Interim Presentation (Policies)

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Interim Presentation

The interim financial statements of Leggett & Platt, Incorporated (“we”, “us” or “our”) included herein have not been audited by an independent registered public accounting firm. The statements include all adjustments, including normal recurring accruals, which management considers necessary for a fair statement of our financial position and operating results for the periods presented. We have prepared the statements pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to such rules and regulations. The operating results for interim periods are not necessarily indicative of results to be expected for an entire year.

The December 31, 2015 financial position data included herein was derived from the audited consolidated financial statements included in Form 10-K, but does not include all disclosures required by GAAP. For further information, refer to the financial statements and footnotes included in our annual report on Form 10-K for the year ended December 31, 2015.

New Accounting Guidance

The Financial Accounting Standards Board (FASB) regularly issues updates to the FASB Accounting Standards Codification that are communicated through issuance of an Accounting Standards Update (ASU).   Below is a summary of the ASUs, effective for current or future periods, most relevant to our financial statements:

• ASU 2016 -13 “Financial Instruments - Credit Losses": Replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This ASU will be effective January 1, 2020. We are evaluating this guidance and do not expect it to have a material impact on our future financial statements.

• ASU 2016-09 “Improvements to Employee Share-Based Payment Accounting”:  Simplifies the financial reporting for share-based compensation.  We adopted this guidance in the first quarter of 2016:

◦ All income tax effects of stock-based compensation are now classified within income tax expense, rather than recognizing some of the effects in additional contributed capital.  To the extent tax deductions from stock-based compensation payments differ from the compensation cost recognized for financial reporting purposes, the tax effects are recorded as discrete items in that quarter.

◦ Prospective application was required, and the impact of adopting this new guidance resulted in an additional tax benefit of $2.5 recorded in the second quarter of 2016, and $8.3 for the first six months of 2016.

◦ This ASU impacted the calculation of the dilutive effect of stock-based compensation on earnings per share, which resulted in an increase in our average diluted shares outstanding of approximately .5 shares.      

◦ The income tax effects are now classified as cash flow from operations, rather than cash flow from financing activities. We have elected to apply this cash flow classification guidance prospectively.

◦ Consistent with our past practice, when shares are withheld from the issuance of stock to fund the payment of the employee’s taxes, the payment is classified as a financing activity.

◦ We have elected to continue to estimate the number of stock-based awards expected to vest, rather than electing to account for forfeitures as they occur.

• ASU 2016 -02 “ Leases”:  Requires that a lessee recognize assets and liabilities on the balance sheet for lease terms of more than 12 months. This ASU will be effective January 1, 2019, and we are evaluating its impact on our future financial statements.  

• ASU 2015-03 “Simplifying the Presentation of Debt Issuance Costs”:  Changes the presentation of long-term debt issuance costs in the financial statements to a reduction of the related liability rather than as a separate asset. We adopted this ASU in the first quarter of 2016 and retrospectively reclassified net deferred loan costs associated with each of our long-term debt issuances from assets to long-term debt on the balance sheet.  The adoption of this ASU did not have a material impact on our financial statements.             

• ASU 2014-09 “Revenue from Contracts with Customers”:  Supersedes most of the existing authoritative literature for revenue recognition and prescribes a five-step model for recognizing revenue. In July 2015, the FASB deferred the effective date of this ASU by one year, which results in the new standard being effective January 1, 2018. In addition, during March, April and May 2016, the FASB issued additional updates (ASU 2016-06, ASU 2016-10 and ASU 2016-12) which clarify the guidance on specific items such as principal-versus agent, identification of performance obligations and licensing implementation, clarification of noncash consideration, and a practical expedient for reflecting contract modifications at transition. This standard requires either a retrospective or a modified retrospective transition approach to adoption. This ASU will be effective January 1, 2018, and we are evaluating its impact on our future financial statements.