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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 March 31, 1996
/ / 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
May 6, 1996 were:
Class A ($.01 par value) 5,779,000
Class B ($.01 par value) 27,185,000
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HUBBELL INCORPORATED
PART I - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
Consolidated Balance Sheet
(unaudited)
(in thousands)
March 31, 1996 December 31, 1995
-------------- -----------------
ASSETS
Current Assets:
Cash and temporary cash investments $ 83,677 $ 86,984
Accounts receivable (net) 167,991 140,765
Inventories 239,218 236,384
Prepaid taxes 31,017 30,958
Other 4,966 5,015
----------- ----------
Total Current Assets 526,869 500,106
Property, Plant and Equipment (net) 213,822 204,190
Other Assets:
Investments 171,088 175,656
Purchase price in excess of net assets of companies acquired (net) 160,676 137,941
Property held as investment 8,036 8,329
Other 28,865 31,023
----------- ----------
$ 1,109,356 $1,057,245
=========== ==========
Liabilities And Shareholders' Equity
Current Liabilities:
Commercial paper and notes $ 18,635 $ ---
Accounts payable 38,220 34,272
Accrued salaries, wages and employee benefits 21,334 26,079
Accrued income taxes 43,084 30,711
Dividends payable 15,493 15,475
Accrued restructuring charge 10,000 10,000
Other accrued liabilities 85,278 78,401
----------- ----------
Total Current Liabilities 232,044 194,938
Long-Term Debt 102,111 102,096
Other Non-Current Liabilities 74,138 76,766
Deferred Income Taxes 17,036 16,107
Shareholders' Equity 684,027 667,338
----------- ----------
$ 1,109,356 $1,057,245
=========== ==========
See notes to consolidated financial statements.
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HUBBELL INCORPORATED
Consolidated Statement of Income
(unaudited)
(in thousands, except per share amounts)
Three Months Ended
March 31,
---------
1996 1995
---- ----
Net Sales $304,600 $278,434
Cost of goods sold 218,330 197,934
-------- ---------
Gross Profit 86,270 80,500
Selling & administrative expenses 42,466 42,180
-------- ---------
Operating Income 43,804 38,320
-------- ---------
Other Income (Expense):
Investment income 3,876 4,003
Interest expense (2,100) (2,213)
Other income (expense), net (976) (1,193)
-------- ---------
Total Other Income, net 800 597
-------- --------
Income before Income Taxes 44,604 38,917
Provision for income taxes 12,935 10,508
-------- --------
Net Income $ 31,669 $ 28,409
======== ========
Earnings Per Share $ 0.94 $ 0.85
======== ========
See notes to consolidated financial statements.
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HUBBELL INCORPORATED
Consolidated Statement of Cash Flows
(unaudited)
(in thousands)
Three Months Ended
March 31,
---------
Cash Flows From Operating Activities 1996 1995
- ------------------------------------ ---- ----
Net income $ 31,669 $ 28,409
Adjustments to reconcile net income to ---
net cash provided by operating activities:
Depreciation and amortization 10,776 9,826
Deferred income taxes 779 (934)
Changes in assets and liabilities, net of the effect of business acquisitions:
(Increase)/Decrease in accounts receivable (16,246) (3,942)
(Increase)/Decrease in inventories 6,564 1,011
(Increase)/Decrease in other current assets 145 2,575
Increase/(Decrease) in current operating liabilities 14,013 (5,119)
Increase/(Decrease) in restructuring accruals (2,118) (2,915)
(Increase)/Decrease in other, net 1,903 6,355
-------- -------
Net cash provided by operating activities 47,485 35,266
-------- -------
Cash Flows From Investing Activities
Acquisition of businesses (31,365) ---
Additions to property, plant and equipment (9,928) (9,344)
Purchases of investments (242) (1,974)
Repayments and sales of investments 4,994 ---
Other, net 2,151 2,030
-------- -------
Net cash used in investing activities (34,390) (9,288)
-------- -------
Cash Flows From Financing Activities
Payment of dividends (15,475) (13,494)
Commercial paper and notes - borrowings (repayments) --- 1,707
Exercise of stock options 714 35
Acquisition of treasury shares (1,641) ---
-------- -------
Net cash provided (used) in financing activities (16,402) (11,752)
-------- -------
Increase (Decrease) in cash and temporary cash investments (3,307) 14,226
Cash And Temporary Cash Investments
Beginning of period 86,984 38,865
-------- -------
End of period $ 83,677 $ 53,091
========== =========
See notes to consolidated financial statements
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HUBBELL INCORPORATED
Notes to Consolidated Financial Statements
March 31, 1996
(unaudited)
1. Inventories are classified as follows: (in thousands)
March 31, December 31,
1996 1995
---- ----
Raw Material $ 84,831 $ 81,253
Work-in-Process 66,390 64,117
Finished Goods 137,677 140,428
--------- ---------
288,898 285,798
Excess of current
Production costs over
LIFO cost basis 49,680 49,414
--------- ---------
$ 239,218 $ 236,384
========= =========
2. Shareholders' Equity comprises: (in thousands)
March 31, December 31,
1996 1995
---- ----
