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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission File No. 1-2958
HUBBELL INCORPORATED
(Exact name of Registrant as specified in its charter)
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CONNECTICUT 06-0397030
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
584 Derby Milford Road, Orange, Connecticut 06477-4024
(Address of principal executive offices) (Zip Code)
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(203) 799-4100
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each Class Name of Exchange on which Registered
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Class A Common - $.01 par value (20 votes per share) New York Stock Exchange
Class B Common - $.01 par value (1 vote per share) New York Stock Exchange
Class A Common Stock Purchase Rights New York Stock Exchange
Class B Common Stock Purchase Rights New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
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 report), 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 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 approximate aggregate market value of the voting stock held by
non-affiliates of the Registrant as of March 15, 1996 was $1,969,864,700*. The
number of shares outstanding of the Class A Common Stock and Class B Common
Stock as of March 15, 1996 was 5,771,196 and 27,174,057, respectively.
Documents Incorporated by Reference
The definitive proxy statement for the proposed annual meeting of
stockholders to be held on May 6, 1996, filed with the Commission on
March 27, 1996 - Part III.
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* Calculated by excluding all shares held by executive Officers and
Directors of Registrant and the Roche Trust, the Hubbell Trust and the
Harvey Hubbell Foundation, without conceding that all such persons are
"affiliates" of registrant for purpose of the Federal Securities Laws.
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PART I
Item 1. Business
Hubbell Incorporated (herein referred to as "Hubbell", the "Company" or the
"registrant", which references shall include its divisions and subsidiaries as
the context may require) was founded as a proprietorship in 1888, and was
incorporated in Connecticut in 1905. For over a century, Hubbell has
manufactured and sold high quality electrical and electronic products for a
broad range of commercial, industrial, telecommunications, and utility
applications. Since 1961, Hubbell has expanded its operations into other areas
of the electrical industry and related fields. Hubbell products are now
manufactured or assembled by nineteen divisions and subsidiaries at twenty-eight
locations in the United States, Canada, Puerto Rico, Mexico, United Kingdom and
Singapore. Hubbell also participates in joint ventures with partners in Germany
and Taiwan, and maintains sales offices in Malaysia, Hong Kong, Mexico, South
Korea, and the Middle East.
Hubbell is primarily engaged in the engineering, manufacture and sale of
electrical and electronic products. These products can be divided into three
general segments: products primarily used in low-voltage applications, products
primarily used in high-voltage applications and products that either are not
directly related to the electrical business, or, if related, cannot be clearly
classified on a voltage application basis. Hubbell defines "low-voltage" as
being 600 volts and less and "high-voltage" as greater than 600 volts. Reference
is made to page 39 for information relative to Industry Segment and Geographic
Area Information for 1995, 1994 and 1993.
On January 2, 1996, Hubbell acquired from Square D Company the assets of the
Anderson Electrical Connectors business ("Anderson"). Anderson, with facilities
in Elkton, Tennessee, and Leeds and Clanton, Alabama, manufactures and sells
electrical connectors and associated hardware including pole line, line and
tower hardware, compression crimping tools and accessories, mechanical and
compression connectors, suspension clamps, terminals, supports, couplers, and
tees for utility distribution and transmission systems and substations, and
industry.
On January 31, 1996, Hubbell acquired the stock of Gleason Reel Corp.
("Gleason"). Gleason, with a facility located in Mayville, Wisconsin,
manufactures and sells industrial-quality electric cable management products
including cable and hose reels, protective steel and nylon cable traks (cable
and hose carriers) and cable festooning hardware, highly engineered container
crane reels and festoons for the international market, slip rings, and a new
line of ergonomic tool support systems (workstation accessories and components
such as balancers, retractors, torque reels, and column, tool support, boom and
jib kits).
PRODUCTS USED IN LOW-VOLTAGE APPLICATIONS
Electrical Wiring Devices
The Wiring Device Division of Hubbell specializes in the manufacture and sale of
highly durable and reliable wiring devices which are supplied principally to
industrial and commercial customers. These products, comprising several thousand
catalog items, include plugs, receptacles (including surge suppressor units),
wall outlets, connectors, adapters, floor boxes and switches (including passive
infrared motion sensing switches).
The Wiring Device Division's pin-and-sleeve devices built to IEC (International
Electrotechnical Commission) standards have incorporated improved water and
dust-tight construction and impact
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resistance. Switch and receptacle wall plates feature proprietary thermoplastic
materials offering high impact resistance and durability, and are available in a
variety of colors. Delivery systems, including the system PDC (under carpet
cable systems for power, data and communications distribution), provide
efficiency and flexibility in both initial installation and remodeling
application.
Hubbell also sells wiring devices for use in certain environments requiring
specialized products, such as multi-pin connectors and cable assemblies for
connection of sensors in processing lines and electric cord reels and modular
cable protection systems. The Wiring Device Division also sells ground fault
circuit interrupter units for commercial and industrial applications. Some of
these units contain a number of outlets to which electrically-powered equipment
may be simultaneously connected for ground fault protection. Ground fault units
interrupt the circuit to which they are connected when a fault to ground is
detected to protect the user from potentially lethal shock.
Bryant Electric, Inc. manufactures and sells electrical wiring devices,
including plugs, connectors, receptacles, switches (including motion sensing
switches), lampholders, control switches, pendants, weatherproof enclosures, and
wall plates, to a separate market segment of industrial and commercial
customers, utilizing its own sales and marketing organization.
Hubbell maintains operations in the United Kingdom, Singapore, Canada and Mexico
which sell a variety of wiring device products similar to those produced in the
United States. Most of the wiring device products sold by these operations are
manufactured in the United States and Puerto Rico.
Lighting Fixtures
Hubbell Lighting, Inc. manufactures and sells lighting fixtures and accessories
for both indoor and outdoor applications in the United States, Canada, Mexico,
United Kingdom, Singapore and elsewhere internationally. Hubbell Lighting has
three basic classifications of products: Outdoor, Industrial and Commercial. The
Outdoor products include floodlights, landscape lights, roadway lights and
poles, which are used to illuminate athletic and recreational fields, service
stations, outdoor display signs, parking lots, roadways and streets, security
areas, shopping centers and similar areas. In addition, a line of decorative
outdoor fixtures is sold for use in residences, parking lots, gardens and
walkways. The Industrial products include fixtures used to illuminate factories,
work spaces, and similar areas, including specialty requirements such as paint
rooms, clean rooms and warehouses. The Commercial products include fluorescent,
emergency and exit, and recessed and track fixtures which are used for offices,
schools, hospitals, retail stores, and similar applications. The fixtures use
high-intensity discharge lamps, such as mercury-vapor, high-pressure
sodium-vapor, and metal-halide lamps, as well as quartz, fluorescent and
incandescent lamps, all of which are purchased from other sources. Hubbell
Lighting also manufactures a broad range of track and down lighting fixtures and
accessories sold under the Marco trademark. These products supplemented existing
track and down lighting product lines developed internally by Hubbell Lighting.
Hubbell Lighting also has a line of Life Safety products, fixtures and related
components which are used in specialized safety applications.
Industrial Controls
Hubbell Industrial Controls, Inc. manufactures and sells a variety of heavy-duty
electrical and radio control products which have broad application in the
control of industrial equipment and processes. These products range from
standard and specialized industrial control components to combinations of
components that control entire industrial manufacturing processes. Standard
products include motor speed controls, pendant-type push-button stations, power
and grounding resistors and overhead crane
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controls. Hubbell Industrial Controls, Inc. also manufactures and sells a line
of transfer switches used to direct electrical supply from alternate sources and
a line of fire pump control products used in fire control systems.
Industrial controls are also manufactured and sold in the United Kingdom by
Hubbell, Ltd. Products sold by this subsidiary are used in motor control
applications and include fuse switches, contactors and solid state timers.
Special Application Products
In addition to its other products, Killark Electric Manufacturing Company
manufactures and sells weather proof and hazardous location products suitable
for standard, explosion proof and other hostile area applications. These
products consist of fittings, enclosures, lighting fixtures, distribution
equipment, motor controls, plugs and receptacles.
Hazardous locations are those areas where a potential for explosion and fire
exists due to the presence of flammable gasses, vapors, dust or easily ignitable
fibers and include such places as refineries, petro-chemical plants, grain
elevators and processing areas.
Sales and Distribution of Low-Voltage Products
A majority of Hubbell's low-voltage products are stock items and are sold
through distributors, home centers and lighting showrooms. A portion of these
products, primarily industrial controls, are sold directly to the customer.
Special application products are sold primarily through wholesale distributors
to contractors, industrial customers and original equipment manufacturers.
Hubbell maintains a sales organization to assist potential users with the
application of certain products to their specific requirements. Hubbell also
maintains regional offices in the United States which work with architects,
engineers, industrial designers, original equipment manufacturers and electrical
contractors for the design of electrical systems to meet the specific
requirements of industrial and commercial users.
Hubbell is also represented by sales representatives for its lighting fixtures,
electrical wiring devices, and industrial controls product lines.
The sales of low-voltage products accounted for approximately 44% of Hubbell's
total revenue in 1995, 45% in 1994 and 52% in 1993.
PRODUCTS USED IN HIGH-VOLTAGE APPLICATIONS
Insulated Wire and Cable
The Kerite Company manufactures and sells premium quality, high performance,
insulated electric power cable for application in critical circuits of electric
utilities and major industrials. This product line utilizes proprietary
insulation systems and unique designs to meet the increasingly demanding
specifications of its customers. Applications include generating plants,
underground and submarine transmission and distribution systems, and
petrochemical and pharmaceutical plants and mines. Kerite produces
specially-designed cable for supplying power to submersible pumps in oil wells.
This cable is designed to offer increased service life in the extreme
temperature and corrosive conditions
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encountered in these adverse environments. The Kerite Company also manufactures
accessories for splicing and terminating cable ends.
Electrical Transmission and Distribution Products
The Ohio Brass Company manufactures a complete line of polymer insulators, and
high-voltage surge arresters used in the construction of electrical transmission
and distribution lines and substations. The Ohio Brass Company's primary focus
in this product area is its Hi*LiteXL and Veri*Lite polymer insulator lines and
its polymer based surge arrester lines. Electrical transmission products,
primarily suspension insulators, are used in the expansion and upgrading of
electrical transmission capability.
A. B. Chance Company manufactures and sells products used in the electrical
transmission, distribution and telecommunications industries, including overhead
and underground electrical apparatus such as (a) distribution switches (to
control and route the flow of power through electrical lines); (b) cutouts,
sectionalizers, and fuses (to protect against faults and over-current conditions
on power distribution systems); and (c) ethylene propylene based rubber and
silicone rubber insulators (to insulate distribution power lines) and
Epoxirod(R) insulator systems (pole framing and conductor accessories).
High Voltage Test and Measurement Equipment
Hipotronics, Inc. manufactures and sells a broad line of high voltage test and
measurement systems to test materials and equipment used in the generation,
transmission and distribution of electricity. In addition, Hipotronics
manufactures test equipment and high voltage power supplies for use in
electrical and electronic industries. Principal products include AC/DC hipot
testers and megohmmeters, cable fault location systems, oil testers and DC
hipots, impulse generators and digital measurement systems, AC series resonant
and corona detection systems, DC test sets and power supplies, variable
transformers, voltage regulators, and motor and transformer test sets.
Sales and Distribution of High-Voltage Products
Sales of high-voltage products are made through distributors and directly to
users such as electric utilities, mining operations, industrial firms, and
engineering and construction firms engaged in electric transmission projects.
Hipotronics' products are sold primarily by direct sales to its customers in the
United States and in foreign countries through its sales engineers and
independent sales representatives.
While Hubbell believes its sales in this area are not materially dependent upon
any customer or group of customers, a decrease in purchases by public utilities
does affect this category.
The sale of high-voltage products accounted for approximately 20% of Hubbell's
total revenue in 1995 and 20% and 16% in 1994 and 1993, respectively.
PRODUCTS NOT CLASSIFIED ON A VOLTAGE BASIS
Outlet Boxes, Enclosures and Fittings
Raco Inc. is a leading manufacturer of steel and plastic boxes used at outlets,
switch locations and junction points as well as a broad line of fittings for the
electrical industry, including rigid conduit fittings, EMT (thinwall) fittings
and other metal conduit fittings. Raco also has a complete electrical
nonmetallic family of products including conduit tubing, fittings and outlet
boxes.
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The major markets for Raco Inc.'s products include industrial, commercial and
residential construction, the do-it-yourself market, the export market, and the
original equipment manufacturer market. Raco Inc.'s products are sold primarily
through distributors and in some retail and hardware outlets.
Hubbell-Bell, Inc. manufactures a variety of electrical box products, with an
emphasis on weather-resistant types suitable for outdoor application. The
weatherproof lines include a full assortment of boxes, covers, combination
devices, lampholders, and lever switches. Bell's products are sold primarily
through electrical and hardware distributors.
E. M. Wiegmann & Co., Inc. manufactures a full-line of fabricated steel
enclosures such as rainproof and dust-tight panels, consoles and cabinets,
wireway and electronic enclosures. These products are used to enclose and
protect electrical conductors, terminations, instruments, distribution equipment
and controls. Wiegmann's products are primarily sold through distributors to
industrial customers and original equipment manufacturers.
