FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended January 28, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________________to________________
Commission File No. 0-5235
HUGHES SUPPLY, INC.
(Exact name of registrant specified in its charter)
Incorporated in the State I.R.S. EMPLOYER I.D.
of Florida Number 59-0559446
Post Office Box 2273, 20 N. Orange Avenue,
Suite 200, Orlando, FL 32801
(Address of principal executive office)
Registrant's Telephone Number, including area code: 407/841-4755
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock ($1.00 Par Value) New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Common Stock ($1.00 Par Value)
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 [ ]
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]
State the aggregate market value of the voting stock held by
nonaffiliates of the Registrant: $113,454,184 as of March 25, 1994.
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the latest practicable
date: 5,114,361 shares of common stock ($1.00 par value) as of
March 25, 1994.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference
and the Part of the Form 10-K into which the document is
incorporated:
Part I - Annual Report to shareholders for fiscal year
ended January 28, 1994 (designated portions).
Part II - Annual Report to shareholders for fiscal year
ended January 28, 1994 (designated portions).
Part III- Proxy Statement dated April 18, 1994 (designated
portions).
Part IV - Annual Report to shareholders for fiscal year
ended January 28, 1994 (designated portions).
PART I
ITEM 1. BUSINESS
(a) General Development of Business
Hughes Supply, Inc. (the "Registrant") was founded as a
general partnership in Orlando, Florida in 1928. The Registrant
was incorporated as a Florida corporation in 1947. As used
throughout this Report, the term "Registrant" shall be deemed to
mean the Registrant and its subsidiaries, except where the context
otherwise indicates.
The Registrant is primarily engaged in the wholesale
distribution of a broad range of materials, equipment and supplies
to the construction industry. Major product lines distributed by the
Registrant include electrical, plumbing, electric utility equipment, building
materials, water and sewer equipment, air conditioning and heating
equipment and pipe, valves and fittings.
The Registrant distributes its product lines through 140
wholesale sales outlets located in Florida and 9 other states
throughout the Southeast. The Registrant operates 53 sales outlets
in Florida, 20 sales outlets in Georgia, 8 sales outlets in
Alabama, and 1 sales outlet in South Carolina under the name of
Hughes Supply, Inc. The subsidiaries of the Registrant operate a
total of 58 sales outlets in Florida, Georgia, North Carolina,
South Carolina, Mississippi, Tennessee, Kentucky, Maryland and
Virginia. In addition to its wholesale sales outlets, the
Registrant and certain of its subsidiaries operate 7 retail
showrooms which offer, principally to retail customers, a variety
of lighting or plumbing fixtures and related accessories. A
current listing of the locations of the wholesale sales outlets and
retail showrooms of the Registrant and its subsidiaries is set
forth as Exhibit 99.1 to this report.
The principal executive offices of the Registrant are located
at 20 North Orange Avenue, Suite 200, Orlando, Florida 32801
(telephone 407-841-4755).
(b) Financial Information About Industry Segments
The Registrant does not engage in significant operations in
more than one industry segment as defined in Statement of Financial
Standards No. 14.
(c) Narrative Description of Business
Products Distributed
The products sold by the Registrant may be classified into the
following seven major product lines:
Electrical fixtures and supplies - electrical supplies,
including wire, cable, cords, boxes, covers, wiring devices,
conduit, raceway duct, safety switches, motor controls, breakers,
panels, fuses and related supplies and accessories, residential,
commercial and industrial electrical fixtures, other special use
fixtures and appliances.
Plumbing, water heaters, fixtures and supplies - plumbing
fixtures and related fittings, residential, commercial and
industrial water heaters, pumps, irrigation equipment and plumbing
accessories and supplies.
Building materials - reinforcing wire, reinforcing bars,
plyform, expansion joints, lumber, doors and related hardware,
masonry and other building materials, home appliances, carpenters',
electricians' and plumbers' tools and other tools and equipment for
the mechanical and building trades.
Electric utility supplies - transformers, conductor cable,
insulators, prestressed concrete transmission and distribution
poles, and other electric utility supplies and related hardware,
accessories and tools.
Air conditioning and heating - air conditioning and heating
equipment, furnaces, heaters, heat pumps, condensing units, duct,
pipe, fittings, registers, grills, freon, insulation and other
refrigeration equipment and supplies.
Water and sewer supplies - water works and industrial
supplies, including large diameter plastic (PVC) and cast iron
pipe, fire hydrants, water meters, valves and related hardware and
accessories.
Pipe, valves and fittings - mechanical and weld pipe, valves
and related fittings, fire protection systems and supplies, high
performance valves and specialty pipe.
There has been no significant change in the nature of the
products sold by the Registrant during the last five years.
<TABLE>
Marketing
In recent years the Registrant's marketing plan has led to the
expansion of the geographic markets served by the Registrant, as
well as the expansion of its product lines. The following table
illustrates, by company, the expansion achieved through
acquisitions over the last five fiscal years.
<CAPTION>
Method of Date of Number of State(s) of Company's Major
Acquired Company Acquisition Acquisition Locations Operation Product Lines
- -------------------- ------------- -------------- --------- ----------- ---------------------------------
<S> <C> <C> <C> <C> <C>
Hughes-Bradley 21% equity November, 1987 1 Georgia Heating and air conditioning
Supply, Inc. (1) purchase equipment and supplies,
plumbing fixtures and supplies
Purchase June, 1989 4 Alabama electrical fixtures and
completed supplies
Atlanta branches (2) Purchase March, 1989 2 (3) Georgia Electrical fixtures and supplies
Tri Plumbing Purchase August, 1989 2 (5) Maryland Plumbing fixtures and supplies
Supply, Inc. (4)
Virginia branch (6) Purchase June, 1993 1 Virginia Plumbing fixtures and supplies
Georgia and Florida Purchase June, 1993 3 Georgia Electrical and electric
branches (7) 1 Florida utility equipment and supplies
Electrical Pooling June, 1993 1 Georgia Electrical fixtures and supplies
Distributors, Inc.
Alabama Water Works Purchase July, 1993 2 Alabama Water and sewer equipment
Supply, Inc. and supplies
Florida branches (8) Purchase December, 1993 2 Florida Building materials
Swaim Supply Pooling January, 1994 6 North Carolina Plumbing fixtures and supplies,
Company, Inc. heating and air conditioning
2 Virginia equipment and supplies
</TABLE>
(1) Merged into the Registrant on August 31, 1990.
(2) Facilities acquired in purchase of assets from Summers Electric Company.
(3) Sales outlets closed during fiscal year ended January 25, 1991.
(4) Merged into USCO Incorporated on December 31, 1992.
(5) One sales outlet closed during fiscal year ended January 29, 1993.
(6) Facility in Falls Church, Virginia aquired in purchase of assets from
Capitol Hydronic Supply Company, Inc. Sales outlet relocated to
Arlington, Virginia.
