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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, 1999
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. [_]
The aggregate market value of the voting stock held by nonaffiliates of the
Registrant was approximately $3,452,820,000 on March 16, 2000.
There were 196,385,151 shares of the Registrant's common stock outstanding
as of March 16, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive Proxy Statement for its Annual
Meeting of Shareholders to be held May 3, 2000, are incorporated by reference
into Part III of this report.
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PART I
Item 1. Business.
The Company is a manufacturer of a wide range of engineered products. It
was incorporated in 1901 as the successor to a partnership formed in 1883 at
Carthage, Missouri. That partnership was a pioneer in the development of steel
coil bedsprings. The Company today serves markets for:
. Residential Furnishings--components for bedding, furniture and other
furnishings, as well as related consumer products.
. Commercial Furnishings--retail store fixtures, displays, storage and
material handling systems and components for office and institutional
furnishings and other products.
. Aluminum Products--die castings, custom tooling and dies, machining,
coating and other value added processes and aluminum raw materials.
. Industrial Materials--drawn steel wire, specialty wire products and
welded steel tubing.
. Specialized Products--automotive seating suspension, lumbar support and
control cable systems, specialized machinery and manufacturing
equipment.
The term "Company," unless the context requires otherwise, refers to
Leggett & Platt, Incorporated and its majority owned subsidiaries.
General Development of Business. The Company acquired twenty-nine
businesses during the year ended December 31, 1999 representing annualized
sales of approximately $480 million. These acquired businesses expanded
annualized sales within our business segments as follows: Commercial
Furnishings--$250 million, Residential Furnishings--$190 million, Specialized
Products--$30 million, and Industrial Materials--$10 million.
Reference is also made to Note B of the Notes to Consolidated Financial
Statements for further information about the Company's acquisitions.
Residential Furnishings. The Company's residential furnishings products
include a broad line of components used by manufacturers to make finished
bedding and residential furniture products. Examples of residential
furnishings components manufactured by the Company include (i) innerspring
units for mattresses, and wood frames, coils and modules for boxsprings; (ii)
foam, textile and fiber cushioning materials, woven and non-woven construction
fabrics for bedding, home furnishings and industrial applications; (iii)
springs and seating suspensions for chairs, sofas and other residential
furniture; (iv) steel mechanisms and hardware for reclining chairs, sleeper
sofas and other types of motion furniture; and (v) other furniture supplies
and cut-to-size dimension lumber.
The Company also manufactures or distributes finished residential
furnishings. These finished products include bed frames, daybeds, bunk beds,
headboards, adjustable electric beds, fashion beds, carpet underlay and non-
slip coated fabrics.
Most of the Company's customers for residential furnishings manufacture
finished bedding (mattresses and boxsprings) or upholstered and non-
upholstered furniture for residential use. Finished residential furnishings
are sold to bedding and furniture manufacturers for resale, or directly to
retailers and distributors.
The Company's diverse range of components gives its residential furnishings
manufacturer-customers access to a single source for most 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 outer
upholstery fabric. This same principle holds true for manufacturers of other
residential furnishings such as upholstered recliner chairs, sofas and
loveseats. 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 residential
furnishings products, rather than the production of components.
1
Commercial Furnishings. The Company manufactures a variety of commercial
furnishings products, including both finished products and components.
Finished commercial furnishings include point-of-purchase displays, store
fixtures and shelving, racking, counters and carts used to store and handle
materials. Point-of-purchase displays and store fixtures, made of wood, metal,
wire and plastics, are used by a wide range of customers, including
manufacturers, distributors and retailers of branded consumer products. The
Company has the ability to provide custom designed full store fixture packages
as well as standardized shelving used by large retailers, grocery stores,
discount chains and the like. Commercial storage products provide for the
efficient storage, organization and handling of materials used in food
service, health care and other applications. Customers for these storage
products include restaurants, hospitals, and many other diverse businesses.
Commercial furnishings components include chair controls (devices which
allow office chairs to be adjusted to height, tilt and swivel), chair bases,
columns, backrests, casters and other components used by customers that
manufacture office, institutional and other commercial furnishings. The
Company also produces plastic components for customers that make lawn mowers,
power tools, wheel chairs and other consumer or commercial products.
Aluminum Products. The Company die casts aluminum components for use in a
number of different industries primarily for non-automotive applications. Some
zinc die castings are also produced.
The Company's die casting products are sold to a diverse group of customers
that manufacture industrial and consumer products. The Company's customers use
these components in their production of gas barbecue grills, outdoor lighting
fixtures, cable line amplifiers, wireless communications systems and other
cable and telecommunication products, computer and electronics products,
electric motors, consumer appliances, power tools, small to mid-size gasoline
engines, mid-to-large size diesel engines, motorcycles, snowmobiles, ATVs,
trucks and automobiles.
The Company also manufactures and refurbishes dies (also known as molds or
tools) for all types and sizes of die casting machines. These complementary
products are sold to customers that buy the Company's die castings and to
others. The Company also provides extensive secondary machinery, coating, sub-
assembly and other value-added services.
In addition, the Company operates two aluminum smelting plants where
aluminum ingot and other forms of raw materials are produced from aluminum
scrap. This aluminum is used by the Company's die casting operations and sold
to unaffiliated customers.
Industrial Materials. The Company produces drawn steel wire and steel
tubing as well as specialty wire products. Drawn wire and tubing are important
raw materials used widely in manufacturing the Company's products. For
example, wire is used to make bedding and furniture components, commercial
furnishings, automotive seating components and other products.
Steel tubing is used in many of the same types of products, including
furniture mechanisms, store fixtures, displays, shelving and storage products
and finished residential furnishings.
In addition to supplying the Company's needs for important materials, the
Company sells drawn wire and tubing products to a diverse group of industrial
customers such as manufacturers of lawn and garden equipment, recreational
equipment, mechanical springs, automotive seating and other products.
2
Specialty wire products using wire drawn by the Company include wire ties
that secure cotton bales and solid waste materials. Customers for these
products include cotton gins, textile companies, recyclers and waste removal
businesses. The Company also manufactures and sells tying heads of various
types which customers use to tie wire.
Specialized Products. Two smaller business units are engaged in
manufacturing specialized products. One concentrates on manufacturing
components primarily for automotive applications. The other business unit
designs, builds and sells specialized machinery and equipment. In the
automotive area the Company manufactures seating suspension, lumbar support
and control cable systems. Subcontractors to automobile manufacturers as well
as the manufacturers themselves are the primary customers for the Company's
automotive products. In the machinery area the Company manufactures highly
automated quilting machines for fabrics used to cover mattresses and other
home furnishings, coilers used to fabricate springs of various types,
industrial sewing machines and other equipment designed primarily for the
assembly of bedding, including material handling systems and other products
for factory automation. While manufacturers of bedding are the primary
customers for the Company's machinery, the Company also designs and produces
some of these specialized products for its own use.
The Company's products are sold and distributed primarily through its own
sales personnel.
Reference is made to Note J of the Notes to Consolidated Financial
Statements for further information concerning sales of each of the Company's
business segments.
Foreign Operations. Foreign sales are a small portion of the Company's
business. However, the Company is growing foreign sales by cautious and
carefully planned expansion in foreign locations where opportunities to
complement existing operations present themselves. In 1999, the Company added
facilities in Australia, Brazil, China, Italy, Mexico, Spain and the United
Kingdom.
The majority of the Company's international operations are in Canada and
primarily manufacture commercial furnishings and components for the Company's
residential furnishings customers. The Company's other international
operations are primarily located in Europe and Mexico and involve (i) the sale
of machinery and equipment designed to manufacture innersprings and other
bedding related components, (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, bedding components and cable
systems.
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.
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, woven and nonwoven fabrics, aluminum
ingot, aluminum scrap, angle iron, coil and 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.
Examples of products produced using steel wire include residential furnishings
such as innersprings and box springs, commercial furnishings such as displays,
shelving and racks and automotive seating systems. The Company also produces,
at various locations, for its own consumption and for sale to customers not
affiliated with the Company, 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(R) (adjustable electric beds); Wallhugger(R) and Hi-Style(TM)
(recliner chairs); SUPER SAGLESS(R) (motion and sofa sleeper mechanisms) and
No-Sag(R) (sinuous wire).
3
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 $17 million in 1999, $12 million in 1998 and $10
million in 1997.
Employees. The Company has approximately 31,000 employees of whom
approximately 24,000 are engaged in production. Approximately 32% 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 1999. 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 2000.
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 the
companies competing with respect to any class or type of product 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 residential furnishings
industry.
Seasonality. The Company's business is not significantly seasonal. For
further information, see the discussion of "Seasonality" in Item 7,
Management's Discussion and Analysis of Financial Condition and Results of
Operations, beginning on page 9.
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.
Item 2. Properties.
The Company's most important physical properties are its manufacturing
plants. Facilities manufacturing, assembling or distributing residential
furnishings products are located in approximately thirty states as well as
Canada, Europe, Asia, Australia, Brazil and Mexico. Commercial furnishings
manufacturing plants and distribution facilities are located in fifteen
states, Canada, Mexico and the United Kingdom. The Aluminum Products segment
has die casting facilities in nine states and Mexico, die and tooling
production facilities in Alabama, Minnesota and Missouri and smelting
operations in Alabama. Industrial Materials are produced at six wire drawing
mills and three welded steel tubing mills and industrial materials are sold
from locations in twelve states, Canada and the United Kingdom. Automotive
products and machinery are produced in facilities in the United States,
Canada, Mexico and Europe.
