10-K405 1 FORM 10-K/405 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 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 [FEE REQUIRED] FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 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 TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- ----------------------- Common Stock, New York Stock Exchange $.01 par value Pacific Stock Exchange Preferred Stock Purchase Rights New York Stock Exchange Pacific Stock Exchange
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Sec. 229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the voting stock held by nonaffiliates of the Registrant was approximately $1,396,352,074. There were 41,663,229 shares of the Registrant's common stock outstanding as of February 24, 1995. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's definitive Proxy Statement for its Annual Meeting of Shareholders to be held May 10, 1995, are incorporated by reference into Part III of this report. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- PART I ITEM 1. BUSINESS General Development of Business. The Company was incorporated in 1901 as the successor to a partnership formed in 1883 at Carthage, Missouri. That partnership was a pioneer in the manufacture and sale of steel coil bedsprings. The Company manufacturers, markets and distributes products that range from components for bedding and furniture to other select furnishings and diversified products. Products produced and sold for the furnishings industry constitute the largest portion of the Company's business. These include components used by companies making furniture and bedding for home, office and commercial applications. Also in the furnishings industry, the Company produces and sells some finished products. In addition, a group of diversified non-furnishings products is produced and sold. The term "Company," unless the context requires otherwise, refers to Leggett & Platt, Incorporated and its majority owned subsidiaries. The Company acquired ten companies in 1994 in exchange for approximately $79 million in cash (net of cash acquired) and 601,000 shares of common stock. The acquired companies expanded the Company's annual sales base by approximately $200 million. For further information concerning acquisitions see Note B of the Notes to Consolidated Financial Statements. Products, Market and Customers. The Company has several thousand customers, most of which are manufacturers of finished furnishings. The Company is not dependent upon any single customer or any few customers. Historically, the furnishings industry has been highly fragmented and included many relatively small companies, widely dispersed geographically. Although a trend toward consolidation in the furnishings industry has continued, the industry as a whole remains fragmented to a substantial degree. The Company's furniture and bedding components customers manufacture bedding (mattresses and boxsprings), upholstered and non-upholstered furniture and other finished products for sale to retailers, institutions, wholesalers and others. The Company's component products are sold and distributed primarily through the Company's sales personnel. The Company also manufactures and sells finished products for the furnishings industry. These finished products include carpet underlay and non- skid pads, metal shelving, point-of-purchase display racks, sleep-related finished furniture, and other furnishings for residential and commercial markets. Some of the finished furniture is sold to bedding and furniture manufacturers which resell the furniture under their own labels to wholesalers or retailers. Certain finished furniture such as bed frames, fashion beds, daybeds and other select items are also sold by the Company directly to retailers. The following list is representative of the principal products produced by the Company in the furnishings industry: 1 BEDDING COMPONENTS Lectro-LOK(R), WEBLOC(R), LOK-Fast(TM), Flex-Deck(TM), and Semiflex(TM) boxspring components Edge and corner stabilizer spring supports Foam and fiber cushioning materials Gribetz computerized single needle (Class V) and multi-needle chain stitch (Class I-IV) quilting machinery, material handling systems, panel cutters, tape edge and border serging machines Hanes construction fabrics Mira-Coil(R), Super-Lastic(R), Lura-Flex(TM), Hinge Flex(TM), and Ever-Flex(TM) innerspring assemblies for mattresses Mounted and crated boxsprings and foundation units Nova-Bond(R) and other insulator pads for mattresses and boxsprings Perm-A-Lator(R), Plasteel(R), Posturizer(TM), Flexnet(TM) and other mattress insulators Spring and basic wire Synthetic, wool, cotton, and silk cushioning materials WBSCO material handling systems and equipment for bedding manufacturers Wood frames and dimension lumber for boxspring frames FINISHED PRODUCTS Bed frames Daybeds made of brass, painted metal and wood DURAPLUSH(TM), Permaloom(R), other carpet underlay and non-skid pads Electric beds Genuine Brass, Lustre Brass(R) and other metal fashion beds and headboards Metal and wire shelving and other commercial fixtures Pedestal bed bases Point-of-purchase displays and racks Rollaway beds Steel bunk beds Trundle beds Wood headboards FURNITURE COMPONENTS Chair controls, casters and other components for office furniture ClassicTouch(TM) and Modular Wallhugger(R) mechanisms for motion upholstered groups Coil-Flex(TM) and ModuCoil(R) spring assemblies for upholstered furniture Components for office panel systems Die cast aluminum, fabricated steel, and injection molded plastic bases for office furniture and dinettes Flex-Cord(R) paper covered wire Hanes construction fabrics MPI/No-Sag(R) and other foam cushioning Mechanisms for adjustable height work tables Metal bed rails for bedroom suites Molded plastic recliner handles and other plastic furniture components No-Sag(R) rocker springs, seating systems and clips Perm-A-Lator(R) wire seating insulators Perma-eze(R) seat and back springs PETCO weltcord and furniture edgings Ring-Flex(R) polyethylene foam edgings SOFA PLUS(TM), MAX(R), and Classic(TM) Series sofa sleeper mechanisms Spring wire Super Sagless Select(TM) motion mechanisms Swivel, rocker and glider components for motion furniture Synthetic fiber, densified fiber batting, seat pads and other cushioning materials System Seating(TM), Seat Pleaser(R) and other furniture coils and accessories Tackit(TM) tackstrips VWR supplies for upholstery Wallhugger(R) and Concept(TM) mechanisms for reclining chairs Webline(R) seating systems Welded steel tubing Outside the furnishings industry, the Company produces and sells for home, industrial and commercial uses a diversified line of components and other products made principally from steel, steel wire, aluminum, plastics, textile fibers and woven and nonwoven fabrics. The Company's diversified products require 2 manufacturing technologies similar to those used in making furnishings related products and certain raw materials which the Company produces for its own use. The following list is representative of the Company's principal diversified products: DIVERSIFIED PRODUCTS Aluminum die cast custom products and aluminum ingot Bale tie machinery and parts Cyclo-Index(R) motion controls for manufacturing equipment Flex-O-Lators(R), No-Sag(R) and Pullmaflex automotive seat suspension systems Formed and welded wire and steel tubing components Gribetz single needle quilters, multi-needle chain stitch quilters, and panel cutters Hanes industrial and apparel fabrics Industrial wire Injection molded plastic products Mechanical springs Non-skid pads Sound insulation materials Specialty foam products Textile fiber wiping cloths and other products The table below sets out further information concerning sales of each class of the Company's products: LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES SUMMARY OF SALES
(Dollar amounts in millions) 1994 1993 1992 AMOUNT Furnishings Products Bedding Components $ 534.5 $ 471.1 $ 409.8 Furniture Components 513.4 412.0 345.5 Finished Products 350.3 312.7 285.7 -------- -------- -------- Total Furnishings Products 1,398.2 1,195.8 1,041.0 Diversified Products 459.9 330.9 274.0 -------- -------- -------- Net Sales $1,858.1 $1,526.7 $1,315.0 ======== ======== ========
Previously reported amounts have been restated to be consistent with current product groupings. Reference is also made to Note I of the Notes to Consolidated Financial Statements for further segment information. The Company sells quilting machines and similar equipment, seating suspension products and certain other component products in a number of foreign countries. The Company's international division is involved primarily in the sale of machinery and equipment designed to manufacture the Company's innersprings and certain other spring products and the licensing of patents owned and presently maintained by the Company in foreign countries. Foreign sales are a minor portion of the Company's business. Sources of Raw Materials. The Company uses a variety of raw materials in manufacturing its products. Some of the Company's most important raw materials include steel rod (from which steel wire is drawn), coil steel, woven and nonwoven fabrics, aluminum ingot, aluminum scrap, angle iron, sheet steel, various woods, textile scrap, foam chemicals, foam scrap, and plastic. 3 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. A substantial portion of the steel rod used by these wire drawing mills is purchased pursuant to a rod supply agreement with a major steel rod producer. The Company also produces, at various locations, for its own consumption and for sale to customers not affiliated with the Company, slit coil steel, welded steel tubing, textile fibers, dimension lumber and aluminum ingot. 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. The Company's more significant trademarks include those listed with the Company's principal products. 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 since 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 $6 million in 1994 and $5 million in 1993 and 1992. Employees. The Company has approximately 16,000 employees of whom approximately 12,500 are engaged in production. Approximately 37% 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 1994. Management is not aware of any circumstance which is likely to result in a material work stoppage related to the negotiations of any contracts expiring during 1995. Competition. The markets for the Company's products are highly competitive in all aspects. There are numerous companies offering products which compete with those products offered by the Company. The primary competitive factors in the Company's industry include price, product quality, customer service and product warranties. The Company believes it is the largest supplier in the United States of a diverse range of components to the furnishings industry. 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. From time to time, the Company is involved in proceedings related to environmental matters. In one instance, the United States Environmental Protection Agency (EPA) ordered one of the Company's subsidiaries to investigate potential releases into the environment and, if necessary, to perform corrective action. The subsidiary successfully appealed the EPA's order. On June 27, 1994, the EPA indicated it planned to issue a new, similar order. The subsidiary, the EPA and the Florida Department of Environmental Protection (FDEP) are negotiating an agreement to investigate and, if necessary, take corrective action to resolve the dispute. Estimated costs to perform an agreed upon investigation and any related corrective actions are not material and have been provided for in the financial statements as of December 31, 1994. If current negotiations with the EPA and the FDEP are unsuccessful, and the EPA issues a new order, the subsidiary expects it would appeal the new order. If this appeal were unsuccessful, the costs to perform any required investigation and, if necessary, corrective action cannot be reasonably estimated. One-half of any costs, including the costs of voluntary actions, would be reimbursed to the Company under a contractual obligation of a former joint owner of the subsidiary. No provision for the costs of performing investigation and corrective action beyond any agreed upon investigation and remediation mentioned above has been recorded in the Company's financial statements. If any such additional investigation and corrective action is required, 4 management believes the possibility of a material adverse effect on the Company's consolidated financial condition or results of operations is remote. ITEM 2. PROPERTIES The Company has approximately 150 locations in North America, including 32 states in the United States. The Company's most important physical properties are its manufacturing plants. These manufacturing plants include five wire drawing mills, three welded steel tubing mills and approximately 50 major manufacturing facilities. The balance of the Company's locations are engaged in assembly, warehousing, sales, administration or research and development. In addition, the Company has several locations in foreign countries. Its corporate headquarters are located in Carthage, Missouri. Most of the Company's major manufacturing plants are owned by the Company. The Company also conducts certain of its 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 E 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. ITEM 3. LEGAL PROCEEDINGS The Company is a defendant in numerous ordinary, routine workers' compensation, product liability, vehicle accident, employment termination, 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. The Company is presently party to a small number of proceedings in which a governmental authority is a party and which involve provisions enacted 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. The EPA has alleged that two of the Company's facilities in Grafton, Wisconsin violated wastewater pretreatment requirements under the Clean Water Act. No action is pending. The EPA has not requested any specific relief, but has indicated it intends to bring an action. Management believes the cost to resolve this matter 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. 5 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS Leggett & Platt's common stock is listed on The New York and Pacific Stock Exchanges with the trading symbol LEG. The Company's initial public offering was on March 29, 1967, and the shares were first listed on The New York Stock Exchange on June 25, 1979. The table below highlights quarterly and annual stock market information for the last two years.
PRICE RANGE -------------------- VOLUME OF DIVIDEND HIGH LOW SHARES TRADED DECLARED ----------- ------- ------------- -------- 1994: Fourth Quarter $37.875 $33.375 4,124,900 $.16 Third Quarter 40.000 33.250 6,716,300 .16 Second Quarter 45.500 35.500 5,715,600 .15 First Quarter 49.500 41.625 4,419,700 .15 For the Year 49.500 33.250 20,976,500 .62 1993: Fourth Quarter $50.000 $40.500 3,338,100 $.14 Third Quarter 46.750 37.000 4,463,200 .14 Second Quarter 39.125 32.875 3,073,400 .13 First Quarter 39.625 34.125 3,897,300 .13 For the Year 50.000 32.875 14,772,000 .54
Price and volume data reflect composite transactions and prices as reported daily by The Wall Street Journal. At February 24, 1995 the Company had 8,087 shareholders of record. 6 ITEM 6. SELECTED FINANCIAL DATA LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES
1994 1993 1992 1991 1990 -------- -------- -------- -------- -------- (Dollar amounts in millions, except per share data) SUMMARY OF OPERATIONS Net sales..................................... $1,858.1 $1,526.7 $1,315.0 $1,221.4 $1,231.3 Earnings from continuing operations........... 115.4 85.9 65.4 40.0 30.2 Earnings per share............................ 2.78 2.09 1.64 1.08 .82 Cash dividends declared per share............. .62 .54 .46 .43 .42 SUMMARY OF FINANCIAL POSITION Total assets.................................. $1,119.9 $ 901.9 $ 772.0 $ 746.7 $ 768.8 Long-term debt................................ 204.9 165.8 147.9 232.7 269.4
______________________ A restructuring charge of $20.3 pre-tax and $14.3 after tax, or $.39 per share is included in 1990. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS CAPITAL RESOURCES AND LIQUIDITY The Company's financial position reflects several important principles and guidelines of management's capital policy. These include management's belief that corporate liquidity must always be adequate to support the Company's projected internal growth rate. At the same time, liquidity must assure management that the Company will be able to withstand any amount of financial adversity that can reasonably be anticipated. Management also intends to direct capital to strategic acquisitions and other investments that provide additional opportunities for expansion and enhanced profitability. Financial planning to meet these needs reflects management's belief that the Company should never be forced to expand its capital resources, whether debt or equity, at a time not of its choosing. Management also believes that financial flexibility is more important than maximization of earnings through excessive leverage. Therefore, management continuously provides for available credit in excess of projected cash needs and has maintained a guideline for long-term debt as a percentage of total capitalization in a range of 30% to 40%. Internally generated funds provided $419.1 million in capital during the last three years. Long-term debt outstanding was 23% of total capitalization at the end of all three years. Obligations having scheduled maturities are the base "layer" of the Company's debt capital. At the end of 1994, these obligations totaled $146.6 million, consisting primarily of privately placed institutional loans and tax-exempt industrial development bonds. At the end of 1993, debt with scheduled maturities totaled $122.3 million, which was up from $112.5 million a year earlier. Near the end of July 1994, the Company issued $25 million in unsecured privately placed debt under a medium-term note program. These notes were issued with average lives of approximately eight years and fixed interest rates averaging 7.6%. Proceeds from the notes were used to repay a portion of the Company's revolving credit. In 1993, the Company issued $50 million of medium- term notes near the end of the third quarter. These notes were issued with average lives of approximately nine years and fixed interest rates averaging 5.8%. Debt of a company acquired in a September 1993 pooling of interests transaction was repaid with the majority of the proceeds from these notes. In 1992, the Company also issued $26 million of medium term notes near the beginning of the 7 fourth quarter. These notes were issued with average lives of approximately five years and fixed interest rates averaging 6.2%. Proceeds of the notes issued in 1992 were used to repay debt outstanding under the Company's revolving bank credit agreements. In March 1992, substantially all of the $40 million of 6 1/2% convertible subordinated debentures, which had been outstanding at the end of 1991, were converted into 2.1 million shares of the Company's common stock. The resulting increase in shareholders' equity enhanced the Company's flexibility in capital management. In November 1994, Standard & Poor's and Moody's, the nation's leading debt rating agencies, both increased their ratings of the Company's senior debt. Standard & Poor's increased its rating to A from A-, and Moody's increased its rating to A2 from A3. The Company's second "layer" of debt capital consists of revolving credit agreements with seven banks. Over the years, management has renegotiated these bank credit agreements and established a commercial paper program to keep pace with the Company's projected growth and to maintain highly flexible sources of debt capital. The credit under these arrangements has been a long-term obligation. If needed, however, the credit is also available for short-term borrowings and repayments. In 1994, there was $58.3 million in revolving debt/commercial paper outstanding at the end of the year, up from $43.5 million in 1993 and $35.4 million in 1992. These increases reflected a portion of funds borrowed to finance cash acquisitions. Internally generated funds were used, as available, to reduce debt outstanding during the last three years. Additional details of long-term debt outstanding, including scheduled maturities, revolving credit and commercial paper are discussed in Note D of the Notes to Consolidated Financial Statements. The following table shows, in millions, the Company's capitalization at the end of the three most recent years. It also shows the amount of additional capital available through the revolving bank credit agreements. The amount of cash and cash equivalents is also shown.
1994 1993 1992 ------ ------ ------ Long-term debt outstanding: Scheduled maturities.............. $146.6 $122.3 $112.5 Revolving credit/commercial paper. 58.3 43.5 35.4 ------ ------ ------ Total long-term debt........... 204.9 165.8 147.9 Shareholders' equity................ 625.2 515.6 441.6 Unused committed credit............. 156.7 116.5 139.6 Cash and cash equivalents........... 2.7 .4 5.2
Net capital investments to modernize and expand manufacturing capacity internally totaled $164.8 million in the last three years. During this period, the Company also employed $162.6 million in cash (net of cash acquired) and issued 2.3 million shares of common stock in acquisitions. During 1994, the Company acquired ten businesses for $78.8 million in cash (net of cash acquired) and .6 million shares of common stock. Additional details of acquisitions are discussed in Note B of the Notes to Consolidated Financial Statements. Cash dividends on the Company's common stock totaled $67.6 million in the last three years. The Company has substantial capital resources to support projected internal cash needs and additional acquisitions consistent with management's goals and objectives. In addition, the Company has the availability of short-term uncommitted credit from several banks. However, there was no short-term debt outstanding at the end of any of the last three years. Working capital increased $78.2 million in the last three years. To gain additional flexibility in capital management and to improve the rate of return on shareholders' equity, the Company continuously seeks efficient use of working capital. The following table shows the annual turnover on average year-end working capital, trade receivables and inventories. The ratios may be affected by the timing of the Company's acquisitions. 8
1994 1993 1992 ---- ---- ---- Working capital turnover (excluding cash and cash equivalents)................... 6.4x 6.1x 5.8x Trade receivables turnover................ 8.2 8.3 8.3 Inventory turnover........................ 6.2 6.0 5.7
Future commitments under lease obligations are described in Note E and contingent obligations in connection with environmental and other matters are discussed in Note J of the Notes to Consolidated Financial Statements. RESULTS OF OPERATIONS The results of operations during the last three years reflect various elements of the Company's long-term growth strategy, along with general trends in the economy and the markets the Company serves, both in the furnishings industry and in a variety of diversified non-furnishings markets. The Company's growth strategy continues to include both internal programs and acquisitions which broaden product lines and provide for increased market penetration and operating efficiencies. With a continuing emphasis on the development of new and improved products and advancements in production technology, the Company is able to consistently offer high quality products, competitively priced. Trends in the general economy were favorable during the last three years. During 1994, economic growth increased as the year progressed. Despite higher interest rates, spending on furnishings and other durable goods increased more than most economists and industry analysts anticipated. Demand also improved in the diversified non-furnishings markets the Company serves. In 1993, economic growth increased in the fourth quarter, following more modest growth during most of the year. Markets generally reacted favorably to lower long-term interest rates and increased availability of credit. During 1992, a post-election increase in overall confidence led to increased spending and accelerated growth in the economy. However, compared with previous first year recoveries from recessionary lows, economic growth and demand for the Company's furnishings and diversified products was modest during most of 1992. Many forecasters are currently anticipating further 1995 growth in the economy and the markets the Company serves. While the rate of growth may be slower this year, economic conditions should remain healthy, with hopefully moderate overall inflation. The long-term outlook for overall business conditions should also remain favorable if the Federal Reserve Board proves to be successful in its attempts to restrain inflationary expectations and slow economic growth. The Company's consolidated net sales increased 22% in 1994 and 16% in 1993, when compared with prior years. Excluding acquisitions, sales would have increased 10% in both of the last two years. These increases primarily reflected higher unit volumes, plus some price increases implemented in response to increases in prices for raw materials. While the percentage and timing of increases in the Company's selling prices varied considerably, the largest 1994 increases were concentrated in aluminum products. In 1993, price increases were concentrated in the Company's steel and wire products. However, some of the 1993 and additional 1994 cost increases the Company experienced in operations producing steel products were not passed along until the end of 1994. In 1992, consolidated net sales increased 8% over 1991, due almost entirely to higher unit volumes. The Company was able to refrain from raising prices in 1992 as previously weaker economic conditions had reduced inflation for most raw materials. The following table shows various measures of earnings as a percentage of sales for the last three years. It also shows the effective income tax rate and the coverage of interest expense by pre-tax earnings plus interest. 9
1994 1993 1992 ---- ---- ---- Gross profit margin......... 23.1% 22.9% 22.8% Pre-tax profit margin....... 10.2 9.2 8.1 Net profit margin........... 6.2 5.6 5.0 Effective income tax rate... 39.1 39.1 38.5 Interest coverage ratio..... 20.3x 14.8x 8.9x
The Company's profit margins, like sales, continued to improve in the last three years. The 1994 gross profit margin increased slightly from 1993, primarily reflecting improved market conditions in the aluminum and foam industries and gains in overall manufacturing efficiencies on higher volume. These favorable factors more than offset cost/price pressures the Company continued to experience in operations producing steel products for the furnishings industry and diversified non-furnishings markets. The 1993 gross profit margin was substantially unchanged from 1992. Operating efficiencies resulting from increased sales and production, cost cutting, and constant attention to cost containment were largely offset by inflation in prices for some key raw materials. Reflecting this inflation, LIFO expense reduced the gross profit margin by 0.2% in both of the last two years. This was in sharp contrast to 1992, when LIFO income slightly increased the gross profit margin. The replacement cost of the LIFO inventory is discussed in Note A of the Notes to Consolidated Financial Statements. The pre-tax profit margin in 1994 increased to 10.2%. This improvement reflected a 0.4% reduction in total selling, distribution and administrative expenses, as a percentage of sales. In addition, interest expense and other deductions, net of other income, decreased slightly as a percentage of sales. The 1993 pre-tax profit margin increased to 9.2% of sales. This improvement primarily reflected a 0.7% reduction in selling, distribution and administrative expenses, as a percentage of sales. Increased efficiencies and reduced bad debt expense contributed to the improvement in operating expense ratios. These factors and a slight increase in other income more than offset one time charges related to acquisitions and the Company's implementation of new accounting statements issued by the Financial Accounting Standards Board. Interest expense, as a percentage of sales, was reduced 0.4% and further improved the pre-tax profit margin. Reduced debt outstanding (before 1993 acquisitions) and lower interest rates were reflected in this improvement. The effective income tax rate was 39.1% in both of the last two years and 38.5% in 1992. In the third quarter of 1993, corporate federal income tax rates were increased from 34% to 35%, retroactive to January 1, 1993. Additional details of income taxes for the last three years are discussed in Note H of the Notes to Consolidated Financial Statements. Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Consolidated Financial Statements and supplementary data included in this Report begin on page 15. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 10 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Reference is made to the section entitled "Election of Directors" in the Company's definitive Proxy Statement for the Company's Annual Meeting of Shareholders to be held on May 10, 1995, said section being incorporated by reference, for a description of the directors of the Company. The following table sets forth the names, ages and positions of all executive officers of the Company. Executive officers are elected annually by the Board of Directors at the first meeting of directors following the Annual Meeting of Shareholders. The description of the executive officers of the Company is as follows:
