1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 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 SEPTEMBER 30, 1994
---------------------------------
-- OR --
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-2958
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HUBBELL INCORPORATED
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(Exact name of registrant as specified in its charter)
STATE OF CONNECTICUT 06-0397030
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
584 DERBY MILFORD ROAD, ORANGE, CT 06477
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(Address of principal executive offices) (Zip Code)
(203) 799-4100
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(Registrant's telephone number, including area code)
N/A
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(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
November 8, 1994 were:
Class A ($.01 par value) 5,892,000
Class B ($.01 par value) 25,479,000
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HUBBELL INCORPORATED
PART I -- FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
Consolidated Balance Sheet
(unaudited)
(in thousands)
September 30, December 31,
1994 1993
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Assets
- -------------------------------------
Current Assets:
Cash and temporary cash investments $ 34,896 $ 44,231
Accounts receivable (net) 142,539 109,987
Inventories 218,679 181,699
Prepaid taxes 25,196 15,875
Other 6,356 10,289
------------- ------------
TOTAL CURRENT ASSETS 427,666 362,081
Property, Plant and Equipment (net) 196,615 154,621
Other Assets:
Investments 204,099 245,081
Purchase price in excess of net assets
of companies acquired (net) 139,875 66,522
Property held as investment 10,938 7,794
Other 33,273 38,199
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$ 1,012,466 $ 874,298
============= ============
Liabilities and Shareholders' Equity
- ------------------------------------
Current Liabilities
Notes payable $ 139,280 $ 91,100
Accounts payable 28,716 20,964
Accrued salaries, wages and employee benefits 25,725 20,215
Accrued income taxes 26,410 35,617
Dividends payable 13,488 12,816
Accrued restructuring charge 14,000 14,000
Other accrued liabilities 72,702 35,494
------------- ------------
TOTAL CURRENT LIABILITIES 320,321 230,206
Long-Term Debt 2,700 2,700
Other Non-Current Liabilities 88,814 79,160
Deferred Income Taxes 5,938 4,572
Shareholders' Equity 594,693 557,660
------------- ------------
$ 1,012,466 $ 874,298
============= ============
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 Nine Months Ended
September 30, September 30,
--------------------------- -------------------------
1994 1993 1994 1993
--------- --------- -------- ----------
Net Sales $267,545 $211,464 $736,524 $620,742
Cost of goods sold 189,206 146,883 515,908 426,224
-------- -------- --------- --------
Gross Profit 78,339 64,581 220,616 194,518
Selling & administrative
expenses 41,998 35,235 118,645 104,483
--------- ---------- ---------- --------
Operating Income 36,341 29,346 101,971 90,035
--------- ---------- ---------- ---------
Other Income (Expense):
Investment income 3,411 3,713 10,831 11,428
Interest expense (1,716) (842) (4,006) (2,570)
Other income
(expense), net (655) (607) (1,843) (1,019)
-------- ---------- -------- -----------
TOTAL OTHER INCOME, NET 1,040 2,264 4,982 7,839
-------- -------- -------- ---------
Income Before Income Taxes 37,381 31,610 106,953 97,874
Provision for income taxes 10,092 8,222 28,877 25,450
-------- -------- -------- ---------
Net Income $27,289 $23,388 $78,076 $72,424
======== ======== ======== =========
Earnings Per Share: $0.86 $0.74 $2.46 $2.29
======== ======== ======== =========
See notes to consolidated financial statements.
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HUBBELL INCORPORATED
Consolidated Statement of Cash Flows
(unaudited)
(in thousands)
Nine Months Ended
September 30
-------------------------------
1994 1993
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CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
Net Income $78,076 $72,424
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 28,243 23,942
Restructuring charge (6,342) --
Deferred income taxes 2,299 864
Changes in assets and liabilities, net of the
effect of business acquisitions:
(Increase)/Decrease in Accounts receivable (11,009) (7,281)
(Increase)/Decrease in Inventories (11,841) 2,984
(Increase)/Decrease in Other current assets 5,915 278
Increase/(Decrease) in Current liabilities
(excluding dividends payable) 941 (7,649)
(Increase)/Decrease in Other, net 2,554 606
--------- --------
Net cash provided by operating activities 88,836 86,168
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Acquisition of businesses (110,000) (16,245)
Additions to property, plant and equipment (39,460) (17,954)
Purchase of non-current investments (9,624) (15,267)
Sale of non-current investments 50,606 7,051
Other, net (821) 688
---------- ---------
Net cash used in investing activities (109,299) (41,727)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------
Payment of dividends (39,134) (37,755)
Short-term borrowing 48,180 7,500
Exercise of stock options 2,082 910
--------- ---------
Net cash provided (used) in financing activities 11,128 (29,345)
--------- ---------
Increase (Decrease) in cash and temporary
cash investments (9,335) 15,096
CASH AND TEMPORARY CASH INVESTMENTS
- -----------------------------------
Beginning of period 44,231 28,255
--------- ---------
End of period $ 34,896 $ 43,351
========= =========
See notes to consolidated financial statements.
