<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, 1999
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/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-2958
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HUBBELL INCORPORATED
- --------------------------------------------------------------------------------
(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 8, 1999 were:
Class A ($.01 par value) 10,337,000
Class B ($.01 par value) 54,413,000
<PAGE> 2
INDEX
HUBBELL INCORPORATED
<TABLE>
<CAPTION>
Part I. Financial Information PAGE
<S> <C>
Item 1. Financial Statements
Consolidated balance sheets - September 30, 1999 (unaudited) and
December 31, 1998 3
Consolidated statements of income (unaudited) - Three months
ended September 30, 1999 and 1998, Nine months ended
September 30, 1999 and 1998 4
Consolidated statements of cash flows (unaudited) - Nine months ended
September 30, 1999 and 1998 5
Notes to consolidated financial statements - September 30, 1999 6-8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9-13
Part II. Other Information
Item 1. Legal Proceedings N/A
Item 2. Changes In Securities and Use of Proceeds N/A
Item 3. Defaults upon Senior Securities N/A
Item 4. Submission of Matters to a Vote of Security Holders N/A
Item 5. Other Information N/A
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 14
</TABLE>
2
<PAGE> 3
HUBBELL INCORPORATED
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
(IN MILLIONS)
<TABLE>
<CAPTION>
(Unaudited)
September 30, 1999 December 31, 1998
------------------ -----------------
<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash and temporary cash investments $ 35.4 $ 30.1
Accounts receivable (net) 243.9 200.2
Inventories 284.4 300.9
Prepaid taxes 28.8 24.0
Other 9.2 9.6
-------- --------
TOTAL CURRENT ASSETS 601.7 564.8
Property, Plant and Equipment (net) 306.3 310.1
Other Assets:
Investments 210.2 197.3
Purchase price in excess of net assets of companies acquired (net) 239.6 232.6
Property held as investment 11.7 12.0
Other 73.6 73.6
-------- ---------
$1,443.1 $1,390.4
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Commercial paper and notes $ 155.3 $ 113.3
Accounts payable 70.1 69.8
Accrued salaries, wages and employee benefits 30.6 26.6
Accrued income taxes 30.7 31.1
Dividends payable 20.8 20.4
Accrued consolidation and streamlining charge 10.0 10.0
Other accrued liabilities 63.2 73.8
-------- --------
TOTAL CURRENT LIABILITIES 380.7 345.0
Long-Term Debt 99.6 99.6
Other Non-Current Liabilities 91.6 104.1
Deferred Income Taxes 4.2 1.1
Shareholders' Equity 867.0 840.6
-------- --------
$1,443.1 $1,390.4
======== ========
</TABLE>
See notes to consolidated financial statements
3
<PAGE> 4
HUBBELL INCORPORATED
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------ ------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $372.4 $361.6 $1,108.5 $1,073.8
Cost of goods sold 275.0 250.7 793.5 742.1
------ ------ ------- -------
GROSS PROFIT 97.4 110.9 315.0 331.7
Selling & administrative
Expenses 57.2 53.3 167.1 160.8
------- ------ ------- -------
OPERATING INCOME 40.2 57.6 147.9 170.9
------- ------ ------- -------
OTHER INCOME (EXPENSE):
Investment income 3.8 4.1 10.6 12.3
Interest expense (4.6) (2.6) (12.3) (7.0)
Other income (expense), net 9.0 (.8) 14.1 (2.0)
------- ------- ------- --------
TOTAL OTHER INCOME, NET 8.2 .7 12.4 3.3
------- ------ ------- -------
INCOME BEFORE INCOME TAXES 48.4 58.3 160.3 174.2
Provision for income taxes 12.6 15.1 41.7 47.0
------- ------ ------- -------
NET INCOME $ 35.8 $43.2 $ 118.6 $127.2
====== ===== ======= ======
EARNINGS PER SHARE - BASIC $ 0.55 $0.65 $ 1.82 $ 1.92
====== ===== ======= =======
EARNINGS PER SHARE - DILUTED $ 0.54 $0.64 $ 1.79 $ 1.87
====== ===== ======= =======
CASH DIVIDENDS PER COMMON
SHARE $ 0.32 $0.31 $ 0.95 $ 0.91
====== ===== ======= =======
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
HUBBELL INCORPORATED
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(IN MILLIONS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
------------