(7) Facilities acquired in Macon, Georgia and Tallahassee, Florida in
purchase of assets from Causey Electrical Supply Company, Causey
Utility Supply Co. and Macon Lighting Center, Inc.
(8) Facilities acquired in purchase of assets from Hausman Corporation.
In addition to expansion through acquisition, the Registrant
has increased its geographic market area by opening new sales
outlets in Jacksonville, Kissimmee, Lady Lake, Ft. Myers, Tampa,
West Palm Beach, Naples, and Auburndale, Florida, in Tifton,
Hartsfield, Alpharetta, and LaGrange, Georgia, in Hickory,
Wilmington and Greensboro, North Carolina, in Dothan and Mobile,
Alabama, in Anderson, South Carolina and in Memphis, Tennessee
during the past five years. During the past year, the Registrant
also discontinued the operation of certain of its sales outlets in
Hickory, North Carolina, Warner Robins, Georgia and Winter Park,
Florida, which were operating unprofitably in areas which could be
served by others of its sales outlets.
Each of the Registrant's sales outlets handles one or more of
the Registrant's product lines. Sales are made primarily to
contractors, electric utilities, municipalities and industrial
accounts. The Registrant employs approximately 300 outside sales
representatives who call on customers and who also work with
architects, engineers and manufacturers' representatives when major
construction projects are involved. For each outside sales
representative, there are generally two inside account executives
who expedite orders, deliveries, quotations, and requests for
pricing. Most orders are taken by telephone, and materials are
delivered by Registrant-owned trucks to the customer's office or
job site.
The Registrant's wholesale and retail outlets are sales and
distribution points for the products sold by the Registrant. Each
sales outlet operates as a separate profit center with its own
sales force. Each is managed by its own manager, who is directly
responsible for customer relations, the hiring and promotion of
personnel, purchasing, sales, the maintenance of adequate inventory
levels, and cost control for the particular sales outlet.
Day to day operations of the sales outlets are the
responsibility of the respective managers, but major decisions
affecting Registrant policy, facilities or capital outlay are
reviewed by the Registrant's executive officers. Purchasing agents
generally make use of a computerized perpetual inventory system to
monitor stock levels, while central distribution centers in
Orlando, Florida, College Park, Georgia and Monroe, North Carolina
provide purchasing assistance. The Hughes Supply, Inc. general
accounting, customer billing, inventory, and accounts payable
systems are processed at the Registrant's central computer facility
in Orlando, Florida, with such processing generally handled by
discrete systems at the subsidiaries.
Over 45,000 wholesale customers are presently served by the
Registrant, and no single customer accounts for more than 2% of
total sales annually. Orders for larger construction projects
normally require long-term delivery schedules throughout the period
of construction, which in some cases may continue for several
years. The substantial majority of customer orders are shipped out
of inventory on hand. Some items are manufactured to customer
specifications and require special ordering. Additionally, some
large volume orders are shipped directly to the customer from the
manufacturer.
Sources of Supply
All products sold by the Registrant are purchased from other
manufacturers and suppliers. The Registrant regularly purchases
from over 6,000 outside manufacturers and suppliers, no single one
of which accounted for more than 6% of the Company's total
purchases during the fiscal year ended January 28, 1994.
Inventories
The Registrant is a wholesale distributor of construction
materials, which maintains significant inventories to meet rapid
delivery requirements and to assure itself of a continuous
allotment of goods from suppliers. As of January 28, 1994,
inventories constituted approximately 36% of the Registrant's total
assets.
Competition
There is strong competition throughout the marketing areas
served by the Registrant in each product line the Registrant
distributes. The main sources of competition are other
wholesalers, manufacturers who sell certain lines directly to
contractors and, to a limited extent, retailers in the markets for
plumbing, electrical fixtures and supplies, building materials and
contractor's tools. Management believes that the Registrant, on
the basis of its total sales, is the largest wholesale distributor
of its range of products in the Southeast. The principal
competitive factors in the Registrant's business are availability
of material, technical product knowledge as to application and
usage, advisory and other service capabilities and pricing of
products.
Compliance With Environmental Protection Provisions
The Registrant accrued approximately $675,000 as an operating
expense in the fiscal year ended January 31, 1992, for estimated
future costs of removing underground fuel storage tanks and
environmental clean-up costs to comply with federal, state and
local laws and regulations for the protection of the environment.
The Registrant does not expect any additional material expenses in
future years associated with fuel storage tanks. Information with
respect to this matter is also included in Management's Discussion
and Analysis of Financial Condition and Results of Operations on
pages 24 and 25 of the Annual Report to shareholders for the fiscal
year ended January 28, 1994, a copy of which is filed as an exhibit
to this report and the cited portion of which is incorporated
herein by reference.
Employees
The Registrant had a total of approximately 2,350 employees as
of January 28, 1994, consisting of approximately 20 executives, 450
managers, 750 sales personnel and 1,130 other employees, including
truck drivers, warehouse personnel, office and clerical workers.
The Registrant's work force has increased by approximately 13%
compared to the prior year in response to increased sales volume as
well as the result of business acquisitions during the current
year.
(d) Financial Information about Foreign and Domestic
Operations and Export Sales
The Registrant does not engage in material operations or
derive a material portion of its sales or revenues from customers
in foreign countries.
ITEM 2. PROPERTIES
The Registrant leases approximately 21,000 square feet of an
office building in Orlando, Florida for its headquarters. In
addition, the Registrant owns or leases 54 sales outlets in
Florida, 22 sales outlets in Georgia, 20 sales outlets in North
Carolina, 10 sales outlets in South Carolina, 11 sales outlets in
Mississippi, 9 sales outlets in Tennessee, 8 sales outlets in
Alabama, 2 sales outlets in Kentucky, 3 sales outlets in Virginia
and 1 sales outlet in Maryland. The typical sales outlet consists
of a combined office and warehouse facility ranging in size from
3,000 to 40,000 square feet, with a paved parking and storage area.
The Registrant also operates a computer center, three central
distribution warehouses, and a garage and trucking terminal. The
Registrant's subsidiary corporate office locations are set forth on
page 28 of the Annual Report to shareholders for the fiscal year
ended January 28, 1994, a copy of which is filed as an exhibit to
this report and the cited portion of which is incorporated herein
by reference.