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HUBBELL INCORPORATED
Notes to Consolidated Financial Statements
September 30, 1994
(unaudited)
1. Inventories are classified as follows: (in thousands)
September 30, December 31,
1994 1993
-------------- ------------
Raw Material $ 75,968 $ 58,359
Work-in-Process 54,479 49,653
Finished Goods 129,524 113,312
-------- --------
$ 259,971 $ 221,324
Excess of current
Production costs over
LIFO cost basis 41,292 39,625
-------- --------
$ 218,679 $ 181,699
========= =========
2. Shareholders' Equity comprises: (in thousands)
September 30, December 31,
1994 1993
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Common Stock, $.01 par value:
-----------------------------
Class A--authorized 50,000,000 shares,
outstanding 5,892,172 and 5,869,546 shares $ 59 $ 59
Class B--authorized 150,000,000 shares,
outstanding 25,474,828 and 25,365,531 shares 254 254
Additional paid-in capital 359,667 358,219
Retained earnings 242,057 203,787
Unrealized holding gains (losses)
on securities (2,700) -----
Cumulative translation adjustments (4,644) (4,659)
--------------- ---------------
$ 594,693 $ 557,660
=============== ===============
3. 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.
4. The results of operations for the three and nine month periods ended
September 30, 1994 and 1993 are not necessarily indicative of the
results to be expected for the full year.
5. On April 19, 1994 the Company completed its acquisition of A. B. Chance
Industries Inc., a manufacturer of electrical apparatus, anchors,
hardware, insulators, hot-line tools, and other safety equipment. The
acquisition was for $110 million in cash, of which the Company borrowed
$45 million on a short-term basis, and will be recorded under the
purchase method of accounting.
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HUBBELL INCORPORATED
Notes to Consolidated Financial Statements
September 30, 1994
(unaudited)
Presented below is the unaudited pro forma combined balance sheet of Hubbell
Incorporated and A. B. Chance Industries, Inc. as of March 31, 1994 and
combined summary of operations as if the transaction had occurred as of the
beginning of 1993 (in 000's except per share):
A.B.CHANCE PRO
HUBBELL INDUSTRIES FORMA
INCORPORATED INC. ADJUSTMENTS COMBINED
------------ ---------- ----------- --------
ASSETS
- ---------------------
Accounts Receivable $117,019 $ 22,284 $ (741) $138,562
Inventories 183,566 26,539 (1,400) 208,705
Other Current Assets 80,416 2,549 (24,228) 58,737
Property, Plant,
and Equipment (Net) 153,049 29,593 399 183,041
Investments 249,556 -- (30,000) 219,556
Goodwill 65,696 32,997 42,948 141,641
Other Assets 46,934 2,797 (1,125) 48,606
-------- -------- ---------- --------
TOTAL $896,236 $116,759 $ (14,147) $998,848
======== ======== ========== ========
LIABILITIES AND COMMON SHAREHOLDERS' EQUITY
- -------------------------------------------
Notes Payable $ 99,200 $ -- $ 45,000 $144,200
Other Current Liabilities 142,940 30,508 12,768 186,216
Long-Term Debt 2,700 62,264 (62,264) 2,700
Other Liabilities
and Deferred Taxes 81,580 6,736 7,600 95,916
Common Shareholders' Equity 569,816 17,251 (17,251) 569,816
-------- -------- ---------- --------
TOTAL $896,236 $116,759 $ (14,147) $998,848
======== ======== ========== ========
SUMMARY OF OPERATIONS
- ---------------------
1994 YEAR-TO-DATE
Net Sales $656,312 $121,862 $ -- $778,174
Income Before Income Taxes $104,025 $ 8,980 $ (3,053) $109,952
Net Income $ 76,161 $ 5,402 $ (2,428) $ 79,135
Earnings Per Share $ 2.40 $ -- $ -- $ 2.50
1993 FULL YEAR
Net Sales $832,423 $156,830 $ -- $989,253
Income Before Income Taxes $ 81,494 $ 7,114 $ 2,664 $ 91,272
Net Income $ 66,306 $ 4,058 $ 1,063 $ 71,427
Earnings Per Share $ 2.10 $ -- $ -- $ 2.26
In preparing the unaudited pro forma combined balance sheet and summary of
operations, adjustments were made to the historical financial statements to
reflect the reduction in the securities portfolio and investment income;
increase in short-term borrowing and interest expense; amortization of the
estimated goodwill of $76 million over 40 years; the repayment of existing debt
of A. B. Chance Industries, Inc.; and other estimated purchase accounting
entries. The pro forma statements are not indicative of the results that would
have been obtained if the operations would have been combined during 1993, nor
are they necessarily indicative of the results that may occur in the future.
