INVENTORIES

9 Months Ended

Sep. 30, 2021

As of January 1, 2021, we changed our method for valuing certain inventories (primarily domestic steel-related inventories, largely in the Bedding Products and Furniture, Flooring & Textile Products segments) to the FIFO cost method from the LIFO cost method. We believe that this change in accounting is preferable as it more closely resembles the physical flow of inventory, is a more consistent method to value inventory across our businesses, and results in improved comparability with industry peers. After this change, we no longer utilize the LIFO cost method; the majority of our inventories are now valued using the FIFO cost method, with the remainder valued using an average-cost method. Prior to this change, our LIFO inventories represented about one-third of our total inventories as of December 31, 2020.

The effects of this change have been retrospectively applied to all periods presented. This change resulted in an increase to retained earnings of $29.4 as of January 1, 2020 in accordance with ASC 250, Accounting Changes and Error Corrections.

In addition, certain financial statement line items in our Consolidated Condensed Statement of Operations for the three and nine months ended September 30, 2020, our Consolidated Condensed Statement of Cash Flows for the nine months ended September 30, 2020, and our Consolidated Condensed Balance Sheet as of December 31, 2020, were adjusted as follows:


	As Originally Reported		Effect of Change		As Adjusted










Consolidated Condensed Statement of Operations for the three months ended September 30, 2020
Cost of goods sold	$	940.8	$	(2.9)	$	937.9


Earnings before interest and income taxes	147.3		2.9		150.2
Income taxes	22.0		.7		22.7
Net earnings	104.9		2.2		107.1

Net earnings per share attributable to Leggett & Platt, Inc. common shareholders:
Basic	$	.77	$	.02	$	.79
Diluted	$	.77	$	.02	$	.79




Consolidated Condensed Statement of Operations for the nine months ended September 30, 2020
Cost of goods sold	$	2,462.3	$	(1.1)	$	2,461.2
Net gain from sale of assets and business	(2.5)		.4		$	(2.1)
Earnings before interest and income taxes	250.8		.7		251.5
Income taxes	45.5		.1		45.6
Net earnings	144.5		.6		145.1

Net earnings per share attributable to Leggett & Platt, Inc. common shareholders:
Basic	$	1.06	$	.01	$	1.07
Diluted	$	1.06	$	.01	$	1.07

Consolidated Condensed Balance Sheet as of December 31, 2020
Total inventories, net	$	645.5	$	46.0	$	691.5
Deferred income taxes	194.2		11.2		205.4
Retained earnings	2,762.4		34.8		2,797.2

Consolidated Condensed Statement of Cash Flows for the nine months ended September 30, 2020
Net earnings	$	144.5	$	.6	$	145.1
Writedown of inventories	8.3		1.1		9.4
Deferred income tax (benefit) expense	(12.6)		.1		(12.5)
Other, net	10.6		.4		11.0
Inventories	38.5		(2.2)		36.3

The following table recaps the components of inventory for each period presented inclusive of the accounting method change discussed above:


	September 30, 2021		December 31, 2020
Finished goods	$	386.0	$	302.3
Work in process	72.1		47.1
Raw materials and supplies	512.1		342.1

Inventories	$	970.2	$	691.5

All inventories are stated at the lower of cost or net realizable value. We generally use standard costs which include materials, labor, and production overhead at normal production capacity.

Inventories are reviewed at least quarterly for slow-moving and potentially obsolete items using actual inventory turnover and, if necessary, are written down to estimated net realizable value. We have had no material changes in inventory writedowns or slow-moving and obsolete inventory reserves in any of the periods presented.