<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to ______________
Commission File Number 1-2958
HUBBELL INCORPORATED
(Exact name of registrant as specified in its charter)
STATE OF CONNECTICUT 06-0397030
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
584 DERBY MILFORD ROAD, ORANGE, CT 06477
(Address of principal executive offices) (Zip Code)
(203) 799-4100
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
------ ------
The number of shares of registrant's classes of common stock outstanding as of
August 5, 1996 were:
Class A ($.01 par value) 5,742,550*
Class B ($.01 par value) 27,230,300*
*Does not reflect the 2-for-1 stock split payable on August 9, 1996.
<PAGE> 2
HUBBELL INCORPORATED
PART I - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and temporary cash investments $ 102,064 $ 86,984
Accounts receivable (net) 175,666 140,765
Inventories 237,809 236,384
Prepaid taxes 31,982 30,958
Other 4,218 5,015
---------- ----------
TOTAL CURRENT ASSETS 551,739 500,106
Property, Plant and Equipment (net) 212,970 204,190
Other Assets:
Investments 167,313 175,656
Purchase price in excess of net assets of companies acquired (net) 159,429 137,941
Property held as investment 8,104 8,329
Other 27,466 31,023
---------- ----------
$1,127,021 $1,057,245
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Commercial paper and notes $ 18,635 $ ---
Accounts payable 44,071 34,272
Accrued salaries, wages and employee benefits 28,237 26,079
Accrued income taxes 34,383 30,711
Dividends payable 17,144 15,475
Accrued restructuring charge 10,000 10,000
Other accrued liabilities 82,849 78,401
---------- ----------
TOTAL CURRENT LIABILITIES 235,319 194,938
Long-Term Debt 99,427 102,096
Other Non-Current Liabilities 73,425 76,766
Deferred Income Taxes 17,243 16,107
Shareholders' Equity 701,607 667,338
---------- ----------
$1,127,021 $1,057,245
========== ==========
</TABLE>
See notes to consolidated financial statements
2
<PAGE> 3
HUBBELL INCORPORATED
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------- --------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $ 328,927 $ 295,006 $ 633,527 $ 573,440
Cost of goods sold 229,881 211,024 444,321 408,958
--------- --------- --------- ---------
GROSS PROFIT 99,046 83,982 189,206 164,482
Selling & administrative expenses 48,710 43,179 95,066 85,359
--------- --------- --------- ---------
OPERATING INCOME 50,336 40,803 94,140 79,123
--------- --------- --------- ---------
OTHER INCOME (EXPENSE):
Investment income 3,990 4,230 7,866 8,233
Interest expense (2,139) (2,370) (4,240) (4,583)
Other income (expense), net (1,840) (1,462) (2,815) (2,655)
--------- --------- --------- ---------
TOTAL OTHER INCOME, NET 11 398 811 995
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 50,347 41,201 94,951 80,118
Provision for income taxes 14,601 11,124 27,536 21,632
--------- --------- --------- ---------
NET INCOME $ 35,746 $ 30,077 $ 67,415 $ 58,486
========= ========= ========= =========
EARNINGS PER SHARE $ 0.53 $ 0.45 $ 1.00 $ 0.88
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 4
HUBBELL INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------
CASH FLOWS FROM OPERATING ACTIVITIES 1996 1995
- ------------------------------------ ---- ----
<S> <C> <C>
Net income $ 67,415 $ 58,486
Adjustments to reconcile net income to ---
net cash provided by operating activities:
Depreciation and amortization 21,923 20,071
Deferred income taxes 217 411
Changes in assets and liabilities, net of the effect of business acquisitions:
(Increase)/Decrease in accounts receivable (23,921) (8,678)
(Increase)/Decrease in inventories 7,973 (5,897)
(Increase)/Decrease in other current assets 697 2,405
Increase/(Decrease) in current operating liabilities 16,628 (11,359)
Increase/(Decrease) in restructuring accruals (4,971) (5,435)
(Increase)/Decrease in other, net 4,136 8,330
--------- ---------
Net cash provided by operating activities 90,097 58,334
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of businesses (31,365) ---
Additions to property, plant and equipment (19,018) (18,161)
Purchases of investments (417) (1,860)
Repayments and sales of investments 8,821 36,635
Other, net 2,657 2,734
--------- ---------
Net cash used in investing activities (39,322) 19,348
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of dividends (30,968) (27,673)
Commercial paper and notes - borrowings (repayments) --- (18,016)
Redemption of industrial development bonds (2,700) --
Exercise of stock options 923 1,790
Acquisition of treasury shares (2,950) (3,844)
--------- ---------
Net cash provided (used) in financing activities (35,695) (47,743)
--------- ---------
Increase (Decrease) in cash and temporary cash investments 15,080 29,939
CASH AND TEMPORARY CASH INVESTMENTS
Beginning of period 86,984 38,865
--------- ---------
End of period $ 102,064 $ 68,804
========= =========
</TABLE>
See notes to consolidated financial statements
4
<PAGE> 5
HUBBELL INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
1. Inventories are classified as follows: (in thousands)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
---- ----
<S> <C> <C>
Raw Material $ 84,608 $ 81,253