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.
4
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.
PART II
Item 5. Market 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
------- ------- ----------- --------
1999:
Fourth Quarter........................... $24.188 $18.625 40,107,000 $ .09
Third Quarter............................ 28.000 19.438 19,910,000 .09
Second Quarter........................... 28.313 19.438 21,907,600 .09
First Quarter............................ 22.688 19.063 26,443,700 .09
For the Year............................. $28.313 $18.625 108,368,300 $ .36
1998:
Fourth Quarter........................... $25.125 $16.875 16,458,000 $ .08
Third Quarter............................ 28.750 19.063 14,293,900 .08
Second Quarter........................... 28.344 24.688 20,038,900 .08
First Quarter............................ 27.938 20.438 20,547,400 .075
For the Year............................. $28.750 $16.875 71,338,200 $.315
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Price and volume data reflect composite transactions and prices as reported
daily by The Wall Street Journal.
The Company had 15,426 shareholders of record on February 25, 2000.
During the fourth quarter of 1999, the Company issued 260,322 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. On October 22, 1999, 198,477 shares were issued to acquire Ark
Ell Springs, Inc. from its shareholders. On November 22, 1999, 61,845 shares
were issued as additional consideration in connection with the January 1998
acquisition of Cumulus Fibres, Inc. from its shareholders.
5
Item 6. Selected Financial Data.
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
(Unaudited)
(Dollar amounts in millions, except per
share data)
Summary of Operations
Net sales....................... $3,779.0 $3,370.4 $2,909.2 $2,466.2 $2,256.9
Earnings from continuing
operations..................... 290.5 248.0 208.3 153.0 134.3
Earnings per share from
continuing operations
Basic......................... 1.46 1.25 1.09 .84 .76
Diluted....................... 1.45 1.24 1.08 .83 .75
Cash dividends declared per
share.......................... .36 .315 .27 .23 .19
======== ======== ======== ======== ========
Summary of Financial Position
Total assets.................... $2,977.5 $2,535.3 $2,106.3 $1,712.9 $1,478.1
Long-term debt.................. 787.4 574.1 466.2 388.5 380.6
======== ======== ======== ======== ========
Merger related costs of $16.4 after-tax, or $.09 per basic and diluted
share are included in 1996 earnings from continuing operations.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Capital Resources and Liquidity
The Company's financial position reflects management's capital policy
guidelines. These guidelines are intended to ensure that corporate liquidity
is adequate to support the Company's projected growth rate. Also, liquidity is
necessary to finance the Company's ongoing operations in periods of economic
downturn. In a normal operating environment, management intends to direct
capital to ongoing operations, strategic acquisitions and other investments
that provide opportunities for expansion and enhanced profitability.
The expansion of capital resources--debt and equity--is planned to allow
the Company to take advantage of favorable capital market conditions, rather
than respond to short-term needs. Such financial flexibility is considered
more important than short-term maximization of earnings per share through
excessive leverage. Therefore, management continuously provides for available
credit in excess of near-term 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%.
6
Total Capitalization
The following table shows the Company's total capitalization at the end of
the three most recent years. Also, the table shows the amount of unused
committed credit available through the Company's revolving bank credit
agreements and the amount of cash and cash equivalents at the end of the three
most recent years.
1999 1998 1997
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(Dollar amounts in
millions)
Long-term debt outstanding:
Scheduled maturities............................ $ 642.7 $ 574.1 $ 402.9
Average interest rates........................ 6.7% 6.6% 6.8%
Average maturities in years................... 5.5 6.2 6.6
Revolving credit/commercial paper............... 144.7 -- 63.3
-------- -------- --------
Total long-term debt........................ 787.4 574.1 466.2
Deferred income taxes and other liabilities....... 112.4 123.0 93.6
Shareholders' equity.............................. 1,646.2 1,436.8 1,174.0
-------- -------- --------
Total capitalization........................ $2,546.0 $2,133.9 $1,733.8
======== ======== ========
Unused committed credit........................... $ 52.8 $ 300.0 $ 176.7
======== ======== ========
Cash and cash equivalents......................... $ 20.6 $ 83.5 $ 7.7
======== ======== ========
Cash provided by operating activities was $370.8 million, $354.9 million
and $288.3 million for 1999, 1998 and 1997, respectively, or a three year
total of $1,014.0 million. The increase in cash provided by operating
activities principally reflects earnings improvements, offset somewhat by
higher working capital requirements.
Long-term debt outstanding was 30.9% of total capitalization at the end of
1999 and 26.9% at the end of both 1998 and 1997. As shown in the table above,
obligations having scheduled maturities are the base "layer" of the Company's
debt capital. At the end of 1999, these obligations consisted primarily of the
Company's privately placed medium-term notes and tax-exempt industrial
development bonds. In the second and third quarters of 1999, the Company
issued a total of $104 million in medium-term notes. Proceeds from the notes
were used to repay maturing notes and for acquisitions. In November 1999, the
Company completed a $500 million shelf registration of debt, the proceeds of
which will be used for working capital additions, capital expenditures, stock
redemption, debt repayment or financing for acquisitions. In February 2000,
$350 million of 7.65% five-year notes were issued under the shelf
registration. These notes were converted to variable rate notes under an
interest rate swap agreement.
In the first and second quarters of 1998, the Company issued a total of
$176 million in medium-term notes. Proceeds from the notes were used to repay
commercial paper outstanding and to provide financing for acquisitions. A
portion of the proceeds were temporarily held in cash and cash equivalents at
December 31, 1998. In the second quarter of 1997, the Company issued $100
million of medium-term notes to repay commercial paper outstanding.
The second "layer" of the Company's debt capital consists of revolving bank
credit agreements and commercial paper issuances. Management has negotiated
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 majority of the credit under these
arrangements is a long-term obligation. If needed, however, the credit is
available for short-term borrowings and repayments. The long-term portion of
the Company's revolving credit agreements was $197.5 million at December 31,
1999, and was increased to $227.5 million in January 2000. At the end of 1999,
the Company had $144.7 million of 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.
7
Uses of Capital Resources
The Company's internal investments to modernize and expand manufacturing
capacity totaled $426.1 million in the last three years. In 2000, management
anticipates internal investments will approximate $170 million. During the
last three years, the Company employed $578.8 million in cash (net of cash
acquired) and issued 6.1 million shares of common stock in acquisitions.
During 1999, twenty-nine businesses were acquired for $290.1 million in cash
(net of cash acquired) and 1.2 million shares of common stock. In addition,
the Company assumed $54.2 of acquisition companies' debt. About one-half of
the 1999 acquisition investments (cash and stock) were made in Commercial
Furnishings and about 40% were made in Residential Furnishings. Additional
details of acquisitions are discussed in Note B of the Notes to Consolidated
Financial Statements. Additions, by segment, to property, plant and equipment
and purchases of long-lived assets are shown in Note J of the Notes to
Consolidated Financial Statements.
Company purchases of its common stock totaled $81.5 million in 1999, $13.5
million in 1998, and $5.7 million in 1997. These purchases were made primarily
for employee stock plans, to replace shares issued in purchase acquisitions
and to satisfy contractual obligations. In mid-1998, the Company's Board of
Directors authorized management, at its discretion, to buy up to 500,000
shares of Leggett stock for use in employee benefit plans. The authorization
is continuously replenished as shares acquired are reissued for these benefit
plans. In addition, management is authorized, again at its discretion, to
repurchase any shares issued in acquisitions accounted for as purchases. In
February 2000, the Board of Directors increased this authorization to
2,000,000 shares.
Cash dividends on the Company's common stock in the last three years
totaled $177.0 million. Over this three-year period, cash dividends per share
have increased at a 16.1% compounded annual rate. As a percent of earnings per
share (diluted), cash dividends per share were 24.8% in 1999, 25.4% in 1998
and 25.0% in 1997.
Future commitments under lease obligations are described in Note F and
contingencies are discussed in Note K of the Notes to Consolidated Financial
Statements.
Short-term Liquidity
Working capital, including working capital from acquired companies,
increased $354.2 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. Inventory levels at the end of 1999 reflect
an unusual amount of purchases made in anticipation of higher prices for
certain key raw materials. Also, the ratios may be affected by the timing of
the Company's acquisitions.
1999 1998 1997
---- ---- ----
Working capital turnover (excluding cash and cash
equivalents).......................................... 5.2x 5.5x 5.6x
Trade receivables turnover............................. 7.3 7.2 7.5
Inventory turnover..................................... 5.1 5.4 5.4
No segment's working capital requirements vary significantly from the
consolidated ratios, except Aluminum Products. Aluminum Products' receivables
turnover is lower than the other segments due principally to the seasonal
nature of its gas barbecue grill business. Also, aluminum commitments to
certain customers result in carrying higher levels of inventory than the
Company's other segments.
Results of Operations
Discussion of Consolidated Results
The results of operations during the last three years reflect various
elements of the Company's long-term growth strategy, along with general
economic trends and the specific market conditions. The Company's growth
8
strategy continues to include internal initiatives and acquisitions which
provide for increased market penetration and operating efficiencies and
broaden product lines. 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 very 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, although 1999 was
also impacted by lower selling prices for certain products. Aluminum and
certain product lines in Residential Furnishings and Industrial Materials
experienced selling price declines in 1999. Residential Furnishings accounted
for 41.4% of the 1999 increase in consolidated sales, and Commercial
Furnishings accounted for 37.9% of the 1999 increase. In 1998, Residential
Furnishings accounted for 39.7% of the consolidated sales increase over 1997
and Commercial Furnishings accounted for 34.4% of the increase.
