1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 2001
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from TO
Commission File Number 1-2958
HUBBELL INCORPORATED
(Exact name of registrant as specified in its charter)
STATE OF CONNECTICUT 06-0397030
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
584 DERBY MILFORD ROAD, ORANGE, CT 06477
(Address of principal executive offices) (Zip Code)
(203) 799-4100
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report.)
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
The number of shares of registrant's classes of common stock outstanding as of
August 6, 2001 were:
Class A ($.01 par value) 9,672,000
Class B ($.01 par value) 48,902,000
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INDEX
HUBBELL INCORPORATED
Part I. Financial Information PAGE
Item 1. Financial Statements - (unaudited)
Consolidated statement of income - Three months ended
June 30, 2001 and 2000, Six months ended June 30, 2001 and 2000 3
Consolidated balance sheets - June 30, 2001 and December 31, 2000 4
Consolidated statement of cash flows - Six months ended June 30,
2001 and 2000 5
Notes to consolidated financial statements - June 30, 2001 6-10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 11-15
Part II. Other Information
Item 1. Legal Proceedings N/A
Item 2. Changes In Securities and Use of Proceeds N/A
Item 3. Defaults upon Senior Securities N/A
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information N/A
Item 6. Exhibits and Report on Form 8-K 17
Signature 17
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HUBBELL INCORPORATED
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
--------------------------- ---------------------------
2001 2000 2001 2000
------- ------- ------- -------
NET SALES $ 341.2 $ 356.6 $ 685.3 $ 717.3
Cost of goods sold 256.3 282.2 513.9 539.8
------- ------- ------- -------
GROSS PROFIT 84.9 74.4 171.4 177.5
Special charge (credit), net -- (.3) -- (.1)
Selling & administrative expenses 56.4 54.7 113.0 113.2
(Gain) on sale of business -- (36.2) -- (36.2)
------- ------- ------- -------
OPERATING INCOME 28.5 56.2 58.4 100.6
OTHER INCOME (EXPENSE):
Investment income 3.1 3.8 6.5 7.5
Interest expense (4.2) (4.0) (9.5) (8.1)
Other income, net .1 .4 .4 3.8
------- ------- ------- -------
TOTAL OTHER INCOME (EXPENSE) (1.0) .2 (2.6) 3.2
INCOME BEFORE INCOME TAXES 27.5 56.4 55.8 103.8
Provision for income taxes 5.7 14.7 12.8 27.0
------- ------- ------- -------
NET INCOME $ 21.8 $ 41.7 $ 43.0 $ 76.8
======= ======= ======= =======
EARNINGS PER SHARE - BASIC $ 0.37 $ 0.67 $ 0.73 $ 1.23
======= ======= ======= =======
EARNINGS PER SHARE - DILUTED $ 0.37 $ 0.67 $ 0.73 $ 1.22
======= ======= ======= =======
CASH DIVIDENDS PER COMMON SHARE $ 0.33 $ 0.33 $ 0.66 $ 0.65
======= ======= ======= =======
See notes to consolidated financial statements.