Work-in-Process 67,909 64,117
Finished Goods 135,327 140,428
-------- --------
287,844 285,798
Excess of current
Production costs over
LIFO cost basis 50,035 49,414
-------- --------
$237,809 $236,384
======== ========
</TABLE>
2. Shareholders' Equity comprises: (in thousands)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
---- ----
<S> <C> <C>
Common Stock, $.01 par value:
Class A-authorized 50,000,000 shares,
outstanding 11,506,310 and 5,831,381 shares 115 58
Class B-authorized 150,000,000 shares,
outstanding 54,408,122 and 27,110,456 shares 544 271
Additional paid-in-capital 435,548 437,908
Retained earnings 273,081 238,303
Unrealized holding gains (losses) on securities 130 74
Cumulative translation adjustments (7,811) (9,276)
--------- ---------
$ 701,607 $ 667,338
========= =========
</TABLE>
5
<PAGE> 6
HUBBELL INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
3. On January 2, 1996, the Company acquired the assets of the Anderson
Electrical Connectors business ("Anderson"). Anderson manufactures
electrical connectors and associated hardware and tools for the electric
utility industry with manufacturing facilities in Alabama and Tennessee. On
January 31, 1996, the Company acquired all the outstanding stock of Gleason
Reel Corp. ("Gleason") based in Mayville, Wisconsin. Gleason manufactures
electric cable management products (including cable and hose reels,
protective steel and nylon cable tracks and cable festooning hardware) and
a line of ergonomic tool support systems.
The businesses were acquired for cash of $31,365,000 and notes of
$18,635,000 that mature in one year and were recorded under the purchase
method of accounting. The costs of the acquired businesses has been
allocated to assets acquired and liabilities assumed based on fair values
with the residual amount assigned to goodwill, which is being amortized
over forty years. The businesses have been included in the financial
statements as of their respective acquisition date and had no material
effect on the Company's financial position and reported earnings.
4. All share data has been adjusted on a proforma basis to reflect the 2-for-1
stock split payable on August 9, 1996, to shareholders of record on July
17, 1996.
5. In the opinion of management, the information furnished in Part I-Financial
Information on Form 10-Q reflects all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial
statements for the periods indicated.
6. The results of operations for the three and six months ended June 30, 1996
and 1995 are not necessarily indicative of the results to be expected for
the full year.
6
<PAGE> 7
HUBBELL INCORPORATED
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 1996
FINANCIAL CONDITION
At June 30, 1996, the Company's financial position remained strong with
working capital of $316.4 million and a current ratio of 2.3 to 1. Total
borrowings at June 30, 1996, were $118.1 million, 16.8% of shareholders
equity.
Cash and temporary cash investments increased $15.1 million for the six
months ended June 30, 1996, as a result of cash provided from operating
activities offset by the purchase of Anderson and Gleason, redemption of
industrial development bonds and quarterly dividend payments.
Net cash provided by operating activities reflects higher net income,
continued emphasis on working capital management and funding of working
capital for the recent acquisitions. Accounts receivable increased in line
with higher sales. The increase in liabilities is principally due to the
higher level of business activity, increased income taxes and accrual of
interest for the ten year notes.
The Company believes that currently available cash, borrowing
facilities, and its ability to increase its credit lines if needed, combined
with internally generated funds should be more than sufficient to fund capital
expenditures as well as any increase in working capital that would be required
to accommodate a higher level of business activity.
RESULTS OF OPERATIONS
Consolidated net sales increased more than 11% for the second quarter
and 10% year-to-date on strong growth reported by Pulse Communications,
Industrial Controls, Ohio Brass, and Premise Wiring combined with the
acquisition of Anderson and Gleason in early 1996. Operating income increased
23% for the quarter and 19% for the first six months on higher sales volume,
improved operating efficiencies from the Company's restructuring program and
the impact of the acquired businesses.
Low voltage segment sales increased more than 6% for the respective
periods on higher shipment of industrial controls, wiring device products and
inclusion of Gleason. Most units showed modest increases as construction
related markets improved from the impact of the severe winter weather in the
first quarter. Operating income increased by 17% and 14%, respectively, on
higher sales, improved operating efficiencies and inclusion of Gleason since
its acquisition.
High voltage segment sales increased more than 21% for the quarter and
first six months on continued growth for surge arresters and insulators
combined with the sales of Anderson products. Segment operating income
increased in line with sales.