Additional information regarding owned and leased properties
of the Registrant is set forth as Exhibit 99.1 to this report and
in Note 6 of the Notes to Consolidated Financial Statements on
pages 21 and 22 of the Annual Report to shareholders for the fiscal
year ended January 28, 1994, a copy of which is filed as an exhibit
to this report and the cited portion of which is incorporated
herein by reference.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the
Registrant or its subsidiaries is a party or of which the property
of either the Registrant or its subsidiaries is the subject which
are required to be reported in response to this item.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the Registrant's security
holders during the fourth quarter of the fiscal year ended January
28, 1994.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Information with respect to the principal market for the
Registrant's common stock, stock prices and dividend information is
set forth under the captions "Shareholder Information" and "Market
Price and Dividend Data" on page 28 and page 3, respectively, of
the Annual Report to shareholders for the fiscal year ended January
28, 1994, a copy of which is filed as an exhibit to this report and
the cited portion of which is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
"Selected Financial Data" is set forth on pages 26 and 27 of
the Registrant's Annual Report to shareholders for the fiscal year
ended January 28, 1994, a copy of which is filed as an exhibit to
this report and the cited portion of which is incorporated herein
by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
"Management's Discussion and Analysis of Financial Condition
and Results of Operations" is set forth on pages 24 and 25 of the
Registrant's Annual Report to shareholders for the fiscal year
ended January 28, 1994, a copy of which is filed as an exhibit to
this report and the cited portion of which is incorporated herein
by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(a) Financial Statements
The financial statements filed with this report are set forth
in the "Index to Consolidated Financial Statements and Schedules"
following Part IV hereof.
(b) Selected Quarterly Data
"Selected Quarterly Financial Data" is set forth on page 3 of
the Registrant's Annual Report to shareholders for the fiscal year
ended January 28, 1994, a copy of which is filed as an exhibit to
this report and the cited portion of which is incorporated herein
by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
The Registrant has not had any change in, or disagreement with
its accountants or reportable event which is required to be
reported in response to this item.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Identification of Directors
Information with respect to Directors of the Registrant is set
forth under "Directors and Nominees for Election as Directors of
the Company" and "Family Relationships Between Certain Directors"
on pages 2 through 5 and page 9, respectively, of the Registrant's
Proxy Statement dated April 18, 1994, which has been filed with the
Commission by the Registrant under Regulation 14A and the cited
portion of which is incorporated herein by reference.
(b) Identification of Executive Officers
Information with respect to Executive Officers of the
Registrant is set forth under "Executive Officers" on page 11 and,
with respect to Executive Officers who are also Directors is also
set forth under the captions referred to in paragraph (a) above of
this Item 10 on pages 2 through 5 and page 9 of the Registrant's
Proxy Statement dated April 18, 1994, which has been filed with the
Commission by the Registrant under Regulation 14A and the cited
portions of which are incorporated herein by reference.
(c) Compliance with Section 16(a) of the Securities Exchange Act of 1934
The information required by Item 405 of Regulation S-K is furnished
under the caption "Compliance with Section 16(a) of the Securities Exchange
Act of 1934" on page 22 of the Registrant's Proxy Statement dated April 18,
1994, which has been filed with the Commission under Regulation 14A and the
cited portion of which is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to executive compensation is set
forth under the caption "Executive Compensation and Other
Information" on pages 11 through 18 of the Registrant's Proxy
Statement dated April 18, 1994. Except as hereinafter set forth,
such information is deemed to have been filed with the Commission
as a part of such Proxy Statement and is incorporated by reference
herein. Notwithstanding anything to the contrary set forth in the
Company's previous filings under the Securities Act of 1933, as
amended (the "33 Act"), or the Securities Exchange Act of 1934, as
amended (the "34 Act"), that might incorporate future filings
including the Proxy Statement or this Report on Form 10-K, the
"Compensation Committee Report on Executive Compensation" on pages
12 through 14 and the section captioned "Shareholder Return" on
page 19 of the Proxy Statement are specifically excluded
from the portions of the Proxy Statement incorporated by reference
herein or into any other filing under the 33 Act or the 34 Act.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information as of March 25, 1994, or as of December 31, 1993,
with respect to persons known to management of the Registrant to be
the beneficial owners of more than 5% of the outstanding common
stock of the Registrant and information with respect to the
security ownership of management of the Registrant is set forth
under the captions "Ownership of Securities by Certain Beneficial
Owners" on pages 5 through 7 and "Ownership of Securities by Certain
Directors and Officers" on pages 8 and 9 of the Registrant's Proxy
Statement dated April 18, 1994, filed with the Commission pursuant
to Regulation 14A, and such information is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to certain relationships and related
transactions is set forth under the caption "Certain Transactions
with Management" on pages 20 through 22 of the Registrant's Proxy
Statement dated April 18, 1994, which has been filed with the
Commission pursuant to Regulation 14A and the cited portion of
which is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
(a) Financial Statements and Financial Statement Schedules
Financial statements and financial statement schedules required
to be filed by item 8 of this Form 10-K are listed in a separately
designated section submitted below. Exhibits are listed in
subparagraph (c) below.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended
January 28, 1994.
(c) Exhibits Filed
A substantial number of the exhibits referred to below are
indicated as having been previously filed as exhibits to other reports
under the Securities and Exchange Act of 1934 or as exhibits to
registration statements under the Securities Act of 1933. Such
previously filed exhibits are incorporated by reference in this Form
10-K. Exhibits not incorporated by reference herein are filed with
this report.
(2) Plan of acquisition, reorganization, arrangement,
liquidation or succession. Not applicable.
(3) Articles of incorporation and by-laws.
3.1 Restated Articles of Incorporation (January 24,
1989), filed as Exhibit 3.1 to Form 10-K for the
fiscal year ended January 27, 1989.
3.2 Composite By-Laws, as amended, filed as Exhibit
3.2 to Form 10-K for the fiscal year ended
January 27, 1989.
(4) Instruments defining the rights of security holders,
including indentures.
4.1 Specimen Stock Certificate representing shares of
the Registrant's common stock, $1,00 par value,
filed as Exhibit 4.2 to Form 10-Q for the quarter
ended October 31, 1984.
4.2 Trust Indenture dated May 1, 1986 between the
Registrant and J. Henry Schroder Bank & Trust
Company, as Trustee for the holders of the 7%
Convertible Subordinated Debentures, filed as
Exhibit 4(b) to Registration No. 33-4714.
4.3 Specimen Copy of Certificate representing 7%
Convertible Subordinated Debenture, filed as
Exhibit 4(c) to Registration No. 33-4714.
4.4 Resolution Approving and Implementing Shareholder
Rights Plan filed as Exhibit 4.4 to Form 8-K
dated May 17, 1988.
(9) Voting trust agreement. Not applicable.
(10) Material contracts.
10.1 Lease Agreements with Hughes, Inc.
(a) Orlando Trucking, Garage and Maintenance
Operations dated December 1, 1971, filed as
Exhibit 13(n) to Registration No. 2-43900.
Letter dated April 15, 1992 extending lease
from month to month, filed as Exhibit 10.1(a)
to Form 10-K for the fiscal year ended
January 31, 1992.
(b) Leases effective March 31, 1988, filed as
Exhibit 10.1 (c) to Form 10-K for the
fiscal year ended January 27, 1989.