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 ratio of earnings to fixed charges.
1999 1998 1997
---- ---- ----
Gross profit margin..................................... 27.0% 25.9% 25.4%
EBIT (Earnings before interest and taxes) margin........ 13.3 12.7 12.5
Net profit margin....................................... 7.7 7.4 7.2
Effective income tax rate............................... 37.2 37.3 37.5
Ratio of earnings to fixed charges...................... 9.8x 9.6x 9.6x
The Company's gross profit margins improved in each of the last two years.
The increase in 1999 reflected several favorable factors. These included
continued increases in production efficiencies, increased sales of products
with above average margins, lower material costs and better manufacturing
overhead absorption. The EBIT margin also increased due to these factors,
offset somewhat by higher operating costs as a percentage of sales. The higher
operating expenses as a percentage of sales, which include some amount of
fixed administrative and other costs, was impacted by the effect on sales of
lower selling prices in certain product lines and higher operating costs in
acquired companies as a percentage of sales. The increase in the 1998 gross
profit and EBIT margins versus 1997 also reflected the Company's continuing
sales growth in products with above average margins, increased production
efficiencies, lower material costs and better manufacturing overhead
absorption.
Seasonality
The percent of consolidated net sales by quarter, excluding the impact of
acquisitions, is as follows for the last three years:
1999 1998 1997
----- ----- -----
First Quarter........................................ 23.9% 23.6% 23.6%
Second Quarter....................................... 25.6 25.1 25.1
Third Quarter........................................ 25.7 25.9 25.5
Fourth Quarter....................................... 24.8 25.4 25.8
----- ----- -----
Year................................................. 100.0% 100.0% 100.0%
===== ===== =====
The Company does not experience significant seasonality, however, as
indicated in the above table, quarter-to-quarter sales can vary in proportion
to the total year by 1-2%. Management estimates that this 1-2% sales impact
can have, at current average net margins and considering overhead absorption,
an approximately 5-10% plus or minus impact on quarter-to-quarter net
earnings. The timing of acquisitions in any year can distort the underlying
seasonality in certain of the Company's businesses. For the Company's
businesses in total, the second and third quarters have proportionately
greater sales, while the first and fourth quarters are lower. Over the last
9
three years, this small seasonality has become somewhat more pronounced, with
the fourth quarter showing proportionately lower sales due to the growth of
the store fixtures business of Commercial Furnishings.
Residential Furnishings and Commercial Furnishings typically have their
strongest sales in the second and third calendar quarters. Commercial
Furnishings particularly has heavy third quarter sales of its store fixtures
products, with the first and fourth quarters significantly lower. Aluminum
Products sales are proportionately greater in the first two calendar quarters
due to gas barbecue grill castings. Industrial Materials sales peak in the
third and fourth quarters from wire products used for baling cotton.
Specialized Products has relatively little quarter-to-quarter variation in
sales, although the automotive business is somewhat heavier in the first two
quarters of the year, and somewhat lower in the third quarter, due to model
changeovers and plant shutdowns in the automobile industry during the summer.
Discussion of Segment Results
A description of the products included in each segment, segment sales,
segment earnings before interest and taxes (EBIT) and other segment data
appear in Note J of the Notes to Consolidated Financial Statements. Following
is a comparison of EBIT margins (Segment EBIT divided by Total Segment Sales):
1999 1998 1997
---- ---- ----
Residential Furnishings................................. 11.2% 11.1% 10.7%
Commercial Furnishings.................................. 16.2 17.8 18.4
Aluminum Products....................................... 9.6 6.3 9.7
Industrial Materials.................................... 14.5 11.2 9.9
Specialized Products.................................... 12.1 11.6 11.5
Residential Furnishings sales increased 9.6% in 1999, principally from
acquisitions, although volume growth was also a significant factor. The growth
in sales was negatively impacted by declining selling prices in certain
product lines. EBIT increased 10.8% in 1999 versus 1998, and EBIT margin
increased slightly as higher volume improved operating efficiencies and raw
material costs were lower. For 1998, Residential Furnishings sales were up
11.6% due primarily to acquisitions. EBIT improved in 1998 by 15.9%, and EBIT
margin improved slightly. Operating efficiencies and lower raw material costs
improved EBIT margins.
Commercial Furnishings sales in 1999 increased 25.0% over the prior year
due primarily to acquisition activity. EBIT improved 14.2% in 1999, but EBIT
margin declined due to product mix, lower volume in certain product lines and
the fact that the Company has not yet fully realized the integration benefits
of the substantial acquisition activity in this segment. In 1998, Commercial
Furnishings sales improved 34.5%, principally from significant acquisition
activity. EBIT in 1998 was 30.2% higher than 1997, but EBIT margin declined
somewhat. Product mix and integration issues related to new acquisitions
impacted EBIT margin.
In 1999, Aluminum Product sales increased 5.9%, principally from improved
operations. This improvement was moderated by declining aluminum prices. EBIT
increased 61.3% and EBIT margin improved from gains in operating efficiency
and a shift to higher margin products at certain die cast facilities. Aluminum
Products sales in 1998 improved 12.8% over 1997, primarily as a result of
acquisitions. EBIT declined 26.9% and EBIT margin was reduced as the impact of
acquisitions was more than offset by a major die cast customer's restructuring
and inventory reduction activities, reduced smelting production as a result of
low scrap prices, and production inefficiencies in certain die cast
facilities.
In 1999, Industrial Materials sales were 4.7% higher than 1998, principally
reflecting acquisition-related sales. The sales improvement was lower than
unit volume gains as selling prices declined for drawn wire. EBIT improved
35.1% in 1999 and EBIT margin was better reflecting lower raw material prices
and improved operating efficiencies. Industrial Materials sales in 1998
increased 5.3% over 1997, primarily from acquisitions. EBIT improved 19.3% in
1998, and EBIT margins were higher due to production efficiencies, better
overhead absorption and lower raw material prices.
10
Specialized Products sales increased 14.3% in 1999 due primarily to
acquisitions. EBIT improved 19.2%, reflecting acquisition growth and higher
automotive sales. EBIT margin was up somewhat from improved efficiencies and
acquisitions. In 1998, Specialized Products sales increased 33.3% reflecting
acquisitions. EBIT grew 35.5% in 1998 versus 1997 reflecting the acquisitions
and improved machinery operations.
New Financial Accounting Standards Board Statements
During 1998, the Financial Accounting Standards Board (FASB) issued a new
accounting standard on "Accounting for Derivative Instruments and Hedging
Activities" (FASB No. 133). This new accounting standard will become effective
for 2001 financial reporting. FASB No. 133 is not expected to have a major
effect on the Company's financial statements since the Company has not engaged
in significant hedging or other activities involving derivative instruments in
the past.
Year 2000 Disclosure
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 or otherwise function
properly when using the year "2000", since that year will be indistinguishable
from the year "1900". These computer programs are found in information
processing applications and in timing devices for certain machinery and
equipment.
To monitor Year 2000 issues, the Company implemented a Corporate level Year
2000 Steering Committee (the Steering Committee). The Steering Committee met
regularly to review the Company's progress, and to consider other actions that
may be necessary for Year 2000 issues.
The Company recognized the Year 2000 issue several years ago, and had been
working since to correct this problem in its computer systems and
manufacturing equipment. As a result of these multi-year efforts, the Company
experienced no disruption of its operations following the Year 2000
"rollover". None of the Company's major customers or suppliers reported
experiencing any significant problems with Year 2000 issues.
Since the Company has been working on Year 2000 issues for several years,
the costs of mitigating these issues, which costs have not been material in
the past, were expensed in ongoing operations. No material costs are expected
from any remaining efforts. Costs of all the Company's system conversion and
implementation efforts, which include those efforts related to the Year 2000
issue, were less than $6 million in 1999. These system conversion and
implementation costs are considered by management to be primarily recurring
costs to remain technologically competitive, and no significant reduction is
expected in these costs in the future as the Company pursues "E-commerce" and
other initiatives. It is not practical to segregate past or anticipated
capital expenditures between Year 2000 compliance and expenditures which occur
normally to keep operations technologically competitive. However, management
believes that capital requirements related to Year 2000 compliance issues were
not significant to its operations.
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
11
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 in the United States, 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.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
(Unaudited)
(Dollar amounts in millions)
Interest Rate
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 typically in the past used derivative financial instruments to hedge its
exposure to interest rate changes. However, during 1999, $14 of fixed rate
debt was issued and converted to variable rate debt by the use of an interest
rate swap agreement, and is included as variable rate debt in the table below.
Substantially all of the debt shown in the table below is denominated in
United States dollars (U.S.$). The fair value of fixed rate debt was less than
its carrying value by $11.2 at December 31, 1999, and exceeded its carrying
value by $23 at December 31, 1998. The Fair Value of the Fixed Rate Debt was
calculated using the U.S. Treasury Bond rate as of December 31, 1999 and 1998
for similar remaining maturities, plus an estimated "spread" over such
Treasury securities representing the Company's interest costs under its
medium-term note program. The fair value of variable rate debt is not
significantly different from its recorded amount.