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HUBBELL INCORPORATED
CONSOLIDATED BALANCE SHEET
(IN MILLIONS)
(unaudited)
June 30, 2001 December 31, 2000
-------- --------
ASSETS
Current Assets:
Cash and temporary cash investments $ 14.1 $ 74.8
Accounts receivable (net) 211.3 209.8
Inventories 289.5 298.6
Prepaid taxes and other 26.7 36.8
-------- --------
TOTAL CURRENT ASSETS 541.6 620.0
Property, plant and equipment (net) 291.4 305.3
Other Assets:
Investments 179.8 192.9
Goodwill, less accumulated amortization 258.3 262.0
Other 73.1 74.3
-------- --------
$1,344.2 $1,454.5
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Commercial paper and notes $ 169.9 $ 259.5
Accounts payable 64.9 69.9
Accrued salaries, wages and employee benefits 19.9 21.0
Accrued income taxes 40.9 43.9
Dividends payable 19.3 19.5
Other accrued liabilities 70.0 75.6
-------- --------
TOTAL CURRENT LIABILITIES 384.9 489.4
Long-Term Debt 99.7 99.7
Other Non-Current Liabilities 90.2 89.9
Deferred Income Taxes 6.1 6.0
Shareholders' Equity 763.3 769.5
-------- --------
$1,344.2 $1,454.5
======== ========
See notes to consolidated financial statements
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HUBBELL INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(IN MILLIONS)
SIX MONTHS ENDED
JUNE 30
---------------------------
CASH FLOWS FROM OPERATING ACTIVITIES 2001 2000
------- -------
Net income $ 43.0 $ 76.8
Adjustments to reconcile net income to
net cash provided by operating activities:
Gain on sale of business -- (36.2)
Gain on sale of assets -- (11.2)
Depreciation and amortization 28.9 27.8
Deferred income taxes .1 (4.9)
Expenditures/reversals - streamlining and special charges (1.9) (16.3)
Special Charge - 2000 -- 10.4
Changes in assets and liabilities, net of business acquisitions/dispositions:
(Increase)/Decrease in accounts receivable (1.6) (9.4)
(Increase)/Decrease in inventories 9.1 (.8)
(Increase)/Decrease in other current assets 10.2 (8.4)
Increase/(Decrease) in current operating liabilities (13.8) 6.3
(Increase)/Decrease in other, net 3.2 (1.6)
------- -------
Net cash provided by operating activities 77.2 49.3
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of businesses -- --
Sale of business -- 61.0
Proceeds from disposition of assets -- 23.3
Additions to property, plant and equipment (15.0) (23.5)
Purchases of investments (2.4) (1.9)
Repayments and sales of investments 15.7 10.4
Other, net .6 4.3
------- -------
Net cash provided by (used in) investing activities (1.1) 73.6
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of dividends (38.8) (41.1)
Commercial paper and notes - (repayments) borrowings (89.6) 44.0
Exercise of stock options 1.5 .8
Acquisition of treasury shares (9.9) (74.6)
------- -------
Net cash used in financing activities (136.8) (70.9)
------- -------
Increase (decrease) in cash and temporary cash investments (60.7) 52.0
CASH AND TEMPORARY CASH INVESTMENTS
Beginning of period 74.8 24.0
------- -------
End of period $ 14.1 $ 76.0
======= =======
See notes to consolidated financial statements.
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HUBBELL INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information. Accordingly, they do not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring items)
considered necessary for a fair presentation have been included.
Operating results for the three and six months ending June 30, 2001 are
not necessarily indicative of the results that may be expected for the
year ending December 31, 2001.
The balance sheet at December 31, 2000 has been derived from the
audited financial statements at that date but does not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements.
For further information, refer to the consolidated financial statements
and footnotes thereto included in the Hubbell Incorporated Annual
Report on Form 10-K for the year ended December 31, 2000.
2. SPECIAL CHARGES - PRIOR YEAR
In the second quarter of 2000, the company recorded special charges,
net, of $23.5 million. The net cost consisted of $30.5 million of
special and non-recurring charges, primarily to cover the cost of
inventory disposals in connection with product line discontinuances,
offset by a $7.0 million reduction in the streamlining program accrual
established in 1997.
The inventory disposal program included the identification of $20.3
million of product line SKU's, 9% of the Company's total SKU offering,
which would no longer be offered for sale. This charge was reported as
a component of cost of sales.
Net sales included a non-recurring charge of $3.5 million related to an
increase in the reserve for customer returns and allowances.
Reflected in special charge (credits), net of $(.3) million in the
prior year second quarter, are costs of $6.7 million, primarily related
to asset impairments and facility consolidation actions, net of the
$7.0 million adjustment to the 1997 streamlining accrual. For the first
six months of 2000, Special charge (credit) net, consisted of $10.4
million of special charges offset by $10.5 million of reduction in the
1997 streamlining program accrual.