NAME AGE POSITION ---- --- -------- Harry M. Cornell, Jr. 66 Chairman of the Board and Chief Executive Officer Felix E. Wright 59 President, Chief Operating Officer and Director Roger D. Gladden 49 Senior Vice President and President--Commercial Products Group Michael A. Glauber 52 Senior Vice President, Finance and Administration (Principal Financial Officer and Principal Accounting Officer) David S. Haffner 42 Senior Vice President and President--Furniture and Automotive Components Group Robert A. Jefferies, Jr. 53 Senior Vice President, Mergers, Acquisitions and Strategic Planning and Director Duane W. Potter 63 Senior Vice President and President--Bedding Components Group
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. has served as the Company's Chief Executive Officer, Chairman of the Board and Chairman of the Board's Executive Committee for more than the last five years. Felix E. Wright was elected President in 1985 and has served as Chief Operating Officer since 1979. Roger D. Gladden was elected Senior Vice President in 1992. Mr. Gladden has been President--Commercial Products Group since 1984 and previously served as Vice President--Administration. Michael A. Glauber was elected Senior Vice President, Finance and Administration in 1990. Mr. Glauber was elected Vice President--Finance in 1979 and Vice President--Finance and Treasurer in 1980. David S. Haffner was elected Senior Vice President and President-- Furniture and Automotive Components Group in 1992. Mr. Haffner was appointed President--Furniture Components Group in 1985 and was elected Vice President of the Company in 1985. Robert A. Jefferies, Jr. was elected Senior Vice President, Mergers, Acquisitions and Strategic Planning in 1990. Mr. Jefferies formerly served as Vice President and the Senior Vice President, General Counsel and Secretary of the Company from 1977 through 1992. Duane W. Potter was elected Vice President in 1978 and Senior Vice President in 1983. Mr. Potter has been President--Bedding Components Group since 1985. 11 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 10, 1995, 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 10, 1995, 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 10, 1995 is incorporated by reference. 12 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K 1. Financial Statements -------------------- 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, 1994 * Consolidated Balance Sheets at December 31, 1994 and 1993 * Consolidated Statements of Cash Flows for each of the years in the three year period ended December 31, 1994 * Consolidated Statements of Changes in Shareholders' Equity for each of the years in the three year period ended December 31, 1994 * Notes to Consolidated Financial Statements * Report of Independent Accountants 2. Financial Statement Schedules ----------------------------- Report of Independent Accountants on Financial Statement Schedule Schedule for each of the years in the three year period ended December 31, 1994 VIII -- 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. 3. Exhibits - See Exhibit Index. -------- 4. Reports on Form 8-K filed during the last quarter ------------------------------------------------- of 1994: None. -------- 13 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA TABLE OF CONTENTS Page ---- Quarterly Summary of Earnings............................................ 15 Consolidated Statements of Earnings...................................... 16 Consolidated Balance Sheets.............................................. 17 Consolidated Statements of Cash Flows.................................... 18 Consolidated Statements of Changes in Shareholders' Equity............... 19 Notes to Consolidated Financial Statements............................... 20 Report of Independent Accountants........................................ 30 14 QUARTERLY SUMMARY OF EARNINGS Leggett & Platt, Incorporated and Subsidiaries
(Unaudited) (Dollar amounts in millions, except per share data) Quarter Year ended December 31, 1994 First Second Third Fourth Total Net sales $434.6 $448.8 $482.6 $492.1 $1,858.1 Gross profit 98.6 104.3 110.6 115.5 429.0 Earnings before income taxes 42.8 46.6 49.9 50.2 189.5 Net earnings 26.0 28.2 30.2 31.0 115.4 ====== ====== ====== ====== ======== Earnings per share $ .63 $ .68 $ .73 $ .74 $ 2 .78 ====== ====== ====== ====== ======== Year Ended December 31, 1993 Net sales $363.0 $371.7 $395.4 $396.6 $1,526.7 Gross profit 82.5 85.4 91.1 90.0 349.0 Earnings before income taxes 32.1 34.4 37.1 37.4 141.0 Net earnings 19.6 21.0 22.3 23.0 85.9 ====== ====== ====== ====== ======== Earnings per share $ .48 $ .51 $ .54 $ .56 $ 2.09 ====== ====== ====== ====== ========
15 CONSOLIDATED STATEMENTS OF EARNINGS Leggett & Platt, Incorporated and Subsidiaries (Dollar amounts in millions, except per share data)
Year ended December 31 1994 1993 1992 Net sales $1,858.1 $1,526.7 $1,315.0 Cost of goods sold 1,429.1 1,177.7 1,015.1 -------- -------- -------- Gross profit 429.0 349.0 299.9 Selling, distribution and administrative expenses 227.0 192.4 175.2 Interest expense 9.8 10.2 13.5 Other (income) and deductions, net 2.7 5.4 4.8 -------- -------- -------- Earnings before income taxes 189.5 141.0 106.4 Income taxes 74.1 55.1 41.0 -------- -------- -------- Net earnings $ 115.4 $ 85.9 $ 65.4 ======== ======== ======== Earnings per share $ 2.78 $ 2.09 $ 1.64 ======== ======== ========
The accompanying notes are an integral part of these financial statements. 16 CONSOLIDATED BALANCE SHEETS Leggett & Platt, Incorporated and Subsidiaries
(Dollar amounts in millions) December 31 1994 1993 ASSETS CURRENT ASSETS Cash and cash equivalents $ 2.7 $ .4 Trade receivables, less allowance of $7.5 in 1994 and $7.2 in 1993 245.3 194.6 Other receivables 9.0 10.1 Inventories Finished goods 134.5 113.3 Work in process 32.1 23.8 Raw materials and supplies 103.1 82.2 LIFO reserve (14.2) (10.2) -------- -------- Total inventories 255.5 209.1 Other current assets 32.2 21.4 -------- -------- Total current assets 544.7 435.6 PROPERTY, PLANT AND EQUIPMENT - AT COST Machinery and equipment 430.1 346.5 Buildings and other 246.9 204.9 Land 22.5 19.8 -------- -------- 699.5 571.2 Less accumulated depreciation 303.5 258.1 -------- -------- Net property, plant and equipment 396.0 313.1 OTHER ASSETS Excess cost of purchased companies over net assets acquired, less accumulated amortization of $14.4 in 1994 and $11.4 in 1993 115.1 93.0 Other intangibles, less accumulated amortization of $12.5 in 1994 and $11.3 in 1993 27.4 25.7 Sundry 36.7 34.5 -------- -------- Total other assets 179.2 153.2 -------- -------- TOTAL ASSETS $1,119.9 $ 901.9 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long-term debt $ 3.9 $ 1.4 Accounts payable 89.9 74.1 Income taxes 9.5 1.6 Accrued expenses 96.5 65.3 Other current liabilities 33.1 23.8 -------- -------- Total current liabilities 232.9 166.2 LONG-TERM DEBT 204.9 165.8 OTHER LIABILITIES 14.7 11.1 DEFERRED INCOME TAXES 42.2 43.2 SHAREHOLDERS' EQUITY Capital stock Preferred stock-authorized, 100,000,000 shares; none issued Common stock-authorized, 300,000,000 shares of $.01 par value; issued 41,608,174 and 40,325,961 shares in 1994 and 1993, respectively .4 .4 Additional contributed capital 134.7 117.3 Retained earnings 496.5 401.0 Cumulative translation adjustment (6.1) (2.8) Less treasury stock-at cost (11,065 and 7,578 shares in 1994 and 1993, respectively) ( .3) ( .3) -------- -------- Total shareholders' equity 625.2 515.6 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,119.9 $ 901.9 ======== =========
The accompanying notes are an integral part of these financial statements. 17 CONSOLIDATED STATEMENTS OF CASH FLOWS Leggett & Platt, Incorporated and Subsidiaries
(Dollar amounts in millions) Year ended December 31 1994 1993 1992 OPERATING ACTIVITIES Net earnings $ 115.4 $ 85.9 $ 65.4 Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation 48.8 39.1 36.5 Amortization 8.1 6.2 6.1 Deferred income tax (benefit) expense (6.6) 8.6 (2.4) Other 2.0 ( .9) 1.6 Other changes, net of effects from purchases of companies Increase in accounts receivable, net (29.1) (9.2) (24.1) Increase in inventories (22.2) (4.4) (8.3) (Increase) decrease in other current assets (4.9) (2.9) .8 Increase in current liabilities 61.5 23.3 24.8 ------- ------- ------ Net Cash Provided by Operating Activities 173.0 145.7 100.4 INVESTING ACTIVITIES Additions to property, plant and equipment (88.5) (54.2) (35.8) Proceeds from sales of property, plant and equipment 1.0 2.8 9.9 Purchases of companies, net of cash acquired (78.8) (78.0) (5.8) Other ( .3) -- (3.5) ------- ------- ------ Net Cash Used for Investing Activities (166.6) (129.4) (35.2) FINANCING ACTIVITIES Additions to debt 49.1 58.1 35.9 Payments on debt (29.6) (57.8) (85.4) Dividends paid (25.4) (21.1) (21.1) Other 1.8 ( .3) (2.0) ------- ------- ------ Net Cash Used for Financing Activities (4.1) (21.1) (72.6) ------- ------- ------ INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2.3 (4.8) (7.4) CASH AND CASH EQUIVALENTS--BEGINNING OF YEAR .4 5.2 12.6 ------- ------- ------ CASH AND CASH EQUIVALENTS--END OF YEAR $ 2.7 $ .4 $ 5.2 ======= ======= ====== SUPPLEMENTAL INFORMATION Interest paid $ 9.2 $ 16.7 $ 12.7 Income taxes paid 68.1 45.3 43.6 Liabilities assumed of acquired companies 40.4 21.8 -- Common stock issued for acquired companies 13.8 2.0 4.3 Common stock issued for conversion of debentures -- -- 39.9 ======= ======= ======
The accompanying notes are an integral part of these financial statements. 18 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY Leggett & Platt, Incorporated and Subsidiaries
(Dollar amounts in millions, except per share data) Additional Cumulative Treasury Stock Common Contributed Retained Translation -------------------- Stock Capital Earnings Adjustment Cost Shares BALANCES--JANUARY 1, 1992 $ 19.4 $ 40.9 $ 287.5 $ .8 $ (2.3) 90,697 Common stock issued (1,629,297 shares) 1.6 47.3 Net treasury stock issued and purchased .1 (2.0) 38,824 Tax benefit related to stock options 1.2 Additional shares issued in two-for-one stock split effected in the form of a stock dividend June 15, 1992 (18,932,239 shares) 18.9 (18.9) 6,675 Translation adjustment (1.6) Retained earnings of pooled company at date of acquisition .6 Net earnings for the year 65.4 Cash dividends declared ($.46 per share) (17.3) ------ ------- ------- ------ ------ -------- BALANCES--DECEMBER 31, 1992 39.9 70.6 336.2 ( .8) (4.3) 136,196 Common stock issued (376,314 shares) .2 6.2 Net treasury stock issued and purchased ( .3) 4.0 (128,618) Tax benefit related to stock options 1.1 Change in par value of common stock (39.7) 39.7 Translation adjustment (2.0) Net earnings for the year 85.9 Cash dividends declared ($.54 per share) (21.1) ------ ------- ------- ------ ------ -------- BALANCES--DECEMBER 31, 1993 .4 117.3 401.0 (2.8) ( .3) 7,578 Common stock issued (1,282,213 shares) 17.0 Net treasury stock issued and purchased ( .1) 3,487 Tax benefit related to stock options .5 Translation adjustment (3.3) Retained earnings of pooled companies at date of acquisition 5.5 Net earnings for the year 115.4 Cash dividends declared ($.62 per share) (25.4) ------ ------- ------- ------ ------ -------- BALANCES--DECEMBER 31, 1994 $ .4 $ 134.7 $ 496.5 $ (6.1) $ (.3) 11,065 ====== ======= ======= ====== ====== ========
The accompanying notes are an integral part of these financial statements. 19 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Leggett & Platt, Incorporated and Subsidiaries (Dollar amounts in millions, except per share data) December 31, 1994, 1993 and 1992 A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the accounts of Leggett & Platt, Incorporated and its majority-owned subsidiaries (the Company). All significant intercompany transactions and accounts have been eliminated in consolidation. 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. CASH EQUIVALENTS: Cash equivalents include cash in excess of daily requirements which is invested in various financial instruments with original maturities of three months or less. INVENTORIES: All inventories are stated at the lower of cost or market. Cost includes materials, labor and production overhead. Cost is determined by the last-in, first-out (LIFO) method for approximately 70% of the inventories at December 31, 1994 and 1993. The first-in, first-out (FIFO) method is used for the remainder. The FIFO cost of inventories at December 31, 1994 and 1993 approximated replacement cost. DEPRECIATION, AMORTIZATION AND ASSET REALIZATION: Property, plant and equipment are depreciated by the straight-line method. The rates of depreciation range from 8.3% to 25% for machinery and equipment, 2.5% to 6.7% for buildings and 12.5% to 33% for other items. Accelerated methods are used for tax purposes. The excess cost of purchased companies over net assets acquired is amortized by the straight-line method over forty years. Other intangibles are amortized by the straight-line method over their estimated lives. Assets subject to periodic depreciation or amortization are evaluated for probable realization, and appropriate adjustment of their carrying value is made when realization is not assured. The excess cost of purchased companies over net assets acquired is evaluated using estimated undiscounted cash flows over the remaining amortization period. COMPUTATIONS OF EARNINGS PER SHARE: Earnings per share is based on the weighted average number of common and common equivalent shares outstanding. Common stock equivalents result from the assumed issuance of shares under stock option plans. CONCENTRATION OF CREDIT RISKS, EXPOSURES AND FINANCIAL INSTRUMENTS: The Company specializes in manufacturing, marketing, and distributing components and other related products for the furnishings industry and diversified markets. The Company's operations are principally in the United States, although the Company also has subsidiaries in Canada and Europe. 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 purchase commitments in foreign currencies. The amounts outstanding under the forward contracts at any point in time are not significant to the Company. The Company has minimal continuing exposures to other foreign currency transactions and interest rate fluctuations, none of which have been hedged by the use of derivative instruments. The carrying value of cash and short-term financial instruments approximates fair value due to the short maturity of those instruments. The carrying value of long-term debt approximates fair value due to the use of variable interest rates and recently issued fixed rate debt. INCOME TAXES: The Company provides for taxes on undistributed earnings of subsidiaries where appropriate. The tax effect of most such distributions would be significantly offset by available foreign tax credits. 20 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Leggett & Platt, Incorporated and Subsidiaries B -- ACQUISITIONS During 1994, the Company acquired certain assets of eight companies in exchange for $78.8 in cash and 22,378 shares of common stock, net of cash acquired, in transactions accounted for as purchases. These companies primarily specialize in manufacturing and distributing components and certain other products to the furnishings industry. The Company also issued 578,436 shares of common stock to acquire two companies during the year in transactions accounted for as poolings of interests. The Company elected not to restate its financial statements as the effect of the poolings was not material. The pooled companies specialize in manufacturing and distributing point-of-purchase display racks and other formed wire products to the furnishings and diversified industries. The following unaudited pro forma information shows the results of operations for the twelve months ended December 31, 1994 and 1993 as though the 1994 acquisitions discussed above had occurred on January 1 of each year presented. The pro forma amounts reflect, where appropriate, purchase accounting adjustments, interest on incremental borrowings and the tax effects thereof. This pro forma information is not necessarily indicative of either results of operations that would have occurred had the acquisitions been made on January 1 of each year or of future results of the combined companies.
1994 1993 Net sales $1,971.4 $1,706.3 Net earnings 118.3 89.0 Earnings per share 2.81 2.13
In September 1993, the Company issued 1,579,354 shares of common stock to acquire Hanes Holding Company (Hanes) in a transaction accounted for as a pooling of interests. Hanes' business consists of converting and distributing woven and nonwoven construction fabrics, primarily in the furnishings industry. In addition, Hanes is a commission dye/finisher of non-fashion fabrics for the furnishings and apparel industries. In another pooling of interests transaction, the Company issued 68,788 shares of common stock to acquire a company whose business is manufacturing furniture components for the furnishings industry. Prior year financial statements were restated for these poolings of interests. In September 1993, the Company acquired VWR Textiles & Supplies (through Hanes) which converts and distributes construction fabrics and manufactures and distributes other soft goods components to the furnishings industry. The purchase price of this acquisition was approximately $26.0. Also in 1993, the Company acquired full ownership of several wire drawing mills which previously had been jointly owned. This transaction involved $33.0 in cash and the assumption of approximately $3.6 of long-term debt. In addition, the Company acquired several smaller companies during 1993 which primarily manufacture and distribute products to the furnishings industry. During 1992, the Company acquired the assets of one small company that primarily manufactures bedding and furniture components for the furnishings industry. The purchase price of this acquisition was approximately $5.8. Also during 1992, the Company acquired a business accounted for as a pooling of interests. The business primarily manufactures bedding and furniture components for the furnishings industry. In exchange for all of the outstanding capital stock of the business, the Company issued 100,903 shares of its common stock. The Company elected not to restate prior year's financial statements as the effect of the pooling was not material. The results of operations of these acquired companies, except the 1993 poolings, have been included in the consolidated financial statements since the dates of acquisition. 21 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Leggett & Platt, Incorporated and Subsidiaries C -- ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities at December 31 consist of the following:
1994 1993 Accrued expenses Wages and commissions payable $ 27.7 $ 19.1 Worker's compensation, medical, auto and product liability insurance 33.0 22.0 Other 35.8 24.2 ------ ------ $ 96.5 $ 65.3 ====== ====== Other current liabilities Outstanding checks in excess of book balances $ 26.1 $ 13.1 Other 7.0 10.7 ------ ------ $ 33.1 $ 23.8 ====== ======
D -- LONG-TERM DEBT Long-term debt, weighted average interest rates and due dates at December 31 are as follows:
1994 1993 Medium-term notes, fixed interest rates of 6.4% and 6.0% for 1994 and 1993, respectively, due dates through 2008 $103.5 $ 78.5 Revolving credit agreements, variable interest rates of 6.5% and 3.4% for 1994 and 1993, respectively 43.3 43.5 Commercial paper, variable interest rates of 6.1% for 1994, due dates in 1995 15.0 -- Industrial development bonds, variable interest rates of 6.1% and 3.2% for 1994 and 1993, respectively, due dates through 2030 32.3 32.3 Industrial development bonds, fixed interest rates of 6.9% and 7.6% for 1994 and 1993, respectively, due dates through 2024 5.5 7.6 Other, partially secured 9.2 5.3 ------ ------ 208.8 167.2 Less current maturities 3.9 1.4 ------ ------ $204.9 $165.8 ====== ======
22 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Leggett & Platt, Incorporated and Subsidiaries D -- LONG-TERM DEBT (CONTINUED) The revolving credit agreements provide for a maximum line of credit of $200.0. For any revolving credit agreement, the Company may elect to pay interest based on 1) the bank's base lending rate, 2) LIBOR, 3) an adjusted certificate of deposit rate, or 4) the money market rate, as specified in the revolving agreements. Any outstanding balances at the end of the third year of the revolving credit agreements may be converted into term loans payable in ten equal semi-annual installments. Commitment fees during the revolving agreement period are 3/16 of 1% per annum of the unused credit line, payable on a quarterly basis. Commercial paper is classified as long-term debt since the Company intends to refinance it 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, require working capital to be maintained at specified amounts and restrict payments of dividends. Unrestricted retained earnings available for dividends at December 31, 1994 were approximately $170.9. Maturities of long-term debt for each of the five years following 1994 are:
Year ended December 31 1995 $ 3.9 1996 4.0 1997 32.4 1998 25.5 1999 22.4
E -- LEASE OBLIGATIONS The Company conducts certain of its 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 approximately $18.0, $17.4 and $16.8 for the years ended December 31, 1994, 1993 and 1992, respectively. Future minimum rental commitments for all long-term noncancelable operating leases are as follows:
Year ended December 31 1995 $10.0 1996 7.1 1997 4.6 1998 2.5 1999 1.0 Later years 1.0 ----- $26.2 =====
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. 23 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Leggett & Platt, Incorporated and Subsidiaries F -- CAPITAL STOCK At December 31, 1994, the Company had 3,266,540 common shares authorized for issuance under stock option plans. Generally, options are granted at not less than quoted market value on the date of grant and become exercisable in varying installments, beginning 6 to 18 months after the date of grant. However, options may be granted at less than market value to replace existing options of an acquired company or in lieu of compensation. Options exercisable were 538,786 and 310,999 at December 31, 1994 and 1993, respectively. Other data regarding the Company's stock options is summarized below:
Per share Shares price Total Outstanding at January 1, 1993 1,532,420 $ 7-23 $28.6 Granted 170,191 33-43 6.8 Exercised (254,132) 7-23 (3.1) Forfeited (29,893) 11-42 (.6) --------- ------ ----- Outstanding at December 31, 1993 1,418,586 7-43 31.7 Granted 184,431 1-43 3.3 Exercised (160,032) 1-23 (2.5) Forfeited (52,357) 15-42 (1.4) --------- ------ ----- Outstanding at December 31, 1994 1,390,628 $ 1-43 $31.1 ========= ====== =====
The Company has also authorized shares for issuance in connection with certain employee stock benefit plans discussed in Note G. 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 $1.00. 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 $39.0. In 1989, the Company declared a dividend distribution of one preferred stock purchase right (a Right) for each share of common stock. The Rights are attached to and traded with the Company's common stock. The Rights may only become exercisable under certain circumstances involving actual or potential acquisitions of the Company's common stock. Depending upon the circumstances, if the Rights become exercisable, the holder may be entitled to purchase shares of Series A junior preferred stock of the Company, shares of the Company's common stock or shares of common stock of the acquiring entity. The Rights remain in existence until February 15, 1999, unless they are exercised, exchanged or redeemed at an earlier date. G -- EMPLOYEE BENEFIT PLANS The Company sponsors contributory and non-contributory pension and retirement plans. Substantially all employees, other than union employees covered by multiemployer plans under collective bargaining agreements, are eligible to participate in the plans. Retirement benefits under the contributory plans are based on career average earnings. Retirement benefits under the non-contributory plans are based on years of service, employees' average compensation and social security benefits. It is the Company's policy to fund actuarially determined costs as accrued. 24 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Leggett & Platt, Incorporated and Subsidiaries G -- EMPLOYEE BENEFIT PLANS (CONTINUED) Information at December 31, 1994, 1993 and 1992 as to the funded status of Company sponsored defined benefit plans, net pension income from the plans for the years then ended and weighted average assumptions used in the calculations are as follows:
1994 1993 1992 Funded Status Actuarial present value of benefit obligations Vested benefits $(50.5) $(46.3) $(37.2) Nonvested benefits (.6) (.6) (.4) ------ ------ ------ Accumulated benefit obligations (51.1) (46.9) (37.6) Provision for future compensation increases (3.6) (3.3) (3.7) ------ ------ ------ Projected benefit obligations (54.7) (50.2) (41.3) Plan assets at fair value 75.2 78.1 65.7 ------ ------ ------ Plan assets in excess of projected benefit obligations 20.5 27.9 24.4 Unrecognized net experience gain ( .4) (9.6) (7.4) Unrecognized net transition asset (4.1) (4.6) (5.3) ------ ------ ------ Prepaid pension costs included in other assets $ 16.0 $ 13.7 $ 11.7 ====== ====== ====== Components of Pension Income (Expense) Service cost $ (1.3) $ (.9) $ (.4) Interest cost (3.5) (3.3) (3.0) Actual return on plan assets (1.9) 12.8 6.9 Net amortization and deferral 9.0 (6.6) (1.4) ------ ------ ------ Net pension income from defined benefit plans $ 2.3 $ 2.0 $ 2.1 ====== ====== ====== Weighted Average Assumptions Discount rate 7.50% 7.25% 8.36% Rate of increase in compensation levels 5.17% 5.14% 5.17% Expected long-term rate of return on plan assets 8.00% 8.00% 8.00% ====== ====== ======
Plan assets are invested in a diversified portfolio of equity, debt and government securities, including 294,000 shares of the Company's common stock at December 31, 1994. Contributions to union sponsored, multiemployer pension plans were $.2 in 1994, 1993 and 1992. These plans are not administered by the Company and contributions are determined in accordance with provisions of negotiated labor 25 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Leggett & Platt, Incorporated and Subsidiaries G -- EMPLOYEE BENEFIT PLANS (Continued) contracts. As of 1994, the actuarially computed values of vested benefits for these plans were equal to or less than the net assets of the plans. Therefore, the Company would have no withdrawal liability. However, the Company has no present intention of withdrawing from any of these plans, nor has the Company been informed that there is any intention to terminate such plans. Net pension income, including Company sponsored defined benefit plans, multiemployer plans and other plans, was $.9, $.7 and $.8 in 1994, 1993 and 1992, respectively. The Company also has a contributory stock purchase/stock bonus plan (SPSB Plan), a non-qualified executive stock purchase program (ESPP) and an employees' discount stock plan (DSP). The SPSB Plan provides Company pre-tax contributions of 50% of the amount of employee contributions. The ESPP provides cash payments of 50% of the employees' contributions, along with an additional payment to assist employees in paying taxes on the cash payments. To the extent possible, contributions to the ESPP are invested in the Company's common stock through the DSP. In addition, the Company matches its contributions when certain profitability levels, as defined in the SPSB Plan and the ESPP, have been attained. The Company's total contributions to the SPSB Plan and the ESPP were $3.3, $2.5 and $2.2 for 1994, 1993 and 1992, respectively. Under the DSP, eligible employees may purchase a maximum of 4,000,000 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 207,704, 181,306 and 237,713 during 1994, 1993 and 1992, respectively. Purchase prices ranged from $17 to $43 per share. Since inception of the DSP in 1982, a total of 2,328,117 shares have been purchased by employees. H -- INCOME TAXES The components of earnings before income taxes are as follows:
Year ended December 31 1994 1993 1992 Domestic $172.7 $128.7 $ 97.6 Foreign 16.8 12.3 8.8 ------ ------ ------ $189.5 $141.0 $106.4 ====== ====== ======
Income tax expense is comprised of the following components:
Year ended December 31 1994 1993 1992 Current Federal $ 63.2 $ 34.5 $ 31.7 State and local 10.9 7.4 7.7 Foreign 6.6 4.6 4.0 ------ ------ ------ 80.7 46.5 43.4 Deferred Federal (6.2) 7.2 (1.6) State and local .1 1.4 (.4) Foreign (.5) -- (.4) ------ ------ ------ (6.6) 8.6 (2.4) ------ ------ ------ $ 74.1 $ 55.1 $ 41.0 ====== ====== ======
26 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Leggett & Platt, Incorporated and Subsidiaries H -- INCOME TAXES (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 at December 31, 1994 and 1993 are as follows:
December 31 1994 1993 Property, plant and equipment $(32.6) $(31.6) Accrued expenses 23.0 14.4 Prepaid pension cost (6.1) (5.4) Intangible assets (4.6) (7.7) Other, net (4.3) (1.0) ------ ------ $(24.6) $(31.3) ====== ======
Deferred tax assets and liabilities included in the consolidated balance sheet are as follows:
December 31 1994 1993 Other current assets $ 17.6 $ 11.9 Deferred income taxes (42.2) (43.2) ------ ------ $(24.6) $(31.3) ======= ======
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 1994 1993 1992 Statutory federal income tax rate 35.0% 35.0% 34.0% Increases (decreases) in rate resulting from State taxes, net of federal benefit 3.8 4.0 4.5 Restructuring benefit -- -- (1.8) Non-deductible expenses, primarily goodwill .8 .7 .9 Other (.5) (.6) .9 ---- ---- ---- Effective tax rate 39.1% 39.1% 38.5% ==== ==== ====