Scheduled Maturity Date
-----------------------------------------------
Long-term debt as of
December 31 2000 2001 2002 2003 2004 Thereafter 1999 1998
- -------------------- ----- ----- ----- ------ ------ ---------- ------ ------
Principal fixed rate
debt................... $15.0* $50.0 $75.0 $114.5 $100.0 $216.7 $571.2 $516.2
Average interest rate. 5.65% 7.22% 7.18% 6.27% 6.98% 6.71% 6.75% 6.71%
Principal variable rate
debt................... -- 4.0 2.9 1.8 158.7 26.0 193.4 33.7
Average interest rate. -- 5.40% 5.35% 5.50% 5.92% 5.55% 5.85% 4.36%
Miscellaneous debt...... 26.6 29.4
------ ------
Total debt.......... 791.2 579.3
Less: current
maturities*.......... (3.8) (5.2)
------ ------
Total long-term
debt............... $787.4 $574.1
====== ======
- --------
*The 2000 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
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
12
may occasionally hedge firm commitments for certain machinery purchases, other
fixed expenses or amounts due in foreign currencies related to its acquisition
program. The decision by management to hedge any transaction is made on a
case-by-case basis. The amount of forward contracts outstanding at December
31, 1999 was approximately $6.5 ($0.4 Pay U.S. $/Receive Mexican Pesos and
$6.1 Pay U.S. $/Receive Spanish Pesetas). The highest amount of forward
contracts during 1999 was approximately $15.4 (Pay U.S. $/Receive British
Pounds).
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 in foreign subsidiaries subject to translation
exposure at December 31 is as follows:
Functional Currency 1999 1998
------------------- ------ ------
Canadian Dollar............................................. $154.7 $104.6
European Currencies......................................... 99.0 67.8
Mexican Peso................................................ 38.1 --
Other....................................................... 10.0 0.2
------ ------
$301.8 $172.6
====== ======
Commodity Price
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 $73 and $48 (at
cost) in inventory at December 31, 1999 and 1998, respectively. 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 are listed in Item 14 and begin immediately after Item 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 3, 2000, said sections being incorporated by
reference, for a description of the directors of the Company.
13
The following table sets forth the names, ages and positions of all
executive officers of the Company. Executive officers are normally elected
annually by the Board of Directors at the Meeting of Shareholders.
Name Age Position
---- --- ------------------------------------------------
Harry M. Cornell, 71 Chairman of the Board
Jr.
Felix E. Wright 64 Vice Chairman of the Board, President and Chief
Executive Officer
David S. Haffner 47 Executive Vice President and Chief Operating
Officer and Director
Bob L. Gaddy 59 Senior Vice President--Chairman and Chief
Executive Officer, Aluminum Products Segment and
Director
Karl G. Glassman 41 Senior Vice President--President, Residential
Furnishings Segment
Michael A. Glauber 56 Senior Vice President--Finance and
Administration (Principal Financial Officer)
Robert G. Griffin 48 Senior Vice President--President, Fixture and
Display Group
Robert A. 58 Senior Vice President--Mergers, Acquisitions and
Jefferies, Jr. Strategic Planning and Director
Jack D. Crusa 45 Senior Vice President--President, Industrial
Materials Segment/President, Automotive Unit
Ernest C. Jett 54 Vice President--General Counsel and Secretary
Allan J. Ross 53 Vice President, Accounting (Principal Accounting
Officer)
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.
Harry M. Cornell, Jr. served as the Company's Chief Executive Officer until
May 12, 1999, and continues to serve as 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 five years and was elected Chief Executive Officer on
May 12, 1999.
David S. Haffner was elected Executive Vice President in 1995. In May, 1999
he was named Chief Operating Officer.
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. Prior to its acquisition by the Company in 1996, Mr. Gaddy
served as Chairman of the Board and Chief Executive Officer of Pace
Industries, Inc. Mr. Gaddy presently serves as Chairman and Chief Executive
Officer of all the Company's aluminum products operations.
Karl G. Glassman has been employed by the Company for more than the last
five years, became Vice President and President--Bedding Components in 1995
and became a Senior Vice President--President Residential Furnishings in 1999.
Michael A. Glauber has served as the Company's Senior Vice President,
Finance and Administration for more than the last five years.
14
Robert G. Griffin has been employed by the Company for more than the last
five years, was named Vice President and Director of Mergers, Acquisitions and
Strategic Planning in 1995, President--Commercial Fixtures and Display Group
in 1998 and Senior Vice President in 1999.
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.
Jack D. Crusa has served the Company as Vice President and President--
Automotive Components for the last five years and became President--Industrial
Materials in 1999 and Senior Vice President in 1999.
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 for more
than the last 5 years. In May, 1996 Mr. Ross was designated by the Board of
Directors as the Company's Principal Accounting Officer.
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 3, 2000, 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 3, 2000, 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
3, 2000 is incorporated by reference.
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, 1999
. Consolidated Balance Sheets at December 31, 1999 and 1998
. Consolidated Statements of Cash Flows for each of the years in the three
year period ended December 31, 1999
. Consolidated Statements of Changes in Shareholders' Equity for each of
the years in the three year period ended December 31, 1999
. Notes to Consolidated Financial Statements
15
. Schedule for each of the years in the three year period ended December
31, 1999
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 1999: None.
16
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Year ended December 31
--------------------------
1999 1998 1997
-------- -------- --------
(Dollar amounts in
millions, except
per share data)
Net sales........................................... $3,779.0 $3,370.4 $2,909.2
Cost of goods sold.................................. 2,758.7 2,498.9 2,171.4
-------- -------- --------
Gross profit.................................... 1,020.3 871.5 737.8
Selling, distribution and administrative expenses... 491.2 422.8 358.8
Amortization of excess cost of purchased companies
and other intangibles.............................. 28.8 21.8 17.3
Other income, net of other deductions............... 2.2 2.2 .8
-------- -------- --------
Earnings before interest and income taxes....... 502.5 429.1 362.5
Interest expense.................................... 43.0 38.5 31.8
Interest income..................................... 3.1 5.0 2.6
-------- -------- --------
Earnings before income taxes.................... 462.6 395.6 333.3
Income taxes........................................ 172.1 147.6 125.0
-------- -------- --------
Net earnings.................................... $ 290.5 $ 248.0 $ 208.3
======== ======== ========
Earnings per share
Basic........................................... $ 1.46 $ 1.25 $ 1.09
======== ======== ========
Diluted......................................... $ 1.45 $ 1.24 $ 1.08
======== ======== ========
The accompanying notes are an integral part of these financial statements.
17
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31
------------------
ASSETS 1999 1998
------ -------- --------
(Dollar amounts
in millions,
except per share
data)
Current Assets
Cash and cash equivalents..................................... $ 20.6 $ 83.5
Accounts and notes receivable, less allowance of $13.3 in 1999
and $13.5 in 1998............................................ 559.4 503.1
Inventories
Finished goods.............................................. 309.9 251.7
Work in process............................................. 63.2 56.2
Raw materials and supplies.................................. 238.2 185.5
LIFO reserve................................................ (5.5) (7.2)
-------- --------
Total inventories......................................... 605.8 486.2
Other current assets.......................................... 70.4 64.3
-------- --------
Total current assets...................................... 1,256.2 1,137.1
Property, Plant and Equipment--at cost
Machinery and equipment....................................... 1,050.9 915.5
Buildings and other........................................... 524.3 470.6
Land.......................................................... 53.5 48.9
-------- --------
Total property, plant and equipment....................... 1,628.7 1,435.0
Less accumulated depreciation................................. 713.7 614.6
-------- --------
Net property, plant and equipment......................... 915.0 820.4
Other Assets
Excess cost of purchased companies over net assets acquired,
less accumulated amortization of $67.3 in 1999 and $50.8 in
1998......................................................... 714.3 498.9
Other intangibles, less accumulated amortization of $32.6 in
1999 and $25.3 in 1998....................................... 45.2 29.7
Sundry........................................................ 46.8 49.2
-------- --------
Total other assets........................................ 806.3 577.8
-------- --------
Total Assets.............................................. $2,977.5 $2,535.3
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable.............................................. $ 146.1 $ 134.8
Accrued expenses.............................................. 194.2 168.8
Other current liabilities..................................... 91.2 97.8
-------- --------
Total current liabilities................................. 431.5 401.4
Long-Term Debt.................................................. 787.4 574.1
Other Liabilities............................................... 43.9 48.1
Deferred Income Taxes........................................... 68.5 74.9
Shareholders' Equity
Capital stock
Preferred stock--authorized, 100,000,000 shares; none issued
Common stock--authorized, 600,000,000 shares of $.01 par
value; issued 198,727,750 and 197,766,091 shares in 1999
and 1998, respectively..................................... 2.0 2.0
Additional contributed capital................................ 424.8 396.1
Retained earnings............................................. 1,278.1 1,058.7
Accumulated other comprehensive income........................ (18.9) (18.2)
Less treasury stock--at cost (1,847,456 and 82,580 shares in
1999 and 1998, respectively)................................. (39.8) (1.8)
-------- --------
Total shareholders' equity................................ 1,646.2 1,436.8
-------- --------
Total Liabilities and Shareholders' Equity................ $2,977.5 $2,535.3
======== ========
The accompanying notes are an integral part of these financial statements.