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HUBBELL INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001
(UNAUDITED)
3. 1997 STREAMLINING PROGRAM
In 1997, the Company recorded a special charge of $52.0 million ($32.2
million after-tax or $.47 per share), comprised of $32.4 million of accrued
consolidation and streamlining costs, $9.5 million of facility asset
impairments, $7.4 million goodwill asset impairment, and other current
employee and product line exit costs of $2.7 million. The Company's
consolidation and streamlining initiatives (the "Plan") were undertaken to
optimize the organization and cost structure primarily within the
Electrical and Power Segments.
As part of management's ongoing review of estimated program costs in
connection with the Plan, adjustments in the amount of $10.5 million were
made in the first and second quarters of 2000. The adjustments (income)
reflected costs originally estimated as part of the 1997 Plan which were
deemed no longer required to complete certain actions in the Electrical and
Power Segments.
The following table sets forth the status of the plan at June 30, 2001 (in
millions):
Employee Disposal Accrued
Benefits and Exit Costs Charge
----- ----- -----
1997 streamlining program $15.6 $16.8 $32.4
Amounts reversed in 2000 (5.4) (5.1) (10.5)
Amount utilized (8.5) (9.8) (18.3)
----- ----- -----
Remaining reserve $ 1.7 $ 1.9 $ 3.6
===== ===== =====
4. BUSINESS COMBINATIONS
Dispositions
In April 2000, the Company completed the sale of its WavePacer Digital
Subscriber Line assets, part of Pulse Communications, Inc. ("Pulse"), to
ECI Telecom Ltd. for a purchase price of $61.0 million. The transaction
produced a gain on sale of $36.2 million in the 2000 second quarter.
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HUBBELL INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001
(UNAUDITED)
5. INVENTORIES ARE CLASSIFIED AS FOLLOWS: (IN MILLIONS)
JUNE 30, DECEMBER 31,
2001 2000
------ ------
Raw Material $ 91.7 $ 93.1
Work-in-Process 72.6 75.0
Finished Goods 167.6 172.9
------ ------
331.9 341.0
Excess of current
costs over LIFO basis 42.4 42.4
------ ------
$289.5 $298.6
====== ======
6. SHAREHOLDERS' EQUITY COMPRISES: (IN MILLIONS)
JUNE 30, DECEMBER 31,
2001 2000
------ ------
Common Stock, $.01 par value:
Class A-authorized 50,000,000 shares,
outstanding 9,604,238 and 9,637,338 shares $ .1 $ .1
Class B-authorized 150,000,000 shares
outstanding 48,864,031 and 49,120,453 shares .5 .5
Additional paid-in-capital 202.6 211.0
Retained earnings 581.6 577.4
Cumulative translation adjustments (21.5) (19.5)
------ ------
$763.3 $769.5
====== ======
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HUBBELL INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001
(UNAUDITED)
7. The following table sets forth the computation of earnings per share
for the three and six months ended June 30, (in millions except per
share data):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------- --------------------
2001 2000 2001 2000
------ ------ ------ ------
Net Income $ 21.8 $ 41.7 $ 43.0 $ 76.8
====== ====== ====== ======
Weighted average number of common
shares outstanding during the period 58.4 61.9 58.4 62.7
Potential dilutive shares .3 .2 .3 .2
------ ------ ------ ------
Average number of shares outstanding - diluted 58.7 62.1 58.7 62.9
Earnings per share:
Basic $ 0.37 $ 0.67 $ 0.73 $ 1.23
Diluted $ 0.37 $ 0.67 $ 0.73 $ 1.22
8. COMPREHENSIVE INCOME (IN MILLIONS)
Total comprehensive income was $22.6 and $40.9 for the three and six
months ended June 30, 2001, respectively, and $39.5 and $71.8 for the
three and six months ended June 30, 2000, respectively. The difference
between net income and comprehensive income relates primarily to
translation adjustments.