In addition to its other products, Hubbell Canada Inc. manufactures a line of
quality nonmetallic plastic switch and outlet boxes configured for the Canadian
residential construction market.
Killark Electric is a leading manufacturer of quality standard and special
application enclosures and fittings including hazardous location products for
use in installations such as chemical plants, pipelines, grain elevators, coal
handling facilities and refineries. These products include conduit raceway
fittings, junction boxes, enclosures, lighting fixtures and standard and custom
controls. Killark also is a major participant in the maintenance and repair,
commercial and industrial construction segments of the domestic electrical
construction materials market. Killark's products are sold primarily through
electrical distributors to contractors, industrial customers and original
equipment manufacturers.
Voice and Data Signal Processing Equipment
Pulse Communications, Inc. designs and manufactures a line of voice and data
signal processing equipment primarily for use by the telephone and
telecommunications industry. Customers of this product line include various
telecommunications companies, the Regional Bell Operating Companies, independent
telephone companies and specialized common carriers and companies with private
networks. Pulse Communications, Inc. also manufactures electronic systems which
monitor various conditions, such as telephone traffic levels or the occurrence
of certain events at one or more remote locations. The information obtained is
processed and appropriate corrective or alarm signals are generated and
transmitted back to a central station.
These products are sold primarily by direct sales to its customers in the United
States and in foreign countries through Pulse Communications, Inc.'s sales
personnel and sales representatives under the Pulsecom trademark.
Hubbell Premise Wiring, Inc. manufactures or sells components used in
telecommunications applications for power, voice and data signals. Products
include adapters and outlets, quick connect jacks, high density jacks,
connectorized cables, patch panels, baluns, flush plates, surface boxes, racks,
enclosures, modular furniture plates, undercarpet cable and other components and
systems used in the processing, distribution, and termination functions for
local area networks (LANS) in commercial and industrial buildings. These
products are sold through a direct sales organization and by selected,
independent telecommunications representatives.
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Holding Devices
The Kellems Division manufactures a line of Kellems(R) grips used to pull,
support and relieve stress in elongated items such as cables, electrical cords,
hoses and conduits. The grips are made of wire mesh in a range of sizes and
strengths to accommodate differing needs. The mesh part of the grip is designed
to tighten around the surface of the items under tension.
Kellems also makes a line of cord connectors designed to prevent electrical
conductors from pulling away from electrical terminals to which the conductors
are attached, and wire management products including flexible, non-metallic
conduit and fittings and non-metallic surface raceway products used in wiring
and cable harness installations. These products are sold primarily through
distributors.
Construction Materials/Tools
Chance manufactures and sells (a) line construction materials, including anchors
used to hold overhead power and communications lines erect, for tower,
streetlight pole, pipeline, and apparatus foundation support, and a variety of
farm, home and construction anchoring, tie-back and holding applications; (b)
pole line hardware, including galvanized steel fixtures and extruded plastic
materials used in overhead and underground line construction and connectors, and
other accessories for making high voltage connections and linkages; (c)
construction tools and accessories for building overhead and underground power
and telephone lines; and (d) hot-line tools (all types of tools mounted on
insulated poles used to maintain energized high voltage lines) and other safety
equipment. These products are sold through distributors and directly to electric
utilities.
The sale of products not classified on a voltage basis accounted for
approximately 36% of Hubbell's total revenue in 1995, 35% in 1994, and 32% in
1993.
INFORMATION APPLICABLE TO ALL GENERAL CATEGORIES
International Operations
Hubbell Ltd. in the United Kingdom manufactures and/or sells fuse switches,
contactors, solid state timers, lighting fixtures, selected wiring device
products, premise wiring products, high performance partial discharge measuring
instruments, specialized control gear, and chart recording products.
Hubbell Canada Inc. and Hubbell de Mexico, S.A. de C.V. currently manufacture
and/or market wiring devices, lighting fixtures, grips, fittings, plastic outlet
boxes, hazardous location products and electrical transmission and distribution
products. Industrial controls products are sold in Canada through an independent
sales agent.
Harvey Hubbell S.E. Asia Pte. Ltd. assembles and/or markets wiring devices,
lighting fixtures, hazardous location products, electrical transmission and
distribution products and cable.
Hubbell also manufactures lighting products, weatherproof outlet boxes, and
fittings in Juarez, Mexico. Hubbell also has interests in various other
international operations such as joint ventures in Germany and Taiwan. Hubbell
also has sales offices in Malaysia, Hong Kong, Mexico, South Korea and the
Middle East.
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As a percentage of total sales, international shipments from foreign
subsidiaries were 6% in 1995, 6% in 1994 and 5% in 1993, with the Canadian
market representing approximately 60% of the total.
Raw Materials
Principal raw materials used in the manufacture of Hubbell products include
steel, brass, copper, aluminum, bronze, plastics, phenolics, elastomers and
petrochemicals.
Hubbell also purchases certain electrical and electronic components, including
solenoids, lighting ballasts, printed circuit boards, integrated circuit chips
and cord sets, from a number of suppliers.
Hubbell is not materially dependent upon any one supplier for raw materials used
in the manufacture of its products and equipment and, at the present time, raw
materials and components essential to its operation are in adequate supply.
Patents
Hubbell has approximately 682 active United States and foreign patents covering
many of its products, which expire at various times. While Hubbell deems these
patents to be of value, it does not consider its business to be dependent upon
patent protection. Hubbell licenses under patents owned by others, as may be
needed, and grants licenses under certain of its patents.
Working Capital
Hubbell maintains sufficient inventory to enable it to provide a high level of
service to its customers. The inventory levels, payment terms and return
policies are in accord with the general practices of the electrical products
industry and standard business procedures.
Backlog
Backlog of orders believed to be firm at December 31, 1995 and 1994 were
approximately $90,100,000 and $83,900,000, respectively. Most of the backlog is
expected to be shipped in the current year.
Although this backlog is important, the majority of Hubbell's revenues result
from sales of inventoried products or products that have short periods of
manufacture.
Competition
Hubbell experiences substantial competition in all categories of its business,
but does not compete with the same companies in all its product categories. The
number and size of competitors vary considerably depending on the product line.
Hubbell cannot specify with exactitude the number of competitors in each product
category or their relative market position. However, some of its competitors are
larger companies with substantial financial and other resources.
Hubbell considers product performance, reliability, quality and technological
innovation as important factors relevant to all areas of its business and
considers its reputation as a manufacturer of quality products to be an
important factor in its business. In addition, product price and other factors
can affect Hubbell's ability to compete.
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Environment
Compliance with Federal, State and local provisions regulating the discharge of
materials into the environment, or otherwise relating to the protection of the
environment, is not believed to have any material effect upon the financial
position or the competitive position of Hubbell.
Employees
As of December 31, 1995, Hubbell had approximately 7,410 full-time employees,
including salaried and hourly personnel. Approximately 2,585 of Hubbell's United
States employees are represented by 8 labor unions. Hubbell considers its labor
relations to be satisfactory.
Item 2. Properties
A list of Hubbell's material manufacturing facilities, classified by segment is
included on Page 40 hereof under Industry Segment and Geographical Area
Information.
Item 3. Legal Proceedings
There are no material pending legal proceedings to which Hubbell or any of its
subsidiaries is a party or of which any of their property is the subject, other
than ordinary and routine litigation incident to their business.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of 1995.
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PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
The Company's Class A and Class B common stocks are principally traded on the
New York Stock Exchange under the symbols "HUBA" and "HUBB". The following
tables provide information on market prices, dividends declared and number of
common shareholders. Market prices and dividends declared have been restated for
the 5% common stock dividend paid in 1995.
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Common A Common B
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Market Prices (Dollars Per Share)
Years Ended December 31, High Low High Low
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1995-First quarter 51 7/8 49 54 50 3/8
1995-Second quarter 55 3/4 50 3/8 58 1/8 53
1995-Third quarter 56 3/8 54 1/8 60 1/8 56 1/2
1995-Fourth quarter 62 1/8 55 3/4 66 58 1/4
1994-First quarter 55 1/4 48 3/8 59 51
1994-Second quarter 54 1/2 49 1/2 59 7/8 50 1/2
1994-Third quarter 50 7/8 47 1/2 54 7/8 51
1994-Fourth quarter 51 47 1/8 55 3/8 50
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Common A Common B
Dividends Declared (Cents Per Share) -------- --------
Years Ended December 31, 1995 1994 1995 1994
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First quarter 43 39 43 39
Second quarter 47 41 47 41
Third quarter 47 41 47 41
Fourth quarter 47 41 47 41
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Number of Common Shareholders
At December 31, 1995 1994 1993 1992 1991
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Class A 1,308 1,327 1,405 1,464 1,523
Class B 5,521 5,354 5,628 5,555 5,438
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Item 6. Selected Financial Data
The following summary should be read in conjunction with the
consolidated financial statements and notes and Exhibit 11 contained herein
(dollars in thousands, except per share amounts).
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OPERATIONS, YEARS ENDED DECEMBER 31, 1995 1994 1993 1992 1991
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Net sales $ 1,143,126 1,013,700 832,423 786,978 756,126
Gross profit $ 339,948 305,020 262,931 257,800 247,640
Restructuring charge $ -- -- (50,000)* -- --
Operating income $ 164,960 140,583 70,241 117,926 118,501
Provision for income taxes $ 45,099 39,402 15,188 36,588 38,821
Income before cumulative effect of change
in accounting principles $ 121,934 106,533 66,306* 94,090 90,597
Return on sales 10.7% 10.5% 8.0% 12.0% 12.0%
Return on common shareholders' average equity 19.1% 18.3% 12.1% 17.7% 18.3%
Return on average total capital 18.5% 18.2% 12.0% 17.6% 18.1%
Cumulative effect of change in accounting principles $ -- -- -- (16,506) --
Net Income $ 121,934 106,533 66,306* 77,584 90,597
Earnings Per Share:
Income before cumulative effect of change
in accounting principles $ 3.65 3.20 2.00* 2.83 2.73
Cumulative effect of change in
accounting principles -- -- -- (0.50) --
Net Income $ 3.65 3.20 2.00* 2.33 2.73
Cash dividends declared per common share $ 1.84 1.62 1.55 1.51 1.40
Additions to property, plant, and equipment $ 38,228 53,178 25,123 22,894 23,063
Depreciation and amortization $ 36,240 34,011 30,098 26,813 22,222
FINANCIAL POSITION, AT YEAR-END
Working capital $ 305,168 112,833 131,875 129,401 232,939
Current ratio 2.6 to 1 1.3 to 1 1.6 to 1 1.6 to 1 3.1 to 1
Property, plant and equipment (net) $ 204,190 201,968 154,621 153,339 147,615
Total assets $ 1,057,245 1,041,569 874,298 806,688 685,341
Long-term debt $ 102,096 2,700 2,700 2,700 8,100
Common shareholders' equity:
Total $ 667,338 608,996 557,660 541,327 518,906
Per share $ 20.00 18.48 16.99 16.53 15.87
NUMBER OF EMPLOYEES, AT YEAR END 7,410 7,405 5,885 5,759 5,532
</TABLE>
Share data have been restated for the 5% common stock dividend paid on
February 3, 1995.
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* In the fourth quarter of 1993, the Company recorded a restructuring charge for
consolidation of manufacturing and distribution operations and other
productivity programs which reduced net income by $31,000,000, $0.93 per share.
Excluding the restructuring charge, net earnings from operations would have been
$97,306,000, $2.93 per share.
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Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
Management views liquidity on the basis of the Company's ability to meet
operational needs, fund additional investments, including acquisitions, and make
dividend payments to shareholders. At December 31, 1995, the Company's financial
condition remained strong with working capital of $305.2 million and a current
ratio of 2.6 to 1.
Net cash provided by operations increased reflecting higher net income and
improved efficiencies in the use of working capital. The increase in
depreciation and amortization is due to a higher level of depreciable assets and
the acquisition of A.B. Chance in April 1994. With the Company's increased
emphasis on working capital management, the level of accounts receivable was
reduced while inventories increased at approximately half the rate of increase
in sales volume while maintaining appropriate levels of customer service.
Cash utilized in investing activities was in line with the Company's historic
patterns. In 1994, investing activities were impacted by the purchase of A.B.
Chance and the high level of capital expenditures for plant and equipment
associated with the restructuring program. While no significant commitments had
been made at December 31, 1995, the Company anticipates that capital
expenditures will be between $50.0 million and $60.0 million annually during the
next three years. This level of expenditure reflects the historical capital
investment pattern plus the normal capital requirements of acquired businesses.
During 1995, the Company realigned its financial structure with the issuance of
ten-year notes in October. The proceeds from the note offering along with
internal funds were used to pay down the Company's outstanding commercial paper.
At December 31, 1995, total borrowings of $102.1 million were 15.3% of
shareholder's equity compared to 23.3% in 1994.
On January 2, 1996, the Company acquired the Anderson Electrical Connector
business ("Anderson"). Anderson manufacturers electrical connectors and
associated hardware and tools for the electrical utility industry. On January
31, 1996, the Company purchased the Gleason Reel Corporation ("Gleason").
Gleason manufactures electrical cable management products and a line of
ergonomic tool support systems. The purchase prices, consisting of cash and
notes with a one year maturity, are immaterial to the Company's financial
position at December 31, 1995.
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.
