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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the Transition period from to
COMMISSION FILE NUMBER 1-7845
LEGGETT & PLATT, INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MISSOURI 44-0324630
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
NO. 1 LEGGETT ROAD 64836
CARTHAGE, MISSOURI (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (417) 358-8131
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ------------------------
Common Stock, $.01 par value New York Stock Exchange
Pacific Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Pacific Stock Exchange
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Sec. 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this form 10-K or any amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by nonaffiliates of the
Registrant was approximately $4,184,896,482.
There were 97,977,739 shares of the Registrant's common stock outstanding as
of February 27, 1998.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive Proxy Statement for its Annual
Meeting of Shareholders to be held May 13, 1998, are incorporated by reference
into Part III of this report.
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PART I
ITEM 1. BUSINESS
The Company is a manufacturer. It was incorporated in 1901 as the successor
to a partnership formed in 1883 at Carthage, Missouri. That partnership was a
pioneer in the manufacture and sale of steel coil bedsprings. The Company
today serves markets for components and related products for bedding,
furniture and other furnishings including commercial fixtures, store displays,
shelving, and related products as well as materials, equipment and
technologies used by Company operations and other manufacturers in diverse
markets. The term "Company," unless the context requires otherwise, refers to
Leggett & Platt, Incorporated and its majority owned subsidiaries.
General Development of Business. In 1997 and the first ten weeks of 1998 the
Company acquired 39 businesses with aggregate annualized sales of
approximately $560 million. Twenty-eight of the acquired operations produce
furnishings, components, commercial fixtures or related furnishings products.
Annualized sales of these operations total approximately $400 million. Also
acquired were three aluminum die casting companies with aggregate annualized
sales of approximately $80 million and eight businesses producing other
materials used by the Company to manufacture its products or which utilize
specialized product or manufacturing technologies with aggregate annualized
sales of approximately $80 million.
Reference is also made to Note B of the Notes to Consolidated Financial
Statements for further information about the Company's acquisitions in 1997.
Products, Customers and Markets. The Company's products include a broad line
of components used by manufacturers to make finished products, finished
furnishings such as commercial fixtures and displays and a number of different
products outside the furnishings industry. Examples of furnishings components
manufactured by the Company include (i) innerspring and boxspring units for
mattresses and boxsprings; (ii) foam, textile, fiber and other cushioning
materials for bedding and furniture; (iii) springs and seating suspensions for
chairs, sofas and other furniture; (iv) steel mechanisms and hardware for
reclining chairs, sleeper sofas and other types of motion furniture; (v) chair
controls, bases and columns for office furniture; (vi) aluminum die cast
components for gas barbecue grills, outdoor lighting fixtures, clean room
flooring and furniture, (vii) molded plastic parts and seating constructions;
(viii) non-fashion construction fabrics; and (ix) other furniture supplies.
The Company's diverse range of components gives its furnishings
manufacturer-customers access to a single source for many of their component
needs. For example, a manufacturer of bedding can come to the Company for
almost every component part of a mattress and boxspring, except the
upholstering material. This same principle holds true for manufacturers of
other furnishings such as upholstered recliner chairs, sofas and loveseats and
office chairs. Because the Company has the advantage of long production runs
and numerous production and assembly locations, it can generally produce
component products more efficiently than its customers. Therefore, components
customers can focus on the design, style and marketing of their various
furnishings products, rather than the production of components.
The Company also manufactures and sells finished furnishings. These finished
products include metal and wooden shelving, point-of-purchase displays and
other commercial fixtures; bed frames; daybeds; bunk beds; headboards;
adjustable electric beds; fashion beds and carpet underlay.
The Company's products are sold and distributed primarily through its own
sales personnel. The Company has several thousand customers, most of which are
manufacturers. The Company is not dependent upon any single customer or any
few customers. A large number of the Company's furnishings customers
manufacture finished bedding (mattresses and boxsprings) or upholstered and
non-upholstered furniture for home, office, institutions and commercial
applications. Customers for commercial furnishings include manufacturers of
packaged consumer products and retailers that use the Company's products to
display a wide variety of merchandise throughout their facilities and at
point-of-purchase. Some of the finished furniture produced by the Company is
sold to bedding and furniture manufacturers that resell the furniture under
their own labels to wholesalers or retailers. Certain finished furniture, such
as bed frames, fashion beds, daybeds and other select items, are also sold by
the Company directly to retailers.
1
Outside the furnishings industry, the Company also produces and sells a
number of different products for various consumer and industrial markets.
These products require manufacturing technologies similar to those used in
making furnishings products. Materials which the Company produces for its own
use are sold to customers outside the Company as well. Examples of these
diverse products include: (i) aluminum die castings sold to manufacturers of
small to mid-size gasoline engines, large and mid-range diesel engines,
motorcycles, recreational boats, electric motors and telecommunications
equipment; (ii) non-fashion fabrics sold to apparel manufacturers; (iii) bale-
tie machinery and parts and galvanized wire and wire ties sold to customers
who compact and recycle solid waste or bale cotton or synthetic fibers; (iv)
seating components and systems, and other sound insulation materials sold to
automotive suppliers; (v) steel wire and welded steel tubing sold to
manufacturers of a wide range of industrial and consumer products; (vi)
aluminum ingot sold to manufacturers of aluminum products; (vii) motion
controls for manufacturing equipment; (viii) quilting machinery and materials
handling equipment sold to manufacturers of consumer products; and (ix)
injection molded plastic products.
The Company's customers for these diverse products participate in a number
of different specialized or niche markets for consumer and industrial
products. These customers have requirements for various aluminum die castings,
components for automotive seating and sound insulation, various kinds and
sizes of steel wire and steel tubing, non-fashion fabrics, cushioning
materials, specialized production equipment and proprietary motion controls
for manufacturing machinery.
The table below sets out further information concerning sales of each class
of the Company's products:
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
SUMMARY OF SALES
YEAR ENDED DECEMBER 31
----------------------------------------------
1997 1996 1995
-------------- -------------- --------------
(UNAUDITED)
(DOLLAR AMOUNTS IN MILLIONS)
Furnishings products
Bedding components........... $ 746.9 25.7% $ 632.5 25.7% $ 558.4 24.8%
Furniture and other
components.................. 846.6 29.1 766.7 31.1 736.4 32.6
Finished products............ 635.4 21.8 501.3 20.3 433.0 19.2
-------- ----- -------- ----- -------- -----
Total furnishings products. 2,228.9 76.6 1,900.5 77.1 1,727.8 76.6
Diversified products........... 680.3 23.4 565.7 22.9 529.1 23.4
-------- ----- -------- ----- -------- -----
Net sales.................. $2,909.2 100.0% $2,466.2 100.0% $2,256.9 100.0%
======== ===== ======== ===== ======== =====
Reference is also made to Note J of the Notes to Consolidated Financial
Statements for further segment information.
Foreign sales are a minor portion of the Company's business. However,
foreign sales are growing and the Company is cautiously proceeding to expand
in foreign locations where opportunities present themselves.
The Company has several operations in Canada producing primarily components
used by manufacturers of bedding and furniture products as well as commercial
fixtures. The Company's international operations outside Canada are primarily
located in Europe and Mexico and involve (i) the sale of machinery and
equipment designed to manufacture the Company's innersprings, certain other
spring products and bedding and other products manufactured by the Company's
customers, (ii) the licensing of patents owned and presently maintained by the
Company in foreign countries, (iii) aluminum die casting, and (iv) the
production of seating components, wire innerspring and boxspring units.
Reference is made to Note J of the Notes to Consolidated Financial
Statements for further information concerning the Company's operations outside
of the United States.
2
Raw Materials. The Company uses a variety of raw materials in manufacturing
its products. Some of the Company's most important raw materials include steel
rod from which steel wire is drawn, coil steel, woven and nonwoven fabrics,
aluminum, aluminum scrap, angle iron, sheet steel, dimension lumber, textile
scrap, foam chemicals, foam scrap, and plastic. Substantially all of the
Company's requirements for steel wire, an important material in many of the
Company's products, are supplied by Company-owned wire drawing mills. The
Company also produces, at various locations, for its own consumption and for
sale to customers not affiliated with the Company, slit coil steel, welded
steel tubing, textile fibers, dimension lumber and aluminum ingot from scrap
aluminum. Numerous supply sources for the raw materials used by the Company
are available. The Company did not experience any significant shortages of raw
materials during the past year.
Patents and Trademarks. The Company holds numerous patents concerning its
various product lines. No single patent or group of patents is material to the
Company's business as a whole. Examples of the Company's more significant
trademarks include SEMI-FLEX(TM), LOK-Fast(TM) and DYNA-Lock(TM) (boxspring
components and foundations); Mira-Coil(R) and Lura-Flex(TM) (mattress
innersprings); Nova-Bond(R) and Flexnet(TM) (insulators for mattresses);
ADJUSTA-MAGIC (adjustable electric beds); Wallhugger(R) and Hi-Style(TM)
(recliner chairs); SUPER SAGLESS(R) (motion and sofa sleeper mechanisms); no-
sag(R) (sinuous wire); Matrex(R) (webbing seating systems); and Gribetz, Spuhl
and Cyclo-Index (machinery).
Research and Development. The Company maintains research, engineering and
testing centers at Carthage, Missouri, and also does research and development
work at several of its other facilities. The Company is unable to precisely
calculate the cost of research and development because the personnel involved
in product and machinery development also spend portions of their time in
other areas. However, the Company believes the cost of research and
development was approximately $10 million in 1997, $9 million in 1996 and $7
million in 1995.
Employees. The Company has approximately 26,000 employees of whom
approximately 21,000 are engaged in production. Approximately 28% of the
Company's production employees are represented by labor unions. The Company
did not experience any material work stoppage related to the negotiation of
contracts with labor unions during 1997. Management is not aware of any
circumstances which are likely to result in a material work stoppage related
to the negotiations of any contracts expiring during 1998.
Competition. There are many companies offering products which compete with
those manufactured and sold by the Company. The markets for the Company's
products are highly competitive in all aspects. Given the diverse range of
components and other products produced by the Company, the number of other
companies competing with respect to any class or type of components or other
products varies over the Company's product range. There are also a number of
maker-users (vertically integrated manufacturers) of many of the products the
Company manufactures. The primary competitive factors in the Company's
business include price, product quality and customer service. To the best of
the Company's knowledge, it is the largest supplier in the United States of a
diverse range of components to the furnishings industry.
Backlog. The Company's relationship with its customers and its manufacturing
and inventory practices do not provide for the traditional backlog associated
with some manufacturing entities and no backlog data is regularly prepared or
used by management.
Government Regulation. The Company's various operations are subject to
federal, state, and local laws and regulations related to the protection of
the environment, worker safety, and other matters. Environmental regulations
include those relating to air and water emissions, underground storage tanks,
waste handling, and the like. While the Company cannot forecast policies that
may be adopted by various regulatory agencies, management believes that
compliance with these various laws and regulations will not have a material
adverse effect on the consolidated financial condition or results of
operations of the Company.
One of the Company's subsidiaries is performing an environmental
investigation at a Florida plant site pursuant to a negotiation with local and
Federal environmental authorities. The costs of the investigation and expected
remediation actions will be shared equally by the Company and a former joint
owner of the plant site.
3
ITEM 2. PROPERTIES
The Company's most important physical properties are its manufacturing
plants. These manufacturing plants include five wire drawing mills, three
welded steel tubing mills, two aluminum smelting operations and over 130 major
manufacturing facilities located in over 30 states, Canada and Mexico. Other
Company locations are engaged in assembly, warehousing, sales, administration
or research and development. In addition, the Company has several locations in
Europe and other foreign countries outside North America. Its corporate
headquarters are located in Carthage, Missouri.
Most of the Company's major manufacturing plants are owned by the Company.
The Company also conducts certain operations in leased premises. Terms of the
leases, including purchase options, renewals and maintenance costs, vary by
lease. For additional information regarding lease obligations, reference is
made to Note F of the Notes to Consolidated Financial Statements.
Properties of the Company include facilities which, in the opinion of
management, are suitable and adequate for the manufacture, assembly and
distribution of its products. These properties are located to allow quick and
efficient deliveries and necessary service to the Company's diverse customer
base.
ITEM 3. LEGAL PROCEEDINGS
The Company is a defendant in various workers' compensation, product
liability, vehicle accident, employment, intellectual property, labor
practices and other claims and legal proceedings, the resolution of which
management believes will not have a material adverse effect on the
consolidated financial condition or results of operations of the Company in
the ordinary course of business.
The Company is party to a small number of proceedings in which a
governmental authority is a party and which involve laws regulating the
discharge of materials into the environment. These proceedings deal primarily
with waste disposal site remediation. Management believes that potential
monetary sanctions, if imposed in any or all of these proceedings, or any
capital expenditures or operating expenses attributable to these proceedings,
will not have a material adverse effect on the consolidated financial
condition or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
4
PART II
ITEM 5. MARKET DATA FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
STOCK MARKET AND OWNERSHIP DATA
The Company's common stock is listed on The New York and Pacific Stock
Exchanges with the trading symbol LEG. The table below highlights quarterly
and annual stock market information for the last two years.
PRICE RANGE VOLUME OF
--------------- SHARES DIVIDEND
HIGH LOW TRADED DECLARED
------- ------- ---------- --------
1997:
Fourth Quarter............................ $44.563 $38.500 7,435,000 $.14
Third Quarter............................. 47.750 41.750 8,129,900 .14
Second Quarter............................ 43.000 32.250 5,884,500 .13
First Quarter............................. 37.375 31.500 7,811,300 .13
------- ------- ---------- ----
For the Year.............................. $47.750 $31.500 29,260,700 $.54
======= ======= ========== ====
1996:
Fourth Quarter............................ $34.750 $29.375 5,277,400 $.12
Third Quarter............................. 29.500 24.125 7,070,400 .12
Second Quarter............................ 29.875 22.375 6,730,300 .11
First Quarter............................. 25.750 20.625 6,039,000 .11
------- ------- ---------- ----
For the Year.............................. $34.750 $20.625 25,117,100 $.46
======= ======= ========== ====
- --------
Price and volume data reflect composite transactions and prices as reported
daily by The Wall Street Journal.
The Company had 12,338 shareholders of record on March 11, 1998.
During the fourth quarter of 1997 the Company issued 59,727 shares of its
common stock in transactions which qualified for exemption from registration
under the Securities Act by virtue of Regulation D and Section 4(2) of the
Securities Act. These securities were issued in connection with the
acquisition of two businesses. On October 6, 1997, 20,681 shares were issued
pursuant to Regulation D and Section 4(2) to acquire Syd-Ren Industries, Inc.
from its sole shareholder. On December 11, 1997, 39,046 shares were issued
pursuant to Regulation D and Section 4(2) to acquire Miller Manufacturing &
Lumber Sales, Inc. from its shareholders.
ITEM 6. SELECTED FINANCIAL DATA
SELECTED FINANCIAL DATA
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
(UNAUDITED)
(DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER
SHARE DATA)
Summary of Operations
Net sales....................... $2,909.2 $2,466.2 $2,256.9 $2,009.1 $1,526.7
Earnings from continuing
operations..................... 208.3 153.0 134.3 119.5 85.6
Basic earnings per share from
continuing
operations..................... 2.19 1.69 1.52 1.38 1.07
Diluted earnings per share from
continuing
operations..................... 2.16 1.67 1.49 1.36 1.04
Cash dividends declared per
share.......................... .54 .46 .38 .31 .27
Summary of Financial Position
Total assets.................... $2,106.3 $1,712.9 $1,478.1 $1,327.0 $1,080.1
Long-term debt.................. 466.2 388.5 380.6 364.1 306.1
Merger related costs of $16.4 after-tax or $.18 per basic and diluted share
are included in 1996 earnings from continuing operations.
5
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
CAPITAL RESOURCES AND LIQUIDITY
The Company's financial position reflects several important principles and
guidelines of management's capital policy. These include management's belief
that corporate liquidity must always be adequate to support the Company's
projected growth rate. At the same time, liquidity must assure management that
the Company will be able to withstand any amount of financial adversity that
can reasonably be anticipated. Management also intends to direct capital to
strategic acquisitions and other investments that provide additional
opportunities for expansion and enhanced profitability.
Financial planning to meet these needs reflects management's belief that the
Company should never be forced to expand its capital resources, whether debt
or equity, at a time not of its choosing. Management also believes that
financial flexibility is more important than maximization of earnings per
share through excessive leverage. Therefore, management continuously provides
for available credit in excess of projected cash needs and has maintained a
guideline for long-term debt as a percentage of total capitalization in a
range of 30% to 40%.
Total Capitalization
The following table shows the Company's total capitalization at the end of
the three most recent years. The table also shows the amount of unused
committed credit available through the Company's revolving bank credit
agreements.
1997 1996 1995
-------- -------- --------
(DOLLAR AMOUNTS IN
MILLIONS)
Long-term debt outstanding:
Scheduled maturities............................ $ 402.9 $ 332.4 $ 315.9
Average interest rates........................ 6.6% 7.7% 8.4%
Average maturities in years................... 6.3 7.6 7.0
Revolving credit/commercial paper............... 63.3 56.1 64.7
-------- -------- --------
Total long-term debt........................ 466.2 388.5 380.6
Deferred income taxes and other liabilities....... 93.6 90.5 75.6
Shareholders' equity.............................. 1,174.0 941.1 746.8
-------- -------- --------
Total capitalization........................ $1,733.8 $1,420.1 $1,203.0
======== ======== ========
Unused committed credit........................... $ 240.0 $ 215.0 $ 207.8
======== ======== ========
Cash provided by operating activities totaled $714.2 million during the last
three years. Long-term debt outstanding was 27% of total capitalization at the
end of the last two years, which compares to 32% in 1995. As shown in the
table above, obligations having scheduled maturities are the base "layer" of
the Company's debt capital. At the end of 1997, these obligations consisted
primarily of the Company's privately placed medium-term notes and tax-exempt
industrial development bonds. In April 1997, the Company issued $100 million
in medium-term notes. Proceeds from the notes were used to repay commercial
paper outstanding.
In June 1996, the Company also issued $100 million in medium-term notes.
Proceeds from these notes provided a majority of the funds required to redeem,
at 113% of par value, all of the Pace Holdings, Inc. (Pace) publicly owned
senior notes that were to mature in almost 7 years and had fixed interest
rates of 10.625%. Funds required to refinance the balance of the senior notes
and Pace's revolving credit initially were provided through the Company's
revolving credit/commercial paper arrangements. In August 1996, the Company
issued an additional $25 million in medium-term notes. Proceeds from these
notes were used to repay a portion of revolving credit/commercial paper
outstanding.
6
In 1995, $25 million in 10-year notes were issued. Proceeds from these
medium-term notes were used to repay a portion of the Company's revolving
credit. The Company's senior debt ratings have been maintained at single A by
Standard & Poor's and single A2 by Moody's during each of the last three
years.
The second "layer" of the Company's debt capital consists of revolving bank
credit agreements and commercial paper issuances. Over the years, management
has renegotiated the bank credit agreements and established a commercial paper
program to continuously support the Company's projected growth and to maintain
highly flexible sources of debt capital. The credit under these arrangements
has been a long-term obligation. If needed, however, the credit is available
for short-term borrowings and repayments. Pace also had $47.2 million in
revolving credit outstanding at the end of 1995, which was included in the
Company's total revolving credit/commercial paper outstanding. Additional
details of long-term debt, including scheduled maturities, revolving credit
and commercial paper are discussed in Note E of the Notes to Consolidated
Financial Statements.