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HUBBELL INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2001
(UNAUDITED)
9. INDUSTRY SEGMENTS
The following table sets forth financial information by industry
segment for the three and six months ended June 30 (in millions):
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
--------------------- ---------------------
2001 2000 2001 2000
------ ------ ------ ------
Net Sales
Electrical $215.2 $234.4 $434.5 $477.3
Power 89.1 98.1 177.1 190.9
Industrial Technology 36.9 24.1 73.7 49.1
------ ------ ------ ------
Total $341.2 $356.6 $685.3 $717.3
====== ====== ====== ======
Operating Income
Electrical $ 20.1 $ 30.9 $ 40.4 $ 65.3*
Special and nonrecurring
charge, net -- (17.6) -- (19.2)
Gain on sale of business -- 36.2 -- 36.2
Power 6.2 10.9 13.9 19.3
Special and nonrecurring
charge, net -- (5.1) -- (3.7)
Industrial Technology 2.2 1.7 4.1 3.5
Special charge -- (.8) -- (.8)
------ ------ ------ ------
Segment Total 28.5 56.2 58.4 100.6
Interest Expense (4.2) (4.0) (9.5) (8.1)
Investment and Other
Income, Net 3.2 4.2 6.9 11.3
------ ------ ------ ------
Income Before Income Taxes $ 27.5 $ 56.4 $ 55.8 $103.8
====== ====== ====== ======
*- Electrical segment operating income for the six months ended
June 30, 2000 includes $8.1 million of gain on sale of a
fully-depreciated west coast warehouse.
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HUBBELL INCORPORATED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 2001
RESULTS OF OPERATIONS
Consolidated net sales for the second quarter and first six months of 2001
declined 4% versus the comparable periods of the prior year. Excluding
acquisitions, sales declined 9%. The decline both in the quarter and
year-to-date was driven by widespread economic weakness in the Company's
principal industrial application, telecommunications and power products markets.
Sales within the company's Industrial Technology Segment, however, improved 53%
quarter over quarter as a result of the July 2000 acquisition of GAI-Tronics.
Net sales in the prior year included a charge of $3.5 million in connection with
customer credit activity primarily within electrical products.
Operating income for the quarter and year-to-date fell 49% and 42%,
respectively, versus the 2000 second quarter and six month results. Excluding
prior year special charges, net, and gains on sale of assets/business, operating
income for the quarter fell 34% and on a year-to-date basis was down 27%.
Operating profit declines exceeded the sales declines primarily due to
unabsorbed fixed manufacturing costs and a larger proportion of lower margin
products in the overall sales mix. Cost reduction actions, which started in the
2000 fourth quarter and are continuing, were effective at minimizing the margin
decline by reducing the variable costs associated with lower sales and lowering
fixed costs.
Segment Results
Electrical Segment sales declined 9% in the quarter and year-to-date versus
comparable periods of 2000. The sales decline is attributable to lower orders
for specification-grade lighting and wiring products and a decline in orders
from data/telecommunications customers affecting sales of premise wiring and the
multiplexing products of Pulse Communications. Partially offsetting these
declines were improved sales within harsh/hazardous electrical product lines
where an increase in energy related construction projects increased sales in the
quarter and year-to-date versus 2000. Segment operating income, before special
charges and asset sale gains, fell 35% in the quarter and 29% year-to-date.
Despite the reporting of modest profits in the quarter and year-to-date within
commodity electrical products, volume declines of higher margin industrial
application products and unabsorbed fixed manufacturing expenses reduced
operating profits. Profitability improvements within commodity electrical
products resulted from the management actions, beginning mid-year 2000, to lower
logistics costs and improve the accuracy of customer shipments from the central
distribution warehouse.