CASH FLOWS FROM OPERATING ACTIVITIES 1999 1998
- ------------------------------------ ---- ----
<S> <C> <C>
Net income $118.6 $127.2
Adjustments to reconcile net income to
net cash provided by operating activities:
Gain on sale of business (8.8) --
Depreciation and amortization 43.2 38.1
Deferred income taxes (1.7) (.7)
Expenditures for streamlining, consolidation and restructuring (3.5) (2.9)
Changes in assets and liabilities, net of the effect of business acquisitions:
(Increase)/Decrease in accounts receivable (37.5) (8.5)
(Increase)/Decrease in inventories 19.8 2.6
(Increase)/Decrease in other current assets .8 18.6
Increase/(Decrease) in current operating liabilities (17.6) (14.8)
(Increase)/Decrease in other, net (2.4) 1.0
------ ------
Net cash provided by operating activities 110.9 160.6
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Acquisition of businesses (38.3) (20.5)
Sale of business 37.4 --
Additions to property, plant and equipment (44.4) (64.9)
Purchases of investments (34.1) (21.7)
Repayments and sales of investments 22.2 25.0
Other, net .6 3.8
------ ------
Net cash used in investing activities (56.6) (78.3)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------
Payment of dividends (61.4) (59.3)
Commercial paper and notes - borrowings 42.0 54.5
Exercise of stock options 5.6 5.3
Acquisition of treasury shares (35.2) (70.8)
------ ------
Net cash used in financing activities (49.0) (70.3)
------ ------
Increase in cash and temporary cash investments 5.3 12.0
CASH AND TEMPORARY CASH INVESTMENTS
- -----------------------------------
Beginning of period 30.1 75.2
------ ------
End of period $ 35.4 $ 87.2
====== ======
</TABLE>
See notes to consolidated financial statements
5
<PAGE> 6
HUBBELL INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring items)
considered necessary for a fair presentation have been included. Operating
results for the three and nine month periods ended September 30, 1999 are
not necessarily indicative of the results that may be expected for the
year ended December 31, 1999.
The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
For further information, refer to the consolidated financial statements
and footnotes thereto included in the Hubbell Incorporated Annual Report
on Form 10-K for the year ended December 31, 1998.
<TABLE>
<CAPTION>
2. INVENTORIES ARE CLASSIFIED AS FOLLOWS: (IN MILLIONS)
SEPTEMBER 30, DECEMBER 31,
1999 1998
---- ----
<S> <C> <C>
Raw Material $ 96.2 $ 104.9
Work-in-Process 70.5 79.6
Finished Goods 163.4 162.0
------ ------
330.1 346.5
Excess of current
costs over LIFO basis 45.7 45.6
------ ------
$284.4 $300.9
====== ======
<CAPTION>
3. SHAREHOLDERS' EQUITY COMPRISES: (IN MILLIONS)
SEPTEMBER 30, DECEMBER 31,
1999 1998
---- ----
Common Stock, $.01 par value:
-----------------------------
<S> <C> <C>
Class A-authorized 50,000,000 shares,
outstanding 10,357,021 and 10,781,483 shares $ .1 $ .1
Class B-authorized 150,000,000 shares
outstanding 54,570,571 and 54,813,287 shares .5 .5
Additional paid-in-capital 367.6 397.8
Retained earnings 512.5 455.7
Unrealized gains (losses) on investments -- .1
Cumulative translation adjustments (13.7) (13.6)
------ ------
$867.0 $840.6
====== ======
</TABLE>
6
<PAGE> 7
HUBBELL INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
4. BUSINESS COMBINATIONS
Acquisitions
On July 15, 1999, the Company completed the purchase of the Haefely high
voltage test and instrumentation business from Trench Switzerland AG for
$25.0 million. Based in Switzerland, the product lines acquired include
high voltage test and measurement equipment and a full line of
electromagnetic test equipment. During the first quarter of 1999, the
Company's Power segment acquired assets used in the manufacture and supply
of high voltage underground cable accessory products and technology for
the electrical utility market for a cash purchase price of $13.3 million.
During the first nine months of 1998, the Company acquired three product
lines and associated assets for an aggregate cash purchase price of $20.5
million.