Uses of Capital Resources
The Company's internal investments to modernize and expand manufacturing
capacity totaled $322.4 million in the last three years. In 1998, management
anticipates internal investments will approximate $135 million. During the
last three years, the Company employed $289.9 million in cash (net of cash
acquired) and issued 11.8 million shares of common stock in acquisitions,
including 5.1 million shares to acquire Pace. During 1997, thirty businesses
were acquired for $171.6 million in cash (net of cash acquired) and 3.0
million shares of common stock. Additional details of acquisitions are
discussed in Note B of the Notes to Consolidated Financial Statements. Company
purchases of its common stock totaled $5.7 million in 1997, $10.1 million in
1996, and $24.5 million in 1995. These purchases were made primarily for
employee stock plans, to replace shares issued in purchase acquisitions and to
satisfy contractual obligations. Cash dividends on the Company's common stock
in the last three years totaled $110.2 million.
Future commitments under lease obligations are described in Note F and
contingencies are discussed in Note K of the Notes to Consolidated Financial
Statements.
The Company has substantial capital resources to support projected internal
cash needs and additional acquisitions consistent with management's goals and
objectives. In addition, the Company has the availability of short-term
uncommitted credit from several banks.
Short-term Liquidity
Working capital has increased $218.5 million in the last three years. To
gain additional flexibility in capital management and to improve the return on
shareholders' equity, the Company continuously seeks efficient use of working
capital. The following table shows the annual turnover on average year-end
working capital, trade receivables and inventories. The ratios may be affected
by the timing of the Company's acquisitions.
1997 1996 1995
---- ---- ----
Working capital turnover (excluding cash and cash
equivalents).......................................... 5.6x 5.7x 6.0x
Trade receivables turnover............................. 7.7 7.8 7.8
Inventory turnover..................................... 5.4 5.2 5.4
"Year 2000" Computer Issue
Computer programs used by the Company for financial and operational purposes
are being revised to be "Year 2000" compliant. The "Year 2000" issue refers to
older computer programs that used only two digits to represent the year,
rather than four digits. As a result, these older computer programs may not
process information properly when using the year 2000, since that year will be
indistinguishable from the year 1900. The revisions required to the Company's
computer programs for the "Year 2000" were identified in prior years.
7
These revisions are estimated to be over 50% complete as of December 31, 1997.
The Company believes it has sufficient internal resources and commitments from
external providers to have substantially all of its computer programs revised
by the end of 1998. No significant impact to the Company's business operations
is expected from the "Year 2000" issue, and the costs to revise the computer
programs are not material.
RESULTS OF OPERATIONS
The results of operations during the last three years reflect various
elements of the Company's long-term growth strategy, along with general trends
in the domestic economy and the markets the Company serves. The Company's
growth strategy continues to include internal initiatives and acquisitions
which broaden product lines and provide for increased market penetration and
operating efficiencies. With a continuing emphasis on the development of new
and improved products and advancements in production technologies, the Company
is able to consistently offer high quality products, competitively priced.
Trends in the general economy were favorable during the last three years. In
each year, acquisitions accounted for more of the Company's sales growth than
other factors. The balance of the Company's sales growth during this period
primarily reflected increases in unit volumes, as selling price increases were
only a minor factor.
The following table shows various measures of earnings as a percentage of
sales for the last three years. It also shows the effective income tax rate
and the coverage of interest expense by pre-tax earnings plus interest.
1997 1996 1995
---- ---- ----
Gross profit margin..................................... 25.4% 25.3% 23.7%
Pre-tax profit margin
Excluding non-recurring costs......................... 11.5 11.2 9.8
Including non-recurring costs......................... 11.5 10.1 9.8
Net profit margin
Excluding non-recurring costs......................... 7.2 6.9 6.0
Including non-recurring costs......................... 7.2 5.7 6.0
Effective income tax rate............................... 37.5 38.7 39.1
Interest coverage ratio................................. 11.5x 9.3x 8.3x
The Company's gross profit margins improved in the last two years. The
slight increase in 1997 reflected several favorable factors. These included
continued increases in production efficiencies, increased sales of products
with above average margins, and better manufacturing overhead absorption. The
pre-tax profit margin increased due to the factors noted, and a decrease in
interest expense as a percentage of sales. Other factors, including a more
favorable distribution of income among tax jurisdictions, resulted in a lower
effective income tax rate.
In 1996, the gross profit margin reflected similar benefits from production
efficiencies, increased sales of products with above average margins, better
manufacturing overhead absorption, as well as reduced costs for raw materials.
The pre-tax profit margin, before non-recurring costs, increased due to these
favorable factors, but reflected a slight increase in total selling,
distribution and administrative expenses. The 1996 non-recurring costs were
associated with the Pace acquisition and are discussed in Note B of the Notes
to Consolidated Financial Statements.
The slight increase in the 1995 gross profit margin primarily reflected the
Company's continuing growth in niche markets with above average margins,
increased production efficiencies and cost containment. The increase in the
gross profit margin was offset by slight increases in total selling,
distribution and administrative expenses and interest expense, as a percentage
of sales. Therefore, the pre-tax profit margin was unchanged from the previous
year.
8
NEW FINANCIAL ACCOUNTING STANDARDS BOARD STATEMENTS
During 1997 and 1998, the Financial Accounting Standards Board (FASB) issued
new accounting standards on "Reporting Comprehensive Income" (FASB No. 130),
"Disclosures about Segments of an Enterprise and Related Information" (FASB
No. 131) and "Employers' Disclosures about Pensions and Other Postretirement
Benefits" (FASB No. 132). These new accounting standards will become effective
for 1998 financial reporting. FASB No. 130 will require the Company to report
separately from net income a "comprehensive income" amount which includes
certain foreign currency translation gains and losses currently reflected in
the cumulative translation adjustment account in shareholders' equity. FASB
No. 131 will require the Company to reconsider and likely change its reported
industry segments in the 1998 annual report to conform to the new
requirements. FASB No. 132 will revise the disclosures about pension and other
postretirement benefit plans. The Company is analyzing these new accounting
standards to determine their impact on its financial reports.
FORWARD-LOOKING STATEMENTS
This report and other public reports or statements made from time to time by
the Company or its management may contain "forward-looking" statements
concerning possible future events, objectives, strategies, trends or results.
Such statements are identified either by the context in which they appear or
by use of words such as "anticipate," "believe," "estimate," "expect," or the
like.
Readers are cautioned that any forward-looking statement reflects only the
beliefs of the Company or its management at the time the statement is made. In
addition, readers should keep in mind that, because all forward-looking
statements deal with the future, they are subject to risks, uncertainties and
developments which might cause actual events or results to differ materially
from those envisioned or reflected in any forward-looking statement. Moreover,
the Company does not have and does not undertake any duty to update any
forward-looking statement to reflect events or circumstances after the date on
which the statement was made. For all of these reasons, forward-looking
statements should not be relied upon as a prediction of actual future events,
objectives, strategies, trends or results.
It is not possible to anticipate and list all of the risks, uncertainties
and developments which may affect the future operations or performance of the
Company, or which otherwise may cause actual events or results to differ from
forward-looking statements. However, some of these risks and uncertainties
include the following: general economic and market conditions and risks, such
as the rate of economic growth, inflation, government regulation, interest
rates, taxation, and the like; risks and uncertainties which could affect
industries or markets in which the Company participates, such as growth rates
and opportunities in those industries, or changes in demand for certain
products, etc.; and factors which could impact costs, including but not
limited to the availability and pricing of raw materials, the availability of
labor and wage rates, and fuel and energy costs.
9
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE SENSITIVITY
The table below provides information about the Company's debt obligations
sensitive to changes in interest rates. The Company has no other significant
financial instruments sensitive to changes in interest rates. The Company has
not in the past used any derivative financial instruments to hedge its
exposure to interest rate changes. Substantially all of the debt shown in the
table below is denominated in United States dollars (U.S. $). The fair value
of variable rate debt is not significantly different from its recorded amount.
The fair value of the fixed rate debt was calculated using the U.S. Treasury
Bond rate as of December 31, 1997 for similar remaining maturities, plus an
estimated "spread" over such Treasury securities representing the Company's
interest costs under its medium-term note program.
SCHEDULED MATURITY DATE
---------------------------------------------
1998 1999 2000 2001 2002 THEREAFTER TOTAL FAIR VALUE
----- ----- ----- ----- ----- ---------- ------ ----------
(DOLLAR AMOUNTS IN MILLIONS)
Long-term debt as of
December 31, 1997:
Principal fixed rate
debt................. $10.0* $35.0 $15.0 $50.0 $75.0 $165.2 $350.2 $360.0
Average interest rate. 5.24% 6.77% 5.65% 7.22% 7.18% 6.96% 6.92%
Principal variable
rate debt............ -- -- -- 5.9 5.1 86.1 97.1
Average interest rate. -- -- -- 3.69% 3.66% 5.78% 5.54%
Miscellaneous debt.... 23.6
------
Total debt.......... 470.9
Less: current
maturities*.......... (4.7)
------
Total long-term
debt............... $466.2
======
- --------
* The 1998 scheduled maturity is not included in current maturities, as the
Company intends to refinance this note on a long-term basis either through
reissuance or unused credit available under its revolving credit
agreements.
EXCHANGE RATE SENSITIVITY
The Company has not typically hedged foreign currency exposures related to
transactions denominated in other than its functional currencies, although
such transactions have not been material in the past. The Company does hedge
firm commitments for certain machinery purchases, and occasionally may hedge
amounts due in foreign currencies related to its acquisition program. The
decision by management to hedge any such transactions is made on a case-by-
case basis. The amount of forward contracts outstanding at December 31, 1997
was approximately $1.5 million (pay U.S. $/receive Swiss Francs) and the
highest amount during 1997 was approximately $35 million (pay U.S. $/receive
Swiss Francs).
The Company views its investment in foreign subsidiaries as a long-term
commitment and does not hedge any translation exposures. The investment in a
foreign subsidiary may take the form of either permanent capital or notes. The
Company's net investment (excluding goodwill) in foreign subsidiaries subject
to translation exposure at December 31, 1997 is as follows:
FUNCTIONAL CURRENCY (DOLLAR AMOUNTS IN MILLIONS)
------------------------------------------------
Canadian dollar...................................................... $131.5
European currencies.................................................. 50.3
Other................................................................ .2
------
Total............................................................ $182.0
======
10
COMMODITY PRICE SENSITIVITY
The Company does not use derivative commodity instruments to hedge its
exposures to changes in commodity prices. The principal commodity price
exposure is aluminum, of which the Company had an estimated 67 million pounds,
equivalent to $46 million at cost ($49 million fair value based on quoted
market prices for similar metal), in inventory at December 31, 1997. The
Company has purchasing procedures and arrangements with customers to mitigate
its exposure to aluminum price changes. No other commodity exposures are
significant to the Company.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and supplementary data included in
this Report begin on page 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Reference is made to the section entitled "Election of Directors" and
"Compliance with Section 16(a) of the Securities Exchange Act of 1934" in the
Company's definitive Proxy Statement for the Company's Annual Meeting of
Shareholders to be held on May 13, 1998, said sections being incorporated by
reference, for a description of the directors of the Company.
The following table sets forth the names, ages and positions of all
executive officers of the Company. Executive officers are elected annually by
the Board of Directors at the first meeting of directors following the Annual
Meeting of Shareholders.
NAME AGE POSITION
---- --- --------
Harry M. Cornell, 69 Chairman of the Board and Chief Executive Offi-
Jr. cer
Felix E. Wright 62 President, Chief Operating Officer and Director
Bob L. Gaddy 57 Senior Vice President and Chairman and Chief Ex-
ecutive Officer-Aluminum Group and Director
Michael A. Glauber 54 Senior Vice President, Finance and Administra-
tion (Principal Financial Officer)
David S. Haffner 45 Executive Vice President and Director
Jerry H. Hudkins 62 Vice President and President-Wire Group
Robert A. 56 Senior Vice President, Mergers, Acquisitions and
Jefferies, Jr. Strategic Planning and Director
Ernest C. Jett 52 Vice President, General Counsel and Secretary
Allan J. Ross 51 Vice President, Accounting (Principal Accounting
Officer)
Duane W. Potter 66 Senior Vice President and President-Foam Compo-
nents Group and Director
Subject to the employment agreements and severance benefit agreements listed
as Exhibits to this Report, officers serve at the pleasure of the Board of
Directors.
11
Harry M. Cornell, Jr. has served as the Company's Chief Executive Officer,
Chairman of the Board and Chairman of the Board's Executive Committee for more
than the last five years.
Felix E. Wright has served as the Company's President and Chief Operating
Officer for more than the last five years.
Bob L. Gaddy joined the Company in May, 1996 with the Company's acquisition
of Pace Industries, Inc. At that time he was elected a Senior Vice President
of the Company. From 1984 to 1993, Mr. Gaddy was President and Chief Operating
Officer of Pace Industries, Inc. and since 1993 has served as Chairman of the
Board and Chief Executive Officer of Pace Industries, Inc.
Michael A. Glauber has served as the Company's Senior Vice President,
Finance and Administration for more than the last five years.
David S. Haffner was elected Executive Vice President in 1995. He previously
served as Senior Vice President and President-Furniture and Automotive
Components Group from 1992 to 1995.
Jerry H. Hudkins has served the Company as Vice President and President-Wire
Group for more than the last five years.
Robert A. Jefferies, Jr. has served as the Company's Senior Vice President,
Mergers, Acquisitions and Strategic Planning for more than the last five
years.
Ernest C. Jett was appointed General Counsel in 1997, and was elected Vice
President and Secretary in 1995. He previously served the Company as Assistant
General Counsel from 1979 to 1995 and as Managing Director of the Legal
Department from 1991 to 1997.
Allan J. Ross has served the Company as Vice President, Accounting since
April, 1993. In May, 1996 Mr. Ross was designated by the Board of Directors as
the Company's Chief Accounting Officer. Prior to that time Mr. Ross served in
various accounting management positions with Monsanto Company, a chemical
manufacturing business.
Duane W. Potter was elected Senior Vice President and President-Foam
Components Group in 1995. He previously served as Senior Vice President and
President-Bedding Components Group from 1983 to 1995.
ITEM 11. EXECUTIVE COMPENSATION
The section entitled "Executive Compensation and Related Matters" in the
Company's definitive Proxy Statement for the Company's Annual Meeting of
Shareholders to be held on May 13, 1998, is incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The section entitled "Ownership of Common Stock" in the Company's definitive
Proxy Statement for the Company's Annual Meeting of Shareholders to be held on
May 13, 1998, is incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The subsection entitled "Related Transactions" of the section entitled
"Executive Compensation and Related Matters" in the Company's definitive Proxy
Statement for the Company's Annual Meeting of Shareholders to be held on May
13, 1998 is incorporated by reference.
12
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
1. FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE COVERED BY REPORT
OF INDEPENDENT ACCOUNTANTS
The Financial Statements listed below are included in this Report:
. Consolidated Statements of Earnings for each of the years in the three
year period ended December 31, 1997
. Consolidated Balance Sheets at December 31, 1997 and 1996
. Consolidated Statements of Cash Flows for each of the years in the three
year period ended December 31, 1997
. Consolidated Statements of Changes in Shareholders' Equity for each of
the years in the three year period ended December 31, 1997
. Notes to Consolidated Financial Statements
. Schedule for each of the years in the three year period ended December
31, 1997
Schedule II--Valuation and Qualifying Accounts and Reserves
All other information schedules have been omitted as the required
information is inapplicable, not required, or the information is included in
the financial statements or notes thereto.
2. EXHIBITS--See Exhibit Index.
3. REPORTS ON FORM 8-K FILED DURING THE LAST QUARTER OF 1997: None.
13
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
YEAR ENDED DECEMBER 31
--------------------------
1997 1996 1995
-------- -------- --------
(DOLLAR AMOUNTS IN
MILLIONS,
EXCEPT PER SHARE DATA)
Net sales........................................... $2,909.2 $2,466.2 $2,256.9
Cost of goods sold.................................. 2,171.4 1,842.7 1,722.0
-------- -------- --------
Gross profit.................................... 737.8 623.5 534.9
Selling, distribution and administrative expenses... 358.8 303.5 272.3
Amortization of excess cost of purchased companies
and other intangibles.............................. 17.3 16.4 15.4
Interest expense.................................... 31.8 30.0 30.4
Merger expense...................................... -- 26.6 --
Other income, net of other deductions............... 3.4 2.7 3.8
-------- -------- --------
Earnings before income taxes and extraordinary
item........................................... 333.3 249.7 220.6
Income taxes........................................ 125.0 96.7 86.3
-------- -------- --------
Net earnings before extraordinary item.......... 208.3 153.0 134.3
Extraordinary item from the extinguishment of debt.. -- 12.5 --
-------- -------- --------
Net earnings.................................... $ 208.3 $ 140.5 $ 134.3
======== ======== ========
Earnings per share
Net earnings before extraordinary item--basic... $ 2.19 $ 1.69 $ 1.52
======== ======== ========
Net earnings before extraordinary item--diluted. $ 2.16 $ 1.67 $ 1.49
======== ======== ========
Net earnings--basic............................. $ 2.19 $ 1.55 $ 1.52
======== ======== ========
Net earnings--diluted........................... $ 2.16 $ 1.53 $ 1.49
======== ======== ========
The accompanying notes are an integral part of these financial statements.
14
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31
------------------
1997 1996
-------- --------
(DOLLAR AMOUNTS
IN MILLIONS,
EXCEPT
PER SHARE DATA)
ASSETS
------
Current Assets
Cash and cash equivalents..................................... $ 7.7 $ 3.7
Accounts and notes receivable, less allowance of $11.5 in 1997
and $8.6 in 1996............................................. 438.6 335.3
Inventories
Finished goods.............................................. 228.0 204.2
Work in process............................................. 50.3 39.4
Raw materials and supplies.................................. 170.0 138.6
LIFO reserve................................................ (15.1) (11.7)
-------- --------
Total inventories......................................... 433.2 370.5
Other current assets.......................................... 65.1 53.8
-------- --------
Total current assets...................................... 944.6 763.3
Property, Plant and Equipment--at cost
Machinery and equipment....................................... 767.8 646.7
Buildings and other........................................... 397.3 333.8
Land.......................................................... 47.2 34.6
-------- --------
Total property, plant and equipment....................... 1,212.3 1,015.1
Less accumulated depreciation................................. 519.1 432.2
-------- --------
Net property, plant and equipment......................... 693.2 582.9
Other Assets
Excess cost of purchased companies over net assets acquired,
less accumulated amortization of $38.2 in 1997 and $28.4 in
1996......................................................... 394.0 290.3
Other intangibles, less accumulated amortization of $24.1 in
1997 and $30.3 in 1996....................................... 31.6 30.2
Sundry........................................................ 42.9 46.2
-------- --------
Total other assets........................................ 468.5 366.7
-------- --------
Total assets.............................................. $2,106.3 $1,712.9
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable.............................................. $ 128.7 $ 110.3
Accrued expenses.............................................. 166.4 140.1
Other current liabilities..................................... 77.4 42.4
-------- --------
Total current liabilities................................... 372.5 292.8
Long-Term Debt.................................................. 466.2 388.5
Other Liabilities............................................... 40.8 36.0
Deferred Income Taxes........................................... 52.8 54.5
Shareholders' Equity
Capital stock
Preferred stock--authorized, 100,000,000 shares; none issued
Common stock--authorized, 300,000,000 shares of $.01 par
value; issued 96,379,560 and 92,113,786 shares in 1997 and
1996, respectively......................................... 1.0 .9
Additional contributed capital................................ 311.9 240.2
Retained earnings............................................. 871.3 704.4
Cumulative translation adjustment............................. (10.1) (4.2)
Less treasury stock--at cost (2,387 and 6,270 shares in 1997
and 1996, respectively)...................................... (.1) (.2)
-------- --------
Total shareholders' equity................................ 1,174.0 941.1
-------- --------
Total liabilities and shareholders' equity................ $2,106.3 $1,712.9
======== ========
The accompanying notes are an integral part of these financial statements.