Power Segment sales declined 10% in the quarter and 8% year-to-date versus
comparable periods of 2000 as a result of lower order input levels, primarily
from utility industry customers, which began in the second half of 2000. Lower
utility industry demand is attributable to disruptions in their procurement
patterns, spending on power generation versus distribution, the California
energy crisis and generally weak economic conditions. Operating income in the
quarter declined 43% and for the first six months fell 28% due to the lower
sales and unabsorbed fixed expenses. Second quarter results also include asset
impairment costs of $3.8 million related to a reduction in productive capacity.
This and other cost avoidance/reduction actions, including lower employment
levels, have been taken in response to the lower volume and further measures are
being identified to keep costs in line with order input levels.
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HUBBELL INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 2001
(CONTINUED)
Industrial Technology Segment reported substantially increased sales in the
quarter and first six months versus 2000 as a result of the July 2000
acquisition of GAI-Tronics Corporation. GAI-Tronics is a leading supplier of
communications systems designed for indoor, outdoor and hazardous environments.
The segment's other businesses faced slower industrial demand resulting in lower
sales compared with the 2000 second quarter and six months. Operating profits in
the quarter and year-to-date improved over comparable periods of 2000 as a
result of the strong profit contribution from GAI-Tronics and modest
profitability gains in high voltage test and measurement products, offset by
weak demand in the segment's industrial base businesses.
Special and Non-recurring Charges - Prior Year
The second quarter and six-month operating results of the prior year included a
special and non-recurring charge, offset by income from a reduction in the
streamlining program accrual established in 1997. These costs net to $23.5
million ($17.4 million net of tax) in the second quarter and $23.7 million
($17.5 million net of tax) for the six months or $0.28 per diluted share in both
periods. The Company's charges and accrual reversal were recorded within their
respective classifications in the consolidated statement of income, as indicated
in Note 2 of Notes to Consolidated Financial Statements.
Net sales includes a non-recurring charge of $3.5 million related to an increase
in the reserve for customer returns and allowances in response to higher
customer credit activity associated with inaccurate/incomplete shipments from an
electrical products central distribution warehouse which began operation in late
1999. Cost of sales reflects a special charge of $20.3 million in connection
with management's decision to streamline its product offering and eliminate
non-strategic inventory across all business units. This action did not have any
significant impact on service levels, sales or profitability throughout 2000 or
in the current year.
Special charge, net, reflects the cost of first and second quarter 2000 cost
reduction and streamlining actions offset by a reversal, in connection with
management's ongoing review, of costs accrued in connection with the 1997
streamlining program, recorded as follows (millions):
First Quarter Second Quarter Six Months
------- ------- -------
2000 special charge $ 3.7 $ 6.7 $ 10.4
Reversal: 1997
streamlining program (3.5) (7.0) (10.5)
------- ------- -------
NET $ .2 $ (.3) $ (.1)
======= ======= =======
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HUBBELL INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 2001
(CONTINUED)
Special charge costs primarily related to asset impairments and facility
consolidation actions undertaken to reduce ongoing operating costs and exit
certain joint venture arrangements. All actions contemplated under the 2000
special charge were completed in the first quarter of 2001.
1997 Streamlining Plan
In 1997, the Company recorded a special charge of $52.0 million, comprised of
$32.4 million of accrued consolidation and streamlining costs, $9.5 million of
facility asset impairments, a $7.4 million goodwill asset impairment, and other
current employee and product line exit costs of $2.7 million. The Company's
consolidation and streamlining initiatives were undertaken to optimize the
organization and cost structure primarily within the Electrical and Power
Segments.