<PAGE> 14
Page 14
RESULTS OF OPERATIONS
1995 Compared to 1994
Consolidated net sales for 1995 increased by 13% as substantially all operating
units reported increases with particularly strong growth for the Lighting,
Industrial Controls, Ohio Brass, Pulse Communications and Premise Wiring
businesses. The sales growth primarily reflects the improved economic conditions
in the United States and Canadian markets and the inclusion for the full year of
1995 of A.B. Chance, which was acquired in April 1994. The inclusion of A.B.
Chance was approximately three percentage points of the increase. Total segment
operating income increased by 16% on the higher sales volume and the benefit of
improved operating efficiencies from the Company's restructuring program.
Low Voltage segment sales increased 9% reflecting the improved market conditions
in the United States and Canada. While all product lines in the segment showed
improvement, fluorescent lighting and industrial controls were particularly
strong. Segment operating income increased 9% on the higher sales volume which
included a higher mix of lower margin products.
Sales of the High Voltage segment increased 14% on higher sales of power cables,
surge arresters and insulators and inclusion of A.B. Chance high voltage
products since its acquisition in April 1994. Sales of test and measurement
equipment were essentially even with last year. Operating income increased 17%
on higher operating volumes, benefits from the realignment of administration and
sales functions and improved manufacturing efficiencies in power cables.
The Other industry segment sales increased 17% on improved shipments in all
product lines with especially strong improvements in telecommunications and wire
management products. Operating income for the segment increased 30% on the
improved volume of higher margin telecommunications products and improved
operating efficiencies.
Sales of products through the Company's International based subsidiaries
increased 27% on the strong performance of the Canadian business and inclusion
of A.B. Chance foreign operations. Sales in Europe were slightly ahead of last
year, and Asia was essentially even. Mexican shipments declined due to the
economic recession brought on by the devaluation of the peso. Operating income
increased by more than 50% on higher sales volume and continued operational
improvements in Canada.
As a percentage of total sales, International shipments from foreign
subsidiaries were 6% in 1995, 6% in 1994 and 5% in 1993 with the Canadian market
representing approximately 60% of the total. International operations expose the
Company to fluctuation in foreign currency exchange rates. To manage this
exposure, the Company closely monitors the working capital requirements of the
international units and may enter into currency hedges for specific
transactions. The Company does not engage in speculation. The gains and losses
on hedges are classified consistent with the transactions being hedged. At
December 31, 1995, there were no currency hedges in place.
General corporate expenses increased 3%. Investment income increased 13% as the
average level of investment funds were higher than 1994 combined with higher
interest rates. As the average level of borrowings were approximately the same
year-over-year, the increase in interest expense is due to higher interest
rates. The increase in other expenses reflects the impact of the second full
year of charges for a corporate owned life insurance program. The effective tax
rate was 27% in 1995, 27% in 1994 and 19% in 1993. The tax rate in 1993 was
impacted by the recording of the restructuring charge in that year. The
Company's tax rate benefits from the lower taxes on earnings in its Puerto Rico
operations, utilization of corporate owned life insurance and continued emphasis
on generating tax-exempt income. Net income and earnings per share increased
14% over the 1994 results on the improvement in operating activity.
<PAGE> 15
Page 15
1994 Compared to 1993
Consolidated net sales for 1994 increased by 22% over 1993 reflecting the
acquisition of A.B. Chance Industries, Inc. in April, 1994, and improvement of
product shipments at the Wiring Device, Industrial Controls, Premise Wiring,
Lighting and Raco operations as the U.S. economy strengthened. These
improvements were impacted by lower activity at the Pulse Communications
subsidiary during the first half of the year. Total segment operating income,
excluding the impact of the restructuring charge recorded in 1993, increased 15%
on higher sales volumes. The rate of increase was moderated by the inclusion of
the A.B. Chance products which have a lower operating margin rate than the
Company's existing businesses.
Low Voltage segment sales increased 6% on higher shipments of wiring device,
lighting and industrial control products as demand in the industrial and
commercial markets improved. Segment operating income increased 6% in line with
the higher sales volumes.
Sales of the High Voltage segment increased more than 52% 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
45% as the rate of growth in sales volume was tempered by the lower-margin
products of the acquired business.
Other industry segment sales increased 32% 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 24%
for the period and was impacted by reduced shipments of the higher margin
telecommunications products, offset in part by cost reductions realized when
Pulse Communications and Raynet Corporation terminated their joint development
project.
International sales increased 28% as the Canadian and Asian economies improved
and the Company continued to expand its product offerings in Mexico. Operating
income increased on the higher sales volume and improved operating efficiencies
in Canada. As a percentage of total sales, International shipments from foreign
subsidiaries were 6% in 1994 and 5% in 1993 with the Canadian market
representing approximately 60% of the total.
General corporate expenses increased 2%. Investment income declined 6% as the
average level of investment funds was reduced by the acquisition of A.B. Chance.
Interest expense increased reflecting a higher level of short-term borrowings
utilized for working capital requirements which has allowed the Company to
maintain its long-term investment positions that have a current yield higher
than the cost of short-term funds. The increase in other expenses reflects a
full year of charges for a corporate owned life insurance program. The effective
tax rate was 27% in 1994, 19% in 1993 and 28% in 1992. The tax rate in 1993 was
impacted by the recording of the restructuring charge in that year. The
Company's tax rate benefits from the lower taxes on earnings in its Puerto Rico
operations and continued emphasis on generating tax-exempt income. Net income
and earnings per share increased by 60% over the 1993 reported results which
included a pre-tax charge of $50,000,000 for restructuring.
<PAGE> 16
Page 16
Restructuring Program
The Company's restructuring program initiated in the fourth quarter of 1993 for
the consolidation of all or a portion of ten manufacturing plants, a labor force
reduction of approximately 6%, (which will affect approximately one thousand
employees with a net reduction of approximately three hundred), the
reorganization of certain operations' management and structure, and a
realignment of warehousing and product distribution capabilities is proceeding
according to plan.
- - Construction of a modern manufacturing facility at the Seymour,
Connecticut, location of The Kerite Company subsidiary was completed in
September 1994. Production in the new plant began in the first quarter
of 1995. The last production line is in the process of being moved and
should be operational in September 1996. The consolidation of sales and
marketing activities for the Ohio Brass and Kerite subsidiaries was
completed in June 1995.
- - A manufacturing site in Denver, Colorado was closed and production was
transferred to another Hubbell location.
- - Downsizing and consolidation of operations in the United Kingdom should
be completed during 1996.
- - Two satellite plants in Los Angeles, California of the Lighting
operation were closed and production was transferred to other
facilities including Christiansburg, Virginia; Martin, Tennessee; and
Juarez, Mexico.
- - Operations serving Canadian customers with marketing, distribution, and
sales based in Ontario at Hubbell Canada Inc. have been reconfigured
and production relocated to other Hubbell operations with available
capacity.
- - Construction of a new plant in Juarez, Mexico was completed in
September 1994. Transfer of equipment and production continued during
1995 and should be completed in 1996.
- - Expansion of manufacturing capacity in Puerto Rico is continuing on
schedule.
- - A 425,000 square foot warehousing and manufacturing facility in
Asheville, North Carolina, was purchased. Consolidation of warehousing
and manufacturing activity will progress throughout 1996.
- - Warehousing and distribution operations for the Bryant Electric
subsidiary in Allentown, Pennsylvania and Chicago, Illinois were
closed.
- - The regional warehouse in Irving, Texas, which serviced the Wiring
Device Division, Killark Electric Manufacturing Company and the
Lighting Division, was closed in November 1995 and sold.
- - The manufacturing facility in Allentown, Pennsylvania was closed in
November 1995 and sold.
- - Consolidation and realignment of Wiring Device Operations in
Stonington, Bridgeport, and Newtown, Connecticut is continuing on
schedule.
<PAGE> 17
Page 17
At December 31, 1995, the restructuring accrual balance was $18,413,000 of which
$10,000,000 is classified as a current liability. Through December 31, 1995,
cumulative costs charged to the restructuring accrual were $31,587,000 since
inception as follows (in thousands):
<TABLE>
<CAPTION>
PLANT & EQUIPMENT COSTS
-----------------------
PERSONNEL COSTS RELOCATION DISPOSAL TOTAL
--------------- ---------- -------- -----
<S> <C> <C> <C> <C>
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
------- -------- ------- -------
CUMULATIVE $15,023 $ 9,878 $ 6,686 $31,587
======= ======== ======= =======
</TABLE>
Personnel costs include non-cash charges of $6,203,000 for early retirement
programs which have been reclassed to the Company's pension liability. With
regards to plant and equipment disposals, idled assets are adjusted to estimated
fair value and are classified as property held as investment. At December 31,
1995, the balance of idled assets to be sold was $600,000. Cumulative proceeds
from asset disposals were $7,800,000 through December 31, 1995, which
approximated carrying value. Cost avoidance, savings-to-date and net cash flows
are in-line with the projected results for the projects.
New Accounting Pronouncements
In March 1995, Statement of Financial Accounting Standards (SFAS) No. 121 -
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" was issued. The methodology set forth in SFAS No. 121 is not
significantly different from the Company's existing policies, and, therefore,
the adoption of the statement retroactive to January 1, 1995, had no impact on
the consolidated financial statements.
In October 1995, SFAS No. 123 - "Accounting for Stock-Based Compensation" was
issued and is effective for the Company on January 1, 1996. SFAS No. 123
permits, but does not require, a fair value based method of accounting for
employee stock option plans which results in compensation expense being
recognized in the results of operations when stock options are granted. The
Company plans to continue to use the current intrinsic value based method of
accounting for such plans where no compensation expense is recognized. However,
as required by SFAS No. 123, the Company will provide pro forma disclosure of
net income and earnings per share in the notes to the consolidated financial
statements as if the fair value based method of accounting has been applied.
Inflation
In times of inflationary cost increases, the Company has historically been able
to maintain its profitability by improvements in operating methods and cost
recovery through price increases. In large measure the reported operating
results have absorbed the effects of inflation since the Company's predominant
use of the LIFO method of inventory accounting generally has the effect of
charging operating results with costs (except for depreciation) that contain
current price levels.
<PAGE> 18
Page 18
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Hubbell Incorporated
In our opinion, the consolidated financial statements listed in the index on
page 49 present fairly, in all material respects, the financial position of
Hubbell Incorporated and its subsidiaries at December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1995, 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
Stamford, Connecticut
January 18, 1996, except as to the subsequent event note on Page 42
which is as of January 31, 1996.
<PAGE> 19
Page 19
Hubbell Incorporated and Subsidiaries
CONSOLIDATED BALANCE SHEET
At December 31, (Dollars in thousands)
<TABLE>
<CAPTION>
ASSETS 1995 1994
- ------ ---- ----
<S> <C> <C>
CURRENT ASSETS
Cash and temporary cash investments $ 86,984 $ 38,865
Accounts receivables less allowances of $4,334
in 1995 and $4,760 in 1994 140,765 143,862
Inventories 236,384 224,088
Prepaid taxes 30,958 31,666
Other 5,015 6,425
---------- ----------
Total current assets 500,106 444,906
---------- ----------
PROPERTY, PLANT, AND EQUIPMENT, AT COST
Land 13,426 12,204
Buildings 120,160 111,871
Machinery and equipment 284,761 282,038
---------- ----------
418,347 406,113
Less-Accumulated depreciation 214,157 204,145
---------- ----------
204,190 201,968
---------- ----------
OTHER ASSETS
Investments 175,656 205,939
Purchase price in excess of net assets of
companies acquired, less accumulated amortization
of $14,864 in 1995 and $11,172 in 1994 137,941 141,570
Property held as investment 8,329 10,027
Other 31,023 37,159
---------- ----------
352,949 394,695
---------- ----------
$1,057,245 $1,041,569
========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 20
Page 20
Hubbell Incorporated and Subsidiaries
CONSOLIDATED BALANCE SHEET
At December 31, (Dollars in thousands)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY 1995 1994
- ------------------------------------ ---- ----
<S> <C> <C>
CURRENT LIABILITIES
Commercial paper and bank borrowings $ -- $ 139,350
Accounts payable 34,272 37,539
Accrued salaries, wages and employee benefits 26,079 26,287
Accrued income taxes 30,711 28,332
Dividends payable 15,475 13,494
Accrued restructuring charge 10,000 14,000
Other accrued liabilities 78,401 73,071
----------- -----------
Total current liabilities 194,938 332,073
----------- -----------
LONG-TERM DEBT 102,096 2,700
----------- -----------
OTHER NON-CURRENT LIABILITIES 76,766 84,876
----------- -----------
DEFERRED INCOME TAXES 16,107 12,924
----------- -----------
COMMON SHAREHOLDERS' EQUITY
Common Stock, par value $.01
Class A - authorized 50,000,000 shares, outstanding 58 59
5,786,315 and 5,895,097 shares
Class B - authorized 150,000,000 shares, outstanding 271 271
27,139,225 and 27,056,945 shares
Additional paid-in capital 437,908 441,469
Retained earnings 238,303 176,994
Cumulative translation adjustments (9,276) (7,650)
Unrealized gain (loss) on investments 74 (2,147)
----------- -----------
Total common shareholders' equity 667,338 608,996
----------- -----------
$ 1,057,245 $ 1,041,569
=========== ===========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 21
Page 21
Hubbell Incorporated and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Years Ended December 31, 1995 1994 1993
- ------------------------ ---- ---- ----
<S> <C> <C> <C>
NET SALES $ 1,143,126 $ 1,013,700 $ 832,423
Cost of goods sold 803,178 708,680 569,492
----------- ----------- -----------
GROSS PROFIT 339,948 305,020 262,931
Restructuring Charge -- -- 50,000
Selling & administrative expenses 174,988 164,437 142,690
----------- ----------- -----------
OPERATING INCOME 164,960 140,583 70,241
----------- ----------- -----------
OTHER INCOME (EXPENSE):
Investment income 16,485 14,626 15,559
Interest expense (8,499) (6,074) (3,386)
Other income (expense), net (5,913) (3,200) (920)
----------- ----------- -----------
TOTAL OTHER INCOME, NET 2,073 5,352 11,253
----------- ----------- -----------
INCOME BEFORE INCOME TAXES 167,033 145,935 81,494
Provision for income taxes 45,099 39,402 15,188
----------- ----------- -----------
NET INCOME $ 121,934 $ 106,533 $ 66,306
=========== =========== ===========
EARNINGS PER SHARE: $ 3.65 $ 3.20 $ 2.00
</TABLE>
See notes to consolidated financial statements.
