<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 SEPTEMBER 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
November 4, 1996 were:
Class A ($.01 par value) 11,447,000
Class B ($.01 par value) 54,541,000
<PAGE> 2
HUBBELL INCORPORATED
PART I - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash and temporary cash investments $ 124,833 $ 86,984
Accounts receivable (net) 181,230 140,765
Inventories 238,779 236,384
Prepaid taxes 32,608 30,958
Other 3,373 5,015
----------- -----------
TOTAL CURRENT ASSETS 580,823 500,106
Property, Plant and Equipment (net) 212,355 204,190
Other Assets:
Investments 168,238 175,656
Purchase price in excess of net assets of companies acquired (net) 158,097 137,941
Property held as investment 8,958 8,329
Other 27,185 31,023
----------- -----------
$ 1,155,656 $ 1,057,245
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Commercial paper and notes $ 18,635 $ ---
Accounts payable 46,576 34,272
Accrued salaries, wages and employee benefits 27,591 26,079
Accrued income taxes 40,184 30,711
Dividends payable 17,157 15,475
Accrued restructuring charge 11,465 10,000
Other accrued liabilities 86,386 78,401
----------- -----------
TOTAL CURRENT LIABILITIES 247,994 194,938
Long-Term Debt 99,442 102,096
Other Non-Current Liabilities 70,104 76,766
Deferred Income Taxes 17,940 16,107
Shareholders' Equity 720,176 667,338
----------- -----------
$ 1,155,656 $ 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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $ 332,770 $ 286,968 $ 966,297 $ 860,408
Cost of goods sold 232,984 200,573 677,305 609,530
--------- --------- ---------- ----------
GROSS PROFIT 99,786 86,395 288,992 250,878
Selling & administrative expenses 48,527 43,408 143,593 128,768
--------- --------- ---------- ----------
OPERATING INCOME 51,259 42,987 145,399 122,110
--------- --------- ---------- ----------
OTHER INCOME (EXPENSE):
Investment income 4,217 3,988 12,083 12,221
Interest expense (2,123) (1,949) (6,363) (6,532)
Other income (expense), net (1,270) (1,601) (4,085) (4,256)
---------- --------- ---------- ----------
TOTAL OTHER INCOME, NET 824 438 1,635 1,433
--------- --------- --------- ----------
INCOME BEFORE INCOME TAXES 52,083 43,425 147,034 123,543
Provision for income taxes 15,104 11,725 42,640 33,357
--------- --------- --------- ----------
NET INCOME $ 36,979 $ 31,700 $ 104,394 $ 90,186
========= ========= ========= ==========
EARNINGS PER SHARE $ 0.55 $ 0.47 $ 1.55 $ 1.35
========= ========= ========= ==========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 4
HUBBELL INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES 1996 1995
- ------------------------------------ ---- ----
Net income $ 104,394 $ 90,186
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 32,814 29,923
Deferred income taxes 183 2,448
Changes in assets and liabilities, net of the effect of business acquisitions:
(Increase)/Decrease in accounts receivable (29,485) (2,340)
(Increase)/Decrease in inventories 7,003 (9,916)
(Increase)/Decrease in other current assets 1,647 2,706
Increase/(Decrease) in current operating liabilities 27,825 (4,275)
Increase/(Decrease) in restructuring accruals (6,948) (7,726)
(Increase)/Decrease in other, net 4,678 9,921
-------- ---------
Net cash provided by operating activities 142,111 110,927
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Acquisition of businesses (31,365) ---
Additions to property, plant and equipment (28,483) (27,896)
Purchases of investments (4,936) (6,147)
Repayments and sales of investments 12,378 36,693
Other, net 1,235 1,801
-------- ---------
Net cash used in investing activities (51,171) 4,451
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------
Payment of dividends (48,112) (43,157)
Commercial paper and notes - borrowings (repayments) --- (31,484)
Redemption of industrial development bonds (2,700) ---
Exercise of stock options 2,242 2,310
Acquisition of treasury shares (4,521) (5,792)
--------- ----------
Net cash provided (used) in financing activities (53,091) (78,123)
--------- ----------
Increase (Decrease) in cash and temporary cash investments 37,849 37,255
CASH AND TEMPORARY CASH INVESTMENTS
- -----------------------------------
Beginning of period 86,984 38,865
-------- ---------
End of period $124,833 $ 76,120
======== =========
</TABLE>
See notes to consolidated financial statements
4
<PAGE> 5
HUBBELL INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
1. Inventories are classified as follows: (in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
---- ----
<S> <C> <C>
Raw Material $ 84,608 $ 81,253
Work-in-Process 75,347 64,117
Finished Goods 128,859 140,428
--------- ---------
288,814 285,798
Excess of current
Production costs over
LIFO cost basis 50,035 49,414
--------- ---------
$ 238,779 $ 236,384
========= ==========
</TABLE>
2. Shareholders' Equity comprises: (in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
---- ----
<S> <C> <C>
Common Stock, $.01 par value:
-----------------------------
Class A-authorized 50,000,000 shares,
outstanding 11,467,910 and 5,831,381 shares $ 115 $ 58
Class B-authorized 150,000,000 shares
outstanding 54,489,681 and 27,110,456 shares 545 271
Additional paid-in-capital 435,299 437,908
Retained earnings 292,903 238,303
Unrealized holding gains (losses) on securities 107 74
Cumulative translation adjustments (8,793) (9,276)
---------- ----------
$ 720,176 $ 667,338
========== ==========
</TABLE>
5
<PAGE> 6
HUBBELL INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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 to reflect the 2-for-1 stock split paid 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 nine months ended September 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
SEPTEMBER 30, 1996
FINANCIAL CONDITION
At September 30, 1996, the Company's financial position remained
strong with working capital of $332.8 million and a current ratio of 2.3 to 1.