Common Stock, $.01 par value:
Class A-authorized 50,000,000 shares,
outstanding 5,769,746 and 5,786,315 shares $ 58 $ 58
Class B-authorized 150,000,000 shares,
outstanding 27,183,972 and 27,139,225 shares 271 271
Additional paid-in-capital 436,980 437,908
Retained earnings 254,479 238,303
Unrealized holding gains (losses) on securities 144 74
Cumulative translation adjustments (7,905) (9,276)
----------- ---------
$684,027 $667,338
=========== =========
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HUBBELL INCORPORATED
Notes to Consolidated Financial Statements
March 31, 1996
(unaudited)
3. On January 2, 1996, the Company acquired the assets of the Anderson
Electrical Connectors business ("Anderson"). Anderson manufactures
electrical connectors and associated hardware and tools for the electric
utility industry with manufacturing facilities in Alabama and Tennessee. On
January 31, 1996, the Company acquired all the outstanding stock of Gleason
Reel Corp. ("Gleason") based in Mayville, Wisconsin. Gleason manufactures
electric cable management products (including cable and hose reels,
protective steel and nylon cable tracks and cable festooning hardware) and
a line of ergonomic tool support systems.
The businesses were acquired for cash of $31,365,000 and notes of
$18,635,000 that mature in one year and were recorded under the purchase
method of accounting. The costs of the acquired businesses has been
allocated to assets acquired and liabilities assumed based on fair values
with the residual amount assigned to goodwill, which is being amortized
over forty years. The businesses have been included in the financial
statements as of their respective acquisition date and had no material
effect on the Company's financial position and reported earnings.
4. In the opinion of management, the information furnished in Part I-Financial
Information on Form 10-Q reflects all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial
statements for the periods indicated.
5. The results of operations for the three months ended March 31, 1996 and
1995 are not necessarily indicative of the results to be expected for the
full year.
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HUBBELL INCORPORATED
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 1996
Financial Condition
At March 31, 1996, the Company's financial position remained strong with
working capital of $294.8 million and a current ratio of 2.3 to 1. Total
borrowings at March 31, 1996, were $120.7 million, 17.7% of shareholders equity.
The net decline in cash and temporary cash investments of $3.3 million for
the three months ended March 31, 1996, reflects the purchase of Anderson and
Gleason and quarterly dividend payment offset by cash provided from operating
activities.
Net cash provided by operating activities reflects higher net income,
continued emphasis on working capital management and funding of working capital
for the recent acquisitions. Accounts receivable increased in line with higher
sales. Inventories declined due to production efficiencies as the start-up phase
of new production lines under the restructuring program progresses. The increase
in liabilities is principally due to the higher level of business activity,
increased income taxes and accrual of interest for the ten year notes.
The Company believes that currently available cash, 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.
Results of Operations
Consolidated net sales increased more than 9% on strong growth reported by
Lighting, Industrial Controls, Ohio Brass, A.B. Chance, Pulse Communications and
Premise Wiring combined with the recent acquisition of Anderson and Gleason.
Operating income increased more than 14% on the higher sales volume, improved
operating efficiencies from the Company's restructuring program and the impact
of the acquired businesses.
Low voltage segment sales increased 5% on higher shipment of industrial
controls, lighting products and inclusion of Gleason. Most units showed modest
increases as construction related markets were impacted by the severe winter
weather. Operating income increased more than 11% on higher sales, improved
operating efficiencies and inclusion of Gleason since its acquisition.
High voltage segment sales increased more than 15% on continued growth for
surge arresters and insulators combined with the sales of Anderson products.
Segment operating income increased in line with sales.
Other industry segment sales increased 11% as almost all units reported
higher sales with particularly strong increases for telecommunications and wire
management products. Operating profits increased 12% on the improved volume of
higher margin telecommunications products and improved operating efficiencies.
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HUBBELL INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 1996
(continued)
Sales through the Company's International units were essentially even with
last year while operating profits increased more than 10% reflecting the
improved profitability of the restructured Canadian and European operations.