15
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31
-------------------------
1997 1996 1995
------- ------- -------
(DOLLAR AMOUNTS IN
MILLIONS)
Operating Activities
Net earnings...................................... $ 208.3 $ 140.5 $ 134.3
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation.................................... 88.3 75.8 62.6
Amortization.................................... 17.3 16.4 15.4
Merger expense (non-cash portion)............... -- 24.4 --
Extraordinary item (non-cash portion)........... -- 4.0 --
Stock and deferred compensation................. 7.9 14.2 4.9
Deferred income tax benefit..................... (1.5) (13.4) (1.9)
Other........................................... (2.1) .5 (2.8)
Other changes, excluding effects from purchases
of companies
(Increase) decrease in accounts receivable,
net.......................................... (52.1) (17.0) 1.0
(Increase) in inventories..................... (15.0) (7.5) (33.6)
(Increase) in other current assets............ (5.1) (2.1) (7.2)
Increase in current liabilities............... 42.3 2.3 15.1
------- ------- -------
Net Cash Provided by Operating Activities... 288.3 238.1 187.8
Investing Activities
Additions to property, plant and equipment........ (119.4) (96.2) (106.8)
Purchases of companies, net of cash acquired...... (171.6) (89.7) (28.6)
Other............................................. 8.2 (3.1) .5
------- ------- -------
Net Cash Used for Investing Activities...... (282.8) (189.0) (134.9)
Financing Activities
Additions to debt................................. 214.8 292.9 108.7
Payments on debt.................................. (164.7) (309.4) (100.4)
Dividends paid.................................... (48.0) (30.3) (31.9)
Issuances of common stock......................... 6.6 5.0 3.0
Purchases of common stock......................... (5.7) (10.1) (24.5)
Other............................................. (4.5) (1.7) (2.6)
------- ------- -------
Net Cash Used for Financing Activities...... (1.5) (53.6) (47.7)
------- ------- -------
Increase (Decrease) in Cash and Cash Equivalents.... 4.0 (4.5) 5.2
Cash and Cash Equivalents--Beginning of Year........ 3.7 8.2 3.0
------- ------- -------
Cash and Cash Equivalents--End of Year.............. $ 7.7 $ 3.7 $ 8.2
======= ======= =======
Supplemental Information
Interest paid..................................... $ 30.3 $ 28.8 $ 30.8
Income taxes paid................................. 124.4 92.8 90.3
Liabilities assumed of acquired companies......... 81.1 47.3 21.7
Common stock issued for acquired companies........ 52.0 58.3 18.3
Common stock issued for employee stock plans...... 27.4 39.4 17.4
The accompanying notes are an integral part of these financial statements.
16
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
ADDITIONAL CUMULATIVE TREASURY STOCK
COMMON CONTRIBUTED RETAINED TRANSLATION ---------------
STOCK CAPITAL EARNINGS ADJUSTMENT COST SHARES
------ ----------- -------- ----------- ----- --------
(DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
Balances--January 1,
1995................... $ .4 $133.6 $500.7 $ (6.1) $ (.3) 11,065
Common stock issued
for acquired
companies and
employee stock plans
(890,257 shares)..... .1 32.6
Treasury stock issued
for employee stock
plans................ (2.3) 11.4 (372,906)
Treasury stock
purchased, primarily
for employee stock
plans and to replace
shares issued for
purchased companies.. (25.8) 887,712
Tax benefit related to
stock options........ .5
Additional shares
issued in two-for-one
stock split effected
in the form of a
stock dividend
September 15, 1995
(42,194,946 shares).. .4 (.4) 118,668
Translation
adjustment........... 1.1
Retained earnings of
pooled company at
date of acquisition.. (1.5)
Net earnings for the
year................. 134.3
Cash dividends
declared ($.38 per
share)............... (31.9)
---- ------ ------ ------ ----- --------
Balances--December 31,
1995................... .9 164.0 601.6 (5.0) (14.7) 644,539
Common stock issued
for acquired
companies and
employee stock plans
(2,994,676 shares)... 90.2
Treasury stock issued
for employee stock
plans................ (5.7) 17.5 (747,033)
Treasury stock
purchased, primarily
shares received in
stock-for-stock
option exercises and
shares to replace
those issued for
purchased companies.. (3.0) 108,764
Treasury stock
purchased under
contractual
agreements and
effectively retired
(287,993 shares)..... (9.6)
Tax benefit related to
stock options........ 1.3
Translation
adjustment........... .8
Retained earnings of
pooled company at
date of acquisition.. 3.6
Net earnings for the
year................. 140.5
Cash dividends
declared ($.46 per
share)............... (41.3)
---- ------ ------ ------ ----- --------
Balances--December 31,
1996................... .9 240.2 704.4 (4.2) (.2) 6,270
Common stock issued
for acquired
companies and
employee stock plans
(4,265,774 shares)... .1 74.6
Treasury stock issued
for employee stock
plans................ (9.7) 17.4 (465,140)
Treasury stock
purchased, primarily
shares received in
stock-for-stock
option exercises and
shares to replace
those issued for
purchased companies.. (17.3) 461,257
Tax benefit related to
stock options........ 6.8
Translation
adjustment........... (5.9)
Retained earnings of
pooled companies at
date of acquisition.. 9.2
Net earnings for the
year................. 208.3
Cash dividends
declared ($.54 per
share)............... (50.6)
---- ------ ------ ------ ----- --------
Balances--December 31,
1997................... $1.0 $311.9 $871.3 $(10.1) $ (.1) 2,387
==== ====== ====== ====== ===== ========
The accompanying notes are an integral part of these financial statements.
17
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
(DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The consolidated financial statements include
the accounts of Leggett & Platt, Incorporated (Leggett & Platt) and its
majority-owned subsidiaries (the Company). All significant intercompany
transactions and accounts have been eliminated in consolidation.
Cash Equivalents: Cash equivalents include cash in excess of daily
requirements which is invested in various financial instruments with original
maturities of three months or less.
Inventories: All inventories are stated at the lower of cost or market. Cost
includes materials, labor and production overhead. Cost is determined by the
last-in, first-out (LIFO) method for approximately 55% of the inventories at
December 31, 1997 and 1996. The first-in, first-out (FIFO) method is
principally used for the remainder. The FIFO cost of inventories at December
31, 1997 and 1996 approximated replacement cost.
Depreciation, Amortization and Asset Impairment: Property, plant and
equipment are depreciated by the straight-line method. The rates of
depreciation range from 6.7% to 25% for machinery and equipment, 2.5% to 6.7%
for buildings and 12.5% to 33% for other items. Accelerated methods are used
for tax purposes. The excess cost of purchased companies over net assets
acquired is amortized by the straight-line method over forty years. Other
intangibles are amortized by the straight-line method over their estimated
lives. Long-lived assets, including intangibles, are evaluated for probable
recovery of their carrying amount. Appropriate adjustment, using current
market prices, estimates of discounted future cash flows and other methods, is
made when recovery of the carrying amount is not reasonably assured.
Computations of Earnings Per Share: The computation of earnings per share
has been restated for all periods in accordance with the requirements of FASB
Statement No. 128, "Earnings per Share".
Concentration of Credit Risks, Exposures and Financial Instruments: The
Company specializes in manufacturing, marketing, and distributing components
and other related products for furnishings and diversified markets. The
Company's operations are principally in the United States, although the
Company also has manufacturing subsidiaries in Canada, Europe, Mexico and
China and marketing and distribution operations in other areas.
The Company performs ongoing credit evaluations of its customers' financial
conditions and generally requires no collateral from its customers, some of
which are highly leveraged. The Company maintains allowances for potential
credit losses and such losses have generally been within management's
expectations.
From time to time, the Company will enter into forward exchange contracts to
hedge equipment purchases and other transactions in foreign currencies. The
amounts outstanding under the forward contracts at any point in time are not
significant to the Company. The Company has minimal continuing exposures to
other foreign currency transactions and interest rate fluctuations.
The carrying value of cash and short-term financial instruments approximates
fair value due to the short maturity of those instruments. The fair value of
long-term debt exceeds the carrying value by approximately $10.
Other Risks: The Company obtains insurance for workers' compensation,
automobile, product and general liability, property loss and medical claims.
However, the Company has elected to retain a significant portion of expected
losses through the use of deductibles. Provisions for losses expected under
these programs are recorded based upon the Company's estimates of the
aggregate liability for claims incurred. These estimates utilize the Company's
prior experience and actuarial assumptions that are provided by the Company's
insurance carriers.
18
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses and the disclosure of contingent assets and liabilities.
Actual results could differ from those estimates.
Income Taxes: The Company provides for taxes on undistributed earnings of
foreign subsidiaries where appropriate. The tax effect of most distributions
would be significantly offset by available foreign tax credits.
Stock-Based Compensation: The Company applies the intrinsic value based
method of accounting prescribed by APB Opinion No. 25 and related
interpretations in accounting for stock-based compensation plans. Accordingly,
compensation cost for stock options is measured as the excess, if any, of the
quoted market price of the Company's stock at the date of grant over the
amount an employee must pay to acquire the stock.
Foreign Currency Translation: The functional currency for most foreign
operations is the local currency. The translation of foreign currencies into
U.S. dollars is performed for balance sheet accounts using current exchange
rates in effect at the balance sheet date and for income and expense accounts
using monthly average exchange rates. The cumulative effects of translating
the functional currencies into the U.S. dollar are included in shareholders'
equity. Foreign entities whose functional currency is the U.S. dollar are not
significant.
Reclassifications: Certain reclassifications have been made to the prior
years' consolidated financial statements to conform to the 1997 presentation.
B-ACQUISITIONS
During 1997, the Company acquired the assets of 28 companies in exchange for
$171.6 in cash, net of cash acquired, and 1,090,050 shares of common stock in
transactions accounted for as purchases. The Company also issued 1,868,480
shares to acquire two businesses in transactions accounted for as poolings of
interests. The Company elected not to restate its financial statements as the
effect of these poolings was not material. These acquired businesses
manufacture and distribute products to furnishings and diversified markets.
The unaudited pro forma consolidated net sales for the years ended December
31, 1997 and 1996 as though the 1997 acquisitions had occurred on January 1 of
each year presented were $3,057.9 and $2,798.1, respectively. The unaudited
pro forma consolidated net earnings and earnings per share are not materially
different from the amounts reflected in the accompanying financial statements.
These pro forma amounts are not necessarily indicative of either results of
operations that would have occurred had the purchases been made on January 1
of each year or of future results of the combined companies.
On May 13, 1996, the Company issued 5,134,092 shares of common stock to
acquire Pace Holdings, Inc. (Pace) in a transaction accounted for as a pooling
of interests. Pace is a leading manufacturer and marketer of non-automotive
aluminum die cast components. Previously issued financial statements were
restated to reflect the pooling.
In connection with a 1993 leveraged buyout transaction, Pace adopted an
employee stock option/bonus plan that provided for the granting of options,
under certain conditions, at an exercise price of $.01 per Pace share. In May
1996, prior to the acquisition, options were granted and exercised under the
plan resulting in compensation expense of $12 before taxes. Other merger
expense, including costs for the accrual of commitments under contracts no
longer benefiting the Company and legal and environmental issues, was $14.6
before taxes in 1996.
Following the acquisition, the Company issued a tender offer to all holders
of the Pace 10.625% senior notes. In June 1996, the notes were redeemed at
approximately 113% of par value, plus accrued interest. The
19
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
cash required for the redemption was provided through the issuance of medium-
term notes and the Company's revolving credit agreements. The Company
recognized an extraordinary charge, net of related tax benefits, of $12.5 from
the extinguishment of debt.
Also during 1996, the Company acquired the assets of twelve companies in
transactions accounted for as purchases. These transactions required the use
of $89.7 in cash, net of cash acquired, and 2,128,124 shares of common stock
and common stock equivalents. In addition, the Company issued 562,429 shares
to acquire another business in a transaction accounted for as a pooling of
interests. The Company elected not to restate its financial statements as the
effect of this pooling was not material. These acquired businesses manufacture
and distribute products to furnishings and diversified markets.
During 1995, the Company acquired the assets of nine companies that
primarily manufacture and distribute components to the furnishings industry.
These transactions, accounted for as purchases, resulted in the use of $28.6
in cash, net of cash acquired, and 642,441 shares of common stock. The Company
also issued 325,000 shares of common stock to acquire a business in a
transaction accounted for as a pooling of interests. The Company elected not
to restate its financial statements as the effect of the pooling was not
material. This company manufactures and distributes formed wire products to
the furnishings industry.
The results of operations of the above acquired companies, except the 1996
Pace pooling, have been included in the consolidated financial statements
since the dates of acquisition.
C-EARNINGS PER SHARE
Basic and diluted earnings per share were calculated as follows:
1997 1996 1995
----------- ----------- -----------
Basic
Weighted average shares
outstanding, including shares
issuable for little or no cash.... 95,134,258 90,536,359 88,629,019
=========== =========== ===========
Net earnings before extraordinary
item.............................. $ 208.3 $ 153.0 $ 134.3
=========== =========== ===========
Earnings per share--basic.......... $ 2.19 $ 1.69 $ 1.52
=========== =========== ===========
Diluted
Weighted average shares
outstanding, including shares
issuable for little or no cash.... 95,134,258 90,536,359 88,629,019
Additional dilutive shares
principally from the assumed
exercise of outstanding stock
options........................... 1,460,554 1,308,328 1,246,686
----------- ----------- -----------
96,594,812 91,844,687 89,875,705
=========== =========== ===========
Net earnings before extraordinary
item.............................. $ 208.3 $ 153.0 $ 134.3
=========== =========== ===========
Earnings per share--diluted........ $ 2.16 $ 1.67 $ 1.49
=========== =========== ===========
20
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
D--ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities at December 31 consist of the
following:
1997 1996
------ ------
Accrued expenses
Wages and commissions payable............................ $ 41.8 $ 33.9
Workers' compensation, medical, auto and product
liability insurance..................................... 46.5 37.5
Income taxes............................................. 10.9 14.9
Other.................................................... 67.2 53.8
------ ------
$166.4 $140.1
====== ======
Other current liabilities
Outstanding checks in excess of book balances............ $ 41.9 $ 19.1
Current maturities of long-term debt..................... 4.7 3.9
Other.................................................... 30.8 19.4
------ ------
$ 77.4 $ 42.4
====== ======
E--LONG-TERM DEBT
Long-term debt, weighted average interest rates and due dates at December 31
are as follows:
1997 1996
------ ------
Medium-term notes, fixed interest rates of 7.0% and 6.8%
for 1997 and 1996, respectively, due dates through 2008... $325.0 $250.0
Commercial paper, variable interest rates of 6.6% for 1997
and 1996, due dates in 1998 and 1997...................... 63.3 56.1
Industrial development bonds, principally variable interest
rates of 4.2% and 4.6% for 1997 and 1996, respectively,
due dates through 2030.................................... 38.9 38.9
Other, partially secured................................... 43.7 47.4
------ ------
470.9 392.4
Less current maturities.................................... 4.7 3.9
------ ------
$466.2 $388.5
====== ======
The current revolving credit agreements provide for a maximum line of credit
of $240. For any revolving credit agreement, the Company may elect to pay
interest based on 1) the bank's base lending rate, 2) LIBOR, 3) an adjusted
certificate of deposit rate, or 4) the money market rate, as specified in the
revolving agreements. The agreements will terminate during 2002, at which time
all outstanding balances will become due. Annual facility fees are 1/10 of 1%
of the total credit line, payable on a quarterly basis.
Commercial paper and medium-term notes that mature in the current year are
classified as long-term debt since the Company intends to refinance them on a
long-term basis either through continued issuance or unused credit available
under the revolving credit agreements.
The revolving credit agreements and certain other long-term debt contain
restrictive covenants which, among other restrictions, limit the amount of
additional debt and require net earnings to meet or exceed specified levels of
funded debt.
21
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Maturities of long-term debt for each of the five years following 1997 are:
Year ended December 31
1998............................ $ 4.7
1999............................ 43.6
2000............................ 18.4
2001............................ 57.4
2002............................ 154.2
F-LEASE OBLIGATIONS
The Company conducts certain operations in leased premises and also leases
most of its automotive and trucking equipment and some other assets. Terms of
the leases, including purchase options, renewals and maintenance costs, vary
by lease.
Total rental expense entering into the determination of results of
operations was $27.3, $24.3 and $22.7 for the years ended December 31, 1997,
1996 and 1995, respectively.
Future minimum rental commitments for all long-term noncancelable operating
leases are as follows:
Year ended December 31
1998............................. $15.5
1999............................. 12.0
2000............................. 8.4
2001............................. 5.9
2002............................. 3.2
Later years...................... 3.8
-----
$48.8
=====
The above lease obligations expire at various dates through 2010. Certain
leases contain renewal and/or purchase options. Aggregate rental commitments
above include renewal amounts where it is the intention of the Company to
renew the lease.
G-CAPITAL STOCK
At December 31, 1997, the Company had 6,852,670 common shares authorized for
issuance under stock option plans. Generally, options become exercisable in
varying installments, beginning 6 to 18 months after the date of grant, and
have a maximum term of 5-15 years. Options may be issued with exercise prices
at or below market price. Compensation cost charged against income related to
the Company's stock option grants for each of the years ending December 31,
1997, 1996 and 1995 was $6.6, $13.7 and $2.4, respectively. Compensation cost
includes amounts for options granted under the deferred compensation plan for
certain executives, which allows the executive to elect stock options in lieu
of future salary and bonuses. Had compensation cost for the Company's stock-
based compensation plans been determined based on the estimated fair value of
the options at the grant dates, consistent with the method of FASB Statement
No. 123, the Company's net income and earnings per share would not be
significantly reduced. The Company does not anticipate that FASB Statement No.
123's method of determining compensation cost will have a significant impact
in future years.
22
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
A summary of the Company's stock option plans as of December 31, 1997, 1996
and 1995, and changes during the years ending on those dates is presented
below:
WEIGHTED
AVERAGE
EXERCISE PRICE
SHARES PER SHARE
---------- --------------
Outstanding at January 1, 1995................. 2,781,256 $11.17
Granted...................................... 344,800 9.44
Exercised.................................... (418,533) 10.55
Forfeited.................................... (75,134) 15.94
----------
Outstanding at December 31, 1995............... 2,632,389 10.87
Granted...................................... 2,477,157 20.27
Exercised.................................... (671,310) 11.22
Forfeited.................................... (42,584) 20.89
----------
Outstanding at December 31, 1996............... 4,395,652 16.01
Granted...................................... 714,751 20.36
Exercised.................................... (1,033,366) 12.90
Forfeited.................................... (80,740) 23.52
----------
Outstanding at December 31, 1997............... 3,996,297 17.43
==========
Options exercisable at
December 31, 1997............................ 1,744,011 12.31
December 31, 1996............................ 1,826,827 9.06
December 31, 1995............................ 1,656,270 10.27
1997 1996 1995
------ ------ ------
Weighted-average fair value of options:
Granted at market price....................... $ 8.87 $ 5.05 $ 4.62
Granted at below market price................. 24.54 16.87 14.27
Weighted-average exercise price of options:
Granted at market price....................... 40.62 23.77 21.03
Granted at below market price................. 9.08 13.52 6.57
Principal assumptions used in calculating fair
value consistent with the method of FASB
Statement No. 123:
Risk-free interest rate....................... 6.0% 5.9% 6.8%
Expected life in years........................ 4.8 4.3 4.8
Expected volatility........................... 19.0% 19.0% 19.0%
Expected dividend yield....................... 1.7% 1.7% 1.7%
The following table summarizes information about stock options outstanding
at December 31, 1997:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------- --------------------------
WEIGHTED-AVERAGE
RANGE OF REMAINING WEIGHTED- WEIGHTED-
EXERCISE NUMBER CONTRACTUAL LIFE AVERAGE NUMBER AVERAGE
PRICES OUTSTANDING IN YEARS EXERCISE PRICE EXERCISABLE EXERCISE PRICE
- -------- ----------- ---------------- -------------- ----------- --------------
$ .01-
$ .50 712,634 13 $ .12 430,730 $ 0.19
3.63-
6.28 329,527 1 5.96 329,527 5.96
9.56-
11.38 127,428 2 11.32 127,428 11.32
15.50-
20.00 947,439 4 18.54 272,234 16.21
20.38-
25.00 1,329,747 3 22.71 492,941 22.45
25.88-
29.88 295,941 8 27.36 91,151 27.38
30.88-
37.75 61,592 4 34.68 -- --
40.00-
44.19 191,989 5 42.60 -- --
23
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company has also authorized shares for issuance in connection with
certain employee stock benefit plans discussed in Note H.