Sub-Item Property
(1) Clearwater
(2) Daytona Beach
(3) Fort Pierce
(4) Lakeland
(5) Lakeland - Lightstyle
(6) Leesburg
(7) Orlando Electrical Operation
(8) Orlando Plumbing Operation
(9) Orlando Utility Warehouse
(10) St. Petersburg
(11) Sarasota
(12) Venice
(13) Winter Haven
(c) Lease amendment letter between Hughes, Inc. and the
Registrant, dated December 1, 1986, amending
Orlando Truck Operations Center and Maintenance
Garage lease, filed as Exhibit 10.1(i) to Form
10-K for the fiscal year ended January 30, 1987.
(d) Lease agreement dated June 1, 1987, between
Hughes, Inc. and the Registrant, for additional
Sarasota property, filed as Exhibit 10.1(j) to Form
10-K for the fiscal year ended January 29,
1988.
(e) Leases dated March 11, 1992, filed as Exhibit
10.1(e) to Form 10-K for the fiscal year ended
January 31, 1992.
Sub-Item Property
(1) Tallahassee Electrical Operation
(2) Gainesville Electrical Operation
(3) Valdosta Electrical Operation
10.2 Hughes Supply, Inc. 1988 Stock Option Plan filed
as Exhibit A to Prospectus included in Registration
No. 33-26468.
10.3 Form of Supplemental Executive Retirement Plan
Agreement entered into between the Registrant and
eight of its executive officers, filed as Exhibit
10.6 to Form 10-K for fiscal year ended
January 30, 1987.
10.4 Directors' Stock Option Plan filed as Exhibit A
to Prospectus included in Registration No.
33-33701.
10.5 Asset Purchase Agreement with Accord Industries
Company, dated October 9, 1990, for sale of
Registrant's manufacturing operations, filed as
Exhibit 10.7 to Form 10-K for fiscal year ended
January 25, 1991.
10.6 Lease Agreement dated June 30, 1993 between Donald C.
Martin and Electrical Distributors, Inc.
10.7 Consulting Agreement dated June 30, 1993 between
Hughes Supply, Inc. and Donald C. Martin.
(11) Statement re computation of per share earnings.
11.1 Summary schedule of earnings per share
calculation.
(12) Statement re computation of ratios. Not applicable.
(13) Annual report to security holders, Form 10-Q or
quarterly report to security holders.
13.1 Information incorporated by reference into
Form 10-K from the Annual Report to shareholders
for the fiscal year ended January 28, 1994.
(16) Letter re change in certifying accountant. Not
applicable.
(18) Letter re change in accounting principles. Not
applicable.
(21) Subsidiaries of the Registrant.
21.1 Subsidiaries of the Registrant.
(22) Published report regarding matters submitted to vote
of Security holders. Not applicable.
(23) Consents of experts and counsel.
23.1 Consent of independent accountants.
(24) Power of attorney. Not applicable.
(27) Financial data schedule. Not applicable.
(28) Information from reports furnished to state insurance
regulatory authorities. Not applicable.
(99) Additional exhibits.
99.1 Location of facilities.
(d) Financial Statement Schedules
Financial statements and financial statement schedules required
by Regulation S-X which are excluded from the annual report to
shareholders by Rule 14a-3(b). Not Applicable.
SIGNATURES
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.
HUGHES SUPPLY, INC.
By: /s/ David H. Hughes
David H. Hughes, Chairman of
the Board and Chief Executive
Officer
/s/ J. Stephen Zepf
J. Stephen Zepf, Treasurer,
Chief Financial Officer,
Chief Accounting Officer
Date: April 22, 1994
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.
/s/ David H. Hughes /s/ Robert N. Blackford
David H. Hughes Robert N. Blackford
April 22, 1994 April 22, 1994
(Director) (Director)
/s/ Clifford M. Hames /s/ Vincent S. Hughes
Clifford M. Hames Vincent S. Hughes
April 22, 1994 April 22, 1994
(Director) (Director)
/s/ Herman B. McManaway
Russell V. Hughes Herman B. McManaway
April 22, 1994 April 22, 1994
(Director) (Director)
/s/ John B. Ellis /s/ A. Stewart Hall, Jr
John B. Ellis A. Stewart Hall, Jr.
April 22, 1994 April 22, 1994
(Director) (Director)
/s/ Donald C. Martin /s/ John D. Baker, II
Donald C. Martin John D. Baker, II
April 22, 1994 April 22, 1994
(Director) (Director)
HUGHES SUPPLY, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
The following consolidated financial statements of the
Registrant and its subsidiaries included in the Annual
Report of the Registrant to its shareholders for the year
ended January 28, 1994, a copy of which is filed herewith,
are incorporated by reference:
Annual
Report
Page
Consolidated Statements of Operations
for the years ended January 28, 1994,
January 29, 1993 and January 31, 1992 14
Consolidated Balance Sheets as of
January 28, 1994 and January 29, 1993 15
Consolidated Statements of Shareholders'
Equity for the years ended January 28,
1994, January 29, 1993 and January 31, 1992 16
Consolidated Statements of Cash Flows for
the years ended January 28, 1994, January
29, 1993 and January 31, 1992 17
Notes to Consolidated Financial Statements 18
Report of Independent Accountants 23
All other financial statements and schedules have been
omitted as they are either not applicable, not required or
the information is given in the financial statements or
related notes.
INDEX OF EXHIBITS FILED WITH THIS REPORT
10.6 Lease Agreement dated June 30, 1993 between Donald C.
Martin and Electrical Distributors, Inc.
10.7 Consulting Agreement dated June 30, 1993 between Hughes
Supply, Inc. and Donald C. Martin.
11.1 Computation of per share earnings.
13.1 Information incorporated by reference into Form 10-K
from the Annual Report to shareholders for fiscal year
ended January 28, 1994.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Coopers & Lybrand.
99.1 Location of facilities.
LEASE AGREEMENT
THIS LEASE AGREEMENT made and entered into as of the 30th day
of June, 1993, by and between DONALD C. MARTIN (hereinafter
referred to as the "Lessor"), and ELECTRICAL DISTRIBUTORS, INC.
(hereinafter referred to as the "Lessee").
W I T N E S S E T H :
WHEREAS, Lessor desires to lease certain property to Lessee;
and
WHEREAS, Lessee desires to lease such property;
NOW, THEREFORE, in consideration of the premises and the
mutual promises and agreements hereinafter contained, the parties
do hereby agree as follows:
ARTICLE I
PROPERTY. Lessor agrees to lease and demise unto Lessee
certain property, known as 5180 Peachtree Road, Atlanta, Georgia
30341, as described on Exhibit "A" hereto (hereinafter referred to
as the "Property").