<PAGE> 22
Page 22
Hubbell Incorporated and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Years Ended December 31, 1995 1994 1993
- ------------------------ ---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 121,934 $ 106,533 $ 66,306
Restructuring charge -- -- 50,000
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 36,240 34,011 30,098
Deferred income taxes 2,592 6,269 (21,181)
Changes in assets and liabilities, net of the effects of business
acquisitions:
(Increase) Decrease in accounts receivable 3,097 (12,332) 8,937
(Increase) Decrease in inventories (12,296) (17,250) 3,528
(Increase) Decrease in other current assets 1,410 4,311 (7,180)
Increase (Decrease) in current liabilities
(excluding dividends payable and short-term borrowing) 6,088 10,451 (8,074)
Increase (Decrease) in restructuring accruals (9,526) (14,811) (7,250)
(Increase) Decrease in other, net 3,047 4,655 3,268
--------- --------- ---------
Net cash provided by operating activities 152,586 121,837 118,452
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of non-current investments (13,602) (11,464) (41,303)
Sale and maturity of non-current investments 47,401 47,206 16,977
Acquisition of businesses, net of cash acquired -- (110,000) (18,319)
Additions to property, plant and equipment (38,228) (53,178) (25,123)
Other, net 2,121 1,364 (3,315)
--------- --------- ---------
Net cash used in investing activities (2,308) (126,072) (71,083)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Short-term borrowing (repayment) (139,350) 48,250 17,300
Long-term borrowing 99,396 -- --
Payment of dividends (58,644) (52,621) (50,562)
Acquisition of treasury shares (6,642) (215) --
Exercise of stock options 3,081 3,455 1,869
Other, net -- -- --
--------- --------- ---------
Net cash used in financing activities (102,159) (1,131) (31,393)
--------- --------- ---------
INCREASE (DECREASE) IN CASH AND TEMPORARY
CASH INVESTMENTS 48,119 (5,366) 15,976
CASH AND TEMPORARY CASH INVESTMENTS
Beginning of period 38,865 44,231 28,255
--------- --------- ---------
End of period $ 86,984 $ 38,865 $ 44,231
========= ========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 23
Page 23
Hubbell Incorporated and Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Class A Class B Additional Cumulative Unrealized
For the three years ended Common Common Paid-In Retained Translation Gain (Loss)
December 31, 1995 Stock Stock Capital Earnings Adjustments on Investments
- ----------------- ----- ----- ------- -------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1992 $ 59 $ 253 $ 356,351 $ 188,385 $ (3,721) $ --
Net income 66,306
Exercise of stock options 1 2,643
Acquisition of treasury shares (775)
Cash dividends declared
($1.55 per share) (50,904)
Translation adjustments (938)
-------- --------- --------- --------- --------- ---------
BALANCE AT DECEMBER 31, 1993 59 254 358,219 203,787 (4,659) --
Net income 106,533
Exercise of stock options 1 6,170
Acquisition of treasury shares (2,930)
Cash dividends declared
($1.62 per share) (53,300)
Translation adjustments (2,991)
Stock dividend declared 16 80,010 (80,026)
Unrealized loss on investments (2,147)
--------- --------- --------- --------- --------- ---------
BALANCE AT DECEMBER 31, 1994 59 271 441,469 176,994 (7,650) (2,147)
Net income 121,934
Exercise of stock options 3,729
Acquisition of treasury shares (1) (7,290)
Cash dividends declared
($1.84 per share) (60,625)
Translation adjustments (1,626)
Unrealized gain on investments 2,221
--------- --------- --------- --------- --------- ---------
BALANCE AT DECEMBER 31, 1995 $ 58 $ 271 $ 437,908 $ 238,303 $ (9,276) $ 74
========= ========= ========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements
<PAGE> 24
Page 24
Hubbell Incorporated and Subsidiaries
STATEMENT OF ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include all subsidiaries; all significant
intercompany balances and transactions have been eliminated. Investments in
joint ventures are accounted for by using the equity method. Certain
reclassifications, which were not significant, have been made in prior period
financial statements to conform to the 1995 presentation.
Use of 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 and disclosures, if any, of
contingent assets and liabilities at the date of the financial statements.
Similarly, estimates and assumptions are required for the reporting of revenues
and expenses. Actual results could differ from the estimates that were used.
Foreign Currency Translation
The assets and liabilities of international subsidiaries are translated to U.S.
dollars at exchange rates in effect at the end of the year, and income and
expense items are translated at average rates of exchange in effect during the
year. The effects of exchange rate fluctuations on the translated amounts of
foreign currency assets and liabilities are included as translation adjustments
in shareholders' equity. Gains and losses from foreign currency transactions are
included in income of the period.
Cash and Temporary Cash Investments
Temporary cash investments consist of liquid investments with maturities of
three months or less when purchased. The carrying value of cash and temporary
cash investments approximates fair value because of their short maturities.
Inventories
Inventories are stated at the lower of cost or market. The cost of substantially
all domestic inventories, 80% of total inventory value, is determined on the
basis of the last-in, first-out (LIFO) method of inventory accounting. The cost
of foreign inventories and certain domestic inventories is determined on the
basis of the first-in, first-out (FIFO) method of inventory accounting.
Property, Plant, and Equipment
Property, plant, and equipment are depreciated over their estimated useful
lives, principally using accelerated methods.
Purchase Price in Excess of Net Assets of Companies Acquired
The cost of companies acquired in excess of the amount assigned to net assets is
being amortized on a straight-line basis over a 40 year period.
<PAGE> 25
Page 25
Deferred Income Taxes
Deferred income taxes are recognized for the tax consequence of differences
between the financial statement carrying amounts and tax bases of assets and
liabilities by applying the currently enacted statutory tax rates. The effect of
a change in statutory tax rates is recognized in income in the period that
includes the enactment date. Federal income taxes have not been provided on the
undistributed earnings of the Company's international subsidiaries as the
Company has reinvested all of these earnings indefinitely.
Retirement Benefits
The Company's policy is to fund pension costs within the ranges prescribed by
applicable regulations. In addition to providing pension benefits, in some
circumstances the Company provides health care and life insurance benefits for
retired employees. The Company's policy is to fund these benefits through
insurance premiums or as actual expenditures are made.
Earnings Per Share
Earnings per share is based on reported income and the weighted average number
of shares of common stock and equivalents outstanding.
Change in Accounting Principles
In March 1995, Statement of Financial Accounting Standards (SFAS) No. 121 -
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" was issued. The statement sets forth guidance as to when to
recognize an impairment of long-lived assets, including goodwill and how to
measure such an impairment. The statement also requires that long-lived assets
to be disposed of be reported at the lower of carrying amount or fair value less
cost to sell. The methodology set forth in SFAS No. 121 is not significantly
different from the Company's existing policies, and, therefore, the adoption of
the statement retroactive to January 1, 1995, had no impact on the consolidated
financial statements of the Company.
In October 1995, SFAS No. 123 - "Accounting for Stock-Based Compensation" was
issued and is effective for the Company on January 1, 1996. SFAS No. 123
permits, but does not require, a fair value based method of accounting for
employee stock option plans which results in compensation expense being
recognized in the results of operations when stock options are granted. The
Company plans to continue to use the current intrinsic value based method of
accounting for such plans where no compensation expense is recognized. However,
as required by SFAS No. 123, the Company will provide pro forma disclosure of
net income and earnings per share in the notes to the consolidated financial
statements as if the fair value based method of accounting has been applied.
Effective January 1, 1994, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 115 - "Accounting for Certain Investments in Debt and
Equity Securities". This statement requires investment securities to be
classified individually into one of three separate categories: trading,
available-for-sale or held-to-maturity and provides guidelines for valuing
investments based on their classifications. Trading investments are bought and
held principally for the purpose of selling them in the near term and are
carried at fair market value. Adjustments to the carrying value of trading
<PAGE> 26
Page 26
investments are included in current earnings. Investments which the Company has
the positive intent and ability to hold to maturity are classified as
held-to-maturity and carried at amortized cost. Investments not classified as
trading or held-to-maturity are classified as available-for-sale. They are
intended to be held for an indefinite period but may be sold in response to
events reasonably expected in the future. These investments are carried at fair
value with adjustments recorded in shareholders' equity, net of income tax.
Prior accounting standards required non-current marketable equity securities to
be carried at the lower of cost or market with adjustments reflected in
shareholders' equity, while all debt securities were carried at amortized cost.
The cumulative effect of adopting SFAS No. 115 on shareholders' equity as of
January 1, 1994 was immaterial.
<PAGE> 27
Page 27
Hubbell Incorporated and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Restructuring Charge
In the fourth quarter of 1993, the Company recorded a $50,000,000 pretax charge
($31,000,000 net of tax benefits, or $.93 per share) for the estimated costs of
a restructuring program. The program entails the consolidation of manufacturing
facilities, reduction in labor force and the realignment of warehousing and
distribution activities. The restructuring charge includes personnel costs
(severance and postemployment benefits), plant and equipment relocation, and
costs associated with disposal of plant and equipment. At December 31, 1995, the
restructuring accrual was $18,413,000 of which $10,000,000 is classified as a
current liability. Costs charged to the restructuring accrual were $9,526,000 in
1995, $14,811,000 in 1994 and $7,250,000 in 1993. These cumulative expenditures
represent personnel costs of $15,023,000; plant and equipment relocation of
$9,878,000 and asset disposals of $6,686,000. Personnel costs include non-cash
charges of $6,203,000 for early retirement programs which have been reclassed to
the Company's pension liability. With regards to plant and equipment disposals,
idled assets are adjusted to estimated fair value and are classified as property
held as investment. At December 31, 1995, the balance of idled assets to be sold
was $600,000. Cumulative proceeds from asset disposals through December 31, 1995
were $7,800,000 which approximated carrying value.
Acquisitions
On January 2, 1996, the Company acquired the Anderson Electrical Connector
business ("Anderson"). Anderson manufactures electrical connectors and
associated hardware and tools for the electric utility industry with
manufacturing facilities in Alabama and Tennessee. The acquisition was for cash
and will be recorded under the purchase method of accounting and the results of
Anderson's operations will be included in the Company's financial statements as
of the acquisition date. The purchase price was immaterial to the Company's
financial position at December 31, 1995 and the acquisition will not have a
significant effect on earnings.
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
$110,000,000 in cash and was recorded under the purchase method of accounting.
The cost of the acquired business has been allocated to assets acquired and
liabilities assumed based on their fair values with the residual amount of
$78,000,000 assigned to goodwill, which is being amortized over forty years. In
connection with the acquisition, liabilities were assumed as follows (in
thousands):
<TABLE>
<S> <C>
Fair value of assets acquired including goodwill $ 166,824
Cash paid for common stock (110,000)
---------
Liabilities assumed $ 56,824
=========
</TABLE>
<PAGE> 28
Page 28
Presented below is the unaudited pro forma combined summary of operations as if
the transaction had occurred as of the beginning of 1993 (in thousands, except
per share):
PRO FORMA SUMMARY OF OPERATIONS
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Net Sales $1,055,350 $989,253
Income Before Income Taxes $ 148,134 $ 91,272
Net Income $ 107,592 $ 71,427
Earnings Per Share $ 3.23 $ 2.15
</TABLE>
In preparing the unaudited pro forma combined 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 goodwill; the repayment of existing debt of
A.B. Chance Industries, Inc.; and other estimated purchase accounting entries.
The pro forma results are not necessarily indicative of what would have been
obtained if the operations had been combined during 1993, nor are they
necessarily indicative of the results that may occur in the future.
<PAGE> 29
Page 29
INVESTMENTS
Investments consist primarily of mortgage-backed securities, U.S. Treasury
Notes, common and preferred stocks. Investments which are available-for-sale are
stated at market values based on current quotes while investments which are
being held-to-maturity are stated at amortized cost. There were no securities
during 1995 and 1994 that were classified as trading investments. Certain
portfolio securities that are affected by changes in interest rates may be
hedged with futures contracts for U.S. Treasury notes and bonds. Market value
gains and losses on the futures contracts are recognized in income when the
effects of the related price changes in the value of the hedged securities are
recognized. At December 31, 1995 there were no open futures contracts.