The effective income tax rate for 1996 is 29% versus 27% in 1995. The
increase in the effective tax rate reflects a higher portion of domestic source
income at resulting higher tax rates and the impact of our recently completed
acquisitions. Net income and earnings per share increased 11%, respectively.
The Company's restructuring program is proceeding according to management's
plan. At March 31, 1996, the restructuring accrual balance was $16,296,000 of
which $10,000,000 is classified as current liability. Through March 31, 1996,
cumulative costs charged to the restructuring accrual were $33,704,000 as
follows (in thousands):
Personnel Plant & Equipment Costs
Costs Relocation Disposal Total
----- ---------- -------- -----
1993 $ 4,456 $ 2,794 $ --- $ 7,250
1994 7,550 2,036 5,225 14,811
1995 3,017 5,048 1,461 9,526
1996 Y-T-D 523 1,022 572 2,117
-------- ------- ------- --------
Cumulative $ 15,546 $ 10,900 $ 7,258 $ 33,704
======== ======== ======= ========
Personnel costs include non-cash charges for early retirement programs
which have been reclassified to the Company's pension liability totaling
$6,203,000 since inception of the restructuring 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 6, 1996:
1. The following nine (9) 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, the affirmative votes being a majority of the voting power of
all outstanding eligible shares all voting as a single class:
Name of Individual Votes For Votes Withheld
------------------ ----------- --------------
E. Richard Brooks 122,190,954 557,095
George W. Edwards, Jr. 122,199,184 548,825
Andrew McNally IV 122,265,918 482,091
Daniel J. Meyer 122,212,785 535,224
Horace G. McDonell 122,165,973 582,036
Joel S. Hoffman 121,887,251 860,758
G. Jackson Ratcliffe 122,247,117 500,892
John A. Urquhart 122,212,957 535,052
Malcolm Wallop 122,038,174 664,835
2. Price Waterhouse was ratified as independent accountants to examine the
annual financial statements for the Company for the year 1996 receiving
122,478,896 affirmative votes, being the affirmative vote of the holders of
a majority of the voting power of all outstanding eligible shares all
voting as a single class, with 76,835 negative votes and 192,279 votes
abstained.
3. The proposal relating to approval of an amendment to, and restatement of,
the Company's Restated Certificate of Incorporation, which appears on page
17 of the definitive proxy statement dated March 22, 1996 and filed with
the Commission on March 27, 1996, which proposal is incorporated herein by
reference, has been approved with 119,719,668 affirmative votes, being the
affirmative vote of the holders of a majority of the voting power of all
outstanding eligible shares all voting as a single class, with 2,610,748
negative votes and 417,593 votes abstained.
4. The proposal relating to approval of an amendment to the Company's
Incentive Compensation Plan, which appears on pages 17 to 19 of the
definitive proxy statement dated March 22, 1996, which proposal is
incorporated herein by reference, has been approved with 117,633,639
affirmative votes, being the affirmative vote of the holders of a majority
of the voting power of all outstanding eligible shares all voting as a
single class, with 3,963,124 negative votes and 1,151,247 votes abstained.
5. The proposal relating to approval of the adoption of the Company's Senior
Executive Incentive Compensation Plan, which appears on pages 19 to 20 of
the definitive proxy statement dated March 22, 1996, which proposal is
incorporated herein by reference, has been approved with 117,063,867
affirmative votes, being the affirmative vote of the holders of a majority
of the voting power of all outstanding eligible shares all voting as a
single class, with 4,334,534 negative votes and 1,349,587 votes abstained.
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HUBBELL INCORPORATED
PART II -- OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
Number Description
------ -----------
10g+ Hubbell Incorporated Incentive Compensation Plan, as amended effective
January 1, 1996. Exhibit B of the registrant's proxy statement, dated
March 22, 1996, filed on March 27, 1996, is incorporated by reference.
10p+ Hubbell Incorporated Senior Executive Incentive Compensation Plan,
effective January 1, 1996. Exhibit C of the registrant's proxy
statement, dated March 22, 1996, filed on March 27, 1996, is
incorporated by reference.
11. Computation of Earnings Per Share
27. Financial Data Schedule (Electronic filings only)
-------------------
+ This exhibit constitutes a management contract, compensatory plan,
or arrangement.
REPORTS ON FORM 8-K
There were no reports on Form 8-K filed for the three months ended March 31,
1996.
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: May 10, 1996 /s/ HARRY B. ROWELL, JR.
------------------------------ ------------------------------
Harry B. Rowell, Jr.
Executive Vice President
(Chief Financial and
Accounting Officer)
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EXHIBIT INDEX
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Exhibit 11 Computation of Earnings Per Share
Exhibit 27 Financial Data Schedule