliver our operating results.
We continue to foster a culture in which everyone is respected, valued, and has an equal opportunity to contribute, thrive, and advance. Our commitment is to maintain our focus on building a workforce that represents the many customers we serve and the communities in which we operate around the world.
Our Ethics Hotline helps ensure that the voices of our employees are heard. 11 Table of Contents PART I Our Culture of Inclusion, Respect, and Equal Opportunity We continue to foster a culture of inclusion in which everyone is respected, valued, and has an equal opportunity to contribute, grow, thrive, and advance.
From this data, we develop plans designed to improve engagement and reduce turnover. At all locations, we also have a grievance-reporting mechanism where employees can express concerns, confidentially and anonymously, regarding possible violations of ethics, law, or our policies. Turnover . We rely on a diverse, stable workforce to deliver our operating results.
In 2024, our turnover rates in the United States were reasonably comparable to average voluntary turnover rates of the manufacturing industry in the United States. At all locations, we also have an Ethics Hotline where employees can express concerns, confidentially and anonymously, regarding possible violations of ethics, law, or our policies.
In 2023, we launched our new combination pocket unit that combines perimeter edge innersprings and specialty foam to create a fabric-encased innerspring and foam column that minimizes motion disturbance from a sleeping partner and improves airflow.
In 2023, we launched CombiCore TM , a semi-finished mattress featuring fabric-encased perimeter edge innerspring and specialty foam columns that minimize motion disturbance from a sleeping partner and improve airflow. In 2024, we launched our pre-foam encased product, which features foam rails automatically attached to an Eco-Base ® innerspring set during the innerspring production process.
Developed with a more mindful approach, Quantum ® Edge and Caliber Edge ® Enhanced Profile with Eco-Base ® integrates a robust fabric that replaces base foam. To maintain mattress profile, innerspring coil height is increased by one inch.
Our Eco-Base ® products feature a robust polyester fabric attached to the bottom of a ComfortCore ® unit, eliminating non-value-added base foam in a finished mattress and saving customers time and labor. To maintain mattress profile, innerspring coil height is increased by one inch.
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These innovative proprietary products and our efficient vertical integration have made us the largest U.S.-based manufacturer in many of these businesses. We strive to understand what drives consumer purchases in our markets and focus our product development activities on meeting end-consumer needs.
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Our innerspring operations produce coils and semi-finished mattress products with internally designed and manufactured wire-forming machines. In Specialty Foam, we blend polyols and chemical additives to enhance foam properties and pour and fabricate foam for use in bedding and furniture applications.
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We are taking actions to create a more focused, agile organization with a portfolio of products and an operating footprint aligned with the markets we serve. Optimizing our manufacturing and distribution footprint should reduce complexity, improve overall efficiency, and align capacity with anticipated future market demand.
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We utilize our specialty foam capabilities to produce mattress accessories and private label boxed mattresses, which often also incorporate our innersprings in hybrid mattress designs. We are a major supplier of adjustable beds, with North American manufacturing and distribution, and global sourcing capabilities. Internationally, primarily in Europe, we produce innersprings, specialty foam, and finished mattresses.
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These actions are expected to allow us to further integrate our specialty foam and innerspring capabilities while maintaining our service and quality levels. We plan to consolidate between 15 and 20 production and distribution facilities (out of 50) in the Bedding Products segment.
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Risk Factors, and in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations on page 39. Strategic Initiatives We are evaluating the market attractiveness and competitive position of all our businesses and assessing opportunities for profitable, long-term growth.
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We also expect to consolidate a small number of production facilities in the Home Furniture and Flooring Products businesses to better align capacity with regional demand and drive operating efficiencies. The production in the affected facilities is expected to be consolidated into other facilities, or in a few cases, eliminated.
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We are also determining which businesses are the best long-term fit for the company and as part of this review, we are currently exploring the potential sale of our Aerospace business. This business has not reached the criteria to be classified as held for sale. Acquisitions We did not acquire any businesses in 2024 or 2023.
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In connection with the Plan, we are withdrawing our previously stated Total Shareholder Return goal of 11-14% and financial targets, including revenue growth of 6-9%, EBIT margin, and dividend payout ratio. We expect revised strategic priorities and financial targets to be issued at a future date.
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We are leveraging our innerspring and specialty foam technologies to develop unique products that meet end-consumer needs while streamlining mattress manufacturing for our customers by reducing labor constraints and simplifying supply chain and inventory requirements.
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In 2023, subsequent measurement period adjustments to the additional contingent consideration resulted in a final purchase price of $88 million. This business has manufacturing locations in Germany and China and a distribution facility in the United States.
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These products help auto manufacturers meet emission standards and their environmental goals for both internal combustion engines and electric vehicles. 10 Table of Contents PART I Across our other businesses, we are engaged in product development activities to improve product quality, increase efficiency, support ongoing growth, and help our customers achieve their goals.
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This acquisition builds scale in our hydraulic cylinders growth platform and brings us into an attractive segment of the market that aligns well with trends in automation and autonomous equipment. This business operates within the Specialized Products segment.
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We believe that the first step toward achieving our long-term strategic business goals is to maintain a culture of employee development at all levels of the Company. In 2024, we engaged employees on a monthly basis in learning spotlights which included development programs regarding career growth, change management, collaboration, feedback, gratitude, professional growth, psychological safety, and other topics.
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These acquisitions became a part of our Furniture, Flooring & Textile Products segment and expanded the geographic scope of our Geo Components business unit. 2021 In January 2021, we acquired a United Kingdom (UK) manufacturer specializing in metallic ducting systems, flexible joints, and components for space, military, and commercial applications for a cash purchase price of $28 million.
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All reports received are promptly investigated, and appropriate action is taken based on the findings.
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This acquisition expanded the capabilities of our aerospace products business to include flexible joint fabrication and operates within our Specialized Products segment. In May 2021, we acquired a Polish manufacturer of bent metal tubing for furniture used in office, residential, and other settings. The total cash purchase price was $5 million.
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We strive to cultivate inclusive team environments that empower all employees to realize their full potential. We believe that it is important to appreciate people's differences and provide equal employment opportunities at all organizational levels, without regard to irrelevant factors such as sex, race, age, etc.
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This acquisition operates within our Furniture, Flooring & Textile Products segment. In June 2021, we acquired a specialty foam and finished mattress manufacturer serving the UK and Irish marketplace with two manufacturing facilities in the Dublin area for a cash purchase price of $120 million. This acquisition operates within our Bedding Products segment.
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Our commitment is to maintain our focus on building a workforce of qualified and talented individuals, who can best contribute to the Company's success. We are taking comprehensive actions to build on our foundational awareness, understanding, engagement, and skills to promote a culture of respect and equal opportunity.
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This business was reported in our Bedding Products segment. 2021 In July 2021, we sold a Mexican specialty wire operation in our Bedding Products segment.
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Market demand (including product mix) is impacted by several economic factors, with housing turnover and consumer confidence being the most significant. Other important factors include disposable income levels, employment levels, and interest rates. All of these factors influence consumer spending on durable goods, and therefore affect demand for our products and components.
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The shortage of semiconductors continues to improve across the automotive industry globally and no longer negatively impacts the sale of our products. The challenges of securing an adequate supply of semiconductors have mostly been resolved, but could be challenged again by any number of unexpected or unplanned events.
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Some of these factors also influence spending on infrastructure, facilities, and equipment, which has historically impacted approximately 25%-30% of our sales. The dynamic macroeconomic environment has pressured most of our end markets and negatively affected the demand for our products. As a result of these uncertainties, we expect 2025 overall demand to be down modestly from 2024 levels.
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Overall, OEM inventory levels continue to improve with most every model available at nearly normal levels. Our Automotive Group uses semiconductors in our seat comfort, motors, and actuator products. 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.
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For more information on our trends in market demand, see Market Demand in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations on page 41. Competition . Many companies offer products that compete with those we manufacture and sell.
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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.
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These innovations enable us to create quality mattresses that can be compressed, and we have intellectual property around these specialty chemical formulations. We are leveraging our innerspring and specialty foam technologies to offer product differentiation for our customers and products that meet end-consumer needs.
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At year-end 2022, we had approximately 19,900 employees. We expect to reduce head count by roughly 900 to 1,100 employees over time, pursuant to our Restructuring Plan.
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In 2023, our turnover rates in the U.S. were reasonably comparable to average voluntary turnover rates of manufacturers in the industries in which we operate. Our Culture of Inclusion, Diversity, and Equity We continue to foster a culture of inclusion, diversity, and equity (ID&E) with equitable opportunities for our employees to contribute, grow, and advance.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

107 edited+44 added−68 removed21 unchanged
Biggest changeThere are inherent uncertainties related to these factors, including but not limited to: • a sustained decline in our stock price, resulting in a material decrease in our market capitalization relative to book value • a material difference in actual results or the long-term outlook of any of our reporting units compared to the assumptions and estimates used in the goodwill valuation calculations • unexpected significant declines in operating results • disruptions in our business • loss of a material customer or discontinued supply contract with a customer If these or any other significant items were to occur, we could incur non-cash impairment charges, which could have a material negative impact on our earnings.
Biggest changeIf 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 other long-lived assets valuation calculations, we could incur future non-cash impairment charges, which could have a material negative impact on our earnings.
Strikes or shutdowns at delivery ports, 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.
Labor strikes or shutdowns at delivery ports, loss of or damage to 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 raw materials, parts, or finished products, resulting in harm to our business and reputation.
In recent years, we have experienced supply chain disruptions related to foam chemical shortages, 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 delivery port disruptions, trucking constraints, and inclement weather.
In recent years, we have experienced supply chain disruptions related to foam chemical shortages, 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 materials, parts, and finished goods because of delivery port disruptions, trucking constraints, and inclement weather.
Whether, or in what form, these proposals will become law in various countries around the world, or how such laws might be interpreted, could impact our assumptions related to the taxation of certain foreign earnings and have an adverse effect on our earnings and cash flows.
Whether, or in what form, these proposals become law in various countries around the world, or how such laws might be interpreted, could impact our assumptions related to the taxation of certain foreign earnings and have an adverse effect on our earnings and cash flows.
However, these liabilities could be increased over time as more information becomes known relative to the resolution of these audits, as either certain governmental tax positions may be sustained, or we may agree to certain tax adjustments. We could incur additional tax expense if we have adjustments higher than the liabilities recorded.
However, these liabilities could be increased over time as more information becomes known relative to the resolution of these audits, as governmental tax positions may be sustained, or we may agree to certain tax adjustments. We could incur additional tax expense if we have adjustments higher than the liabilities recorded.
We are subject to value-added taxes (VAT) in various foreign jurisdictions. Where we are entitled to a refund of the VAT we have paid, we are required to make a claim for refund from the government authorities. We establish VAT receivables for these claims, but have been experiencing significant refund delays in Mexico.
We are subject to value-added taxes (VAT) in various foreign jurisdictions. Where we are entitled to a refund of the VAT we have paid, we are required to make a claim for refund from the government authorities. We establish VAT receivables for these claims, but have been experiencing refund delays in Mexico.
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.
Conflict between China and Taiwan might lead to trade sanctions, export controls, 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.
Also, our failure, or perceived failure, to meet the standards set forth in the sustainability report could negatively impact 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-K.
Furthermore, our failure, or perceived failure, to meet the standards set forth in the Sustainability Report could negatively impact 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-K.
We are subject to audit by taxing authorities in the countries where we operate and are currently in various stages of examination in several of these jurisdictions. We have established liabilities as we believe are appropriate, with such amounts representing what we believe is a reasonable provision for taxes that we ultimately might be required to pay.
We are subject to audit by taxing authorities in the countries where we operate and are currently in various stages of examination in several jurisdictions. We have established liabilities we believe are appropriate, with such amounts representing what we believe is a reasonable provision for taxes that we ultimately might be required to pay.
If our assumptions or analyses regarding any of our contingencies are incorrect, if facts and circumstances change, or if future litigation arises, we could realize losses in excess of the recorded accruals (and in excess of the $22 million referenced above), which could have a material negative impact on our financial condition, results of operations, and cash flows.
If our assumptions or analyses regarding any of our contingencies are incorrect, if facts and circumstances change, or if future litigation arises, we could realize losses in excess of the recorded accruals (and in excess of the $13 million referenced above), which could have a material negative impact on our financial condition, results of operations, and cash flows.
If the existing antidumping and countervailing duties are overturned on appeal, or not extended beyond their current terms and dumping and/or subsidization recurs, or manufacturers in the subject countries circumvent the existing duties through transshipment in other jurisdictions or otherwise, our market share, sales, profit margins, and earnings could be adversely affected.
If any of the antidumping and countervailing duties are overturned on appeal, or not extended beyond their current terms and dumping and/or subsidization recurs, or manufacturers in the subject countries circumvent the existing duties through transshipment in other jurisdictions or otherwise, our market share, sales, profit margins, and earnings could be adversely affected.
While we prohibit the use of unauthorized AI technologies, our employees may use AI in an unauthorized manner, which could expose our sensitive data to disclosure, violate third-party intellectual property rights, violate privacy laws, produce inaccurate responses that could lead to errors in our business activities, and ultimately harm our reputation.
While we prohibit the use of unauthorized AI technologies, our employees may use AI in an unauthorized manner, which could expose our sensitive data to disclosure, violate third-party intellectual property rights or privacy laws, produce inaccurate responses that could lead to errors in our business activities, and harm our reputation.
The 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.
The 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 severe weather-related events, natural disasters, and/or significant changes in climate patterns, could have an increasingly adverse impact on our business and customers.
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 competitiveness, profit margins, and earnings.
If the applicable foreign currency 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 competitiveness, profit margins, and earnings.
These evolving privacy and data protection requirements create uncertainty and added compliance obligations that could harm our business, reputation, financial condition, and operating results.
These evolving privacy and data protection requirements create uncertainty and add compliance obligations that could harm our business, reputation, financial condition, and operating results.
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.
We are engaged in the manufacture of various automotive components, including lumbar supports 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.
This may inhibit our ability to transfer our employee personal data from our other operations, such as in Europe, China, and Brazil, to our headquarters in the U.S. or elsewhere, making it much more difficult to effectively manage our global human capital.
This may inhibit our ability to transfer our employee personal data from our other operations, such as in Europe, China, and Brazil, to our headquarters in the United States or elsewhere, making it much more difficult to effectively manage our global human capital.
We also bear the risk of delays or non-delivery from our suppliers or reduced demand from our customers because of natural disasters, fire or explosion, terrorism, pandemics, union strikes, foreign government action including asset seizure or changed licensing or land use requirements which restrict operations, 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.
We also bear the risk of delays or non-delivery from our suppliers or reduced demand from our customers because of natural disasters, fires, explosions, terrorism, pandemics, labor strikes, foreign government action including asset seizure, changed licensing, or land use requirements which restrict operations, 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.
Indirect Physical Effects The physical effects of climate change could continue to have an adverse impact on our supply chain. In recent years, 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.
Indirect Physical Effects The physical effects of climate change could continue to have an adverse impact on our supply chain. In prior years, we experienced (due, in part, to severe weather-related impacts) supply shortages in chemicals, which restricted foam supply and constrained overall mattress production in the bedding industry.
The United States has imposed broad-ranging tariffs on steel and aluminum (each of which we use in our manufacturing processes), a wide assortment of Chinese-made products, and other products on a country-specific basis. In retaliation, many other countries have imposed counter-tariffs on U.S.-produced items.
The United States has imposed broad-ranging tariffs on steel and aluminum (each of which we use in our manufacturing processes), a wide assortment of Chinese-made products, and other products on a country-specific basis. Additional tariffs could be imposed. In retaliation, many other countries have imposed, and could impose in the future, counter-tariffs on U.S.-produced items.
Changes in tax laws or challenges to our tax positions pursuant to ongoing tax audits could negatively impact our earnings and cash flows. We are subject to the tax laws and reporting rules of the U.S. (federal, state, and local) and several foreign jurisdictions.
Changes in tax laws or challenges to our tax positions pursuant to ongoing tax audits could negatively impact our earnings and cash flows. We are subject to the tax laws and reporting rules of the United States (federal, state, and local) and several foreign jurisdictions.
If debt under the credit facility or senior notes were to be accelerated, we may not have sufficient cash to repay this debt, which would have an immediate material adverse effect on our business, results of operations, and financial condition.