The following tables set forth selected data with respect to the Company's
long-term investments at December 31, (in thousands):
<TABLE>
<CAPTION>
1995
-----------------------------
Gross Gross
Amortized Unrealized Unrealized Fair Carrying
Cost Gains Losses Value Value
---- ----- ------ ----- -----
<S> <C> <C> <C> <C> <C>
AVAILABLE-FOR-SALE
INVESTMENTS
Common & Preferred Stocks $ 822 $ 236 $ (474) $ 584 $ 584
Federal National Mortgage
Assoc. Securities (FNMA) -- -- -- -- --
Mortgage-backed Securities 911 241 -- 1,152 1,152
U.S. Treasury Notes & Municipal
Bonds 10,901 122 (5) 11,018 11,018
-------- -------- -------- -------- --------
Total Available-For-Sale
Investments $ 12,634 $ 599 $ (479) $ 12,754 $ 12,754
======== ======== ======== ======== ========
HELD-TO-MATURITY
INVESTMENTS
Federal National Mortgage
Assoc. Securities (FNMA) $104,399 $ 3,194 $ (2,389) $105,204 $104,399
Gov't. National Mortgage
Assoc. Securities (GNMA) 35,095 2,174 (361) 36,908 35,095
Mortgage-backed securities 16,921 220 -- 17,141 16,921
U.S. Treasury Notes & Municipal
Bonds 6,487 43 (14) 6,516 6,487
-------- -------- -------- -------- --------
Total Held-To-Maturity
Investments $162,902 $ 5,631 $ (2,764) $165,769 $162,902
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
1994
--------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair Carrying
Cost Gains Losses Value Value
---- ----- ------ ----- -----
<S> <C> <C> <C> <C> <C>
AVAILABLE-FOR-SALE
INVESTMENTS
Common & Preferred Stocks $ 25,529 $ 399 $ (3,263) $ 22,665 $ 22,665
Federal National Mortgage
Assoc. Securities (FNMA) 4,477 5 (206) 4,276 4,276
Mortgage-backed Securities 4,668 -- (275) 4,393 4,393
U.S. Treasury Notes & Municipal
Bonds 13,350 2 (125) 13,227 13,227
-------- -------- -------- -------- --------
Total Available-For-Sale
Investments $ 48,024 $ 406 $ (3,869) $ 44,561 $ 44,561
======== ======== ======== ======== ========
HELD-TO-MATURITY
INVESTMENTS
Federal National Mortgage
Assoc. Securities (FNMA) $104,716 $ 912 $ (6,074) $ 99,554 $104,716
Gov't. National Mortgage
Assoc. Securities (GNMA) 39,641 1,015 (1,793) 38,863 39,641
Mortgage-backed securities 16,986 14 (234) 16,766 16,986
U.S. Treasury Notes & Municipal
Bonds 35 -- -- 35 35
-------- -------- -------- -------- --------
Total Held-To-Maturity
Investments $161,378 $ 1,941 $ (8,101) $155,218 $161,378
======== ======== ======== ======== ========
</TABLE>
<PAGE> 30
Page 30
INVESTMENTS CONT'D.
Contractual maturities of investments in debt securities available-for-sale
and held-to-maturity at December 31, 1995 were as follow (in
thousands):
<TABLE>
<CAPTION>
U.S. Treasury
Mortgage Backed Notes &
FNMA GNMA Securities Municipal Bonds
---- ---- ---------- ---------------
Amortized Fair Amortized Fair Amortized Fair Amortized Fair
Cost Value Cost Value Cost Value Cost Value
---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AVAILABLE-FOR-SALE
INVESTMENTS
Due within 1 year $ -- $ -- $ -- $ -- $ -- $ -- $ 1,265 $ 1,300
After 1 but within 5 years -- -- -- -- -- -- 7,118 7,183
After 5 but within 10 years -- -- -- -- -- -- 2,518 2,535
After 10 years -- -- -- -- 911 1,152 -- --
-------- -------- ------- ------- ------- ------- ------- ------
TOTAL $ -- $ -- $ -- $ -- $ 911 $ 1,152 $10,901 $11,018
======== ======== ======= ======= ======= ======= ======= =======
HELD-TO-MATURITY
INVESTMENTS
Due within 1 year $ -- $ -- $ -- $ -- $ 6,723 $ 6,723 $ 5,452 $5,464
After 1 but within 5 years -- -- -- -- 3,198 3,418 1,035 1,052
After 5 but within 10 years -- -- 8,317 8,695 7,000 7,000 -- --
After 10 years $104,399 $105,204 $26,778 $28,213 -- -- -- --
-------- -------- ------- ------- ------- ------- ------- ------
TOTAL $104,399 $105,204 $35,095 $36,908 $16,921 $17,141 $ 6,487 $6,516
======== ======== ======= ======= ======= ======= ======= ======
</TABLE>
<PAGE> 31
Page 31
Inventories
Inventories are classified as follows at December 31, (in thousands):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Raw material $ 81,253 $ 79,065
Work-in-process 64,117 59,035
Finished goods 140,428 135,042
--------- --------
285,798 273,142
Excess of current production costs over LIFO cost basis 49,414 49,054
--------- --------
Total $ 236,384 $224,088
========= ========
</TABLE>
The financial accounting basis for the LIFO inventories of acquired companies
exceeds the tax basis by approximately $29,600,000 at December 31, 1995.
Income Taxes
The following table sets forth selected data with respect to the Company's
income tax provisions for the years ended December 31, (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Income before income taxes and cumulative
effect of change in accounting
principles:
United States $163,093 $ 146,609 $ 83,157
International 3,940 (674) (1,663)
-------- --------- --------
Total $167,033 $ 145,935 $ 81,494
======== ========= ========
Provisions for income taxes:
Federal $ 35,306 $ 28,350 $ 32,080
State 5,492 4,612 4,837
International 1,709 171 (548)
Deferred 2,592 6,269 (21,181)
-------- --------- --------
Total $ 45,099 $ 39,402 $ 15,188
======== ========= ========
</TABLE>
The principal items making up the deferred tax provisions are set forth in the
following table for the years ended December 31, (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Transactions of leasing subsidiary $(1,016) $ (912) $ (686)
Restructuring reserve 3,620 5,628 (16,245)
Depreciation 1,478 (219) (354)
Other, net (1,490) 1,772 (3,896)
------- ------- --------
Total $ 2,592 $ 6,269 $(21,181)
======= ======= ========
</TABLE>
<PAGE> 32
Page 32
The components of the net deferred tax (asset) liability at December 31, (in
thousands) were as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
Deferred tax assets:
<S> <C> <C>
Inventory $ 3,200 $ 3,807
Pensions 10,908 12,939
Postretirement and postemployment benefits 10,324 10,036
Accrued restructuring charge 6,997 10,617
Accrued liabilities 40,917 37,689
Miscellaneous other 5,635 7,518
------------ ----------
Total deferred tax asset 77,981 82,606
------------ ----------
Deferred tax liabilities:
Property, plant, and equipment 25,245 23,932
Leasing subsidiary 18,168 19,184
LIFO inventories of acquired businesses 11,250 11,480
Miscellaneous other 8,467 9,268
------------ ----------
Total deferred tax liability 63,130 63,864
------------ ----------
Net deferred tax (asset) liability $ (14,851) $ (18,742)
============ ==========
</TABLE>
Deferred taxes are classified in the financial statements as a net short-term
deferred tax asset of $30,958,000 and a net long-term deferred tax liability of
$16,107,000.
At December 31, 1995, United States income taxes had not been provided on
approximately $9,800,000 of undistributed international earnings. Payments of
income taxes were $39,836,000 in 1995, $37,362,000 in 1994 and $33,106,000 in
1993.
The consolidated effective income tax rates varied from the United States
federal statutory income tax rate for the years ended December 31, as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Federal statutory income tax rate 35.0% 35.0% 35.0%
State income taxes, net of federal benefit 2.3 2.2 2.6
Partially tax-exempt income (5.2) (4.4) (5.7)
Non-taxable income from
Puerto Rico operations (6.5) (5.4) (11.1)
Other, net 1.4 (0.4) (2.2)
---- ---- ----
Consolidated effective income tax rate 27.0% 27.0% 18.6%
==== ==== ====
</TABLE>
The decline in the consolidated effective income tax rate to 18.6% in 1993 was a
result of the decline in pre-tax income following the charge for restructuring.
<PAGE> 33
Page 33
Other Non-Current Liabilities
Other Non-Current Liabilities consists of the following at December 31, (in
thousands):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Pensions $ 27,573 $ 32,201
Other postretirement benefits 17,795 18,493
Accrued restructuring charge 8,413 13,939
Other, net 22,985 20,243
-------- --------
Total $ 76,766 $ 84,876
======== ========
</TABLE>
Pension Benefits
The Company and its subsidiaries have a number of non-contributory defined
benefit pension plans and defined contribution plans covering substantially all
employees. The pension plans provide pension benefits that are based on a
combination of years of service and either compensation levels or specified
dollar amounts.
The following table sets forth the components of pension cost for the years
ended December 31, (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Benefits earned $ 6,634 $ 7,194 $ 6,704
Increase in present value of
benefits earned in prior years 13,181 11,411 10,706
Actual return on plan assets (34,970) 3,202 (15,312)
Deferred gain or (loss) 21,520 (14,847) 4,560
Amortization of actuarial gains and
losses and prior service cost (2,808) (200) (294)
-------- -------- --------
Net Pension Cost $ 3,557 $ 6,760 $ 6,364
======== ======== ========
ASSUMPTIONS USED IN DETERMINING PENSION COST:
Discount rate 8.5% 7.5% 8.0%
Long-term rate of compensation increase 5.0% 5.0% 6.5%
Expected long-term rate of return
on plan assets 9.5% 8.5% 9.0%
</TABLE>
Pension expense as a percent of payroll was 1.9% in 1995, 3.2% in 1994 and 3.3%
in 1993.
<PAGE> 34
Page 34
The following table sets forth the retirement plans' status and the pension
liability recognized in the Company's balance sheet at December 31, (in
thousands):
<TABLE>
<CAPTION>
Plans Where Assets Exceed Plans Where Accumulated
Accumulated Benefits Benefits Exceed Assets
------------------------- -----------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
ESTIMATED FUNDS REQUIRED TO PROVIDE FOR FUTURE
PAYMENT OF:
Benefits based on service to date and present
pay levels:
Vested $ 140,745 $ 88,518 $ 17,386 $ 35,200
Non-vested 11,635 6,389 1,099 1,433
--------- -------- -------- --------
Accumulated benefit obligation 152,380 94,907 18,485 36,633
Additional amounts related to projected pay increases 19,069 17,063 8,151 4,198
--------- -------- -------- --------
Projected benefit obligation 171,449 111,970 26,636 40,831
--------- -------- -------- --------
ASSETS AVAILABLE FOR BENEFITS:
Plan assets (market value) 175,660 121,460 4,667 24,030
Company assets (recorded liability) 12,933 19,883 17,123 16,241
--------- -------- -------- --------
Total Assets 188,593 141,343 21,790 40,271
--------- -------- -------- --------
ASSETS IN EXCESS OF (LESS THAN)
PROJECTED BENEFIT OBLIGATION $ 17,144 $ 29,373 $ (4,846) $ (560)
========= ======== ======== ========
Consisting of:
Unrecognized net asset (obligation) at transition $ 4,406 $ 4,255 $ (2) $ 804
Unrecognized actuarial gain (loss) since transition $ 13,517 $ 23,245 $ (4,476) $ (1,364)
Unrecognized prior service costs incurred
since transition $ (779) $ 1,873 $ (368) $---
</TABLE>
The projected benefit obligations were determined using discount rates of 7.25%
for 1995 and 8.5% for 1994 and assumed average long-term rate of compensation
increase of 4.0% for 1995 and 5.0% for 1994.
At December 31, 1995, approximately $93,300,000 of plan assets were invested in
common stocks, including Hubbell Incorporated common stock with a market value
of $10,900,000. The balance of plan assets are invested in short term money
market accounts, government and corporate bonds.
Postretirement Benefits Other Than Pensions
The Company and its subsidiaries have a number of health care and life insurance
benefit plans covering eligible employees who reached retirement age while
working for the Company, providing they retired prior to 1992. These benefits
were discontinued in 1991 for substantially all future retirees, with the
exception of the A.B. Chance Company which was acquired in 1994.
For retirees prior to 1992, some of the plans provide for retiree contributions,
which are periodically increased. The plans anticipate future cost-sharing
changes that are consistent with the Company's past practices. The plans are
funded either on a monthly premium basis or as benefits become due.
At December 31, 1995, the recorded liability for providing these postretirement
benefits was based on a 7% discount rate and assumed health care cost trend rate
of 13% declining to 5.5% over ten years. The costs recognized for providing
these benefits in 1995, 1994 and 1993 were $1,300,000, $1,400,000 and $1,300,000
respectively. The costs for 1995, 1994 and 1993 were primarily interest.