18
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31
-------------------------
1999 1998 1997
------- ------- -------
(Dollar amounts in
millions)
Operating Activities
Net earnings...................................... $ 290.5 $ 248.0 $ 208.3
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation.................................... 120.5 106.1 88.3
Amortization.................................... 28.8 21.8 17.3
Stock and deferred compensation................. 3.0 10.8 7.9
Deferred income tax expense (benefit)........... (6.7) 17.3 (1.5)
Other........................................... (7.3) (3.6) (2.1)
Other changes, excluding effects from purchases
of companies
(Increase) decrease in accounts receivable,
net.......................................... 5.0 (31.5) (52.1)
(Increase) in inventories..................... (74.0) (6.6) (15.0)
(Increase) in other current assets............ (4.7) (7.2) (5.1)
(Decrease) increase in current liabilities.... 15.7 (.2) 42.3
------- ------- -------
Net Cash Provided by Operating Activities... 370.8 354.9 288.3
Investing Activities
Additions to property, plant and equipment........ (159.1) (147.6) (119.4)
Purchases of companies, net of cash acquired...... (290.1) (117.1) (171.6)
Other............................................. 8.2 6.7 8.2
------- ------- -------
Net Cash Used for Investing Activities...... (441.0) (258.0) (282.8)
Financing Activities
Additions to debt................................. 255.6 269.7 214.8
Payments on debt.................................. (98.6) (216.9) (164.7)
Dividends paid.................................... (69.1) (59.9) (48.0)
Issuances of common stock......................... 4.0 5.0 6.6
Purchases of common stock......................... (81.5) (13.5) (5.7)
Other............................................. (3.1) (5.5) (4.5)
------- ------- -------
Net Cash Provided by (Used for) Financing
Activities................................. 7.3 (21.1) (1.5)
------- ------- -------
Increase (Decrease) in Cash and Cash Equivalents.... (62.9) 75.8 4.0
Cash and Cash Equivalents--Beginning of Year........ 83.5 7.7 3.7
------- ------- -------
Cash and Cash Equivalents--End of Year.............. $ 20.6 $ 83.5 $ 7.7
======= ======= =======
Supplemental Information
Interest paid..................................... $ 42.6 $ 36.5 $ 30.3
Income taxes paid................................. 170.5 142.6 124.4
Liabilities assumed of acquired companies......... 106.7 118.9 81.1
Common stock issued for acquired companies........ 26.9 66.8 52.0
Common stock issued for employee stock plans...... 29.6 26.4 27.4
======= ======= =======
The accompanying notes are an integral part of these financial statements.
19
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Year ended December 31
----------------------------
1999 1998 1997
-------- -------- --------
(Dollar amounts in
millions, except per share
data)
Common Stock
Balance, beginning of period................... $ 2.0 $ 1.0 $ .9
Common stock issued............................ -- -- .1
Two-for-one stock split........................ -- 1.0 --
-------- -------- --------
Balance, end of period....................... $ 2.0 $ 2.0 $ 1.0
======== ======== ========
Additional Contributed Capital
Balance, beginning of period................... $ 396.1 $ 311.9 $ 240.2
Common stock issued............................ 37.8 87.3 74.6
Treasury stock issued.......................... (11.9) (6.2) (9.7)
Tax benefit related to stock options........... 2.8 4.1 6.8
Two-for-one stock split........................ -- (1.0) --
-------- -------- --------
Balance, end of period....................... $ 424.8 $ 396.1 $ 311.9
======== ======== ========
Retained Earnings
Balance, beginning of period................... $1,058.7 $ 871.3 $ 704.4
Net earnings for the year...................... 290.5 248.0 208.3
Retained earnings of pooled companies at date
of acquisition................................ -- 1.7 9.2
Cash dividends declared (per share: 1999--$.36;
1998--$.315; 1997--$.27)...................... (71.1) (62.3) (50.6)
-------- -------- --------
Balance, end of period....................... $1,278.1 $1,058.7 $ 871.3
======== ======== ========
Treasury Stock
Balance, beginning of period................... $ (1.8) $ (.1) $ (.2)
Treasury stock purchased....................... (88.5) (19.7) (17.3)
Treasury stock issued.......................... 50.5 18.0 17.4
-------- -------- --------
Balance, end of period....................... $ (39.8) $ (1.8) $ (.1)
======== ======== ========
Accumulated Other Comprehensive Income
Balance, beginning of period................... $ (18.2) $ (10.1) $ (4.2)
Foreign currency translation adjustment........ (.7) (8.1) (5.9)
-------- -------- --------
Balance, end of period....................... $ (18.9) $ (18.2) $ (10.1)
======== ======== ========
Total Shareholders' Equity................... $1,646.2 $1,436.8 $1,174.0
======== ======== ========
Comprehensive Income
Net earnings................................... $ 290.5 $ 248.0 $ 208.3
Foreign currency translation adjustment (net of
income tax expense (benefit): 1999--($.8);
1998--$2.2; 1997--$1.1)....................... (.7) (8.1) (5.9)
-------- -------- --------
Total Comprehensive Income................... $ 289.8 $ 239.9 $ 202.4
======== ======== ========
The accompanying notes are an integral part of these financial statements.
20
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
(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.
Sales Recognition: The Company primarily recognizes sales upon the shipment
of its products. Exceptions to this policy are not significant and conform to
industry practices.
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 50% of the inventories
at December 31, 1999 and 1998. The first-in, first-out (FIFO) method is
principally used for the remainder. The FIFO cost of inventories at December
31, 1999 and 1998 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 7% to 25% for machinery and equipment, 3% to 7% for
buildings and 12% 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. The rates of
amortization range from 5% to 33%. In accordance with FASB Statement No. 121,
long-lived assets, including intangibles, are evaluated for probable recovery
of their carrying amount. Appropriate adjustment, using current market values,
estimates of discounted future cash flows and other methods, is made when
recovery of the carrying amount is not reasonably assured.
Concentration of Credit Risks, Exposures and Financial Instruments: The
Company engages in manufacturing, marketing, and distributing engineered
products for markets served by the Company as described in Note J. The
Company's operations are principally in the United States, although the
Company also has manufacturing subsidiaries in Canada, Europe, Mexico, China,
Brazil and Australia 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 and
interest rate swaps related to fixed rate debt. The amounts outstanding under
the forward contracts and interest rate swaps 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 is less than the carrying value by approximately
$11.
21
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
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.
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 comprehensive
income. Foreign entities whose functional currency is the U.S. dollar are not
significant.
B--Acquisitions
During 1999, the Company acquired 29 businesses in transactions accounted
for as purchases. These transactions required the use of $290.1 in cash, net
of cash acquired, and 1,227,500 shares of common stock valued at $25.8.
Options to purchase an additional 39,568 shares of common stock valued at $1.1
were also extended by the Company in substitution for previously existing
options. These amounts include additional consideration of $19.3 paid for
prior year acquisitions. The excess of the purchase price over the fair value
of the net assets acquired increased goodwill by $233.4. These acquired
businesses manufacture and distribute products primarily to the commercial
furnishings and residential furnishings markets, as well as the other markets
the Company serves.
The unaudited pro forma consolidated net sales for the years ended December
31, 1999 and 1998 as though the 1999 acquisitions had occurred on January 1 of
each year presented were $4,031.3 and $3,810.7, 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.
During 1998, the Company acquired 16 businesses in transactions accounted
for as purchases. These transactions required the use of $117.1 in cash, net
of cash acquired, and 2,741,480 shares of common stock valued at $59.8. The
excess of the purchase price over the fair value of the net assets acquired
increased goodwill by $121.8. The Company also issued 183,892 shares to
acquire one 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 primarily to the commercial furnishings and residential
furnishings markets, as well as the other markets the Company serves.
22
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
During 1997, the Company acquired the assets of 28 companies in exchange
for $171.6 in cash, net of cash acquired, and 2,180,100 shares of common stock
valued at $38.7 in transactions accounted for as purchases. The excess of the
purchase price over the fair value of the net assets acquired increased
goodwill by $116.0. These companies manufacture and distribute products to
residential furnishings, commercial furnishings and other markets. The Company
also issued 3,736,960 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
businesses manufacture and distribute products to aluminum products markets.
The results of operations of the above acquired companies have been
included in the consolidated financial statements since the dates of
acquisition.
The terms of certain of the Company's acquisition agreements provide for
additional consideration to be paid if the acquired company's results of
operations exceed certain targeted levels. Such additional consideration may
be paid in cash or shares of the Company's common stock, and is recorded when
earned as additional purchase price. The maximum amount of additional
consideration remaining at December 31, 1999 is approximately $92 and will be
payable, if earned, through 2004.