The components of the initial reserve at December 31, 1997, amounts utilized in
1997-June 2001 and reversed in 2000, and the accrued consolidation and
streamlining reserve balances remaining at June 30, 2001 were (in millions):
Employee Disposal Accrued
Benefits and Exit Costs Charge
------ ------ ------
1997 streamlining program $ 15.6 $ 16.8 $ 32.4
Amounts reversed in 2000 (5.4) (5.1) (10.5)
Amounts utilized (8.5) (9.8) (18.3)
------ ------ ------
Remaining reserve $ 1.7 $ 1.9 $ 3.6
====== ====== ======
One plant closing remains, which is scheduled to be completed in 2001.
This action is consistent with the timing established in the Plan.
Remaining actions are not expected to require any significant cash
expenditures.
Gain on sale of business
In April 2000, the Company completed the sale of its WavePacer Digital
Subscriber Line assets to ECI Telecom Ltd. for a purchase price of $61.0
million. The transaction produced a gain on sale of $36.2 million in the prior
year second quarter.
Other Income / Expense
Interest expense in the quarter was consistent with the 2000 second quarter as
higher average debt levels were offset by lower average interest rates on the
Company's outstanding commercial paper. Through six months of 2001, interest
expense was higher than the comparable 2000 period due primarily to higher
average debt levels.
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HUBBELL INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 2001
(CONTINUED)
Other income, net, for the six months declined versus 2000 primarily due to
inclusion in the prior year of a first quarter gain on sale of leveraged lease
investments in contemplation of their pending expiration.
Income Taxes - During the second quarter, management revised the full year
estimated effective income tax rate to 23% from the 25% rate utilized in the
2001 first quarter. The 2000 second quarter and six month effective tax rate was
26%. The reduction in the effective tax rate is a result of a lower portion of
overall earnings being derived from domestic operations.
Net Income for the second quarter and six months declined due to a reduction in
operating income and other income, offset by a lower tax rate. Diluted earnings
per share declined by a lower percentage than net income as a result of a
reduction in the average number of diluted shares outstanding.
LIQUIDITY AND CAPITAL RESOURCES
Management views liquidity on the basis of the Company's ability to meet
operational funding needs, fund additional investments, including acquisitions,
and make dividend payments to shareholders. The Company's working capital
position at June 30, 2001 was $156.7 million, up from $130.6 million at December
31, 2000. Total borrowings at June 30, 2001 were lowered to $269.6 million, 35%
of total shareholders equity, versus $359.2 million or 47% of total
shareholder's equity, at year-end. The combination of improved operating cash
flow and a reduction of investments facilitated a decline in commercial paper
outstanding and, consequently, the debt to equity ratio as compared to December
31, 2000.
The company also applied financial resources to pay the quarterly dividend to
shareholders, make capital expenditures and, in the first quarter, complete the
1997 share repurchase program.
At its meeting in December 2000, the Company's Board of Directors authorized
repurchase of an additional $300 million of Class A and Class B shares. This
authorization is expected to be completed over a three-year period, however,
management has not yet executed any purchases under this program through June
30, 2001.
Cash provided by operations increased in the first six months of 2001 versus the
first half of 2000 due primarily to better management of inventory, the timing
of tax payments and reduced expenditures in connection with streamlining and
special charges. The decline in operating liabilities reflects a decline in
accounts payable and general business accruals, consistent with the lower
levels of business activity year-over-year. Investing cash flow in the prior
year includes $61.0 million from the sale of DSL assets, liquidation of an
investment in leveraged leases and proceeds from the sale of a west coast
warehouse. Financing cash flows reflect the impact of the reduction in
commercial paper borrowings during 2001 and completion of the 1997 share
repurchase program, which limited cash expenditures for treasury shares to $9.9
million in 2001 versus $74.6 million in 2000.
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HUBBELL INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 2001
(CONTINUED)
The Company believes that currently available cash, available borrowing
facilities, and its ability to increase its credit lines if needed, combined
with internally generated funds should be more than sufficient to fund capital
expenditures, as well as any increase in working capital that would be required
to accommodate a higher level of business activity. The Company actively seeks
to expand by acquisition as well as through the growth of its present
businesses. While a significant acquisition may require additional borrowings,
the Company believes it would be able to obtain financing based on its favorable
historical earnings performance and strong financial position.