If debt under the credit facility or 20 Table of Contents PART I senior notes were to be accelerated, we may not have sufficient cash to repay this debt, which would have an immediate material adverse effect on our business, results of operations, and financial condition.
Increased focus by the U.S. and other governmental authorities on climate change and other environmental matters has led to enhanced regulation in these areas, which is expected to result in increased compliance costs and could subject us to additional potential liabilities.
Increased focus by the United States and other governmental authorities on climate change and other environmental matters has led to enhanced regulation in these areas, which is expected to result in increased compliance costs and could subject us to potential liabilities.
As a U.S. company, the ability to manage aspects of our operation and workforce centrally 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.
As a U.S. company, the ability to manage aspects of our operation and workforce centrally and the ability to make decisions based on complete and accurate global data are important and require the ability to transfer 24 Table of Contents PART I and access personal data.
We cannot be certain that the attacker’s capabilities will not compromise our technology protecting information systems, including those 24 Table of Contents PART I 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 cannot be certain that the attacker’s capabilities will not compromise our technology protecting information systems or bypass our detection capabilities, including those resulting from ransomware attached to our industrial control systems. If these systems are materially interrupted or damaged by any incident or fail for any extended period of time, then our results of operations could be adversely affected.
Investor advocacy groups, certain institutional investors, investment funds, lenders, market participants, shareholders, customers, and other stakeholders have focused increasingly on the environmental, social, and governance (ESG) or “sustainability” practices of companies. These parties have placed increased importance on the implications of the social cost of their investments.
Investor advocacy groups, certain institutional investors, investment funds, lenders, market participants, shareholders, customers, and other stakeholders have increasingly focused on the sustainability practices of companies. These parties have placed increased importance on the social cost implications of their investments.
Our credit facility is a multi-currency facility maturing in September 2026, providing us the ability, from time to time, to borrow, repay, and re-borrow up to $1.2 billion, subject to certain restrictive covenants and customary conditions. The credit facility serves as back-up for our commercial paper borrowing. 21 Table of Contents PART I Our credit facility contains restrictive covenants.
Our credit facility is a multi-currency facility maturing in September 2026, providing us the ability, from time to time, to borrow, repay, and re-borrow up to $1.2 billion, subject to certain restrictive covenants and customary conditions. The credit facility serves as back-up for our commercial paper borrowing.
We monitor our receivable portfolio closely and make reserve decisions based upon individual customer credit risk reviews, customer payment trends (percentage of current and past due), historical loss experience, and general macroeconomic and industry trends that could impact the expected collectability of all customers or pools of customers with similar risks.
We monitor our receivable portfolio closely and make reserve decisions based upon individual customer credit risk reviews, aging of customer accounts, historical loss experience, and general macroeconomic and industry trends that could impact the expected collectability of all customers or pools of customers with similar risks.
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 costs of our property insurance. The market transition risks related to climate change could adversely affect our business, results of operations, and financial condition.
In addition, although the cost has not been material to our business, results of operations, and financial condition, severe weather-related incidents have resulted and may, in the future, result in increased costs of property insurance. The market transition risks related to climate change could adversely affect our business, results of operations, and financial condition.
When these threats and incidents occur, we have taken appropriate remediation steps and, through investigation, determined that the threats or incidents did not have a material effect on our business, results of operations, or financial results.
From time to time, we have experienced immaterial cybersecurity threats and incidents. When these threats and incidents occur, we have taken appropriate remediation steps and, through investigation, determined that the threats or incidents did not have a material effect on our business, results of operations, or financial results.
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.
This reduced our production levels and increased the cost of chemicals and foam. 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.
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, or other contractors to meet their obligations on schedule or in accordance with our expectations could adversely affect our business and financial results.
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 to meet their obligations on schedule could adversely affect our business and financial results.
Business disruptions to our steel rod mill, if coupled with an inability to purchase an adequate and/or timely supply of quality steel rod from alternative sources, could have a material negative impact on our Bedding Products segment and the Company's results of operations. We purchase steel scrap from third-party suppliers.
Business disruptions to our steel rod mill or wire drawing mills, if coupled with an inability to purchase an adequate and/or timely supply of quality steel rod from alternative sources, could have a material negative impact on our Bedding Products segment and the Company's results of operations.
As of December 31, 2023, we had 135 manufacturing facilities in 18 countries. Most of our facilities are engaged in manufacturing processes that produce GHG emissions, including carbon dioxide. We also maintain a fleet of over-the-road tractor trailers that emit GHG emissions when providing freight services to many of our U.S.-based manufacturing locations.
Most of our facilities are engaged in manufacturing processes that produce GHG emissions, including carbon dioxide. We also maintain a fleet of over-the-road tractor trailers that emit GHG emissions when providing freight services to many of our U.S.-based manufacturing locations.
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.
If our customers (who may be subject to climate change regulatory requirements or 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.
A significant portion of our assets consists of goodwill and other long-lived assets, the carrying value of which would be reduced if we determine that those assets are impaired. At December 31, 2023, goodwill and other intangible assets represented $1.7 billion, or 36% of our total assets.
A significant portion of our assets consists of goodwill and other long-lived assets, the carrying value of which would be reduced if we determine that those assets are impaired. At December 31, 2024, goodwill and other intangible assets represented $935 million, or 26% of our total assets.
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).
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).
The covenants (a) require us to maintain as of the last day of each fiscal quarter, or if we borrow under the credit facility (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 the Company has made a Material Acquisition in any fiscal quarter, at the Company’s election, the maximum Leverage Ratio shall be 4.00 to 1.00 for the fiscal quarter during which such Material Acquisition is consummated and the next three consecutive fiscal quarters; (b) limit the amount of total secured 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 the assets of the Company and its subsidiaries, taken as a whole (other than accounts receivable sold in a Permitted Securitization Transaction, products sold in the ordinary course of business, and our ability to sell, lease, transfer, or dispose of any of the assets of the Company or one of its subsidiaries to the Company or one of its subsidiaries, as applicable) at any given point in time.
After the amendment, our credit facility contains restrictive covenants which include (a) an amended Leverage Ratio requiring us to maintain, as of the last day of each fiscal quarter, or when we borrow under the credit facility (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 4.00 to 1.00 as of March 31, 2024 through June 30, 2025, and not greater than 3.50 to 1.00 beginning September 30, 2025 through maturity, provided however, subject to certain limitations, if we make a Material Acquisition in any fiscal quarter after June 30, 2025, at our election, the maximum Leverage Ratio shall be 4.00 to 1.00 for the fiscal quarter during which such Material Acquisition is consummated and the next three consecutive fiscal quarters; (b) a limitation of the amount of total secured obligations to 15% of our total consolidated assets; and (c) a limitation on 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 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.
If our ESG practices do not meet investor, lender, or other industry stakeholder expectations and standards, which continue to evolve, our access to capital may be negatively impacted based on an assessment of our ESG practices.
If our sustainability practices do not meet these stakeholder expectations and standards, which continue to evolve, our access to capital may be negatively impacted based on an assessment of our sustainability practices.
Also, we may not be able to implement the Plan in a timely manner that will positively impact our financial condition and results of operations. Moreover, we may not be able to dispose of real estate pursuant to the Plan or obtain the expected proceeds in a timely manner, and the number of employees impacted by the Plan may change.
Also, we may not be able to implement the 2024 Plan in a timely manner that will positively impact our 16 Table of Contents PART I financial condition and results of operations. Moreover, we may not be able to dispose of real estate pursuant to the 2024 Plan or obtain the expected proceeds in a timely manner.
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 an adverse effect on our business.
If our operations are found to violate these broad-ranging data protection laws, we may incur substantial fines, face reputational harm, and be required to change our business practices, any of which could have an adverse effect on our business.
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.
It includes our sustainability policies and practices on a variety of matters, including, but not limited to, Board and management sustainability oversight, governance and ethics, environmental sustainability, greenhouse gas 25 Table of Contents PART I emissions reduction, employee health, safety, product stewardship, quality and safety management, and supply chain social standards and compliance.
For more information regarding our legal contingencies, please see Note S on page 115 of the Notes to Consolidated Financial Statements. Item 1B. Unresolved Staff Comments. None.
For more information regarding our legal contingencies, please see Note T on page 121 of the Notes to Consolidated Financial Statements. 26 Table of Contents PART I Item 1B. Unresolved Staff Comments. None.
We have experienced some reduced sales and lower earnings related to lower-priced imports of mattresses and innersprings. Continued lower-priced mattress and innerspring imports could further negatively impact market share, sales, profit margins, and earnings. Unfair competition could adversely affect our market share, sales, profit margins, and earnings. We produce innersprings for mattresses that are sold to bedding manufacturers.
We have experienced some reduced sales and lower earnings related to lower-priced imports of mattresses and innersprings. Continued lower-priced mattress and innerspring imports could further negatively impact market share, sales, profit margins, and earnings. 21 Table of Contents PART I Unfair competition could adversely affect our market share, sales, profit margins, and earnings.
At December 31, 2023, we had 135 manufacturing facilities in 18 countries, primarily located in North America, Europe, and Asia. We serve thousands of customers worldwide. In 2023, our largest customer represented less than 6% of our sales, and our customers were located in approximately 100 countries.
At December 31, 2024, we had 119 manufacturing facilities in 18 countries, primarily located in North America, Europe, and Asia. We serve thousands of customers worldwide. In 2024, our customers were located in approximately 100 countries.
If these laws or regulations (including the 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 26 Table of Contents PART I with climate change treaties or legislative and regulatory requirements could also negatively impact our reputation.
If these laws or regulations (including the SEC's climate-related disclosure rules, if upheld) 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 or legislative and regulatory requirements could also lead to significant fines and penalties and negatively impact our reputation.
If we are unable to obtain the chemicals or pass the cost along to our customers, our results of operations may be negatively impacted. Higher raw material costs could lead some of our customers to modify their product designs, causing a change in the quantity and mix of our components in their finished goods (replacing higher-cost with lower-cost components).
Higher raw material costs could lead some of our customers to modify their product designs, causing a change in the quantity and mix of our components in their finished goods (replacing higher-cost with lower-cost components). If this were to occur, it could negatively impact our results of operations.
If so, any resulting shortage could endanger our ability to manufacture and timely deliver our products. It also could negatively impact our OEM and Tier customers’ production schedules and the 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.
It also could negatively impact our OEM and Tier customers’ production schedules and the 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 financial condition.
This wire is used in the production of mattress innersprings and other products. A disruption to the operation of, or supply of steel scrap to, our steel rod mill could require us to purchase steel rod from alternative supply sources, subject to market availability.
A disruption to the operation of, or supply of steel scrap to, our steel rod mill could require us to purchase steel rod from alternative supply sources, subject to market availability.
This scrap is converted into steel rod in our mill in Sterling, Illinois. Our steel rod mill has historically had annual output of approximately 500,000 tons, a substantial majority of which has been used internally by our wire mills, which convert the steel rod into drawn steel wire.
We purchase steel scrap from third-party suppliers and convert it into steel rod in our mill in Sterling, Illinois. Our steel rod mill has historically had annual output of approximately 500,000 tons, a majority of which has been used internally by our wire mills.
There are proposals by the Organization for Economic Cooperation and Development, the European Union, and other tax jurisdictions, some of which are currently being adopted in various countries, to reform tax laws or change interpretations of existing tax rules.
Current economic and political conditions make these tax rules (and governmental interpretation of these rules) subject to significant change and uncertainty. There are proposals by the Organization for Economic Cooperation and Development, the European Union, and other tax jurisdictions, some of which have already been adopted in various countries, to reform tax laws or change interpretations of existing tax rules.
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.
Although our diverse geographical manufacturing footprint and our broad geographical customer base mitigates the potential physical risks of any local or regional severe weather-related event having a material effect on our operations and results, the increased frequency and severity of such weather-related 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 and wire drawing mills), all of which could harm our business, results of operations, and financial condition.
At times, this has resulted in reduced volume and higher costs in many of our businesses, including our Automotive Group and Bedding Products segment, primarily related to negative impacts on component demand and finished goods production.
At times, this has resulted in reduced volume and higher costs in many of our businesses, including our Automotive Group and Bedding Products segment.
However, if we are unable to continue to react to changes in technology, successfully develop, engineer, and bring to market new and innovative products, or successfully respond to evolving business trends, including continuing to produce 18 Table of Contents PART I comparatively lightweight components, our share in these automotive markets could be negatively impacted.
However, if we are unable to continue to react to changes in technology, successfully develop new and innovative products, or successfully respond to evolving business trends, including continuing to produce comparatively lightweight components, our share in these markets could be materially negatively impacted. Global economic, political, legal, and business factors could adversely impact our business. We operate in global markets.
Although we believe the amounts we have claimed are fully realizable, continued government actions in Mexico, including audits of the amounts we 27 Table of Contents PART I have requested, could either further delay the receipt of our refunds, or cause us to settle for a lesser amount than the VAT receivable we have recorded.
Although we believe the amounts we claimed are fully collectible, continued government actions in Mexico, including audits of the refund amounts, could either further delay the receipt of our refunds, or cause us to settle for a lesser amount than the recorded VAT receivable. These actions could adversely impact our future cash flows and/or pretax earnings.
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.
Some of our customers have suffered financial difficulty. As a result, some of our customers have been unable to pay their debts to us, have exhibited slow payments, have rejected their contractual obligations to us under bankruptcy laws or otherwise, or we have had to negotiate significant discounts and/or extend financing terms with these parties. These collection issues may continue.
We operate in global markets. Approximately 39% of our sales in 2023 were generated outside the United States. In addition, as of December 31, 2023, we had 50 manufacturing facilities outside the United States, and approximately 31% of our tangible long-lived assets were located outside the United States.
Approximately 40% of our sales in 2024 were generated outside the United States. In addition, as of December 31, 2024, 48 manufacturing facilities and approximately one-third of our tangible long-lived assets were located outside the United States.
However, 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 and other activities, we could also incur additional costs and require additional resources to monitor, report, and comply with various ESG practices.
The Board’s Nominating, Governance and Sustainability Committee oversees our sustainability programs and related risks. However, it is possible that stakeholders may not be satisfied with our sustainability practices or the speed of their adoption. We could also incur additional costs and require more resources to monitor, report, and comply with various sustainability practices.
Although we have purchased broad form cyber insurance coverage and believe that our cybersecurity protection systems are adequate, cybersecurity risk has increased due to remote access, remote work conditions, and increased sophistication of cybersecurity adversaries, as well as the increased frequency of malware attacks.
Although we have purchased broad form cyber insurance coverage and strive to provide a balanced level of cybersecurity protections, cybersecurity risk has increased due to remote access and increased sophistication of cybersecurity adversaries, as well as the increased frequency of cybersecurity attacks, including malware.
While we anticipate long-term growth for this reporting unit, it is moving at a slow pace. In evaluating the potential for impairment of goodwill and other long-lived assets, we make assumptions regarding future operating performance, business trends, and market and economic performance, as well as our future sales and operating margins, growth rates, and discount rates.
In evaluating the potential for impairment of goodwill and other long-lived assets, we make assumptions and estimates regarding future operating performance, business trends, and market and economic performance, including future sales, operating margins, growth rates, and discount rates.
If market conditions cause scrap costs and rod pricing to change at different 22 Table of Contents PART I rates (both in terms of timing and amount), metal margins could continue to be compressed, and this would negatively impact our results of operations.
If market conditions cause scrap costs and rod pricing to change at different rates (both in terms of timing and amount), metal margins could continue to be compressed, and this would negatively impact our results of operations. We import certain chemicals to supplement domestic supply, but port delays and logistics issues could limit access to those products.
In 2023, drought conditions lowered the water levels of the Mississippi River and Panama Canal, reducing traffic through these waterways. Although these issues have not had a material impact on our results of operations, additional logistical disruptions could result in additional delays in our ability to deliver products timely to certain customers.
Although these issues did not have a material impact on our results of operations, additional logistical disruptions could result in additional costs and delays in our ability to deliver products timely to certain customers.
We produce steel wire rod for consumption by our wire mills (primarily to produce innersprings) and to sell to third parties. We also produce and sell finished mattresses.
We produce innersprings for mattresses that are sold to bedding manufacturers. We produce steel wire rod for consumption by our wire mills (primarily to produce innersprings) and to sell to third parties. We also produce and sell finished mattresses. In response to petitions filed with the U.S.
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.
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.