In 1993, the Company's shareholders approved an amendment to the Company's
Restated Articles of Incorporation reducing the par value of Common Stock to
$.01 from $1. The amendment provided that the stated capital of the Company
would not be affected as of the date of the amendment. Accordingly, stated
capital of the Company exceeds the amount reported as common stock in the
financial statements by approximately $39.
In 1989, the Company declared a dividend distribution of one preferred stock
purchase right (a Right) for each share of common stock. The Rights are
attached to and traded with the Company's common stock. The Rights may only
become exercisable under certain circumstances involving actual or potential
acquisitions of the Company's common stock. Depending upon the circumstances,
if the Rights become exercisable, the holder may be entitled to purchase
shares of Series A junior preferred stock of the Company, shares of the
Company's common stock or shares of common stock of the acquiring entity. The
Rights remain in existence until February 15, 1999, unless they are exercised,
exchanged or redeemed at an earlier date.
H--EMPLOYEE BENEFIT PLANS
The Company sponsors contributory and non-contributory defined benefit
retirement plans. Substantially all U.S. employees, other than union employees
covered by multiemployer plans under collective bargaining agreements or non-
union employees participating in isolated defined contribution plans, are
eligible to participate in the Company sponsored benefit plans. Retirement
benefits under the contributory plans are based on career average earnings.
Retirement benefits under the non-contributory plan are based on years of
service, employees' average compensation and social security benefits. It is
the Company's policy to fund actuarially determined costs as accrued.
Information at December 31, 1997, 1996 and 1995 as to the funded status of
Company sponsored defined benefit plans, net pension income from the plans for
the years then ended and weighted average assumptions used in the calculations
are as follows:
1997 1996 1995
------ ------ ------
Funded Status
Actuarial present value of benefit obligations
Vested benefits.................................... $(82.8) $(64.5) $(58.8)
Nonvested benefits................................. (1.6) (.8) (.6)
------ ------ ------
Accumulated benefit obligations...................... (84.4) (65.3) (59.4)
Provision for future compensation increases.......... (5.1) (3.9) (3.1)
------ ------ ------
Projected benefit obligations........................ (89.5) (69.2) (62.5)
Plan assets at fair value............................ 127.6 98.8 87.1
------ ------ ------
Plan assets in excess of projected benefit
obligations......................................... 38.1 29.6 24.6
Unrecognized net experience gain..................... (14.8) (7.6) (3.4)
Unrecognized net transition asset.................... (2.0) (2.7) (3.4)
------ ------ ------
Prepaid pension costs included in other assets..... $ 21.3 $ 19.3 $ 17.8
====== ====== ======
Components of Pension Income (Expense)
Service cost......................................... $ (1.6) $ (1.7) $ (.8)
Interest cost........................................ (5.0) (4.5) (4.1)
Actual return on plan assets......................... 29.8 12.4 12.5
Net amortization and deferral........................ (21.2) (4.7) (5.8)
------ ------ ------
Net pension income from defined benefit plans........ $ 2.0 $ 1.5 $ 1.8
====== ====== ======
Weighted Average Assumptions
Discount rate........................................ 7.25% 7.25% 7.25%
Rate of increase in compensation levels.............. 5.20% 5.19% 5.18%
Expected long-term rate of return on plan assets..... 8.00% 8.00% 8.00%
====== ====== ======
24
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Plan assets are invested in a diversified portfolio of equity, debt and
government securities, including 588,000 shares of the Company's common stock
at December 31, 1997.
Contributions to union sponsored, defined benefit, multiemployer pension
plans were $.2 in 1997, 1996 and 1995. These plans are not administered by the
Company and contributions are determined in accordance with provisions of
negotiated labor contracts. As of 1997, the actuarially computed values of
vested benefits for these plans were primarily equal to or less than the net
assets of the plans. Therefore, the Company would have no material withdrawal
liability. However, the Company has no present intention of withdrawing from
any of these plans, nor has the Company been informed that there is any
intention to terminate such plans.
Net pension (expense) income, including Company sponsored defined benefit
plans, multiemployer plans and other plans, was $(.8), $(.4) and $.2 in 1997,
1996 and 1995, respectively.
The Company also has a contributory stock purchase/stock bonus plan (SPSB
Plan), a non-qualified executive stock purchase program (ESPP) and an
employees' discount stock plan (DSP). The SPSB Plan provides Company pre-tax
contributions of 50% of the amount of employee contributions. The ESPP
provides cash payments of 50% of the employees' contributions, along with an
additional payment to assist employees in paying taxes on the cash payments.
To the extent possible, contributions to the ESPP are invested in the
Company's common stock through the DSP. In addition, the Company matches its
contributions when certain profitability levels, as defined in the SPSB Plan
and the ESPP, have been attained. The Company's total contributions to the
SPSB Plan and the ESPP were $5.8, $4.7 and $4.3 for 1997, 1996 and 1995,
respectively.
Under the DSP, eligible employees may purchase a maximum of 8,000,000 shares
of Company common stock. The purchase price per share is 85% of the closing
market price on the last business day of each month. Shares purchased under
the DSP were 435,697, 504,605 and 506,613 during 1997, 1996 and 1995,
respectively. Purchase prices ranged from $15 to $39 per share. Since
inception of the DSP in 1982, a total of 6,103,149 shares have been purchased
by employees.
I--INCOME TAXES
The components of earnings before income taxes and extraordinary item are as
follows:
YEAR ENDED DECEMBER
31
--------------------
1997 1996 1995
------ ------ ------
Domestic............................................. $292.2 $218.0 $198.7
Foreign.............................................. 41.1 31.7 21.9
------ ------ ------
$333.3 $249.7 $220.6
====== ====== ======
Income tax expense is comprised of the following components:
YEAR ENDED
DECEMBER 31
--------------------
1997 1996 1995
------ ----- -----
Current
Federal........................................... $102.2 $86.3 $71.1
State and local................................... 9.9 12.1 9.7
Foreign........................................... 14.4 11.7 7.4
------ ----- -----
126.5 110.1 88.2
Deferred
Federal........................................... (5.5) (12.8) (3.7)
State and local................................... 4.1 (.5) 1.2
Foreign........................................... (.1) (.1) .6
------ ----- -----
(1.5) (13.4) (1.9)
------ ----- -----
$125.0 $96.7 $86.3
====== ===== =====
In addition to the above income tax expense, the Company recognized a
current benefit from an extraordinary item of $7.7 in 1996.
25
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Deferred income taxes are provided for the temporary differences between the
financial reporting basis and the tax basis of the Company's assets and
liabilities. The major temporary differences that give rise to deferred tax
assets or liabilities are as follows:
DECEMBER 31
--------------
1997 1996
------ ------
Property, plant and equipment............................ $(53.7) $(47.9)
Accrued expenses......................................... 55.2 42.8
Prepaid pension cost..................................... (8.4) (7.7)
Other, net............................................... (14.0) (11.8)
------ ------
$(20.9) $(24.6)
====== ======
Deferred tax assets and liabilities included in the consolidated balance
sheet are as follows:
DECEMBER 31
--------------
1997 1996
------ ------
Other current assets...................................... $ 31.9 $ 29.9
Deferred income taxes..................................... (52.8) (54.5)
------ ------
$(20.9) $(24.6)
====== ======
Income tax expense, as a percentage of earnings before income taxes and
extraordinary item, differs from the statutory federal income tax rate as
follows:
YEAR ENDED
DECEMBER 31
----------------
1997 1996 1995
---- ---- ----
Statutory federal income tax rate...................... 35.0% 35.0% 35.0%
Increases in rate resulting primarily from state and
other jurisdictions................................... 2.5 3.7 4.1
---- ---- ----
Effective tax rate..................................... 37.5% 38.7% 39.1%
==== ==== ====
J--SEGMENT INFORMATION
The Company's operations principally consist of manufacturing and marketing
components and related finished products for the furnishings industry. In
addition, the Company supplies a diversified group of industries with products
which are similar in manufacturing technology to its furnishings operations.
Other than furnishings, no industry segment is significant.
Operating profit is determined by deducting from net sales the cost of goods
sold and the selling, distribution, administrative and other expenses
attributable to the segment operations. Operating profit was reduced in the
furnishings segment by $18.8 and the diversified group by $7.8 because of non-
recurring merger costs for the Pace acquisition in 1996. Corporate expenses
not allocated to the segments include corporate general and administrative
expenses, interest expense and certain other income and deduction items which
are incidental to the Company's operations. Capital expenditures, as defined
herein, include property, plant and equipment of acquired businesses as well
as existing operations. The identifiable assets of industry segments are those
used in
26
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
the Company's operations of each segment. Corporate identifiable assets
include cash, land, buildings and equipment used in conjunction with corporate
activities and sundry assets. Financial information by segment is as follows:
YEAR ENDED DECEMBER 31 FURNISHINGS DIVERSIFIED CORPORATE CONSOLIDATED
---------------------- ----------- ----------- --------- ------------
1997
Net sales............... $2,228.9 $680.3 $ -- $2,909.2
Operating profit........ 318.2 66.3 (51.2) 333.3
Capital expenditures.... 156.5 36.4 5.1 198.0
Depreciation and
amortization expense... 83.6 19.6 2.4 105.6
Identifiable assets..... 1,610.1 449.1 47.1 2,106.3
1996
Net sales............... $1,900.5 $565.7 $ -- $2,466.2
Operating profit........ 243.1 53.9 (47.3) 249.7
Capital expenditures.... 117.5 27.5 5.4 150.4
Depreciation and
amortization expense... 71.0 18.4 2.8 92.2
Identifiable assets..... 1,313.0 363.9 36.0 1,712.9
1995
Net sales............... $1,727.8 $529.1 $ -- $2,256.9
Operating profit........ 214.1 51.5 (45.0) 220.6
Capital expenditures.... 94.7 26.9 4.2 125.8
Depreciation and
amortization expense... 58.7 15.9 3.4 78.0
Identifiable assets..... 1,134.2 290.0 53.9 1,478.1
The Company's areas of operation outside of the United States principally
include Canada, Europe and Mexico, none of which are significant to
consolidated operations. Prior to 1996, net sales and identifiable assets were
not significant. Information about the Company's operations in different
geographic locations is as follows:
YEAR ENDED DECEMBER 31 UNITED STATES FOREIGN CORPORATE CONSOLIDATED
---------------------- ------------- ------- --------- ------------
1997
Net sales.................. $2,652.9 $256.3 $ -- $2,909.2
Inter-area sales........... 8.2 81.5 -- 89.7
Operating profit........... 338.2 46.3 (51.2) 333.3
Identifiable assets........ 1,759.4 299.8 47.1 2,106.3
1996
Net sales.................. $2,304.8 $161.4 $ -- $2,466.2
Inter-area sales........... 7.5 65.6 -- 73.1
Operating profit........... 261.3 35.7 (47.3) 249.7
Identifiable assets........ 1,446.1 230.8 36.0 1,712.9
27
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
K--CONTINGENCIES
The Company is involved in various legal proceedings including matters which
involve claims against the Company under employment, intellectual property,
environmental and other laws. When it appears probable in management's
judgement that the Company will incur monetary damages or other costs in
connection with such claims and proceedings, and the costs can be reasonably
estimated, appropriate liabilities are recorded in the financial statements
and charges are made against earnings. No claim or proceeding has resulted in
a material charge against earnings, nor are the total liabilities recorded
material to the Company's financial position. While the results of any
ultimate resolution cannot be predicted, management believes the possibility
of a material adverse effect on the Company's consolidated financial position,
results of operations and cash flows from these claims and proceedings is
remote. The more significant claims and proceedings are briefly described in
the following paragraphs.
One of the Company's subsidiaries is performing an environmental
investigation at a Florida plant site pursuant to a negotiation with local and
Federal environmental authorities. The costs of the investigation and any
remediation actions will be shared equally by the Company and a former joint
owner of the plant site.
In connection with an acquisition, one of the Company's subsidiaries is
involved in an unfair labor complaint filed by the National Labor Relations
Board. An administrative decision has been rendered against the subsidiary,
which was recently upheld by the appellate court. The Company is currently
pursuing additional legal and other actions to resolve this matter.
28
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Leggett & Platt, Incorporated:
In our opinion, the financial statements listed in the index appearing under
Item 14 on page 13 present fairly, in all material respects, the financial
position of Leggett & Platt, Incorporated and Subsidiaries at December 31,
1997 and 1996, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1997 in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
St. Louis, Missouri
February 4, 1998
29
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
QUARTERLY SUMMARY OF EARNINGS
(UNAUDITED)
(DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1997 FIRST SECOND THIRD FOURTH TOTAL
- ---------------------------- ------ ------ ------ ------ --------
Net sales................................. $673.2 $721.2 $747.0 $767.8 $2,909.2
Gross profit.............................. 170.2 183.4 188.5 195.7 737.8
Earnings before income taxes.............. 78.1 83.9 83.9 87.4 333.3
Net earnings.............................. 48.4 52.0 52.8 55.1 208.3
Earnings per share
Net earnings--basic..................... $ .52 $ .55 $ .55 $ .57 $ 2.19
Net earnings--diluted................... $ .51 $ .55 $ .54 $ .56 $ 2.16
YEAR ENDED DECEMBER 31, 1996
- ----------------------------
Net sales................................. $591.2 $620.0 $628.6 $626.4 $2,466.2
Gross profit.............................. 144.6 157.6 157.3 164.0 623.5
Earnings before income taxes and
extraordinary item....................... 61.4 43.8 71.9 72.6 249.7
Net earnings before extraordinary item.... 37.7 26.6 44.0 44.7 153.0
Net earnings.............................. 37.7 14.1 44.0 44.7 140.5
Earnings per share
Net earnings before extraordinary item--
basic.................................. $ .42 $ .30 $ .49 $ .48 $ 1.69
Net earnings before extraordinary item--
diluted................................ $ .42 $ .29 $ .48 $ .48 $ 1.67
Net earnings--basic..................... $ .42 $ .16 $ .49 $ .48 $ 1.55
Net earnings--diluted................... $ .42 $ .15 $ .48 $ .48 $ 1.53
Merger related costs of $26.6 pre-tax and $16.4 after-tax, or $.18 per basic
and diluted share are included in 1996 second quarter net earnings before
extraordinary item.
30
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(AMOUNTS IN MILLIONS)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- ------------ --------- ---------- ----------
ADDITIONS
CHARGED
BALANCE AT TO COST BALANCE AT
BEGINNING OF AND END OF
DESCRIPTION PERIOD EXPENSES DEDUCTIONS PERIOD
- ----------- ------------ --------- ---------- ----------
Year ended December 31, 1997......
Allowance for doubtful
receivables...................... $8.6 $5.6 $2.7(A) $11.5
==== ==== ==== =====
Year ended December 31, 1996......
Allowance for doubtful
receivables...................... $7.5 $4.8 $3.7(A) $ 8.6
==== ==== ==== =====
Year ended December 31, 1995......
Allowance for doubtful
receivables...................... $8.1 $5.8 $6.4(A) $ 7.5
==== ==== ==== =====
- --------
(A) Uncollectible accounts charged off, net of recoveries.
31
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
Leggett & Platt, Incorporated
/s/ Harry M. Cornell, Jr.
By:__________________________________
Harry M. Cornell, Jr.
Chairman of the Board and Chief
Executive Officer
Dated: March 30, 1998
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
--------- ----- ----
(A) PRINCIPAL EXECUTIVE OFFICER:
/s/ Harry M. Cornell, Jr Chairman of the Board and March 30, 1998
____________________________________ Chief Executive Officer
Harry M. Cornell, Jr.
(B) PRINCIPAL FINANCIAL OFFICER:
/s/ Michael A. Glauber Senior Vice President, March 30, 1998
____________________________________ Finance & Administration
Michael A. Glauber
(C) PRINCIPAL ACCOUNTING OFFICER:
/s/ Allan J. Ross Vice President, Accounting March 30, 1998
____________________________________
Allan J. Ross
(D) DIRECTORS:
Raymond F. Bentele* Director
____________________________________
Raymond F. Bentele
Robert Ted Enloe, III* Director
____________________________________
Robert Ted Enloe, III
Richard T. Fisher* Director
____________________________________
Richard T. Fisher
32
SIGNATURE TITLE DATE
--------- ----- ----
Bob L. Gaddy* Director
____________________________________
Bob L. Gaddy
David S. Haffner* Director
____________________________________
David S. Haffner
Thomas A. Hays* Director
____________________________________
Thomas A. Hays
Robert A. Jefferies, Jr.* Director
____________________________________
Robert A. Jefferies, Jr.
Alexander M. Levine* Director
____________________________________
Alexander M. Levine
Richard L. Pearsall* Director
____________________________________
Richard L. Pearsall
Duane W. Potter* Director
____________________________________
Duane W. Potter
Maurice E. Purnell, Jr.* Director
____________________________________
Maurice E. Purnell, Jr.
Felix E. Wright* Director
____________________________________
Felix E. Wright
/s/ Ernest C. Jett March 30, 1998
*By ___________________________
Ernest C. Jett
Attorney-in-Fact pursuant to
Power of
Attorney dated March 11, 1998
33
EXHIBIT INDEX
SEQUENTIAL
EXHIBIT NO. DOCUMENT DESCRIPTION PAGE NO.
----------- -------------------- ----------
3.1 Restated Articles of Incorporation of the Company as
of May 13, 1987.
3.2 Amendment to Restated Articles of Incorporation of
the Company, filed as Exhibit 3.1 to Form S-4 (Regis-
tration No. 33-66238 which was filed with the Securi-
ties and Exchange Commission on July 19, 1993), is
incorporated by reference.
3.3 By-Laws of the Company as amended and restated as of
August 11, 1993, filed as Exhibit 3.2 to Registrant's
Form 10-Q for the quarter ended June 30, 1993, are
incorporated by reference.
4.1 Article III of Registrant's Restated Articles of In-
corporation, filed as Exhibit 3.1 above, is incorpo-
rated by reference.
4.2 Rights Agreement dated February 15, 1989 between Reg-
istrant and The Chase Manhattan Bank, N.A., pertain-
ing to preferred stock rights distributed by Regis-
trant, filed as Exhibit 1 to Registrant's Form 8-A
dated February 15, 1989, and Amendment No. 1 to
Rights Agreement dated August 29, 1994, filed as Ex-
hibit 3 to Registrant's Form 8-A/A dated September 8,
1994, are incorporated by reference.
4.2A Letter Agreement dated December 18, 1991 between Reg-
istrant and Mellon Securities Trust Company
("Mellon") relating to appointment of Mellon as
Rights Agent under the Rights Agreement, filed as Ex-
hibit 4.2A to Registrant's Form 10-K for the year
ended December 31, 1991, is incorporated by refer-
ence.
10.1(1) Restated and Amended Employment Agreement between
Harry M. Cornell, Jr. and Leggett & Platt, Incorpo-
rated dated as of August 14, 1996, filed as Exhibit
10.1 to Registrant's Form 10-K for the year ended De-
cember 31, 1996, is incorporated by reference.
10.2(1) Employment Agreement between the Company and Felix E.
Wright dated May 1, 1981, as amended, filed as Ex-
hibit 10.2 to Registrant's Form 10-K for the year
ended December 31, 1989, is incorporated by refer-
ence.
