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Previous: HILTON HOTELS CORP, 424B2, 1994-08-10 |
Next: INTEL CORP, 10-C, 1994-08-10 |
<PAGE> 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 JUNE 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
--------------------------------
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 8, 1994 were:
Class A ($.01 par value) 5,886,000
Class B ($.01 par value) 25,458,000
<PAGE> 2
-- 2 --
HUBBELL INCORPORATED
PART I -- FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
Consolidated Balance Sheet
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
------------ ------------
<S> <C> <C>
Assets
- - -------------------------------------
Current Assets:
Cash and temporary cash investments $ 21,358 $ 44,231
Accounts receivable (net) 142,859 109,987
Inventories 216,996 181,699
Prepaid taxes 24,766 15,875
Other 6,679 10,289
---------- ----------
TOTAL CURRENT ASSETS 412,658 362,081
Property, Plant and Equipment (net) 191,587 154,621
Other Assets:
Investments 200,930 245,081
Purchase price in excess of net assets
of companies acquired (net) 140,669 66,522
Property held as investment 10,767 7,794
Other 35,961 38,199
---------- ----------
$ 992,572 $ 874,298
========== ==========
Liabilities and Shareholders' Equity
- - ------------------------------------
Current Liabilities
Notes payable $ 131,900 $ 91,100
Accounts payable 30,686 20,964
Accrued salaries, wages and employee benefits 26,280 20,215
Accrued income taxes 27,006 35,617
Dividends payable 13,476 12,816
Accrued restructuring charge 14,000 14,000
Other accrued liabilities 70,362 35,494
---------- ----------
TOTAL CURRENT LIABILITIES 313,710 230,206
Long-Term Debt 2,700 2,700
Other Non-Current Liabilities 89,871 79,160
Deferred Income Taxes 5,632 4,572
Shareholders' Equity 580,659 557,660
---------- ----------
$ 992,572 $ 874,298
========== ==========
See notes to consolidated financial statements.
</TABLE>
<PAGE> 3
-- 3 --
HUBBELL INCORPORATED
Consolidated Statement of Income
(unaudited)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
1994 1993 1994 1993
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Sales $261,935 $211,261 $468,979 $409,279
Cost of goods sold 184,198 145,051 326,701 279,341
--------- --------- --------- ---------
Gross Profit 77,737 66,210 142,278 129,938
Selling & administrative
expenses 42,546 35,408 76,647 69,249
--------- --------- --------- ---------
Operating Income 35,191 30,802 65,631 60,689
--------- --------- --------- ---------
Other Income (Expense):
Investment income 3,553 3,817 7,420 7,715
Interest expense (1,423) (916) (2,290) (1,728)
Other income
(expense), net (625) 94 (1,188) (411)
-------- -------- -------- --------
TOTAL OTHER INCOME, NET 1,505 2,995 3,942 5,576
-------- -------- -------- --------
Income Before Income Taxes 36,696 33,797 69,573 66,265
Provision for income taxes 10,237 8,787 18,785 17,229
-------- -------- -------- --------
Net Income $26,459 $25,010 $50,788 $49,036
======== ======== ======== ========
Earnings Per Share: $0.83 $0.79 $1.60 $1.55
======== ======== ======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 4
-- 4 --
HUBBELL INCORPORATED
Consolidated Statement of Cash Flows
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30
------------------------
1994 1993
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
- - ------------------------------------
Net Income $50,788 $49,036
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 18,688 15,843
Restructuring charge (4,614) --
Deferred income taxes 1,993 465
Changes in assets and liabilities, net of the
effect of business acquisitions:
(Increase)/Decrease in Accounts receivable (11,329) (4,456)
(Increase)/Decrease in Inventories (10,158) (2,132)
(Increase)/Decrease in Other current assets 6,022 (1,089)
Increase/(Decrease) in Current liabilities
(excluding dividends payable) 619 (10,407)
(Increase)/Decrease in Other, net 1,054 (177)
--------- ---------
Net cash provided by operating activities 53,063 47,083
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
- - ------------------------------------
Acquisition of businesses (110,000) (16,245)
Additions to property, plant and equipment (26,445) (12,230)
Purchase of non-current investments (6,455) --
Sale of non-current investments 50,606 10,606
Other, net (312) 1,101
--------- ---------
Net cash used in investing activities (92,606) (16,768)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
- - ------------------------------------
Payment of dividends (25,658) (24,953)
Short-term borrowing 40,800 11,400
Exercise of stock options 1,528 863
--------- ---------
Net cash provided (used) in financing activities 16,670 (12,690)
--------- ---------
Increase (Decrease) in cash and temporary
cash investments (22,873) 17,625
CASH AND TEMPORARY CASH INVESTMENTS
- - -----------------------------------
Beginning of period 44,231 28,255