Ongoing trade action by the U.S. government, along with the existence of antidumping and countervailing duty orders against multiple countries, could result in reduced market availability and/or higher cost of steel rod. 17 Table of Contents PART I If we experience a disruption to our ability to produce steel rod in our mill, coupled with a reduction of adequate and/or timely supply from alternative market sources of quality steel rod, we could experience a material negative impact on our Bedding Products segment and the Company’s results of operations.
If we experience a disruption to our ability to produce steel rod in our mill, coupled with a reduction of adequate and/or timely supply from alternative market sources of quality steel rod, we could experience a material negative impact on our Bedding Products segment and the Company’s results of operations.
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 our carbon footprint) that could materially affect our business, capital expenditures, results of operations, financial condition, competitive position, and reputation.
There are certain transition risks (meaning risks related to the process of reducing our 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.
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 semiconductor manufacturing equipment which restrict U.S. companies’ ability to export these products to China without a license.
The U.S. government has imposed export controls regarding certain advanced semiconductor chips and semiconductor manufacturing equipment which restrict U.S. companies’ ability to export these products to China without a license. The Netherlands and Japan have also moved forward with more restrictive export controls related to specific equipment used for the manufacture of semiconductors.
The timing of lower selling prices, combined with turnover rate of the higher-cost inventory on hand prior to the cost reduction, may 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.
Conversely, if raw material costs decrease, we generally pass through reduced selling prices to our customers. The timing of lower selling prices, combined with turnover rate of the higher-cost inventory on hand prior to the cost reduction, may reduce our profit margins and earnings. Steel is our principal raw material.
Because of certain risks and uncertainties, the Plan may not achieve its intended outcomes. Our estimates of the number of facilities to be consolidated and the cash and non-cash costs and impairments associated with the Plan are preliminary in nature. All or some of the estimates may change as our analysis develops and additional information is obtained.
Because of certain risks and uncertainties, the estimates of the number of facilities to be consolidated, EBIT benefit, sales attrition, proceeds from the sale of real estate, and the cash and non-cash costs and impairments associated with the 2024 Plan may change as our analysis develops and additional information is obtained.
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.
If we are unable to secure an adequate and timely supply of products in our supply chain, or the cost of these products materially increases, it could have a negative impact on our business, results of operations, and financial condition. 17 Table of Contents PART I In recent years, drought conditions lowered water levels of the Mississippi River and Panama Canal, reducing traffic through these waterways, which impacted some of our shipments.
Although we deny liability in all currently threatened or pending litigation proceedings, we have recorded an immaterial aggregate litigation contingency accrual at December 31, 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 $22 million.
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 $13 million.
Because the forecasted undiscounted cash flows had fallen below the carrying value for these asset groups, we tested for impairment by comparing the estimated fair value of long-lived assets to their carrying values, which resulted in a non-cash charge of $444 million for long-lived asset impairments (primarily customer relationships, technology, and trademark intangibles) in the Bedding Products segment during the fourth quarter of 2023.
Because the forecasted undiscounted cash flows had fallen below the carrying value for these asset groups, we tested for impairment by comparing the estimated fair value of long-lived assets to their carrying values.
Our ability to mitigate these risks will depend on our continued effective maintenance, training, monitoring, and enforcement of appropriate policies governing the use of AI technologies, and the results of any such use, by us. If any of these risks are realized, it could adversely impact our results of operations, cash flow, financial condition, and stock price.
Our ability to mitigate these risks will depend on our continued effective maintenance, training, monitoring, and enforcement of appropriate policies governing the use of AI technologies, and the results of any such use, by us. The legal and regulatory landscape relating to AI and its use is uncertain and rapidly evolving.
The challenges of securing an adequate supply of semiconductors have mostly been resolved, but could be challenged again by any number of unexpected or unplanned events. According to certain market reports, Taiwan and, to a lesser extent, China are leading manufacturers of the world’s semiconductor supply.
Our OEM and Tier customers also use semiconductors, or components containing semiconductors, in their manufacture of automotive components and/or vehicles. This supply could be challenged by any number of unexpected or unplanned events. According to certain market reports, Taiwan and, to a lesser extent, China are leading manufacturers of the world’s semiconductor supply.
As of December 31, 2023, we had $134 million of deferred tax assets (net of an $18 million valuation allowance). After netting of deferred tax liabilities, the net amount presented within Sundry assets on our Consolidated Balance Sheets is $13 million. It is possible the amount and source of our taxable income could materially change in the future.
As discussed in N ote O of the Consolidated Financial Statements, we had $148 million of deferred tax assets (net of a $21 million valuation allowance) as of December 31, 2024. It is possible the amount and source of our taxable income could materially change in the future.
The unauthorized use of artificial intelligence could expose sensitive Company information, infringe intellectual property rights, violate privacy laws, and harm our reputation. Our business uses artificial intelligence (AI) technologies, including those offered by third parties, on a limited basis, generally to mitigate cybersecurity risks.
Our business uses artificial intelligence (AI) technologies, including those offered by third parties, on a limited basis, generally to mitigate cybersecurity risks.
Our reliance on international sales and international manufacturing facilities exposes us to a number of risks, including price and currency controls; government embargoes or foreign trade restrictions, including import and export tariffs; extraterritorial effects of U.S. laws such as the Foreign Corrupt Practices Act; expropriation of assets; war, civil uprisings, acts of terror, and riots; political instability; nationalization of private enterprises; hyperinflationary conditions; the necessity of obtaining governmental approval for new and continuing products and operations, currency conversion, or repatriation of assets; legal systems of decrees, laws, taxes, regulations, interpretations, and court decisions that are not always fully developed and that may be retroactively or arbitrarily applied; cost and availability of international labor, materials, and shipping channels; and customer loyalty to local companies.
Our reliance on sales and manufacturing facilities outside the United States expose us to a number of risks, including price and currency controls; sanctions, export controls or trade restrictions, including import and export tariffs; extraterritorial effects of U.S. laws; expropriation of assets; war, civil uprisings; political instability; nationalization of private enterprises; hyperinflationary conditions; the necessity of governmental approvals for products and operations, currency conversion, cash repatriation; and laws and regulations that may be arbitrarily applied.
We are exposed to foreign currency exchange rate risk which may negatively impact our competitiveness, profit margins, and earning s. International sales have represented a significant percentage of our total sales, which exposes us to currency exchange rate fluctuations. In 2023, 39% of our sales were generated by international operations, primarily in Europe, China, Canada, and Mexico.
We are exposed to foreign currency exchange rate risk which may negatively impact our competitiveness, profit margins, and earnings. In 2024, 40% of our sales were generated by international operations, primarily in Europe, China, Canada, and Mexico. As of December 31, 2024, 48 of our manufacturing facilities were located outside the United States.
The execution of any of these opportunities may result in additional material restructuring costs, restructuring-related costs, or impairments.
We continue to evaluate our businesses for further restructuring opportunities in addition to those activities included in the 2024 Plan. The execution of any of these opportunities may result in additional material restructuring costs, restructuring-related costs, or impairments.
The Netherlands and Japan have also moved forward with more restrictive export controls related to specific equipment used for the manufacture of semiconductors. The new controls may contribute to a global semiconductor shortage and negatively impact our ability to source an adequate supply of semiconductors used in our manufacturing processes.
The new controls may contribute to a global semiconductor shortage and negatively impact our ability to source an adequate supply of semiconductors used in our manufacturing processes. If so, any resulting shortage could endanger our ability to manufacture and timely deliver our products.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeBased on the ERM analysis, we adjust, if necessary, our process for the identification, assessment, and monitoring of cybersecurity threats and incidents. 28 Table of Contents PART I We engage third parties in connection with our cybersecurity identification, assessment, and response processes, including to periodically benchmark our cybersecurity program against the National Institute of Standards and Technology’s Cybersecurity Framework.
Biggest changeWe engage third parties in connection with our cybersecurity identification, assessment, and response processes, including to periodically benchmark our cybersecurity program against the National Institute of Standards and Technology’s Cybersecurity Framework. We also maintain active retainers with certain third parties that can be engaged in the event of a cybersecurity threat or incident.
Cybersecurity Risk Management and Strategy We have a process in place for assessing, identifying, and managing material risks from cybersecurity threats and incidents, which is based on industry-recognized frameworks and takes a multifaceted approach to protecting our network, systems, and data, including personal information.
Cybersecurity Risk Management and Strategy We have processes in place for assessing, identifying, and managing material risks from cybersecurity threats and incidents, which is based on industry-recognized frameworks and takes a multifaceted approach to protecting our network, systems, and data, including personal information.
Our CISO and the Crisis Response Team, pursuant to guidance from our CISO, assess, identify, and manage material risks from cybersecurity threats and incidents, as described above under "Cybersecurity Risk Management and Strategy." The CISO has served in this role since 2022, and has over 20 years of professional experience in identifying, evaluating, and responding to cybersecurity threats and incidents.
Our CISO and the Crisis Response Team, pursuant to guidance from our CISO, assess, identify, and manage material risks from cybersecurity threats and incidents, as described above under "Cybersecurity Risk Management and Strategy." The CISO has served in this role since October 2024, and has over 20 years of professional experience in identifying, evaluating, and responding to cybersecurity threats and incidents.
Cybersecurity threats are identified, assessed, and monitored by our security operations center, which is staffed with cybersecurity professionals who report to the Company's Chief Information Security Officer (CISO), and includes resources provided by external vendors.
Cybersecurity threats are identified, assessed, and monitored by our Security Operations Center, which is staffed with cybersecurity professionals who report to the Company's Chief Information Security Officer (CISO), and includes resources provided by external vendors to cover continuous monitoring.
Although we have not experienced any material cybersecurity incidents, because of past immaterial cybersecurity threats and incidents, and what we have learned in responding to those threats, we have accelerated multiple cybersecurity program enhancement efforts, including expansion of resources, increased visibility, and stronger protective controls.
Although we have not experienced any material cybersecurity incidents, because of past immaterial cybersecurity threats and incidents, and what we have learned in responding to those threats, we have increased our cybersecurity program enhancement efforts, including stronger protective controls.
When a cybersecurity threat or incident meets certain categorized thresholds as determined by our Cybersecurity Incident Response Plan, we follow an escalation review process which can result in our CISO forwarding the threat or incident to our cybersecurity crisis response team consisting of our Chief Executive Officer (CEO), Chief Financial Officer, Chief Human Resources Officer, Chief Information Officer, and General Counsel (the "Crisis Response Team").
When a cybersecurity threat or incident meets certain categorized thresholds, as determined by our Cybersecurity Incident Response Plan, we follow an escalation review process which can result in our CISO forwarding the threat or incident to our cybersecurity crisis response team consisting of our CEO, CFO, CHRO, CIO, and General Counsel (the "Crisis Response Team").
Pursuant to the ERM process, cybersecurity risk is evaluated for likelihood, significance, and velocity on a semiannual basis by designated risk owners. The risk owners consist of a cross-functional group of leaders, led by our CISO.
Pursuant to the ERM process, cybersecurity risk is evaluated for likelihood, significance, and velocity on a semiannual basis by designated risk owners. The risk owners consist of a cross-functional group of leaders, led by our CISO. Based on the ERM analysis, we adjust, if necessary, our process for the identification, assessment, and monitoring of cybersecurity threats and incidents.
Cybersecurity Governance Our Board has oversight of all cybersecurity threats and incidents. On a quarterly basis, and more often if warranted, the CISO, or the CEO in coordination with the CISO, reports to the full Board any potentially material cybersecurity threat or incident and our activities regarding the prevention, detection, mitigation, and remediation of cybersecurity threats and incidents.
On a quarterly basis, and more often if warranted, the Company's CIO, or the CFO in coordination with the CIO, each after consultation with the CISO, reports to the full Board any potentially material cybersecurity threat or incident and our activities monitoring the prevention, detection, mitigation, and remediation of cybersecurity threats and incidents.
We also maintain active retainers with certain third parties that can be engaged in the event of a cybersecurity threat or incident. We have established a process to oversee and identify risks and cybersecurity threats associated with our third-party service providers, which includes the use of monitoring technology. We also survey certain third-party providers regarding their security controls.
We have established a process to oversee and identify risks and cybersecurity threats associated with our third-party service providers, which includes the use of monitoring technology. We also survey certain third-party providers regarding their security controls.
In 2024, we expect to spend roughly $9 million in maintaining and enhancing our cybersecurity protection efforts. As of the date of this report, we are not aware of any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected us, including our business strategy, results of operations, or financial condition.
As of the date of this report, we are not aware of any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected us, including our business strategy, results of operations, or financial condition.
Although we have purchased broad form cyber insurance coverage and believe that our cybersecurity protection systems are adequate, cybersecurity risk has increased due to remote access, remote work conditions, and increased sophistication of cybersecurity adversaries, as well as the increased frequency of malware attacks.
Although we have purchased broad form cyber insurance coverage and strive to provide a balanced level of cybersecurity protections, cybersecurity risk has increased due to remote access and increased sophistication of cybersecurity adversaries, as well as the increased frequency of cybersecurity attacks, including malware.
As such, information technology failures or cybersecurity breaches could still create system disruptions or unauthorized disclosure or alterations of confidential information and disruptions to the systems of our third-party suppliers and providers. 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.
As such, information technology failures or cybersecurity breaches could still create system disruptions or unauthorized disclosure or alterations of confidential information and disruptions to the systems of our third-party suppliers and providers.
However, for a discussion of risks from cybersecurity threats that could materially affect our business strategy, results of operations, or financial condition, see Item 1A. Risk Factors - " Information technology failures, cybersecurity incidents, or new technology disruptions could have a material adverse effect on our operations " on page 24, which is incorporated by reference into this Item 1C.
Risk Factors - "Information technology failures, cybersecurity incidents, or new technology disruptions could have a material adverse effect on our operations" on page 23, which is incorporated by reference into this Item 1C. Cybersecurity Governance Our Board has oversight of all cybersecurity threats and incidents.
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 cannot be certain that the attacker’s capabilities will not compromise our technology protecting information systems or bypass our detection capabilities, including those resulting from ransomware attached to our industrial control systems. If these systems are materially interrupted or damaged by any incident or fail for any extended period of time, then our results of operations could be adversely affected.
For more information regarding cybersecurity risks, refer to Info r m ation Technology and Cybersecurity Risk Factors on page 24. 29 Table of Contents PART I
We may also be required to devote significant management resources and expend significant additional resources to address problems created by any such interruption, damage, or failure. For more information regarding cybersecurity risks, refer to Item 1A. Risk Factors - Information Technology and Cybersecurity Risk Factors on page 23. 28 Table of Contents PART I
Removed
The CISO holds a bachelor’s degree in electrical engineering from Arizona State University and is a Certified CISO under the Carnegie Mellon University CISO Certification Program, a Certified Information Systems Auditor (CISA), and a Certified Information Systems Security Professional (CISSP).
Added
However, for a discussion of risks from cybersecurity threats that could materially affect 27 Table of Contents PART I our business strategy, results of operations, or financial condition, see Item 1A.
Added
Our CISO holds a Bachelor of Science degree from DeVry University, Addison, Illinois, a Masters in Business Administration from Western Governors University, is a Certified Information Systems Security Professional (CISSP), a GIAC Certified Incident Handler (GCIH), and holds a GIAC Certification in Strategic Planning, Policy and Leadership.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIf we experience a disruption in our ability to produce steel rod in our mill, for whatever reason, coupled with a reduction of adequate and/or timely supply from alternative market sources of quality steel rod, we could experience a material negative impact on our Bedding Products segment’s and the Company’s results of operations.
Biggest changeIf we experience a disruption in our ability to produce steel rod in our mill, for whatever reason, coupled with a reduction of adequate and/or timely supply from alternative market sources of quality 29 Table of Contents PART I steel rod, or if we experience a disruption in our ability to produce drawn wire in our wire mills, for whatever reason, coupled with a reduction of adequate and/or timely supply from alternative market sources of quality drawn wire, we could experience a material negative impact on our Bedding Products segment’s and the Company’s results of operations.
Trade actions by the U.S. government, along with the existence of antidumping and countervailing duty orders against multiple countries, could result in reduced market availability and/or an increase in the cost of steel rod.
Trade actions by the U.S. government, along with the existence of antidumping and countervailing duty orders against multiple countries, could result in reduced market availability and/or an increase in the cost of steel rod and/or drawn wire.