Total borrowings at September 30, 1996, were $118.1 million, 16.4% of
shareholders equity.
Cash and temporary cash investments increased $37.8 million for the
nine months ended September 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 16% for the third quarter and 12%
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 19% for the
quarter and nine 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. Operating income increased by 10% and 13%, respectively,
on higher sales, improved operating efficiencies and inclusion of Gleason since
its acquisition.
High voltage segment sales increased more than 36% for the quarter and
25% for the nine 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 16% for the third quarter and
12% year-to-date 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
SEPTEMBER 30, 1996
(CONTINUED)
Sales through the Company's International units were 12% higher in the
quarter and 5% higher than last year while operating profits increased more
than 50% 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 which is due in part to the recently completed acquisitions. Net income
and earnings per share increased by 17%, respectively, for the quarter while
for the first nine months the increases were 16% and 15%, respectively.
The Company's restructuring program is proceeding according to
management's plan. At September 30, 1996, the restructuring accrual balance
was $11,465,000. Through September 30, 1996, cumulative costs charged to the
restructuring accrual were $38,535,000 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 1,732 4,220 996 6,948
-------- -------- ------- --------
Cumulative $ 16,755 $ 14,098 $ 7,682 $ 38,535
======== ======== ======= ========
</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
- ------ -----------
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 September
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: November 7, 1996 /s/ Harry B. Rowell, Jr.
---------------------------- ----------------------------
Harry B. Rowell, Jr.
Executive Vice President
(Chief Financial and
Accounting Officer)
9
<PAGE> 1
EXHIBIT 11
HUBBELL INCORPORATED
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income $36,979 $31,700 $104,394 $90,186
======= ======= ======== =======
Weighted average number of common shares
outstanding during the period 65,953 65,864 65,913 65,892
Common equivalent shares 1,259 926 1,222 792
------- ------- -------- -------
Average number of shares outstanding 67,212 66,790 67,135 66,684
======= ======= ======== =======
Earnings per Share $ 0.55 $ 0.47 $ 1.55 $ 1.35
======= ======= ======== =======
</TABLE>
Share data for all periods has been adjusted to reflect the 2-for-1 stock
split paid 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 124,833
<SECURITIES> 0
<RECEIVABLES> 187,717
<ALLOWANCES> 6,487
<INVENTORY> 238,779
<CURRENT-ASSETS> 580,823
<PP&E> 449,044
<DEPRECIATION> (236,689)
<TOTAL-ASSETS> 1,155,656
<CURRENT-LIABILITIES> 247,994
<BONDS> 0
0
0
<COMMON> 660
<OTHER-SE> 719,516
<TOTAL-LIABILITY-AND-EQUITY> 1,155,656
<SALES> 966,297
<TOTAL-REVENUES> 966,297
<CGS> 677,305
<TOTAL-COSTS> 677,305
<OTHER-EXPENSES> 1,635
<LOSS-PROVISION> 1,394
<INTEREST-EXPENSE> 6,363
<INCOME-PRETAX> 147,034
<INCOME-TAX> 42,640
<INCOME-CONTINUING> 104,394
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 104,394
<EPS-PRIMARY> 1.55
<EPS-DILUTED> 1.55
</TABLE>
