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What Changed
Risk factors · Feb 26, 2025 → Feb 26, 2026
161 added · 133 removed between the two most recent 10-Ks. The risks a company starts — or stops — disclosing are often the story.
Newly disclosed
Reporting Unit (Dollar amounts in millions) December 31, 2025 Goodwill Value Fair value in excess of carrying value as of June 30, 2025 Bedding $ 324 20 % Home Furniture 68 34 Work Furniture 55 29 If expectations are not met in future quarters, additional goodwill impairment(s) may be required.
As a result, we performed recoverability and impairment testing, which led to a non-cash pretax charge of $444 million for long-lived asset impairments (primarily customer relationships, technology, and trademarks) in the Bedding Products segment for the fourth quarter of 2023.
In addition, we had an impairment of $1 million related to a small U.S. machinery business within the Bedding Products segment that reached held-for-sale status in the fourth quarter of 2024 and was associated with the 2024 Plan.
Long-lived Asset Impairment As discussed in Note E to the Consolidated Financial Statements on page 94, impairment charges of $19 million in 2025 were related to the 2024 Plan and were primarily related to lease impairments.
In addition, net property, plant, and equipment, operating lease right-of-use assets, and other noncurrent assets totaled $950 million, or 27% of total assets. 18 Table of Contents PART I 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 in the second quarter.
We had $6 million of long-lived asset impairment charges in 2024, of which $4 million were associated with the 2024 Plan.
While we believe our current asset valuations are appropriate, future assessments may result in non-cash charges, which would have a material negative impact to our earnings. 19 Table of Contents PART I If we do not comply with the restrictive covenants in our credit facility, we may not be able to borrow in the commercial paper market or under our credit facility and our outstanding debt instruments may default, all of which would adversely impact our liquidity.
While improper or unauthorized use of AI technologies increases the risk of exposing sensitive data, violating third-party intellectual property rights or privacy laws, the use of authorized AI also carries certain inherent risks, including inaccurate or biased responses, all of which could lead to errors in our business activities and harm our reputation.
In addition, if we fail to adapt or are unable to deploy AI successfully, or if our competitors and other third parties adopt AI into their operations and processes more rapidly or effectively than us, we could be placed at a competitive disadvantage and our ability to compete could be negatively impacted.
The annual goodwill impairment testing in the second quarter of 2025 indicated no impairments.
On August 29, 2025, we divested our Aerospace Products Group which was reported in our Specialized Products segment, as discussed in Note S to the Consolidated Financial Statements on page 121, and under Divestitures and Acquisitions in Item 1.
In January 2026, our Board of Directors, in consultation with its financial and legal advisors, announced that it had determined that the 5 Table of Contents PART I Somnigroup offer undervalues the Company and publicly declined the Somnigroup proposal.
No longer disclosed
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.
While the Aerospace Products reporting unit did not incur impairment charges, fair value exceeded carrying value by 21% in our 2024 testing.
If we do not comply with the restrictive covenants in our credit facility, we may not be able to borrow in the commercial paper market or under our credit facility and our outstanding debt instruments may default, all of which would adversely impact our liquidity.
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.
Furthermore, the Trump Administration has initiated investigations into nonreciprocal trade arrangements with the goal of implementing a tariff equalization scheme, the threat or implementation of which could spur additional retaliatory moves by other countries.
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.
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 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.
Our 2024 Restructuring Plan may not achieve its intended outcomes, and we may incur restructuring costs, restructuring-related costs, and impairments in addition to those anticipated to be incurred in connection with our announced 2024 Restructuring Plan. 2024 Restructuring Plan In the first quarter of 2024, we committed to a restructuring plan (the “2024 Restructuring Plan” or “2024 Plan”).
In 2025, we expect to have further consolidations in Bedding Products (primarily in Specialty Foam), achieve full implementation of manufacturing efficiency improvement activities in Hydraulic Cylinders, and complete restructuring initiatives in Flooring Products.
Below is a table containing the 2024 Restructuring Plan costs, EBIT benefit, sales attrition, and proceeds from the sale of real estate incurred or realized in 2024, and our estimates for 2025 and thereafter: (Dollar amounts in millions-all pretax) 2024 Actual Estimates for 2025 1 Total Plan Estimate 2, 3, 4 Total Plan Prior Estimate 3 Plan activity: Restructuring and restructuring-related costs: Cash $ 30 $15 to $20 $45 to $50 $30 to $40 Non-cash 18 15 to 20 35 to 40 35 to 45 Total costs $ 48 $30 to $40 $80 to $90 $65 to $85 Pretax net cash from real estate 5 $ 20 $15 to $40 $60 to $80 $60 to $80 Plan impacts: Sales attrition $ 15 $ 60 $ 80 $ 80 EBIT benefit $ 22 $55 to $60 $60 to $70 $50 to $60 1 Estimates for 2025 sales attrition and EBIT benefit include full year impacts of the actions completed in 2024 and additional actions expected to be completed in 2025. 2 Due to implementation timing of certain restructuring activities, we expect to have a small amount of incremental EBIT benefit and sales attrition in 2026.
Additionally, due to the timing of listing properties, we expect the remainder of real estate sales to occur in 2026. 3 Estimates of annualized sales attrition and EBIT benefit are expected to be realized after the 2024 Plan is fully implemented in late 2025. 4 Increases in our total plan estimates for both cash costs and EBIT benefit are related to 2024 Plan activities in our Specialized Products segment and our general and administrative initiatives. 5 Pretax net cash from real estate is only related to the 2024 Plan and does not include the sale of idle real estate.