ARTICLE II
LEASE TERM. The term of this Lease Agreement shall be for a
period of five (5) years commencing on July 1, 1993, and ending on
June 30, 1998, both dates inclusive, unless sooner terminated as
herein provided. In no event shall there be any renewal of this
Lease by operation of law, and if Lessee remains in possession of
the Property after the termination of this Lease and without a new
lease executed by Lessor and Lessee, but with the acquiescence of
Lessor, Lessee shall be deemed to be occupying the Property under
a month-to-month periodic tenancy at an amount to be agreed upon by
the parties hereto, and in no event less than the then-current Rent
as hereinafter provided, and otherwise subject to all the covenants
and provisions of this Lease insofar as the same are applicable to
a month-to-month periodic tenancy. Lessor and Lessee agree that
any such periodic tenancy may be terminated by thirty (30) days
prior written notice by either party to this Lease to the other
party. If Lessee remains in possession after termination of this
Lease without Lessor's acquiescence or consent, Lessee thereupon
shall be deemed a tenant-at-sufferance and may be evicted at once
without notice.
ARTICLE III
3.1 RENT. From July 1, 1993 through and including June 30,
1995, Lessee agrees to pay Lessor without demand, deduction or set-
off as rental $3.25 per square foot per year (32,780 square feet x
$3.25 = $106,535.00 annually, $8,877.92 monthly), in advance, on
the first (1st) day of each calendar month during the Lease Term.
From July 1, 1995, through and including June 30, 1998, Lessee
agrees to pay Lessor without demand, deduction or set-off as rental
$3.75 per square foot per year (32,780 square feet x $3.75 =
$122,925.00 annually, $10,243.75 monthly), in advance, on the first
(1st) day of each calendar month during the Lease Term. Lessee
shall pay to Lessor all rent and all other charges due and owing by
Lessee under this Lease without deduction or set-off, in legal
tender, and at Lessor's address specified in Section 14.7 or as
otherwise directed from time to time by Lessor's notice.
3.2 ADDITIONAL RENT. Lessee shall pay to Lessor in addition
to all rent as herein provided, on or before the dates the same
shall become due and payable, and as additional rent, all taxes,
insurance and general maintenance of the Property, which Lessee
assumes or agrees to pay hereunder, together with all interest and
penalties that may accrue thereon. In the event of non-payment,
Lessor shall have the rights and remedies herein provided for in
the case of non-payment of rent or a breach of condition.
3.3 TAXES AND OTHER CHARGES. Lessee shall, without notice or
demand, as additional rent, pay and discharge, on or before the
last day on which the same may be paid without penalty, all taxes,
rates and charges, sanitary assessments, and other governmental
impositions and charges of every kind and nature whatsoever, and
each and every installment thereof together with all interest and
penalties thereon, which shall or may during the Lease Term be
levied, assessed or imposed on or become a lien upon or become due
or payable out of or for or by reason of the Property or any part
thereof, the Lessee's or the Lessor's interest in the Property and
the improvements located thereon, or any buildings, appurtenances,
or equipment now or hereafter erected or placed thereon or therein
or any part thereof, or the sidewalks or streets in front of or
adjoining the Property including further any rent tax which may now
or hereafter be imposed in addition to or in lieu of real property
ad valorem taxes. All taxes levied, assessed or imposed in
addition to the foregoing shall be paid by Lessee together with all
interest and penalties thereon, under or by virtue of all present
or future laws, ordinances, requirements, orders, directives, rules
or regulations of the federal, state, county and city or local
governments and of all other governmental authorities whatsoever.
Lessee shall pay all taxes and assessments which shall prior to or
during the Lease Term be levied, assessed or imposed on or become
a lien upon the personal property of Lessee located upon the
Property. Lessee shall be deemed to have complied with the
covenants of this Lease if payment of such rents, taxes, sanitary
assessments, and other governmental impositions and charges, shall
have been made within any grace period allowed by law or by the
governmental authority imposing the same during which payment is
permitted without penalty or interest, and either before the same
shall become a lien upon the Property or shall become delinquent.
Lessee shall within ten (10) days after receipt of written request
therefor by Lessor produce and deliver to Lessor reasonably
satisfactory evidence of such payment.
Lessor shall be responsible for the payment of all special
assessments imposed upon the Property.
All such rents, taxes, rates and charges, sanitary
assessments, and other governmental impositions and charges which
become due and are payable in the calendar year in which the Lease
Term expires, shall be apportioned pro rata between Lessor and
Lessee in accordance with the respective portions of such period
during which the Lease Term shall be in effect.
Lessee shall have the right to contest or review by legal
proceedings, or in such other manner as it may deem suitable
(which, if instituted, Lessee shall conduct promptly at its own
expense, and free of any expense to Lessor, and, if necessary, in
the name of Lessor), any tax, assessment, rate or charge, sanitary
assessment, or other governmental imposition or charge
aforementioned.
Nothing herein contained shall be construed to require Lessee
to pay any inheritance, estate, succession, transfer, gift,
franchise, income, income profit or excess profit, capital stock,
capital levy, corporate or unincorporated business tax or other
similar tax, that is or may be imposed upon Lessor, its successors
or assigns, or upon the rent payable by Lessee. In the event any
sales tax shall be due on rent for the Property, then Lessee shall
be responsible for paying and shall pay, when due, any such sales
tax.
<PAGE>
ARTICLE IV
COSTS AND EXPENSES OF LESSEE. All costs, expenses and
obligations of every kind, including but not limited to utilities,
repairs and maintenance relating to the Property which may arise or
become due during the term of this Lease, shall be paid by Lessee,
except as designated herein. Lessor shall be responsible for the
payment of major repairs to the roof, the foundation and the
structural walls.
ARTICLE V
COVENANTS OF LESSOR. Lessor covenants and agrees as follows:
A. That Lessor owns the Property in fee simple and has full
right, power and authority to enter into this Lease for the terms
herein granted and that the Property may be used by Lessee during
the entire term of this Lease for the purposes for which it is
currently being used by Lessee.
B. That Lessee, upon the payment of the Rent herein provided
and upon the performance of all the terms of this Lease, shall at
all times during the Lease Term and during any extension or renewal
term, peaceably and quietly enjoy the property without any
disturbance from Lessor or from any other person claiming through
Lessor.
C. That the Property currently conforms and complies with
any and all applicable laws or private restrictions.
D. That Lessor has no knowledge or notice of any pending or
threatened law suits or insolvencies with respect to either Lessor
or the Property.
ARTICLE VI
COVENANTS OF LESSEE. Lessee covenants and agrees as follows:
A. To pay Lessor the Rent herein stipulated at the time and
in the manner herein provided.
B. To take good care of the Property and suffer no waste or
damage and at the end or other expiration of the term of this
Lease, to return the Property in its current condition, normal wear
and tear excepted.
C. To observe and comply with all presently existing State,
City and County ordinances and regulations applicable to the
Property, and all orders and requirements presently imposed by any
other duly constituted governmental authority having jurisdiction
over the Property.
ARTICLE VII
USE.
7.1 LAWFUL PURPOSE. Lessee may use the Property for any
lawful purpose. Lessee shall not use or permit any of the Property
to be used for any unlawful purpose. Lessee shall comply, at its
own expense, with all statutes, regulations, rules, ordinances, and
orders of any governmental body, department, or agency thereof
which apply to or result from Lessee's use or occupancy of the
Property.