We believe that our owned and leased facilities are suitable and adequate for the manufacture, assembly, and distribution of our products. Our properties are located to allow timely and efficient delivery of products and services to our diverse customer base. In 2023, most of our manufacturing facilities operated at less than full capacity utilization rates.
We believe that our owned and leased facilities are suitable and adequate for the manufacture, assembly, and distribution of our products. Our properties are strategically located to allow timely and efficient delivery of products and services to our diverse customer base. In 2024, most of our manufacturing facilities operated at less than full capacity utilization rates.
For additional information regarding lease obligations, see Note J on page 97 of the Notes to Consolidated Financial Statements. We do not have any manufacturing facilities that are subject to liens or encumbrances that are material to the segment in which they are reported or to the Company as a whole.
For additional information regarding lease obligations, see Note K on page 103 of the Notes to Consolidated Financial Statements. We do not have any manufacturing facilities that are subject to liens or encumbrances that are material to the segment in which they are reported or to the Company as a whole.
It has annual output capacity of approximately 500,000 tons of steel rod, of which a substantial majority is used by our own wire mills. Our wire mills convert the steel rod into drawn steel wire. This wire is used in the production of many of our products, including mattress innersprings.
It has annual output capacity of approximately 500,000 tons of steel rod, of which approximately half is used by our own wire mills. Our wire mills convert the steel rod into drawn steel wire. This wire is used in the production of many of our products, including mattress innersprings.
The production in the affected facilities is expected to be consolidated into other facilities, or in a few cases, eliminated. Optimizing our manufacturing and distribution footprint should reduce complexity, improve overall efficiency, and align capacity with anticipated future market demand.
The production in the affected facilities has been consolidated into other facilities, or in a few cases, eliminated. Optimizing our manufacturing and distribution footprint should reduce complexity, improve overall efficiency, and align capacity with anticipated future market demand.
Item 2. Properties. Our corporate office is located in Carthage, Missouri. As of December 31, 2023, we had 135 manufacturing locations in 18 countries, of which 85 were located across the United States and 50 were located in foreign countries. We also had various sales, warehouse, and administrative facilities. However, our manufacturing plants are our most important properties.
Item 2. Properties. Our corporate office is located in Carthage, Missouri. As of December 31, 2024, we had 119 manufacturing locations in 18 countries, of which 71 were located across the United States and 48 were located in foreign countries. We also had various sales, warehouse, and administrative facilities. However, our manufacturing plants are our most important properties.
For more information about the Restructuring Plan, please see the discussion under Restructuring Plan in Operational Risk Factors beginning on page 16 in Item 1A Risk Factors, and on page 37 in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations .
For more information about the 2024 Restructuring Plan, please see the discussion under 2024 Restructuring Plan in Operational Risk Factors beginning on page 15 in Item 1A. Risk Factors, and on page 39 in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . Item 3. Legal Proceedings.
No individual physical property is material to our overall manufacturing processes, except for our steel rod mill in Sterling, Illinois, which is reported in our Bedding Products segment. The rod mill consists of approximately 1 million square feet of owned production space.
No individual physical property is material to our overall manufacturing processes, except for our steel rod mill in Sterling, Illinois, and our wire mills in Carthage, Missouri, and Kouts, Indiana. These facilities are reported in our Bedding Products segment. The rod mill consists of approximately 1 million square feet of owned production space.
Manufacturing Locations Owned or Leased by Segment Company- Wide Subtotals by Segment Manufacturing Locations Bedding Products Specialized Products Furniture, Flooring & Textile Products Owned 70 33 14 23 Leased 65 14 21 30 Total 135 47 35 53 We lease many of our manufacturing, warehouse, and other facilities on terms that vary by lease (including purchase options, renewals, and maintenance costs).
Manufacturing Locations Owned or Leased by Segment Company- Wide Subtotals by Segment Manufacturing Locations Bedding Products Specialized Products Furniture, Flooring & Textile Products Owned 61 25 14 22 Leased 58 8 20 30 Total 119 33 34 52 We lease many of our manufacturing, warehouse, and other facilities on terms that vary by lease (including purchase options, renewals, and maintenance costs).
Manufacturing Locations by Segment Company- Wide Subtotals by Segment Manufacturing Locations Bedding Products Specialized Products Furniture, Flooring & Textile Products United States 85 36 6 43 Europe 19 7 10 2 China 14 1 11 2 Canada 8 — 3 5 Mexico 5 2 2 1 Other 4 1 3 — Total 135 47 35 53 For more information regarding the geographic location of our manufacturing facilities refer to Geographic Areas of Operation under Item 1 Business on page 9.
Manufacturing Locations by Segment Company- Wide Subtotals by Segment Manufacturing Locations Bedding Products Specialized Products Furniture, Flooring & Textile Products United States 71 23 6 42 Europe 19 7 10 2 China 13 1 10 2 Canada 8 — 3 5 Mexico 4 1 2 1 Other 4 1 3 — Total 119 33 34 52 For more information regarding the geographic location of our manufacturing facilities refer to Geographic Areas of Operation under Item 1.
As such, we have excess production capacity in most of our businesses. 30 Table of Contents PART I In the first quarter of 2024, we committed to the Restructuring Plan, pursuant to which we expect to consolidate between 15 and 20 manufacturing and distribution facilities in the Bedding Products segment, primarily in the United States.
As such, we have excess production capacity in most of our businesses. In the first quarter of 2024, we committed to the 2024 Restructuring Plan, pursuant to which we have consolidated 14 manufacturing and distribution facilities in the Bedding Products segment, and two production facilities in the Furniture, Flooring & Textile Products segment, primarily in the United States.
Removed
These actions are expected to allow us to further integrate our specialty foam and innerspring capabilities, while maintaining our service and quality levels.
Added
A disruption to the operation of, or supply of steel rod to, our wire mills could require us to purchase drawn wire from alternative supply sources, subject to market availability.
Added
Reference is made to the information in Note T on page 121 of the Notes to Consolidated Financial Statements, which is incorporated into this section by reference. Mattress Antidumping Matters Petition Regarding China, Cambodia, Indonesia, Malaysia, Serbia, Thailand, Turkey, and Vietnam.
Added
On March 31, 2020, the Company, along with six other domestic mattress producers, Brooklyn Bedding LLC, Corsicana Mattress Company, Elite Comfort Solutions (a Leggett subsidiary), FXI, Inc., Innocor, Inc., and Kolcraft Enterprises, Inc., and two labor 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, 2020 Petitioners), filed petitions with the U.S.
Added
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 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.
Added
These petitions resulted in antidumping and countervailing duty orders imposing duties ranging from 2.22% to 763.28% on mattresses imported from China, Cambodia, Indonesia, Malaysia, Serbia, Thailand, Turkey, and Vietnam for five years, through May 2026.
Added
The ITC is currently examining whether to extend a 2019 order on mattresses from China, following the DOC's February 2025 determination that revocation of the 2019 duty order would likely lead to the continuation of reoccurrence of dumping of mattresses from China. Following certain appeals that were filed with the U.S.
Added
Court of International Trade (CIT), some of which remain ongoing, the CIT ruled in favor of the ITC and 2020 Petitioners and sustained the ITC’s unanimous injury decision. On February 15, 2024, one respondent filed an appeal of the CIT's decision to the U.S.
Added
Court of Appeals for the Federal Circuit but agreed to dismiss the appeal on October 29, 2024. As a result, this particular appeal to the U.S. Court of Appeals for the Federal Circuit has been finally resolved. Petition Regarding Indonesia, Bosnia and Herzegovina, Bulgaria, Burma, India, Italy, Kosovo, Mexico, the Philippines, Poland, Slovenia, Spain, and Taiwan.
Added
On July 28, 2023, the Company, along with nine other domestic mattress producers, Brooklyn Bedding LLC, Carpenter Company, Corsicana Mattress Company, Future Foam, Inc., FXI, Inc., Kolcraft Enterprises Inc., Serta Simmons Bedding, LLC, Southerland Inc., and Tempur Sealy International, and two labor 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, filed petitions with the DOC and the ITC alleging that manufacturers of mattresses in Bosnia and Herzegovina, Bulgaria, Burma, India, Italy, Kosovo, Mexico, the Philippines, Poland, Slovenia, Spain, and Taiwan were unfairly selling their products in the United States at less than fair value 30 Table of Contents PART I (dumping) and manufacturers of mattresses in Indonesia were unfairly benefiting from subsidies, causing harm to the U.S. industry and seeking the imposition of duties on mattresses imported from these countries.
Added
The ITC made a preliminary determination of injury on September 11, 2023. On December 26, 2023, the DOC made a negative preliminary determination regarding Indonesian subsidies, but, on February 26, 2024, imposed duties on finished mattresses.
Added
With respect to Bosnia and Herzegovina, Bulgaria, Burma, Italy, Philippines, Poland, Slovenia, and Taiwan, the DOC’s final determinations were issued on May 9, 2024, and imposed duties ranging from 106.27% to 744.81% on finished mattresses. The ITC’s final determination with respect to those countries was issued on June 11, 2024.
Added
In June 2029, the DOC and ITC will conduct a sunset review to determine whether to extend the orders for an additional five years. With respect to Indonesia, India, Kosovo, Mexico, and Spain, the DOC’s final determinations were issued July 16, 2024, and (excluding Indonesia) imposed duties ranging from 4.61% to 344.70%.
Added
Regarding Indonesia, the DOC found that the subsidies were below the de minimis threshold. The order evidencing the ITC’s final determination as to India, Kosovo, Mexico, and Spain was issued in September 2024.
Added
This case has been finally resolved with respect to the duties and injury findings, but an importer filed an appeal with respect to the ITC's critical circumstances determination imposing retroactive duties, which is still pending. In October 2029, the DOC and ITC will conduct a sunset review to determine whether to extend the orders for an additional five years.
Added
Environmental Matters Item 103 of the SEC's Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and the proceedings involve potential monetary sanctions unless we reasonably believe the monetary sanctions, exclusive of interest and costs, will not equal or exceed a threshold which we determine is reasonably designed to result in disclosure of any such proceeding that is material to our business or financial condition.
Added
Item 103 states that the disclosure threshold is $300,000, or at our election, a threshold that does not exceed the lesser of $1 million or one percent of our consolidated current assets. In the past, we have used the $300,000 threshold for this purpose. However, we have determined such disclosure threshold to be $1 million.
Added
We have no environmental matters to disclose for this period under either threshold.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings. Reference is made to the information in Note S on page 115 of the Notes to Consolidated Financial Statements, which is incorporated into this section by reference. Mattress Antidumping Matters Petition Regarding China, Cambodia, Indonesia, Malaysia, Serbia, Thailand, Turkey, and Vietnam.
Biggest changeLegal Proceedings on page 30 and Note T on page 121 of the Notes to Consolidated Financial Statements, which is incorporated herein by reference. Climate Change Transition Risks Change in Laws, Policies, and Regulations.
Removed
On March 31, 2020, the Company, along with six other domestic mattress producers, Brooklyn Bedding LLC, Corsicana Mattress Company, Elite Comfort Solutions (a Leggett subsidiary), FXI, Inc., Innocor, Inc., and Kolcraft Enterprises, Inc., and two labor 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”), filed petitions with the U.S.
Added
Item 3. Legal Proceedings on page 30 for more information.
Removed
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.
Added
If any of the foregoing existing or future antidumping and countervailing duties are overturned on appeal or not extended beyond their current terms and dumping and/or subsidization recurs, or manufacturers in the subject countries circumvent the existing duties through transshipment in other jurisdictions or otherwise, our market share, sales, profit margins, and earnings could be adversely affected.
Removed
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%).
Added
RESULTS OF OPERATIONS—2024 vs. 2023 Consolidated Results The following table shows the changes in sales and earnings during 2024 and identifies the major factors contributing to the changes from prior year.
Removed
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.
Added
(Dollar amounts in millions, except per share data) Amount % Net trade sales: Year ended December 31, 2023 $ 4,725 Approximate volume declines (205) (4) Approximate raw material-related deflation (136) (3) Year ended December 31, 2024 $ 4,384 (7) % Earnings: (Dollar amounts, net of tax) Year ended December 31, 2023 $ (137) 2024 goodwill impairment (634) Non-recurring 2023 long-lived asset impairment 341 2024 restructuring, restructuring-related, and impairment charges (38) Offsetting 2023 and 2024 net real estate gains 15 Offsetting 2023 and 2024 net insurance proceeds from tornado damage (5) 2024 CEO transition costs (4) Special tax item (5) Other items, primarily lower volume and unfavorable sales mix, raw material-related pricing adjustments, metal margin compression, and higher expenses (bad debt, medical, etc.) (45) Year ended December 31, 2024 $ (512) 2023 Earnings (Loss) Per Diluted Share $ (1.00) 2024 Earnings (Loss) Per Diluted Share $ (3.73) Full-year trade sales decreased 7%, to $4.38 billion.
Removed
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.
Added
Organic sales decreased 7%, with volume declines of 4% and raw material-related price decreases of 3%. Earnings decreased as a result of the items listed in the above table.
Removed
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.
Added
The special tax item is associated with a deferred tax asset valuation allowance related to a 2022 acquisition in our Specialized Products segment. 43 Table of Contents Interest and Income Taxes Net interest expense in 2024 was lower by $4 million compared to 2023.
Removed
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.
Added
Interest rates on borrowings were higher, reflecting the effect of the retirement of our $300 million Senior Notes in the fourth quarter of 2024 paid with commercial paper, but were more than offset by lower outstanding balances due to our deleveraging efforts. Our worldwide effective income tax rate was approximately 0% in 2024 and 21% in 2023.
Removed
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.
Added
The following table reflects how our effective income tax rate differs from the statutory federal income tax rate. See Note O on page 114 of the Notes to Consolidated Financial Statements for additional details.
Removed
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. On December 19, 2023, the CIT ruled in favor of the ITC and Petitioners and sustained the ITC’s unanimous injury decision.
Added
Year Ended December 31 2024 2023 Statutory federal income tax rate 21.0 % 21.0 % Increases (decreases) in rate resulting from: State taxes, net of federal benefit .1 .2 Tax effect of foreign operations .8 (1.4) Global intangible low-taxed income (.4) (1.5) Current and deferred foreign withholding taxes (1.9) (7.3) Goodwill and long-lived asset impairments (19.5) 5.4 Stock-based compensation (.2) .1 Change in valuation allowance (1.3) (.4) Change in uncertain tax positions, net (.1) (.3) Other permanent differences, net 1.1 3.9 Other, net — 1.4 Effective tax rate (.4) % 21.1 % 44 Table of Contents PART II Segment Results In the following section we discuss 2024 sales and EBIT (earnings before interest and taxes) for each of our segments.
Removed
On February 15, 2024, one respondent filed an appeal of the CIT's decision to the U.S. Court of Appeals for the Federal Circuit. These matters and the other appeals are ongoing with no timeline for decisions. Petition Regarding Indonesia, Bosnia and Herzegovina, Bulgaria, Burma, India, Italy, Kosovo, Mexico, the Philippines, Poland, Slovenia, Spain, and Taiwan.
Added
We provide additional detail about segment results in Note C on page 89 of the Notes to Consolidated Financial Statements. We use EBIT to assess operational performance, and it is useful to investors as it aids in understanding of underlying operational profitability.
Removed
On July 28, 2023, the Company, along with nine other domestic mattress producers, Brooklyn Bedding LLC, Carpenter Company, Corsicana Mattress Company, Future Foam, Inc., FXI, Inc., Kolcraft Enterprises Inc., Serta Simmons Bedding, LLC, Southerland Inc., and Tempur Sealy International, and two labor 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”), filed petitions 31 Table of Contents PART I with the DOC and the ITC alleging that manufacturers of mattresses in Bosnia and Herzegovina, Bulgaria, Burma, India, Italy, Kosovo, Mexico, the Philippines, Poland, Slovenia, Spain, and Taiwan were unfairly selling their products in the United States at less than fair value (dumping) and manufacturers of mattresses in Indonesia were unfairly benefiting from subsidies, causing harm to the U.S. industry and seeking the imposition of duties on mattresses imported from these countries.