C--Earnings Per Share
Basic and diluted earnings per share were calculated as follows:
1999 1998 1997
----------- ----------- -----------
Basic
Weighted average shares
outstanding, including shares
issuable for little or no cash... 198,492,506 197,682,147 190,268,516
=========== =========== ===========
Net earnings........................ $ 290.5 $ 248.0 $ 208.3
=========== =========== ===========
Earnings per share.................. $ 1.46 $ 1.25 $ 1.09
=========== =========== ===========
Diluted
Weighted average shares
outstanding, including shares
issuable for little or no cash... 198,492,506 197,682,147 190,268,516
Additional dilutive shares
principally from the assumed
exercise of outstanding stock
options.......................... 2,445,498 2,987,686 2,921,108
----------- ----------- -----------
200,938,004 200,669,833 193,189,624
=========== =========== ===========
Net earnings........................ $ 290.5 $ 248.0 $ 208.3
=========== =========== ===========
Earnings per share.................. $ 1.45 $ 1.24 $ 1.08
=========== =========== ===========
23
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:
1999 1998
------ ------
Accrued expenses
Wages and commissions payable............................ $ 48.5 $ 36.0
Workers' compensation, medical, auto and product
liability insurance..................................... 42.9 45.5
Income taxes............................................. 11.2 5.9
Other.................................................... 91.6 81.4
------ ------
$194.2 $168.8
====== ======
Other current liabilities
Outstanding checks in excess of book balances............ $ 47.4 $ 46.5
Current maturities of long-term debt..................... 3.8 5.2
Other.................................................... 40.0 46.1
------ ------
$ 91.2 $ 97.8
====== ======
E--Long-Term Debt
Long-term debt, weighted average interest rates and due dates at December
31 are as follows:
1999 1998
------ ------
Medium-term notes, fixed interest rates of 6.8% for both
1999 and 1998, due dates through 2009..................... $560.0 $491.0
Commercial paper, variable interest rate of 5.9% for 1999,
due dates in 2000......................................... 144.7 --
Industrial development bonds, principally variable interest
rates of 5.7% and 4.5% for 1999 and 1998, respectively,
due dates through 2030.................................... 39.9 38.9
Other, partially secured................................... 46.6 49.4
------ ------
791.2 579.3
Less current maturities.................................... 3.8 5.2
------ ------
$787.4 $574.1
====== ======
At December 31, 1999, the revolving credit agreements provided for a
maximum line of credit of $295. In January 2000, this amount was increased to
$340. 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 credit agreements. Agreement amounts of $227.5 and $112.5 will
terminate July 31, 2004 and August 28, 2000, respectively, at which time all
outstanding balances will become due.
Medium-term notes and commercial paper 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.
24
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Maturities of long-term debt for each of the five years following 1999 are:
Year ended December 31
2000............................ $ 3.8
2001............................ 62.2
2002............................ 80.4
2003............................ 123.4
2004............................ 274.2
In November 1999, the Company completed a $500 shelf registration of debt,
of which $350 of 7.65% five-year public notes was issued in February 2000.
This debt was subsequently converted to variable rate debt by the use of an
interest rate swap agreement.
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 $36.4, $29.6 and $27.3 for the years ended December 31, 1999,
1998 and 1997, respectively.
Future minimum rental commitments for all long-term noncancelable operating
leases are as follows:
Year ended December 31
2000............................. $19.0
2001............................. 12.8
2002............................. 8.4
2003............................. 4.9
2004............................. 2.4
Later years...................... 2.6
-----
$50.1
=====
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.
25
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
G--Capital Stock
Stock Activity
Activity in the Company's stock accounts for each of the three years ended
December 31 is as follows:
Common Treasury
Stock Stock
----------- ----------
Balance, January 1, 1997.......................... 184,227,572 (12,540)
Shares issued................................... 8,531,548 930,280
Treasury stock purchased........................ -- (922,514)
----------- ----------
Balance, December 31, 1997........................ 192,759,120 (4,774)
Shares issued................................... 5,006,971 779,695
Treasury stock purchased........................ -- (857,501)
----------- ----------
Balance, December 31, 1998........................ 197,766,091 (82,580)
Shares issued................................... 961,659 2,342,411
Treasury stock purchased........................ -- (4,107,287)
----------- ----------
Balance, December 31, 1999........................ 198,727,750 (1,847,456)
=========== ==========
The Company issues shares for employee stock plans and acquisitions. The
Company purchases its common stock to meet the requirements of the employee
stock purchase and incentive plans, to replace shares issued in purchase
acquisitions and to satisfy contractual obligations. The Company will also
receive shares in stock-for-stock option exercises.
Stock Options
At December 31, 1999, the Company had 13,643,867 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,
1999, 1998 and 1997 was $11.5, $8.9 and $6.6, 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.
26
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
A summary of the Company's stock option plans as of December 31, 1999, 1998
and 1997, and changes during the years ending on those dates is presented
below:
Weighted
Average
Exercise Price
Shares per Share
---------- --------------
Outstanding at January 1, 1997................. 8,791,304 $ 8.01
Granted...................................... 1,429,502 10.18
Exercised.................................... (2,066,732) 6.45
Forfeited.................................... (161,480) 11.76
---------- ------
Outstanding at December 31, 1997............... 7,992,594 8.72
Granted...................................... 966,798 14.38
Exercised.................................... (1,218,447) 9.05
Forfeited.................................... (36,760) 16.85
---------- ------
Outstanding at December 31, 1998............... 7,704,185 9.34
Granted...................................... 4,998,591 16.33
Exercised.................................... (1,279,755) 6.29
Forfeited.................................... (104,340) 19.99
---------- ------
Outstanding at December 31, 1999............... 11,318,681 $12.67
========== ======
Options exercisable at
December 31, 1999............................ 5,605,669 $ 8.43
December 31, 1998............................ 4,646,155 6.67
December 31, 1997............................ 3,488,022 6.16
1999 1998 1997
------ ------ ------
Weighted-average fair value of options:
Granted at market price....................... $ 4.59 $ 5.66 $ 4.44
Granted below market price.................... 17.67 16.52 12.27
Weighted-average exercise price of options:
Granted at market price....................... 20.09 23.20 20.31
Granted below market price.................... 2.50 3.17 4.54
Principal assumptions used in calculating fair
value consistent with the method of FASB
Statement No. 123:
Risk-free interest rate....................... 5.2% 5.1% 6.0%
Expected life in years........................ 4.8 5.1 4.8
Expected volatility........................... 23.0% 20.0% 19.0%
Expected dividend yield....................... 1.5% 1.5% 1.7%
27
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The following table summarizes information about stock options outstanding
at December 31, 1999:
Options Outstanding Options Exercisable
------------------------------------------- --------------------------
Weighted-Average
Remaining Weighted- Weighted-
Range of Number Contractual Life Average Number Average
Exercise Prices Outstanding In Years Exercise Price Exercisable Exercise Price
- --------------- ----------- ---------------- -------------- ----------- --------------
$ .01-
$ 2.60 1,866,376 9.9 $ .09 1,407,166 $ .12
2.61-
5.19 988,965 14.5 4.01 478,819 4.03
5.20-
10.39 1,217,732 1.9 9.14 987,569 8.94
10.40-
12.98 1,830,013 1.2 11.45 1,823,990 11.45
12.99-
15.58 551,366 6.2 13.69 518,362 13.69
15.59-
18.18 68,906 2.2 16.47 43,152 16.45
18.19-
20.78 3,861,273 4.5 20.01 86,428 20.71
20.79-
23.37 777,500 3.2 22.41 246,354 22.44
23.38-
25.97 156,550 4.0 24.62 13,829 25.41
The Company also has authorized shares for issuance in connection with
certain employee stock benefit plans discussed in Note H.
Par Value Amendment
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.
Shareholder Protection Rights Plan
In 1989, the Company declared a dividend distribution of one preferred
stock purchase right (a Right) for each share of common stock. The Rights were
attached to and traded with the Company's common stock. The Rights became
exercisable only under certain circumstances involving actual or potential
acquisitions of the Company's common stock. The Rights expired in February
1999. The Company simultaneously issued substantially identical rights, which
remain in existence until February 2009, unless they are exercised, exchanged
or redeemed at an earlier date. Depending upon the circumstances, if these
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.
28
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
H--Employee Benefit Plans
The following table provides information at December 31 as to the Company
sponsored defined benefit pension plans:
1999 1998 1997
------ ------ ------
Change in Benefit Obligation
Benefit obligation, beginning of period.............. $100.1 $ 89.5 $ 69.2
Service cost....................................... 3.2 2.2 1.6
Interest cost...................................... 5.3 5.1 5.0
Plan participants' contributions................... 4.3 4.0 3.5
Actuarial (gains) losses........................... (4.9) 4.4 14.7
Benefits paid...................................... (5.9) (5.1) (4.5)
------ ------ ------
Benefit obligation, end of period.................... 102.1 100.1 89.5
Change in Plan Assets
Fair value of plan assets, beginning of period....... 132.1 127.6 98.8
Actual return on plan assets....................... 24.1 5.6 29.8
Plan participants' contributions................... 4.3 4.0 3.5
Benefits paid...................................... (5.9) (5.1) (4.5)
------ ------ ------
Fair value of plan assets, end of period............. 154.6 132.1 127.6
Plan Assets in Excess of Benefit Obligations........... 52.5 32.0 38.1
Unrecognized net actuarial gains..................... (24.3) (5.6) (14.8)
Unrecognized net transition asset.................... (0.7) (1.0) (1.7)
Unrecognized prior service cost...................... (0.2) (.3) (.3)
------ ------ ------
Prepaid pension cost................................. $ 27.3 $ 25.1 $ 21.3
====== ====== ======
Components of Net Pension Income
Service cost......................................... $ (3.2) $ (2.2) $ (1.6)
Interest cost........................................ (5.3) (5.1) (5.0)
Expected return on plan assets....................... 10.3 10.0 7.9
Amortization of net transition asset................. .4 .7 .7
Recognized net actuarial gain........................ -- .4 --
------ ------ ------
Net pension income................................... $ 2.2 $ 3.8 $ 2.0
====== ====== ======
Weighted Average Assumptions
Discount rate........................................ 6.00% 5.50% 6.00%
Expected return on plan assets....................... 8.00% 8.00% 8.00%
Rate of compensation increase........................ 4.40% 4.40% 5.20%
Plan assets are invested in a diversified portfolio of equity, debt and
government securities, including 1,176,000 shares of the Company's common
stock at December 31, 1999.
Contributions to union sponsored, defined benefit, multiemployer pension
plans were $.7, $.2, and $.2 in 1999, 1998 and 1997, respectively. These plans
are not administered by the Company and contributions are determined in
accordance with provisions of negotiated labor contracts. As of 1999, 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.