7.2 LESSOR'S RIGHT TO ENTER PROPERTY. Lessor and its agents,
employees, and contractors shall have the right to enter the
Property during normal business hours, without undue interference
with the conduct of Lessee's business therein, to inspect and
examine the Property and to exhibit the Property to prospective
purchasers, tenants and lenders. In the event of emergency, or if
otherwise necessary to prevent injury to persons or damage to
property, such entry to the Property may be made by force without
any liability whatsoever on the part of Lessor for damage resulting
from such forcible entry.
ARTICLE VIII
ASSIGNMENT AND SUBLETTING.
8.1 Lessee shall not, without Lessor's prior written consent,
which shall not be unreasonably withheld or delayed: (i) assign,
convey, mortgage, pledge, encumber, or otherwise transfer (whether
voluntarily, by operation of law, or otherwise) this Lease or any
interest under it; (ii) allow any transfer thereof or any lien upon
Lessee's interest by operation of law; (iii) sublet the Property or
any part thereof; or (iv) permit the use or occupancy of the
Property or any part thereof by any one other than Lessee; and any
attempt to consummate any of the foregoing without Lessor's consent
shall be void.
8.2 Notwithstanding anything herein to the contrary, if at
any time or from time to time during the Lease Term, Lessee desires
to sublet all or a part of the Property or assign, convey,
mortgage, pledge, encumber, or otherwise transfer the Lease or any
interest under it, Lessee shall notify Lessor in writing
(hereinafter referred to in this Article VIII as the "Notice") of
the terms of the proposed subletting or assignment, the identity of
the proposed assignee or sublessee, the area proposed to be sublet
(if a sublease is proposed), and such other information as Lessor
may request to evaluate Lessee's request to assign or sublet.
Notwithstanding the provisions of this Article VIII, Lessee may
sublet or assign, convey, mortgage, pledge, encumber, or otherwise
transfer the Lease or any interest under it, to its parent
corporation or to an affiliate or subsidiary corporation of which
such parent corporation owns the majority of the shares of common
and preferred stock without Lessor's prior written consent or
approval. In such event, Lessee shall notify Lessor, in writing,
of such an assignment or sublease, conveyance, mortgage, pledge,
encumbrance, or other transfer prior to the commencement of the
term of such assignment or sublease.
8.3 Within twenty (20) days of Lessor's receipt of the
proposed assignment or sublease, conveyance, mortgage, pledge,
encumbrance, or other transfer, and such requested additional
information, Lessor shall approve or disapprove in writing the
terms of the proposed assignment or sublease, conveyance, mortgage,
pledge, encumbrance, or other transfer, and the proposed assignee
or sublessee or other party thereto. Failure to so approve or
disapprove shall be deemed approval by Lessor. If a fully executed
counterpart of such assignment or sublease, conveyance, mortgage,
pledge, encumbrance, or other transfer is not delivered to Lessor
within forty-five (45) days after the date of Lessor's written
approval, then Lessor's approval of same shall be deemed null and
void and Lessee shall again comply with all the conditions of this
Section 8.3 as if the Notice and options hereinabove referred to
had not been given and received.
8.4 Lessee agrees to pay, as additional rental, to Lessor, on
demand, reasonable costs incurred by Lessor in connection with any
request by Lessee for Lessor to consent to any of the transactions
contemplated by this Article VIII by Lessee.
8.5 If, with the consent of Lessor, this Lease is assigned or
the Property or any part thereof is sublet or occupied by anybody
other than Lessee, Lessor may, after default by Lessee, collect
rent from the assignee, subtenant or occupant, and apply the net
amount collected to the Rent, but no such assignment, subletting,
occupancy, or collection shall be deemed (i) a waiver of any of
Lessee's covenants contained in this Lease, (ii) the acceptance by
Lessor of the assignee, subtenant, or occupant as Lessee, or (iii)
the release of Lessee from further performance by Lessee of its
covenants under this Lease.
ARTICLE IX
EMINENT DOMAIN.
9.1 If all or any substantial part of the Property, including
but not limited to ten (10) percent of the parking, access,
building or signage, should be taken for any public or quasi-public
use under governmental law, ordinance, or regulation, or by right
of eminent domain, or by private purchase in lieu thereof, and the
taking would prevent or materially interfere with the use of the
Property for the purpose for which it is then being used, this
Lease shall terminate effective when the physical taking shall
occur in the same manner as if the date of such taking were the
date originally fixed in this Lease for the expiration of the Lease
Term.
9.2 If part of the Property is taken for any public or quasi-
public use under any governmental law, ordinance, or regulation, or
by right of eminent domain, or by private purchase in lieu thereof,
and this Lease is not terminated as provided in subsection (a)
above, this Lease shall not terminate but the Rent payable
hereunder during the unexpired portion of this Lease shall be
reduced to such extent, if any, as may be fair and reasonable under
all of the circumstances and Lessor shall undertake to restore the
Property to a condition suitable for Lessee's use, as near to the
condition thereof immediately prior to such taking as is reasonably
feasible under all circumstances.
9.3 Lessee shall not share in any condemnation award or
payment in lieu thereof or in any award for damages resulting from
any grade change of adjacent streets, the same being hereby
assigned to Lessor by Lessee; provided, however, that Lessee may
separately claim and receive from the condemning authority, if
legally payable, compensation for Lessee's removal and relocation
costs and for Lessee's loss of business and/or business
interruption.
9.4 Notwithstanding anything to the contrary contained in
this Article 9, if during the Lease Term the use or occupancy of
any part of the Property shall be taken or appropriated temporarily
for any public or quasi-public use under any governmental law,
ordinance, or regulation, or by right of eminent domain, this Lease
shall be and remain unaffected by such taking or appropriation and
Lessee shall continue to pay in full all rental payable hereunder
by Lessee during the Lease Term. In the event of any such
temporary appropriation or taking, Lessee shall be entitled to
receive that portion of any award which represents compensation for
the loss of use or occupancy of the Property during the Lease Term,
and Lessor shall be entitled to receive that portion of any award
which represents the cost of restoration and compensation for the
loss of use or occupancy of the Property after the end of the term
of this Term Lease.
ARTICLE X
INSURANCE.
10.1 Lessee shall carry fire and extended coverage insurance
insuring Lessee's interest in its improvements and betterments to
the Property and any and all furniture, equipment, supplies, and
other property owned, leased, held, or possessed by it and
contained therein, such insurance coverage to be in an amount equal
to the full insurable value of such improvements and property.
Lessee may, in the alternative, elect to self-insure the Property
in whole or in part, provided such self-insurance, along with any
and all additional third-party insurance shall equal the full
insurable value of the Property.
