ACQUISITIONS

6 Months Ended

Jun. 30, 2019

The following table contains the estimated fair values (using inputs as discussed in Note 14) of the assets acquired and liabilities assumed at the date of acquisition for all acquisitions during the periods presented. Of the goodwill included in the table below, $127.1 is expected to be deductible for tax purposes.



	Six Months Ended June 30,
	2019			2018
Accounts receivable	$	70.7		$	12.9
Inventory	60.7			16.0
Property, plant and equipment	80.7			26.5
Goodwill	559.8			26.4
Other intangible assets:
Customer relationships (15-year life)	372.3			18.0
Technology (5 to 15-year life)	173.3			4.9
Trademarks and trade names (15-year life)	65.8			2.7
Non-compete agreements and other (5-year life)	28.1			.9
Other current and long-term assets	27.3			.8
Current liabilities	(44.3		)	(10.1		)
Deferred income taxes	(128.5		)	(9.4		)
Other long-term liabilities	(21.6		)	(.8		)
Fair value of net identifiable assets	1,244.3			88.8
Less: Additional consideration payable (receivable)	—			(1.4		)
Net cash consideration	$	1,244.3		$	90.2

The following table summarizes acquisitions for the periods presented.

We are finalizing all the information required to complete the purchase price allocations related to recent acquisitions and do not anticipate any material modifications.

Certain of our acquisition agreements provide for additional consideration to be paid in cash at a later date and are recorded as liabilities at the acquisition date. At June 30, 2019 and December 31, 2018, our liability for these future payments was $9.5 ($9.5 current) and $10.8 ($.8 current and $10.0 long-term), respectively. Components of the liability are based on estimates and contingent upon future events, therefore, the amounts may fluctuate materially until the payment dates. Additional consideration, including interest, paid on prior year acquisitions was $1.1 and $8.0 for the six months ended June 30, 2019 and 2018, respectively.

A brief description of our acquisition activity by year for the periods presented is included below.

2019

In January 2019, we completed the acquisition of ECS, a leader in proprietary specialized foam technology, primarily for the bedding and furniture industries. Through this acquisition, we gained critical capabilities in proprietary foam technology, along with scale in the production of private-label finished mattresses. There was no contingent consideration associated with this acquisition.

2018

In May 2018, we acquired a manufacturer and distributor of silt fence, a core product for our Geo Components business unit, for $2.6.

In January 2018, we acquired Precision Hydraulic Cylinders (PHC), a leading global manufacturer of engineered hydraulic cylinders primarily for the materials handling market. The purchase price was $87.4 and added $26.9 of goodwill. PHC serves a market of mainly large Original Equipment Manufacturer (OEM) customers utilizing highly engineered components with long product life-cycles, yet representing a small percentage of the end product’s cost. PHC represents a new growth platform and forms a new business group entitled Hydraulic Cylinders within the Specialized Products segment.

Pro forma Results

The following table summarizes, on an unaudited pro forma basis, the combined results of operations of Leggett and ECS as though the acquisition had occurred as of January 1, 2018. It is not necessarily indicative of the results of operations that would have been realized had the ECS acquisition occurred as of January 1, 2018, nor is it meant to be indicative of any future results of operations. It does not include benefits expected from revenue or product mix enhancements, operating synergies or cost savings that may be realized or any estimated future costs that may be incurred to integrate the ECS business.



	Six Months Ended				Three Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Net sales	$	2,389.9	$	2,425.5	$	1,213.2	$	1,251.5
Net earnings	149.1		145.6		86.2		82.4
EPS basic	1.11		1.08		.64		.61
EPS diluted	1.11		1.07		.64		.61

The information above reflects pro forma adjustments based on available information and certain assumptions that we believe are reasonable, including:


•	Amortization and depreciation adjustments relating to fair value estimates of intangible and tangible assets;


•	Incremental interest expense on debt incurred in connection with the ECS acquisition;


•	Amortization of the fair value adjustment to inventory as though the transaction occurred on January 1, 2018;


•	Recognition of transaction costs as though the transaction occurred on January 1, 2018; and

•

Estimated tax impacts of the pro forma adjustments.

Six Months Ended

Number of Acquisitions

Product/Service

June 30, 2019

Residential Products

A leader in proprietary specialized foam technology, primarily for the bedding and furniture industries

June 30, 2018

Residential Products; Specialized Products

Manufacturer and distributor of silt fence; Global manufacturer of engineered hydraulic cylinders