29
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Net pension expense, including Company sponsored defined benefit plans,
multiemployer plans and other plans, was $4.3, $2.1 and $2.1 in 1999, 1998 and
1997, respectively.
The Company has a contributory stock purchase/stock bonus plan (SPSB Plan),
a nonqualified 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 $8.5, $6.9 and $5.8 for 1999, 1998 and 1997,
respectively.
Under the DSP, eligible employees may purchase a maximum of 19,000,000
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 1,026,479, 894,445 and 871,394 during 1999, 1998 and 1997,
respectively. Purchase prices ranged from $10 to $24 per share. Since
inception of the DSP in 1982, a total of 14,127,222 shares have been purchased
by employees.
I--Income Taxes
The components of earnings before income taxes are as follows:
Year ended December
31
--------------------
1999 1998 1997
------ ------ ------
Domestic............................................. $397.2 $340.8 $292.2
Foreign.............................................. 65.4 54.8 41.1
------ ------ ------
$462.6 $395.6 $333.3
====== ====== ======
Income tax expense is comprised of the following components:
Year ended December
31
---------------------
1999 1998 1997
------ ------ ------
Current
Federal.......................................... $141.1 $108.1 $102.2
State and local.................................. 11.8 4.2 9.9
Foreign.......................................... 25.9 18.0 14.4
------ ------ ------
178.8 130.3 126.5
Deferred
Federal.......................................... (5.1) 4.1 (5.5)
State and local.................................. 3.3 11.0 4.1
Foreign.......................................... (4.9) 2.2 (.1)
------ ------ ------
(6.7) 17.3 (1.5)
------ ------ ------
$172.1 $147.6 $125.0
====== ====== ======
30
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
--------------
1999 1998
------ ------
Property, plant and equipment............................ $(67.8) $(70.0)
Accrued expenses......................................... 55.0 51.3
Prepaid pension cost..................................... (10.7) (10.1)
Other, net............................................... (19.2) (20.8)
------ ------
$(42.7) $(49.6)
====== ======
Deferred tax assets and liabilities included in the consolidated balance
sheet are as follows:
December 31
--------------
1999 1998
------ ------
Other current assets...................................... $ 25.8 $ 25.3
Deferred income taxes..................................... (68.5) (74.9)
------ ------
$(42.7) $(49.6)
====== ======
A valuation allowance has not been provided for the deferred tax asset as
the Company believes it will be realized through future taxable income and
reversal of other timing differences.
Income tax expense, as a percentage of earnings before income taxes,
differs from the statutory federal income tax rate as follows:
Year ended December 31
-------------------------
1999 1998 1997
------- ------- -------
Statutory federal income tax rate............. 35.0% 35.0% 35.0%
Increases in rate resulting primarily from
state and other jurisdictions................ 2.2 2.3 2.5
------- ------- -------
Effective tax rate............................ 37.2% 37.3% 37.5%
======= ======= =======
J--Segment Information
The Company has primarily determined its reportable segments based upon the
internal organization, which is generally focused on broad end-user markets
for its diversified products. Residential Furnishings derives its revenues
from bedding, furniture and other furnishings components and related consumer
products. Commercial Furnishings derives its revenues from office and
institutional furnishings components, retail store fixtures, displays and
other commercial products and systems. The Aluminum Products segment derives
its revenues from die castings, custom tooling and dies, machining and coating
and aluminum raw materials (ingot). Industrial Materials derives its revenues
from drawn wire, specialty wire products and welded steel tubing materials.
Specialized Products is a combination of segments which derive their revenues
from machinery and manufacturing equipment and automotive seating suspension,
lumbar support and control cable systems.
The accounting principles used in the preparation of the segment
information are the same as used for the consolidated financial statements,
except that the segment assets and income reflect the FIFO basis of accounting
31
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
for inventory. Certain inventories are accounted for using the LIFO basis in
the consolidated financial statements. The Company evaluates performance based
on earnings from operations before interest and income taxes (EBIT).
Intersegment sales are made primarily at prices that approximate market-based
selling prices. Centrally incurred costs are allocated to the segments based
on estimates of services used by the segment. Certain general and
administrative costs of the Company are allocated to the segments based on
sales. Asset information for the segments includes only inventory, trade
receivables, net property, plant and equipment and unamortized purchased
intangibles. These segment assets are reflected in the segment information at
their estimated average for the year. Long-lived assets as disclosed include
property, plant and equipment, goodwill and other intangibles, and long-term
assets. Centrally incurred costs and allocated general and administrative
costs include depreciation and other costs related to assets that are not
allocated or otherwise included in the segment assets. Prior years' segment
results have been restated due to a change in organizational structure and to
conform to the current presentation. The impact of restatement of prior years
is not significant.
Summarized financial information concerning the Company's reportable
segments is shown in the following tables:
Inter-
External Segment Total
Year ended December 31 Sales Sales Sales EBIT
---------------------- -------- ------- -------- ------
1999
Residential Furnishings............... $1,946.6 $ 9.5 $1,956.1 $219.7
Commercial Furnishings................ 778.1 2.9 781.0 126.9
Aluminum Products..................... 532.8 15.6 548.4 52.6
Industrial Materials.................. 282.6 202.1 484.7 70.1
Specialized Products.................. 238.9 41.9 280.8 34.1
Intersegment eliminations............. (2.6)
Adjustment to LIFO method............. 1.7
-------- ------ -------- ------
$3,779.0 $272.0 $4,051.0 $502.5
======== ====== ======== ======
1998
Residential Furnishings............... $1,777.2 $ 6.8 $1,784.0 $198.3
Commercial Furnishings................ 623.3 1.7 625.0 111.1
Aluminum Products..................... 501.1 16.8 517.9 32.6
Industrial Materials.................. 269.6 193.5 463.1 51.9
Specialized Products.................. 199.2 46.4 245.6 28.6
Intersegment eliminations............. (1.3)
Adjustment to LIFO method............. 7.9
-------- ------ -------- ------
$3,370.4 $265.2 $3,635.6 $429.1
======== ====== ======== ======
1997
Residential Furnishings............... $1,592.6 $ 2.8 $1,595.4 $171.1
Commercial Furnishings................ 464.4 .3 464.7 85.3
Aluminum Products..................... 441.4 17.6 459.0 44.6
Industrial Materials.................. 259.7 180.1 439.8 43.5
Specialized Products.................. 151.1 33.1 184.2 21.1
Intersegment eliminations............. .3
Adjustment to LIFO method............. (3.4)
-------- ------ -------- ------
$2,909.2 $233.9 $3,143.1 $362.5
======== ====== ======== ======
32
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Additions Acquired
to Property, Companies' Depreciation
Plant and Long-Lived and
Assets Equipment Assets Amortization
-------- ------------ ---------- ------------
1999
Residential Furnishings. $1,173.4 $ 60.7 $128.3 $ 61.7
Commercial Furnishings.. 721.4 21.8 163.2 28.4
Aluminum Products....... 441.1 30.5 -- 22.2
Industrial Materials.... 204.8 17.6 5.3 13.9
Specialized Products.... 216.8 15.0 16.2 12.4
Unallocated assets...... 204.0 13.5 10.7
Adjustment to year-end
vs. average assets..... 16.0
-------- ------ ------ ------
$2,977.5 $159.1 $313.0 $149.3
======== ====== ====== ======
1998
Residential Furnishings. $ 971.0 $ 54.4 $ 64.7 $ 58.0
Commercial Furnishings.. 469.8 9.7 116.1 21.4
Aluminum Products....... 404.4 42.6 24.5 17.9
Industrial Materials.... 204.5 7.3 10.4 12.7
Specialized Products.... 188.8 28.1 4.6 8.9
Unallocated assets...... 285.9 5.5 9.0
Adjustment to year-end
vs. average assets..... 10.9
-------- ------ ------ ------
$2,535.3 $147.6 $220.3 $127.9
======== ====== ====== ======
1997
Residential Furnishings. $ 856.7 $ 40.4 $ 67.7 $ 48.9
Commercial Furnishings.. 315.0 13.3 75.7 15.4
Aluminum Products....... 353.3 23.9 11.1 13.6
Industrial Materials.... 179.9 18.3 2.8 11.5
Specialized Products.... 178.9 15.0 46.9 8.4
Unallocated assets...... 227.6 8.5 7.8
Adjustment to year-end
vs. average assets..... (5.1)
-------- ------ ------ ------
$2,106.3 $119.4 $204.2 $105.6
======== ====== ====== ======
33
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Revenues from external customers, by product line, are as follows:
Year ended December 31
--------------------------
1999 1998 1997
-------- -------- --------
Residential Furnishings
Bedding components.......................... $ 742.8 $ 663.2 $ 596.3
Residential furniture components............ 444.4 412.0 371.7
Finished & consumer products................ 510.5 463.3 414.2
Other residential furnishings products...... 248.9 238.7 210.4
-------- -------- --------
1,946.6 1,777.2 1,592.6
Commercial Furnishings
Store displays, fixtures & storage products. 502.1 369.7 236.9
Office furnishings & plastic components..... 276.0 253.6 227.5
-------- -------- --------
778.1 623.3 464.4
Aluminum Products
Die cast products........................... 457.7 423.3 355.3
Smelter, tool & die operations.............. 75.1 77.8 86.1
-------- -------- --------
532.8 501.1 441.4
Industrial Materials
Wire, wire products & steel tubing.......... 282.6 269.6 259.7
Specialized Products
Automotive products & specialized machinery. 238.9 199.2 151.1
-------- -------- --------
$3,779.0 $3,370.4 $2,909.2
======== ======== ========
The Company's operations outside of the United States are principally in
Canada, Europe and Mexico, none of which are individually material to its
consolidated operations. The geographic information that follows regarding
sales is based on the area of manufacture.