10.2 Lessee also agrees to carry a policy or policies of
comprehensive general liability insurance, including personal
injury and property damage, with contractual liability endorsement,
in the amount of One Million Dollars ($1,000,000.00) for property
damage and One Million Dollars ($1,000,000.00) per occurrence for
personal injuries or deaths of persons occurring in or about the
Property. Said policies shall: (i) name Lessor as an additional
insured and insure Lessor's contingent liability under this Lease,
(ii) be issued by an insurance company which is acceptable to
Lessor and licensed to do business in the State of Georgia, and
(iii) provide that said insurance shall not be canceled unless
thirty (30) days prior written notice shall have been given to
Lessor. Certificates of insurance shall be delivered to Lessor by
Lessee upon commencement of the term of the Lease and upon each
renewal of said insurance. Lessee may, in the alternative, elect
to self-insure the Property, in whole or in part, provided such
self-insurance, along with any and all additional third-party
insurance shall equal One Million Dollars ($1,000,000.00).
10.3 Lessee shall obtain from its insurers under all policies
of fire, theft, public liability, worker's compensation, and other
insurance maintained by it at any time during the Lease Term
insuring or covering the Property or any portion thereof or
operations therein, and shall in good faith endeavor to obtain a
waiver of all rights of subrogation which the insurer might have
against Lessor, if obtainable.
ARTICLE XI
INDEMNITY. Lessee agrees to indemnify and hold Lessor
harmless from and defend Lessor against any and all claims or
liability for any injury or death to any person or damage to any
property whatsoever:
A. occurring in, on or about the Property, to the extent such
injury, death or damage shall be caused in part or in whole by the
act, neglect or fault of, or omission of any duty with respect to
the same, by Lessee, its agents, employees, contractors, invitees,
licensees or tenants;
B. arising from any work or thing whatsoever done by or
benefiting the Lessee in or about the Property or from transactions
of the Lessee concerning the Property;
C. arising from any breach or event of default on the part of
the Lessee in the performance of any covenant or agreement on the
part of the Lessee to be performed pursuant to the terms of this
Lease; or
D. otherwise arising from any act or neglect of the Lessee,
or any of its agents, employees, contractors, invitees, licensees
or tenants.
ARTICLE XII
12.1 LIABILITY OF LESSOR. Lessor shall not be liable to
Lessee or to any person, firm, corporation, or other business
association claiming by, through or under Lessee, for any defects
known to Lessee in the Property; nor for the theft, mysterious
disappearance, or loss of any property of Lessee from the Property.
Lessor shall not be liable for any interference, disturbance, or
act caused by any person other than Lessor, nor shall Lessee be
relieved from any obligation herein because of such interference,
disturbance, or act of any person other than Lessor.
12.2 LIMITATION OF LIABILITY. Lessor's obligations and
liability with respect to this Lease shall be limited solely to
Lessor's interest in the Property, as such interest is constituted
from time to time, and Lessor shall not have any personal liability
whatsoever with respect to this Lease. In any action or proceeding
brought to enforce the obligation of Lessor to Lessee under this
Lease, Lessor and Lessee agree that any final judgment or decree
shall be enforceable against Lessor only to the extent of Lessor's
interest in the Property, as aforesaid, and any such judgment or
decree shall not be capable of execution against, nor be a lien on,
any assets of Lessor other than its interest in the Property, as
aforesaid. Lessor shall maintain a minimum of one million dollars
($1,000,000.00) equity in the Property.
ARTICLE XIII
EVENTS OF DEFAULT AND REMEDIES.
13.1 The occurrence of any of the following shall constitute
an event of default:
(a) The Rent or any other sum of money payable under
this Lease is not paid when due;
(b) Lessee's interest in the Lease or the Property shall
be subjected to any attachment, levy, or sale pursuant to
any order or decree entered against Lessee in any legal
proceeding and such order or decree shall not be vacated
within ninety (90) days of entry thereof; or
(c) Lessee breaches or fails to comply with any term,
provision, condition, or covenant of this Lease, other
than the payment of Rent and any other sum due and
payable hereunder.
13.2 Upon the occurrence of an event of default and, in the
case of an event of default under subsection (a) above, if such
event of default is not cured within five (5) days of receipt of
written demand, and, in the case of an event of default under
subsections (b) or (c) above, if such event of default is not cured
within thirty (30) days after written notice of such event of
default is given by Lessor to Lessee, or such longer period of time
as is reasonably necessary under the circumstances. Lessor shall
have the option to do and perform any one or more of the following
in addition to, and not in limitation of, any other remedy or right
permitted it by law or in equity or by this Lease:
(a) Lessor, with or without terminating this Lease, may
reenter the Property and perform, correct or repair any
condition which shall constitute a failure on Lessee's
part to keep, observe, perform, satisfy, or abide by any
term, condition, covenant, agreement, or obligation of
this Lease, and Lessee shall fully reimburse and
compensate Lessor on demand for all costs and expenses
reasonably incurred by Lessor in such performance,
correction or repairing, including accrued interest as
provided in the next sentence. All sums so expended to
cure Lessee's default shall accrue interest from the date
of demand until date of payment at a rate of interest per
annum equal to the lesser of (i) sixteen percent (16%)
per annum; or (ii) the highest rate permitted by law.
(b) Lessor, with or without terminating this Lease, may
immediately, or at any time thereafter, demand in writing
that Lessee vacate the Property and thereupon Lessee
shall vacate the Property and remove therefrom all
property thereon belonging to or placed on the Property
by, at the direction of, or with consent of Lessor within
ten (10) days of receipt by Lessee of such notice from
Lessor, whereupon Lessor shall have the right to reenter
and take possession of the Property. Any such demand,
reentry and taking possession of the Property by Lessor
shall not of itself constitute an acceptance by Lessor of
a surrender of this Lease or of the Property by Lessee
and shall not of itself constitute a termination of this
Lease by Lessor.
(c) Lessor, with or without terminating this Lease, may
immediately or at any time thereafter relet the Property
or any part thereof for such time or times, at such
rental or rentals and upon such other terms and
conditions as Lessor in its commercially reasonable
discretion may deem advisable, and Lessor may make any
alterations or repairs to the Property which it may deem
necessary or proper to facilitate such reletting; and
Lessee shall pay all costs of such reletting including
but not limited to the cost of any such alterations and
repairs to the Property, attorneys' fees, and brokerage
commissions; and if this Lease shall not have been
terminated, Lessee shall continue to pay all rent and all
other charges due under this Lease up to and including
the date of beginning of payment of rent by any
subsequent tenant of part or all of the Property, and
thereafter Lessee shall pay monthly during the remainder
of the term of this Lease the difference, if any, between
the rent and other charges collected from any such
subsequent tenant or tenants and the rent and other
charges reserved in this Lease, but Lessee shall not be
entitled to receive any excess of any such rents
collected over the rents reserved herein.