The costs of the acquired businesses have 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 during the respective periods.
Dispositions
In September, the Company completed the sale of The Kerite Company, a
wholly-owned subsidiary reported in the Power segment. Kerite, which
manufactures high-performance, insulated power cable, was sold to The
Marmon Corporation for a cash purchase price of $38.5 million. The sale
produced a net gain of $8.8 million which is included in Other income
(expense), net, in the Consolidated Statement of Income.
5. The following table sets forth the computation of earnings per share for
the three and nine months ended September 30 (in millions except per share
data):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------ ------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income $35.8 $43.2 $118.6 $127.2
===== ===== ====== ======
Weighted average number of common
shares outstanding during the period 65.0 65.8 65.1 66.3
Common equivalent shares 1.0 1.4 1.1 1.7
----- ----- ------ ------
Average number of shares outstanding 66.0 67.2 66.2 68.0
Earnings per share:
Basic $0.55 $0.66 $1.82 $1.92
Diluted $0.54 $0.64 $1.79 $1.87
</TABLE>
7
<PAGE> 8
HUBBELL INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
6. COMPREHENSIVE INCOME (IN MILLIONS)
Total comprehensive income was $36.1 and $118.4 for the three and
nine months ended September 30, 1999 and $42.1 and $124.1 for the three
and nine months ended September 30, 1998.
7. The following table sets forth financial information by industry segment
for the three and nine months ended September 30 (in millions):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------ ------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales
---------
Electrical $217.1 $207.3 $ 657.3 $ 603.6
Power 105.3 97.5 305.2 289.4
Telecommunications 24.4 38.7 85.3 123.5
Other 25.6 18.1 60.7 57.3
------ ------ -------- --------
Total $372.4 $361.6 $1,108.5 $1,073.8
====== ====== ======== ========
Operating Income
----------------
Electrical $ 34.8 $ 38.5 $ 111.0 $ 110.0
Power 6.3 13.1 32.5 37.5
Telecommunications (2.4) 3.8 -- 17.7
Other 1.5 2.2 4.4 5.7
------ ------ -------- --------
Segment Total 40.2 57.6 147.9 170.9
Interest Expense (4.6) (2.6) (12.3) (7.0)
Investment and Other Income, Net 12.8 3.3 24.7 10.3
------ ------ -------- --------
Income Before Income Taxes $ 48.4 $ 58.3 $ 160.3 $ 174.2
====== ====== ======== ========
</TABLE>
8. The issuance of FAS No. 133 - "Accounting for Derivative Instruments
and Hedging Activity" which is effective for the Company in 2001, requires
the recognition of all derivatives as either assets or liabilities on the
consolidated balance sheet at fair value. This will change the current
practices of the Company, but it is not expected to have a significant
impact on financial position or results of operations.
8
<PAGE> 9
HUBBELL INCORPORATED
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SEPTEMBER 30, 1999
RESULTS OF OPERATIONS
Consolidated net sales for the third quarter increased 3% versus the comparable
period of the prior year. Sales improvements occurred at the Company's largest
segments, Electrical and Power, primarily as a result of the fourth quarter
1998 acquisition of two lighting businesses and the first quarter 1999
acquisition of high voltage underground cable accessory product assets. Sales
were also up significantly in the Other segment as a result of the 1999 third
quarter acquisition of the Haefely high voltage test and instrumentation
business. These increases were partially offset by lower shipments from the
Company's Telecommunications segment in the quarter and year-to-date.
For the year-to-date period, consolidated sales improved 3% as a result of
higher shipments of specification-grade wiring device and lighting products in
the Electrical segment and the impact of acquisitions.
Operating income for the quarter declined due to the lower volume and a
year-over-year increase in new product development costs within the
Telecommunications segment, and a significant margin decline in the Power
segment related to unanticipated delays and related additional costs incurred
in implementating a complex series of operational changes. Operating income
within the Electrical segment remained ahead of last year on a year-to-date
basis, but declined modestly during the third quarter due to a change in mix
toward lower margin commercial products and the impact of the lower initial
margins of newly acquired businesses.