Tax benefits of approximately $2.0 associated with the Company's restructuring charge were not recognized during 1990. These tax benefits became available during 1992 and were recognized accordingly. 27 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Leggett & Platt, Incorporated and Subsidiaries I -- INDUSTRY SEGMENT INFORMATION The Company's operations principally consist of manufacturing, marketing and distributing components and related finished products for the furnishings industry. In addition, the Company supplies a diversified group of industries with products which are similar in manufacturing technology to its furnishings operations. Other than furnishings, no industry segment is significant. Operating profit is determined by deducting from net sales the cost of goods sold and the selling, distribution, administrative and other expenses attributable to the segment operations. Corporate expenses not allocated to the segments include corporate general and administrative expenses, interest expense and certain other income and deduction items which are incidental to the Company's operations. Capital expenditures, as defined herein, include amounts relating to acquisitions as well as internal expenditures. The identifiable assets of industry segments are those used in the Company's operations of each segment. Corporate identifiable assets include cash, land, buildings and equipment used in conjunction with corporate activities and sundry assets. Previously reported amounts have been restated to be consistent with current segment groupings. Financial information by segment is as follows:
Year ended December 31 Furnishings Products Diversified Corporate Consolidated 1994 Net sales $1,398.2 $459.9 $ -- $1,858.1 Operating profit 153.4 54.7 (18.6) 189.5 Capital expenditures 91.5 30.1 3.9 125.5 Depreciation and amortization expense 42.8 12.2 1.9 56.9 Identifiable assets 834.2 244.6 41.1 1,119.9 1993 Net sales $1,195.8 $330.9 $ -- $1,526.7 Operating profit 129.0 33.9 (21.9) 141.0 Capital expenditures 68.4 16.9 3.0 88.3 Depreciation and amortization expense 35.9 8.0 1.4 45.3 Identifiable assets 710.8 151.4 39.7 901.9 1992 Net sales $1,041.0 $274.0 $ -- $1,315.0 Operating profit 104.4 27.2 (25.2) 106.4 Capital expenditures 30.8 6.8 3.0 40.6 Depreciation and amortization expense 34.1 6.8 1.7 42.6 Identifiable assets 592.1 125.2 54.7 772.0
28 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Leggett & Platt, Incorporated and Subsidiaries J -- CONTINGENCIES ENVIRONMENTAL: From time to time, the Company is involved in proceedings related to environmental matters. In one instance, the United States Environmental Protection Agency (EPA) ordered one of the Company's subsidiaries to investigate potential releases into the environment and, if necessary, to perform corrective action. The subsidiary successfully appealed the EPA's order. On June 27, 1994, the EPA indicated it planned to issue a new, similar order. The subsidiary, the EPA and the Florida Department of Environmental Protection (FDEP) are negotiating an agreement to investigate and, if necessary, take corrective action to resolve the dispute. Estimated costs to perform an agreed upon investigation and any related corrective actions are not material and have been provided for in the financial statements as of December 31, 1994. If current negotiations with the EPA and the FDEP are unsuccessful, and the EPA issues a new order, the subsidiary expects it would appeal the new order. If this appeal were unsuccessful, the costs to perform any required investigation and, if necessary, corrective action cannot be reasonably estimated. One-half of any costs, including the costs of voluntary actions, would be reimbursed to the Company under a contractual obligation of a former joint owner of the subsidiary. No provision for the costs of performing investigation and corrective action beyond any agreed upon investigation and remediation mentioned above has been recorded in the Company's financial statements. If any such additional investigation and corrective action is required, management believes the possibility of a material adverse effect on the Company's consolidated financial condition or results of operation is remote. OTHER RISKS: The Company obtains insurance for worker's 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 carrier. The total estimated liability for these losses at December 31, 1994 and 1993 was $33.0 and $22.0, respectively, and is included in accrued expenses. The increase in the liability from 1993 to 1994 is not indicative of a change in the Company's loss experience, but rather is due to a change in the procedure for funding these losses with the Company's insurance carrier. 29 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Leggett & Platt, Incorporated: In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of earnings, of changes in shareholders' equity and of cash flows present fairly, in all material respects, the financial position of Leggett & Platt, Incorporated and Subsidiaries at December 31, 1994 and 1993, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1994 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP St. Louis, Missouri February 14, 1995 30 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. Dated: March 28, 1995 LEGGETT & PLATT, INCORPORATED By: /s/ HARRY M. CORNELL, JR. ---------------------------------- Harry M. Cornell, Jr. Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date --------- ----- ---- (a) PRINCIPAL EXECUTIVE OFFICER: /S/ HARRY M. CORNELL, JR. Chairman of the Board, March 28, 1995 --------------------------------- Chief Executive Officer Harry M. Cornell, Jr. and Director (b) PRINCIPAL FINANCIAL OFFICER AND PRINCIPAL ACCOUNTING OFFICER: /S/ MICHAEL A. GLAUBER Senior Vice President, March 28, 1995 --------------------------------- Finance & Administration Michael A. Glauber (c) DIRECTORS: HERBERT C. CASTEEL * Director --------------------------------- Herbert C. Casteel ROBERT TED ENLOE, III * Director --------------------------------- Robert Ted Enloe, III RICHARD T. FISHER * Director --------------------------------- Richard T. Fisher FRANK E. FORD, JR. * Director --------------------------------- Frank E. Ford, Jr. 31 Signature Title Date --------- ----- ---- ROBERT A. JEFFERIES, JR. * Director --------------------------------- Robert A. Jefferies, Jr. ALEXANDER M. LEVINE * Director --------------------------------- Alexander M. Levine RICHARD L. PEARSALL * Director --------------------------------- Richard L. Pearsall MAURICE E. PURNELL, JR. * Director --------------------------------- Maurice E. Purnell, Jr. FELIX E. WRIGHT * Director --------------------------------- Felix E. Wright * By /s/ ERNEST C. JETT March 28, 1995 ___________________________ Ernest C. Jett Attorney-in-Fact pursuant to Power of Attorney dated as of February 8, 1995 32 EXHIBIT INDEX
SEQUENTIAL EXHIBIT NO. DESCRIPTION PAGE NO. ----------- ----------- ---------- 3.1 The Restated Articles of Incorporation of the Company, filed as Exhibit 3 to Registrant's Form 10-Q for the quarter ended June 30, 1987, are incorporated by reference. 3.2 Amendment to Restated Articles of Incorporation of the Company, filed as Exhibit 3.1 to Form S-4 (Registration No. 33-66238 which was filed with the Securities and Exchange Commission on July 19, 1993), is incorporated by reference. 3.3 By-Laws of the Company as amended and restated as of August 11, 1993, filed as Exhibit 3.2 to Registrant's Form 10-Q for the quarter ended June 30, 1993, are incorporated by reference. 4.1 Article III of Registrant's Restated Articles of Incorporation, filed as Exhibit 3.1 above, is incorporated by reference. 4.2 Rights Agreement dated February 15, 1989 between Registrant and The Chase Manhattan Bank, N.A., pertaining to preferred stock rights distributed by Registrant, filed as Exhibit 1 to Registrant's Form 8-A dated February 15, 1989, and Amendment No. 1 to Rights Agreement dated August 29, 1994, filed as Exhibit 3 to Registrant's Form 8-A/A dated September 8, 1994, are incorporated by reference. 4.2A Letter Agreement dated December 18, 1991 between Registrant and Mellon Securities Trust Company ("Mellon") relating to appointment of Mellon as Rights Agent under the Rights Agreement, filed as Exhibit 4.2A to Registrant's Form 10-K for the year ended December 31, 1991, is incorporated by reference. 10.1(1) Employment Agreement between the Company and Mr. Cornell dated May 9, 1979, as amended, filed as Exhibit 10.1 to Registrant's Form 10-K for the year ended December 31, 1989, and Amendment No. 3 to Employment Agreement dated March 15, 1993, filed as Exhibit 10.1 to Registrant's Form 10-K for the year ended December 31, 1992, are incorporated by reference. 10.2(1) Employment Agreement between the Company and Mr. Wright dated May 1, 1981, as amended, filed as Exhibit 10.2 to Registrant's Form 10-K for the year ended December 31, 1989, is incorporated by reference. 10.3(1) Employment Agreement between the Company and Mr. Jefferies dated November 7, 1990, filed as Exhibit 10.3 to Registrant's Form 10-K for the year ended December 31, 1990, and Amendment No. 1 to Employment Agreement dated January 1, 1993, filed as Exhibit 10.3 to Registrant's Form 10-K for the year ended December 31, 1992, are incorporated by reference.
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10.4(1) Severance Benefit Agreement between the Company and Harry M. Cornell, Jr. dated May 9, 1984. 10.5(1) Severance Benefit Agreement between the Company and Felix E. Wright dated May 9, 1984. 10.6(1) Severance Benefit Agreement between the Company and Robert A. Jefferies, Jr. dated May 9, 1984. 10.7(1) Reference is made to Appendix A to Registrant's definitive Proxy Statement dated April 4, 1994 used in conjunction with Registrant's Annual Meeting of Shareholders held on May 11, 1994 for a copy of the Company's 1989 Flexible Stock Plan, as amended, which is incorporated by reference. 10.8(1) Summary description of the Company's Key Management Incentive Compensation Plan, filed as Exhibit 10.7 of Registrant's Form 10-K for the year ended December 31, 1993, which is incorporated by reference. 10.9(1) Reference is made to description of certain long-term disability arrangements between Registrant and its salaried employees filed as Exhibit 10.7 of Registrant's Form 10-K for the year ended December 31, 1991, which is incorporated by reference. 10.10(1) Reference is made to Exhibit D to Registrant's definitive Proxy Statement dated April 1, 1986 used in conjunction with Registrant's Annual Meeting of Shareholders held on May 7, 1986 for a copy of the form of Indemnification Agreement approved by the shareholders of Registrant and entered into between Registrant and each of its directors and executive officers, which is incorporated by reference. 10.11(1) Registrant's Director Stock Option Plan, filed as Appendix A to Registrant's definitive Proxy Statement dated March 31, 1989 used in conjunction with Registrant's Annual Meeting of Shareholders held on May 10, 1989, and Amendment to Director Stock Option Plan dated May 13, 1992, filed as Exhibit 10.10 to Registrant's Form 10-K for the year ended December 31, 1992, are incorporated by reference. 10.12(1) Reference is made to 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 on November 13, 1991, filed as Exhibit 10.11 of Registrant's Form 10-K for the year ended December 31, 1991, which is incorporated by reference. 10.13(1) Stock Award Agreements between the Company and Felix E. Wright (dated July 27, 1993) and Harry M. Cornell, Jr. (dated December 20, 1993), filed as Exhibits 10.18 and 10.19, respectively, of Registrant's Form 10-K for the year ended December 31, 1993, are incorporated by reference. 10.14(1) Stock Award Agreement dated July 5, 1994 between the Company and Felix E. Wright. 10.15(1) Stock Award Agreement dated July 5, 1994 between the Company and Duane W. Potter.
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10.16(1) Stock Award Agreement dated July 5, 1994 between the Company and David S. Haffner. 10.17(1) Stock Award Agreement dated December 20, 1994 between the Company and Harry M. Cornell, Jr. 10.18(1) Summary description of the Company's Deferred Compensation Program. 11 Statement of Computation of Earnings Per Common Share. 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. 35 REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE To the Board of Directors and Shareholders of Leggett & Platt, Incorporated Our audits of the consolidated financial statements referred to in our report dated February 14, 1995, appearing on page 30 of Leggett & Platt, Incorporated's Annual Report on Form 10-K for the year ended December 31, 1994, also included an audit of the Financial Statement Schedule listed in Item 14-2 in Part IV of this Form 10-K. In our opinion, this Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. PRICE WATERHOUSE LLP St. Louis, Missouri February 28, 1995 36 LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES For the three years ended December 31, 1994 (Amounts in millions)
Column A Column B Column C Column D Column E -------- ------------ --------- ---------- ----------- Additions Charged Balance at to Costs Balance at Beginning of and End of Description Period Expenses Deductions Period ----------- ------------ --------- ---------- ----------- Year ended December 31, 1994 Valuation reserve for non-operating sundry assets.................................... $1.7 $ .3 $ - $2.0 ==== ==== ==== ==== Allowance for doubtful receivables................ $7.2 $5.7 $5.4(B) $7.5 ==== ==== ==== ==== Year ended December 31, 1993 Valuation reserve for non-operating sundry assets.................................... $2.7 $ .2 $1.2(A) $1.7 ==== ==== ==== ==== Allowance for doubtful receivables................ $7.1 $2.8 $2.7(B) $7.2 ==== ==== ==== ==== Year ended December 31, 1992 Valuation reserve for non-operating sundry assets.................................... $1.1 $1.6 $ - $2.7 ==== ==== ==== ==== Allowance for doubtful receivables................ $8.2 $3.6 $4.7(B) $7.1 ==== ==== ==== ====
_____________________ (A) Portion of reserve balance associated with assets disposed during 1993. (B) Uncollectible accounts charged off, net of recoveries. 37 EX-10.4 2 CORNELL SEVERENCE AGMT
EXHIBIT 10.4 SEVERANCE BENEFIT AGREEMENT TABLE OF CONTENTS ----------------- PAGE ---- 1. Change in Control; Employment Agreement...................................1 1.1 Change in Control....................................................1 1.2 Employment Agreement.................................................2 2. Termination of Employment Following a Change in Control...................3 2.1 General..............................................................3 2.2 Termination for Disability...........................................3 2.3 Termination by Company for "Cause"...................................3 2.4 Termination by Executive for Good Reason.............................4 2.5 Notice of Termination................................................6 2.6 Date of Termination..................................................7 2.7 Prior Notice Required of Company Actions.............................7 3. Benefits upon Termination of Employment...................................7 3.1 General..............................................................7 3.2 Base Salary Through Date of Termination; Previously Earned Bonus.....8 3.3 Pro-Rata Bonus for Year of Termination...............................8 3.4 Monthly Severance Payments...........................................8 3.5 Fringe Benefits (General)............................................8 3.6 Retirement Plans.....................................................9 3.7 Stock Options.......................................................10 3.8 Purchase of Company Car.............................................10 3.9 Job Search Assistance; Legal Fees; etc..............................10 3.10 Repurchase of Company Shares Owned by Executive.....................11 3.11 Termination Which Does Not Require Payment of Termination Benefits..11 4. New Employment; Reduction of Termination Benefits........................11 5. Voluntary Termination of Employment By Executive.........................12 6. Termination of Employment Prior to Change in Control.....................13 7. Successor; Binding Agreement.............................................13 8. Miscellaneous............................................................14 8.1 Notice..............................................................14
i
8.2 No Waiver................................................................14 8.3 Enforceability...........................................................14 8.4 Disputes.................................................................15 8.5 Sections; Captions.......................................................15 8.6 Term of Agreement........................................................15 8.7 No Right of Offset.......................................................15 8.8 Successive Changes in Control............................................15 8.9 Interpretation of Agreement..............................................16
ii SEVERANCE BENEFIT AGREEMENT --------------------------- This Severance Benefit Agreement (the "Agreement") is made as of May 9, 1984 by Leggett & Platt, Incorporated, No. 1, Leggett Road, Carthage, Missouri 64836 (the "Company") and HARRY M. CORNELL, JR. (the "Executive"), residing at 1401 Bellaire Place, Joplin, Missouri 64801. RECITALS -------- The Executive functions as President, Chairman of the Board and Chief Executive Officer of the Company on the date hereof and is one of the key employees of the Company. The Company considers the maintenance of sound and vital management essential to protecting and enhancing the best interests of the Company and its shareholders. In this connection, the Company recognizes that in today's business environment the possibility of a change in control of the Company may exist in the future. The Company further recognizes that such possibility, and the uncertainty which it may raise among key executives, could result in the departure or distraction of key executives to the detriment of the Company and its shareholders. Accordingly, the Board of Directors of the Company (the "Board") has determined that appropriate steps should be taken (i) to further induce the Executive to remain with the Company and (ii) to reinforce and encourage the continued attention and dedication of the Executive to his assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control of the Company. Now, Therefore, in consideration of the premises and for other good and valuable considerations, receipt of which are hereby acknowledged, the Company and the Executive do agree as follows: 1. Change in Control; Employment Agreement --------------------------------------- 1.1 Change in Control ----------------- The Company may be required to provide certain benefits to the Executive under this Agreement following each and every "Change in Control" of the Company. A "Change in Control" of the Company shall be deemed to have occurred if: (a) There is any change in control as contemplated by (i) Item 5(f) of Schedule 14A, Regulation 14A, promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act") or (ii) Item 1 1 of Form 8-K promulgated by the Securities and Exchange Commission under the Exchange Act; or (b) Any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 25% or more of the combined voting power of the Company's then outstanding voting securities; or (c) Those persons serving as directors of the Company on the date of this Agreement (the "Original Directors") and/or their Successors do not constitute a majority of the whole Board of Directors of the Company (the term "Successors" shall mean those directors whose election or nomination for election by the Company's shareholders has been approved by the vote of at least two-thirds of the Original Directors and previously qualified Successors serving as directors of the Company at the time of such election or nomination for election); or (d) The Company shall be a party to a merger or consolidation with another corporation and as a result of such merger or consolidation, less than 75% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the former shareholders of the Company as the same shall have existed immediately prior to such merger or consolidation; or (e) The Company liquidates, sells or otherwise transfers all or substantially all of its assets to a person not controlled by the Company both immediately prior to and immediately after such sale. 1.2 Employment Agreement -------------------- Any benefits provided to the Executive under this Agreement will unless specifically stated otherwise in this Agreement be in addition to and not in lieu of any benefits that may be provided the Executive under his employment agreement with the Company dated May 9, 1979 (this agreement as previously, herein or hereafter amended, restated or superseded is herein called the "Employment Agreement"). Nothing in this Agreement is to be deemed to give the Company the right to take any action or engage in any omission with respect to the Executive (including Company Actions as defined in Section 2.4) at any time when any such action or omission is not permissible and proper under the Employment Agreement if then in force. Similarly, except as provided otherwise in this Agreement (e.g. Section 2.4 and Section 5) nothing in this Agreement is to be deemed to give the Executive the right to take any action or engage in any 2 omission with respect to the Company at any time when any such act or omission is not permissible and proper under the Employment Agreement if then in force. This Agreement shall continue for the term provided in Section 8.6 and shall not be affected by any termination of the Employment Agreement. 2. Termination of Employment Following a Change in Control ------------------------------------------------------- 2.1 General ------- During the 36-month period immediately following each and every Change in Control (the "Protected Period"), the Executive and the Company shall comply with all provisions of this Section 2 regarding termination of the Executive's employment. 2.2 Termination for Disability -------------------------- If the Employment Agreement is not in force, the Company may terminate the Executive's employment for Disability. If the Employment Agreement is in force, the Company may terminate the Executive's employment for disability only in accordance with the terms of the Employment Agreement. "Disability" as used in this Agreement as distinguished from the Employment Agreement shall mean the Executive's absence from, and his inability to substantially perform, his duties with the Company for a continuous period of six or more months as a result of physical causes or mental illness. During any period prior to the termination of his employment that the Executive is absent from, and is unable to substantially perform, his duties with the Company as a result of physical causes or mental illness, the Company shall continue to pay the Executive his full base salary at the rate then in effect and any bonuses earned by the Executive under Company bonus plans until such time as the Executive's employment is terminated by the Company for Disability. Following termination of employment under this Section, the Executive's benefits shall be determined in accordance with the Company's long term disability program as in effect on the date hereof, or any successor program then in effect. 2.3 Termination by Company for "Cause" ---------------------------------- If the Employment Agreement is not in force, the Company may terminate the Executive for Cause as defined in this Agreement. If the Employment Agreement is in force, the Company may terminate the Executive for Cause only in accordance with the terms of the Employment Agreement. Termination for "Cause" under this Agreement as distinguished from the Employment Agreement shall be limited to the following: 3 (a) The Executive's conviction of any crime involving money or other property of the Company or any of its subsidiaries or of any other crime (whether or not involving the Company or any of its subsidiaries) that constitutes a felony in the jurisdiction involved; or (b) The Executive's continued, repeated, willful violations of specific written directions of the Board or the Company's chief executive officer, which directions are consistent with this Agreement and the Executive's duties and do not constitute Company Action as defined in Section 2.4 and which violations continue following the Executive's receipt of such written directions; or (c) The Executive's continued, repeated, willful failure to perform his duties; provided, however, that no discharge shall be deemed for Cause under this subsection (c) unless the Executive first receives written notice from the Board or the Company's chief executive officer advising the Executive of specific acts or omissions alleged to constitute a failure to perform his duties, and such failure continues after the Executive shall have had a reasonable opportunity to correct the acts or omissions so complained of. No act or failure to act on the Executive's part shall be considered "willful" unless done, or omitted to be done, by the Executive in bad faith and without reasonable belief that his action or omission was in the best interest of the Company. Moreover, the Executive should not be terminated for Cause unless and until there shall have been delivered to the Executive a notice of termination duly adopted by the affirmative vote of at least three-quarters of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with his counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Executive was guilty of the conduct set forth in Section 2.3(a), (b) or (c) and specifying the particulars thereof in detail. A termination shall not be deemed for Cause if, for example, the termination results from the Company's determination that the Executive's position is redundant or unnecessary or that the Executive's performance is unsatisfactory or if the termination stems from the Executive's refusal to agree to or accept any Company Action described and defined in Section 2.4. 2.4 Termination by Executive for Good Reason ---------------------------------------- The Executive may, whether or not his Employment Agreement remains in force, terminate his employment for "Good Reason" by giving notice of termination to the Company following (i) any action or omission by the Company described in this Section 2.4 or 4 (ii) receipt of notice from the Company of the Company's intention to take any such action or engage in any such omission. A termination of employment under this Section 2.4 shall be deemed a valid and proper termination of the Employment Agreement if then in force and to this extent the parties agree that the Employment Agreement is hereby amended. The actions or omissions which may lead to a termination of employment for Good Reason (herein collectively and severally "Company Actions") are as follows: (a) A reduction by the Company in the Executive's base salary as in effect on the date hereof or as the same may be increased from time to time or a failure by the Company to increase the Executive's base salary each year during the Protected Period by an amount which at least equals, on a percentage basis, the average percentage increase in base salary for all officers of the Company during the three full calendar years immediately preceding the Change in Control; or (b) A change in the Executive's reporting responsibilities, titles or offices as in effect immediately prior to a Change in Control; or (c) The assignment to the Executive of any positions, duties or responsibilities inconsistent in the good faith opinion of the Executive with the Executive's positions, duties and responsibilities with the Company immediately prior to the Change in Control; or (d) A failure by the Company (i) to continue any cash bonus or other incentive plans substantially in the forms in effect immediately prior to the Change in Control, or (ii) to continue the Executive as a participant in such plans on at least the same basis as the Executive participated in accordance with the plans immediately prior to the Change in Control; or (e) A requirement by the Company that the Executive be based or perform his duties anywhere other than at the Company's Corporate Office location immediately prior to the Change in Control, except for required travel on the Company's business to an extent substantially consistent with the Executive's business travel obligations immediately prior to the Change in Control or, in the event the Executive consents to any relocation, the failure by the Company to pay (or reimburse the Executive for) all reasonable expenses incurred by him relating to a change of his principal residence in connection with such relocation and to indemnify the Executive against any loss realized on the sale of his principal residence in connection with any such change of residence (loss 5 is defined as the difference between the actual sale price of such residence and the higher of (i) the aggregate investment in such residence (including improvements thereto) or (ii) the fair market value of such as determined by a real estate appraiser designated by the Executive and reasonably satisfactory to the Company); or (f) A failure by the Company to continue in effect any benefit or other compensation plan (e.g. stock ownership plan, stock purchase plan, stock option plan, life insurance plan, health and accident plan or disability plan) in which the Executive is participating at the time of a Change in Control (or plans providing the Executive with substantially similar benefits), the taking of any action by the Company which would adversely affect the Executive's participation in or materially reduce the Executive's benefits under any of such plans or deprive the Executive of any material fringe benefit enjoyed by him at the time of the Change in Control, or the Company's failure to provide the Executive with the number of paid vacation days to which he is entitled in accordance with the Company's normal vacation practices with respect to the Executive at the time of the Change in Control; or (g) A failure by the Company to obtain the assumption agreement to perform this Agreement by any successor as contemplated by Section 7 of this Agreement; or (h) Any purported termination of the Executive's employment that is not carried out (i) pursuant to a notice of termination which satisfies the requirements of Section 2.5 or (ii) in accordance with Section 2.3, if applicable; and for purposes of this Agreement, no such purported termination shall be effective. 