Other industry segment sales increased 10% for the respective periods
as almost all units reported higher sales with particularly strong increases
for telecommunications and wire management products. Operating profits
increased more than 20% for the respective periods on the improved volume of
higher margin telecommunications products and improved operating efficiencies.
7
<PAGE> 8
HUBBELL INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 1996
(CONTINUED)
Sales through the Company's International units were 6% higher in the
quarter and 2% higher than last year while operating profits increased more
than 15% reflecting the improved profitability of the restructured Canadian
and European operations.
The effective income tax rate for 1996 is 29% versus 27% in 1995. The
increase in the effective tax rate reflects a higher portion of domestic
source income at resulting higher tax rates and the impact of our recently
completed acquisitions. Net income and earnings per share increased by 19%
and 18%, respectively, for the quarter while for the first six months the
increases were 15% and 14%, respectively.
The Company's restructuring program is proceeding according to
management's plan. At June 30, 1996, the restructuring accrual balance was
$13,442,000 of which $10,000,000 is classified as current liability. Through
June 30, 1996, cumulative costs charged to the restructuring accrual were
$36,558,000 as follows (in thousands):
<TABLE>
<CAPTION>
Personnel Plant & Equipment Costs
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
1996 Y-T-D 1,477 2,948 546 4,971
-------- -------- ------- ---------
Cumulative $ 16,500 $ 12,826 $ 7,232 $ 36,558
======== ======== ======= ========
</TABLE>
Personnel costs include non-cash charges for early retirement programs
which have been reclassified to the Company's pension liability totaling
$6,203,000 since inception of the restructuring program.
8
<PAGE> 9
HUBBELL INCORPORATED
PART II -- OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
NUMBER DESCRIPTION
------ -----------
3a. Hubbell Incorporated Restated Certificate of Incorporation, as
amended effective May 13, 1996 (the date of filing with the
Secretary of State of the State of Connecticut). Exhibit A of
the registrant's proxy statement, dated March 22, 1996, filed on
March 27, 1996, is incorporated by reference.
11. Computation of Earnings Per Share
27. Financial Data Schedule (Electronic filings only)
REPORTS ON FORM 8-K
There were no reports on Form 8-K filed for the three months ended June 30,
1996.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HUBBELL INCORPORATED
Dated: August 12, 1996 /s/ H. B. Rowell, Jr.
----------------------------------------
Harry B. Rowell, Jr.
Executive Vice President
(Chief Financial and Accounting Officer)
9
<PAGE> 10
EXHIBIT INDEX
-------------
NUMBER DESCRIPTION
------ -----------
3a. Hubbell Incorporated Restated Certificate of Incorporation, as
amended effective May 13, 1996 (the date of filing with the
Secretary of State of the State of Connecticut). Exhibit A of
the registrant's proxy statement, dated March 22, 1996, filed on
March 27, 1996, is incorporated by reference.
11. Computation of Earnings Per Share
27. Financial Data Schedule (Electronic filings only)
<PAGE> 1
EXHIBIT 11
HUBBELL INCORPORATED
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------- --------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income $ 35,746 $30,077 $67,415 $ 58,486
======== ======= ======= ========
Weighted average number of common shares
outstanding during the period 65,915 65,908 65,915 65,906
Common equivalent shares 1,188 794 1,182 726
-------- ------- ------- --------
Average number of shares outstanding 67,103 66,702 67,097 66,632
======== ====== ======= ========
Earnings per Share $ 0.53 $ 0.45 $ 1.00 $ 0.88
</TABLE>
Share data for all periods has been adjusted to reflect the 2-for-1 stock
split payable on August 9, 1996, to shareholders of record on July 17, 1996.
10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 102,064
<SECURITIES> 0
<RECEIVABLES> 181,577
<ALLOWANCES> 5,911
<INVENTORY> 237,809
<CURRENT-ASSETS> 551,739
<PP&E> 447,941
<DEPRECIATION> (234,971)
<TOTAL-ASSETS> 1,127,021
<CURRENT-LIABILITIES> 235,319
<BONDS> 0
0
0
<COMMON> 659
<OTHER-SE> 700,948
<TOTAL-LIABILITY-AND-EQUITY> 1,127,021
<SALES> 633,527
<TOTAL-REVENUES> 633,527
<CGS> 444,321
<TOTAL-COSTS> 444,321
<OTHER-EXPENSES> 811
<LOSS-PROVISION> 894
<INTEREST-EXPENSE> 4,240
<INCOME-PRETAX> 94,951
<INCOME-TAX> 27,536
<INCOME-CONTINUING> 67,415
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 67,415
<EPS-PRIMARY> 1.00
<EPS-DILUTED> 1.00
</TABLE>