10.3(1) Employment Agreement between the Company and Robert
A. Jefferies, Jr. dated November 7, 1990, filed as
Exhibit 10.3 to Registrant's Form 10-K for the year
ended December 31, 1990, and Amendment No. 1 to Em-
ployment Agreement dated January 1, 1993, filed as
Exhibit 10.3 to Registrant's Form 10-K for the year
ended December 31, 1992, are incorporated by refer-
ence.
10.4(1) Severance Benefit Agreement between the Company and
Harry M. Cornell, Jr. dated May 9, 1984 filed as Ex-
hibit 10.4 to Registrant's Form 10-K for the year
ended December 31, 1994, is incorporated by refer-
ence.
10.5(1) Severance Benefit Agreement between the Company and
Felix E. Wright dated May 9, 1984 filed as Exhibit
10.5 to Registrant's Form 10-K for the year ended De-
cember 31, 1994, is incorporated by reference.
10.6(1) Severance Benefit Agreement between the Company and
Robert A. Jefferies, Jr. dated May 9, 1984 filed as
Exhibit 10.6 to Registrant's Form 10-K for the year
ended December 31, 1994, is incorporated by refer-
ence.
10.7(1) Reference is make to Appendix B to Registrant's de-
finitive Proxy Statement dated March 27, 1997 used in
conjunction with Registrant's Annual Meeting of
Shareholders held on May 14, 1997 for a copy of the
Company's 1989 Flexible Stock Plan, as amended, which
is incorporated by reference.
34
SEQUENTIAL
EXHIBIT NO. DOCUMENT DESCRIPTION PAGE NO.
----------- -------------------- ----------
10.8(1) Summary description of the Company's Key Management
Incentive Compensation Plan filed as Exhibit 10.7 to
Registrant's Form 10-K for the year ended December
31, 1993, is incorporated by reference.
10.9(1) Reference is made to description of certain long-term
disability arrangements between Registrant and its
salaried employees filed as Exhibit 10.7 to Regis-
trant's Form 10-K for the year ended December 31,
1991, which is incorporated by reference.
10.10(1) Form of Indemnification Agreement approved by the
shareholders of Registrant and entered into between
Registrant and each of its directors and executive
officers, filed as Exhibit 10.10 to Registrant's Form
10-K for the year ended December 31, 1995, is incor-
porated by reference.
10.11(1) Reference is made to Appendix A to Registrant's de-
finitive Proxy Statement dated March 27, 1997 used in
conjunction with Registrant's Annual Meeting of
Shareholders held on May 14, 1997, for a copy of the
Company's Director Stock Option Plan, as amended,
which is incorporated by reference.
10.12(1) Leggett & Platt, Incorporated Executive Stock Pur-
chase Program adopted June 6, 1989 under the
Company's 1989 Flexible Stock Plan, and effective as
of July 1, 1989, as amended on November 13, 1991,
filed as Exhibit 10.11 to Registrant's Form 10-K for
the year ended December 31, 1991, is incorporated by
reference.
10.13(1) Revised Employment Agreement between Bob L. Gaddy,
Pace Industries, Inc. and Leggett & Platt, Incorpo-
rated, filed as Exhibit 10.13 to Registrant's Form
10-K for the year ended December 31, 1996, is incor-
porated by reference.
10.14(1) Stock Award Agreement dated December 31, 1996 between
the Company and Harry M. Cornell, Jr., filed as Ex-
hibit 10.18 to Registrant's Form 10-K for the year
ended December 31, 1996, is incorporated by refer-
ence.
10.15(1) Stock Award Agreement dated June 1, 1996 between the
Company and Felix E. Wright, filed as Exhibit 10.19
to Registrant's Form 10-K for the year ended December
31, 1996, is incorporated by reference.
10.16(1) Stock Award Agreement dated June 1, 1996 between the
Company and Duane W. Potter, filed as Exhibit 10.20
to Registrant's Form 10-K for the year ended December
31, 1996, is incorporated by reference.
10.17(1) Stock Award Agreement dated June 1, 1996 between the
Company and David S. Haffner, filed as Exhibit 10.21
to Registrant's Form 10-K for the year ended December
31, 1996, is incorporated by reference.
10.18(1) Stock Award Agreement dated September 1, 1996 between
the Company and Jerry H. Hudkins, filed as Exhibit
10.22 to Registrant's Form 10-K for the year ended
December 31, 1996, is incorporated by reference.
10.19(1) Stock Award Agreement dated September 1, 1996 between
the Company and Michael A. Glauber, filed as Exhibit
10.23 to Registrant's Form 10-K for the year ended
December 31, 1996, is incorporated by reference.
10.20(1) Registrant's Stock Award Program adopted December 30,
1997.
10.21(1) The summary description of the Company's Deferred
Compensation Program, filed as Exhibit 10.18 to Reg-
istrant's Form 10-K for the year ended December 31,
1995, is incorporated by reference.
35
SEQUENTIAL
EXHIBIT NO. DOCUMENT DESCRIPTION PAGE NO.
----------- -------------------- ----------
10.22(1) Noncompetition Agreement, dated as of May 13,1996 be-
tween Bob L. Gaddy and Leggett & Platt, Incorporated,
filed as Exhibit 10.25 to Registrant's Form 10-K for
the year ended December 31, 1996, is incorporated by
reference.
10.23(1) Pace Industries, Inc., Revised and Restated Employee
Incentive Compensation Plan, filed as Exhibit 10.27
to Registrant's Form 10-K for the year ended December
31, 1996, is incorporated by reference.
21 Schedule of Subsidiaries of Registrant.
23 Consent of Independent Accountants.
24 Power of Attorney executed by members of the
Company's Board of Directors regarding this Form 10-K
and certain registration statements.
27 Financial Data Schedule.
27.1 Restated Financial Data Schedules.
27.2 Restated Financial Data Schedules.
27.3 Restated Financial Data Schedules.
- --------
(1) Denotes management contract or compensatory plan or arrangement.
36
Exhibit 3.1
RESTATED ARTICLES OF INCORPORATION
OF
LEGGETT & PLATT, INCORPORATED
--- oOo ---
TO: Honorable Roy D. Blunt
Secretary of State
State of Missouri
Jefferson City, MO 65101
Pursuant to the provisions of The General and Business Corporation Law of
Missouri, the undersigned Corporation adopts Restated Articles of Incorporation
in the following manner:
I.
The name of the Corporation is Leggett & Platt, Incorporated. The name
under which it was originally organized was Leggett & Platt Spring Bed and
Manufacturing Company.
II.
A meeting of the Board of Directors of the Corporation was duly called and
held on the 13th day of May, 1987, pursuant to notice duly given in accordance
with the Bylaws of the Corporation and the Statutes of the State of Missouri.
III.
At such meeting a proposal was duly made by resolution and seconded that
the Corporation adopt Restated Articles of Incorporation which correctly set
forth without change the corresponding provisions of the Corporation's Articles
of Incorporation as theretofore amended, and that such Restated Articles of
Incorporation attached hereto shall supersede this Corporation's original
Articles of Incorporation and all amendments thereto and all prior restatements
thereof.
IV.
The Restated Articles of Incorporation attached hereto correctly set forth
without change the corresponding provisions of the Articles of Incorporation as
heretofore amended and restated, and said Restated Articles of Incorporation
supersede the original Articles of Incorporation and all amendments thereto and
all prior restatements thereof.
IN WITNESS WHEREOF, the undersigned, Felix E. Wright, President of Leggett
& Platt, Incorporated, has executed this instrument and Robert A. Jefferies,
Jr., Secretary of Leggett & Platt, Incorporated, has affixed its corporate seal
hereto and attested said seal on the 13th day of May, 1987.
(CORPORATE SEAL) LEGGETT & PLATT, INCORPORATED
ATTEST:
- ------------------------ ---------------------
Robert A. Jefferies, Jr. Felix E. Wright
Secretary President
STATE OF MISSOURI )
) ss.
COUNTY OF NEWTON )
I, Nora L. Tebbets, a notary public, do hereby certify that on this 13th
day of May, 1987, personally appeared before me Felix E. Wright, who being by me
first duly sworn, declared that he is the President of Leggett & Platt,
Incorporated, that he signed the foregoing document as President of the
Corporation, and that the statements therein contained are true.
---------------------
Notary Public
My Commission Expires: ___________________
RESTATED ARTICLES OF INCORPORATION
LEGGETT & PLATT, INCORPORATED
-- oOo --
ARTICLE I
The name of this corporation shall be "LEGGETT & PLATT, INCORPORATED."
ARTICLE II
The corporation has heretofore complied with the requirements of law as to
initial minimum capital, without which it could not have commenced business.
ARTICLE III
The aggregate number of shares which the corporation shall have the
authority to issue is One Hundred Million (100,000,000) shares of Common Stock
of One Dollar ($1.00) par value and One Hundred Million (100,000,000) shares of
Preferred Stock without par value.
1. Common Stock. The following is a statement of the designations,
preferences, limitations and relative rights in respect of the shares of the
Common Stock.
(a) Dividends. Subject to the prior and superior rights of the
Preferred Stock as set forth below and in any Directors' Resolution
(hereinafter defined), dividends may be paid on the Common Stock as and
when declared by the Board of Directors of the corporation out of any funds
of the corporation legally available for the payment thereof.
The corporation shall not issue fractional shares or script in
satisfaction of any stock dividend, but in lieu thereof shall pay in cash
an amount equal to such fraction multiplied by the current per share market
value of the class of stock on which the stock dividend is issued, as
determined by the Board of Directors.
(b) Dissolution. Subject to the prior and superior rights of the
Preferred Stock as set forth below and in any Directors' Resolution
(hereinafter defined), in the event of any liquidation, dissolution or
winding up of the affairs of the corporation, whether voluntary or
involuntary, the holders of Common Stock shall be entitled to share ratably
in the distribution of the assets of the corporation. Neither the
consolidation nor merger of the corporation into or with any other
corporation or corporations, nor merger of any other corporation into the
corporation, nor a reorganization of the corporation, nor the purchase or
redemption of all or part of the outstanding shares of any class or classes
of the stock of the corporation, nor a sale or transfer of the property and
business of the corporation as, or substantially as, an entity, shall be
deemed a liquidation, dissolution or winding up of the affairs of the
corporation within the meaning of any of the provisions of this paragraph.
(c) Voting. Except as otherwise required by law, each share of
Common Stock shall have equal voting rights, each holder of such stock of
the corporation entitled to vote shall have one vote, in person or by
proxy, for each share thereof held, and all shares of the corporation,
including shares of Preferred Stock, shall be voted as a single class
except where specifically required by law to vote separately.
2. Preferred Stock. The Board of Directors is hereby authorized from time
to time to provide by resolution for the issuance of shares of Preferred Stock
in one or more classes and one or more series within any class not exceeding the
aggregate number of shares of Preferred Stock authorized by these Restated
Articles of Incorporation, as amended from time to time; and to determine with
respect to each such class or series the voting power, if any (which voting
powers if granted may be full or limited), designations, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions appertaining thereto, including
without limiting the generality of the foregoing, the voting rights appertaining
to shares of Preferred Stock of any class or series, the rate of dividend to
which holders of Preferred Stock of any class or series may be entitled (which
may be cumulative or noncumulative), the rights of holders of Preferred Stock of
any class or series in the event of liquidation, dissolution or winding up of
the affairs of the corporation, and the rights (if any) of holders of Preferred
Stock of any class or series to convert or exchange such shares of Preferred
Stock of such class or series for shares of any other class or series of capital
stock of this corporation or any other corporation (including the determination
of the price or prices or the rate or rates applicable to such right to convert
or exchange and the adjustment thereof, the time or times during which the
rights to convert or exchange shall be applicable and the time or times during
which a particular price or rate shall be applicable).
Before the corporation shall issue any shares of Preferred Stock of any
class or series, a certificate setting forth a copy of the resolution or
resolutions of the Board of Directors, fixing the voting power, designations,
preferences, the relative, participating, optional or other rights, if any, and
the qualifications, limitations and restrictions, if any, appertaining to the
shares of Preferred Stock of such class or series, and the number of shares of
Preferred Stock of such class or series, authorized by the Board of Directors to
be issued shall be made and filed in accordance with applicable law.
3. Pre-emptive Rights. No holder of any stock of the corporation shall be
entitled as a matter of right to purchase or subscribe for any part of any stock
of the corporation, authorized by this Article III, or of any additional stock
of any class to be issued by reason of any increase of the authorized stock of
the corporation, or of any bonds, certificates of indebtedness, debentures or
other securities convertible into stock of the corporation, but any stock
authorized by this Article III or any such additional authorized issue of new
stock or of securities convertible into stock may be issued and disposed of by
the Board of Directors to such persons, firms, corporations or associations for
such consideration and upon such terms and in such manner as the Board of
Directors may in their discretion determine without offering any thereof on the
same terms or on any terms to the stockholders then of record or to any class of
stockholders.
4. Shareholders' Rights to Have Shares Redeemed in Certain Circumstances.
The following is a statement of the shareholders' rights to have shares of
Common Stock redeemed by the corporation in certain circumstances.
(a) In the event that any person (Acquiring Person) (i) who is the
beneficial owner, directly or indirectly, of more than fifty per cent of
the shares of Common Stock outstanding becomes the beneficial owner,
directly or indirectly, of any additional shares of Common Stock pursuant
to a tender offer opposed by the Board of Directors of the corporation or
(ii) becomes the beneficial owner, directly or indirectly, of more than
fifty
per cent of the shares of the Common Stock outstanding and any of such
shares of Common Stock were acquired pursuant to a tender offer opposed by
the Board of Directors of the Corporation, each holder of shares of Common
Stock, other than the Acquiring Person or a transferee of the Acquiring
Person, shall have the right until and including the forty-fifth day
following the date the notice to holders of shares of Common Stock referred
to in subsection (c) herein is mailed to have the shares of Common Stock
held by such holder redeemed by the corporation at the Redemption Price
determined as provided in subsection (d) herein, and each holder of
securities convertible into shares of Common Stock or of options, warrants,
or rights exercisable to acquire shares of Common Stock prior to such
forty-fifth day, other than the Acquiring Person or a transferee of the
Acquiring Person, shall have the right simultaneously with the conversion
of such securities or exercise of such options, warrants, or rights to have
the shares of Common Stock to be received thereupon by such holder redeemed
by the corporation at the Redemption Price.
(b) For purposes of this Section 4:
(1) A tender offer opposed by the Board of Directors of the corporation
shall mean a tender offer that the Board of Directors, acting pursuant to a
resolution approved by a majority of the Company's directors, recommends be
rejected by the shareholders of the corporation if such recommendation is
made by public announcement or written notice to the shareholders of the
corporation at any time on or before the expiration of such tender offer,
including all extensions and amendments thereof, and is not withdrawn by
public announcement or written notice to shareholders on or before such
expiration.
(2) The term "person" shall include an individual, a corporation,
partnership, trust or other entity. When two or more persons act as a
partnership, limited partnership, syndicate, or other group for the purpose
of acquiring shares of Common Stock of the corporation, such partnership,
syndicate or group shall be deemed a "person."
(3) For the purposes of determining whether a person is an Acquiring
Person, such person shall be deemed to beneficially own (i) all shares of
Common Stock with respect to which such person has the capability to
control or influence the voting power in respect thereof and (ii) all
shares of Common Stock which such person has the immediate or future right
to acquire, directly or indirectly, pursuant to agreements, through the
exercise of options, warrants or rights or through the conversion of
convertible securities or otherwise; and all shares of Common Stock which
such person has the right to acquire in such manner shall be deemed to be
outstanding shares, but shares of Common Stock which any other person has
the right to acquire in such manner shall not be deemed to be outstanding
shares.
(4) The term "tender offer," as used herein, shall mean a tender offer
within the meaning of the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
(5) Subject to the provisions of subsection (b) (2) herein, "outstanding
shares" shall mean shares of Common Stock which at the time in question
have been issued by the corporation and not reacquired and held or retired
by it or held by any subsidiary of the corporation.
(c) (1) Not later than twenty days following the date on which the
corporation receives reasonable notice that any person has become an
Acquiring Person (the "Record Date"), the corporation shall give written
notice (the "Shareholder Notice") by first class mail, postage prepaid, at
the addresses shown on the records of the corporation, to each holder of
record as of the Record Date of:
(i) shares of Common Stock;
(ii) securities that are convertible into shares of Common
Stock immediately or within forty-five days following the Record Date;
and
(iii) options, warrants or rights that are exercisable to
acquire shares of Common Stock immediately or within forty-five days
following the Record Date;
and shall advise all such holders of the right to have shares of Common
Stock redeemed and the procedure for such redemption. In the event that the
corporation fails to give the Shareholder Notice as required by subsection
(c), any holder entitled to receive such Shareholder Notice may within
sixty days thereafter serve written demand upon the corporation to give
such Shareholder Notice. If within twenty days after receipt of written
demand the corporation fails to give the required Shareholder Notice, such
holder may at the expense and on behalf of the corporation take such
reasonable action as may be appropriate to cause Shareholder Notice to be
given under this subsection (c).
(2) In the event shares of Common Stock are subject to redemption in
accordance with this Section 4, the Board of Directors of the corporation
shall designate a Redemption Agent, which shall be a corporation or
association (i) organized and doing business under the laws of the United
States or any State, (ii) subject to supervision or examination by Federal
or State authority, (iii) having combined capital and surplus of at least
$5,000,000 and (iv) having the power to exercise corporate trust powers.
(3) For a period of forty-five days from the date of the mailing of
the Shareholder Notice to persons entitled thereto pursuant to this
subsection (c), persons entitled to have shares of Common Stock redeemed
pursuant to this Section 4 may, at their option, deposit certificates
representing all or less than all shares of Common Stock held of record by
them with the Redemption Agent together with written notice that the holder
elects to have such shares redeemed pursuant to this Section 4. The Company
shall redeem all shares delivered for redemption allowable under Missouri
law, on a pro rata basis (except that no fractional shares shall be
redeemed), and the shares so redeemed shall no longer be considered
outstanding as of the close of business on the day certificates evidencing
such shares are deposited in proper form with the Redemption Agent. Any
shares not permitted to be redeemed under Missouri law shall be immediately
returned to the depositing shareholder and shall remain issued and
outstanding.
(4) The corporation shall deposit in trust with the Redemption Agent,
as soon as possible, cash sufficient to pay the aggregate Redemption Price
of all of the shares of Common Stock redeemed.
(5) As soon as practicable after receipt by the Redemption Agent of
cash deposited by the corporation pursuant to subsection (4) immediately
above, the Redemption Agent shall issue its checks payable to the order of
the persons entitled to receive the Redemption Price of the shares of
Common Stock redeemed. If the amount of cash so received by the Redemption
Agent at any one time is not sufficient to pay the aggregate Redemption
Price to which all such persons are entitled, the Redemption Agent shall
pay each such person a pro rata part of the amount to which he is entitled.
(6) In the event the entire Redemption Price has not been paid for
all shares received by the Redemption Agent within thirty (30) days
following the last day shareholders are entitled to deposit shares for
redemption as provided in subsection (c) (3) hereof, then each shareholder
who has not received the full Redemption Price for any of such shares shall
be entitled to receive interest on the unpaid portion of the Redemption
Price due him at the rate of 18% per annum or the highest rate of interest
allowed by applicable law, whichever is less, from the expiration of said
thirty (30) day period until the Redemption Price is paid in full. All
funds paid by the Redemption Agent shall be allocated first to accrued and
unpaid interest and then to the Redemption Price.
(d) (1) The Redemption Price shall be the higher of (i) the highest price
paid by the Acquiring Person, including any commissions paid to brokers or
dealers for solicitation or other services, for any shares of Common Stock
pursuant to a tender offer that was made at any time by such Acquiring
Person and was opposed by the Board of Directors of the corporation; or
(ii) the highest market price per Common Share on the Record Date. For
purposes of subpart (i) of this subsection (d) (1), if the consideration
paid in any such acquisition of shares consisted, in whole or part, of
consideration other than cash, the Board of Directors of the corporation
shall take such action, as in its judgment it deems appropriate, to
establish the cash value of such consideration, but such valuation shall
not be less than the cash value, if any, ascribed to such consideration by
the Acquiring Person. For purposes of this subpart (ii) of subsection (d)
(1), the price on the Record Date shall be the highest sale price per
Common Share traded on the New York Stock Exchange or other national
securities exchange on the Record Date or, if Common Shares are not then
traded on a national securities exchange, the mean of the highest bid and
highest asked prices per Common Share quoted in the National Association of
Securities Dealers Automated Quotation System on the Record Date.