2.5 Notice of Termination --------------------- Any purported termination by the Company of the Executive's employment under Section 2.2 (Disability) or 2.3 (for Cause) or by the Executive under Section 2.4 (for Good Reason) shall be communicated by notice of termination to the other party. A notice of termination shall mean a notice which shall include the specific termination Section in this Agreement relied upon and shall set forth in reasonable detail, the facts and circumstances claimed to provide a basis for termination of employment under the Section so indicated. 6 2.6 Date of Termination ------------------- The date the Executive's employment is terminated under this Agreement for Disability, for Cause or for Good Reason is called the "Date of Termination." In cases of Disability, the date of termination shall be 30 days after notice of termination is given (provided that the Executive shall not have returned to the performance of his duties on a full-time basis during such 30 day period). If the Executive's employment is terminated for Cause, the Date of Termination shall be the date specified in the notice of termination. If the Executive's employment is terminated for Good Reason, the Date of Termination shall be the date set out in the notice of termination. Any dispute by a party hereto regarding a notice of termination delivered to such party must be conveyed to the other party within 30 days after the notice of termination is given. If the particulars of the dispute are not conveyed within the 30-day period, then the disputing party's claims regarding the termination shall be forever deemed waived. 2.7 Prior Notice Required of Company Actions ---------------------------------------- During the Protected Period, the Company shall not terminate the Executive's employment (except for Disability or for Cause or pursuant to the Employment Agreement) or take any Company Action as defined in Section 2.4 without first giving the Executive at least three months' prior notice of termination or the planned Company Action, as the case may be. 3. Benefits upon Termination of Employment --------------------------------------- 3.1 General ------- If, during the Protected Period following each Change in Control, the Executive's employment is terminated either (i) by the Company (other than for Disability or Cause under this Agreement and other than for disability or cause under the Employment Agreement) or (ii) by the Executive for Good Reason, then the Executive, at his election, shall be entitled to the benefits provided in this Section 3 (collectively and severally "Termination Benefits"). If the Executive elects to receive Termination Benefits under this Agreement then he shall automatically forfeit his option under Section 9 of the Employment Agreement to render consulting services to the Company on the terms and conditions set out in the Employment Agreement. This forfeiture shall not in any manner affect the option of the Company under Section 9 of the Employment Agreement to obtain the consulting services of the Executive. 7 3.2 Base Salary Through Date of Termination; Previously Earned Bonus ---------------------------------------------------------------- The Company shall promptly pay the Executive his full base salary through the Date of Termination at the rate in effect at the time notice of termination is given. In addition, the Company shall promptly pay the amount of any bonus for a past period which has been earned by the Executive but not yet paid under the applicable bonus plan. The Company shall give the Executive credit for any vacation earned but not taken. 3.3 Pro-Rata Bonus for Year of Termination -------------------------------------- The Company shall pay the Executive a pro-rata bonus for the year in which his employment terminates. The pro-rata bonus shall be equal to "A" divided by "B" with the quotient multiplied by "C" where: (a) "A" equals the number of days the Executive is employed by the Company in the year in which the termination of employment occurs (the "Termination Year"); (b) "B" equals 365; and (c) "C" equals the maximum bonus the Executive would have been eligible for in the Termination Year under Section 4.2 of his Employment Agreement or under the Company's Executive and Key Man Incentive Compensation Plan (or successor plans), whichever may be applicable. The pro-rata bonus shall be paid by the Company in a lump sun, concurrently with the first severance pay installment provided for in Section 3.4. 3.4 Monthly Severance Payments -------------------------- The Company shall pay the Executive aggregate severance payments equal to (i) 160% of the Executive's annual base salary as of the date of the Change in Control or as of the Date of Termination, whichever is greater, multiplied by (ii) three. The severance payments shall be made in 36 equal, consecutive monthly installments, with the first installment to be on the first day of the first month immediately following the Date of Termination. The 160% figure in this Section shall be appropriately increased or decreased if and as the Executive's maximum annual bonus potential (expressed as a percentage of his annual base salary) is increased or decreased. 3.5 Fringe Benefits (General) ------------------------- The Company shall maintain in full force, for the continued benefit of the Executive for three years after the Date of Termination, all employee benefit plans, 8 programs and/or arrangements (collectively and severally "Benefit Plans") in which the Executive was entitled to participate immediately prior to the Date of Termination provided the Executive's continued participation is possible under the general terms and provisions of such Benefit Plans. If the Executive's participation in any such Benefit Plan is barred, the Company shall arrange to provide the Executive with benefits substantially similar to those which the Executive is entitled to receive under such Plans. At the end of the three year period of coverage, the Executive shall have the option to have assigned to him at no cost and with no apportionment of prepaid premiums, any assignable insurance policy owned by the Company and relating specifically to the Executive. 3.6 Retirement Plans ---------------- The Company shall pay the Executive in cash a lump sum additional retirement benefit. Such benefit shall be paid at the Executive's normal retirement age (or earlier retirement age should the Executive so elect) as defined in the retirement programs in which the Executive participates or any successor programs in effect on the date of any Change in Control. Such additional benefit shall be equal to the actuarial equivalent of the additional retirement benefit to which the Executive would have been entitled under such retirement programs had he accumulated three additional years of continuous service (following the Date of Termination) under such retirement programs both for purposes of determining eligibility for benefits and for purposes of calculating the amount of such benefits. If any retirement program requires contributions by participants and the Executive is precluded by the terms of the program from making such contributions following the Date of Termination, then the amount of additional retirement benefit payable under this Section 3.6 shall be equitably adjusted to reflect the absence of contributions by the Executive. The Company shall pay the Executive in cash each month the result obtained by subtracting "Y" from "X" where: (a) "Y" is the monthly Pension Payment the Executive receives under Section 6 of the Employment Agreement; and (b) "X" is the monthly Pension Payment the Executive would have received under Section 6 of the Employment Agreement had his employment terminated three years later than it in fact terminated. The benefits under this Section 3.6 are in addition to those the Executive may be entitled to under the retirement programs in question. In addition, the benefits provided under this Section 3.6 do not in any way limit the benefits payable to the Executive under Section 3.5. 9 3.7 Stock Options ------------- The Company shall at the request of the Executive accelerate and make immediately exercisable in full all unexercised stock options which the Executive then holds to acquire securities from the Company. This shall be done, to the maximum extent possible, in a manner that will allow the Executive, upon the exercise of any such options, to obtain favorable Federal Income Tax treatment. The Executive's request may be made at any time during the period beginning with the giving of the notice of termination and ending three months after the Executive's employment terminates (the "Option Election Period"). Instead of exercising any or all outstanding stock options then held by him, the Executive may elect during the Option Exercise Period to surrender to the Company his rights in such outstanding stock options (whether or not then exercisable). Upon such surrender, the Company shall pay to the Executive an amount in cash per optioned share equal to the difference between (i) the option price of such share and (ii) the higher of: (x) the closing price of the Company's shares on the date of the Change in Control, (y) the closing price of the Company's shares on the date the options (or in the case of Section 3.10, the shares) are surrendered to the Company, or (z) the highest price per Company share actually paid in connection with any Change in Control of the Company. If, within six months of the taking of any Company Action under Section 2.4, the Executive dies while still employed by the Company, the Executive's estate shall be entitled, upon notice to the Company within 90 days of the Executive's death, to be paid an amount equal to the amount the Executive would have received had he surrendered all of his stock options under this Section as of the date preceding his death. Such amount shall be paid in cash by the Company within 45 days after receipt of the notice and the delivery of an instrument surrendering all rights the Executive's estate may have held to the stock options. 3.8 Purchase of Company Car ----------------------- The Company shall permit the Executive during the Option Election Period to purchase any Company automobile the Company was providing for the Executive's use at the time notice of termination was given. The purchase price shall be the book or wholesale value of such automobile at such time, whichever is lower. 3.9 Job Search Assistance; Legal Fees; etc. --------------------------------------- The Company shall reimburse the Executive for the costs of his job search, including air fares, telephone conversations, advertisements, executive placement or search fees and the like to the extent not reimbursed by others. In addition, the Company shall provide the Executive with adequate secretarial assistance and office space while the Executive's job search continues. The Company shall promptly reimburse the Executive for all relocation costs to the extent such reimbursement is not made by the Executive's new 10 employer. The Company's obligations under this first paragraph of Section 3.9 shall terminate three years from the Date of Termination. The Company shall pay all relocation and indemnity payments as set forth in Section 2.4(e), and all legal fees and expenses incurred by the Executive as a result of the termination of his employment (including all such fees and expenses, if any, incurred in contesting or disputing any such termination of employment or in seeking to obtain or enforce any right or benefit provided by this Agreement). 3.10 Repurchase of Company Shares Owned by Executive ----------------------------------------------- Upon request made during the Option Election Period, the Company shall purchase all Company shares owned by the Executive immediately prior to the Date of Termination. Within 45 days after the request is made, the Executive's shares properly endorsed and free of all claims shall be delivered to the Company. Thereupon, the Company shall pay the purchase price in cash. The purchase price shall be the highest price per share that can be computed under Section 3.7. 3.11 Termination Which Does Not Require Payment of Termination Benefits ------------------------------------------------------------------ No Termination Benefits need be provided by the Company to the Executive under this Section 3 if the Executive's employment is terminated: (a) By his death; or (b) By the Executive for any reason other than for Good Reason (e.g. by retirement); or (c) By the Company for Disability or for Cause under this Agreement or for disability or cause under the Employment Agreement. As used herein, retirement by the Executive means termination of employment in accordance with the Company's normal retirement policy, including early retirement, generally applicable to the Company's salaried employees or in accordance with any special retirement arrangement jointly established by the Company and the Executive and mutually agreeable to both. 4. New Employment; Reduction of Termination Benefits ------------------------------------------------- The Termination Benefits provided under Section 3 shall not be treated as damages, but rather shall be treated as severance compensation to which the Executive is entitled. The Executive shall not be required to mitigate the amount of any Termination Benefit provided under Section 3 by seeking other employment or otherwise. If, however, 11 following a termination of employment which invokes Section 3, the Executive becomes employed full time by a third party (as distinguished from becoming self-employed or being employed by an employer controlled by the Executive and/or members of his immediate family), then the amount of any cash compensation (including base salary and bonuses) received by the Executive from such third party shall reduce on a dollar for dollar basis, but not below zero, the amount of cash payments which the Executive is thereafter entitled to receive under Section 3.4. In addition, any fringe benefits that the Executive may receive from full time employment by a third person (as distinguished from self-employment or employment by an employer controlled by the Executive and/or members of his immediate family) shall be applied against and reduce any fringe benefits thereafter to be made available to the Executive under Section 3.5. In no event shall the Executive be required to return to the Company any Termination Benefits received by him prior to his commencement of full time employment with a third person. 5. Voluntary Termination of Employment By Executive ------------------------------------------------ The Executive may voluntarily terminate his employment with the Company for any reason (including retirement) within one year of any Change in Control described in this Section. A termination of employment under this Section 5 shall be deemed a valid and proper termination of the Employment Agreement if then in force and to this extent the parties agree that the Employment Agreement is hereby amended. Upon any such termination of employment the Executive may in his sole discretion elect to receive, and the Company shall provide, the following benefits and no others under this under this Agreement: (a) The Company shall promptly pay the Executive those salary, bonus and vacation payments provided for in Section 3.2, which section is incorporated by reference in this Section 5. (b) The Company shall promptly pay the Executive the pro-rata bonus provided for in Section 3.3, which section is incorporated by reference in this Section 5. (c) The Company shall promptly pay the Executive a non-forfeitable lump sum cash termination payment equal to 75% of the Executive's total cash compensation for the calendar year immediately preceding the Date of Termination of his employment. (d) The Company shall provide the Executive for one year with those fringe benefits described in Section 3.5, which section is incorporated by reference in this Section 5. The fringe benefits provided under this subsection (d) shall be reduced by any fringe benefits the Executive may thereafter receive from full time employment by a third person (as distinguished from self-employment). 12 If the Executive does not elect to receive benefits under this Section 5, then he shall remain eligible to receive Termination Benefits in accordance with the provisions of Section 3. The benefits payable to the Executive under this Section 5 are in addition to all benefits provided to him under the Employment Agreement except as provided in the next following sentence. If the Executive elects to receive benefits under this Section 5 then he shall automatically forfeit his option under Section 9 of the Employment Agreement to render consulting services to the Company on the terms and conditions set out in the Employment Agreement. This forfeiture shall not in any manner affect the option of the Company under Section 9 of the Employment Agreement to obtain the consulting services of the Executive. The only Change in Control that will permit an Executive to make an election under this Section 5 is a Change in Control that is opposed by a majority vote of the Board and in connection with such Change in Control or as a result thereof: (a) A majority of the whole Board becomes comprised of persons other than Original Directors or their Successors (as those terms are defined in Section l(c)); or (b) Any person (as defined in Section l(b)) becomes the beneficial owner (as defined in Section l(b)); directly or indirectly of 50% or more of the combined voting power of the Company's then outstanding voting securities. 6. Termination of Employment Prior to Change in Control ---------------------------------------------------- Prior to a Change in Control and if there is no Employment Agreement in force, the Executive shall not voluntarily terminate his employment with the Company except upon at least three months' prior notice. Similarly, the Company shall not terminate the Executive's employment other than for Cause except upon at least three months' prior notice. If the Employment Agreement is in force, termination of employment by the Executive or the Company shall be governed by the terms thereof. 7. Successor; Binding Agreement ---------------------------- The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place (the assumption shall be by agreement in form and substance satisfactory to the Executive). Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the 13 Executive, at his election, to Termination Benefits from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if he terminated his employment for Good Reason, except that for purposes of implementing the foregoing, the date on which any such election becomes effective shall be deemed the Date of Termination. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section 7 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law. This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amount would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to his devisee, legatee or other designee or, if there be no such designee, to his estate. 8. Miscellaneous ------------- 8.1 Notice ------ All notices, elections, waivers and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 8.2 No Waiver --------- No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and an officer of the Company. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. 8.3 Enforceability -------------- The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 14 8.4 Disputes -------- Notwithstanding the pendency of any dispute involving this Agreement, the Company shall continue to pay all amounts and provide all benefits which the Executive alleges are required by this Agreement (collectively the "Disputed Benefits") until the dispute is finally resolved by agreement, litigation or otherwise. If the dispute is resolved in the Company's favor, then the person(s) resolving the dispute shall further determine (i) whether the Executive initiated and continued the dispute in good faith and (ii) whether there was a reasonable basis for the allegations made by the Executive. If it is determined the Executive proceeded in good faith and with a reasonable basis for his allegations, then the Executive shall not be required to reimburse the Company for the Disputed Benefits received by him. Otherwise the Executive shall be required (i) to fully reimburse the Company for the actual cost to the Company of providing the Disputed Benefits and (ii) to pay the Company as liquidated damages a lump sum cash payment equal to 20% of the Disputed Benefits. 8.5 Sections; Captions ------------------ All references in this Agreement to Sections refer to the applicable Sections of this Agreement. References in this Agreement to a given Section (e.g. Section 3) shall, unless the context requires otherwise, refer to all parts of such Section (e.g. 3.1 through 3.10). The captions have been placed in this Agreement for ease of reference only. They shall not be used in the interpretation of this Agreement. 8.6 Term of Agreement ----------------- This Agreement shall continue in force so long as the Executive remains employed by the Company or any successor and shall apply to any Change in Control that occurs while the Executive remains so employed. 8.7 No Right of Offset ------------------ Effective upon the occurrence of a Change in Control, the Company waives, and will not assert, any right to set off the amount of any claims, liabilities, damages or losses the Company may have against any amounts payable by the Company to the Executive whether under this Agreement or otherwise. 8.8 Successive Changes in Control ----------------------------- A separate Change in Control shall be deemed to have occurred with each occurrence of any event described at subsections (a) through (e) of Section 1.1. This Agreement pertains to each and every Change in Control, including successive Changes in Control involving the same controlling person(s). 15 8.9 Interpretation of Agreement --------------------------- In the event of any ambiguity, vagueness or other matter involving the interpretation or meaning of this Agreement, this Agreement shall be liberally construed so as to provide to the Executive the full benefits set out herein. IN WITNESS WHEREOF, this Agreement has been signed as of the day and year first above written. LEGGETT & PLATT, INCORPORATED Attest: /s/ ERNEST C. JETT By /s/ MICHAEL A. GLAUBER ---------------------------------- ---------------------------------- Assistant Secretary Vice President /s/ HARRY M. CORNELL, JR. ---------------------------------- Executive 16 EX-10.5 3 WRIGHT SEVERENCE AGMT EXHIBIT 10.5 SEVERANCE BENEFIT AGREEMENT TABLE OF CONTENTS -----------------
PAGE ---- 1. Change in Control; Employment Agreement.......................................... 1 1.1 Change in Control........................................................... 1 1.2 Employment Agreement........................................................ 2 2. Termination of Employment Following a Change in Control.......................... 3 2.1 General..................................................................... 3 2.2 Termination for Disability.................................................. 3 2.3 Termination by Company for "Cause".......................................... 3 2.4 Termination by Executive for Good Reason.................................... 4 2.5 Notice of Termination....................................................... 6 2.6 Date of Termination......................................................... 7 2.7 Prior Notice Required of Company Actions.................................... 7 3. Benefits upon Termination of Employment.......................................... 7 3.1 General..................................................................... 7 3.2 Base Salary Through Date of Termination; Previously Earned Bonus............ 8 3.3 Pro-Rata Bonus for Year of Termination...................................... 8 3.4 Monthly Severance Payments.................................................. 8 3.5 Fringe Benefits (General)................................................... 8 3.6 Retirement Plans............................................................ 9 3.7 Stock Options............................................................... 9 3.8 Purchase of Company Car.....................................................10 3.9 Job Search Assistance; Legal Fees; etc. ....................................10 3.10 Repurchase of Company Shares Owned by Executive.............................11 3.11 Termination Which Does Not Require Payment of Termination Benefits..........11 4. New Employment; Reduction of Termination Benefits................................11 5. Voluntary Termination of Employment By Executive.................................12 6. Termination of Employment Prior to Change in Control.............................13 7. Successor; Binding Agreement.....................................................13 8. Miscellaneous....................................................................14 8.1 Notice......................................................................14 8.2 No Waiver...................................................................14
i 8.3 Enforceability............................................................14 8.4 Disputes..................................................................14 8.5 Sections; Captions........................................................15 8.6 Term of Agreement.........................................................15 8.7 No Right of Offset........................................................15 8.8 Successive Changes in Control.............................................15 8.9 Interpretation of Agreement...............................................15