Year ended December 31
--------------------------
1999 1998 1997
-------- -------- --------
External sales
United States................................ $3,345.8 $3,025.9 $2,636.6
Foreign...................................... 433.2 344.5 272.6
-------- -------- --------
$3,779.0 $3,370.4 $2,909.2
======== ======== ========
Long-lived assets
United States................................ $1,421.4 $1,183.8 $ 989.2
Foreign...................................... 299.9 214.4 172.5
-------- -------- --------
$1,721.3 $1,398.2 $1,161.7
======== ======== ========
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. One of the Company's subsidiaries was
involved in an unfair labor complaint filed by the National Labor Relations
Board prior to the Company's acquisition of the subsidiary. This matter has
been resolved consistent with management's expectations and did not have a
material adverse effect on the Company's financial statements.
34
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS--(Concluded)
When it appears probable in management's judgement that the Company will
incur monetary damages or other costs in connection with 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 claims and proceedings is remote.
35
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Leggett & Platt,
Incorporated:
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(1) present fairly, in all material respects, the
financial position of Leggett & Platt, Incorporated and its subsidiaries at
December 31, 1999 and 1998, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1999 in
conformity with accounting principles generally accepted in the United States.
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 auditing standards generally accepted in the United States, 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/ PricewaterhouseCoopers, LLP
St. Louis, Missouri
February 2, 2000
36
LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
QUARTERLY SUMMARY OF EARNINGS
(Unaudited)
(Dollar amounts in millions, except per share data)
Year ended December 31, 1999 First Second Third Fourth Total
- ---------------------------- ------ ------ ------ ------- --------
Net sales.................................. $887.6 $935.2 $991.1 $965.1 $3,779.0
Gross profit............................... 232.4 253.4 269.9 264.6 1,020.3
Earnings before income taxes............... 105.1 115.1 124.0 118.4 462.6
Net earnings............................... 66.1 72.4 77.7 74.3 290.5
Earnings per share
Basic.................................... $ .33 $ .37 $ .39 $ .37 $ 1.46
Diluted.................................. $ .33 $ .36 $ .39 $ .37 $ 1.45
Year ended December 31, 1998
- ----------------------------
Net sales.................................. $793.2 $855.4 $884.1 $837.7 $3,370.4
Gross profit............................... 202.3 219.3 228.8 221.1 871.5
Earnings before income taxes............... 92.7 100.8 104.4 97.7 395.6
Net earnings............................... 57.9 63.4 65.2 61.5 248.0
Earnings per share
Basic.................................... $ .29 $ .32 $ .33 $ .31 $ 1.25
Diluted.................................. $ .29 $ .32 $ .32 $ .31 $ 1.24
37
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, 1999
Allowance for doubtful
receivables...................... $13.5 $5.5 $5.7(A) $13.3
===== ==== ==== =====
Year ended December 31, 1998
Allowance for doubtful
receivables...................... $11.5 $5.2 $3.2(A) $13.5
===== ==== ==== =====
Year ended December 31, 1997
Allowance for doubtful
receivables...................... $ 8.6 $5.6 $2.7(A) $11.5
===== ==== ==== =====
- --------
(A) Uncollectible accounts charged off, net of recoveries
38
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
By: /s/ Felix E. Wrigh___________t
Felix E. Wright
President and
Chief Executive Officer
Dated: March 28, 2000
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/ Felix E. Wright Vice Chairman of the Board, March 28, 2000
____________________________________ President & Chief Executive
Felix E. Wright Officer
(b) Principal Financial Officer:
/s/ Michael A. Glauber Senior Vice President, March 28, 2000
____________________________________ Finance & Administration
Michael A. Glauber
(c) Principal Accounting Officer:
/s/ Allan J. Ross Vice President--Accounting March 28, 2000
____________________________________
Allan J. Ross
(d) Directors:
Chairman
____________________________________
Harry M. Cornell, Jr.
Raymond F. Bentele* Director
____________________________________
Raymond F. Bentele
Robert Ted Enloe, III* Director
____________________________________
Robert Ted Enloe, III
Richard T. Fisher* Director
____________________________________
Richard T. Fisher
Bob L. Gaddy* Director
____________________________________
Bob L. Gaddy
39
Signature Title Date
--------- ----- ----
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.
Alice L. Walton* Director
____________________________________
Alice L. Walton
/s/ Ernest C. Jett
*By____________________________
Ernest C. Jett
Attorney-in-Fact
Under Power-of-Attorney
dated March 28, 2000 March 28, 2000
40
EXHIBIT INDEX
Sequential
Exhibit No. Document Description Page No.
----------- -------------------- ----------
3.1 Restated Articles of Incorporation of the Company as
of May 13, 1987, filed as Exhibit 3.1 to Registrant's
Form 10-K for the year ended December 31, 1998, is
incorporated by reference.
3.2 Amendment to Restated Articles of Incorporation of
the Company dated May 12, 1993, filed as Exhibit 3.2
to Registrant's Form 10-K for the year ended December
31, 1998, is incorporated by reference.
3.3 Amendment to Restated Articles of Incorporation of
the Company dated May 12, 1999.
3.4 Restated By-Laws of the Company as of August 11,
1993, with all amendments through March 15, 1999,
filed as Exhibit 3.3 to Registrant's Form 10-K for
the year ended December 31, 1998, is incorporated by
reference.
4.1 Article III of Registrant's Restated Articles of
Incorporation, filed as Exhibit 3.1 above, is
incorporated by reference.
4.2 Rights Agreement effective February 15, 1999 between
Registrant and ChaseMellon Shareholder Services, LLC,
pertaining to preferred stock rights distributed by
Registrant, filed as Exhibit 1 to Registrant's Form
8-K filed December 1, 1998, is incorporated by
reference.
4.3 Indenture, dated as of November 24, 1999 between
Registrant and The Chase Manhattan Bank, as Trustee,
filed as Exhibit 4.1 to Registration Statement No.
333-90443, on Form S-3, effective as of November 15,
1999, is incorporated by reference.
10.1(1) Restated and Amended Employment Agreement between
Harry M. Cornell, Jr. and Leggett & Platt,
Incorporated dated as of August 14, 1996, filed as
Exhibit 10.1 to Registrant's Form 10-K for the year
ended December 31, 1996, is incorporated by
reference, and Amendment No. 1 to Employment
Agreement dated January 1, 1999.
10.2(1) Restated and Amended Employment Agreement between the
Company and Felix E. Wright dated March 1, 1999,
filed as Exhibit 10.2 to Registrant's Form 10-K for
the year ended December 31, 1998, is incorporated by
reference.
10.3(1) Employment Agreement between the Company and Robert
A. Jefferies, Jr. dated November 7, 1990 and
Amendment No. 1 to Employment Agreement dated January
1, 1993.
10.4(1) Severance Benefit Agreement between the Company and
Harry M. Cornell, Jr. dated May 9, 1984, filed as
Exhibit 10.4 to Registrant's Form 10-K for the year
ended December 31, 1994, is incorporated by
reference.
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
December 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
reference.
10.7(1) Reference is made to Appendix B to Registrant's
definitive Proxy Statement dated March 27, 1997, used
in connection 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.
41
Sequential
Exhibit No. Document Description Page No.
----------- -------------------- ----------
10.8(1) Summary description of the Company's Key Management
Incentive Compensation Plan.
10.9(1) Reference is made to Appendix B to Registrant's
definitive Proxy Statement dated March 31, 1999, used
in connection with Registrant's Annual Meeting of
Shareholders held on May 12, 1999, for a copy of the
Company's 1999 Key Officer's Incentive Plan, which is
incorporated by reference.
10.10(1) Description of certain long-term disability
arrangements between Registrant and its salaried
employees.
10.11(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
incorporated by reference.
10.12(1) Reference is made to Appendix A to Registrant's
definitive Proxy Statement dated March 27, 1997, used
in connection 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.
10.13(1) Leggett & Platt, Incorporated Executive Stock
Purchase Program adopted June 6, 1989 under the
Company's 1989 Flexible Stock Plan, and effective as
of July 1, 1989, as amended.
10.14(1) Revised Employment Agreement between Bob L. Gaddy,
Pace Industries, Inc. and Leggett & Platt,
Incorporated, filed as Exhibit 10.13 to Registrant's
Form 10-K for the year ended December 31, 1996, is
incorporated by reference.
10.15(1) Registrant's Stock Award Program, filed as Exhibit
10.20 of the Registrant's Form 10-K for the year
ended December 31, 1997, is incorporated by
reference.
10.16(1) The Company's Deferred Compensation Program, filed as
Exhibit 10.15 of the Registrant's Form 10-K for the
year ended December 31, 1998, is incorporated by
reference.
10.17(1) The Company's Executive Deferred Stock Program, filed
as Exhibit 10.16 of the Registrant's Form 10-K for
the year ended December 31, 1998, is incorporated by
reference.
10.18(1) Noncompetition Agreement, dated as of May 13,1996
between 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.
10.19(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.
12 Computation of Ratio of Earnings to Fixed Charges.
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.
- --------
(1) Denotes management contract or compensatory plan or arrangement.
42