(2) The determinations to be made pursuant to this Section 4 shall be
made by the Board of Directors not later than the date of the Shareholder
Notice referred to in subsection (c) hereof. In making such determination,
the Board of Directors may engage such persons, including investment
banking firms and the independent accountants who have reported on the most
recent financial statements of the corporation, and utilize employees and
agents of the corporation who will, in the judgment of the Board of
Directors, be of assistance to the Board of Directors.
(3) The determinations to be made pursuant to this Section 4, when
made by the Board of Directors acting in good faith on the basis of such
information and assistance as was then reasonably available for such
purpose, shall be conclusive and binding upon the corporation and its
shareholders, including any person referred to in subsection (c) hereof.
(e) This Section 4 of this Article III may be amended or repealed
only by the affirmative vote of the holders of at least eighty-five (85%)
of the outstanding shares of Common Stock of the corporation: provided,
however, that no amendment or repeal adopted after the Shareholder Notice
under subsection (c) hereof shall affect any such shares thereafter
deposited with the Redemption Agent in connection with such Shareholder
Notice for redemption pursuant to this Section 4.
5. Shareholder Voting Requirements for Approval of Mergers,
Consolidations, and Certain Dispositions of Assets of the Company. The
affirmative vote of the holders of at least two-thirds of the outstanding shares
of the corporation entitled to vote shall be required for the approval of (i)
any merger or consolidation of the corporation with or into any other
corporation or entity; (ii) any sale, lease or exchange or other disposition
(other than by mortgage, deed of trust or pledge), of all, or substantially all,
property and assets, with or without the goodwill, of the corporation, if not
made in the usual and regular course of its business; or (iii) any plan or
agreement relating to any transaction or agreement set forth in (i) or (ii) of
this Section 5.
This Section 5 of this Article III shall be amended or repealed only by the
affirmative vote of the holders of at least two-thirds of the outstanding shares
entitled to vote on such amendment or repeal.
6. Miscellaneous. The corporation shall be entitled to treat the person
in whose name any share, right or option is registered as the owner thereof for
all purposes and shall not be bound to recognize any equitable or other claim to
or interest in such share, right or option on the part of any other person,
whether or not the corporation shall have notice thereof, save as may be
expressly provided by the laws of the State of Missouri.
A director shall be fully protected in relying in good faith upon the books
of account of the corporation or statements prepared by any of its officials as
to the value and amount of the assets, liabilities and/or net profits of the
corporation, or any other facts pertinent to the existence and amount of surplus
or other funds from which dividends might properly be declared and paid.
Without action by the stockholders, the shares of stock may be issued by
the corporation from time to time for such consideration (not less than the par
value thereof if such stock has a par value) as may be fixed from time to time
by the Board of Directors thereof, and any and all such shares so issued, the
full consideration for which has been paid or delivered, shall be deemed fully
paid stock and not liable to any further call or assessment thereon, and the
holder of such shares shall not be liable for any further call or assessment
thereon, or for any other payment thereon.
6. Shareholder Voting Requirements, Fairness of Certain Proposed Business
Combinations.
(a) Except as expressly provided in Section 6(b) hereof, no Business
Combination shall be consummated without first being approved by the affirmative
vote of 95% of the then outstanding Voting Stock voting together as a single
class. The affirmative vote required by this Section 6(a) is in addition to any
other affirmative vote required by law, these Restated Articles of
Incorporation, the By-Laws of the corporation or otherwise.
(b) Section 6(a) hereof shall not apply to a Business Combination if all
of the conditions precedent specified in either Section 6(b)(1) or Section
6(b)(2) are met prior to the consummation of such Business Combination.
(1) The Business Combination shall have been duly approved by a
majority of all of the Continuing Directors.
(2) All of conditions 6(b)(2)(i) through 6(b)(2)(v) shall have been
met.
(i) The amount of (X) cash or (Y) non-cash consideration to be
received per share by holders of Voting Stock (or each class of Voting
Stock separately, if applicable) in such proposed Business Combination
shall be at least equal to the highest amount determined under
6(b)(2)(i)(A), (B) and (C) below:
(A) the highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid by
the Interested Shareholder for any share of such Voting Stock
acquired by it (X) within the two-year period immediately prior
to the first public announcement of the proposed Business
Combination (the "Announcement Date") or (Y) in the transaction
in which the Interested Shareholder became an Interested
Shareholder, whichever is higher;
(B) the Fair Market Value per share of such Voting Stock on
the Announcement Date or on the date on which the Interested
Shareholder became an Interested Shareholder (such latter date is
referred to in this Section 6 as the "Determination Date"),
whichever is higher, multiplied by the greater of one (1.0) or
the ratio of (X) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by the Interested Shareholder for any shares of such
Voting Stock acquired by it within the two-year period
immediately prior to the Announcement Date or in the transaction
in which the Interested Shareholder became an Interested
Shareholder, whichever is higher, to (Y) the Fair Market Value
per share of such Voting Stock on the first date in such two-year
period immediately prior to the Announcement Date on which the
Interested Shareholder acquired any such Voting Stock, or, in the
event the Interested Shareholder did not acquire any such Voting
stock within such two-year period, the Fair Market Value per
share of such Voting Stock on the most recent date on which the
Interested Shareholder acquired any such Voting Stock; and
(C) the primary earnings per share of the Common Stock for
the four full consecutive fiscal quarters of the corporation
immediately preceding the Announcement Date multiplied by the
price/earnings ratio of the Interested Shareholder. For purposes
of this Section 6(b)(2)(i)(C) the "price/earnings ratio" shall be
the ratio of (X) the per share Fair Market Value of all
outstanding common stock of the Interested Shareholder on the
Announcement Date to (Y) the primary earnings per share
attributable to such common stock for the four full consecutive
quarters of the Interested Shareholder immediately preceding the
Announcement Date. If more than one Person constitutes the
Interested Shareholder, the price/earnings ratio of the Person
having the highest price/earnings ratio shall be used for the
computation required by this Section 6(b)(2)(i)(C). The Fair
Market Value of non-cash consideration shall be determined as of
the date of the consummation of the Business Combination.
(ii) The consideration to be received by holders of a particular
class of outstanding Voting Stock pursuant to the proposed Business
Combination shall be cash unless the Interested Shareholder acquired
all Voting Stock beneficially owned by such Interested Shareholder for
non-cash consideration. In such case, the consideration to be paid in
the proposed Business Combination shall be in the same form previously
paid by the Interested Shareholder for such Voting Stock.
(iii) After such Interested Shareholder has become an Interested
Shareholder and prior to the consummation of such Business
Combination:
(A) there shall have been no failure to declare and pay at
the regular date therefor any dividends (whether or not
cumulative) on any outstanding preferred stock of the
corporation, except as approved by a majority of all of the
Continuing Directors;
(B) there shall have been no reduction in the rate or
frequency of dividends paid on any class of common stock of the
corporation as compared to the practice of the corporation
immediately preceding the Determination Date (except as necessary
to reflect any subdivision of any class of such common stock or
to the extent necessary to comply with the provisions of any
applicable law) or except as approved by a majority of all of the
Continuing Directors;
(C) there shall have been an increase in such rate of
dividends as is necessary to reflect any reclassification
(including any reverse stock split), recapitalization,
reorganization or any similar transaction which has the effect of
reducing the number of outstanding shares of any class of common
stock of the corporation, unless the failure to increase such
annual rate is approved by a majority of all of the Continuing
Directors; and
(D) such Interested Shareholder shall not have become the
beneficial owner of any additional shares of Voting Stock except
to the extent necessary to fulfill contractual obligations
incurred in the transaction which resulted in such Interested
Shareholder becoming an Interested Shareholder so long as the
terms of such transaction are not amended or modified subsequent
to the Determination Date.
(iv) After the Determination Date, the Interested Shareholder
shall not have received the benefit, directly or indirectly (except
proportionately as a shareholder), of any loans, advances, guarantees,
pledges or other financial assistance, or any tax credits or other tax
advantages provided by the corporation, whether in anticipation of
such Business Combination or otherwise.
(v) A proxy or information statement describing the proposed
Business Combination containing the views of all of the Continuing
Directors and any investment advisor selected by a majority of all of
the Continuing Directors and complying with the requirements of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing such Act, rules or
regulations) shall be mailed to shareholders of the corporation at
least 30 days prior to the consummation of such Business Combination
(whether or not such proxy or information statement is required to be
mailed pursuant to such Act or subsequent provisions).
(3) Notwithstanding this Section 6(b), any Business Combination
meeting the conditions precedent specified in Sections 6(b)(1) or 6(b)(2)
shall, nevertheless, proceed only upon receiving any affirmative vote
required by law, these Restated Articles of Incorporation, the By-Laws of
the corporation, or otherwise.
(c) Definitions for the purposes of this Section 6:
(1) "Affiliate." An "Affiliate" of, or a Person "affiliated" with, a
specific Person, means a Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common
control with, the Person specified.
(2) "Announcement Date." See Section 6(b)(2)(i)(A).
(3) "Associate." The term "Associate" means:
(i) any corporation or organization (other than this
corporation or a Subsidiary of this corporation) of which a Person is
an officer of partner or is, directly or indirectly, the beneficial
owner of ten percent (10%) or more of any class of equity securities;
or
(ii) any trust or other estate in which a Person has a
substantial beneficial interest or as to which a Person serves as
trustee or in a similar fiduciary capacity; or
(iii) any relative or spouse of a Person, or any relative of
such spouse, who has the same home as such Person; or
(iv) any investment company registered under the Investment
Company Act of 1940 for which a Person or any Affiliate of such Person
serves as investment advisor.
(4) "Beneficial Owner." A Person shall be a "Beneficial Owner" of
any Voting Stock:
(i) which a Person or any of its Affiliates or Associates
directly or indirectly, pursuant to any agreement, arrangement or
understanding, has or shares the power to vote or direct the voting of
or to dispose of or direct the disposition of; or
(ii) which such Person or any of its Affiliates or Associates
has the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise;
or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
Voting Stock.
(5) "Business Combination." Each of the following shall be deemed a
"Business Combination":
(i) any merger or consolidation of the corporation or of any
Subsidiary of the corporation with any Interested Shareholder or any
Affiliate of an Interested Shareholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to
or with any Interested Shareholder or any Affiliate or any Interested
Shareholder of any assets of the corporation or any subsidiary of the
corporation having an aggregate Fair Market Value of $5,000,000 or
more; or
(iii) any issuance or transfer by the corporation or any
Subsidiary of the corporation (in one transaction or a series of
transactions) of any securities of the corporation or any Subsidiary
of the corporation to any Interested Shareholder or any Affiliate of
any Interested Shareholder in exchange for cash, securities or other
property (or a combination thereof) having an aggregate Fair Market
Value of $5,000,000 or more; or
(iv) the adoption of any plan or proposal for the liquidation
or dissolution of the corporation at any time during which there
exists an Interested Shareholder; or
(v) any reclassification of securities (including any reverse
stock split), or recapitalization of the corporation, or any merger or
consolidation of the corporation with any of its Subsidiaries or any
other transaction (whether or not with or into or otherwise involving
an Interested Shareholder) which has the effect, directly or
indirectly, of increasing the proportionate share of the outstanding
shares of any class of Voting Stock which are beneficially owned by
any Interested Shareholder or any Affiliate of any Interested
Shareholder.
(6) "Continuing Director." The term "Continuing Director" shall
include any member of the Board of Directors of the corporation who was
serving as a director of the corporation on May 9, 1984 and the Successors
of any such member. For purposes of this Section 6(c)(6), a Successor shall
mean any director of the corporation elected subsequent to May 9, 1984
whose nomination or election was approved by the affirmative vote of a
majority of all of the Continuing Directors and previously qualified
Successors serving at the time of such vote. If at any time the number of
Continuing Directors shall be less than four (4) or one-third (1/3) of the
number of Continuing Directors serving on the Determination Date, whichever
is greater, it shall be deemed that no Continuing Directors exist;
provided, however, this sentence shall not apply to Section 6(b)(2)(v).
(7) "Determination Date." See Section 6(b)(2)(i)(B).
(8) "Fair Market Value." "Fair Market Value" shall mean:
(i) in the case of equity or debt securities, the closing sale
price on the date in question of such securities on the Composite Tape
for New York Stock Exchange-Listed Stocks, or, if such securities are
not quoted on the Composite Tape, on the New York Stock Exchange, or,
if such securities are not listed on such exchange, on the principal
United States securities exchange registered under the Securities
Exchange Act of 1934 on which such securities are listed, or, if such
securities are not listed on any such exchange, the highest closing
bid quotation with respect to such securities on the date in question
on the National Association of Securities Dealers, Inc. Automated
Quotation System or any system then in use, or, if no such quotations
are available, the fair market value on the date in question of such
securities as determined by a majority of all of the Continuing
Directors or if no Continuing Directors are then serving by a majority
of all of the Board of Directors in good faith; and
(ii) in the case of property other than equity or debt
securities, the fair market value of such property on the date in
question as determined in good faith by a majority of all of the
Continuing Directors or if no Continuing Directors are then serving by
a majority of all of the Board of Directors in good faith.
(9) "Interested Shareholder." An "Interested Shareholder" is any
Person which is the Beneficial Owner of ten percent (10%) or more of any
class of Voting Stock. The term "Interested Shareholder" shall never
include the corporation or any Subsidiary of the corporation. The term
"Interested Shareholder" shall also never include any fiduciary or trustee
for the employees of the corporation or its Subsidiaries acting pursuant to
any benefit plan or arrangement established by the corporation.
(10) "Person." The term "Person" shall mean any individual,
partnership, corporation, group or other entity. When two or more Persons
act as a partnership, limited partnership, syndicate, association or other
group for the purpose of acquiring, holding or disposing of shares of
stock, such partnership, syndicate, association or group shall be deemed a
"Person."
(11) "Subsidiary." The term "Subsidiary" shall mean any corporation or
other entity of which the Person in question owns at least 50% of any class
of equity securities, directly or indirectly.
(12) "Voting Stock." "Voting Stock" shall mean the Common Stock and
any other class of capital stock of the corporation which shall from time
to time be outstanding which is entitled to vote generally in the election
of directors.
(d) Nothing contained in this Section 6 shall be construed to relieve any
Interested Shareholder from any fiduciary obligation imposed by law.
(e) Notwithstanding any other provisions of these Restated Articles of
Incorporation or the By-Laws of the corporation (and notwithstanding the fact
that a lesser percentage may be specified by law, these Restated Articles of
Incorporation, or the By-Laws of the corporation), the affirmative vote of the
holders of ninety-five percent (95%) or more of the shares of Voting Stock,
voting together as a single class, shall be required to amend, repeal, or adopt
any provisions inconsistent with, this Section 6; provided, however, that at any
time there does not exist an Interested Shareholder, this Section 6 may be
amended or repealed (or provisions may be adopted inconsistent with this Section
6) upon the affirmative vote of sixty percent (60%) or more of the outstanding
shares of Voting Stock, voting together as a single class.
ARTICLE IV
This corporation reserves the right to amend, alter, change or repeal any
provision contained in these Articles of Incorporation in the manner now or
hereafter prescribed by law and all rights conferred on officers, directors and
shareholders herein are granted subject to this reservation.
ARTICLE V
The property and business of the corporation shall be controlled and
managed by a board of directors. The number of directors shall be fixed by, or
in the manner provided in, the bylaws; provided, however, the number of
directors shall be not less than three (3).
ARTICLE VI
The duration of the corporation is perpetual.
ARTICLE VII
The purposes for which this corporation is organized are as follows:
To design and manufacture products of every description fabricated
from various grades of ferrous and non-ferrous metals and their alloys and
to buy, sell and otherwise deal therein;
To manufacture, buy, sell, procure, distribute, market, exchange,
import, export and in any other manner deal in or deal with (as principal,
agent or otherwise) various spring, coil, wire, metal and other products of
various grades of ferrous and non-ferrous metals and their alloys, as well
as materials, parts, instruments, devices and other tools, parts,
components and supplies;
To manufacture, purchase, or otherwise acquire, invest in, own,
mortgage, pledge, lease, sell, assign and transfer or otherwise dispose of,
trade, deal in and deal with goods, wares and merchandise and personal
property of every class and description within or without the State of
Missouri;
To acquire by purchase, lease or otherwise erect, maintain, operate,
lease, mortgage and otherwise deal in and deal with real estate, buildings,
warehouses, storehouses, manufacturing plants, factories, machine shops and
any other structures and equipment necessary, useful or desirable for the
conduct of the business of this corporation;
To acquire the goodwill, rights and property and to undertake the
whole or any part of the assets and liabilities of any person, firm,
association or corporation; to pay for the same in cash, the stock of this
corporation, bonds, or otherwise; to hold or in any manner to dispose of
the whole or any part of the property so purchased; to conduct in any
lawful manner the whole or any part of any business so acquired and to
exercise all the powers necessary or convenient in and about the conduct
and management of such business;
To enter into partnership or into any arrangement for sharing of
profits, union of interests, cooperation, joint adventure, reciprocal
concession or otherwise, with any person or corporation carrying on or
engaged in or about to carry on or engage in or any business or transaction
which the corporation is authorized to carry on or engage in, or any
business or transaction capable of being conducted so as directly or
indirectly to benefit the corporation; and, without banking or discount
privileges, to lend money to and/or guarantee the contracts of and payment
of the principal of and interest on any notes, debentures, bonds or other
evidences of indebtedness of any such person, corporation or entity, or
otherwise assist any such person or corporation, and to take or otherwise
acquire shares and securities of any such corporation, and to sell, hold,
reissue, with or without guaranty, or otherwise deal with the same;
To purchase or otherwise acquire, apply for, register, hold, use, sell
or in any manner dispose of and to grant licenses or other rights in and in
any manner deal with patents, inventions, improvements, processes,
formulas, trademarks, trade names, rights and licenses secured under
letters patent, copyrights or otherwise;
To enter into, make and perform contracts of every kind for any lawful
purpose with any person, firm, association or corporation, town, city,
county, body politic, state, territory, government or colony or dependency
thereof;
To borrow or raise moneys for any of the purposes of the corporation
and, from time to time without limit as to amount, to draw, make, accept,
endorse, execute and issue promissory notes, drafts, bills of exchange,
warrants, bonds, debentures and other negotiable or non-negotiable
instruments and evidences of indebtedness, and to secure the payment of any
thereof and of the interest thereon by mortgage upon or pledge, conveyance
or assignment in trust of the whole or any part of the property of the
corporation, whether at the time owned or thereafter acquired, and to sell,
pledge or otherwise dispose of such bonds or other obligations of the
corporation for its corporate purposes;
To purchase, hold, sell and transfer the shares of its own capital
stock, provided it shall not use its funds or property for the purchase of
its own shares of capital stock when such use would cause any impairment of
its capital except as otherwise permitted by law, and provided further that
shares of its own capital stock belonging to it shall not be voted upon
directly or indirectly;
To render general and special services and advice and to do all things
as may be necessary or convenient in carrying out any or all of the
foregoing purposes;
The objects and purposes specified herein shall be regarded as
independent objects and purposes and, except where otherwise expressed,
shall be in no way limited nor restricted by reference to or inference from
the terms of any other clause or paragraph of these Articles of
Incorporation;
The foregoing shall be construed both as objects and powers, and the
enumeration thereof shall not be held to limit or restrict in any manner
the general powers conferred on this corporation by the laws of the State
of Missouri.