<PAGE> 35
Page 35
Commercial Paper, Bank and Other Borrowings
The following table sets forth the components of the Company's structure at
December 31, (in thousands):
<TABLE>
<CAPTION>
1995 1994
------------------------------------ ------------------------------------
COMMERCIAL COMMERCIAL
PAPER AND PAPER AND
BANK LONG-TERM BANK LONG-TERM
BORROWINGS DEBT TOTAL BORROWINGS DEBT TOTAL
---------- --------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance at year end $ 0 $ 102,096 $ 102,096 $ 139,350 $ 2,700 $142,050
Highest aggregate month end balance $ 149,752 $145,723
Average borrowings during the year $103,331 $ 27,752 $ 131,083 $ 122,822 $ 2,700 $125,522
Weighted average interest rate:
At year end N/A 6.86% 6.86% 6.05% 11.25% 6.15%
Paid during the year 6.03% 7.14% 6.26% 4.65% 11.25% 4.79%
</TABLE>
Interest paid for commercial paper, bank borrowings, and long-term debt totaled
$7,181,000 in 1995, $4,890,000 in 1994 and $3,280,000 in 1993. The Company
maintains various bank credit agreements primarily to support commercial paper
borrowings. At December 31, 1995, the Company had total unused bank credit
agreements of $50 million. The expiration date for the bank credit agreements
is September 27, 1999. Borrowings under credit agreements generally are
available at the prime rate or at a surcharge over the London Interbank Offered
Rate (LIBOR). Annual commitment fee requirements to support availability of
credit agreements at December 31, 1995 total approximately $50,000. In October,
1995, the Company issued ten year non-callable notes due in 2005 at a face value
of $100,000,000 and a fixed interest rate of 6 5/8%. The net proceeds of the
offering were $99,380,000 and were used to pay down commercial paper.
Additionally, the Company has Industrial Development Bonds of $2,700,000 due in
2001 with an interest rate of 11 1/4%.
<PAGE> 36
Page 36
Leases
Total rental expense under operating leases was $6,600,000 in 1995, $6,900,000
in 1994 and $5,600,000 in 1993.
The minimum annual rentals on non-cancelable, long-term, operating leases in
effect at December 31, 1995 will approximate $1,930,000 in 1996, $1,540,000 in
1997, and will decline thereafter.
Research, Development and Engineering
Expenses for new product development and ongoing improvement of existing
products were $12,400,000 in 1995, $12,500,000 in 1994 and $15,400,000 in 1993.
Financial Instruments
Concentration of Credit Risks: Financial instruments which potentially subject
the Company to concentration of credit risks consist of trade receivables and
temporary cash investments. The Company grants credit terms in the normal course
of business to its customers. Due to the diversity of its product segments, the
Company has a diverse customer base including electrical distributors and
wholesalers, electric utilities, equipment manufacturers, electrical
contractors, telephone operating companies and retail and hardware outlets. As
part of its ongoing procedures, the Company monitors the credit worthiness of
its customers. Bad debt write-offs have historically been minimal. The Company
places its temporary cash investments with financial institutions and limits the
amount of exposure to any one institution.
Fair Value: The carrying amounts reported in the consolidated balance sheets for
cash and temporary cash investments, receivables, commercial paper and bank
borrowings, accounts payable and accruals approximate their fair values given
the immediate or short-term maturity of these financial investments.
The fair value of investment securities and long term debt are as follows (in
thousands):
<TABLE>
<CAPTION>
1995 1994
---- ----
Carrying Fair Carrying Fair
Value Value Value Value
----- ----- ----- -----
<S> <C> <C> <C> <C>
Investments
Available-for-sale $ 12,754 $ 12,754 $ 44,561 $ 44,561
Held-to-maturity $ 162,902 $ 165,769 $ 161,378 $ 155,218
Long Term Debt $(102,096) $(106,324) $ (2,700) $ (2,800)
</TABLE>
Fair value is based on quoted market prices for the same or similar securities.
<PAGE> 37
Page 37
Capital Stock
Share activity in the Company's preferred and common stocks is set forth below
for the three years ended December 31, 1995:
<TABLE>
<CAPTION>
Preferred Stock Common Stock
--------------- ------------
Class A Class B
------- --------
<S> <C> <C> <C>
OUTSTANDING AT DECEMBER 31, 1992 --- 5,855,095 25,329,453
Exercise of stock options 22,669 65,216
Acquisition/Issuance of treasury shares (2,016) (11,876)
------- --------- ----------
OUTSTANDING AT DECEMBER 31, 1993 --- 5,875,748 25,382,793
Exercise of stock options 37,223 139,337
Acquisition/Issuance of treasury shares (17,874) (34,330)
Stock dividend declared --- 1,569,145
------- --------- ----------
OUTSTANDING AT DECEMBER 31, 1994 --- 5,895,097 27,056,945
Exercise of stock options 15,596 101,089
Acquisition/Issuance of treasury shares (124,378) (18,809)
------- --------- ----------
OUTSTANDING AT DECEMBER 31, 1995 --- 5,786,315 27,139,225
</TABLE>
Shares held in Treasury at December 31, 1995: Class A Common - 1,815,220; Class
B Common - 1,963,561. For accounting purposes, the Company treats treasury
shares as being constructively retired and accordingly charges the purchase
price against par value and additional paid-in capital. Voting rights per share:
Class A Common - twenty; Class B Common - one. In addition, the Company has
5,891,097 authorized shares of preferred stock; none are outstanding.
On December 13, 1994, the Board of Directors declared a 5% stock dividend
payable in Class B Common Stock to all shareholders on February 3, 1995. In the
accompanying financial statements all per common share amounts have been
restated to reflect the stock dividend.
The Company has a Shareholder Rights Plan under which holders of Class A Common
Stock have Class A Rights and holders of Class B Common Stock have Class B
Rights. These Rights become exercisable after a specified period of time only if
a person or group of affiliated persons acquires beneficial ownership of 20
percent or more of the outstanding Class A Common Stock of the Company or
announces or commences a tender or exchange offer that would result in the
offeror acquiring beneficial ownership of 30 percent or more of the outstanding
Class A Common Stock of the Company. Once exercisable, the Rights would entitle
their registered holders to purchase, for each common share held, one share of
the Company's Class A Common Stock or Class B Common Stock, as the case may be,
at a price of $98.72 per share, subject to adjustment to prevent dilution. Upon
the occurrence of certain events or transactions specified in the Rights
Agreement, a holder of Rights applicable to one share is entitled to receive for
an exercise price of $98.72 per share owned, a number of shares of the Company's
Class A Common Stock or Class B Common Stock, as the case may be, or an
acquiring corporation's common stock, having a market value equal to twice the
exercise price. The Rights may be redeemed by the Company for one cent per Right
prior to the tenth day after a person or group of affiliated persons has
acquired 20 percent or more of the outstanding Class A Common Stock of the
Company. The Rights expire on December 31, 1998, unless earlier redeemed by the
Company.
Shares of common stock were reserved at December 31, 1995 as follows:
<TABLE>
<CAPTION>
<S> <C>
Exercise of stock purchase rights 32,925,540
Exercise of outstanding stock options 2,251,942
Future grant of stock options 1,164,559
----------
Total (Class A, 6,364,852; Class B, 29,977,189) 36,342,041
==========
</TABLE>
<PAGE> 38
Page 38
Stock Options
The Company has granted to officers and key employees options to purchase the
Company's Class A and Class B Common Stock and the Company may grant to officers
and key employees options to purchase the Company's Class B Common Stock at not
less than 85% of market prices on the date of grant. Stock option activity
(restated for the 5% common stock dividend declared in 1994) for the three years
ended December 31, 1995 is set forth below:
<TABLE>
<CAPTION>
Number Option price
of shares per share
--------- ------------
<S> <C> <C> <C>
OUTSTANDING AT DECEMBER 31, 1992 1,605,403 $12.29 - $46.77
Granted 321,405 $50.30
Exercised (92,336) $12.29 - $46.77
Canceled or expired (580) $38.66
---------
OUTSTANDING AT DECEMBER 31, 1993 1,833,892 $13.32 - $53.99
Granted 371,385 $51.43
Exercised (185,388) $13.32 - $53.99
Canceled or expired (14,007) $50.30 - $53.99
---------
OUTSTANDING AT DECEMBER 31, 1994 2,005,882 $19.07 - $53.99
Granted 379,900 $64.13
Exercised (116,685) $19.07 - $53.99
Cancelled or expired (17,155) $50.30 - $53.99
---------
OUTSTANDING AT DECEMBER 31, 1995 2,251,942 $21.90 - $64.13
</TABLE>
Options for the purchase of 1,525,078 shares were exercisable at December 31,
1995, at prices ranging from $21.90 to $53.99 per share.
<PAGE> 39
Page 39
Industry Segment and Geographic Area Information
Nature of Operations
Hubbell Incorporated was founded as a proprietorship in 1888, and was
incorporated in Connecticut in 1905. For over a century, Hubbell has
manufactured and sold high quality electrical and electronic products for a
broad range of commercial, industrial, telecommunications and utility
applications. Since 1961, Hubbell has expanded its operations into other areas
of the electrical industry and related fields. Hubbell products are now
manufactured or assembled by nineteen divisions and subsidiaries at twenty-eight
locations in the United States, Canada, Puerto Rico, Mexico, United Kingdom and
Singapore. Hubbell also participates in joint ventures with partners in Germany
and Taiwan, and maintains sales offices in Malaysia, Mexico, Hong Kong, South
Korea and the Middle East.
The Company is primarily engaged in the engineering, manufacture and sale of
electrical and electronic products. These products
can be divided into three general segments: products primarily used in
low-voltage applications, products primarily used in high-voltage applications
and products that either are not directly related to the electrical business,
or, if related, cannot be clearly classified on a voltage application basis. At
December 31, 1995, these segments were comprised as follows:
Low Voltage products are in the range of 600 volts or less, are sold principally
to distributors and represent stock items of standard and special application
wiring device products, lighting fixtures and low voltage industrial controls.
High Voltage products are in the more than 600 volt range, are sold through
distributors, independent sales representatives and directly to customers by
sales engineers. Segment products are comprised of test and measurement
equipment, wire and cable, electrical transmission and distribution products
such as insulators, surge arresters, switches, cutouts, sectionalizers and
fuses.
The Other segment consists of products not classified on a voltage basis. This
segment includes standard and special application cabinets and enclosures,
fittings, switch and outlet boxes, wire management components and systems,
construction materials and tools for building and maintenance of overhead and
underground power and telephone lines, data transmission and telecommunications
equipment and components for voice and data signals. Segment products are sold
to customers in a wide range of markets including industrial, commercial and
residential construction; hardware and home center outlets; original equipment
manufacturers; electric and telephone utilities.
On a geographic basis, the Company defines "international" as operations and
activities based outside of the United States and its possessions. Sales of
international units were 6% of total sales in 1995, 6% in 1994 and 5% in 1993
with the Canadian market representing approximately 60% of the total. Net assets
of international subsidiaries were 4% of the consolidated total in 1995, 4% in
1994 and 4% in 1993. Export sales from the United States operations to
unaffiliated customers were $71,500,000 in 1995, $62,600,000 in 1994 and
$37,000,000 in 1993.
<PAGE> 40
Page 40
The Company's principal manufacturing facilities are located in the following
areas, classified by segment:
<TABLE>
<CAPTION>
Approximate Floor
Segment Location No. of Facilities Area in Square Feet
------- -------- ----------------- -------------------
<S> <C> <C> <C>
Low Voltage Segment Connecticut 2 492,600
Ohio 1 76,900
Puerto Rico 2 221,100 (1)
Tennessee 1 250,000
Virginia 1 321,300
North Carolina 1 22,000 (2)
Mexico 1 40,000 (2)
High Voltage Segment Connecticut 1 503,000
New York 2 171,000
Ohio 1 92,000
South Carolina 1 197,000
Missouri 1* 795,000
Other Segments Connecticut 1 67,400
Illinois 1 207,100
Indiana 1 320,000
Missouri 1** 234,400
Virginia 1 138,000
Mexico 1 161,500
North Carolina 1 35,000
- -----------------------------
</TABLE>
(1) 69,100 square feet leased (2) Leased
* Some products are classified in the Other Segment
** Some products are classified in the Low Voltage Segment
Additionally, the Company owns or leases warehouses and distribution centers
containing approximately 1,145,300 square feet. The Company believes its
manufacturing and warehousing facilities are adequate to carry on its business
activities.
As of December 31, 1995, the Company has approximately 7,410 full-time
employees, including salaried and hourly personnel. Approximately 36% of the
total employees are represented by labor unions. During the next twelve months
there are no significant union contracts due for renegotiation.
Financial Information
Financial information by industry segment and geographic area for the three
years ended December 31, 1995, is summarized below (in thousands). When reading
the data the following items should be noted:
- - Net sales comprise sales to unaffiliated customers - intersegment and
inter-area sales are immaterial.
- - Segment operating income consists of net sales less operating expenses.
General corporate expenses, interest expense, and other income, have not been
allocated to segments.
- - General corporate assets not allocated to segments are principally cash and
investments.