Segment Results
Electrical segment sales increased by 5% in the third quarter and 9%
year-to-date on higher shipments of specification-grade wiring and lighting
products and the acquisition of three businesses during 1998. Year-to-date
operating income increased in response to the strong volumes in
specification-grade products. However, in the quarter, these increases were more
than offset by declining prices of commodity products used to service commercial
markets and lower initial margins of newly acquired businesses.
Power segment sales increased 8% for the third quarter and 5% for the nine
months of 1999 versus 1998. The effect of the acquisition of the underground
cable accessory products business in 1999 and higher shipments of generally all
products within the segment contributed to the increases. Operating income
declined due to costs associated with increased activity in executing a complex
series of changes in the segment's operations. Specifically, the relocation of
production and distribution facilities to lower cost sites, reorganization of
the segment into a feeder plant/centralized distribution structure, and the
implementation of integrated business systems combined to detract significantly
from profits in the quarter. These costs combined with continued weakness in
international markets and price declines in select products also turned the
year-to-date operating profit comparisons negative, lowering year-to-date
operating margins to 11% versus 13% in 1998.
Telecommunications segment sales and margins declined sharply for the quarter
and year-to-date period versus comparable periods of the prior year. At Pulse
Communications, Inc. ("Pulse"), the Company's telecommunications subsidiary,
orders from the telephone operating companies for the subsidiary's current
multiplexing products declined substantially versus the same periods of 1998.
Concurrently, the investment in DSL product development continued at a high
level.
9
<PAGE> 10
HUBBELL INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SEPTEMBER 30, 1999
(CONTINUED)
The Company, together with external advisors, is continuing to review strategic
alternatives with respect to Pulse which can range from a third party investment
to a sale of all or part of the business segment. A resolution of this process
is expected by year-end.
The Other industry segment reported substantially increased sales as a result of
the July acquisition of the Haefely high voltage test and instrumentation
business. Excluding Haefely, sales declined in the quarter and year-to-date
primarily due to low demand in the North American and Asian capital goods
markets served by the segment's controls/communications and industrial cable
management systems businesses. Operating profits declined due to lower sales and
margins in the existing operations in response to the low demand from
customers.
The effective income tax rate for 1999 remained at 26% versus 27% in the 1998
year-to-date period and 26% in the 1998 third quarter. The year-to-date rate
decline is attributable to a higher level of tax benefits from Puerto Rican
operations.
Interest expense increased in the quarter and year-to-date versus comparable
periods of 1998 primarily due to higher average debt levels during these
periods.
Other income net has increased primarily as a result of the third quarter 1999
gain on sale of The Kerite Company, a manufacturer of high performance,
insulated power cable included in the Power segment. The increase also reflects
insurance recoveries in connection with damage sustained from Hurricane Georges
received earlier in the year.
Third quarter and year-to-date net income and diluted earnings per share
declined primarily due to lower operating income, partially offset by lower
average shares outstanding versus the comparable year-ago periods.
Progress toward completing the Company's consolidation and streamlining program
is occurring more slowly than management had intended due to the complexity of
the moves and the effect of concurrent initiatives relating to business systems
implementations at the affected businesses. However, management expects to
improve and accelerate execution of the identified actions and, correspondingly,
the rate of spending against previously established reserves, throughout the
remainder of 1999. At September 30, 1999, the accrual balance was $21.4 million.
Through September 30, 1999, cumulative costs charged to the consolidation and
streamlining accrual were $23.2 million as follows:
<TABLE>
<CAPTION>
Employee Asset Exit Other
Benefits Disposals Costs Costs Total
-------- --------- ----- ----- -----
<S> <C> <C> <C> <C> <C>
1997 Streamlining Charge $15.6 $18.0 $6.1 $4.9 $44.6
Amounts Utilized in 1997 (0.6) (7.3) (0.1) (4.9) (12.9)
Amounts Utilized in 1998 (3.8) (2.4) (0.6) --- (6.8)
Amounts Utilized in 1999 (1.2) (2.3) --- --- (3.5)
----- ----- ---- ---- -----
Remaining Reserve $10.0 $ 6.0 $5.4 $--- $21.4
===== ===== ==== ==== =====
</TABLE>
10
<PAGE> 11
HUBBELL INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SEPTEMBER 30, 1999
(CONTINUED)
FINANCIAL CONDITION
At September 30, 1999, the Company's financial position remained strong with
working capital of $221.0 million and a current ratio of 1.6 to 1. Total
borrowings at September 30, 1999, were $254.9 million, 29% of shareholders
equity. When compared to December 31, 1998, the debt to equity ratio increased 4
percentage points from 25% as a result of a higher investment in working
capital. However, at June 30, 1999, the debt to equity ratio declined from
32% to 29% primarily as a result of the proceeds received from sale of The
Kerite Company and improved working capital performance during the third
quarter. All of the above amounts and percentages exclude consideration of the
approximate $200 million of non-cash investments maintained at September 30,1999
and December 31,1998.
