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Leggett & Platt, Incorporated's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Across the company as a whole, unit volume increased slightly. Demand improved in certain of our markets during 2011 with automotive and office furniture leading the way. In contrast, stagnant demand negatively impacted our major residential markets. Many consumers continued to postpone spending on larger ticket items such as bedding and furniture in the phase of ongoing weak economy.

On the third quarter earnings call, we stated that our view of continuing demand weakness in certain of our markets and our plan to initiate actions that would yield improved ongoing profitability. In late December, we announced further restructuring which included the closure of 4 production facilities along with other cost reductions. These activities resulted in a $0.16 per share, predominantly noncash charge to earnings during the fourth quarter. The restructuring-related activities that we initiated during 2011 in total should benefit 2012 earnings per share by approximately $0.07 to $0.10.

We were very pleased to report in late December that we were acquiring Western Pneumatic Tube, a leading provider to the aerospace industry of integral components for critical aircraft systems. Our strategic long-term 4% to 5% annual growth objective envisions periodic acquisitions of companies exactly like Western. High-quality businesses with secure leading positions in growing, profitable, attractive markets and that makes sense to be part of Leggett & Platt. The acquisition was completed on January 12 and is expected to be slightly accretive to EPS in 2012.

Operating cash for the fourth quarter was $127 million, bringing the full year 2011 operating cash to $329 million. With concerns about weak markets, our operating folks continue to closely monitor the working capital levels. We ended the year with working capital at 11.8% of annualized sales. Now current liabilities include approximately $30 million associated with an interest rate swap that we entered in 2010.

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