ii SEVERANCE BENEFIT AGREEMENT --------------------------- This Severance Benefit Agreement (the "Agreement") is made as of May 9, 1984 by Leggett & Platt, Incorporated, No. 1, Leggett Road, Carthage, Missouri 64836 (the "Company") and FELIX E. WRIGHT (the "Executive"), residing at Route 4, Carthage, Missouri 64836. RECITALS -------- The Executive functions as Executive Vice President and Chief Operating Officer of the Company on the date hereof and is one of the key employees of the Company. The Company considers the maintenance of sound and vital management essential to protecting and enhancing the best interests of the Company and its shareholders. In this connection, the Company recognizes that in today's business environment the possibility of a change in control of the Company may exist in the future. The Company further recognizes that such possibility, and the uncertainty which it may raise among key executives, could result in the departure or distraction of key executives to the detriment of the Company and its shareholders. Accordingly, the Board of Directors of the Company (the "Board") has determined that appropriate steps should be taken (i) to further induce the Executive to remain with the Company and (ii) to reinforce and encourage the continued attention and dedication of the Executive to his assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control of the Company. Now, Therefore, in consideration of the premises and for other good and valuable considerations, receipt of which are hereby acknowledged, the Company and the Executive do agree as follows: 1. Change in Control; Employment Agreement --------------------------------------- 1.1 Change in Control ----------------- The Company may be required to provide certain benefits to the Executive under this Agreement following each and every "Change in Control" of the Company. A "Change in Control" of the Company shall be deemed to have occurred if: (a) There is any change in control as contemplated by (i) Item 5(f) of Schedule 14A, Regulation 14A, promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act") or (ii) Item 1 1 of Form 8-K promulgated by the Securities and Exchange Commission under the Exchange Act; or (b) Any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 25% or more of the combined voting power of the Company's then outstanding voting securities; or (c) Those persons serving as directors of the Company on the date of this Agreement (the "Original Directors") and/or their Successors do not constitute a majority of the whole Board of Directors of the Company (the term "Successors" shall mean those directors whose election or nomination for election by the Company's shareholders has been approved by the vote of at least two-thirds of the Original Directors and previously qualified Successors serving as directors of the Company at the time of such election or nomination for election); or (d) The Company shall be a party to a merger or consolidation with another corporation and as a result of such merger or consolidation, less than 75% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the former shareholders of the Company as the same shall have existed immediately prior to such merger or consolidation; or (e) The Company liquidates, sells or otherwise transfers all or substantially all of its assets to a person not controlled by the Company both immediately prior to and immediately after such sale. 1.2 Employment Agreement -------------------- Any benefits provided to the Executive under this Agreement will unless specifically stated otherwise in this Agreement be in addition to and not in lieu of any benefits that may be provided the Executive under his employment agreement with the Company dated May 1, 1981 (this agreement as previously, herein or hereafter amended, restated or superseded is herein called the "Employment Agreement"). Nothing in this Agreement is to be deemed to give the Company the right to take any action or engage in any omission with respect to the Executive (including Company Actions as defined in Section 2.4) at any time when any such action or omission is not permissible and proper under the Employment Agreement if then in force. Similarly, except as provided otherwise in this Agreement (e.g. Section 2.4 and Section 5) nothing in this Agreement is to be deemed to give the Executive the right to take any action or engage in any 2 omission with respect to the Company at any time when any such act or omission is not permissible and proper under the Employment Agreement if then in force. This Agreement shall continue for the term provided in Section 8.6 and shall not be affected by any termination of the Employment Agreement. 2. Termination of Employment Following a Change in Control ------------------------------------------------------- 2.1 General ------- During the 36 month period immediately following each and every Change in Control (the "Protected Period"), the Executive and the Company shall comply with all provisions of this Section 2 regarding termination of the Executive's employment . 2.2 Termination for Disability -------------------------- If the Employment Agreement is not in force, the Company may terminate the Executive's employment for Disability. If the Employment Agreement is in force the Company may terminate the Executive's employment for disability only in accordance with the terms of the Employment Agreement. "Disability" as used in this Agreement as distinguished from the Employment Agreement shall mean the Executive's absence from, and his inability to substantially perform, his duties with the Company for a continuous period of six or more months as a result of physical causes or mental illness. During any period prior to the termination of his employment that the Executive is absent from, and is unable to substantially perform, his duties with the Company as a result of physical causes or mental illness, the Company shall continue to pay the Executive his full base salary at the rate then in effect and any bonuses earned by the Executive under Company bonus plans until such time as the Executive's employment is terminated by the Company for Disability. Following termination of employment under this Section 2.2, the Executive's benefits shall be determined in accordance with the Company's long term disability program as in effect on the date hereof, or any successor program then in effect. 2.3 Termination by Company for "Cause" ---------------------------------- If the Employment Agreement is not in force the Company may terminate the Executive for Cause as defined in this Agreement. If the Employment Agreement is in force the Company may terminate the Executive for Cause only in accordance with the terms of the Employment Agreement. Termination for "Cause" under this Agreement as distinguished from the Employment Agreement shall be limited to the following: 3 (a) The Executive's conviction of any crime involving money or other property of the Company or any of its subsidiaries or of any other crime (whether or not involving the Company or any of its subsidiaries) that constitutes a felony in the jurisdiction involved; or (b) The Executive's continued, repeated, willful violations of specific written directions of the Board or the Company's chief executive officer, which directions are consistent with this Agreement and the Executive's duties and do not constitute Company Action as defined in Section 2.4 and which violations continue following the Executive's receipt of such written directions; or (c) The Executive's continued, repeated, willful failure to perform his duties; provided, however, that no discharge shall be deemed for Cause under this subsection (c) unless the Executive first receives written notice from the Board or the Company's chief executive officer advising the Executive of specific acts or omissions alleged to constitute a failure to perform his duties, and such failure continues after the Executive shall have had a reasonable opportunity to correct the acts or omissions so complained of. No act or failure to act on the Executive's part shall be considered "willful" unless done, or omitted to be done, by the Executive in bad faith and without reasonable belief that his action or omission was in the best interest of the Company. Moreover, the Executive should not be terminated for Cause unless and until there shall have been delivered to the Executive a notice of termination duly adopted by the affirmative vote of at least three-quarters of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with his counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Executive was guilty of the conduct set forth in Section 2.3(a), (b) or (c) and specifying the particulars thereof in detail. A termination shall not be deemed for Cause if, for example, the termination results from the Company's determination that the Executive's position is redundant or unnecessary or that the Executive's performance is unsatisfactory or if the termination stems from the Executive's refusal to agree to or accept any Company Action described and defined in Section 2.4. 2.4 Termination by Executive for Good Reason ---------------------------------------- The Executive may, whether or not his Employment Agreement remains in force, terminate his employment for "Good Reason" by giving notice of termination to the Company following (i) any action or omission by the Company described in this Section 2.4 or 4 (ii) receipt of notice from the Company of the Company's intention to take any such action or engage in any such omission. A termination of employment under this Section 2.4 shall be deemed a valid and proper termination of the Employment Agreement if then in force and to this extent the parties agree that the Employment Agreement is hereby amended. The actions or omissions which may lead to a termination of employment for Good Reason (herein collectively and severally "Company Actions") are as follows: (a) A reduction by the Company in the Executive's base salary as in effect on the date hereof or as the same may be increased from time to time or a failure by the Company to increase the Executive's base salary each year during the Protected Period by an amount which at least equals, on a percentage basis, the average percentage increase in base salary for all officers of the Company during the three full calendar years immediately preceding the Change in Control; or (b) A change in the Executive's reporting responsibilities, titles or offices as in effect immediately prior to a Change in Control; or (c) The assignment to the Executive of any positions, duties or responsibilities inconsistent in the good faith opinion of the Executive with the Executive's positions, duties and responsibilities with the Company immediately prior to the Change in Control; or (d) A failure by the Company (i) to continue any cash bonus or other incentive plans substantially in the forms in effect immediately prior to the Change in Control, or (ii) to continue the Executive as a participant in such plans on at least the same basis as the Executive participated in accordance with the plans immediately prior to the Change in Control; or (e) A requirement by the Company that the Executive be based or perform his duties anywhere other than at the Company's Corporate Office location immediately prior to the Change in Control, except for required travel on the Company's business to an extent substantially consistent with the Executive's business travel obligations immediately prior to the Change in Control or, in the event the Executive consents to any relocation, the failure by the Company to pay (or reimburse the Executive for) all reasonable expenses incurred by him relating to a change of his principal residence in connection with such relocation and to indemnify the Executive against any loss realized on the sale of his principal residence in connection with any such change of residence (loss 5 is defined as the difference between the actual sale price of such residence and the higher of (i) the aggregate investment in such residence (including improvements thereto) or (ii) the fair market value of such as determined by a real estate appraiser designated by the Executive and reasonably satisfactory to the Company); or (f) A failure by the Company to continue in effect any benefit or other compensation plan (e.g. stock ownership plan, stock purchase plan, stock option plan, life insurance plan, health and accident plan or disability plan) in which the Executive is participating at the time of a Change in Control (or plans providing the Executive with substantially similar benefits), the taking of any action by the Company which would adversely affect the Executive's participation in or materially reduce the Executive's benefits under any of such plans or deprive the Executive of any material fringe benefit enjoyed by him at the time of the Change in Control, or the Company's failure to provide the Executive with the number of paid vacation days to which he is entitled in accordance with the Company's normal vacation practices with respect to the Executive at the time of the Change in Control; or (g) A failure by the Company to obtain the assumption agreement to perform this Agreement by any successor as contemplated by Section 7 of this Agreement; or (h) Any purported termination of the Executive's employment that is not carried out (i) pursuant to a notice of termination which satisfies the requirements of Section 2.5 or (ii) in accordance with Section 2.3, if applicable; and for purposes of this Agreement, no such purported termination shall be effective. 2.5 Notice of Termination --------------------- Any purported termination by the Company of the Executive's employment under Section 2.2 (Disability) or 2.3 (for Cause) or by the Executive under Section 2.4 (for Good Reason) shall be communicated by notice of termination to the other party. A notice of termination shall mean a notice which shall include the specific termination Section in this Agreement relied upon and shall set forth in reasonable detail, the facts and circumstances claimed to provide a basis for termination of employment under the Section so indicated. 6 2.6 Date of Termination ------------------- The date the Executive's employment is terminated under this Agreement for Disability, for Cause or for Good Reason is called the "Date of Termination." In cases of Disability, the date of termination shall be 30 days after notice of termination is given (provided that the Executive shall not have returned to the performance of his duties on a full-time basis during such 30 day period). If the Executive's employment is terminated for Cause, the Date of Termination shall be the date specified in the notice of termination. If the Executive's employment is terminated for Good Reason, the Date of Termination shall be the date set out in the notice of termination. Any dispute by a party hereto regarding a notice of termination delivered to such party must be conveyed to the other party within 30 days after the notice of termination is given. If the particulars of the dispute are not conveyed within the 30 day period, then the disputing party's claims regarding the termination shall be forever deemed waived. 2.7 Prior Notice Required of Company Actions ---------------------------------------- During the Protected Period, the Company shall not terminate the Executive's employment (except for Disability or for Cause or pursuant to the Employment Agreement) or take any Company Action as defined in Section 2.4 without first giving the Executive at least three months' prior notice of termination or the planned Company Action, as the case may be. 3. Benefits upon Termination of Employment --------------------------------------- 3.1 General ------- If, during the Protected Period following each Change in Control, the Executive's employment is terminated either (i) by the Company (other than for Disability or Cause under this Agreement and other than for disability or cause under the Employment Agreement) or (ii) by the Executive for Good Reason, then the Executive, at his election, shall be entitled to the benefits provided in this Section 3 (collectively and severally "Termination Benefits"). If the Executive elects to receive Termination Benefits under this Agreement then he shall automatically forfeit his option, if any, under Section 9 of the Employment Agreement to render consulting services to the Company on the terms and conditions set out in the Employment Agreement and shall also automatically forfeit his right to receive the compensations and benefits provided for in Section 10 of the Employment Agreement. 7 3.2 Base Salary Through Date of Termination; Previously Earned Bonus ---------------------------------------------------------------- The Company shall promptly pay the Executive his full base salary through the Date of Termination at the rate in effect at the time notice of termination is given. In addition, the Company shall promptly pay the amount of any bonus for a past period which has been earned by the Executive but not yet paid under the applicable bonus plan. The Company shall give the Executive credit for any vacation earned but not taken. 3.3 Pro-Rata Bonus for Year of Termination -------------------------------------- The Company shall pay the Executive a pro-rata bonus for the year in which his employment terminates. The pro-rata bonus shall be equal to "A" divided by "B" with the quotient multiplied by "C" where: (a) "A" equals the number of days the Executive is employed by the Company in the year in which the termination of employment occurs (the "Termination Year"); (b) "B" equals 365; and (c) "C" equals the maximum bonus the Executive would have been eligible for in the Termination Year under Section 4.2 of his Employment Agreement or under the Company's Executive and Key Man Incentive Compensation Plan (or successor plans), whichever may be applicable. The pro-rata bonus shall be paid by the Company in a lump sum, concurrently with the first severance pay installment provided for in Section 3.4. 3.4 Monthly Severance Payments -------------------------- The Company shall pay the Executive aggregate severance payments equal to (i) 148% of the Executive's annual base salary as of the date of the Change in Control or as of the Date of Termination, whichever is greater, multiplied by (ii) three. The severance payments shall be made in 36 equal, consecutive monthly installments, with the first installment to be on the first day of the first month immediately following the Date of Termination. The 148% figure in this Section shall be appropriately increased or decreased if and as the Executive's maximum annual bonus potential (expressed as a percentage of his annual base salary) is increased or decreased. 3.5 Fringe Benefits (General) ------------------------- The Company shall maintain in full force, for the continued benefit of the Executive for three years after the Date of Termination, all employee benefit plans, 8 programs and/or arrangements (collectively and severally "Benefit Plans") in which the Executive was entitled to participate immediately prior to the Date of Termination provided the Executive's continued participation is possible under the general terms and provisions of such Benefit Plans. If the Executive's participation in any such Benefit Plan is barred, the Company shall arrange to provide the Executive with benefits substantially similar to those which the Executive is entitled to receive under such Plans. At the end of the three year period of coverage, the Executive shall have the option to have assigned to him at no cost and with no apportionment of prepaid premiums, any assignable insurance policy owned by the Company and relating specifically to the Executive. 3.6 Retirement Plans ---------------- The Company shall pay the Executive in cash a lump sum additional retirement benefit. Such benefit shall be paid at the Executive's normal retirement age (or earlier retirement age should the Executive so elect) as defined in the retirement programs in which the Executive participates or any successor programs in effect on the date of any Change in Control. Such additional benefit shall be equal to the actuarial equivalent of the additional retirement benefit to which the Executive would have been entitled under such retirement programs had he accumulated three additional years of continuous service (following the Date of Termination) under such retirement programs both for purposes of determining eligibility for benefits and for purposes of calculating the amount of such benefits. If any retirement program requires contributions by participants and the Executive is precluded by the terms of the program from making such contributions following the Date of Termination, then the amount of additional retirement benefit payable under this Section 3.6 shall be equitably adjusted to reflect the absence of contributions by the Executive. The benefits under this Section 3.6 are in addition to those the Executive may be entitled to under the retirement programs in question. In addition, the benefits provided under this Section 3.6 do not in any way limit the benefits payable to the Executive under Section 3.5. 3.7 Stock Options ------------- The Company shall at the request of the Executive accelerate and make immediately exercisable in full all unexercised stock options which the Executive then holds to acquire securities from the Company. This shall be done, to the maximum extent possible, in a manner that will allow the Executive, upon the exercise of any such options, to obtain favorable Federal Income tax treatment. The Executive's request may be made at any time during the period beginning with the giving of the notice of termination and ending three months after the Executive's employment terminates (the "Option Election Period"). Instead of exercising any or all outstanding stock options then held by him, the Executive may elect during the Option Exercise Period to surrender to the Company 9 his rights in such outstanding stock options (whether or not then exercisable). Upon such surrender, the Company shall pay to the Executive an amount in cash per optioned share equal to the difference between (i) the option price of such share and (ii) the higher of: (x) the closing price of the Company's shares on the date of the Change in Control, (y) the closing price of the Company's shares on the date the options (or in the case of Section 3.10, the shares) are surrendered to the Company, or (z) the highest price per Company share actually paid in connection with any Change in Control of the Company. If, within six months of the taking of any Company Action under Section 2.4, the Executive dies while still employed by the Company, the Executive's estate shall be entitled, upon notice to the Company within 90 days of the Executive's death, to be paid an amount equal to the amount the Executive would have received had he surrendered all of his stock options under this Section as of the date preceding his death. Such amount shall be paid in cash by the Company within 45 days after receipt of the notice and the delivery of an instrument surrendering all rights the Executive's estate may have held to the stock options. 3.8 Purchase of Company Car ----------------------- The Company shall permit the Executive during the Option Election Period to purchase any Company automobile the Company was providing for the Executive's use at the time notice of termination was given. The purchase price shall be the book or wholesale value of such automobile at such time, whichever is lower. 3.9 Job Search Assistance; Legal Fees; etc. --------------------------------------- The Company shall reimburse the Executive for the costs of his job search, including air fares, telephone conversations, advertisements, executive placement or search fees and the like to the extent not reimbursed by others. In addition, the Company shall provide the Executive with adequate secretarial assistance and office space while the Executive's job search continues. The Company shall promptly reimburse the Executive for all relocation costs to the extent such reimbursement is not made by the Executive's new employer. The Company's obligations under this first paragraph of Section 3.9 shall terminate three years from the Date of Termination. The Company shall pay all relocation and indemnity payments as set forth in Section 2.4(e), and all legal fees and expenses incurred by the Executive as a result of the termination of his employment (including all such fees and expenses, if any, incurred in contesting or disputing any such termination of employment or in seeking to obtain or enforce any right or benefit provided by this Agreement). 10 3.10 Repurchase of Company Shares Owned by Executive ----------------------------------------------- Upon request made during the Option Election Period, the Company shall purchase all Company shares owned by the Executive immediately prior to the Date of Termination. Within 45 days after the request is made, the Executive's shares properly endorsed and free of all claims shall be delivered to the Company. Thereupon, the Company shall pay the purchase price in cash. The purchase price shall be the highest price per share that can be computed under Section 3.7. 3.11 Termination Which Does Not Require Payment of Termination Benefits ------------------------------------------------------------------ No Termination Benefits need be provided by the Company to the Executive under this Section 3 if the Executive's employment is terminated: (a) By his death; or (b) By the Executive for any reason other than for Good Reason (e.g. by retirement); or (c) By the Company for Disability or for Cause under this Agreement or for disability or cause under the Employment Agreement. As used herein, retirement by the Executive means termination of employment in accordance with the Company's normal retirement policy, including early retirement, generally applicable to the Company's salaried employees or in accordance with any special retirement arrangement jointly established by the Company and the Executive and mutually agreeable to both. 4. New Employment; Reduction of Termination Benefits ------------------------------------------------- The Termination Benefits provided under Section 3 shall not be treated as damages, but rather shall be treated as severance compensation to which the Executive is entitled. The Executive shall not be required to mitigate the amount of any Termination Benefit provided under Section 3 by seeking other employment or otherwise. If, however, following a termination of employment which invokes Section 3, the Executive becomes employed full time by a third party (as distinguished from becoming self-employed or being employed by an employer controlled by the Executive and/or members of his immediate family), then the amount of any cash compensation (including base salary and bonuses) received by the Executive from such third party shall reduce on a dollar for dollar basis, but not below zero, the amount of cash payments which the Executive is thereafter entitled to receive under Section 3.4. In addition, any fringe benefits that the Executive may receive from full time employment by a third person (as distinguished from self-employment or employment by an employer controlled by the Executive and/or members of his immediate family) shall be 11 applied against and reduce any fringe benefits thereafter to be made available to the Executive under Section 3.5. In no event shall the Executive be required to return to the Company any Termination Benefits received by him prior to his commencement of full time employment with a third person. 5. Voluntary Termination of Employment By Executive ------------------------------------------------ The Executive may voluntarily terminate his employment with the Company for any reason (including retirement) within one year of any Change in Control described in this Section. A termination of employment under this Section 5 shall be deemed a valid and proper termination of the Employment Agreement if then in force and to this extent the parties agree that the Employment Agreement is hereby amended. Upon any such termination of employment the Executive may in his sole discretion elect to receive, and the Company shall provide, the following benefits and no others under this under this Agreement: (a) The Company shall promptly pay the Executive those salary, bonus and vacation payments provided for in Section 3.2, which section is incorporated by reference in this Section 5. (b) The Company shall promptly pay the Executive the pro-rata bonus provided for in Section 3.3, which section is incorporated by reference in this Section 5. (c) The Company shall promptly pay the Executive a non-forfeitable lump sum cash termination payment equal to 75% of the Executive's total cash compensation for the calendar year immediately preceding the Date of Termination of his employment. (d) The Company shall provide the Executive for one year with those fringe benefits described in Section 3.5, which section is incorporated by reference in this Section 5. The fringe benefits provided under this subsection (d) shall be reduced by any fringe benefits the Executive may thereafter receive from full time employment by a third person (as distinguished from self-employment). If the Executive does not elect to receive benefits under this Section 5, then he shall remain eligible to receive Termination Benefits in accordance with the provisions of Section 3. The benefits payable to the Executive under this Section 5 are in addition to all benefits provided to him under the Employment Agreement except as provided in the next following sentence. If the Executive elects to receive benefits under this Section 5 then he shall automatically forfeit his option, if any, under Section 9 of the Employment Agreement to 12 render consulting services to the Company on the terms and conditions set out in the Employment Agreement and shall also automatically forfeit his right to receive the compensations and benefits provided for in Section 10 of the Employment Agreement. The only Change in Control that will permit an Executive to make an election under this Section 5 is a Change in Control that is opposed by a majority vote of the Board and in connection with such Change in Control or as a result thereof: (a) A majority of the whole Board becomes comprised of persons other than Original Directors or their Successors (as those terms are defined in Section l(c)); or (b) Any person (as defined in Section l(b)) becomes the beneficial owner (as defined in Section l(b)); directly or indirectly of 50% or more of the combined voting power of the Company's then outstanding voting securities. 6. Termination of Employment Prior to Change in Control ---------------------------------------------------- Prior to a Change in Control and if there is no Employment Agreement in force, the Executive shall not voluntarily terminate his employment with the Company except upon at least three months' prior notice. Similarly, the Company shall not terminate the Executive's employment other than for Cause except upon at least three months' prior notice. If the Employment Agreement is in force, termination of employment by the Executive or the Company shall be governed by the terms thereof. 7. Successor; Binding Agreement ---------------------------- The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place (the assumption shall be by agreement in form and substance satisfactory to the Executive). Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive, at his election, to Termination Benefits from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if he terminated his employment for Good Reason, except that for purposes of implementing the foregoing, the date on which any such election becomes effective shall be deemed the Date of Termination. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section 7 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law. 13 This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amount would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to his devisee, legatee or other designee or, if there be no such designee, to his estate. 8. Miscellaneous ------------- 8.1 Notice ------ All notices, elections, waivers and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 8.2 No Waiver --------- No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and an officer of the Company. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. 8.3 Enforceability -------------- The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 8.4 Disputes -------- Notwithstanding the pendency of any dispute involving this Agreement, the Company shall continue to pay all amounts and provide all benefits which the Executive alleges are required by this Agreement (collectively the "Disputed Benefits") until the dispute is finally resolved by agreement, litigation or otherwise. If the dispute is resolved in the Company's favor, then the person(s) resolving the dispute shall further determine (i) whether the Executive initiated and continued the dispute in good faith and (ii) whether there was a 14 reasonable basis for the allegations made by the Executive. If it is determined the Executive proceeded in good faith and with a reasonable basis for his allegations, then the Executive shall not be required to reimburse the Company for the Disputed Benefits received by him. Otherwise the Executive shall be required (i) to fully reimburse the Company for the actual cost to the Company of providing the Disputed Benefits and (ii) to pay the Company as liquidated damages a lump sum cash payment equal to 20% of the Disputed Benefits. 