<PAGE> 41
Page 41
<TABLE>
<CAPTION>
INDUSTRY SEGMENT 1995 1994 1993
NET SALES: ---- ---- ----
<S> <C> <C> <C>
Low Voltage $ 497,428 $ 456,287 $ 431,974
High Voltage 234,052 205,721 134,195
Other 411,646 351,692 266,254
----------- ----------- ---------
Total $ 1,143,126 $ 1,013,700 $ 832,423
=========== =========== =========
OPERATING INCOME:
Low Voltage $ 96,965 $ 89,148 $ 83,835
Restructuring Charge -- -- (28,300)
High Voltage 25,040 21,314 15,388
Restructuring Charge -- -- (3,100)
Other 57,630 44,368 35,049
Restructuring Charge -- -- (18,600)
----------- ----------- ---------
Segment Total 179,635 154,830 84,272
General corporate expenses (14,675) (14,247) (14,031)
Interest expense (8,499) (6,074) (3,386)
Investment and other income, net 10,572 11,426 14,639
----------- ----------- ---------
Income before income taxes $ 167,033 $ 145,935 $ 81,494
=========== =========== =========
ASSETS:
Low Voltage $ 262,399 $ 261,789 $ 246,937
High Voltage 204,821 204,159 109,205
Other 248,336 241,835 156,757
General Corporate 341,689 333,786 361,399
----------- ----------- ---------
Total $ 1,057,245 $ 1,041,569 $ 874,298
=========== =========== =========
CAPITAL EXPENDITURES:
Low Voltage $ 16,845 $ 22,655 $ 8,464
High Voltage 8,546 16,377 8,657
Other 12,349 13,791 6,397
General Corporate 488 355 1,605
----------- ----------- ---------
Total $ 38,228 $ 53,178 $ 25,123
=========== =========== =========
DEPRECIATION AND AMORTIZATION:
Low Voltage $ 14,407 $ 14,521 $ 15,968
High Voltage 9,148 7,497 4,885
Other 11,753 10,746 7,851
General Corporate 932 1,247 1,394
----------- ----------- ---------
Total $ 36,240 $ 34,011 $ 30,098
=========== =========== =========
</TABLE>
<PAGE> 42
Page 42
GEOGRAPHIC AREA
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
NET SALES:
United States $1,072,267 $ 957,740 $ 788,708
International 70,859 55,960 43,715
---------- ---------- ---------
Total $1,143,126 $1,013,700 $ 832,423
========== ========== =========
OPERATING INCOME:
United States $ 169,890 $ 148,470 $ 132,150
Restructuring charge -- -- (49,100)
International 9,745 6,360 2,122
Restructuring charge -- -- (900)
---------- ---------- ---------
Total $ 179,635 $ 154,830 $ 84,272
========== ========== =========
ASSETS:
United States $1,007,276 $ 999,567 $ 839,853
International 49,969 42,002 34,445
---------- ---------- ---------
Total $1,057,245 $1,041,569 $ 874,298
========== ========== =========
</TABLE>
Subsequent Event
On January 31, 1996, the Company acquired all the outstanding stock of Gleason
Reel Corporation ("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 purchase price, which consisted of cash and
notes with maturities of one year, was immaterial to the Company's financial
position at December 31, 1995 and the acquisition will not have a significant
effect on earnings.
Quarterly Financial Data (Unaudited)
The table below sets forth summarized quarterly financial data for the years
ended December 31, 1995 and 1994 (in thousands, except per share amounts). Share
data has been restated for the 5% common stock dividend paid in 1995:
<TABLE>
<CAPTION>
First Second Third Fourth
1995 Quarter Quarter Quarter Quarter
- ---- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Sales $278,434 $295,006 $286,968 $282,718
Gross Profit $ 80,500 $ 83,982 $ 86,395 $ 89,071
Net Income $ 28,409 $ 30,077 $ 31,700 $ 31,748
Earnings Per Share $ 0.85 $ 0.90 $ 0.95 $ 0.95
1994
- ----
Net Sales $207,044 $261,935 $267,545 $277,176
Gross Profit $ 64,540 $ 77,737 $ 78,339 $ 84,404
Net Income $ 24,328 $ 26,459 $ 27,289 $ 28,457
Earnings Per Share $ 0.73 $ 0.79 $ 0.82 $ 0.86
</TABLE>
<PAGE> 43
Page 43
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
Information relative to Executive Officers appears on Page 46
of this report.
Item 10. Directors and Executive Officers of the Registrant(1)
Item 11. Executive Compensation (1)
Item 12. Security Ownership of Certain Beneficial Owners and
Management (1)
Item 13. Certain Relationships and Related Transactions (1)
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
1. Financial Statements and Schedules
Financial statements and schedules listed in the Index to Financial Statements
and Schedules appearing on Page 49 are filed as part of this Annual Report on
Form 10-K.
2. Exhibits
Number Description
3a Restated Certificate of Incorporation, as amended through May
10, 1991. Exhibit 4.1 of the registrant's Registration
Statement on Form S-3, filed on August 17, 1995 is herein
incorporated by reference.
3b By-Laws, Hubbell Incorporated, as amended on December 12,
1989. Exhibit 3b of the registrant's report on Form 10-K for
the year 1989, filed on March 26, 1990, is incorporated by
reference.
3c Rights Agreement, dated as of December 13, 1988, between
Hubbell Incorporated and Manufacturers Hanover Trust Company
(now known as Chemical Mellon Shareholder Services, L.L.C.)
as Rights Agent. Registrant's Form 8-A, dated December 27,
1988, and filed on December 29, 1988, is incorporated by
reference.
- ------------------
(1) The definitive proxy statement for the annual meeting of
shareholders to be held on May 6, 1996, filed with the Commission on
March 27, 1996, pursuant to Regulation 14A, is incorporated herein by
reference.
<PAGE> 44
Page 44
2. Exhibits - Continued
Number Description
4 Loan Agreement dated as of June 1, 1981, between the
Connecticut Development Authority and Harvey Hubbell,
Incorporated. Exhibit 4c of the registrant's report on Form
10-K for the year 1981, filed on March 29, 1982, is
incorporated herein by reference.
10a+ Hubbell Incorporated Supplemental Executive Retirement Plan,
as amended and restated effective May 1, 1993. Exhibit 10a of
the registrant's report on Form 10-Q for the second quarter,
1993, filed on August 12, 1993, is incorporated by reference.
10b(1)+ Hubbell Incorporated 1973 Stock Option Plan for Key
Employees, as amended and restated effective May 2, 1994.
Exhibit 10b(1) of the registrant's report on Form 10-Q for
the first quarter, 1994, filed on May 9, 1994, is
incorporated by reference.
10c+ Description of the Hubbell Incorporated, Post Retirement
Death Benefit Plan for Participants in the Supplemental
Executive Retirement Plan, as amended effective May 1, 1993.
Exhibit 10c of the registrant's report on Form 10-Q for the
second quarter, 1993, filed on August 12, 1993, is
incorporated herein by reference.
10f Hubbell Incorporated Deferred Compensation Plan for
Directors, as amended and restated effective June 20, 1991.
Exhibit 10f of the registrant's report on Form 10-Q for the
second quarter, 1991, filed on August 7, 1991, is
incorporated by reference.
10g+* Hubbell Incorporated Incentive Compensation Plan, as amended
effective December 13, 1995.
10h Hubbell Incorporated Key Man Supplemental Medical Insurance,
as amended and restated effective December 9, 1986. Exhibit
10h of the registrant's report on Form 10-K for the year
1987, filed on March 25, 1988, is incorporated by reference.
10i Hubbell Incorporated Retirement Plan for Directors, as
amended and restated effective March 13, 1990. Exhibit 10i of
the registrant's report on Form 10-K for the year 1989, filed
on March 26, 1990, is incorporated by reference.
10l+ Employment Agreement, dated March 28, 1989 (effective January
1, 1989), between Hubbell Incorporated and G. Jackson
Ratcliffe, Chairman of the Board, President and Chief
Executive Officer. Exhibit 10l of the registrant's report on
Form 10-K for the year 1988, filed on March 29, 1989, is
incorporated by reference.
- -------------------
+ This exhibit constitutes a management contract, compensatory plan,
or arrangement
* Filed hereunder
<PAGE> 45
Page 45
2. Exhibits - Continued
Number Description
------ -----------
10m+ Employment Agreement, dated March 28, 1989 (effective January
1, 1989), between Hubbell Incorporated and Vincent R. Petrecca,
Executive Vice President. Exhibit 10m of the registrant's
report on Form 10-K for the year 1988, filed on March 29, 1989,
is incorporated by reference.
10n+ Employment Agreement, dated March 28, 1989 (effective January
1, 1989), between Hubbell Incorporated and Harry B. Rowell,
Jr., Executive Vice President. Exhibit 10n of the registrant's
report on Form 10-K for the year 1988, filed on March 29, 1989,
is incorporated by reference.
10o+ Hubbell Incorporated Policy for Providing Severance Payments to
Key Managers, as amended and restated effective September 9,
1993. Exhibit 10o of the registrant's report on Form 10-Q for
the third quarter, 1993, filed on November 10, 1993, is
incorporated by reference.
11 Computation of earnings per share.
21 Listing of significant subsidiaries.
27 Exhibit 27 Financial Data Schedule (Electronic filings only)
3. Reports on Form 8-K
A report on Form 8-K, pertaining to the issuance and sale of
$100,000,000 aggregate principal amount of the Registrant's 6 5/8% Notes due
2005, pursuant to an Underwriting Agreement dated September 28, 1995, was filed
with the Securities and Exchange Commission on October 3, 1995.
- ------------------------
+ This exhibit constitutes a management contract, compensatory plan, or
arrangement
<PAGE> 46
Page 46
Executive Officers of the Registrant
<TABLE>
<CAPTION>
Name Age(1) Present Position Business Experience
<S> <C> <C> <C>
G. Jackson Ratcliffe 59 Chairman of the Board, President President and Chief Executive Officer since January 1, 1988;
and Chief Executive Officer Chairman of the Board since 1987; Executive Vice President -
Administration 1983-1987; Senior Vice President-Finance and
Law 1980-1983; Vice President, General Counsel and Secretary
1974-1980.
Vincent R. Petrecca 55 Executive Vice President Present position since January 1, 1988; Group Vice President
1984-1987; Vice President and General Manager of the Wiring
Device Division 1981-1984; Vice President and General Manager of
the Lighting Division 1976-1981.
Harry B. Rowell, Jr. 54 Executive Vice President Present position since January 1, 1988; Group Vice
President 1985-1987; Vice President Corporate Development and
Planning 1979-1985.
Thomas H. Pluff 48 Group Vice President Present position since March 1989.
Richard W. Davies 49 Vice President, General Counsel Present position since January 1, 1996; General Counsel since
and Secretary 1987; Secretary since 1982; Assistant Secretary
1980-1982; Assistant General Counsel 1974-1987.
James H. Biggart, Jr. 43 Vice President and Treasurer Present position since January 1, 1996;
Treasurer since 1987; Assistant Treasurer 1986-1987; Director of
Taxes 1984-1986.
</TABLE>
There is no family relationship between any of the
above-named executive officers.
- --------------------------
(1) As of March 15, 1996
<PAGE> 47
Page 47
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.
HUBBELL INCORPORATED
By /s/G.J. Ratcliffe 3/11/96
------------------------------- -------
G. J. Ratcliffe Date
Chairman of the Board, President, Chief
Executive Officer and Director
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.
By /s/G.J. Ratcliffe 3/11/96
------------------------------- -------
G. J. Ratcliffe Date
Chairman of the Board, President, Chief
Executive Officer and Director
By /s/H.B. Rowell, Jr. 3/11/96
------------------------------- -------
H. B. Rowell, Jr. Date
Executive Vice President
(Chief Financial and Accounting Officer)
By /s/E.R. Brooks 3/11/96
------------------------------- -------
E. R. Brooks Date
Director
By /s/G.W. Edwards, Jr. 3/11/96
------------------------------- -------
G. W. Edwards, Jr. Date
Director
By /s/J.S. Hoffman 3/11/96
------------------------------- -------
J. S. Hoffman Date
Director
<PAGE> 48
Page 48
By /s/H.G. McDonell 3/11/96
------------------------------- -------
H. G. McDonell Date
Director
By /s/A. McNally IV 3/11/96
------------------------------- -------
A. McNally IV Date
Director
By /s/D.J. Meyer 3/11/96
------------------------------- -------
D. J. Meyer Date
Director
By /s/J.A. Urquhart 3/11/96
------------------------------- -------
J. A. Urquhart Date
Director
By /s/M. Wallop 3/11/96
------------------------------- -------
M. Wallop Date
Director
<PAGE> 49
Page 49
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
<TABLE>
<CAPTION>
Form 10-K for
Financial Statements 1995, Page:
- -------------------- -----------
<S> <C>
Report of Independent Accountants.....................................................18
Consolidated Balance Sheet at December 31, 1995 and 1994..............................19
Consolidated Statement of Income for the three years
ended December 31, 1995...............................................................21
Consolidated Statement of Cash Flows for the three years
ended December 31, 1995...............................................................22
Consolidated Statement of Changes in Shareholders' Equity
for the three years ended December 31, 1995...........................................23
Statement of Accounting Policies......................................................24
Notes to Consolidated Financial Statements............................................27
Financial Statement Schedule
- ----------------------------
Report of Independent Accountants
on Financial Statement Schedule.......................................................50
Valuation and Qualifying Accounts and Reserves
(Schedule VIII).......................................................................51
</TABLE>
All other schedules are omitted because they are not applicable or the required
information is shown in the consolidated financial statements or notes thereto.