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HUBBELL INCORPORATED
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
September 30, 1994
Results of Operations
---------------------
Consolidated net sales for the third quarter of 1994 increased 27% over the
comparable period in 1993 due to the inclusion of A. B. Chance Industries,
Inc. and improved sales at the Wiring Device, Industrial Controls, Premise
Wiring, Lighting and Raco operations partially offset by lower activity at the
Pulse Communications subsidiary. Operating income increased 24%. Year-to-date
results were similar with increases of 19% in net sales and 13% in operating
income.
Low Voltage segment sales increased 7% and 4% for the quarter and year-to-date
periods on higher shipments of wiring device, lighting, and industrial control
products as demand in the industrial and commercial markets improved. Segment
operating income increased in line with the higher sales volumes.
Sales of the High Voltage segment increased more than 70% for the quarter and
more than 45% year-to-date due to the inclusion of A. B. Chance Industries,
Inc. and higher sales of insulators and surge arresters while demand for power
cable remained flat. Operating income increased at approximately one-half the
rate of growth in sales volume reflecting the lower-margined products of the
acquired business.
Other Industry segment sales increased 36% for the quarter and 28% year-to-date
reflecting the inclusion of certain product lines of A. B. Chance (line
construction hardware and support and foundation anchors), as well as, improved
shipments of enclosures, fittings, switch and outlet boxes, and wire management
products which offset the lower sales of telecommunication products. Segment
operating income increased by 20% for the periods reflecting the impact of the
reduced shipment of the higher-margined telecommunications products. Due to
changed market conditions, the Company has reduced the scope of its development
program for telecommunication products and the Pulse Communications subsidiary
and Raynet Corporation terminated their joint development project.
Interest expense increased reflecting a higher level of short-term borrowings
which have been utilized by the Company to maintain its long-term investment
positions which have a current yield higher than the cost of short-term funds.
The effective tax rate for 1994 was 27% versus 26% in 1993. Net income and
earnings per share increased by more than 16% for the third quarter and more
than 7% year-to-date, reflecting the acquisition of A.B.Chance in April and
gradual improvement in existing operations.
Liquidity and Capital Resources
-------------------------------
At September 30, 1994, notes payable of $139.3 million and long-term debt of
$2.7 million were 23.9% of shareholders' equity. Working capital was $107.3
million and the current ratio was 1.3 to 1.0.
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HUBBELL INCORPORATED
PART II -- OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
EXHIBITS
11. Computation of Earnings Per Share.
27. Financial Data Schedule
REPORTS ON FORM 8-K
There were no reports on Form 8-K filed for the three months ended
September 30, 1994.
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: November 10, 1994 /s/ Harry B. Rowell, Jr.
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Harry B. Rowell, Jr.
Executive Vice President
(Chief Financial and Accounting Officer)
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EXHIBITS INDEX
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Exhibit Page
No. Description No.
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11 Computation of Earnings Per Share.
27 Financial Data Schedule
1
Exhibit 11
HUBBELL INCORPORATED
Computation of Earnings Per Share
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- -------------------------------
1994 1993 1994 1993
-------- -------- -------- --------
Net Income $27,289 $23,388 $78,076 $72,424
======= ======= ======= =======
Weighted average number
of common shares outstanding
during the year 31,333 31,211 31,310 31,202
Common equivalent shares 388 434 407 432
------- ------- ------- -------
Average number of shares
outstanding 31,721 31,645 31,717 31,634
======= ======= ======= =======
Earnings per share $0.86 $0.74 $2.46 $2.29
======= ======= ======= =======
5
1,000
9-MOS
DEC-31-1994
SEP-30-1994
34,896
0
148,027
(5,488)
218,679
427,666
428,590
(231,975)
1,012,466
320,321
2,700
313
0
0
594,380
1,012,466
736,524
736,524
515,908
515,908
0
1,143
4,006
106,953
28,877
78,076
0
0
0
78,076
2.46
2.46