MARKET RISKS
In the operation of its business, the Company has identified market risk
exposures to foreign currency exchange rates, raw material prices and interest
rates. There were no material changes during the quarter affecting the
identified risks or the Company's strategy for managing these exposures.
FORWARD-LOOKING STATEMENTS
Certain statements made in this Management's Discussion and Analysis of
Financial Condition and Results of Operations, and elsewhere in this report, are
forward-looking and are based on the Company's reasonable current expectations.
These forward-looking statements may be identified by the use of words or
phrases such as "believe", "expect", "anticipate", "should", "plan",
"estimated", "potential", "target", "goals" and "scheduled", among others. In
connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company is hereby identifying certain
important factors that could cause actual results to differ materially from
those contained in the specified statements. Such factors include, but are not
limited to: the timing of completion of actions and cash expenditures in
connection with the 1997 streamlining program.
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HUBBELL INCORPORATED
PART II -- OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Shareholders held on May 7, 2001:
1. The following eight (8) individuals were elected directors of the
Company for the ensuing year to serve until the next Annual Meeting of
Shareholders of the Company and until their respective successors may
be elected and qualified, each Director being elected by plurality
vote:
NAME OF INDIVIDUAL VOTES FOR VOTES WITHHELD
------------------ --------- --------------
G. Jackson Ratcliffe 202,680,073 12,660,058
E. Richard Brooks 212,230,326 3,109,805
George W. Edwards, Jr. 212,261,922 3,078,209
Joel S. Hoffman 212,303,880 3,036,251
Andrew McNally IV 212,225,289 3,114,842
Daniel J. Meyer 212,175,382 3,164,749
John A. Urquhart 212,193,195 3,146,936
Malcolm Wallop 212,076,301 3,263,830
2. PricewaterhouseCoopers LLP was ratified as independent accountants to
examine the annual financial statements for the Company for the year
2001 receiving 213,799,283 affirmative votes, being a majority of the
votes cast on the matter all voting as a single class, with 637,364
negative votes and 903,486 votes abstained.
3. The proposal relating to approval of the Company's 1973 Stock Option
Plan for Key Employees, as amended, which appears on pages 20 to 22 of
the proxy statement, dated March 27, 2001 (the "Proxy Statement"),
which proposal is incorporated herein by reference, has been approved
with 201,683,357 affirmative votes, being a majority of the votes cast
on the matter all voting as a single class (and representing a majority
of the votes entitled to be cast), with 11,947,583 negative votes and
1,709,190 votes abstained.
4. The proposal relating to reapproval of the Company's Senior Executive
Incentive Compensation Plan, which appears on pages 22 to 24 of the
Proxy Statement, which proposal is incorporated herein by reference,
has been approved with 206,255,657 affirmative votes, being a majority
of the votes cast on the matter all voting as a single class, with
6,380,070 negative votes and 2,704,424 votes abstained.
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HUBBELL INCORPORATED
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K
EXHIBITS
NUMBER DESCRIPTION
------ -----------
10a+* Hubbell Incorporated Supplemental Executive Retirement Plan,
as amended and restated, effective June 7, 2001.
10b(l)+* Hubbell Incorporated 1973 Stock Option Plan for Key Employees,
as amended and restated, effective May 7, 2001.
- ---------------------------------
+ This exhibit constitutes a management contract, compensatory plan, or
arrangement
* Filed hereunder
REPORTS ON FORM 8-K
There were no reports on Form 8-K filed for the three months ended June 30,
2001.
Pursuant to the requirements 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.
HUBBELL INCORPORATED
Dated: August 9, 2001 /s/ Timothy H. Powers
-------------------------------------
Timothy H. Powers
President and Chief Executive Officer
(Chief Financial Officer)
17