8.5 Sections; Captions ------------------ All references in this Agreement to Sections refer to the applicable Sections of this Agreement. References in this Agreement to a given Section (e.g. Section 3) shall, unless the context requires otherwise, refer to all parts of such Section (e.g. 3.1 through 3.10). The captions have been placed in this Agreement for ease of reference only. They shall not be used in the interpretation of this Agreement. 8.6 Term of Agreement ----------------- This Agreement shall continue in force so long as the Executive remains employed by the Company or any successor and shall apply to any Change in Control that occurs while the Executive remains so employed. 8.7 No Right of Offset ------------------ Effective upon the occurrence of a Change in Control, the Company waives, and will not assert, any right to set off the amount of any claims, liabilities, damages or losses the Company may have against any amounts payable by the Company to the Executive whether under this Agreement or otherwise. 8.8 Successive Changes in Control ----------------------------- A separate Change in Control shall be deemed to have occurred with each occurrence of any event described at subsections (a) through (e) of Section 1.1. This Agreement pertains to each and every Change in Control, including successive Changes in Control involving the same controlling person(s). 8.9 Interpretation of Agreement --------------------------- In the event of any ambiguity, vagueness or other matter involving the interpretation or meaning of this Agreement, this Agreement shall be liberally construed so as to provide to the Executive the full benefits set out herein. 15 IN WITNESS WHEREOF, this Agreement has been signed as of the day and year first above written. LEGGETT & PLATT, INCORPORATED Attest: /s/ ERNEST C. JETT By /s/ ROGER D. GLADDEN --------------------------------- ---------------------------------- Assistant Secretary Vice President /s/ FELIX E. WRIGHT ---------------------------------- Executive 16 EX-10.6 4 JEFFERIES SEVERENCE AGMT EXHIBIT 10.6 SEVERANCE BENEFIT AGREEMENT TABLE OF CONTENTS ----------------- PAGE ---- 1. Change in Control........................................................ 1 2. Termination of Employment Following a Change in Control.................. 2 2.1 General............................................................ 2 2.2 Termination for Disability......................................... 2 2.3 Termination by Company for "Cause"................................. 3 2.4 Termination by Executive for Good Reason........................... 4 2.5 Notice of Termination.............................................. 5 2.6 Date of Termination................................................ 6 2.7 Prior Notice Required of Company Actions........................... 6 3. Benefits upon Termination of Employment.................................. 6 3.1 General............................................................ 6 3.2 Base Salary Through Date of Termination; Previously Earned Bonus... 6 3.3 Pro-Rata Bonus for Year of Termination............................. 7 3.4 Monthly Severance Payments......................................... 7 3.5 Fringe Benefits (General).......................................... 7 3.6 Retirement Plans................................................... 8 3.7 Stock Options...................................................... 8 3.8 Purchase of Company Car............................................ 9 3.9 Job Search Assistance; Legal Fees; etc............................. 9 3.10 Repurchase of Company Shares Owned by Executive.................... 9 3.11 Termination Which Does Not Require Payment of Termination Benefits. 9 4. New Employment; Reduction of Termination Benefits........................ 10 5. Voluntary Termination of Employment By Executive......................... 10 6. Termination of Employment Prior to Change in Control..................... 11 7. Successor; Binding Agreement............................................. 12 8. Miscellaneous............................................................ 12 8.1 Notice............................................................. 12 8.2 No Waiver.......................................................... 12 8.3 Enforceability..................................................... 13 i 8.4 Disputes........................................................... 13 8.5 Sections; Captions................................................. 13 8.6 Term of Agreement.................................................. 13 8.7 No Right of Offset................................................. 13 8.8 Successive Changes in Control...................................... 14 8.9 Interpretation of Agreement........................................ 14 ii SEVERANCE BENEFIT AGREEMENT --------------------------- This Severance Benefit Agreement (the "Agreement") is made as of May 9, 1984 by Leggett & Platt, Incorporated, No. 1, Leggett Road, Carthage, Missouri 64836 (the "Company") and ROBERT A. JEFFERIES, JR., residing at 1218 S. Maple, Carthage, Missouri 64836 (the "Executive"). RECITALS -------- The Executive functions as Vice President, General Counsel and Secretary of the Company on the date hereof and is one of the key employees of the Company. The Company considers the maintenance of sound and vital management essential to protecting and enhancing the best interests of the Company and its shareholders. In this connection, the Company recognizes that in today's business environment the possibility of a change in control of the Company may exist in the future. The Company further recognizes that such possibility, and the uncertainty which it may raise among key executives, could result in the departure or distraction of key executives to the detriment of the Company and its shareholders. Accordingly, the Board of Directors of the Company (the "Board") has determined that appropriate steps should be taken (i) to further induce the Executive to remain with the Company and (ii) to reinforce and encourage the continued attention and dedication of the Executive to his assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control of the Company. Now, Therefore, in consideration of the premises and for other good and valuable considerations, receipt of which are hereby acknowledged, the Company and the Executive do agree as follows: 1. Change in Control ----------------- The Company may be required to provide certain benefits to the Executive under this Agreement following each and every "Change in Control" of the Company. A "Change in Control" of the Company shall be deemed to have occurred if: (a) There is any change in control as contemplated by (i) Item 5(f) of Schedule 14A, Regulation 14A, promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act") or (ii) Item 1 of Form 8-K promulgated by the Securities and Exchange Commission under the Exchange Act; or 1 (b) Any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 25% or more of the combined voting power of the Company's then outstanding voting securities; or (c) Those persons serving as directors of the Company on the date of this Agreement (the "Original Directors") and/or their Successors do not constitute a majority of the whole Board of Directors of the Company (the term "Successors" shall mean those directors whose election or nomination for election by the Company's shareholders has been approved by the vote of at least two-thirds of the Original Directors and previously qualified Successors serving as directors of the Company at the time of such election or nomination for election); or (d) The Company shall be a party to a merger or consolidation with another corporation and as a result of such merger or consolidation, less than 75% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the former shareholders of the Company as the same shall have existed immediately prior to such merger or consolidation; or (e) The Company liquidates, sells or otherwise transfers all or substantially all of its assets to a person not controlled by the Company both immediately prior to and immediately after such sale. 2. Termination of Employment Following a Change in Control ------------------------------------------------------- 2.1 General ------- During the 36-month period immediately following each and every Change in Control (the "Protected Period"), the Executive and the Company shall comply with all provisions of this Section 2 regarding termination of the Executive's employment. 2.2 Termination for Disability -------------------------- The Company may terminate the Executive's employment for Disability. "Disability" shall mean the Executive's absence from, and his inability to substantially perform, his duties with the Company for a continuous period of six or more months as a result of physical causes or mental illness. During any period prior to the termination of his employment that the Executive is absent from, and is unable to substantially perform, his duties with the Company as a result of physical causes or mental illness, the Company shall continue to pay the Executive his full base salary at the rate then in effect and any bonuses 2 earned by the Executive under Company bonus plans until such time as the Executive's employment is terminated by the Company for Disability. Following termination of employment, the Executive's benefits shall be determined in accordance with the Company's long term disability program as in effect on the date hereof, or any successor program then in effect. 2.3 Termination by Company for "Cause" ---------------------------------- The Company may terminate the Executive for Cause. Termination for "Cause" shall be limited to the following: (a) The Executive's conviction of any crime involving money or other property of the Company or any of its subsidiaries or of any other crime (whether or not involving the Company or any of its subsidiaries) that constitutes a felony in the jurisdiction involved; or (b) The Executive's continued, repeated, willful violations of specific written directions of the Board or the Company's chief executive officer, which directions are consistent with this Agreement and the Executive's duties and do not constitute Company Action as defined in Section 2.4 and which violations continue following the Executive's receipt of such written directions; or (c) The Executive's continued, repeated, willful failure to perform his duties; provided, however, that no discharge shall be deemed for Cause under this subsection (c) unless the Executive first receives written notice from the Board or the Company's chief executive officer advising the Executive of specific acts or omissions alleged to constitute a failure to perform his duties, and such failure continues after the Executive shall have had a reasonable opportunity to correct the acts or omissions so complained of. No act or failure to act on the Executive's part shall be considered "willful" unless done, or omitted to be done, by the Executive in bad faith and without reasonable belief that his action or omission was in the best interest of the Company. Moreover, the Executive should not be terminated for Cause unless and until there shall have been delivered to the Executive a notice of termination duly adopted by the affirmative vote of at least three-quarters of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with his counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Executive was guilty of the conduct set forth in Section 2.3(a), (b) or (c) and specifying the particulars thereof in detail. 3 A termination shall not be deemed for Cause if, for example, the termination results from the Company's determination that the Executive's position is redundant or unnecessary or that the Executive's performance is unsatisfactory or if the termination stems from the Executive's refusal to agree to or accept any Company Action described and defined in Section 2.4. 2.4 Termination by Executive for Good Reason ---------------------------------------- The Executive may terminate his employment for "Good Reason" by giving notice of termination to the Company following (i) any action or omission by the Company described in this Section 2.4 or (ii) receipt of notice from the Company of the Company's intention to take any such action or engage in any such omission. The actions or omissions which may lead to a termination of employment for Good Reason (herein collectively and severally "Company Actions") are as follows: (a) A reduction by the Company in the Executive's base salary as in effect on the date hereof or as the same may be increased from time to time or a failure by the Company to increase the Executive's base salary each year during the Protected Period by an amount which at least equals, on a percentage basis, the average percentage increase in base salary for all officers of the Company during the three full calendar years immediately preceding the Change in Control; or (b) A change in the Executive's reporting responsibilities, titles or offices as in effect immediately prior to a Change in Control; or (c) The assignment to the Executive of any positions, duties or responsibilities inconsistent in the good faith opinion of the Executive with the Executive's positions, duties and responsibilities with the Company immediately prior to the Change in Control; or (d) A failure by the Company (i) to continue any cash bonus or other incentive plans substantially in the forms in effect immediately prior to the Change in Control, or (ii) to continue the Executive as a participant in such plans on at least the same basis as the Executive participated in accordance with the plans immediately prior to the Change in Control; or (e) A requirement by the Company that the Executive be based or perform his duties anywhere other than at the Company's Corporate Office location immediately prior to the Change in Control, except for required travel on the Company's business to an extent substantially consistent with the Executive's business travel obligations immediately prior to the 4 Change in Control or, in the event the Executive consents to any relocation, the failure by the Company to pay (or reimburse the Executive for) all reasonable expenses incurred by him relating to a change of his principal residence in connection with such relocation and to indemnify the Executive against any loss realized on the sale of his principal residence in connection with any such change of residence (loss is defined as the difference between the actual sale price of such residence and the higher of (i) the aggregate investment in such residence (including improvements thereto) or (ii) the fair market value of such as determined by a real estate appraiser designated by the Executive and reasonably satisfactory to the Company); or (f) A failure by the Company to continue in effect any benefit or other compensation plan (e.g. stock ownership plan, stock purchase plan, stock option plan, life insurance plan, health and accident plan or disability plan) in which the Executive is participating at the time of a Change in Control (or plans providing the Executive with substantially similar benefits), the taking of any action by the Company which would adversely affect the Executive's participation in or materially reduce the Executive's benefits under any of such plans or deprive the Executive of any material fringe benefit enjoyed by him at the time of the Change in Control, or the Company's failure to provide the Executive with the number of paid vacation days to which he is entitled in accordance with the Company's normal vacation practices with respect to the Executive at the time of the Change in Control; or (g) A failure by the Company to obtain the assumption agreement to perform this Agreement by any successor as contemplated by Section 7 of this Agreement; or (h) Any purported termination of the Executive's employment that is not carried out (i) pursuant to a notice of termination which satisfies the requirements of Section 2.5 or (ii) in accordance with Section 2.3, if applicable; and for purposes of this Agreement, no such purported termination shall be effective. 2.5 Notice of Termination --------------------- Any purported termination by the Company of the Executive's employment under Section 2.2 (Disability) or 2.3 (for Cause) or by the Executive under Section 2.4 (for Good Reason) shall be communicated by notice of termination to the other party. A notice of termination shall mean a notice which shall include the specific termination Section in this Agreement relied upon and shall set forth in reasonable detail, the facts and 5 circumstances claimed to provide a basis for termination of employment under the Section so indicated. 2.6 Date of Termination ------------------- The date the Executive's employment is terminated under this Agreement for Disability, for Cause or for Good Reason is called the "Date of Termination." In cases of Disability, the date of termination shall be 30 days after notice of termination is given (provided that the Executive shall not have returned to the performance of his duties on a full-time basis during such 30 day period). If the Executive's employment is terminated for Cause, the Date of Termination shall be the date specified in the notice of termination. If the Executive's employment is terminated for Good Reason, the Date of Termination shall be the date set out in the notice of termination. Any dispute by a party hereto regarding a notice of termination delivered to such party must be conveyed to the other party within 30 days after the notice of termination is given. If the particulars of the dispute are not conveyed within the 30 day period, then the disputing party's claims regarding the termination shall be forever deemed waived. 2.7 Prior Notice Required of Company Actions ---------------------------------------- During the Protected Period, the Company shall not terminate the Executive's employment (except for Disability or for Cause) or take any Company Action as defined in Section 2.4 without first giving the Executive at least three months' prior notice of termination or the planned Company Action, as the case may be. 3. Benefits upon Termination of Employment --------------------------------------- 3.1 General ------- If, during the Protected Period following each Change in Control, the Executive's employment is terminated either (i) by the Company (other than for Disability or Cause) or (ii) by the Executive for Good Reason, then the Executive shall be entitled to the benefits provided in this Section 3 (collectively and severally "Termination Benefits"). 3.2 Base Salary Through Date of Termination; Previously Earned Bonus ---------------------------------------------------------------- The Company shall promptly pay the Executive his full base salary through the Date of Termination at the rate in effect at the time notice of termination is given. In addition, the Company shall promptly pay the amount of any bonus for a past period which has been earned by the Executive but not yet paid under the applicable bonus plan. The Company shall give the Executive credit for any vacation earned but not taken. 6 3.3 Pro-Rata Bonus for Year of Termination -------------------------------------- The Company shall pay the Executive a pro-rata bonus for the year in which his employment terminates. The pro-rata bonus shall be equal to "A" divided by "B" with the quotient multiplied by "C" where: (a) "A" equals the number of days the Executive is employed by the Company in the year in which the termination of employment occurs (the "Termination Year"); (b) "B" equals 365; and (c) "C" equals the maximum bonus the Executive would have been eligible for in the Termination Year. The pro-rata bonus shall be paid by the Company in a lump sum, concurrently with the first severance pay installment provided for in Section 3.4. 3.4 Monthly Severance Payments -------------------------- The Company shall pay the Executive aggregate severance payments equal to (i) 136% of the Executive's annual base salary as of the date of the Change in Control or as of the Date of Termination, whichever is greater, multiplied by (ii) three. The severance payments shall be made in 36 equal, consecutive monthly installments, with the first installment to be on the first day of the first month immediately following the Date of Termination. The 136% figure in this Section shall be appropriately increased or decreased if and as the Executive's maximum annual bonus potential (expressed as a percentage of his annual base salary) is increased or decreased. 3.5 Fringe Benefits (General) ------------------------- The Company shall maintain in full force, for the continued benefit of the Executive for three years after the Date of Termination, all employee benefit plans, programs and/or arrangements (collectively and severally "Benefit Plans") in which the Executive was entitled to participate immediately prior to the Date of Termination provided the Executive's continued participation is possible under the general terms and provisions of such Benefit Plans. If the Executive's participation in any such Benefit Plan is barred, the Company shall arrange to provide the Executive with benefits substantially similar to those which the Executive is entitled to receive under such Plans. At the end of the three year period of coverage, the Executive shall have the option to have assigned to him at no cost and with no apportionment of prepaid premiums, any assignable insurance policy owned by the Company and relating specifically to the Executive. 7 3.6 Retirement Plans ---------------- The Company shall pay the Executive in cash a lump sum additional retirement benefit. Such benefit shall be paid at the Executive's normal retirement age (or earlier retirement age should the Executive so elect) as defined in the retirement programs in which the Executive participates or any successor programs in effect on the date of any Change in Control. Such additional benefit shall be equal to the actuarial equivalent of the additional retirement benefit to which the Executive would have been entitled under such retirement programs had he accumulated three additional years of continuous service (following the Date of Termination) under such retirement programs both for purposes of determining eligibility for benefits and for purposes of calculating the amount of such benefits. If any retirement program requires contributions by participants and the Executive is precluded by the terms of the program from making such contributions following the Date of Termination, then the amount of additional retirement benefit payable under this Section 3.6 shall be equitably adjusted to reflect the absence of contributions by the Executive. The benefits under this Section 3.6 are in addition to those the Executive may be entitled to under the retirement programs in question. In addition, the benefits provided under this Section 3.6 do not in any way limit the benefits payable to the Executive under Section 3.5. 3.7 Stock Options ------------- The Company shall at the request of the Executive accelerate and make immediately exercisable in full all unexercised stock options which the Executive then holds to acquire securities from the Company. This shall be done, to the maximum extent possible, in a manner that will allow the Executive, upon the exercise of any such options, to obtain favorable Federal Income tax treatment. The Executive's request may be made at any time during the period beginning with the giving of the notice of termination and ending three months after the Executive's employment terminates (the "Option Election Period"). Instead of exercising any or all outstanding stock options then held by him, the Executive may elect during the Option Exercise Period to surrender to the Company his rights in such outstanding stock options (whether or not then exercisable). Upon such surrender, the Company shall pay to the Executive an amount in cash per optioned share equal to the difference between (i) the option price of such share and (ii) the higher of: (x) the closing price of the Company's shares on the date of the Change in Control, (y) the closing price of the Company's shares on the date the options (or in the case of Section 3.10, the shares) are surrendered to the Company, or (z) the highest price per Company share actually paid in connection with any Change in Control of the Company. If, within six months of the taking of any Company Action under Section 2.4, the Executive dies while still employed by the Company, the Executive's estate shall be 8 entitled, upon notice to the Company within 90 days of the Executive's death, to be paid an amount equal to the amount the Executive would have received had he surrendered all of his stock options under this Section as of the date preceding his death. Such amount shall be paid in cash by the Company within 45 days after receipt of the notice and the delivery of an instrument surrendering all rights the Executive's estate may have held to the stock options. 3.8 Purchase of Company Car ----------------------- The Company shall permit the Executive during the Option Election Period to purchase any Company automobile the Company was providing for the Executive's use at the time notice of termination was given. The purchase price shall be the book or wholesale value of such automobile at such time, whichever is lower. 3.9 Job Search Assistance; Legal Fees; etc. --------------------------------------- The Company shall reimburse the Executive for the costs of his job search, including air fares, telephone conversations, advertisements, executive placement or search fees and the like to the extent not reimbursed by others. In addition, the Company shall provide the Executive with adequate secretarial assistance and office space while the Executive's job search continues. The Company shall promptly reimburse the Executive for all relocation costs to the extent such reimbursement is not made by the Executive's new employer. The Company's obligations under this first paragraph of Section 3.9 shall terminate three years from the Date of Termination. The Company shall pay all relocation and indemnity payments as set forth in Section 2.4(e), and all legal fees and expenses incurred by the Executive as a result of the termination of his employment (including all such fees and expenses, if any, incurred in contesting or disputing any such termination of employment or in seeking to obtain or enforce any right or benefit provided by this Agreement). 3.10 Repurchase of Company Shares Owned by Executive ----------------------------------------------- Upon request made during the Option Election Period, the Company shall purchase all Company shares owned by the Executive immediately prior to the Date of Termination. Within 45 days after the request is made, the Executive's shares properly endorsed and free of all claims shall be delivered to the Company. Thereupon, the Company shall pay the purchase price in cash. The purchase price shall be the highest price per share that can be computed under Section 3.7. 3.11 Termination Which Does Not Require Payment of Termination Benefits ------------------------------------------------------------------ No Termination Benefits need be provided by the Company to the Executive under this Section 3 if the Executive's employment is terminated: 9 (a) By his death; or (b) By the Executive for any reason other than for Good Reason (e.g. by retirement); or (c) By the Company for Disability or for Cause. As used herein, retirement by the Executive means termination of employment in accordance with the Company's normal retirement policy, including early retirement, generally applicable to the Company's salaried employees or in accordance with any special retirement arrangement jointly established by the Company and the Executive and mutually agreeable to both. 4. New Employment; Reduction of Termination Benefits ------------------------------------------------- The Termination Benefits provided under Section 3 shall not be treated as damages, but rather shall be treated as severance compensation to which the Executive is entitled. The Executive shall not be required to mitigate the amount of any Termination Benefit provided under Section 3 by seeking other employment or otherwise. If, however, following a termination of employment which invokes Section 3, the Executive becomes employed full time by a third party (as distinguished from becoming self-employed or being employed by an employer controlled by the Executive and/or members of his immediate family), then the amount of any cash compensation (including base salary and bonuses) received by the Executive from such third party shall reduce on a dollar for dollar basis, but not below zero, the amount of cash payments which the Executive is thereafter entitled to receive under Section 3.4. In addition, any fringe benefits that the Executive may receive from full time employment by a third person (as distinguished from self-employment or employment by an employer controlled by the Executive and/or members of his immediate family) shall be applied against and reduce any fringe benefits thereafter to be made available to the Executive under Section 3.5. In no event shall the Executive be required to return to the Company any Termination Benefits received by him prior to his commencement of full time employment with a third person. 