Added
(Dollar amounts in millions) 2024 2023 Change in Sales % Change Organic $ % Sales 1 Trade sales Bedding Products $ 1,751.7 $ 1,964.7 $ (213.0) (10.8) % (10.8) % Specialized Products 1,239.1 1,279.8 (40.7) (3.2) (3.2) Furniture, Flooring & Textile Products 1,392.8 1,480.8 (88.0) (5.9) (5.9) Total trade sales $ 4,383.6 $ 4,725.3 $ (341.7) (7.2) % (7.2) % 2024 2023 Change in EBIT EBIT Margins $ % 2024 2023 EBIT Bedding Products $ (549.0) $ (344.2) $ (204.8) (59.5) % (31.3) % (17.5) % Specialized Products 64.4 125.0 (60.6) (48.5) 5.2 9.8 Furniture, Flooring & Textile Products 58.2 128.6 (70.4) (54.7) 4.2 8.7 Intersegment eliminations & other (3.5) .2 (3.7) Total EBIT 2 $ (429.9) $ (90.4) $ (339.5) (375.6) % (9.8) % (1.9) % 2024 2023 Depreciation and amortization Bedding Products $ 59.0 $ 103.9 Specialized Products 43.0 41.1 Furniture, Flooring & Textile Products 21.7 22.5 Unallocated 3 12.3 12.4 Total depreciation and amortization $ 136.0 $ 179.9 1 This is the change in sales not attributable to acquisitions or divestitures in the last 12 months. 2 Total 2024 EBIT of $(429.9) million less interest expense net of interest income of $79.3 million and income tax of $2.2 million equals 2024 Net earnings (loss) of $(511.4) million.
Removed
The ITC made a preliminary determination of injury on September 11, 2023 . On December 26, 2023, the DOC made a negative preliminary determination on the filed petitions regarding subsidies. On January 19, 2024, the DOC initiated an investigation on new subsidy allegations that were presented by the Petitioners.
Added
Total 2023 EBIT of $(90.4) million less interest expense net of interest income of $83.0 million and and income tax of $(36.6) million equals 2023 Net earnings (loss) of $(136.8) million. 3 Unallocated consists primarily of depreciation and amortization on non-operating assets. Bedding Products Trade sales decreased 11%.
Removed
The DOC’s preliminary determination on dumping was issued February 26, 2024 and imposed duties ranging from 10.74% to 744.81% on finished mattresses. The DOC’s final determinations are expected in July 2024, and the ITC’s final determination is expected in September 2024.
Added
Organic sales were down 11%, from volume declines of 6%, primarily due to demand softness in U.S. and European bedding markets and the expected exit of a customer in Specialty Foam, partially offset by higher trade rod sales. Raw material-related selling price decreases reduced sales 5%.
Added
EBIT decreased $205 million, primarily from $588 million of non-cash goodwill impairment charges, $37 million of restructuring and impairment charges, raw material-related pricing adjustments, unfavorable sales mix in Steel Rod and Specialty Foam, metal margin compression, lower volume, and other expense items such as higher bad debt reserves and increased inventory write-downs/reserves.
Added
These decreases were partially offset 45 Table of Contents PART II by the non-recurrence of a $444 million long-lived asset impairment, lower amortization expense due to the 2023 long-lived asset impairment, gains on sales of real estate, restructuring benefit, and operational efficiency improvements in Specialty Foam. Specialized Products Trade sales decreased 3%. Organic sales decreased 3%.
Added
Volume decreased 3% with soft demand in the second half of the year in Automotive and Hydraulic Cylinders partially offset by strong demand in Aerospace. Raw material-related price increases were offset by currency impact.
Added
EBIT decreased $61 million, primarily from a $44 million non-cash goodwill impairment charge in Hydraulic Cylinders, lower volume, $10 million of restructuring and impairment charges, and less benefit from a reduction to a contingent purchase price liability associated with a prior year acquisition, partially offset by disciplined cost management and operational efficiency improvements.
Added
Furniture, Flooring & Textile Products Trade sales decreased 6%. Organic sales were down 6%. Volume decreased 3% with continued weak demand in residential end markets and demand softness in Geo Components through the third quarter. Raw material-related selling price decreases reduced sales 3%.
Added
EBIT decreased $70 million, primarily from a $44 million non-cash goodwill impairment charge in Work Furniture, lower volume, $2 million of restructuring charges, and the non-recurrence of a $5 million net gain on insurance proceeds from tornado damage ($7 million in 2023 and $2 million in 2024) and a $6 million gain from the sale of real estate.
Added
RESULTS OF OPERATIONS—2023 vs. 2022 Consolidated Results The following table shows the changes in sales and earnings during 2023, and identifies the major factors contributing to the changes from prior year.
Added
(Dollar amounts in millions, except per share data) Amount % 1 Net trade sales: Year ended December 31, 2022 $ 5,147 Divestitures (1) — % 2022 sales excluding divestitures 5,146 Approximate volume declines (299) (6) Approximate raw material-related deflation and currency impact (238) (4) Organic sales (537) (10) Acquisition sales growth 116 2 Year ended December 31, 2023 $ 4,725 (8) % Earnings: (Dollar amounts, net of tax) Year ended December 31, 2022 $ 310 2023 long-lived asset impairment (341) 2023 gain on sale of real estate 8 2023 gain from net insurance proceeds from tornado damage 7 Other items, primarily lower metal margin and lower volume (121) Year ended December 31, 2023 $ (137) 2022 Earnings Per Diluted Share $ 2.27 2023 Earnings (Loss) Per Diluted Share $ (1.00) 1 Calculations impacted by rounding 46 Table of Contents PART II Full-year trade sales decreased 8%, to $4.73 billion.
Added
Organic sales decreased 10%, with volume declines of 6% and combined raw material-related price decreases and currency impact of 4%. Acquisitions, net of divestitures, contributed 2% to sales growth. Volume declines were impacted by continued weak residential end market demand, partially offset by automotive and industrial end market demand strength.
Added
Earnings decreased primarily from a long-lived asset impairment charge, metal margin compression in our Steel Rod business, and lower trade sales volume in residential end markets.
Added
Interest and Income Taxes Net interest expense in 2023 was higher by $2 million compared to 2022, primarily due to increased interest rates on higher average commercial paper balances, somewhat offset by the interest expense associated with our matured 2012 $300 million Senior Notes, which were fully paid in the third quarter of 2022.
Added
Our worldwide effective income tax rate was approximately 21% in 2023 and 23% in 2022. The following table reflects how our effective income tax rate differs from the statutory federal income tax rate. See Note O on page 114 of the Notes to Consolidated Financial Statements for additional details.
Added
Year Ended December 31 2023 2022 Statutory federal income tax rate 21.0 % 21.0 % Increases (decreases) in rate resulting from: State taxes, net of federal benefit .2 .9 Tax effect of foreign operations (1.4) (.5) Global intangible low-taxed income (1.5) .6 Current and deferred foreign withholding taxes (7.3) 2.6 Long-lived asset impairment 5.4 — Stock-based compensation .1 (.1) Change in valuation allowance (.4) (.1) Change in uncertain tax positions, net (.3) — Other permanent differences, net 3.9 (1.0) Other, net 1.4 (.2) Effective tax rate 21.1 % 23.2 % 47 Table of Contents PART II Segment Results In the following section we discuss 2023 sales and EBIT for each of our segments.
Added
We provide additional detail about segment results in Note C on page 89 of the Notes to Consolidated Financial Statements. We use EBIT to assess operational performance, and it is useful to investors as it aids in understanding of underlying operational profitability.
Added
(Dollar amounts in millions) 2023 2022 Change in Sales % Change Organic $ % Sales 1 Trade sales Bedding Products $ 1,964.7 $ 2,356.3 $ (391.6) (16.6) % (16.6) % Specialized Products 1,279.8 1,118.3 161.5 14.4 7.1 Furniture, Flooring & Textile Products 1,480.8 1,672.1 (191.3) (11.4) (13.5) Total trade sales $ 4,725.3 $ 5,146.7 $ (421.4) (8.2) % (10.4) % 2023 2022 Change in EBIT EBIT Margins $ % 2023 2022 EBIT Bedding Products $ (344.2) $ 219.6 $ (563.8) (256.7) % (17.5) % 9.3 % Specialized Products 125.0 99.4 25.6 25.8 9.8 8.9 Furniture, Flooring & Textile Products 128.6 165.0 (36.4) (22.1) 8.7 9.9 Intersegment eliminations & other .2 1.0 (.8) Total EBIT 2 $ (90.4) $ 485.0 $ (575.4) (118.6) % (1.9) % 9.4 % 2023 2022 Depreciation and amortization Bedding Products $ 103.9 $ 104.1 Specialized Products 41.1 40.5 Furniture, Flooring & Textile Products 22.5 23.2 Unallocated 3 12.4 12.0 Total depreciation and amortization $ 179.9 $ 179.8 1 This is the change in sales not attributable to acquisitions or divestitures in the last 12 months.
Added
Refer to the respective segment discussion below for a reconciliation of the change in total segment sales to organic sales. 2 Total 2023 EBIT of $(90.4) million less interest expense net of interest income of $83.0 million and income tax of $(36.6) million equals 2023 Net earnings (loss) of $(136.8) million.
Added
Total 2022 EBIT of $485.0 million less interest expense net of interest income of $81.4 million and income tax of $93.7 million equals 2022 Net earnings (loss) of $309.9 million. 3 Unallocated consists primarily of depreciation and amortization on non-operating assets. Bedding Products Trade sales decreased 17%.
Added
Organic sales were down 17%, from volume declines of 8% and raw material-related selling price decreases, net of currency benefit, of 9%. EBIT decreased $564 million, primarily from a $444 million non-cash long-lived asset impairment charge, lower metal margin in our Steel Rod business, and lower volume. 48 Table of Contents PART II Specialized Products Trade sales increased 14%.
Added
Organic sales were up 7%, from volume growth of 8% partially offset by currency impact, net of raw material-related price increases, of 1%. Acquisitions contributed 7% to sales growth.
Added
EBIT increased $26 million, primarily from higher volume. 2023 also benefited from a $15 million reduction to a contingent purchase price liability associated with a prior year acquisition mostly offset by higher costs to support demand. Furniture, Flooring & Textile Products Trade sales decreased 11%.
Added
Organic sales were down 13% from volume declines of 11% and raw material-related selling price decrease, net of currency benefit, of 2%. Acquisitions contributed 2% to sales growth.
Added
EBIT decreased $36 million, primarily from lower volume partially offset by pricing discipline, a $7 million gain on net insurance proceeds from tornado damage, and a $6 million gain on the sale of real estate.
Added
LIQUIDITY AND CAPITALIZATION Liquidity Sources of Cash Cash on Hand At December 31, 2024, we had cash and cash equivalents of $350 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.
Added
If we were to immediately bring back all our foreign cash to the United States in the form of dividends, we would pay foreign withholding taxes of approximately $20 million. Due to capital requirements in various jurisdictions, $70 million of this cash was inaccessible for repatriation at year end.
Added
Inaccessible cash balances can fluctuate from quarter to quarter based on the amount of foreign distributable profits available and the variability of our foreign cash balances. Cash from Operations The primary source of funds for our short-term cash requirements is our cash generated from operating activities.
Added
Earnings and changes in working capital levels are the two factors that generally have the greatest impact on our cash from operations.
Added
Cash from operations - 2022 $441 million, 2023 $497 million, 2024 $306 million Cash from operations decreased $191.5 million in 2024, primarily from lower earnings and less benefit from working capital versus last year. 49 Table of Contents PART II We ended 2024 with working capital at 20.0% and adjusted working capital at 13.0% of annualized sales. 1 The table below explains this non-GAAP calculation.
Added
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.
Added
As discussed in Cash on Hand on page 49, 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.
Added
(Dollar amounts in millions) 2024 2023 Current assets $ 1,690.5 $ 1,881.4 Current liabilities 846.4 1,262.6 Working capital 844.1 618.8 Cash and cash equivalents 350.2 365.5 Current debt maturities and current portion of operating lease liabilities 54.7 365.3 Adjusted working capital $ 548.6 $ 618.6 Annualized sales 1 $ 4,225.6 $ 4,460.4 Working capital as a percent of annualized sales 20.0 % 13.9 % Adjusted working capital as a percent of annualized sales 13.0 % 13.9 % 1 Annualized sales equal fourth quarter sales ($1,056.4 million in 2024 and $1,115.1 million in 2023) multiplied by 4.
Added
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.
Added
Three Primary Components of our Working Capital Amount (in millions) Days 2024 2023 2022 2024 2023 2022 Trade Receivables $ 503.0 $ 564.9 $ 609.0 DSO 1 44 45 44 Inventories $ 722.6 $ 819.7 $ 907.5 DIO 2 77 81 83 Accounts Payable $ 497.7 $ 536.2 $ 518.4 DPO 3 52 50 50 1 Days sales outstanding: ((beginning of year trade receivables + end of year trade receivables) ÷ 2) ÷ (net trade sales ÷ number of days in the period) 2 Days inventory on hand: ((beginning of year inventory + end of year inventory) ÷ 2) ÷ (cost of goods sold ÷ number of days in the period) 3 Days payables outstanding: ((beginning of year accounts payable + end of year 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.
Added
Trade Receivables - Our trade receivables decreased by $62 million at December 31, 2024 compared to the prior year and our DSO has been relatively consistent the last three years. The decrease in accounts receivable was primarily due to demand softness, lower pricing due to deflation, and restructuring plan impacts.
Added
We recorded bad debt expense of $6 million during 2024 and a benefit of $7 million during 2023. Weak demand and changing market dynamics have created disruption and financial instability for some of our customers, particularly in the Bedding Products segment. A few customers began to exhibit slow payment and past-due trends during 2024.
Added
As a result, we increased our reserves for these customers 50 Table of Contents PART II and implemented payment plans where needed. The 2023 reduced expense is primarily related to adjustments to our allowance for certain reduced risk, including specifically-reserved accounts.
Added
We monitor our receivable portfolio closely and make reserve decisions based upon individual customer credit risk reviews, aging of customer accounts, historical loss experience, and general macroeconomic and industry trends that could impact the expected collectability of all customers or pools of customers with similar risks.
Added
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.
Added
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 similar customers.
Added
Inventories - Our inventories decreased by $97 million at December 31, 2024 compared to the prior year, and our DIO decreased during 2024 primarily due to the impacts of the 2024 Restructuring Plan through write-downs, efforts to manage inventory to current demand, and deflation.
Added
Throughout 2022 and 2023, inventories decreased as we worked to manage inventories to levels needed to support current demand, while maintaining our ability to service customer requirements.
Added
In 2023, raw material deflation, primarily in our Bedding Products and Furniture, Flooring & Textile Products segments, was partially offset by currency impacts and increased inventories in the Specialized Products segment to support sales growth. We continuously monitor our slower-moving and potentially obsolete inventory through reports on inventory quantities compared to usage within the previous 12 months.
Added
We also utilize cycle counting programs and complete physical counts of our inventory. When potential write-down of inventories is indicated by these controls, we will take charges for write-downs to maintain an adequate level of reserves. Additions to inventory reserves were $36 million, $9 million, and $17 million during 2024, 2023, and 2022, respectively.
Added
Reserves increased in 2024 primarily due to 2024 Restructuring Plan impacts. Accounts Payable - Our accounts payable decreased by $38 million at December 31, 2024 compared to the prior year, and our DPO increased during 2024.
Added
The 2024 accounts payable decrease was related to lower purchasing volumes due to softening demand and efforts to lower inventory levels, partially offset by timing of payments. The 2023 increase in accounts payable was primarily related to working capital initiatives and currency.
Added
Our payment terms did not change meaningfully since last year, and we have continued to focus on optimizing payment terms with our vendors.
Added
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.
Added
Accounts Receivable and Accounts Payable Programs - We participate in trade receivables sales programs in combination with third-party banking institutions and certain customers. Under each of these programs, we sell our entire interest in the trade receivable for 100% of face value, less a discount.
Added
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 Balance Sheets, and the related proceeds are reported as cash provided by operating activities in the Consolidated Statements of Cash Flows.
Added
We had approximately $45 million and $60 million of trade receivables that were sold and removed from our Consolidated Balance Sheets at December 31, 2024 and 2023, respectively. These sales reduced our quarterly DSO by roughly four and five days at December 31, 2024 and 2023, respectively.
Added
The impact to operating cash flow was an approximate $15 million decrease and $5 million decrease for the years ended December 31, 2024 and 2023, 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 or for a fee.
Added
While these programs assist us in negotiating payment terms with our suppliers, we continue to make payments based on our customary terms. Contracts with our suppliers are negotiated independently of supplier participation in the programs, and we cannot increase payment terms pursuant to the programs.