<PAGE> 50
Page 50
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Hubbell Incorporated
Our audits of the consolidated financial statements referred to in our report
dated January 18, 1996, except for the subsequent event note which is as of
January 31, 1996, appearing on page 18 of this Form 10-K also included an audit
of the Financial Statement Schedule listed in the index on page 49. In our
opinion, the 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
Stamford, Connecticut
January 18, 1996
<PAGE> 51
Page 51
HUBBELL INCORPORATED Schedule VIII
AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
(In thousands)
Reserves deducted in the balance sheet from the assets to which they apply:
<TABLE>
<CAPTION>
Additions Deductions -
Balance at charged Acquisition uncollectible Balance
beginning to costs of accounts at end
of period and expenses businesses written off of period
--------- ------------ ---------- ------------- ---------
Allowances for doubtful
accounts receivable:
<S> <C> <C> <C> <C> <C>
Year 1993 $3,340 $1,845 $ 64 $ (1,481) $3,768
Year 1994 $3,768 $1,676 $ 77 $ (761) $4,760
Year 1995 $4,760 $ 693 $ 0 $ (1,119) $4,334
</TABLE>
<PAGE> 52
EXHIBIT INDEX
-------------
Number Description
3a Restated Certificate of Incorporation, as amended through May
10, 1991. Exhibit 4.1 of the registrant's Registration
Statement on Form S-3, filed on August 17, 1995, is herein
incorporated by reference.
3b By-Laws, Hubbell Incorporated, as amended on December 12,
1989. Exhibit 3b of the registrant's report on Form 10-K for
the year 1989, filed on March 26, 1990, is incorporated by
reference.
3c Rights Agreement, dated as of December 13, 1988, between
Hubbell Incorporated and Manufacturers Hanover Trust Company
(now known as Chemical Mellon Shareholder Services, L.L.C.)
as Rights Agent. Registrant's Form 8-A, dated December 27,
1988, and filed on December 29, 1988, is incorporated by
reference.
4 Loan Agreement dated as of June 1, 1981, between the
Connecticut Development Authority and Harvey Hubbell,
Incorporated. Exhibit 4c of the registrant's report on Form
10-K for the year 1981, filed on March 29, 1982, is
incorporated herein by reference.
10a+ Hubbell Incorporated Supplemental Executive Retirement Plan,
as amended and restated effective May 1, 1993. Exhibit 10a of
the registrant's report on Form 10-Q for the second quarter,
1993, filed on August 12, 1993, is incorporated by reference.
10b(1)+ Hubbell Incorporated 1973 Stock Option Plan for Key
Employees, as amended and restated effective May 2, 1994.
Exhibit 10b(1) of the registrant's report on Form 10-Q for
the first quarter, 1994, filed on May 9, 1994, is
incorporated by reference.
10c+ Description of the Hubbell Incorporated, Post Retirement
Death Benefit Plan for Participants in the Supplemental
Executive Retirement Plan, as amended effective May 1, 1993.
Exhibit 10c of the registrant's report on Form 10-Q for the
second quarter, 1993, filed on August 12, 1993, is
incorporated herein by reference.
10f Hubbell Incorporated Deferred Compensation Plan for
Directors, as amended and restated effective June 20, 1991.
Exhibit 10f of the registrant's report on Form 10-Q for the
second quarter, 1991, filed on August 7, 1991, is
incorporated by reference.
10g+* Hubbell Incorporated Incentive Compensation Plan, as amended
effective December 13, 1995.
10h Hubbell Incorporated Key Man Supplemental Medical Insurance,
as amended and restated effective December 9, 1986. Exhibit
10h of the registrant's report on Form 10-K for the year
1987, filed on March 25, 1988, is incorporated by reference.
10i Hubbell Incorporated Retirement Plan for Directors, as
amended and restated effective March 13, 1990. Exhibit 10i of
the registrant's report on Form 10-K for the year 1989, filed
on March 26, 1990, is incorporated by reference.
10l+ Employment Agreement, dated March 28, 1989 (effective January
1, 1989), between Hubbell Incorporated and G. Jackson
Ratcliffe, Chairman of the Board, President and Chief
Executive Officer. Exhibit 10l of the registrant's report on
Form 10-K for the year 1988, filed on March 29, 1989, is
incorporated by reference.
10m+ Employment Agreement, dated March 28, 1989 (effective January
1, 1989), between Hubbell Incorporated and Vincent R.
Petrecca, Executive Vice President. Exhibit 10m of the
registrant's report on Form 10-K for the year 1988, filed
on March 29, 1989, is incorporated by reference.
10n+ Employment Agreement, dated March 28, 1989 (effective January
1, 1989), between Hubbell Incorporated and Harry B. Rowell,
Jr., Executive Vice President. Exhibit 10n of the
registrant's report on Form 10-K for the year 1988, filed on
March 29, 1989, is incorporated by reference.
10o+ Hubbell Incorporated Policy for Providing Severance Payments
to Key Managers, as amended and restated effective September
9, 1993. Exhibit 10o of the registrant's report on Form 10-Q
for the third quarter, 1993, filed on November 10, 1993, is
incorporated by reference.
11 Computation of earnings per share.
21 Listing of significant subsidiaries.
27 Exhibit 27 Financial Data Schedule (Electronic filings only)
- ------------------
(1) The definitive proxy statement for the annual meeting of
shareholders to be held on May 6, 1996, filed with the Commission on
March 27, 1996, pursuant to Regulation 14A, is incorporated herein by
reference.
+ This exhibit constitutes a management contract, compensatory plan,
or arrangement
* Filed hereunder
<PAGE> 1
Exhibit 10g
HUBBELL INCORPORATED
INCENTIVE COMPENSATION PLAN
---------------------------
As Amended, Effective December 13, 1995
<PAGE> 2
HUBBELL INCORPORATED
INCENTIVE COMPENSATION PLAN
- -------------------------------------------------------------------------------
ARTICLE I
PURPOSE
1.1 The purpose of this Incentive Compensation Plan (the "Plan") is to
provide incentive compensation to executive and administrative employees of
Hubbell Incorporated (the "Company") and its subsidiaries who have contributed
effectively to the success of the Company by their ability, industry, loyalty or
exceptional services and to encourage continuance of their services with the
Company by a form of recognition of their efforts in contributing significantly
to the success and growth of the Company in the preceding fiscal year.
1.2 The persons eligible to participate in the Plan shall be those
employees who are primarily responsible in an administrative or executive
capacity for the direction of the functions and operations of the divisions and
departments within the Company or a subsidiary of the Company.
ARTICLE II
ADMINISTRATION
2.1 The Board of Directors shall appoint in each year from among their
number at least three directors, none of whom shall be an employee of the
Company, to be known as the Bonus and Salary Committee (the "Committee"), to
serve at the pleasure of the Board. Vacancies in the Committee shall be filled
by the Board.
2.2 The Committee shall administer the Plan under such rules,
regulations and criteria as it shall prescribe. It shall designate a member
thereof as secretary to keep minutes and records of its proceedings. It shall
report its doings to the Board of Directors. Its decisions in the administration
and interpretation of the Plan shall be final as to all interested parties and
shall be and constitute acts of the Company.
2.3 The Committee shall from time to time designate the employees
eligible for participation in the Plan. The persons so designated by the
Committee are hereinafter called "participants". In making such designations the
Committee shall give consideration to the recommendations and criticisms of the
executive officers of the Company.
2.4 The Committee in its discretion shall determine after the close of
each fiscal year the amount, if any, of the incentive payment to be awarded for
such fiscal year to each participant. In determining the amount thereof the
Committee shall consider the responsibility and position of the participant
during such fiscal year, the accomplishments of the division or department under
his direction during such fiscal year, the amount of his annual salary during
such fiscal year and such other factors as the Committee deems pertinent. The
total of the incentive payments awarded by the Committee with respect to each
fiscal year shall not exceed the total amount of the incentive compensation fund
as determined under Article III.
- 1 -
<PAGE> 3
ARTICLE III
COMPUTATION
OF INCENTIVE COMPENSATION FUND
3.1 Incentive payments under the Plan shall be made out of the
incentive compensation fund. The amount of the incentive compensation fund
available for distribution by the Committee shall be as audited and certified by
the independent auditors of the Company who shall report the amount thereof to
the Board of Directors and to the Committee upon conclusion of the audit of the
books for the fiscal year.
3.2 The incentive compensation fund shall be limited to that amount
determined by the independent auditors of the Company. The annual amount paid to
the incentive compensation fund shall be equal to 4% of the amount by which the
consolidated net earnings of the Company and its subsidiaries exceed 10% of
their invested capital and long-term debt at the beginning of each fiscal year.
Net earnings shall be computed before provision for the deduction of (i) federal
and state income taxes, (ii) the amount of the incentive compensation fund
accrued for the year, (iii) extraordinary items and prior period adjustments and
(iv) such other adjustments as the auditors deem appropriate under accepted
accounting procedures and practices.
3.3 The unawarded balance of said fund with respect to any fiscal year
shall be returned to the general funds of the Company at the end of three years.
ARTICLE IV
METHOD OF MAKING
INCENTIVE PAYMENTS
4.1 Incentive payments awarded under the Plan shall be paid in cash.
The amount of any incentive payment to be made to a participant in cash shall be
paid as soon as practicable (but not later than six months) after the close of
the fiscal year for which such incentive payment is awarded.
ARTICLE V
GENERAL PROVISIONS
5.1 Neither the establishment of the Plan nor the selection of any
employee as a participant shall give any such participant any right to be
retained in the employ of the Company or any subsidiary of the Company, or any
right whatsoever under the Plan other than to receive incentive payments awarded
by the Committee.
5.2 The place of administration of the Plan shall be conclusively
deemed to be within the State of Connecticut, and the validity, construction,
interpretation and effect of the Plan, its rules and regulations and the rights
of any and all participants having or claiming to have an interest therein or
thereunder shall be governed by and determined conclusively and solely in
accordance with the laws of the State of Connecticut, without regard to any
conflicts of laws provisions.
- 2 -
<PAGE> 4
5.3 No member of the Board of Directors or of the Committee shall be
liable to any person in respect of the Plan for any act or omission of such
member or of any other member or of any officer, agent or employee of the
Company.
ARTICLE VI
AMENDMENT, SUSPENSION
OR TERMINATION
6.1 The Board of Directors of the Company may from time to time amend,
suspend or terminate, in whole or in part, any or all of the provisions of the
Plan, provided that no such action shall affect the rights of any participant or
the operation of the Plan with respect to any payment to which a participant may
have become entitled, deferred or otherwise, prior to the effective date of such
action.
6.2 No amendment without prior stockholder approval shall be adopted by
the Board of Directors which shall alter the present formula for determining the
incentive compensation fund so as to increase the maximum annual amount
available for distribution or retroactively affect the payment of any incentive
payment awarded for any prior fiscal year.
ARTICLE VII
EFFECTIVE DATE OF THE PLAN
The Plan shall become effective on December 10, 1968.
- ------------------------
As amended effective December 13, 1995
L\P\BNFT\121395.ICP
12/13/95
-3-
<PAGE> 1
Page 52
Exhibit 11
HUBBELL INCORPORATED
AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
FIVE YEARS ENDED DECEMBER 31, 1995
(In thousands except per share data)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income before cumulative effect of
change in accounting principles $121,934 $106,533 $66,306 $ 94,090 $90,597
Cumulative effect of change in
accounting principles -- -- -- (16,506) --
-------- -------- ------- -------- -------
Net Income after cumulative effect
of change in accounting principles $121,934 $106,533 $66,306 $ 77,584 $90,597
======== ======== ======= ======== =======
Weighted average number of common
shares outstanding during the year 32,926 32,907 32,783 32,735 32,650
Common equivalent shares 446 384 417 490 499
-------- ------- ------- ------- -------
Average number of shares outstanding 33,372 33,291 33,200 33,225 33,149
======== ======= ======= ======= =======
Earnings per share:
Income before cumulative effect of
change in accounting principles $ 3.65 $ 3.20 $ 2.00 $ 2.83 $ 2.73
Cumulative effect of change in
accounting principles -- -- -- (0.50) --
-------- -------- ------- -------- -------
Net income $ 3.65 $ 3.20 $ 2.00 $ 2.33 $ 2.73
======== ======== ======= ======== =======
</TABLE>
Share data has been restated for the 5% stock dividend paid in 1995.
<PAGE> 1
Page 53
Exhibit 21
HUBBELL INCORPORATED
AND SUBSIDIARIES
LISTING OF SIGNIFICANT SUBSIDIARIES
<TABLE>
<CAPTION>
State or Other Percentage
Jurisdiction of Owned By
Incorporation Registrant
------------- ----------
<S> <C> <C>
The Kerite Company Connecticut 100%
Hubbell, Ltd. England 100%
Hubbell Canada Inc. Canada 100%
Killark Electric Manufacturing Company Missouri 100%
The Ohio Brass Company Delaware 100%
Raco Inc. Delaware 100%
Hubbell Industrial Controls, Inc. Delaware 100%
Hubbell Plastics, Inc. Delaware 100%
Harvey Hubbell Caribe, Inc. Delaware 100%
Hubbell Lighting, Inc. Connecticut 100%
Hubbell-Bell, Inc. Connecticut 100%
Pulse Communications, Inc. Virginia 100%
Hubbell Premise Wiring, Inc. Delaware 100%
Bryant Electric, Inc. Delaware 100%
Harvey Hubbell S.E. Asia (Pte.) Ltd. Singapore 100%
Hipotronics, Inc. Delaware 100%
E. M. Wiegmann & Company, Inc. Missouri 100%
Wepawaug Development Corp. Connecticut 100%
A. B. Chance Industries, Inc. Delaware 100%
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