5. Voluntary Termination of Employment By Executive ------------------------------------------------ If the Executive voluntarily terminates his employment with the Company for any reason (including retirement) within one year of any Change in Control described in this Section, then the Executive may in his sole discretion elect to receive, and the Company shall provide, the following benefits and no others under this under this Agreement: (a) The Company shall promptly pay the Executive those salary, bonus and vacation payments provided for in Section 3.2, which section is incorporated by reference in this Section 5. 10 (b) The Company shall promptly pay the Executive the pro-rata bonus provided for in Section 3.3, which section is incorporated by reference in this Section 5. (c) The Company shall promptly pay the Executive a non-forfeitable lump sum cash termination payment equal to 75% of the Executive's total cash compensation for the calendar year immediately preceding the Date of Termination of his employment. (d) The Company shall provide the Executive for one year with those fringe benefits described in Section 3.5, which section is incorporated by reference in this Section 5. The fringe benefits provided under this subsection (d) shall be reduced by any fringe benefits the Executive may thereafter receive from full time employment by a third person (as distinguished from self-employment). If the Executive does not elect to receive benefits under this Section 5, then he shall remain eligible to receive Termination Benefits in accordance with the provisions of Section 3. The only Change in Control that will permit an Executive to make an election under this Section 5 is a Change in Control that is opposed by a majority vote of the Board and in connection with such Change in Control or as a result thereof: (a) A majority of the whole Board becomes comprised of persons other than Original Directors or their Successors (as those terms are defined in Section l(c)); or (b) Any person (as defined in Section l(b)) becomes the beneficial owner (as defined in Section l(b)); directly or indirectly of 50% or more of the combined voting power of the Company's then outstanding voting securities. 6. Termination of Employment Prior to Change in Control ---------------------------------------------------- Prior to a Change in Control, the Executive shall not voluntarily terminate his employment with the Company except upon at least three months' prior notice. Similarly, the Company shall not terminate the Executive's employment other than for Cause except upon at least three months' prior notice. 11 7. Successor; Binding Agreement ---------------------------- The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place (the assumption shall be by agreement in form and substance satisfactory to the Executive). Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive, at his election, to Termination Benefits from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if he terminated his employment for Good Reason, except that for purposes of implementing the foregoing, the date on which any such election becomes effective shall be deemed the Date of Termination. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section 7 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law. This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amount would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to his devisee, legatee or other designee or, if there be no such designee, to his estate. 8. Miscellaneous ------------- 8.1 Notice ------ All notices, elections, waivers and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 8.2 No Waiver --------- No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and an officer of the Company. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or 12 conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. 8.3 Enforceability -------------- The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 8.4 Disputes -------- Notwithstanding the pendency of any dispute involving this Agreement, the Company shall continue to pay all amounts and provide all benefits which the Executive alleges are required by this Agreement (collectively the "Disputed Benefits") until the dispute is finally resolved by agreement, litigation or otherwise. If the dispute is resolved in the Company's favor, then the person(s) resolving the dispute shall further determine (i) whether the Executive initiated and continued the dispute in good faith and (ii) whether there was a reasonable basis for the allegations made by the Executive. If it is determined the Executive proceeded in good faith and with a reasonable basis for his allegations, then the Executive shall not be required to reimburse the Company for the Disputed Benefits received by him. Otherwise the Executive shall be required (i) to fully reimburse the Company for the actual cost to the Company of providing the Disputed Benefits and (ii) to pay the Company as liquidated damages a lump sum cash payment equal to 20% of the Disputed Benefits. 8.5 Sections; Captions ------------------ All references in this Agreement to Sections refer to the applicable Sections of this Agreement. References in this Agreement to a given Section (e.g. Section 3) shall, unless the context requires otherwise, refer to all parts of such Section (e.g. 3.1 through 3.10). The captions have been placed in this Agreement for ease of reference only. They shall not be used in the interpretation of this Agreement. 8.6 Term of Agreement ----------------- This Agreement shall continue in force so long as the Executive remains employed by the Company or any successor and shall apply to any Change in Control that occurs while the Executive remains so employed. 8.7 No Right of Offset ------------------ Effective upon the occurrence of a Change in Control, the Company waives, and will not assert, any right to set off the amount of any claims, liabilities, damages 13 or losses the Company may have against any amounts payable by the Company to the Executive whether under this Agreement or otherwise. 8.8 Successive Changes in Control ----------------------------- A separate Change in Control shall be deemed to have occurred with each occurrence of any event described at subsections (a) through (e) of Section 1. This Agreement pertains to each and every Change in Control, including successive Changes in Control involving the same controlling person(s). 8.9 Interpretation of Agreement --------------------------- In the event of any ambiguity, vagueness or other matter involving the interpretation or meaning of this Agreement, this Agreement shall be liberally construed so as to provide to the Executive the full benefits set out herein. IN WITNESS WHEREOF, this Agreement has been signed as of the day and year first above written. Attest: LEGGETT & PLATT, INCORPORATED /s/ ERNEST C. JETT By /s/ HARRY M. CORNELL, JR. ------------------------- ------------------------------- Secretary President /s/ ROBERT A. JEFFERIES, JR. ------------------------------- Executive 14 EX-10.14 5 STOCK AWARD AGMT - WRIGHT EXHIBIT 10.14 STOCK AWARD AGREEMENT --------------------- FELIX E. WRIGHT Leggett & Platt, Incorporated (the "Company") and Felix E. Wright (the "Participant") agree as of July 5, 1994 as follows: 1. 1989 FLEXIBLE STOCK PLAN. The Basic Stock Award and the Additional Stock Award provided for below (individually "Stock Award" or "Award" and collectively "Stock Awards" or "Awards") constitute "Other Stock Based Awards" under the Company's 1989 Flexible Stock Plan (the "Plan") and are granted to Participant under Article XVIII of the Plan. All Stock Awards provided for in this Agreement have been granted in the sole discretion of the Committee which administers the Plan. No consideration whatsoever has been required of Participant as a condition to receiving or enjoying Awards. This Agreement and all shares of Common Stock of the Company ("Shares") granted to or acquired by Participant under or pursuant to this Agreement is subject to the Plan. A copy of the Plan is available to Participant upon request. Capitalized terms used in this Agreement, if not defined herein, shall have the meanings given to such terms by the Plan. 2. BASIC STOCK AWARD. The Participant is granted bi-weekly awards of Common Stock of the Company, such awards to be made beginning July 8, 1994 and ending December 23, 1994. Each bi-weekly Basic Stock Award and Incentive Bonus will be in whole (not fractional) Shares having a fair market value on the date the Award is made that is as close as possible to $3,950. The awards made under this Section are individually and collectively called the "Basic Stock Award." 3. ADDITIONAL STOCK AWARD. On or before March 1, 1995 the Committee will grant a one-time "Additional Stock Award" to Participant if (i) Participant remains a full-time executive of an Employer as of December 31, 1994 or has terminated his employment before December 31, 1994 because of permanent and total disability, retirement or death and (ii) the Company has met the 1994 earnings objectives as determined by the Committee for the awarding of an Additional Stock Award. The Additional Stock Award will be in whole (not fractional) Shares having a fair market value on the date the Award is made that is as close as possible to the product of "X" and "Y" where: -1- (a) "X" equals .787; and (b) "Y" equals the aggregate fair market value of all Basic Stock Awards received by Participant (with such fair market value being determined as of the date that each Basic Stock Award is made). 4. DIVIDENDS ON COMPANY SHARES; PARTICIPANT'S INVESTMENTS. ------------------------------------------------------- ______ Participant elects to have income taxes withheld from all cash dividends on Company Shares. X Participant elects not to have income taxes withheld from all ------ cash dividends on Company Shares. (Check one of two above.) Participant authorizes the Company to be paid and to receive all cash dividends on Company Shares. The Company shall invest all cash dividends from Company Shares (plus any interest thereon) in such debt or equity issues, mutual funds, annuity contracts and/or other investments as shall be agreeable to Participant and the Committee. Such investments together with all proceeds thereof and increments thereto are collectively called "Participant's Investments." In no event will Participant's Investments include the Company's Common Stock or the Company's preferred stock or any debt instruments convertible into such Common Stock or preferred stock. Participant in his sole and absolute discretion and without being under any obligation to do so, may transmit cash to the Company (bi-weekly by payroll deduction or in lump sum amounts). Any such cash transmitted during the period of this Agreement shall not be less than 2% nor more than 10% of Participant's gross cash compensation for the calendar year 1993. All cash transmitted will be invested by the Company in the same manner as cash dividends from Company Shares and thereupon shall constitute and remain a portion of Participant's Investments. The substantive provisions of Sections 5.1, 5.2, 5.3, 6 and 10 of this Agreement dealing with Common Stock and certificates therefor shall apply with like force to Participant's Investments and certificates or other evidences of Participant's Investments. 5. OTHER CONDITIONS OF STOCK AWARD. The grant of each Stock Award shall be subject to the following additional terms and conditions: 5.1 NAMES ON CERTIFICATES FOR COMMON STOCK. Certificates for all Common Stock shall normally be issued in the name of the Participant only. However, if the Participant so -2- requests, certificates will be issued (i) in the name of the Participant and the Participant's spouse as tenants by the entirety, or (ii) in the name of the Participant and any other person designated by the Participant as joint tenants with right of survivorship. Any such issuance will be in accordance with such guidelines as the Committee may promulgate. With the Committee's consent, which may be given or withheld in the Committee's sole and absolute discretion, certificates for Common Stock may be issued in the name of a person other than the Participant. Any such issuance shall be on such terms and conditions as the Committee may deem appropriate. Irrespective of the names (other than the Participant's) appearing on any certificates for Common Stock, such certificates shall remain subject to all of the terms and conditions of this Agreement. 5.2 STOCK NOT TRANSFERABLE. Common Stock may not be transferred, pledged or otherwise disposed of by the Participant or any other holder thereof until it is no longer subject to repurchase pursuant to Section 13 and until the earlier of (i) the Participant's death, total and permanent disability, retirement, or other termination of employment or (ii) such time as the Committee shall determine. 5.3 POSSESSION OF STOCK CERTIFICATES; LEGENDS. Until Common Stock is no longer nontransferable, certificates for such Common Stock may be held by the Company or such other person or entity as the Committee shall select and may be marked with such legend as the Committee shall determine. 5.4 SUBSTITUTION OF CERTIFICATES. A Participant shall be permitted from time to time to substitute certificates for Common Stock already owned by the Participant and not subject to this Agreement for a like number of Common Stock certificates. Participant shall also be permitted from time to time to substitute property already owned by the Participant and not subject to this Agreement for Participant's Investments having similar fair market value. Any and all such substitutions shall be in accordance with such guidelines as the Committee may promulgate. 6. TRUST OR CUSTODIAL ACCOUNT. The committee shall have the right at any time to establish a trust, custodial account or other arrangement to hold certificates for Common Stock which is nontransferable upon such terms as it deems appropriate and which are not in conflict with the Plan or this Agreement. 7. ADJUSTMENT. In the event of any change in the Common Stock of the Company described in Section 3.3 of the Plan, the Committee shall have the right to make such amendments to this Agreement as it shall deem necessary to carry out the purposes of this Agreement. -3- 8. AUTHORITY AND FURTHER STEPS. In addition to this Agreement, the Participant shall execute such additional documents and take all steps as the Committee shall request to effectuate the provisions of this Agreement. 9. TERMINATION OF EMPLOYMENT. If Participant's employment terminates for any reason, no further installment of any Basic Stock Award which is payable in installments shall be made. If the Participant's employment terminates for any reason prior to December 31 of any year, any Additional Stock Award for that year which has not been paid will be forfeited unless (a) such termination (i) was because of permanent and total disability or death or (ii) occurred on or after the Participant attained 60 years of age or attained 55 years of age and had been employment by an Employer for at least 5 continuous years or (b) the Committee provides otherwise. 10. ASSIGNMENT. Unless allowed by the Committee, no Award shall be assignable by the Participant. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Company, the Participant and their respective successors, assigns, heirs and personal representatives. 11. FUTURE GRANTS. Nothing contained in this Agreement or other document shall require the grant to Participant of additional Awards or any other Benefit under the Plan or prohibit any other Benefit which is granted from being a different Benefit or from being granted on different and/or additional terms and conditions than those in this Agreement. 12. NO EMPLOYMENT CONTRACT. This Agreement shall not confer upon the Participant any right of continued employment nor shall it interfere in any way with the right of the Employer to terminate the Participant's employment at any time (subject to any employment contract that might exist between Participant and the Employer). 13. OPTION TO REPURCHASE. The Company shall have an option to buy all of a Participant's Common Stock obtained directly through a Stock Award. The option price shall be $1, and the option must be exercised by the Committee within sixty (60) days following the Participant's termination of employment. The above option applies only to a Participant (a) who is under age 60 when his employment terminates, (b) who has been employed by an Employer for less than 5 continuous years when his employment terminates and (c) whose employment is terminated for a reason other than permanent and total disability or death. For purposes of determining a Participant's length of employment, employment with an Employer prior to the time that it became an Employer shall be disregarded. Without, in any way, limiting the provisions of Section 8, in order to facilitate the Company's exercise of the foregoing option, the Participant shall, as a condition to receiving an Award, execute such stock and other assignments and other documents of transfer as the Committee shall request at any time. Notwithstanding the foregoing, -4- the decision as to whether to exercise the option granted by this Section 13 shall be made solely by the Committee. LEGGETT & PLATT, INCORPORATED /s/ FELIX E. WRIGHT By: /s/ R. A. JEFFERIES, JR. ------------------------------------- ------------------------------------- Participant Senior Vice President -5- EX-10.15 6 STOCK AWARD AGMT - POTTER EXHIBIT 10.15 STOCK AWARD AGREEMENT --------------------- DUANE W. POTTER Leggett & Platt, Incorporated (the "Company") and Duane W. Potter (the "Participant") agree as of July 5, 1994 as follows: 1. 1989 FLEXIBLE STOCK PLAN. The Basic Stock Award and the Additional Stock Award provided for below (individually "Stock Award" or "Award" and collectively "Stock Awards" or "Awards") constitute "Other Stock Based Awards" under the Company's 1989 Flexible Stock Plan (the "Plan") and are granted to Participant under Article XVIII of the Plan. All Stock Awards provided for in this Agreement have been granted in the sole discretion of the Committee which administers the Plan. No consideration whatsoever has been required of Participant as a condition to receiving or enjoying Awards. This Agreement and all shares of Common Stock of the Company ("Shares") granted to or acquired by Participant under or pursuant to this Agreement is subject to the Plan. A copy of the Plan is available to Participant upon request. Capitalized terms used in this Agreement, if not defined herein, shall have the meanings given to such terms by the Plan. 2. BASIC STOCK AWARD. The Participant is granted bi-weekly awards of Common Stock of the Company, such awards to be made beginning July 8, 1994 and ending December 23, 1994. Each bi-weekly Basic Stock Award and Incentive Bonus will be in whole (not fractional) Shares having a fair market value on the date the Award is made that is as close as possible to $1,196. The awards made under this Section are individually and collectively called the "Basic Stock Award." 3. ADDITIONAL STOCK AWARD. On or before March 1, 1995 the Committee will grant a one-time "Additional Stock Award" to Participant if (i) Participant remains a full-time executive of an Employer as of December 31, 1994 or has terminated his employment before December 31, 1994 because of permanent and total disability, retirement or death and (ii) the Company has met the 1994 earnings objectives as determined by the Committee for the awarding of an Additional Stock Award. The Additional Stock Award will be in whole (not fractional) Shares having a fair market value on the date the Award is made that is as close as possible to the product of "X" and "Y" where: -1- (a) "X" equals .787; and (b) "Y" equals the aggregate fair market value of all Basic Stock Awards received by Participant (with such fair market value being determined as of the date that each Basic Stock Award is made). 4. DIVIDENDS ON COMPANY SHARES; PARTICIPANT'S INVESTMENTS. ------------------------------------------------------- _______ Participant elects to have income taxes withheld from all cash dividends on Company Shares. X Participant elects not to have income taxes withheld from ------- all cash dividends on Company Shares. (Check one of two above.) Participant authorizes the Company to be paid and to receive all cash dividends on Company Shares. The Company shall invest all cash dividends from Company Shares (plus any interest thereon) in such debt or equity issues, mutual funds, annuity contracts and/or other investments as shall be agreeable to Participant and the Committee. Such investments together with all proceeds thereof and increments thereto are collectively called "Participant's Investments." In no event will Participant's Investments include the Company's Common Stock or the Company's preferred stock or any debt instruments convertible into such Common Stock or preferred stock. Participant in his sole and absolute discretion and without being under any obligation to do so, may transmit cash to the Company (bi-weekly by payroll deduction or in lump sum amounts). Any such cash transmitted during the period of this Agreement shall not be less than 2% nor more than 10% of Participant's gross cash compensation for the calendar year 1993. All cash transmitted will be invested by the Company in the same manner as cash dividends from Company Shares and thereupon shall constitute and remain a portion of Participant's Investments. The substantive provisions of Sections 5.1, 5.2, 5.3, 6 and 10 of this Agreement dealing with Common Stock and certificates therefor shall apply with like force to Participant's Investments and certificates or other evidences of Participant's Investments. 5. OTHER CONDITIONS OF STOCK AWARD. The grant of each Stock Award shall be subject to the following additional terms and conditions: 5.1 NAMES ON CERTIFICATES FOR COMMON STOCK. Certificates for all Common Stock shall normally be issued in the name of the Participant only. However, if the Participant so -2- requests, certificates will be issued (i) in the name of the Participant and the Participant's spouse as tenants by the entirety, or (ii) in the name of the Participant and any other person designated by the Participant as joint tenants with right of survivorship. Any such issuance will be in accordance with such guidelines as the Committee may promulgate. With the Committee's consent, which may be given or withheld in the Committee's sole and absolute discretion, certificates for Common Stock may be issued in the name of a person other than the Participant. Any such issuance shall be on such terms and conditions as the Committee may deem appropriate. Irrespective of the names (other than the Participant's) appearing on any certificates for Common Stock, such certificates shall remain subject to all of the terms and conditions of this Agreement. 5.2 STOCK NOT TRANSFERABLE. Common Stock may not be transferred, pledged or otherwise disposed of by the Participant or any other holder thereof until it is no longer subject to repurchase pursuant to Section 13 and until the earlier of (i) the Participant's death, total and permanent disability, retirement, or other termination of employment or (ii) such time as the Committee shall determine. 5.3 POSSESSION OF STOCK CERTIFICATES; LEGENDS. Until Common Stock is no longer nontransferable, certificates for such Common Stock may be held by the Company or such other person or entity as the Committee shall select and may be marked with such legend as the Committee shall determine. 5.4 SUBSTITUTION OF CERTIFICATES. A Participant shall be permitted from time to time to substitute certificates for Common Stock already owned by the Participant and not subject to this Agreement for a like number of Common Stock certificates. Participant shall also be permitted from time to time to substitute property already owned by the Participant and not subject to this Agreement for Participant's Investments having similar fair market value. Any and all such substitutions shall be in accordance with such guidelines as the Committee may promulgate. 6. TRUST OR CUSTODIAL ACCOUNT. The committee shall have the right at any time to establish a trust, custodial account or other arrangement to hold certificates for Common Stock which is nontransferable upon such terms as it deems appropriate and which are not in conflict with the Plan or this Agreement. 7. ADJUSTMENT. In the event of any change in the Common Stock of the Company described in Section 3.3 of the Plan, the Committee shall have the right to make such amendments to this Agreement as it shall deem necessary to carry out the purposes of this Agreement. -3- 8. AUTHORITY AND FURTHER STEPS. In addition to this Agreement, the Participant shall execute such additional documents and take all steps as the Committee shall request to effectuate the provisions of this Agreement. 9. TERMINATION OF EMPLOYMENT. If Participant's employment terminates for any reason, no further installment of any Basic Stock Award which is payable in installments shall be made. If the Participant's employment terminates for any reason prior to December 31 of any year, any Additional Stock Award for that year which has not been paid will be forfeited unless (a) such termination (i) was because of permanent and total disability or death or (ii) occurred on or after the Participant attained 60 years of age or attained 55 years of age and had been employment by an Employer for at least 5 continuous years or (b) the Committee provides otherwise. 10. ASSIGNMENT. Unless allowed by the Committee, no Award shall be assignable by the Participant. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Company, the Participant and their respective successors, assigns, heirs and personal representatives. 11. FUTURE GRANTS. Nothing contained in this Agreement or other document shall require the grant to Participant of additional Awards or any other Benefit under the Plan or prohibit any other Benefit which is granted from being a different Benefit or from being granted on different and/or additional terms and conditions than those in this Agreement. 12. NO EMPLOYMENT CONTRACT. This Agreement shall not confer upon the Participant any right of continued employment nor shall it interfere in any way with the right of the Employer to terminate the Participant's employment at any time (subject to any employment contract that might exist between Participant and the Employer). 13. OPTION TO REPURCHASE. The Company shall have an option to buy all of a Participant's Common Stock obtained directly through a Stock Award. The option price shall be $1, and the option must be exercised by the Committee within sixty (60) days following the Participant's termination of employment. The above option applies only to a Participant (a) who is under age 60 when his employment terminates, (b) who has been employed by an Employer for less than 5 continuous years when his employment terminates and (c) whose employment is terminated for a reason other than permanent and total disability or death. For purposes of determining a Participant's length of employment, employment with an Employer prior to the time that it became an Employer shall be disregarded. Without, in any way, limiting the provisions of Section 8, in order to facilitate the Company's exercise of the foregoing option, the Participant shall, as a condition to receiving an Award, execute such stock and other assignments and other documents of transfer as the Committee shall request at any time. Notwithstanding the foregoing, -4- the decision as to whether to exercise the option granted by this Section 13 shall be made solely by the Committee. LEGGETT & PLATT, INCORPORATED /s/ DUANE W. POTTER By: /s/ R. A. JEFFERIES, JR. ------------------------------------- ------------------------------------- Participant Senior Vice President -5- EX-10.16 7 STOCK AWARD AGMT - HAFFNER EXHIBIT 10.16 STOCK AWARD AGREEMENT --------------------- DAVID S. HAFFNER Leggett & Platt, Incorporated (the "Company") and David S. Haffner (the "Participant") agree as of July 5, 1994 as follows: 1. 1989 FLEXIBLE STOCK PLAN. The Basic Stock Award and the Additional Stock Award provided for below (individually "Stock Award" or "Award" and collectively "Stock Awards" or "Awards") constitute "Other Stock Based Awards" under the Company's 1989 Flexible Stock Plan (the "Plan") and are granted to Participant under Article XVIII of the Plan. All Stock Awards provided for in this Agreement have been granted in the sole discretion of the Committee which administers the Plan. No consideration whatsoever has been required of Participant as a condition to receiving or enjoying Awards. This Agreement and all shares of Common Stock of the Company ("Shares") granted to or acquired by Participant under or pursuant to this Agreement is subject to the Plan. A copy of the Plan is available to Participant upon request. Capitalized terms used in this Agreement, if not defined herein, shall have the meanings given to such terms by the Plan. 2. BASIC STOCK AWARD. The Participant is granted bi-weekly awards of Common Stock of the Company, such awards to be made beginning July 8, 1994 and ending December 23, 1994. Each bi-weekly Basic Stock Award and Incentive Bonus will be in whole (not fractional) Shares having a fair market value on the date the Award is made that is as close as possible to $1,450. The awards made under this Section are individually and collectively called the "Basic Stock Award." 