ARTICLE VIII
1. Right to Indemnification. Each person who was or is a director or
officer of the Corporation shall be indemnified by the Corporation as a matter
of right to the fullest extent permitted or authorized by applicable law and as
otherwise provided in this Article VIII. The term "applicable law" means (i)
Section 351.355 of The Missouri General and Business Corporation Law (other than
subsection 6 thereof and any other subsection comparable in purpose to
subsection 6) as in effect on May 7, 1986 and as thereafter amended (but in the
case of any such amendment, only to the extent such amendment permits the
Corporation to provide broader indemnification rights than The Missouri General
and Business Corporation Law permitted the Corporation to provide immediately
prior to such amendment) and (ii) any other statutory indemnification provision
adopted after May 7, 1986.
2. Right to Advance of Expenses. Expenses incurred by any person who was
or is a director or officer of the Corporation in defending any threatened,
pending or on-going action, suit or proceeding (whether civil, criminal,
administrative or investigative, including those by or in the right of the
Corporation) shall be promptly advanced by the Corporation when so requested by
such person at any time and from time to time, but only if the requesting person
delivers to the Corporation an undertaking to repay to the Corporation all
amounts so advanced if it should ultimately be determined that the requesting
person is not entitled to be indemnified by the Corporation under applicable
law, this Article VIII, and any by-law of the Corporation, agreement, vote of
shareholders or disinterested directors or otherwise.
3. Rights not Exclusive. The indemnification and other rights provided by
this Article shall not be deemed exclusive of any other rights to which a
director or officer may be entitled under any by-law, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in any other capacity while holding
the office of director or officer, and the Corporation is hereby specifically
authorized to provide such indemnification and other rights by any by-law,
agreement, vote of shareholders or disinterested directors or otherwise.
4. Insurance. The Corporation may purchase and maintain insurance on
behalf of any person who was or is a director, officer, employee or agent of the
Corporation, or was or is serving at the request of the Corporation as a
director, officer, employee or agent of another Corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against or
incurred by such person in any such capacity, or arising out of his or her
status as such, whether or not the Corporation would have the power to indemnify
such person against such liability under this Article VIII, the Corporation's
by-laws, agreement, vote of shareholders or disinterested directors or
otherwise.
5. Enforceability; Amendment. Each person who was or is a director or
officer of the Corporation and the heirs, executors, administrators and estate
of such person, is a third party beneficiary of this Article VIII and shall be
entitled to enforce against the Corporation all indemnification and other rights
granted to such person by applicable law and as otherwise provided in this
Article VIII.
This Article VIII may be hereafter amended or repealed; provided, however,
that no amendment or repeal shall reduce, terminate or otherwise adversely
affect the right of a person who was or is a director or officer to obtain
indemnification or an advance of expenses with respect to an action, suit or
proceeding that pertains to or arises out of actions or omissions that occur
prior to the later of (a) the effective date of such amendment or repeal; (b)
the expiration date of such person's then current term of office with, or
service for, the Corporation (provided such person has a stated term of office
or service and completes such term); or (c) the effective date such person
resigns his office or terminates his service (provided such person has a stated
term of office or service but resigns prior to the expiration of such term).
ARTICLE IX
1. In furtherance and not in limitation of the powers conferred by the
laws of the State of Missouri, the Board of Directors is expressly authorized:
To make, alter, amend and repeal the By-Laws;
To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to alter or
abolish any such reserve;
To authorize and cause to be executed mortgages and liens upon the
property and franchises of this corporation;
To designate, by resolution passed by a majority of the whole Board,
an executive committee, to consist of two or more directors, which
committee, to the extent provided in such resolution or in the By-Laws of
the corporation, shall have and may exercise any or all of the powers of
the Board of Directors in the management of the business and affairs of
this corporation and have power to authorize the seal of this corporation
to be affixed to all papers which may require it;
Provided to the extent that any of the foregoing powers conflict with
any applicable statute of the State of Missouri, now or hereafter in
effect, such statute, to the extent of such conflict, shall be controlling.
To the extent permitted by the laws of the State of Missouri, this
corporation may in its By-Laws confer powers additional to the foregoing
upon the directors, in addition to the powers and authorities expressly
conferred upon them by law.
2. (a) Notwithstanding any other provisions of these Restated Articles of
Incorporation or the By-Laws of the Corporation (and notwithstanding the fact
that a lesser percentage may be specified by law, these Restated Articles of
Incorporation, or the By-Laws of the Corporation), no Protected By-Law shall be
amended or repealed and no provision of the Corporation's By-Laws or these
Restated Articles of Incorporation inconsistent with any Protected By-Law, shall
be adopted at any time there exists a Substantial Shareholder without first
obtaining the approval of either (1) 80% or more of the then outstanding Voting
Stock voting together as a single class or (2) a majority of all of the
Continuing Directors.
(b) Definitions for purposes of this Section 2.
(1) "Affiliate." Affiliate shall have the same meaning as set forth
in Section 6(c)(1) of Article III of these Restated Articles of
Incorporation.
(2) "Associate." Associate shall have the same meaning as set forth
in Section 6(c)(3) of Article III of these Restated Articles of
Incorporation.
(3) "Beneficial Owner." A Person shall be deemed the "Beneficial
Owner" of and shall be deemed to "beneficially own" any Voting Stock:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly; provided,
however, that a Person shall not be deemed to
beneficially own any Voting Stock to the extent that the Person's
beneficial ownership is attributable solely to the Person's shared
authority to direct the disposition of Voting Stock beneficially owned
by any mutual fund registered as an investment company under the
Investment Company Act of 1940 in such Person's capacity as an
investment advisor registered with the Securities and Exchange
Commission;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding, or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, Voting Stock tendered
pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person's Affiliates or Associates until said
tendered Voting Stock is accepted for purchase; or (B) the right to
vote pursuant to any agreement, arrangement or understanding;
provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any Voting Stock if the agreement,
arrangement or understanding to vote such security, (1) arises solely
from a revocable proxy given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and (2) is not also then
reportable on Schedule 13D pursuant to Section 13(d) of the Exchange
Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any Voting Stock of the Corporation.
(4) "Continuing Director." The term "Continuing Director" shall
include any member of the Board of Directors of the Corporation who was
serving as a director of the Corporation at the close of business on May 7,
1986, and the Successors of any such member. For purposes of this Section
2(b)(4), a Successor shall mean any director of the Corporation elected
subsequent to May 7, 1986 whose nomination or election was approved by the
affirmative vote of a majority of all of the Continuing Directors and
previously qualified Successors serving at the time of such vote. If at any
time the number of Continuing Directors shall be less than four (4) or one-
third (1/3) of the number of Continuing Directors serving on the
Determination Date, whichever is greater, it shall be deemed that no
Continuing Directors exist.
(5) "Determination Date." The day on which a Substantial Shareholder
first becomes a Substantial Shareholder.
(6) "Person." Person shall have the same meaning as set forth in
Section 6(c)(10) of Article III of these Restated Articles of
Incorporation.
(7) "Protected By-Law." A "Protected By-Law" shall be any By-Law of
the Corporation designated as such by resolution duly adopted by the
Corporation's directors.
(8) "Subsidiary." Subsidiary shall have the same meaning as set
forth in Section 6(c)(11) of Article III of these Restated Articles of
Incorporation.
(9) "Substantial Shareholder." A Substantial Shareholder is any
Person which is the Beneficial Owner of twenty percent (20%) or more of any
class of Voting Stock. The term Substantial Shareholder shall never include
the Corporation or any subsidiary of the Corporation, any fiduciary or
trustee for the employees of the Corporation or its subsidiaries acting
pursuant to any benefit plan or arrangement established by the Corporation
or any subsidiary of the Corporation, or any such plan.
(10) "Voting Stock." Voting Stock shall have the same meaning as set
forth in Section 6(c)(12) of Article III of these Restated Articles of
Incorporation.
(c) Notwithstanding any other provisions of these Restated Articles of
Incorporation or the By-Laws of the Corporation (and notwithstanding the fact
that a lesser percentage may be specified by law, these Restated Articles of
Incorporation, or the By-Laws of the Corporation), the affirmative vote of
eighty percent (80%) or more of the shares of Voting Stock voting together as a
single class, shall be required to amend, repeal, or adopt any provisions
inconsistent with, this Section 2; provided, however, that at any time there
does not exist a Substantial Shareholder, this Section 2 may be amended or
repealed (or provisions may be adopted inconsistent with this Section 2) upon
the affirmative vote of sixty percent (60%) or more of the outstanding shares of
Voting Stock, voting together as a single class.
ARTICLE X
No contract or other transaction between the corporation and any other
corporation and no other act of the corporation shall, in the absence of fraud,
be invalidated or in any way affected by the fact that any of the directors of
the corporation are pecuniarily or otherwise interested in such contract,
transaction or other act, or are directors or officers of such other
corporation. The foregoing provision shall not be construed so as to relieve any
director of this corporation of any liability unless his interest in such
contract, transaction or other act shall have been disclosed or shall have been
known to the Board of Directors. Any director of the corporation, individually,
or any firm or association of which any such director may be a member, may be a
party to, or may be pecuniarily or otherwise interested in, any contract or
transaction of the corporation, provided that the fact that he individually or
such firm or association is so interested shall be disclosed or shall have been
known to the Board of Directors; and any director of the corporation who is a
director or officer of such other corporation or who is so interested may be
counted in determining the existence of a quorum at any meeting of the Board of
Directors which shall authorize any such contract or transaction, and may vote
thereat to authorize any such contract or transaction with like force and effect
as if he were not such director or officer of such other corporation or not so
interested, every director of the corporation being hereby relieved from any
disability which might otherwise prevent him from carrying out transactions with
or contracting with the corporation for the benefit of himself or any firm,
corporation, association, trust or organization in which or with which he may be
in anywise interested or connected.
ARTICLE XI
The registered office of this corporation is 18th Road, Carthage, Missouri;
and the name and address of the present registered agent of this corporation is
R.A. Jefferies, Jr., 18th Road, Carthage, Missouri 64836.
ARTICLE XII
The names and places of residence of the incorporators of this corporation
are as follows:
Name Place of Residence
---- ------------------
William McMillan......................... Carthage, Missouri
Wm. K. Caffee............................ Carthage, Missouri
J.P. Newell.............................. Carthage, Missouri
Kate M. Johns............................ Carthage, Missouri
W.E. Hall................................ Carthage, Missouri
R.E. Lister.............................. Carthage, Missouri
W.W. Bailey.............................. Carthage, Missouri
Robert Ornduff........................... Carthage, Missouri
J.P. Leggett............................. Carthage, Missouri
G.D. Leggett............................. Carthage, Missouri
C.B. Platt............................... Carthage, Missouri
M. B. Parke.............................. Carthage, Missouri
E. O'Keefe............................... Carthage, Missouri
M.J. McClurg............................. Carthage, Missouri
Wm. E. Brinkerhoff....................... Carthage, Missouri
B.A. Mevey............................... Carthage, Missouri
Exhibit 10.20 (1)
LEGGETT & PLATT, INCORPORATED
STOCK AWARD PROGRAM
-------------------
(Adopted on December 30, 1997 and
Effective as of January 1, 1998)
1. Introduction. Section 423(b)(8) of the Internal Revenue Code ("Code")
prevents certain of the Company's executives from fully participating in
the Leggett and Platt, Incorporated Executive Stock Purchase Program
("ESPP"). Accordingly, the Leggett & Platt, Incorporated Stock Award
Program ("Award Program") is hereby established pursuant to the Leggett &
Platt, Incorporated 1989 Flexible Stock Plan ("Plan") by the Committee
("Committee") which administers the Plan. Capitalized terms which are not
defined in the Award Program shall have the same meaning as in the Plan.
The Committee shall administer the Award Program and, in connection
therewith, shall have all of the authorities granted to it in the Plan.
2. Eligibility and Participation. Unless the Committee determines otherwise,
Harry M. Cornell, Jr. and any Section 16 Officer, Vice President, Senior
Vice President, Executive Vice President or President who is a participant
in the ESPP shall, to the extent provided below, be a participant
("Participant") in the Award Program. The Committee has full power and
authority to determine the individuals who will be Participants in the
Award Program.
3. Stock Awards. The Award Program shall provide for a basic stock award
("Basic Stock Award") and an additional stock award ("Additional Stock
Award"). These awards are sometimes referred to individually as a "Stock
Award" or "Award" and collectively as "Stock Awards" or "Awards" and
constitute Other Stock Based Awards under Article XVIII of the Plan.
4. Effective Date; Fiscal Year. The Award Program shall be effective as of
January 1, 1998, and its fiscal year ("Fiscal Year") shall be the calendar
year.
5. Grant of Awards. Each Participant who, during a Fiscal Year, becomes
ineligible to purchase Shares under the Leggett & Platt, Incorporated 1989
Discount Plan, as amended ("Discount Plan"), shall receive the following
Awards:
5.1 Basic Award. The Basic Stock Award for each Fiscal Year shall be a
bi-weekly Award which shall commence as of the first pay day on which
the Participant is ineligible to participate in the Discount Plan and
shall end on the last date of such ineligibility. Each Basic Stock
Award shall be the number of whole Shares
1
having a Fair Market Value on the date the Award is made which would,
in the Committee's judgment, allow the Participant to receive
substantially the same economic benefits as would have occurred if the
Participant could have fully participated in the ESPP.
5.2 Additional Stock Award. No later than March 1 of each year, the
Committee shall grant to each Participant who was a Participant in the
Award Program for the previous Fiscal Year an Additional Stock Award
if (i) such Participant was a full-time executive Employee of the
Employer on the last day of such Fiscal Year or terminated his
employment prior to such last day because of permanent and total
disability, retirement or death and (ii) the Company has met the prior
Fiscal Year earnings objectives determined by the Committee for
granting Additional Stock Awards. The Additional Stock Award shall be
the number of whole Shares which have a Fair Market Value on the date
the Award is made equal to or nearest to the product of X times Y
where (i) X is .787 and (ii) Y is the aggregate Fair Market Value of
all Basic Stock Awards received by the Participant under the Award
Program in the prior Fiscal Year determined as of the date each such
Award was made.
Unless the Committee determines otherwise, the amount of the Awards shall
be calculated in accordance with past practices of the Company.
6. Dividends; Participant's Investments. All dividends on shares acquired by
a Participant pursuant to the Award Program shall be paid to the Company.
Income taxes shall not be withheld from such dividends unless elected by
the Participant. The Company shall invest all cash dividends from Shares
(plus any interest thereon) in such debt or equity issues, mutual funds,
annuity contracts and/or other investments as shall be agreeable to
Participant and the Committee. Such investments, together with all
proceeds thereof and increments thereto, are collectively called
"Participant's Investments". In no event will Participant's Investments
include Common Stock or the Company's preferred stock or any debt
instruments convertible into Common Stock or such preferred stock. A
Participant, in his sole and absolute discretion and without being under
any obligation to do so, may transmit cash to the Company (bi-weekly by
payroll deduction or in lump sum amounts). Any such cash transmitted
during a Fiscal Year shall not be less than 2% nor more than 10% of
Participant's gross cash compensation for the prior Fiscal Year. All cash
transmitted will be invested by the Company in the same manner as cash
dividends from Shares and thereupon shall constitute and remain a portion
of Participant's Investments. The substantive provisions of Sections 7.1,
7.2, 7.3, 8 and 12 of this Award Program dealing with Common Stock and
certificates therefor shall apply with like force to Participant's
Investments and certificates or other evidences of Participant's
Investments.
2
7. Other Conditions of Stock Award. The grant of each Stock Award shall be
subject to the following additional terms and conditions:
7.1 Names on Certificates for Common Stock. Certificates for all Common
Stock shall normally be issued in the name of the Participant only.
However, if the Participant so requests, certificates will be issued
(i) in the name of the Participant and the Participant's spouse as
tenants by the entirety, or (ii) in the name of the Participant and
any other person designated by the Participant as joint tenants with
right of survivorship. Any such issuance will be in accordance with
such guidelines as the Committee may promulgate. With the Committee's
consent, which may be given or withheld in the Committee's sole
discretion, certificates for Common Stock may be issued in the name of
a person other than the Participant. Any such issuance shall be on
such terms and conditions as the Committee may deem appropriate.
Irrespective of the names (other than the Participant's) appearing on
any certificates for Common Stock, such certificates shall remain
subject to all of the terms and conditions of this Award Program.
7.2 Stock Not Transferable. Common Stock may not be transferred, pledged
or otherwise disposed of by the Participant or any other holder
thereof until it is no longer subject to the repurchase pursuant to
Section 15 and until the earlier of (i) the Participant's death, total
and permanent disability, retirement, or other termination of
employment or (ii) such time as the Committee shall determine.
7.3 Possession of Stock Certificates: Legends. Until Common Stock is no
longer nontransferable, certificates for such Common Stock may be held
by the Company or such other person or entity as the Committee shall
select and may be marked with such legend as the Committee shall
determine.
7.4 Substitution of Certificates. A Participant shall be permitted from
time to time to substitute certificates for Common Stock already owned
by the Participant and not subject to the Award Program for a like
number of Common Stock certificates. A Participant shall also be
permitted from time to time to substitute property already owned by
the Participant and not subject to the Award Program for Participant's
Investments having similar fair market value. Any and all such
substitutions shall be in accordance with such guidelines as the
Committee may promulgate.
8. Trust or Custodial Account. The Committee shall have the right at any time
to establish a trust, custodial account or other arrangement to hold
certificates for Common Stock which is nontransferable upon such terms as
it deems appropriate and which are not in conflict with the Plan or the
Award Program.
9. Adjustment. In the event of any change in the Common Stock of the Company
described in Section 3.3 of the Plan, the Committee shall have the right to
make such amendments
3
to the Award Program as it shall deem necessary to carry out the purposes
of the Award Program.
10. Authority and Further Steps. The Participant shall execute such documents
and take all steps as the Committee shall request to effectuate the
provisions of the Award Program.
11. Termination of Employment. If Participant's employment terminates for any
reason, no further installment of any Basic Stock Award which is payable in
installments shall be made. If the Participant's employment terminates for
any reason prior to December 31 of any Fiscal Year, any Additional Stock
Award for that year which has not been paid will be forfeited unless (a)
such termination (i) was because of permanent and total disability or death
or (ii) occurred on or after the Participant attained 60 years of age or
attained 55 years of age and had been employed by an Employer for at least
5 continuous years or (b) the Committee provides otherwise.
12. Assignment. Unless allowed by the Committee, no Award shall be assignable
by the Participant. Subject to the foregoing, the Award Program shall be
binding upon and inure to the benefit of the Company, the Participant and
their respective successors, assigns, heirs and personal representatives.
13. Future Grants. Nothing contained in the Award Program or other document
shall require the grant to Participant of additional Awards or any other
Benefit under the Plan or prohibit any other Benefit which is granted from
being a different Benefit or from being granted on different and/or
additional terms and conditions than those in the Award Program.
14. No Employment Contract. The Award Program shall not confer upon the
Participant any right of continued employment nor shall it interfere in any
way with the right of the Employer to terminate the Participant's
employment at any time (subject to any employment contract that might exist
between Participant and the Employer).
15. Option to Repurchase. The Company shall have an option to buy all of a
Participant's Common Stock acquired solely through a Stock Award. The
option price shall be $1, and the option must be exercised by the Committee
within 60 days following the Participant's termination of employment. The
above option applies only to a Participant (a) who is under age 60 when his
employment terminates, (b) who has been employed by an Employer for less
than 5 continuous years when his employment terminates, and (c) whose
employment is terminated for a reason other than permanent and total
disability or death. For purposes of determining a Participant's length of
employment, employment with an Employer prior to the time that it became an
Employer shall be disregarded. Without limiting the provisions of Section
10, in order to facilitate the Company's exercise of the foregoing option,
the Participant shall, as a condition to receiving an Award, execute such
stock and other assignments and other documents of transfer as the
4
Committee shall request at any time. Notwithstanding the foregoing, the
decision as to whether to exercise the option granted by this Section 15
shall be made solely by the Committee.