CASH FLOWS
Cash provided by operations improved significantly during the quarter versus
earlier 1999 quarters, but continued to trail 1998's strong nine month cash
flow from operations due primarily to higher investments in working capital and
lower net income. Working capital increased as a result of higher accounts
receivable caused by longer collection periods for commodity products sold in
the Electrical segment and increased sales in the Power segment and in
specification-grade wiring device and lighting products.
The increase in cash and temporary cash investments through September 30, 1999
of $5.3 million reflects the following: cash provided from operating activities,
the issuance of commercial paper and the sale of The Kerite Company; offset by
the acquisition of Haefely, investments in plant and equipment, the acquisition
of treasury shares under the Company's share repurchase program and quarterly
dividend payments.
The Company believes that currently available cash, borrowing facilities, and
its ability to increase 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.
IMPACT OF THE YEAR 2000 ISSUE
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the Year 1900 rather than the Year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
11
<PAGE> 12
HUBBELL INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SEPTEMBER 30, 1999
(CONTINUED)
During 1995, the Company established a task force to assess the impact the Year
2000 could have on the Company's operations and its relationship with customers
and vendors and to develop appropriate action plans. The action plans address
the required modification or replacement of software and equipment utilized in
the Company's operations along with a timetable and estimated costs. Cost for
replacement of software and equipment are capitalized in accordance with Company
policies while costs of modifications are expensed as incurred. Total
expenditures are estimated to be $20 million with nearly all of the amount
having been spent to date.
The action plans also address the impact that suppliers and customer Year 2000
issues may have on the Company. The Company relies on third party suppliers for
materials, utilities, transportation, banking and key services. Efforts to
evaluate supplier's Year 2000 readiness and to determine alternatives and
contingency plans such as alternate supply sources and accumulation of inventory
are substantially complete. Approaches to reducing supply disruptions will vary
by business and facility and are intended as a means of managing the risk but
cannot eliminate the potential for disruption due to a third party. The Company
is also dependent upon its customers for sales and cashflow. Interruptions in
our customers' operation from Year 2000 issues could result in reduced sales,
increased inventories or receivables and lower cashflows. While these events are
possible, the diversity of the Company's customer base is broad enough to
minimize the effects of a single occurrence. Steps are being taken to monitor
customers' Year 2000 readiness, including testing of transactions, as a means of
determining risks and alternatives.
At this time, activities have been substantially completed in accordance with
the action plans. While the Company believes its efforts to address the Year
2000 Issue will be successful in avoiding any material adverse effect on the
Company's operations or financial condition, it recognizes that failing to
resolve Year 2000 issues on a timely basis would, in a "most reasonably likely
worst case scenario", significantly limit its ability to manufacture and
distribute its products and process its daily business transactions for a period
of time, especially if such failure is coupled with third party or
infrastructure failures. Similarly, the Company could be significantly affected
by the failure of one or more significant suppliers, customers or components of
the infrastructure to conduct their respective operations after 1999. Adverse
effects on the Company could include, among other things, business disruption,
increased costs, loss of business and other similar risks.
MARKET RISKS
In the operation of its business, the Company has identified market risk
exposures to foreign currency exchange rates, raw material prices and interest
rates. There have not been any material changes affecting the identified risks
or the Company's strategy for managing the exposures from the preceding fiscal
year.