--------- ---------
End of period $ 21,358 $ 45,880
========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 5
-- 5 --
HUBBELL INCORPORATED
Notes to Consolidated Financial Statements
June 30, 1994
(unaudited)
1. Inventories are classified as follows: (in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
---------- ------------
<S> <C> <C>
Raw Material $ 70,937 $ 58,359
Work-in-Process 57,333 49,653
Finished Goods 129,218 113,312
-------- --------
257,488 221,324
Excess of current
Production costs over
LIFO cost basis 40,492 39,625
-------- --------
$216,996 $181,699
========= =========
</TABLE>
2. Shareholders' Equity comprises: (in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
---------- ------------
<S> <C> <C>
Common Stock, $.01 par value:
-----------------------------
Class A--authorized 50,000,000 shares,
outstanding 5,890,861 and 5,875,748 shares $ 59 $ 59
Class B--authorized 150,000,000 shares,
outstanding 25,449,416 and 25,382,793 shares 254 254
Additional paid-in capital 359,478 358,219
Retained earnings 228,257 203,787
Unrealized holding gains (losses)
on securities (2,100)
Cumulative translation adjustments (5,289) (4,659)
-------- --------
$580,659 $557,660
========= =========
</TABLE>
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 six month periods ended June
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.
<PAGE> 6
-- 6 --
HUBBELL INCORPORATED
Notes to Consolidated Financial Statements
June 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):
<TABLE>
<CAPTION>
A.B.CHANCE PRO
HUBBELL INDUSTRIES FORMA
INCORPORATED INC. ADJUSTMENTS COMBINED
------------ ---------- ----------- --------
<S> <C> <C> <C> <C>
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 $429,530 $ 81,100 $ -- $510,630
Income Before Income Taxes $ 68,123 $ 4,840 $ (1,191) $ 71,772
Net Income $ 50,068 $ 2,865 $ (1,086) $ 51,847
Earnings Per Share $ 1.58 $ -- $ -- $ 1.63
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
</TABLE>
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.
<PAGE> 7
-- 7 --
HUBBELL INCORPORATED
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
June 30, 1994
Results of Operations
Consolidated net sales for the second quarter of 1994 increased 24% 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, and Ohio Brass operations partially offset by lower activity at the
Pulse Communications subsidiary. Operating income increased only 14% since a
significant portion of the increased sales volume was in lower margined
products and the reduction in profit contribution from the Pulse
Communications subsidiary. Year-to-date reflects similar results with increases
of 15% in net sales and 8% in operating income.
Low Voltage segment sales increased 7% and 5% 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 more than doubled for the quarter and
increased more than 60% 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 4% for the quarter and 6% year-to-date
on improved shipments of enclosures, fittings, switch and outlet boxes, and
wire management products which offset the lower sales of telecommunication
products. Segment operating income was essentially even with last year
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 have agreed to
terminate 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 due to the
acquisition of A. B. Chance Industries, Inc. Net income and earnings per share
increased by more than 5% for the second quarter, while on a year-to-date basis
the rate of increase was more than 3%, respectively.
Liquidity and Capital Resources
At June 30, 1994, notes payable of $131.9 million and long-term debt of $2.7
million were 23.2% of shareholders' equity. Working capital was $98.9 million
and the current ratio was 1.3 to 1.0.
<PAGE> 8
-- 8 --
HUBBELL INCORPORATED
PART II -- OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
11. Computation of Earnings Per Share.
REPORTS ON FORM 8-K
A report on Form 8-K, pertaining to the April 19, 1994 acquisition of A.
B. Chance Industries, Inc., was filed with the Securities and Exchange
Commission on April 29, 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: August 10, 1994 /s/ Harry B. Rowell, Jr.
---------------- ----------------------------------------
Harry B. Rowell, Jr.
Executive Vice President
(Chief Financial and Accounting Officer)
<PAGE> 9
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- - ------- -----------
11 Computation of Earnings Per Share
<PAGE> 1
Exhibit 11
HUBBELL INCORPORATED
Computation of Earnings Per Share
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- --------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Income $26,459 $25,010 $50,788 $49,036
======= ======= ======= =======
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 $0.83 $0.79 $1.60 $1.55
======= ======= ======= =======
</TABLE>
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