3. ADDITIONAL STOCK AWARD. On or before March 1, 1995 the Committee will grant a one-time "Additional Stock Award" to Participant if (i) Participant remains a full-time executive of an Employer as of December 31, 1994 or has terminated his employment before December 31, 1994 because of permanent and total disability, retirement or death and (ii) the Company has met the 1994 earnings objectives as determined by the Committee for the awarding of an Additional Stock Award. The Additional Stock Award will be in whole (not fractional) Shares having a fair market value on the date the Award is made that is as close as possible to the product of "X" and "Y" where: -1- (a) "X" equals .787; and (b) "Y" equals the aggregate fair market value of all Basic Stock Awards received by Participant (with such fair market value being determined as of the date that each Basic Stock Award is made). 4. DIVIDENDS ON COMPANY SHARES; PARTICIPANT'S INVESTMENTS. ------------------------------------------------------- ______ Participant elects to have income taxes withheld from all cash dividends on Company Shares. X Participant elects not to have income taxes withheld from all ______ cash dividends on Company Shares. (Check one of two above.) Participant authorizes the Company to be paid and to receive all cash dividends on Company Shares. The Company shall invest all cash dividends from Company Shares (plus any interest thereon) in such debt or equity issues, mutual funds, annuity contracts and/or other investments as shall be agreeable to Participant and the Committee. Such investments together with all proceeds thereof and increments thereto are collectively called "Participant's Investments." In no event will Participant's Investments include the Company's Common Stock or the Company's preferred stock or any debt instruments convertible into such Common Stock or preferred stock. Participant in his sole and absolute discretion and without being under any obligation to do so, may transmit cash to the Company (bi-weekly by payroll deduction or in lump sum amounts). Any such cash transmitted during the period of this Agreement shall not be less than 2% nor more than 10% of Participant's gross cash compensation for the calendar year 1993. All cash transmitted will be invested by the Company in the same manner as cash dividends from Company Shares and thereupon shall constitute and remain a portion of Participant's Investments. The substantive provisions of Sections 5.1, 5.2, 5.3, 6 and 10 of this Agreement dealing with Common Stock and certificates therefor shall apply with like force to Participant's Investments and certificates or other evidences of Participant's Investments. 5. OTHER CONDITIONS OF STOCK AWARD. The grant of each Stock Award shall be subject to the following additional terms and conditions: 5.1 NAMES ON CERTIFICATES FOR COMMON STOCK. Certificates for all Common Stock shall normally be issued in the name of the Participant only. However, if the Participant so -2- requests, certificates will be issued (i) in the name of the Participant and the Participant's spouse as tenants by the entirety, or (ii) in the name of the Participant and any other person designated by the Participant as joint tenants with right of survivorship. Any such issuance will be in accordance with such guidelines as the Committee may promulgate. With the Committee's consent, which may be given or withheld in the Committee's sole and absolute discretion, certificates for Common Stock may be issued in the name of a person other than the Participant. Any such issuance shall be on such terms and conditions as the Committee may deem appropriate. Irrespective of the names (other than the Participant's) appearing on any certificates for Common Stock, such certificates shall remain subject to all of the terms and conditions of this Agreement. 5.2 STOCK NOT TRANSFERABLE. Common Stock may not be transferred, pledged or otherwise disposed of by the Participant or any other holder thereof until it is no longer subject to repurchase pursuant to Section 13 and until the earlier of (i) the Participant's death, total and permanent disability, retirement, or other termination of employment or (ii) such time as the Committee shall determine. 5.3 POSSESSION OF STOCK CERTIFICATES; LEGENDS. Until Common Stock is no longer nontransferable, certificates for such Common Stock may be held by the Company or such other person or entity as the Committee shall select and may be marked with such legend as the Committee shall determine. 5.4 SUBSTITUTION OF CERTIFICATES. A Participant shall be permitted from time to time to substitute certificates for Common Stock already owned by the Participant and not subject to this Agreement for a like number of Common Stock certificates. Participant shall also be permitted from time to time to substitute property already owned by the Participant and not subject to this Agreement for Participant's Investments having similar fair market value. Any and all such substitutions shall be in accordance with such guidelines as the Committee may promulgate. 6. TRUST OR CUSTODIAL ACCOUNT. The committee shall have the right at any time to establish a trust, custodial account or other arrangement to hold certificates for Common Stock which is nontransferable upon such terms as it deems appropriate and which are not in conflict with the Plan or this Agreement. 7. ADJUSTMENT. In the event of any change in the Common Stock of the Company described in Section 3.3 of the Plan, the Committee shall have the right to make such amendments to this Agreement as it shall deem necessary to carry out the purposes of this Agreement. -3- 8. AUTHORITY AND FURTHER STEPS. In addition to this Agreement, the Participant shall execute such additional documents and take all steps as the Committee shall request to effectuate the provisions of this Agreement. 9. TERMINATION OF EMPLOYMENT. If Participant's employment terminates for any reason, no further installment of any Basic Stock Award which is payable in installments shall be made. If the Participant's employment terminates for any reason prior to December 31 of any year, any Additional Stock Award for that year which has not been paid will be forfeited unless (a) such termination (i) was because of permanent and total disability or death or (ii) occurred on or after the Participant attained 60 years of age or attained 55 years of age and had been employment by an Employer for at least 5 continuous years or (b) the Committee provides otherwise. 10. ASSIGNMENT. Unless allowed by the Committee, no Award shall be assignable by the Participant. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Company, the Participant and their respective successors, assigns, heirs and personal representatives. 11. FUTURE GRANTS. Nothing contained in this Agreement or other document shall require the grant to Participant of additional Awards or any other Benefit under the Plan or prohibit any other Benefit which is granted from being a different Benefit or from being granted on different and/or additional terms and conditions than those in this Agreement. 12. NO EMPLOYMENT CONTRACT. This Agreement shall not confer upon the Participant any right of continued employment nor shall it interfere in any way with the right of the Employer to terminate the Participant's employment at any time (subject to any employment contract that might exist between Participant and the Employer). 13. OPTION TO REPURCHASE. The Company shall have an option to buy all of a Participant's Common Stock obtained directly through a Stock Award. The option price shall be $1, and the option must be exercised by the Committee within sixty (60) days following the Participant's termination of employment. The above option applies only to a Participant (a) who is under age 60 when his employment terminates, (b) who has been employed by an Employer for less than 5 continuous years when his employment terminates and (c) whose employment is terminated for a reason other than permanent and total disability or death. For purposes of determining a Participant's length of employment, employment with an Employer prior to the time that it became an Employer shall be disregarded. Without, in any way, limiting the provisions of Section 8, in order to facilitate the Company's exercise of the foregoing option, the Participant shall, as a condition to receiving an Award, execute such stock and other assignments and other documents of transfer as the Committee shall request at any time. Notwithstanding the foregoing, -4- the decision as to whether to exercise the option granted by this Section 13 shall be made solely by the Committee. LEGGETT & PLATT, INCORPORATED /s/ DAVID S. HAFFNER By: /s/ R. A. JEFFERIES, JR. ------------------------------------- ------------------------------------ Participant Senior Vice President -5- EX-10.17 8 STOCK AWARD AGMT - CORNELL EXHIBIT 10.17 STOCK AWARD AGREEMENT Leggett & Platt, Incorporated (the "Company") and Harry M. Cornell, Jr. (the "Participant") agree as of December 20, 1994 as follows: 1. 1989 FLEXIBLE STOCK PLAN. The Basic Stock Award and the Additional Stock Award provided for below (individually "Stock Award" or "Award" and collectively "Stock Awards" or "Awards") constitute "Other Stock Based Awards" under the Company's 1989 Flexible Stock Plan (the "Plan") and are granted to Participant under Article XVIII of the Plan. All Stock Awards provided for in this Agreement have been granted in the sole discretion of the Committee which administers the Plan. No consideration whatsoever has been required of Participant as a condition to receiving or enjoying Awards. This Agreement and all shares of Common Stock of the Company ("Shares") granted to or acquired by Participant under or pursuant to this Agreement is subject to the Plan. A copy of the Plan is available to Participant upon request. Capitalized terms used in this Agreement, if not defined herein, shall have the meanings given to such terms by the Plan. 2. BASIC STOCK AWARD. The Participant is granted bi-weekly awards of Common Stock of the Company, such awards to be made beginning January 6, 1995 and ending December 22, 1995. On or before March 31, 1995, the Committee will grant a one-time Basic Stock Award to Participant providing Participant remains a full-time executive of an Employer on that date. Each bi-weekly Basic Stock Award and the one-time Basic Stock Award will be in whole (not fractional) Shares having a fair market value on the date the Award is made that is as close as possible to 7.35% of each installment of Participant's pay, including Participant's incentive bonus. The parties to this Agreement agree that the immediately preceding percentages may be adjusted upward or downward as necessary by the Company to reflect any changes in federal, state or local tax rates. The awards made under this Section are individually and collectively called the "Basic Stock Award." 3. ADDITIONAL STOCK AWARD. On or before March 1, 1996 the Committee will grant a one-time "Additional Stock Award" to Participant if (i) Participant remains a full-time executive of an Employer as of December 31, 1995 or has terminated his employment before December 31, 1995 because of permanent and total disability, retirement or death and (ii) the Company has met the 1995 earnings objectives as determined by the Committee for the awarding of an Additional Stock Award. -1- The Additional Stock Award will be in whole (not fractional) Shares having a fair market value on the date the Award is made that is as close as possible to the product of "X" and "Y" where: (a) "X" equals .787; and (b) "Y" equals the aggregate fair market value of all Basic Stock Awards received by Participant during calendar year 1995. The fair market value of each Basic Stock Award shall be determined as of the date such Award is made. 4. DIVIDENDS ON COMPANY SHARES; PARTICIPANT'S INVESTMENTS. ------------------------------------------------------ ________ Participant elects to have income taxes withheld from all cash dividends on Company Shares. X Participant elects not to have income taxes withheld from -------- all cash dividends on Company Shares. (Check one of two above.) Participant authorizes the Company to be paid and to receive all cash dividends on Company Shares. The Company shall invest all cash dividends from Company Shares (plus any interest thereon) in such debt or equity issues, mutual funds, annuity contracts and/or other investments as shall be agreeable to Participant and the Committee. Such investments together with all proceeds thereof and increments thereto are collectively called "Participant's Investments." In no event will Participant's Investments include the Company's Common Stock or the Company's preferred stock or any debt instruments convertible into such Common Stock or preferred stock. Participant in his sole and absolute discretion and without being under any obligation to do so, may transmit cash to the Company (bi-weekly by payroll deduction or in lump sum amounts). Any such cash transmitted during the period of this Agreement shall not be less than 1% nor more than 10% of Participant's gross cash compensation for the calendar year 1994. All cash transmitted will be invested by the Company in the same manner as cash dividends from Company Shares and thereupon shall constitute and remain a portion of Participant's Investments. The substantive provisions of Sections 5.1, 5.2, 5.3, 6 and 10 of this Agreement dealing with Common Stock and certificates therefor shall apply with like force to Participant's Investments and certificates or other evidences of Participant's Investments. 5. OTHER CONDITIONS OF STOCK AWARD. The grant of each Stock Award shall be subject to the following additional terms and conditions: 5.1 NAMES ON CERTIFICATES FOR COMMON STOCK. Certificates for all Common Stock shall normally be issued in the name of the Participant only. However, if the Participant so requests, -2- certificates will be issued (i) in the name of the Participant and the Participant's spouse as tenants by the entirety, or (ii) in the name of the Participant and any other person designated by the Participant as joint tenants with right of survivorship. Any such issuance will be in accordance with such guidelines as the Committee may promulgate. With the Committee's consent, which may be given or withheld in the Committee's sole and absolute discretion, certificates for Common Stock may be issued in the name of a person other than the Participant. Any such issuance shall be on such terms and conditions as the Committee may deem appropriate. Participant may also transfer Common Stock to a revocable trust providing the terms of such trust meets the requirements set forth in Section 21 of the Company's Executive Stock Purchase Program. Irrespective of the names (other than the Participant's) appearing on any certificates for Common Stock, such certificates shall remain subject to all of the terms and conditions of this Agreement. 5.2 STOCK NOT TRANSFERRABLE. Common Stock may not be transferred, pledged or otherwise disposed of by the Participant or any other holder thereof until it is no longer subject to repurchase pursuant to Section 13 and until the earlier of (i) the Participant's death, total and permanent disability, retirement, or other termination of employment or (ii) such time as the Committee shall determine. In addition, Participant may not sell or otherwise dispose of any shares of Common Stock awarded under this Agreement unless the shares have been held for at least six months after the date of the Award. 5.3 POSSESSION OF STOCK CERTIFICATES; LEGENDS. Until Common Stock is no longer nontransferable, certificates for such Common Stock may be held by the Company or such other person or entity as the Committee shall select and may be marked with such legend as the Committee shall determine. 5.4 SUBSTITUTION OF CERTIFICATES. A Participant shall be permitted from time to time to substitute certificates for Common Stock already owned by the Participant and not subject to this Agreement for a like number of Common Stock certificates which have been held for at least six months from the date that they were awarded. Participant shall also be permitted from time to time to substitute property already owned by the Participant and not subject to this Agreement for Participant's Investments having similar fair market value. Any and all such substitutions shall be in accordance with such guidelines as the Committee may promulgate. 6. TRUST OR CUSTODIAL ACCOUNT. The Committee shall have the right at any time to establish a trust, custodial account or other arrangement to hold certificates for Common Stock which is nontransferable upon such terms as it deems appropriate and which are not in conflict with the Plan or this Agreement. -3- 7. ADJUSTMENT. In the event of any change in the Common Stock of the Company described in Section 3.3 of the Plan, the Committee shall have the right to make such amendments to this Agreement as it shall deem necessary to carry out the purposes of this Agreement. 8. AUTHORITY AND FURTHER STEPS. In addition to this Agreement, the Participant shall execute such additional documents and take all steps as the Committee shall request to effectuate the provisions of this Agreement. 9. TERMINATION OF EMPLOYMENT. If Participant's employment terminates for any reason, no further installment of any Basic Stock Award which is payable in installments shall be made. If the Participant's employment terminates for any reason prior to December 31 of any year, any Additional Stock Award for that year which has not been paid will be forfeited unless (a) such termination (i) was because of permanent and total disability or death or (ii) occurred on or after the Participant attained 60 years of age or attained 55 years of age and had been employed by an Employer for at least 5 continuous years or (b) the Committee provides otherwise. 10. ASSIGNMENT. Unless allowed by the Committee, no Award shall be assignable by the Participant. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Company, the Participant and their respective successors, assigns, heirs and personal representatives. 11. FUTURE GRANTS. Nothing contained in this Agreement or other document shall require the grant to Participant of additional Awards or any other Benefit under the Plan or prohibit any other Benefit which is granted from being a different Benefit or from being granted on different and/or additional terms and conditions than those in this Agreement. 12. NO EMPLOYMENT CONTRACT. This Agreement shall not confer upon the Participant any right of continued employment nor shall it interfere in any way with the right of the Employer to terminate the Participant's employment at any time (subject to any employment contract that might exist between Participant and the Employer). 13. OPTION TO REPURCHASE. The Company shall have an option to buy all of a Participant's Common Stock obtained directly through a Stock Award. The option price shall be $1, and the option must be exercised by the Committee within 60 days following the Participant's termination of employment. The above option applies only to a Participant (a) who is under age 60 when his employment terminates, (b) who has been employed by an Employer for less than 5 continuous years when his employment terminates and (c) whose employment is terminated for a reason other than permanent and total disability or death. For purposes of determining a Participant's length of employment, employment with an Employer prior to the time that it became an Employer shall be disregarded. Without, in any way, limiting the provisions of Section 8, in order to facilitate -4- the Company's exercise of the foregoing option, the Participant shall, as a condition to receiving an Award, execute such stock and other assignments and other documents of transfer as the Committee shall request at any time. Notwithstanding the foregoing, the decision as to whether to exercise the option granted by this Section 13 shall be made solely by the Committee. LEGGETT & PLATT, INCORPORATED /s/ HARRY M. CORNELL, JR. By: /s/ R. A. JEFFERIES, JR. --------------------------- ------------------------- Participant Senior Vice President -5- EX-10.18 9 DEFFERED COMP. PROGRAM EXHIBIT 10.18 DEFERRED COMPENSATION PROGRAM The Company has implemented a program through which certain managers, including the Company's executive officers, may elect to forego future cash compensation such as salary and bonus. When an election to forego future cash compensation is made the manager receives from the Company either a market rate- based interest bearing obligation of the Company to pay cash to the manager in the future or an option to purchase shares of the Company's common stock, $.01 par value (the "Common Stock"). Stock options are granted under the Company's 1989 Flexible Stock Plan, as amended. The formula used to determine the number of shares subject to the options is (i) the cash compensation foregone divided by (ii) the current market value of one share of Common Stock minus $1.00. This quotient is then multiplied by 1.176. The option price under the stock options is $1.00 per share. The options have a term of fifteen years from the grant date and become exercisable at the later of (i) six months after grant or (ii) when they would otherwise be entitled to receive the cash compensation. The options are not transferable. EX-11 10 STMT OF EARNINGS PER SHARE EXHIBIT 11 LEGGETT & PLATT, INCORPORATED AND SUBSIDIARIES COMPUTATIONS OF EARNINGS PER SHARE
(Amounts in millions, except per share data) Year Ended December 31, -------------------------- 1994 1993 1992 ------ ----- ----- EARNINGS PER SHARE Weighted average number of common shares outstanding................. 41.0 40.1 39.1 Dilution from outstanding stock options--computed using the "treasury stock" method............................................ .6 .7 .5 Dilution from shares issuable under contingent earnout agreement..... - .3 .2 ------ ----- ----- Weighted average number of common shares outstanding as adjusted..... 41.6 41.1 39.8 ====== ===== ===== Net Earnings......................................................... $115.4 $85.9 $65.4 ====== ===== ===== Earnings Per Share................................................... $ 2.78 $2.09 $1.64 ====== ===== =====
EX-21 11 SUBSIDIARIES EXHIBIT 21 SCHEDULE OF SUBSIDIARIES OF REGISTRANT
Name of State of Percentage of Organization Incorporation Voting Interest ------------ -------------- --------------- AAA WIRE PRODUCTS, INC. Texas 100% BERKSHIRE FURNITURE CO., INC. Delaware 100% BOIS AISE DE ROBERVAL INC. Canada 100% BOIS J.L.P. INC. Canada 100% COLLIER-KEYWORTH, INC. North Carolina 100% CREST-FOAM CORP. New Jersey 100% CREST-HOOD FOAM COMPANY, INC. Delaware 100% DRESHER, INC. Delaware 100% GRIBETZ INTERNATIONAL, INC. Delaware 100% GRIBETZ THREADS, INC. Florida 100% HANES COMPANIES FOUNDATION North Carolina 100% HANES COMPANIES, INC. North Carolina 100% HANES CONVERTING COMPANY OF NEW YORK, INC. North Carolina 100% L&P ACQUISITION COMPANY - 7 Delaware 100% L&P ACQUISITION COMPANY - 8 Delaware 100% L&P ACQUISITION COMPANY - 10 Delaware 100% L&P ACQUISITION COMPANY - 12 Delaware 100% L&P ACQUISITION COMPANY - 14 Delaware 100% L&P ACQUISITION COMPANY - 15 Delaware 100% L&P AUTOMOTIVE EUROPE GMBH Germany 100%
1
Name of State of Percentage of Organization Incorporation Voting Interest ------------ -------------- --------------- L&P INTERNATIONAL HOLDINGS COMPANY Delaware 100% L AND P MEXICO, S.A. DE C.V. Mexico 100% L&P NETHERLANDS HOLDINGS B.V. The Netherlands 100% L&P PROPERTY MANAGEMENT COMPANY Illinois 100% L&P TRANSPORTATION CO. Delaware 100% L&P WESTERN SPRING CO. Delaware 100% LEGGETT & PLATT CANADA LTD. Canada 100% LEGGETT & PLATT FOREIGN SALES CORPORATION West Indies 100% LEGGETT AND PLATT INTERNATIONAL CORPORATION Missouri 100% LEGGETT & PLATT INTERNATIONAL DEVELOPMENT CO. Delaware 100% LEGGETT & PLATT INTERNATIONAL SERVICE CORPORATION Delaware 100% LEGGETT & PLATT U.K. LIMITED United Kingdom 100% LEGGETT WIRE COMPANY Delaware 100% MG LOAN COMPANY Delaware 100% MASTERBLEND, INC. Mississippi 100% MULTILASTIC LIMITED United Kingdom 100% NO-SAG SPRING COMPANY, LIMITED Canada 100% NORTHFIELD METAL PRODUCTS (1994) LTD./PRODUITS METAUX NORTHFIELD (1994) LTEE Canada 100%
2
Name of State of Percentage of Organization Incorporation Voting Interest ------------ -------------- --------------- PULLMAFLEX A.B. (SWEDEN) Sweden 100% PULLMAFLEX BENELUX N.V. Belgium 100% PULLMAFLEX ESPANOLA Spain 100% PULLMAFLEX INTERNATIONAL B.V. (NETHERLANDS) Holland 100% PULLMAFLEX INTERNATIONAL LIMITED England 100% PULLMAFLEX JAPAN KK Japan 100% PULLMAFLEX U.K. LIMITED England 100% SOUTHEASTERN MANUFACTURING CO., INC. Florida 100% STEINER-LIFF TEXTILE PRODUCTS, CO. Delaware 100% STYLELANDER METAL STAMPING, INC. Mississippi 100% SUPER SAGLESS, INC. Delaware 100% SUPLOM LTD. Switzerland 100% TI, INC. Missouri 100% TALBOT INDUSTRIES, INC. Missouri 100% WBSCO, INC. New Mexico 100% WEBER PLASTICS CO. LTD. Canada 100% YOUNG SPRING & WIRE COMPANY Delaware 100% YOUNGFLEX A.G. Switzerland 100%
3 EX-23 12 CONSENT OF IND AUDITORS EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS We hereby consent to the incorporation by reference in the Registration Statements of Leggett & Platt, Incorporated, listed below, of our report dated February 14, 1995 appearing on page 30 of Leggett & Platt, Incorporated's Annual Report on Form 10-K for the year ended December 31, 1994. We also consent to the incorproation by reference of our report on the Financial Statement Schedules, which is included in this Form 10-K. 1. Post-Effective Amendment No. 1 to Form S-8, Registration No. 33-15441, filed August 29, 1989. 2. Form S-8, Registration No. 33-44224, filed November 27, 1991. 3. Form S-8, Registration No. 33-45334, filed January 27, 1992. 4. Form S-8, Registration No. 33-45335, filed January 27, 1992. 5. Form S-8, Registration No. 33-45336, filed January 27, 1992. 6. Form S-8, Registration No. 33-67910, filed August 26, 1993. 7. Form S-8, Registration No. 33-54339, filed June 28, 1994. 8. Post-Effective Amendment No. 1 to Form S-3, Registration No. 33-55413, filed September 23, 1994. 9. Form S-3, Registration No. 33-55725, filed September 30, 1994. 10. Form S-3, Registration No. 33-56111, filed October 25, 1994. 11. Form S-3, Registration No. 33-56919, filed December 16, 1994. PRICE WATERHOUSE LLP /S/ PRICE WATERHOUSE LLP St. Louis, Missouri March 28, 1995 EX-24 13 POWER OF ATTORNEY EXHIBIT 24 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors of LEGGETT & PLATT, INCORPORATED, a Missouri corporation (the "Corporation"), does hereby nominate, constitute and appoint Harry M. Cornell, Jr., Michael A. Glauber, Robert A. Jefferies, Jr., and Ernest C. Jett, or any one of them, his true and lawful attorneys-in-fact, to sign in the name of and on behalf of the undersigned directors of the Corporation and to file with the Securities & Exchange Commission ("SEC") the Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 and any other documents or further Amendments to said Annual Report, and to take such other action, all as said attorneys-in-fact, or any one of them, deem necessary or advisable to the end that such Annual Report or amendments thereto in respect of same, shall comply with the Securities Exchange Act of 1934, as amended, and the applicable rules of the SEC thereunder; and does hereby ratify and confirm all that said attorneys-in-fact, and each of them, may do by virtue hereof. Additionally, each of the undersigned directors of the Corporation does hereby nominate, constitute and appoint Harry M. Cornell, Jr., Michael A. Glauber, Robert A. Jefferies, Jr. and Ernest C. Jett, or any one of them, his true and lawful attorneys-in-fact, to, from time to time, sign in the name of and on behalf of the undersigned directors of the Corporation and to file with the SEC Registration Statements with respect to the Corporation's common stock, $.01 par value, and the Preferred Stock Purchase Rights attached to and trading with such Common Stock to be sold in secondary offerings by shareholders of the Company and any other documents or further Amendments or Post-Effective Amendments to such Registration Statements and to take such other action, all as said attorneys-in-fact, or any one of them, deem necessary or advisable and does hereby ratify and confirm all that said attorneys-in-fact, and each of them, may do by virtue hereof. Additionally, each of the undersigned directors of the Corporation does hereby nominate, constitute and appoint Harry M. Cornell, Jr., Michael A. Glauber, Robert A. Jefferies, Jr. and Ernest C. Jett, or any one of them, his true and lawful attorneys-in-fact, to, from time to time, sign in the name of and on behalf of the undersigned directors of the Corporation and file with the SEC Registration Statements with respect to securities (including the Corporation's common stock, $.01 par value, and the Preferred Stock Purchase Rights attached to and trading with such Common Stock) to be sold pursuant to the Corporation's Restated Employee Stock Purchase/Stock Bonus Plan, 1989 Discount Stock Plan, 1989 Flexible Stock Plan, Directors Stock Option Plan and any other employee benefit plans of the Corporation adopted or approved during calendar year 1995 and any other documents or further Amendments or Post- Effective Amendments to such Registration Statements (or any previous registration statements filed as respects any of the above-mentioned plans) and to take such other action, all as said attorneys-in-fact, or any one of them, deem necessary or advisable and does hereby ratify and confirm all that said attorneys-in-fact, and each of them, may do by virtue hereof. EX-27 14 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FOR THE FINANCIAL STATEMENTS OF LEGGETT & PLATT, INCORPORATED FOR THE YEAR ENDED DECEMBER 31, 1994 (COMMISSION FILE NUMBER 1-7845) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. YEAR DEC-31-1994 JAN-01-1994 DEC-31-1994 2,700,000 0 252,800,000 7,500,000 255,500,000 544,700,000 699,500,000 303,500,000 1,119,900,000 232,900,000 204,900,000 400,000 0 0 624,800,000 1,119,900,000 1,858,100,000 1,858,100,000 1,429,100,000 1,429,100,000 0 0 9,800,000 189,500,000 74,100,000 115,400,000 0 0 0 115,400,000 2.78 0