Added
The primary program allows a supplier to 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. As such, there is no direct impact on our DPO, accounts payable, operating cash flows, or liquidity.
Added
The accounts payable settled through the third-party programs, which remain on our Consolidated Balance Sheets, were approximately $120 million and $105 million at December 31, 2024 and 2023, respectively. 51 Table of Contents PART II The above items encompass multiple individual programs that are utilized as tools in our cash flow management, and we offer them as options to facilitate customer and vendor operating cycles.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

12 edited+5 added−6 removed3 unchanged
Biggest changeHe previously served as Chief Operating Officer from 2019 until his appointment as CEO, President—Bedding Products from 2020 to 2021, Executive Vice President, President—Specialized Products and Furniture Products from 2017 to 2019, Senior Vice President and President of Specialized Products from 2016 to 2017, Vice President and President of the Automotive Group from 2014 to 2015, President of Automotive Asia from 2011 to 2013, Vice President of Specialized Products from 2009 to 2013, and in various other capacities for the Company since 2000.
Biggest changeGlassman also served as the Company's Chief Executive Officer from 2016 to 2021, President from 2013 to 2019, Chief Operating Officer from 2006 to 2015, Executive Vice President from 2002 to 2013, President of the former Residential Furnishings segment from 1999 to 2006, Senior Vice President from 1999 to 2002, and in various capacities since 1982. Benjamin M.
She previously served as Vice President – Deputy General Counsel from 2020 to 2023, as Deputy General Counsel from 2015 to 2020, and as Associate General Counsel & Chief Litigation Counsel from 2012 to 2022 after joining the Company’s Legal Department in 2006. J. Tyson Hagale was appointed Executive Vice President, President—Bedding Products in February 2023.
She previously served as Vice President – Deputy General Counsel from 2020 to 2023, as Deputy General Counsel from 2015 to 2020, and as Associate General Counsel & Chief Litigation Counsel from 2012 to 2022 after joining the Company’s Legal Department in 2006. J. Tyson Hagale was appointed Executive Vice President, President—Bedding Products in 2023.
She previously served as Vice President from 2015 to 2017, and Staff Vice President, Financial Reporting from 2007 to 2015. She has served the Company in various financial capacities since 1998. 33 Table of Contents PART II
She previously served as Vice President from 2015 to 2017, and Staff Vice President, Financial Reporting from 2007 to 2015. She has served the Company in various financial capacities since 1998. 32 Table of Contents PART II PART II
Smith has served the Company as President—Home Furniture Group since 2020, VP Operations—Home Furniture Group from 2019 to 2020, and VP Operations—Seating & Distribution from 2018 to 2019 after joining the Company in 2014 as the general manager of Matrex, a Home Furniture operation. Prior to Leggett, Mr.
Smith previously served the Company as President—Home Furniture Group from 2020 to 2024, VP Operations—Home Furniture Group from 2019 to 2020, and VP Operations—Seating & Distribution from 2018 to 2019 after joining the Company in 2014 as the general manager of Matrex, a Home Furniture operation. Prior to Leggett, Mr.
He previously served the Company as Executive Vice President—Business Support Services during 2023, Senior Vice President—Business Support Services in 2022, Vice President, Business Support Services from 2019 to 2022, Vice President, Treasurer from 2017 to 2019 and Vice President, Internal Audit/Due Diligence from 2012 to 2017. Mr.
He previously served the Company as Executive Vice President—Business Support Services during 2023 until his appointment as CFO, Senior Vice President—Business Support Services in 2022, Vice President, Business Support Services from 2019 to 2022, Vice President, Treasurer from 2017 to 2019 and Vice President, Internal Audit/Due Diligence from 2012 to 2017. Mr.
He held roles within the Company’s operations from 2016 to 2020, including Director of Finance and Business Development for the Specialized and Furniture, Flooring & Textile Products segments, and served as Director of Corporate Development in 2015 and in various other roles since 2005. Christina Ptasinski was appointed Executive Vice President—Chief Human Resources Officer in February 2023.
He held roles within the Company’s operations from 2016 to 2020, including Director of Finance and Business Development for the Specialized and Furniture, Flooring & Textile Products segments, and served as Director of Corporate Development in 2015 and in various other roles since 2005. Lindsey N. Odaffer was appointed Executive Vice President—Chief Human Resources Officer, effective January 1, 2025.
The table below sets forth the names, ages and positions of persons appointed as executive officers of the Company. Executive officers are normally appointed annually by the Board of Directors. Name Age Position J. Mitchell Dolloff 58 President and Chief Executive Officer Benjamin M. Burns 46 Executive Vice President and Chief Financial Officer Jennifer J.
The table below sets forth the names, ages, and positions of persons appointed as executive officers of the Company. Executive officers are normally appointed annually by the Board of Directors. Name Age Position Karl G. Glassman 66 President and Chief Executive Officer Benjamin M. Burns 47 Executive Vice President and Chief Financial Officer Jennifer J.
Burns served the Company in various other auditing capacities since 2003. 32 Table of Contents PART I Jennifer J. Davis was appointed Executive Vice President and General Counsel, effective January 1, 2024.
Burns served the Company in various other auditing capacities since 2003. Jennifer J. Davis was appointed Executive Vice President and General Counsel in January 2024.
He joined Leggett in 2001 as a member of the Corporate Development Department, and served in a variety of financial and strategic roles during his first ten years with the Company. Steven K. Henderson was appointed Executive Vice President, President—Specialized Products and Furniture, Flooring & Textile Products in 2020. Mr.
He joined Leggett in 2001 as a member of the Corporate Development Department, and served in a variety of financial and strategic roles during his first ten years with the Company. Ryan M. Kleiboeker was appointed Executive Vice President—Chief Strategic Planning Officer in February 2024.
Davis 48 Executive Vice President and General Counsel J. Tyson Hagale 46 Executive Vice President, President—Bedding Products Steven K. Henderson 63 Executive Vice President, President—Specialized Products and Furniture, Flooring & Textile Products, effective through April 1, 2024 Ryan M. Kleiboeker 45 Executive Vice President—Chief Strategic Planning Officer Christina Ptasinski 64 Executive Vice President—Chief Human Resources Officer R.
Davis 49 Executive Vice President and General Counsel J. Tyson Hagale 47 Executive Vice President, President—Bedding Products Ryan M. Kleiboeker 46 Executive Vice President—Chief Strategic Planning Officer Lindsey N. Odaffer 42 Executive Vice President—Chief Human Resources Officer R. Samuel Smith, Jr. 57 Executive Vice President, President—Specialized Products and Furniture, Flooring & Textile Products Tammy M.
On February 26, 2024, Mr. Henderson notified the Company of his decision to retire, effective April 1, 2024. Ryan M. Kleiboeker was appointed Executive Vice President—Chief Strategic Planning Officer on February 26, 2024. He previously served the Company as Senior Vice President—Chief Strategic Planning Officer since June 2023 and Vice President—Corporate Development and Financial Planning since 2020.
He previously served the Company as Senior Vice President—Chief Strategic Planning Officer since 2023 and Vice President—Corporate Development and Financial Planning since 2020.
Samuel Smith, Jr. 56 Senior Vice President, President—Furniture, Flooring & Textile Products, effective April 2, 2024 Tammy M. Trent 57 Senior Vice President—Chief Accounting Officer Subject to certain severance benefit agreements, the executive officers generally serve at the pleasure of the Board of Directors. The severance benefit agreements with Messrs.
Trent 58 Senior Vice President—Chief Accounting Officer Subject to certain severance benefit agreements, the executive officers generally serve at the pleasure of the Board of Directors. The severance benefit agreements with Ms. Davis and Messrs. Glassman, Burns, 31 Table of Contents PART I Hagale and Smith are listed as exhibits to this report.
Removed
Dolloff, Burns, Hagale and Henderson are listed as exhibits to this report. Please see Exhibit Index on page 118 for reference to the agreements. J. Mitchell Dolloff was appointed the Company’s Chief Executive Officer, effective January 1, 2022, and continues to serve as President since his appointment in 2020.
Added
Please see Exhibit Index on page 123 for reference to the agreements. Karl G. Glassman has served as the Company's President and Chief Executive Officer since May 2024, and served as segment manager of Specialized Products on a temporary basis until February 2025.
Removed
Beginning April 2, 2024, Mr. Dolloff will oversee the Specialized Products segment on an interim basis after Mr. Henderson's retirement as discussed below. Benjamin M. Burns was appointed Executive Vice President and Chief Financial Officer on June 21, 2023.
Added
He previously served as the Company's Executive Chairman of the Board from 2022 until his retirement in May 2023 and was first appointed Chairman of the Board in 2020. Mr.
Removed
Henderson previously served the Company as Vice President, President—Automotive Group since 2017. He joined the Company after more than 30 years of experience in a variety of leadership positions at Dow Automotive Systems and served as Business President—Automotive Systems since 2009, where he was responsible for the global business, including profit and loss, business strategy, and organizational health.
Added
Burns was appointed Executive Vice President and Chief Financial Officer in 2023.
Removed
She previously served the Company as Senior Vice President—Chief Human Resources Officer since 2021. She joined the Company with over 20 years of human resources leadership experience. She most recently served, from 2019 to 2021, as Senior Vice President HR for CEVA Logistics, where she previously served as Head of Global HR Performance from 2018 to 2019.
Added
She previously served the Company as Vice President, Financial Support Services in 2024, as Vice President, Internal Audit/Due Diligence since 2017, and in various other internal audit roles of increasing responsibility since 2005. R. Samuel Smith, Jr. was appointed as Executive Vice President, President—Specialized Products and Furniture, Flooring & Textile Products in February 2025.
Removed
CEVA Logistics is a global logistics and supply chain company in both freight management and contract logistics operating in many countries with thousands of employees. Prior to that, Ms. Ptasinski was the Chief Human Resources Officer for Crane Worldwide Logistics from 2008 to 2018.
Added
He previously served as Executive Vice President, President—Furniture, Flooring & Textile Products since August 2024, and Senior Vice President, President—Furniture, Flooring & Textile Products since April 2024. Mr.
Removed
Crane Worldwide Logistics is a logistics and supply chain company providing customized supply chain solutions, intermodal transportation and warehousing with over 100 locations in several countries. R. Samuel Smith, Jr., was appointed as Senior Vice President, President—Furniture, Flooring & Textile Products, on February 26, 2024, to be effective April 2, 2024. Mr.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

11 edited+5 added−0 removed2 unchanged
Biggest changeWe have no contractual restrictions that materially limit our ability to pay such dividends. Our Board of Directors and management are evaluating capital allocation priorities, including cash allocated to paying dividends.
Biggest changeOn February 26, 2025, our Board declared a quarterly cash dividend of $.05 per share payable on April 15, 2025 to shareholders of record on March 14, 2025. We have no contractual restrictions that materially limit our ability to pay such dividends.
Also, it is not incorporated by reference in any of our filings under the Securities Act of 1933 or the Exchange Act, whether made before or after the date of this Form 10-K and irrespective of any general incorporation language in any such filing, except to the extent we specifically incorporate this Stock Performance Graph section by reference therein.
Also, it is not incorporated by reference in any of our filings under the Securities Act of 1933 or the Exchange Act, whether made before or after the date of this Form 10-K and irrespective of any general incorporation language 34 Table of Contents PART II in any such filing, except to the extent we specifically incorporate this Stock Performance Graph section by reference therein.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is traded on the New York Stock Exchange (symbol LEG). Shareholders and Dividends As of February 20, 2024, we had 5,612 shareholders of record. In 2023, we increased the annual dividend by $.08 from $1.74 to $1.82 per share.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is traded on the New York Stock Exchange (symbol LEG). Shareholders and Dividends As of February 20, 2025, we had 5,748 shareholders of record. In 2024, we decreased the annual dividend by $1.21 from $1.82 to $.61 per share.
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 October 2023 — $ — — 10,000,000 November 2023 — $ — — 10,000,000 December 2023 — $ — — 10,000,000 Total — $ — — 1 This column does not include shares withheld for taxes on stock unit conversions, as well as forfeitures of stock units, all of which totaled 21,215 shares in the fourth quarter of 2023. 2 On February 22, 2022, the Board authorized management to repurchase up to 10 million shares each calendar year.
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 October 2024 — $ — — 10,000,000 November 2024 — $ — — 10,000,000 December 2024 — $ — — 10,000,000 Total — $ — — 1 This column does not include shares withheld for taxes on stock unit conversions, as well as forfeitures of stock units, all of which totaled 42,500 shares in the fourth quarter of 2024.
This standing authorization was announced in the annual report on Form 10-K for the year ended December 31, 2021, filed February 22, 2022, and will remain in force until repealed by the Board of 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.
This standing authorization was first announced on Form 10-Q for the quarter ended June 30, 2024, filed August 7, 2024, and will remain in force until repealed by the Board of Directors. This standing Board authorization replaced the prior Board authorization adopted in 2022, which provided the same repurchase authority to the Company with only minor administrative differences.
For the Years Ended 2018 2019 2020 2021 2022 2023 LEG $ 100 $ 147 $ 134 $ 129 $ 106 $ 92 S&P Midcap 400 100 126 143 179 155 181 Peer Group 100 145 181 249 213 251 This Stock Performance Graph section does not constitute soliciting material, is not deemed filed with the Securities and Exchange Commission, is not subject to Regulation 14A or 14C of the Securities Exchange Act, as amended (the “Exchange Act”), and is not subject to the liabilities of Section 18 of the Exchange Act.
For the Years Ended 2019 2020 2021 2022 2023 2024 LEG $ 100 $ 91 $ 88 $ 72 $ 62 $ 24 S&P Midcap 400 100 114 142 123 143 163 S&P SmallCap 600 100 111 141 118 137 149 Old Peer Group 100 125 172 147 173 194 New Peer Group 100 117 147 111 145 154 This Stock Performance Graph section does not constitute soliciting material, is not deemed filed with the Securities and Exchange Commission, is not subject to Regulation 14A or 14C of the Securities Exchange Act, as amended (the “Exchange Act”), and is not subject to the liabilities of Section 18 of the Exchange Act.
For more information on dividends see Dividends in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations on page 51. Issuer Purchases of Equity Securities As seen by the below table, neither us nor any affiliated purchaser purchased any shares of our common stock during any calendar month in the fourth quarter of 2023.
Issuer Purchases of Equity Securities As seen by the below table, neither us nor any affiliated purchaser purchased any shares of our common stock during any calendar month in the fourth quarter of 2024.
The Company has selected a Peer Group of manufacturing companies that, though involved in different industries, resemble the Company in diversification, strategy, growth objectives, acquisitiveness, customer breadth, and geographic extent. Our Peer Group includes: Carlisle Companies Incorporated (CSL), Danaher Corporation (DHR), Dover Corporation (DOV), Eaton Corporation plc (ETN), Emerson Electric Co. (EMR), Illinois Tool Works Inc. (ITW), Ingersoll Rand Inc.
Our Old Peer Group was based on diversification, strategy, growth objectives, acquisitiveness, customer breadth, and geographic extent, which created some misalignment given the Company's current strategic and operational goals. The Old Peer Group included: Carlisle Companies Incorporated (CSL), Danaher Corporation (DHR), Dover Corporation (DOV), Eaton Corporation plc (ETN), Emerson Electric Co. (EMR), Illinois Tool Works Inc. (ITW), Ingersoll Rand Inc.
As such, we have had substantively the same share repurchase authority since 2004, and this authority included the 2023 calendar year.
We substantively have had the same share repurchase authority since 2004, and this authority includes the 2025 calendar year. No specific repurchase schedule has been established.
The comparison assumes that $100 was invested on December 31, 2018 in shares of LEG and in each of the indices, and assumes that all of the dividends were reinvested. We measure the Company’s relative performance against the S&P Midcap 400 ® index, of which the Company is included.
The comparison assumes that $100 was invested on December 31, 2019 in shares of LEG and in each of the indices, and assumes that all of the dividends were reinvested.
No specific repurchase schedule has been established. 34 Table of Contents PART II Stock Performance Graph The following graph and table below show the cumulative total shareholder return for five years for the Company’s common stock (LEG), the S&P Midcap 400 ® index, and our Peer Group index.