16. Permissible Transfer. Notwithstanding the provisions of Section 7.2, a
Participant may transfer Participant's Investments which are no longer
subject to the repurchase option under Section 15 to a trust established by
the Participant as grantor if the following conditions are satisfied:
16.1 Terms of Trust. The trust must contain the following provisions:
(i) the Participant must have the right to amend the trust, in
whole or in part;
(ii) the Participant must have the right to revoke the trust, in
whole or in part; and
(iii) during the Participant's lifetime, the income and principal of
the trust may not be distributed or used for the benefit of any
person or entity other than the Participant.
16.2 Agreement. The Participant and/or trustee of the trust must execute
an agreement or agreements which contain such warranties, terms and
conditions as the Company shall require.
In the event that Participant's Investments are transferred to a trust, in
accordance with the provisions described above, it shall remain subject to
the terms and conditions of the Award Program but any reversion of
ownership of the Participant's Investments from the trust to the
Participant, by full or partial revocation of the trust, distribution of
Participant's Investments, or otherwise, shall not be considered a transfer
under the Award Program. In addition, in the event of any transfer to a
trust, in accordance with the above provisions, the term "Participant"
shall, to the extent necessary to carry out the terms of the Award Program,
mean the trustee of any such trust and/or the trust itself.
5
EXHIBIT 21
SCHEDULE OF SUBSIDIARIES OF REGISTRANT
Name of Country or State Percentage of
Organization of Incorporation Voting Interest
- ------------ ---------------- ---------------
AAA WIRE PRODUCTS, INC. Texas 100%
AMERICAN INNERSPRING CO. California 100%
AMERICAN WOODWORKS, INC. South Carolina 100%
B&C DIE CAST, INC. Arkansas 100%
CAMBRIDGE TOOL & MFG. CO., INC. Massachusetts 100%
CAMEO FIBERS CORPORATION Delaware 100%
COLLIER-KEYWORTH, INC. North Carolina 100%
CREST-FOAM CORP. New Jersey 100%
CREST-HOOD FOAM COMPANY, INC. Delaware 100%
DRESHER, INC. Delaware 100%
CULP-GADSDEN, INC. Alabama 100%
CUMULUS FIBRES, INC. North Carolina 100%
CUMULUS FIBRES OF FLORIDA, INC. Delaware 100%
GRIBETZ INTERNATIONAL, INC. Delaware 100%
HANES COMPANIES FOUNDATION North Carolina 100%
HANES CNC SERVICES CO. North Carolina 100%
HANES COMPANIES, INC. North Carolina 100%
INTERNATIONAL STORAGE SYSTEMS
CORPORATION Florida 100%
IREDELL FIBER, INC. North Carolina 100%
JAPENAMELAC CORP. Massachusetts 100%
L&P ACQUISITION COMPANY - 8 Delaware 100%
L&P ACQUISITION COMPANY - 15 Delaware 100%
L&P ACQUISITION COMPANY - 18 Delaware 100%
L&P ACQUISITION COMPANY - 28 Missouri 100%
L&P ACQUISITION COMPANY - 29 Delaware 100%
L&P ACQUISITION COMPANY - 30 Delaware 100%
L&P ACQUISITION COMPANY - 31 Delaware 100%
L&P ACQUISITION COMPANY - 32 Delaware 100%
L&P ACQUISITION COMPANY - 33 Delaware 100%
L&P CENTRAL ASIA, INC. Delaware 100%
L&P FINANCIAL SERVICES CO. Delaware 100%
L&P INTERNATIONAL HOLDINGS COMPANY Delaware 100%
L&P MEDICAL, INC. Missouri 100%
L&P MANUFACTURING, INC. Delaware 100%
L&P PARTNERS HOLDINGS, INC. Delaware 100%
L&P PROPERTY MANAGEMENT COMPANY Delaware 100%
L&P TEXPRO, INC. Delaware 100%
L&P TRANSPORTATION CO. Delaware 100%
L&P WESTERN SPRING CO. Delaware 100%
LEGGETT AND PLATT INTERNATIONAL
CORPORATION Missouri 100%
LEGGETT & PLATT ASIA MARKETING, INC. Delaware 100%
LEGGETT & PLATT INTERNATIONAL
DEVELOPMENT CO. Delaware 100%
LEGGETT & PLATT INTERNATIONAL
SERVICE CORPORATION Delaware 100%
LEGGETT WIRE COMPANY Delaware 100%
MASTERBLEND, INC. Mississippi 100%
MATREX FURNITURE COMPONENTS, INC. North Carolina 100%
MG LOAN COMPANY Delaware 100%
MILLER MANUFACTURING & LUMBER SALES, INC. Kansas 100%
MISSISSIPPI SPRING CO., INC. (THE) Mississippi 100%
OCONTO METAL FINISHING, INC. Delaware 100%
PACE INDUSTRIES AIRO DIE CAST, INC. Pennsylvania 100%
PACE INDUSTRIES DIE CAST PRODUCTS, INC. California 100%
PACE INDUSTRIES, INC. Arkansas 100%
PACE INDUSTRIES PUGET DIVISION, INC. Arkansas 100%
PACIFIC FAIRMONT CORPORATION California 100%
PARTHENON CNC SERVICES CO. Delaware 100%
PHOENIX INTERNATIONAL LTD. Kentucky 100%
Country
Name of or State of Percentage of
Organization Incorporation Voting Interest
- ------------ --------------- ---------------
PHOENIX METAL TECHNOLOGIES, LTD. Kentucky 100%
PREMIER INTERNATIONAL COMPONENTS, INC. Florida 100%
PORTER INTERNATIONAL, INC. Massachusetts 100%
RODGERS WADE MANUFACTURING COMPANY Texas 100%
SOUTHEASTERN MANUFACTURING CO., INC. Florida 100%
SPUHL ANDERSON MACHINE COMPANY, INC. Delaware 100%
SPUHL INTERNATIONAL, INC. Delaware 100%
SYNDICATE SYSTEMS, INC. Indiana 100%
STEADLEY COMPANY Missouri 100%
STEINER-LIFF TEXTILE PRODUCTS, CO. Delaware 100%
STYLELANDER METAL STAMPING, INC. Mississippi 100%
SYD-REN INDUSTRIES, INC. California 100%
TALBOT INDUSTRIES, INC. Missouri 100%
TARRANT INTERIORS, INC. Texas 100%
WBSCO, INC. New Mexico 100%
WICHITA WIRE, INC. Kansas 100%
- ----------------------------------------------------------------------------
ADMINISTRADORA SOAL S.A. DE C.V. Mexico 75%
BOIS AISE DE ROBERVAL INC. Canada 100%
BOIS J.L.P. INC. Canada 100%
CARREIRO S.A. DE C.V. Mexico 75%
COMERCIALIZADORA SOAL S.A. DE C.V. Mexico 75%
FIBRAS ACOLCHABLES, SA DE CV Mexico 75%
FIDES S. R. L. Italy 100%
GATEWAY HOLDINGS LIMITED England 100%
GATEWAY (TEXTILES) LIMITED England 100%
GOR-DON METAL PRODUCTS & SERVICES, INC. Canada 100%
INTER-SPRING LIMITED England 100%
L AND P MEXICO, S.A. DE C.V. Mexico 100%
L&P AUTOMOTIVE EUROPE GMBH Germany 100%
L&P EUROPE LIMITED England 100%
Country
Name of or State of Percentage of
Organization Incorporation Voting Interest
- ------------ --------------- ---------------
L&P FAHRZEUG-UND MATRATZEN-
KOMPONENTEN GESCHAFTSFUHRUNG
GMBH Germany 100%
L&P NETHERLANDS HOLDINGS B.V. The Netherlands 100%
LEGGETT & PLATT ADMINISTRADORA, S.A. DE C.V. Mexico 100%
LEGGETT & PLATT (BARBADOS) LTD. West Indies 100%
LEGGETT & PLATT CANADA LTD. Canada 100%
LEGGETT & PLATT DE GUADALAJARA, S.A.
DE C.V. Mexico 100%
LEGGETT & PLATT DE MEXICALI, S.A. DE C.V. Mexico 100%
LEGGETT & PLATT DE MEXICO, S.A. DE C.V. Mexico 100%
LEGGETT & PLATT FOREIGN SALES CORPORATION West Indies 100%
LEGGETT & PLATT (GUANG ZHOU) CO. LTD. People's Republic
of China 100%
LEGGETT & PLATT KOREA, LTD. South Korea 100%
LEGGETT & PLATT (SHANGHAI) CO. LTD. People's Republic
of China 100%
LEGGETT & PLATT (SOUTHEAST ASIA) PTE LTD Singapore 100%
LEGGETT & PLATT U.K. LIMITED United Kingdom 100%
LES BOIS BLANCHET INC./BLANCHET LUMBER INC. Canada 100%
LES INDUSTRIES LENROD LTEE/LENROD
INDUSTRIES LTD. Canada 100%
M F KNITTING CO. LIMITED England 100%
MARSH, FERN & COMPANY LIMITED England 100%
9038-8315 QUEBEC, INC. Canada 100%
NORTHEASTERN COMPONENTS
(INTERNATIONAL) LTD. England 100%
NORTHFIELD METAL PRODUCTS (1994) LTD. Canada 100%
NO-SAG SPRING COMPANY, LIMITED Canada 100%
PACE INDUSTRIES DE MEXICO, S.A. DE C.V. Mexico 100%
PORTER INTERNATIONAL SALES, INC. U. S. Virgin Islands 100%
PULLMAFLEX A.B. Sweden 100%
PULLMAFLEX BENELUX N.V. Belgium 100%
PULLMAFLEX ESPAYOLA S.A. Mexico 100%
PULLMAFLEX INTERNATIONAL B.V.
(NETHERLANDS) Holland 100%
PULLMAFLEX INTERNATIONAL LIMITED England 100%
PULLMAFLEX U.K. LIMITED England 100%
PURCHASE MARKETING, INC. Canada 100%
Country
Name of or State of Percentage of
Organization Incorporation Voting Interest
- ------------ --------------- ---------------
S R HOLBOOK LIMITED England 100%
SLOTEX INC. Canada 100%
SPANCO EXPORT, LTD. U.S. Virgin Islands 100%
SPUHL A.G. Switzerland 100%
SPUHL A.G. SUCURSAL REPUBLICA ARGENTINA Argentina 100%
SPUHL HOLDING A.G. Switzerland 100%
WEBER PLASTICS CO. LTD. Canada 100%
YOUNGFLEX A.G. Switzerland 100%
RELATED COMPANIES WHICH ARE NOT SUBSIDIARIES OF REGISTRANT
ADCOM WIRE, a Florida partnership, Florida Partnership 100%
d/b/a Adcom Wire Company
(owned 50% by L&P Acquisition
Company - 8 and 50% by Leggett
Wire Company)
CARREIRO HOLDINGS S.A. DE C.V. Mexico Joint Venture 75%
GLOBE SPRING AND CUSHION COMPANY,
LIMITED Canada Joint Venture 50%
L&P FAHRZEUG-UND MATRATZEN-
KOMPONENTEN GMBH & CO. KG Germany Partnership 100%
LEGGETT PARTNERS, L.P. Texas Partnership 100%
PACE INDUSTRIES OF MEXICO, LLC Delaware Joint Venture 51%
Exhibit 23
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statements of Leggett & Platt, Incorporated, listed below, of our report dated
February 4, 1998 appearing on page 29 of Leggett & Platt, Incorporated's Annual
Report on Form 10-K for the year ended December 31, 1997.
1. Post-Effective Amendment No. 1 to Form S-8, Registration No. 33-15441,
filed August 29, 1989.
2. Form S-8, Registration No. 33-44224, filed November 27, 1991.
3. Form S-8, Registration No. 33-45334, filed January 27, 1992.
4. Form S-8, Registration No. 33-45335, filed January 27, 1992.
5. Form S-8, Registration No. 33-45336, filed January 27, 1992.
6. Post-Effective Amendment No. 1 to Form S-8, Registration No. 33-45334,
filed June 26, 1992.
7. Form S-8, Registration No. 33-67910, filed August 26, 1993.
8. Form S-8, Registration No. 33-54339, filed June 28, 1994.
9. Form S-8, Registration No. 33-54431, filed July 1, 1994.
10. Form S-3, Registration No. 333-03223, filed May 7, 1996.
11. Form S-3, Registration No. 333-10289, filed August 15, 1996.
12. Form S-3, Registration No. 333-15603, filed November 16, 1996.
13. Form S-3, Registration No. 333-16541, filed November 21, 1996.
14. Form S-3, Registration No. 333-24055, filed March 27, 1997.
15. Form S-3, Registration No. 333-27743, filed May 23, 1997.
16. Form S-3, Registration No. 333-27723, filed May 23, 1997.
17. Form S-3, Registration No. 333-29097, filed June 13, 1997.
18. Form S-3, Registration No. 333-30893, filed July 8, 1997.
19. Form S-3, Registration No. 333-31647, filed July 21, 1997.
20. Form S-3, Registration No. 333-42657, filed December 19, 1997.
21. Form S-3, Registration No. 333-45427, filed February 2, 1998.
PRICE WATERHOUSE LLP
St. Louis, Missouri
March 30, 1998
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors of
LEGGETT & PLATT, INCORPORATED, a Missouri corporation (the "Corporation"), does
hereby nominate, constitute and appoint Harry M. Cornell, Jr., Michael A.
Glauber, Robert A. Jefferies, Jr., and Ernest C. Jett, or any one of them, his
true and lawful attorneys-in-fact, to sign in the name of and on behalf of the
undersigned directors of the Corporation and to file with the Securities &
Exchange Commission ("SEC") the Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997 and any other documents or further
Amendments to said Annual Report, and to take such other action, all as said
attorneys-in-fact, or any one of them, deem necessary or advisable to the end
that such Annual Report or amendments thereto in respect of same, shall comply
with the Securities Exchange Act of 1934, as amended, and the applicable rules
of the SEC thereunder; and does hereby ratify and confirm all that said
attorneys-in-fact, and each of them, may do by virtue hereof.
Additionally, each of the undersigned directors of the Corporation does
hereby nominate, constitute and appoint Harry M. Cornell, Jr., Michael A.
Glauber, Robert A. Jefferies, Jr. and Ernest C. Jett, or any one of them, his
true and lawful attorneys-in-fact, to, from time to time, sign in the name of
and on behalf of the undersigned directors of the Corporation and file with the
SEC Registration Statements with respect to securities (including the
Corporation's common stock, $.01 par value, and the Preferred Stock Purchase
Rights attached to and trading with such Common Stock) to be sold pursuant to
the Corporation's Restated Employee Stock Purchase/Stock Bonus Plan, 1989
Discount Stock Plan, 1989 Flexible Stock Plan, Directors Stock Option Plan and
any other employee benefit plans of the Corporation adopted or approved during
calendar year 1998 and any other documents or further Amendments or Post-
Effective Amendments to such Registration Statements (or any previous
registration statements filed as respects any of the above-mentioned Plans) and
to take such other action, all as said attorneys-in-fact, or any one of them,
deem necessary or advisable and does hereby ratify and confirm all that said
attorneys-in-fact, and each of them, may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney or
a counterpart hereof, as of the 11th day of March, 1998.
/s/ Raymond F. Bentele /s/ Robert A. Jefferies, Jr.
- ---------------------------------- -----------------------------------
Raymond F. Bentele Robert A. Jefferies, Jr.
/s/ Harry M. Cornell, Jr. /s/ Alexander M. Levine
- ---------------------------------- -----------------------------------
Harry M. Cornell, Jr. Alexander M. Levine
/s/ Robert Ted Enloe, III /s/ Richard L. Pearsall
- ---------------------------------- -----------------------------------
Robert Ted Enloe, III Richard L. Pearsall
/s/ Richard T. Fisher /s/ Duane W. Potter
- ---------------------------------- -----------------------------------
Richard T. Fisher Duane W. Potter
/s/ Bob L. Gaddy /s/ Maurice E. Purnell, Jr.
- ---------------------------------- -----------------------------------
Bob L. Gaddy Maurice E. Purnell, Jr.
/s/ David S. Haffner /s/ Felix E. Wright
- ---------------------------------- -----------------------------------
David S. Haffner Felix E. Wright
/s/ Thomas A. Hays
- ----------------------------------
Thomas A. Hays
5
1000
12-MOS
DEC-31-1997
DEC-31-1997
7700
0
450100
11500
433200
944600
1212300
519100
2106300
372500
466200
0
0
1000
1173000
2106300
2909200
2909200
2171400
2171400
0
0
31800
333300
125000
208300
0
0
0
208300
2.19
2.16
5
1,000
12-MOS 12-MOS
DEC-31-1996 DEC-31-1995
DEC-31-1996 DEC-31-1995
3,700 8,200
0 0
343,900 306,800
8,600 7,500
370,500 337,800
763,300 686,600
1,015,100 875,500
432,200 364,900
1,712,900 1,478,100
292,800 275,100
388,500 380,600
0 0
0 0
900 900
940,200 745,900
1,712,900 1,478,100
2,466,200 2,256,900
2,466,200 2,256,900
1,842,700 1,722,000
1,842,700 1,722,000
0 0
0 0
30,000 30,400
249,700 220,600
96,700 86,300
153,000 134,300
0 0
12,500 0
0 0
140,500 134,300
1.55 1.52
1.53 1.49
Financial Data Schedules are being Restated in accordance with the requirements
of FASB Statement No. 128, "Earnings Per Share."
5
1,000
9-MOS 6-MOS 3-MOS 9-MOS 6-MOS
DEC-31-1997 DEC-31-1997 DEC-31-1997 DEC-31-1996 DEC-31-1996
SEP-30-1997 JUN-30-1997 MAR-31-1997 SEP-30-1996 JUN-30-1996
9,500 7,200 3,700 4,600 4,800
0 0 0 0 0
474,300 443,600 406,000 383,500 385,800
12,400 11,000 9,000 10,700 10,300
406,800 375,500 377,200 351,200 343,900
942,500 872,800 835,800 780,000 772,500
1,172,600 1,103,000 1,071,400 967,900 942,700
497,800 470,900 453,600 412,000 396,700
2,084,800 1,938,300 1,859,900 1,686,700 1,661,300
378,500 319,500 323,500 309,800 286,200
487,000 458,700 462,300 431,800 465,500
0 0 0 0 0
0 0 0 0 0
1,000 900 900 900 900
1,119,600 1,062,700 980,100 846,700 808,700
2,084,800 1,938,300 1,859,900 1,686,700 1,661,300
2,141,400 1,394,400 673,200 1,839,800 1,211,200
2,141,400 1,394,400 673,200 1,839,800 1,211,200
1,599,300 1,040,800 503,000 1,380,300 909,000
1,599,300 1,040,800 503,000 1,380,300 909,000
0 0 0 0 0
0 0 0 0 0
23,300 15,300 7,200 22,900 15,900
245,900 162,000 78,100 177,100 105,200
92,700 61,600 29,700 68,800 40,900
153,200 100,400 48,400 108,300 64,300
0 0 0 0 0
0 0 0 12,500 12,500
0 0 0 0 0
153,200 100,400 48,400 95,800 51,800
1.62 1.07 .52 1.07 .58
1.60 1.06 .51 1.05 .57
Financial Data Schedules are being Restated in accordance with the requirements
of FASB Statement No. 128, "Earnings Per Share".
5
1,000
3-MOS
DEC-31-1996
MAR-31-1996
4,700
0
347,000
8,000
331,800
719,700
901,700
379,100
1,524,000
302,700
365,000
0
0
900
777,500
1,524,000
591,200
591,200
446,600
446,600
0
0
7,800
61,400
23,700
37,700
0
0
0
37,700
.42
.42
Financial Data Schedule is being Restated in accordance with the requirements
of FASB Statement No. 128, "Earnings Per Share" and for a Pooling of interests
with Pace Holdings Inc.