12
<PAGE> 13
HUBBELL INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SEPTEMBER 30, 1999
(CONTINUED)
FORWARD-LOOKING STATEMENTS
Certain statements made in the discussion of Financial Condition and Results of
Operations and Cash Flows are forward-looking. These statements may be
identified by the use of forward-looking words or phrases such as "expects",
"projected", and "unanticipated". Such forward-looking statements involve
numerous assumptions, known and unknown risks, uncertainties and other factors
which may cause actual and future performance, or achievements of the Company
to be materially different from any future results, performance, or
achievements expressed or implied by such forward-looking statements. Such
factors include: achieving sales levels to fulfill revenue expectations;
unexpected costs or charges, certain of which may be outside the control of the
Company, resolution of the Pulse Communications transaction on terms favorable
to the Company; general economic and business conditions; competition; and
other factors.
Certain statements under the caption "Impact of the Year 2000 Issue" are also
forward-looking. These may be identified by the use of forward-looking words or
phrases, such as "believe", "expect", "anticipate", "should", "plan",
"estimated", "potential", "target", "goals", and "scheduled", among others. In
connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company is hereby identifying important
factors that could cause actual results to differ materially from those
contained in the specified statements. The Company notes that a variety of
factors could cause the Company's assessment of Year 2000 issues to differ
materially from the actual impact of Year 2000 issues. The risk and
uncertainties that may affect the Company's assessment of Year 2000 issues
include (1) the complexity involved in ascertaining all situations in which
Year 2000 issues may arise; (2) the ability of the Company to obtain the
services of sufficient personnel to implement the program; (3) possible
increases in the cost of personnel required to implement the program; (4)
absence of delays in scheduled deliveries of new hardware and software from
third party suppliers; (5) the receipt and the reliability of responses from
suppliers, customers and others to whom compliance inquiries are being made;
(6) the ability of material third parties to bring their affected systems into
compliance and (7) absence of unforeseen events which could delay timely
implementation of the program.
13
<PAGE> 14
HUBBELL INCORPORATED
PART II -- OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
NUMBER DESCRIPTION
3(a) Certificate of Correction, dated September 9, 1999, related to the
Certificate of Amendment to the Certificate of Incorporation filed
with the Secretary of the State of Connecticut on December 16, 1998
at 2:00 PM; and Certificate of Correction, dated September 9, 1999,
related to the Certificate of Amendment to the Certificate of
Incorporation filed with the Secretary of the State of Connecticut
on December 16, 1998 at 2:30 PM.*
3(c) Amendment to Rights Agreement, dated September 9, 1999.*
27. Financial Data Schedule (Electronic filings only)
- ---------------------------
* Filed hereunder
REPORTS ON FORM 8-K
There were no reports on Form 8-K filed for the three months ended
September 30, 1999.
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 12, 1999 /s/ T. H. Powers
----------------- -------------------------
Timothy H. Powers
Senior Vice President and
Chief Financial Officer
14
<PAGE> 15
EXHIBIT INDEX
-------------
EXHIBITS
NUMBER DESCRIPTION
- ------ -----------
3(a) Certificate of Correction, dated September 9, 1999, related to the
Certificate of Amendment to the Certificate of Incorporation filed
with the Secretary of the State of Connecticut on December 16, 1998
at 2:00 PM; and Certificate of Correction, dated September 9, 1999,
related to the Certificate of Amendment to the Certificate of
Incorporation filed with the Secretary of the State of Connecticut
on December 16, 1998 at 2:30 PM.*
3(c) Amendment to Rights Agreement, dated September 9, 1999.*
27. Financial Data Schedule (Electronic filings only)
<PAGE> 1
EXHIBIT 3(a)
(page 1 of 2)
CERTIFICATE OF CORRECTION
Hubbell Incorporated files this Certificate of Correction pursuant to
Section 33 - 611 of the Connecticut Business Corporation Act.
1. The document to be corrected is the Certificate of Amendment to the
Certificate of Incorporation filed December 16, 1998 at 2:00 p.m.
2. The Certificate of Amendment incorrectly refers to the creation of "a
series of Preferred Stock, par value $10.00 per share". This reference is
incorrect because the class of Preferred Stock authorized in the Certificate of
Incorporation is "Preferred Stock without par value".
3. This Certificate of Correction corrects the Certificate of Amendment
as follows: in the paragraph on the first page which begins with the word
"RESOLVED," the words "par value $10.00 per share" are deleted and replaced with
the words "without par value".
4. IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Correction this 9th day of September, 1999.
/s/Richard W. Davies
---------------------------------------
Name: Richard W. Davies
Title: Vice President, General Counsel
and Secretary
<PAGE> 2
EXHIBIT 3(a)
(page 2 of 2)
CERTIFICATE OF CORRECTION
Hubbell Incorporated files this Certificate of Correction pursuant to
Section 33-611 of the Connecticut Business Corporation Act.
1. The document to be corrected is the Certificate of Amendment to the
Certificate of Incorporation filed December 16, 1998 at 2:30 p.m.
2. The Certificate of Amendment incorrectly refers to the creation of "a
series of Preferred Stock, par value $10.00 per share". This reference is
incorrect because the class of Preferred Stock authorized in the Certificate of
Incorporation is "Preferred Stock without par value".
3. This Certificate of Correction corrects the Certificate of Amendment
as follows: in the paragraph on the first page which begins with the word
"RESOLVED," the words "par value $10.00 per share" are deleted and replaced with
the words "without par value".
4. IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Correction this 9th day of September, 1999.
/s/Richard W. Davies
-----------------------------------------
Name: Richard W. Davies
Title: Vice President, General Counsel
and Secretary
<PAGE> 1
EXHIBIT 3(c)
AMENDMENT TO RIGHTS AGREEMENT
Pursuant to Section 27 of the Rights Agreement, dated as of December 8,
1998 (the "Agreement"), between Hubbell Incorporated, a Connecticut corporation
(the "Company"), and ChaseMellon Shareholder Services, L.L.C., a New Jersey
limited liability company, as Rights Agent (the "Rights Agent"), the Company and
the Rights Agent hereby agree to amend the Agreement as follows:
1. Section 1(kk) of the Agreement is hereby amended to read in its
entirety as follows:
(kk) "Series A Preferred Stock" shall mean the Series A Junior
Participating Preferred Stock, without par value, of the Company
having the rights and preferences set forth in the Form of Certificate
of Amendment, as corrected, attached to this Agreement as Exhibit A.
2. Section 1(ll) of the Agreement is hereby amended to read in its
entirety as follows:
(ll) "Series B Preferred Stock" shall mean the Series B Junior
Participating Preferred Stock, without par value, of the Company
having the rights and preferences set forth in the Form of Certificate
of Amendment, as corrected, attached to this Agreement as Exhibit B.
3. In the paragraph on page A-1 of Exhibit A to the Agreement which
begins with the word "RESOLVED," the words "par value $10.00 per
share" are hereby deleted and replaced with the words "without par
value".
4. In the paragraph on page B-1 of Exhibit B to the Agreement which
begins with the word "RESOLVED," the words "par value $10.00 per
share" are hereby deleted and replaced with the words "without par
value".
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to Rights
Agreement to be duly executed as of September 9, 1999.
Hubbell Incorporated
By: /s/Richard W. Davies
-------------------------------------
Name: Richard W. Davies
Title: Vice President, General Counsel
and Secretary
ChaseMellon Shareholder Services, L.L.C.,
As Rights Agent
By: /s/Laura R. Picone
-------------------------------------
Name: Laura R. Picone
-------------------------------------
Title: Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,528
<SECURITIES> 33,885
<RECEIVABLES> 251,421
<ALLOWANCES> 7,484
<INVENTORY> 284,383
<CURRENT-ASSETS> 601,749
<PP&E> 607,494
<DEPRECIATION> 301,233
<TOTAL-ASSETS> 1,443,130
<CURRENT-LIABILITIES> 380,739
<BONDS> 0
0
0
<COMMON> 650
<OTHER-SE> 866,353
<TOTAL-LIABILITY-AND-EQUITY> 1,443,130
<SALES> 1,108,460
<TOTAL-REVENUES> 1,108,460
<CGS> 793,519
<TOTAL-COSTS> 793,519
<OTHER-EXPENSES> 14,097
<LOSS-PROVISION> 567
<INTEREST-EXPENSE> 12,323
<INCOME-PRETAX> 160,291
<INCOME-TAX> 41,675
<INCOME-CONTINUING> 118,616
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 118,616
<EPS-BASIC> 1.82
<EPS-DILUTED> 1.79
</TABLE>