The authority does not obligate the Company to purchase a minimum number of shares. 33 Table of Contents Stock Performance Graph The following graph and table below show the cumulative total shareholder return for five years for the Company’s common stock (LEG), the S&P Midcap 400 ® index, the S&P SmallCap 600 ® index, our Old Peer Group index, and our New Peer Group index.
Added
However, our current expectation is to continue paying dividends at a comparable quarterly rate or higher. For more information on dividends, see Dividends in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations on page 53.
Added
The average price per share for these shares was $10.61. 2 On August 7, 2024, the Board authorized the Company to repurchase up to 10 million shares each calendar year.
Added
The Company exited the S&P Midcap 400 ® index and joined the S&P SmallCap 600 ® index in June 2024, at which time we began measuring the Company's relative performance against the S&P SmallCap 600 ® index.
Added
The Company compared itself against the S&P Midcap 400 ® index in previous years and this index has been included in the graph and chart below for comparative purposes only. The Company has selected a New Peer Group of manufacturing companies to be more closely aligned with the Company’s current end market exposure, macroeconomic sensitivity, and capital discipline.
Added
Our New Peer Group includes: AMETEK, Inc. (AME), Core & Main, Inc. (CNM), Fortune Brands Innovations, Inc. (FBIN), Gentherm Incorporated (THRM), La-Z-Boy Incorporated (LZB), Lear Corporation (LEA), Masco Corporation (MAS), MillerKnoll, Inc. (MLKN), Mohawk Industries, Inc. (MHK), and Somnigroup International Inc. (SGI) (formerly known as Tempur Sealy International, Inc. (TPX)).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

42 edited+39 added−238 removed3 unchanged
Biggest changeThere are inherent uncertainties related to these factors, including but not limited to: • a sustained decline in our stock price, resulting in a material decrease in our market capitalization relative to book value • a material difference in actual results or the long-term outlook of any of our reporting units compared to the assumptions and estimates used in the goodwill valuation calculations • unexpected significant declines in operating results • disruptions in our business • loss of a material customer or discontinued supply contract with a customer If these or any other significant items were to occur, we could incur non-cash impairment charges, which could have a material negative impact on our earnings.
Biggest changeIf 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 other long-lived assets valuation calculations, we could incur future non-cash impairment charges, which could have a material negative impact on our earnings. 38 Table of Contents PART II 2024 Restructuring Plan In the first quarter of 2024, we committed to a restructuring plan.
The fourth quarter 2023 activities resulting in the long-lived asset impairments discussed above were also considered a triggering event for goodwill impairment testing of the Bedding reporting unit, and no impairments were indicated (as discussed on page 61 in Goodwill and Long -Lived Asset Impairment Testing ).
The fourth quarter 2023 activities resulting in the long-lived asset impairments discussed above were also considered a triggering event for goodwill impairment testing of the Bedding reporting unit, and no impairments were indicated (as discussed in Goodwill and Long-Lived Asset Impairments ) starting on page 36.
We typically compete in market segments that value product differentiation. 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 efficient operations, automation, vertical integration in steel rod and wire, logistics and distribution efficiencies, and large-scale purchasing of raw materials and commodities.
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 efficient operations, automation, vertical integration in steel rod and wire, logistics and distribution efficiencies, and large-scale purchasing of raw materials and commodities.
To stay competitive with global steel costs, both contract and non-contract innerspring pricing was adjusted in the back half of 2023. We have also reacted to foreign competition in certain cases by 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.
To stay competitive with global steel costs, both contract and non-contract innerspring pricing was adjusted in the back half of 2023 and fully realized in 2024. We have also reacted to foreign competition in certain cases by developing new proprietary products that help our customers reduce total costs and by shifting production offshore to take advantage of lower input costs.
While sales and earnings have been lower as compared to acquisition-date estimates for the customer bases associated with Elite Comfort Solutions (ECS) and Kayfoam (acquired in 2019 and 2021, respectively), estimated undiscounted cash flows for these asset groups exceeded their carrying amounts until the fourth quarter of 2023.
While sales and earnings were lower as compared to acquisition-date estimates for the customer bases associated with ECS and Kayfoam (acquired in 2019 and 2021, respectively), estimated undiscounted cash flows for these asset groups exceeded their carrying amounts until the fourth quarter of 2023.
Also, we may not be able to implement the Plan in a timely manner that will positively impact our financial condition and results of operations. Moreover, we may not be able to dispose of real estate pursuant to the Plan or obtain the expected proceeds in a timely manner, and the number of employees impacted by the Plan may change.
Also, we may not be able to implement the 2024 Plan in a timely manner that will positively impact our financial condition and results of operations. Moreover, we may not be able to dispose of real estate pursuant to the 2024 Plan or obtain the expected proceeds in a timely manner.
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 orders for an additional five years. Appeals were filed with the U.S.
These petitions resulted in antidumping and countervailing duty orders set to 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 orders for an additional five years. Following certain appeals that were filed with the U.S.
Organic sales decreased sales 10%, with volume declines of 6% and combined raw material-related price decreases and currency impact of 4%. Acquisitions, net of divestitures, contributed 2% to sales growth. 2022 trade sales increased 1% due to acquisitions, net of divestitures.
Organic sales decreased 7% with volume declines of 4% and raw material-related price decreases of 3%. 2023 trade sales decreased 8%. Organic sales decreased 10%, with volume declines of 6% and combined raw material-related price decreases and currency impact of 4%. Acquisitions, net of divestitures, contributed 2% to sales growth.
Earnings in 2023 decreased primarily from a $444 million non-cash impairment of long-lived assets (primarily customer relationships, technology, and trademark intangibles), metal margin compression in our Steel Rod business, and lower trade sales volume in residential end markets partially offset by higher trade sales volume in industrial end markets.
Earnings in 2023 decreased primarily from a $444 million non-cash impairment of long-lived assets, metal margin compression in our Steel Rod business, and lower trade sales volume in residential end markets partially offset by higher trade sales volume in industrial end markets. In 2024, we generated $306 million in cash from operations compared to $497 million in 2023.
We have also been impacted by fluctuations in transportation and energy costs as well as labor. Our ability to recover higher costs (through selling price increases) is crucial. When we experience significant increases in costs, we typically implement price increases to recover the higher costs. Conversely, when costs decrease significantly, we generally pass those lower costs through to our customers.
Our ability to recover higher costs (through selling price increases) is crucial. When we experience significant increases in costs, we typically implement price increases to recover the higher costs. Conversely, when costs decrease significantly, we generally pass those lower costs through to our customers.
Page No. • Highlights 36 • Introduction 37 • Results of Operations 2023 vs 2022 41 • Results of Operations 2022 vs 2021 44 • Liquidity and Capitalization 47 • Critical Accounting Policies and Estimates 54 • Contingencies 58 • New Accounting Standards 62 HIGHLIGHTS 2023 2022 2021 (Dollar amounts in millions, except for per share data) Net trade sales $ 4,725 $ 5,147 $ 5,073 Earnings (loss) before interest and taxes (EBIT) (90) 485 596 Cash from operations 497 441 271 Total debt 1,988 2,084 2,090 Dividends per share $ 1.82 $ 1.74 $ 1.66 Trade sales decreased 8% in 2023.
Page No. • Highlights 35 • Introduction 36 • Results of Operations 2024 vs 2023 43 • Results of Operations 2023 vs 2022 46 • Liquidity and Capitalization 49 • Critical Accounting Policies and Estimates 58 • Contingencies 60 • New Accounting Standards 63 HIGHLIGHTS 2024 2023 2022 (Dollar amounts in millions, except for per share data) Net trade sales $ 4,384 $ 4,725 $ 5,147 Earnings (loss) before interest and taxes (EBIT) (430) (90) 485 Cash from operations 306 497 441 Total debt 1,864 1,988 2,084 Dividends per share $ .61 $ 1.82 $ 1.74 Trade sales decreased 7% in 2024.
Because of certain risks and uncertainties, the Plan may not achieve its intended outcomes. Our estimates of the number of facilities to be consolidated and the cash and non-cash costs and impairments associated with the Plan are preliminary in nature. All or some of the estimates may change as our analysis develops and additional information is obtained.
Because of certain risks and uncertainties, the 2024 Plan may not achieve its intended outcomes. Our estimates of the number of facilities to be consolidated, EBIT benefit, sales attrition, proceeds from the sale of real estate, and the cash and non-cash costs and impairments associated with the 2024 Plan may change as our analysis develops and additional information is obtained.
In July 2023, the Company, along with nine other domestic mattress producers and two labor unions, filed petitions with the DOC and the ITC alleging that manufacturers of mattresses in Bosnia and Herzegovina, Bulgaria, Burma, India, Italy, Kosovo, Mexico, the Philippines, Poland, Slovenia, Spain, and Taiwan were unfairly selling their products in the United States at less than fair value (dumping) and manufacturers of mattresses in Indonesia were unfairly benefiting from subsidies, causing harm to the U.S. industry and seeking the imposition of duties on mattresses imported from these countries.
In July 2023, the Company, along with other petitioners, filed petitions with the DOC and the ITC alleging that manufacturers of mattresses in twelve additional countries were unfairly selling their products in the United States at less than fair value and manufacturers of mattresses in Indonesia were unfairly benefiting from subsidies, causing harm to the U.S. industry and seeking the imposition of duties on mattresses imported from these countries.
While we anticipate long-term growth for this reporting unit, it is moving at a slow pace. In evaluating the potential for impairment of goodwill and other long-lived assets, we make assumptions regarding future operating performance, business trends, and market and economic performance, as well as our future sales and operating margins, growth rates, and discount rates.
In evaluating the potential for impairment of goodwill and other long-lived assets, we make assumptions and estimates regarding future operating performance, business trends, and market and economic performance, including future sales, operating margins, growth rates, and discount rates.
As a result of the continued uncertainty, we expect 2024 overall demand to be down modestly from 2023 levels. Trends in Cost of Goods Sold Our costs can vary significantly as market prices for raw materials (many of which are commodities) fluctuate. We typically have short-term commitments from our suppliers; accordingly, our raw material costs generally move with the market.
Trends in Cost of Goods Sold Our costs can vary significantly as market prices for raw materials (many of which are commodities) fluctuate. We typically have short-term commitments from our suppliers; accordingly, our raw material costs generally move with the market. We have also been impacted by fluctuations in transportation, energy, and labor costs.
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 2020, the Company, along with other petitioners, filed petitions with the DOC and the ITC alleging that manufacturers of mattresses in seven different countries were unfairly selling their products in the United States at less than fair value and manufacturers of mattresses in China were benefiting from subsidies.
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.
Our success has stemmed from the ability to remain price competitive while delivering innovation, 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.
Also, in late 2023 and early 2024, the conflict in the Red Sea caused delays with some of our shipments, while other shipments from China to the U.S. or Europe have been re-routed.
In recent years, drought conditions lowered water levels of the Mississippi River and Panama Canal, reducing traffic through these waterways, which impacted some of our shipments. Also, in late 2023 and early 2024, the conflict in the Red Sea caused delays with some of our shipments, while other shipments from China to the United States or Europe have been re-routed.
The execution of any of these opportunities may result in additional material restructuring costs, restructuring-related costs, or impairments. 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.
Market Demand Market demand (including product mix) is impacted by several economic factors, with housing turnover and consumer confidence being the most significant. Other important factors include disposable income levels, employment levels, and interest rates. All of these factors influence consumer spending on durable goods, and therefore affect demand for our products and components.
Because the forecasted undiscounted cash flows had fallen below the carrying value for these asset groups, we tested for impairment by comparing the estimated fair value of long-lived assets to their carrying values, which resulted in a non-cash charge of $444 million for long-lived asset impairments (primarily customer relationships, technology, and trademark intangibles) in the Bedding Products segment during the fourth quarter of 2023.
Because the forecasted undiscounted cash flows had fallen below the carrying value for these asset groups, we tested for impairment by comparing the estimated fair value of long-lived assets to their carrying values.
In August 2022, we used our commercial paper program to repay $300 million of 3.4%, 10-year bonds that matured. We increased the annual dividend in 2023 to $1.82 per share from $1.74 per share in 2022 and extended our record of consecutive annual increases to 52 years.
In November 2024, we used our commercial paper program to repay $300 million of 3.8%, 10-year bonds that matured. In 2024, we paid down $126 million of debt. 35 Table of Contents We decreased the annual dividend in 2024 to $.61 per share from $1.82 per share in 2023.
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.
We have experienced changes in the costs 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.
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%-30% of our sales. Since early 2022, the dynamic macroeconomic environment has pressured our residential end markets and negatively affected the demand for our products.
Some of these factors also influence spending on infrastructure, facilities, and equipment, which has historically impacted approximately 25%-30% of our sales. The dynamic macroeconomic environment has pressured most of our end markets and negatively affected the demand for our products. In recent years, the U.S. mattress market has become increasingly bifurcated.
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.
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.
Although these issues have not had a material impact on our results of operations, additional logistical disruptions could result in additional delays in our ability to deliver products timely to certain customers. The shortage of semiconductors continues to improve across the automotive industry globally and no longer negatively impacts the sale of our products.
Although these issues did not have a material impact on our results of operations, additional logistical disruptions including, but not limited to, labor availability, potential labor strikes, port congestion, and trade tensions, could result in additional costs and delays in our ability to deliver products timely to certain customers.
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 the first half of 2022, steel rod price increases outpaced steel scrap price increases, resulting in significantly expanded metal margins within the steel industry.
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). Steel rod and steel scrap costs both declined modestly during 2024, leading to metal margin compression. As a result, we experienced lower metal margins in our Steel Rod business.
For more information regarding cybersecurity risks, refer to Information T echnology and Cybersecurity Risk Factors on page 24 and Item 1C Cybersecurity on page 28. Goodwill and Long-Lived Asset 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.
Major Factors That Impact Our Business Goodwill and Long-Lived Asset Impairments 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 December 31, 2024, goodwill and other intangible assets represented $935 million, or 26% of our total assets.
Restructuring Plan In the first quarter of 2024, we committed to a restructuring plan, primarily associated with our Bedding Products segment and, to a lesser extent, our Furniture, Flooring & Textile Products segment (the “Restructuring Plan” or “Plan”), which is expected to be substantially complete by the end of 2025.
The 2024 Plan is primarily associated with our Bedding Products segment and, to a lesser extent, our Furniture, Flooring & Textile Products segment. The 2024 Plan was expanded in the second quarter of 2024 to include a restructuring opportunity within the Specialized Products segment and in the third quarter of 2024 to include the general and administrative cost structure initiatives.
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 most cases, the major changes (both increases and decreases) were passed through to customers with selling price adjustments. Steel costs modestly declined throughout 2024 as U.S. steel markets continued to face soft demand and increased foreign competition.
Pursuant to the Plan, we expect to: • consolidate between 15 and 20 production and distribution facilities (out of 50) in the Bedding Products segment and a small number of production facilities in our Furniture, Flooring & Textile Products segment; • reduce workforce levels over time; • incur restructuring and restructuring-related costs between $65 and $85 million, of which approximately half are anticipated to be incurred in 2024 and the remainder in 2025.
We expect to consolidate between 15 and 20 production and distribution facilities in the Bedding Products segment and a small number of production facilities in the Furniture, Flooring & Textile Products segment. The following summarizes the 2024 Plan activity: 2024 PROGRESS Bedding Products segment • Consolidated 14 production and distribution facilities (ten in U.S.
The fourth quarter 2023 activities resulting in the long-lived asset impairments discussed below were also considered a triggering event for goodwill impairment testing of the Bedding reporting unit, and no goodwill impairments were indicated.
The Bedding reporting unit's fair value exceeded carrying value by 40% at our second quarter 2023 testing date and had decreased to 19% after a triggering event occurred to test for goodwill impairment for this reporting unit late in the fourth quarter of 2023, as discussed in the "Long-lived asset impairment" section below.
We also divested a small South African innerspring operation in our International Bedding business. These topics are discussed in more detail in the sections that follow. INTRODUCTION Customers We serve a broad suite of customers, with our largest customer representing less than 6% of our sales in 2023. Many are companies whose names are widely recognized.
INTRODUCTION Customers We serve a broad suite of customers, with our largest customer representing less than 8% of our sales in 2024. 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.
Late in the fourth quarter of 2023, certain of our ECS and Kayfoam customers notified us of efforts to improve their financial position, which could adversely impact our future cash flow forecasts.
Aerospace’s long-term forecasts continue to reflect demand improvements as industry recovery continues. 37 Table of Contents LONG-LIVED ASSET IMPAIRMENT Late in the fourth quarter of 2023, we had a triggering event to review long-lived assets and test for impairment when certain of our Elite Comfort Solutions (ECS) and Kayfoam customers notified us of efforts to improve their financial position by moving their business to or exploring alternative suppliers, which adversely impacted our future cash flow forecast.
As discussed in the Major Factors that Impact our Business on page 37, we recorded a $444 million non-cash impairment of long-lived assets (primarily customer relationships, technology, and trademark intangibles) during the fourth quarter of 2023. Our annual goodwill impairment testing performed in the second quarter of 2023 and 2022 indicated no goodwill impairments.
This resulted in a non-cash pretax charge of $444 million for long-lived asset impairments (primarily customer relationships, technology, and trademark intangibles) in the Bedding Products segment during the fourth quarter of 2023. This impairment was unrelated to the 2024 Restructuring Plan discussed below.
We returned to inventory levels more reflective of demand in 2022, which was partially offset by a decrease in accounts payable as purchases slowed due to lower volume and efforts to reduce inventory levels. We ended 2023 with $332 million of availability under the $1.2 billion credit facility.
The decrease was primarily driven by lower earnings and less benefit from working capital. Cash flow in 2023 increased primarily from working capital improvements partially offset by lower earnings. We ended 2024 with $443 million of availability under the $1.2 billion credit facility.
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 . 39 Table of Contents Antidumping and countervailing orders on steel wire rod imports.
In June 2029, the DOC and ITC will conduct a sunset review to determine whether to extend those orders for an additional five years.
Any failure to achieve the intended outcomes could materially adversely affect our business, financial condition, results of operations and cash flows, and liquidity. We continue to evaluate opportunities across our businesses for further restructuring opportunities in addition to those activities included in the announced Plan.
We continue to evaluate our businesses for further restructuring opportunities in addition to those activities included in the 2024 Plan. The execution of any of these opportunities may result in additional material restructuring costs, restructuring-related costs, or impairments.
Management uses the 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 Long-Lived Asset Impairment Weak demand and changing market dynamics in the bedding industry have created disruption and financial instability with some of our customers.
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 metric, and it is useful to investors, as supplemental information to analyze our underlying sales performance from period to period in our legacy businesses.
In February 2024, one respondent filed an appeal of the CIT's decision to the U.S. Court of Appeals for the Federal Circuit. These matters and the other appeals are ongoing with no timeline for decisions. 2023 mattress antidumping matter.
Court of International Trade (CIT), some of which remain ongoing, the CIT ruled in favor of the ITC and petitioners and sustained the ITC’s unanimous injury decision. In February 2024, one respondent filed an appeal of the CIT's decision to the U.S.
At December 31, 2023, goodwill and other intangible assets represented $1.7 billion, or 36% 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 24% of total assets.
In addition, net property, plant and equipment, operating lease right-of-use assets, and sundry assets totaled $1,036 million, or 28% of total assets. GOODWILL IMPAIRMENT We test goodwill for impairment at the reporting unit level (the business groups that are one level below the operating segments) when triggering events occur or at least annually.
The DOC’s preliminary determination on dumping was issued in February 2024, imposing duties ranging from 11% to 745% on finished mattresses. The DOC’s final determinations are expected in July 2024, and the ITC’s final determination is expected in September 2024.
The ITC made a preliminary determination of injury in September 2023, and the DOC’s 42 Table of Contents PART II preliminary determination on dumping was issued in February 2024. With respect to eight of the countries, the DOC’s final dumping determinations were issued in May 2024, and the ITC's final injury determination was issued in June 2024.
Costs began to moderate in late 2022 and have returned to pre-pandemic conditions during 2023. We typically pass through cost fluctuations to our customers. Our other raw materials include woven and nonwoven fabrics. We have experienced changes in the costs of these materials and generally have been able to pass them through to our customers.
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. Although pricing fluctuated throughout 2024, average costs for the year were flat versus 2023. Our other raw materials include woven and nonwoven fabrics.
Removed
Earnings in 2022 decreased primarily from lower trade sales volume, lower overhead absorption from reduced production, operational inefficiencies in Specialty Foam, higher raw material and transportation costs and operational inefficiencies in Automotive, and the non-recurrence of a prior year gain on the sale of real estate associated with our exited Fashion Bed business.
Added
Earnings in 2024 decreased primarily from $676 million non-cash goodwill impairment charges, $50 million of restructuring and impairment charges, lower volume and unfavorable sales mix, raw material-related pricing adjustments (primarily in our Bedding Products segment), metal margin compression in our Steel Rod business, and other expected higher expense items such as bad debt, medical, and less benefit from a reduction to a contingent purchase price liability associated with a prior year acquisition.
Removed
These decreases were partially offset by metal margin expansion in our Steel Rod business and pricing discipline in the Furniture, Flooring & Textile Products segment. In 2023, we generated $497 million in cash from operations compared to $441 million in 2022. The increase was primarily driven by working capital improvements partially offset by lower earnings.
Added
These decreases were partially offset by the non-recurrence of a $444 million non-cash impairment of long-lived assets (primarily customer relationships, technology, and trademark intangibles), lower amortization as a result of the 2023 long-lived asset impairment, operational efficiency improvements, gains on the sale of real estate, and restructuring benefit.
Removed
Cash flow in 2021 was significantly impacted by increased working capital due to restocking efforts following inventory depletion in 2020. Although working capital was still a use of cash in 2022, it was much improved over 2021.
Added
The decision to reduce the dividend was made following a thorough evaluation by the Board and our management team. This action along with minimal acquisitions and share repurchases frees up capital to accelerate the deleveraging of our balance sheet and solidify our long-held financial strength. We had no acquisitions in 2024 and 2023.
Removed
In 2023, we repurchased minimal shares of our stock as we focused on managing cash and debt repayment. For the full year, we used $6 million to repurchase approximately .2 million shares of our stock at an average price of $32.56. Portfolio management remains a strategic priority.
Added
In 2024, we used $5 million to repurchase approximately .3 million shares of our stock at an average price of $19.17. In the first quarter of 2024, we committed to a restructuring plan (the “2024 Restructuring Plan” or “2024 Plan”).
Removed
Over the past several years, we have enhanced our business portfolio by executing on our strategy of pursuing profitable growth and exiting or restructuring businesses that consistently struggled to deliver acceptable returns. We had no acquisitions in 2023.
Added
We continue to make solid progress implementing the 2024 Plan. Portfolio management remains a strategic priority. We are focused on simplifying our portfolio to businesses that are the right long-term fit. These topics are discussed in more detail in the sections that follow.
Removed
In 2022, we acquired four businesses: 36 Table of Contents PART II a global manufacturer of hydraulic cylinders for heavy construction equipment with operations in Germany, China, and the U.S.; a small textiles business that converts and distributes construction fabrics for the furniture and bedding industries; and two Canadian-based distributors of products used for erosion control, stormwater management, and various other applications.
Added
We perform our annual goodwill impairment testing in the second quarter. The 2023 goodwill impairment testing indicated no impairments.
Removed
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.
Added
The 2024 annual goodwill impairment testing indicated that fair value had fallen below carrying value for three reporting units, and fair value exceeded carrying value by less than 100% for one reporting unit. 36 Table of Contents PART II The following table represents 2024 total goodwill impairments.
Removed
This impairment was unrelated to the Restructuring Plan as discussed in Operational Risk Factors beginning on page 16 in Item 1A Risk Factors and in the Restructuring Plan section below.
Added
This includes non-cash pretax charges of $675 million related to our second quarter annual goodwill impairment testing and $1 million related to a small operation in the Bedding Products segment that reached held-for-sale status in the fourth quarter of 2024 and was associated with the 2024 Plan.
Removed
We will continue to monitor our Bedding reporting unit, and changed facts and circumstances may lead to a different determination in the future.
Added
Year Ended Reporting Unit Segment December 31, 2024 Bedding Bedding Products $ 588 Work Furniture Furniture, Flooring & Textile Products 44 Hydraulic Cylinders Specialized Products 44 $ 676 The fair values of our reporting units in relation to their respective carrying values and significant assumptions used are presented in the tables in Note F to the Consolidated Financial Statements, beginning on page 96.
Removed
Optimizing our manufacturing and distribution footprint should reduce complexity, improve overall efficiency, and align capacity with anticipated future market demand.
Added
In general, the fair values for these reporting units decreased versus prior year due to macroeconomic pressures, including low demand, particularly in residential end markets. The fair values of our reporting units were reconciled to our consolidated market capitalization, which decreased due to the significant decline in stock price during the second quarter of 2024.
Removed
This includes $30 to $40 million in future cash costs, the majority of which are anticipated to be incurred in 2024; • ultimately realize a positive financial impact when fully implemented in late 2025; 37 Table of Contents • receive between $60 and $80 million in pretax net cash proceeds from the sale of real estate associated with the Restructuring Plan; and • experience a reduction in annual sales by approximately $100 million.
Added
Our closing stock price per share was $26.17 on December 29, 2023, $19.15 on March 28, 2024, and $11.46 on June 28, 2024.
Removed
It is also possible that the Plan may have a negative impact on our relationships with our employees, customers, and vendors. Finally, because restructuring activities are complex and involve time-consuming processes, substantial demands may be placed on management, which could divert attention from other business priorities or disrupt our daily operations.
Added
We concluded that an impairment existed under generally accepted accounting principles in connection with the preparation and review of our second quarter financial statements filed on August 7, 2024 as part of the quarterly report on Form 10-Q . If actual results differ materially from estimates used in our calculations, we could incur future impairment charges.
Removed
Steel costs inflated in the first half of 2022 but deflated in the second half of 2022 as demand in the steel markets softened. Steel costs fluctuated up and down throughout the year, but average costs were down versus 2022.
Added
Units with Impairments In addition to the decline in our stock price during the second quarter, the reporting units discussed below also had the following factors contributing to the impairments: Bedding Domestic bedding manufacturers are facing numerous challenges, including low demand, overcapacity, and increased pressure from finished mattress imports, resulting in financial stress across the industry.
Removed
Beginning in the second half of 2022 and continuing through 2023, metal margins compressed and, as a result, we experienced lower metal margins in our Steel Rod business. We have exposure to the cost of chemicals, including TDI, MDI, and polyol.
Added
The domestic mattress market has changed dramatically in a relatively short time span.
Removed
The cost of these chemicals has fluctuated at times, but we have generally passed the changes through to our customers. In 2022, chemical prices were relatively stable at historically high levels. Prices began to soften in the latter part of 2022 with continued declines through 2023.
Added
The landscape has shifted from a largely domestic OEM-produced innerspring mattress market to one where innerspring, foam, and hybrid mattresses are sold at a wide range of price points through a variety of channels and produced by a mix of domestic OEMs, domestic private label producers, and import manufacturers.
Removed
Shortages in the labor markets in some industries in which we operate could create challenges in hiring and maintaining adequate workforce levels. 38 Table of Contents PART II In 2022, some facilities experienced disruptions in logistics necessary to import, export, or transfer raw materials or finished goods, which generally resulted in increased transportation costs.
Added
These changing market dynamics and weak demand have created disruption and financial instability with some of our customers.
Removed
Supply Chain Shortages and Disruptions We have experienced supply chain disruptions related to labor availability and freight challenges, as well as higher costs associated with each of these issues. In 2022, we experienced delays in delivery of raw materials, parts, and finished goods because of shutdown or congested delivery ports and trucking constraints.
Added
Work Furniture Work Furniture demand for both contract and residential end-use products has remained at sustained low levels. Fair value exceeded carrying value by 74% at our second quarter 2023 testing date. Hydraulic Cylinders The Hydraulic Cylinders reporting unit's fair value at our second quarter 2023 testing date exceeded carrying value by 18%.
Removed
This resulted in reduced volume and higher costs in many of our businesses. These issues began to moderate in late 2022 and returned to near pre-pandemic conditions in 2023. In 2023, drought conditions lowered the water levels of the Mississippi River and Panama Canal, reducing traffic through these waterways.
Added
Fair value approximated carrying value primarily due to an August 2022 acquisition that is experiencing operational inefficiencies. Units with No Impairments, but Fair Value Exceeded Carrying Value by Less than 100% Aerospace Products The Aerospace Products reporting unit did not incur impairment charges, but fair value exceeded carrying value by less than 100% at both testing dates.
Removed
The challenges of securing an adequate supply of semiconductors have mostly been resolved, but could be challenged again by any number of unexpected or unplanned events. Overall, OEM inventory levels continue to improve with most every model available at nearly normal levels. Our Automotive Group uses semiconductors in our seat comfort, motors, and actuator products.
Added
The fair value of this reporting unit exceeded its carrying value by 21% at our second quarter 2024 testing date as compared to 44% in 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+2 added−0 removed3 unchanged
Biggest changeLong-term debt as of December 31, Scheduled Maturity Date 2024 2025 2026 2027 2028 Thereafter 2023 2022 Principal fixed rate debt $ 300.0 $ — $ — $ 500.0 $ — $ 1,000.0 $ 1,800.0 $ 1,800.0 Average stated interest rate 3.80 % — — 3.50 % — 3.95 % 3.80 % 3.80 % Principal variable rate debt — — — 1.8 — 2.0 3.8 3.8 Unamortized discounts and deferred loan costs (13.6) (15.6) Commercial paper 1 186.0 282.5 Miscellaneous debt and finance leases 11.4 12.9 Total debt 1,987.6 2,083.6 Less: current maturities 308.0 9.4 Total long-term debt $ 1,679.6 $ 2,074.2 1 The weighted average interest rate for the average net commercial paper outstanding activity during the years ended December 31, 2023 and 2022 was 5.2% and 3.2%, respectively.
Biggest change(11.7) (13.6) Commercial paper 1 368.0 186.0 Miscellaneous debt and finance leases 4.0 11.4 Total debt 1,864.1 1,987.6 Less: current maturities 1.3 308.0 Total long-term debt $ 1,862.8 $ 1,679.6 1 The weighted average interest rate for the average net commercial paper outstanding activity during the years ended December 31, 2024 and 2023 was 5.6% and 5.2%, respectively.
The fair value of fixed rate debt was approximately $175.0 less than carrying value at December 31, 2023 and approximately $210 million less than carrying value at December 31, 2022. The fair value of the fixed rate debt was based on quoted prices in an active market.
The fair value of fixed rate debt was approximately $245.0 million less than carrying value at December 31, 2024 and approximately $175.0 million less than carrying value at December 31, 2023. The fair value of the fixed rate debt was based on quoted prices in an active market.
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 at December 31 is as follows: Functional Currency (amounts in millions) 2023 2022 European Currencies $ 525.9 $ 555.8 Chinese Yuan 271.2 252.8 Canadian Dollar 236.3 217.3 Mexican Peso 85.4 55.2 Other 83.3 74.6 Total $ 1,202.1 $ 1,155.7 63 Table of Contents
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 at December 31 is as follows: Functional Currency (amounts in millions) 2024 2023 European Currencies $ 396.5 $ 525.9 Chinese Yuan 267.2 271.2 Canadian Dollar 208.9 236.3 Mexican Peso 71.4 85.4 Other 78.8 83.3 Total $ 1,022.8 $ 1,202.1
It is our policy not to speculate using derivative instruments. Information regarding cash flow hedges and fair value hedges is provided in Note A beginning on page 80 and Note R beginning on page 115 of the Notes to Consolidated Financial Statements and is incorporated by reference into this section.
Information regarding cash flow hedges and fair value hedges is provided in Note A beginning on page 82 and Note S beginning on page 120 of the Notes to Consolidated Financial Statements and is incorporated by reference into this section. 64 Table of Contents PART II Investment in Foreign Subsidiaries We view our investment in foreign subsidiaries as a long-term commitment.
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.
This investment may take the form of either permanent capital or notes.
Added
Long-term debt as of December 31, Scheduled Maturity Date 2025 2026 2027 2028 2029 Thereafter 2024 2023 Principal fixed rate debt $ — $ — $ 500.0 $ — $ 500.0 $ 500.0 $ 1,500.0 $ 1,800.0 Average stated interest rate — — 3.50 % — 4.40 % 3.50 % 3.80 % 3.80 % Principal variable rate debt — — 1.8 — — 2.0 3.8 3.8 Unamortized discounts and deferred loan costs .
Added
It is our policy not to speculate using derivative instruments.

Other LEG 10-K year-over-year comparisons