(d) Lessor may immediately or at any time thereafter
terminate this Lease, and this Lease shall be deemed to
have been terminated upon receipt by Lessee of written
notice of such termination; upon such termination Lessor
shall recover from Lessee all damages Lessor may suffer
by reason of such termination including, without
limitation, all arrearages in rentals, costs, charges,
additional rentals, and reimbursements, the cost
(including court costs and attorneys' fees) of recovering
possession of the Property, the cost of any alteration of
or repair to the Property which is necessary or proper to
prepare the same for re-letting and, in addition thereto,
Lessor shall have and recover from Lessee an amount equal
to the excess if any, of the total amount of all rents
and other charges to be paid by Lessee for the remainder
of the term of this Lease over the then reasonable rental
value of the Property for the remainder of the term of
this Lease, such excess discounted to present value using
a discount rate equal to six percent (6%).
(e) Lessor shall have a good faith duty to mitigate his
losses hereunder.
13.3 If Lessor re-enters the Property or terminates this Lease
pursuant to any of the provisions of this Lease, Lessee hereby
waives all claims for damages which may be caused by such re-entry
or termination by Lessor. Lessee shall and does hereby agree to
indemnify and hold Lessor harmless from any loss, cost (including
court costs and attorneys' fees), or damages suffered by Lessor by
reason of such re-entry or termination. No such re-entry or
termination shall be considered or construed to be a forcible
entry.
13.4 No course of dealing between Lessor and Lessee or any
failure or delay on the part of Lessor in exercising any rights of
Lessor under this Section 13 or under any other provisions of this
Lease shall operate as a waiver of any rights of Lessor hereunder
or under any other provisions of this Lease, nor shall any waiver
of any event of default on one occasion operate as a waiver of any
subsequent event of default or of any other event of default. No
express waiver shall affect any condition, covenant, rule, or
regulation other than the one specified in such waiver and that one
only for the time and in the manner specifically stated.
13.5 The exercise by Lessor of any one or more of the rights
and remedies provided in this Lease shall not prevent the
subsequent exercise by Lessor of any one or more of the other
rights and remedies herein provided. All remedies provided for in
this Lease are cumulative and may, at the election of Lessor, be
exercised alternatively, successively, or in any other manner and
are in addition to any other rights provided for or allowed by law
or in equity.
ARTICLE XIV
MISCELLANEOUS.
14.1 PRONOUNS. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine or neuter, singular
or plural, as the identity of the entity, person or persons may
require.
14.2 INSOLVENCY OR BANKRUPTCY. The appointment of a receiver
to take possession of all or substantially all of the assets of
Lessee, or an assignment of Lessee for the benefit of creditors, or
any action taken or suffered by Lessee under any insolvency,
bankruptcy, or reorganization act, unless terminated or dismissed
within eighty-five (85) days, shall at Lessor's sole option
constitute a breach of this Lease by Lessee. Upon the happening of
any such event or at any time thereafter, this Lease shall
terminate. In no event shall this Lease be assigned or assignable
by operation of law or by voluntary or involuntary bankruptcy
proceedings or otherwise and in no event shall this Lease or any
rights or privileges hereunder be an asset of Lessee under any
bankruptcy, insolvency, or reorganization proceedings.
14.3 LATE PAYMENTS. Lessee shall pay, in the event Rent or
other charge to be paid by Lessee hereunder is not paid when due,
(A) a late fee of five percent (5.0%) of the amount past due, which
late fee Lessee acknowledges is an agreed upon reimbursement to
Lessor for the administrative expense incurred by Lessor as a
result of Lessee's late payment and not a penalty and is reasonable
in light of the difficulty to estimate costs; and (B) interest on
the amount past due (excluding late fees) at a rate per annum equal
to the lesser of (ii) twelve percent (12%) per annum; or (iii) the
highest rate permitted by law, from due date until paid. Should
Lessee make a partial payment of past due amounts, the amount of
such partial payment shall be applied first, to late fees, second,
to accrued but unpaid interest, and third, to past due amounts, in
inverse order of their due date.
14.4 ATTORNEYS' FEES. In the event of any litigation arising
out of this Lease or the relationships evidenced hereby, the
prevailing party shall be entitled to receive from the other party,
an amount equal to the prevailing party's actual attorneys' fees,
reasonably incurred.
14.5 INTENTIONALLY LEFT BLANK
14.6 NO WAIVER OF RIGHTS. No failure or delay of Lessor to
exercise any right or power given it herein or to insist upon
strict compliance by Lessee of any obligation imposed on it herein
and no custom or practice of either party hereto at variance with
any term hereof shall constitute a waiver or a modification of the
terms hereof by Lessor or any right it has herein to demand strict
compliance with the terms hereof by Lessee. No person has or shall
have any authority to waive any provision of this Lease unless such
waiver is expressly made in writing and signed by Lessor.
14.7 ADDRESSES AND NOTICES.
(a) Except for legal process which may also be served as by
law provided or as provided in subsection (b) below, all notices
required or desired to be given with respect to this Lease in order
to be effective shall be in writing and shall be deemed to be given
to and received by the party intended to receive such notice when
hand delivered or three (3) days after such notice shall have been
deposited, postage prepaid, to the United States mail, certified,
return receipt requested, properly addressed to the addresses
specified in item (c) of this Section. In the event of a change of
address by either party, such party shall give written notice
thereof in accordance with the foregoing.
(b) To the extent permitted by law, Lessee hereby: (i)
appoints and designates the Property as a proper place for service
of process upon Lessee (provided, however, Lessor does not hereby
waive the right to serve Lessee with process by any other lawful
means); and (ii) expressly waives the service of any notice under
any existing or future law of the State of Florida applicable to
Lessors and tenants.
(c) Lessor: Donald C. Martin
4570 Henderson Mill Road
Mansfield, Georgia 30341
Lessee: Electrical Distributors, Inc.
5180 Peachtree Road
Atlanta, Georgia 30341
14.8 ENTIRE AGREEMENT AND EXHIBITS. This Lease constitutes
and contains the sole and entire agreement of Lessor and Lessee and
no prior or contemporaneous oral or written representation or
agreement between the parties and affecting the Property shall have
legal effect. No modification or amendment of this Lease shall be
binding upon the parties unless such modification or amendment is
in writing and signed by Lessor and Lessee. The content of each
and every exhibit which is referenced in this Lease as being
attached hereto is incorporated into this Lease as fully as if set
forth in the body of this Lease.
14.9 SUBORDINATION NON-DISTURBANCE AND ATTORNMENT.
(a) Except as provided in subsections (d) and (e) below, this
Lease and all rights of Lessee hereunder are and shall be subject
and subordinate to the lien of any mortgage, deed to secure debt,
deed of trust, or other instrument in the nature thereof which may
now or hereafter affect Lessor's estate or interest in and to the
Property and to any other instrument encumbering the fee title of
the Property and to any modifications, renewals, consolidations,
extensions, or replacements thereof.
(b) Subsection (a) above shall be self-operative, and no
further instrument of subordination shall be required by the holder
of any such instrument affecting or encumbering the Property. In
confirmation of such subordination, Lessee shall, upon demand, at
any time or times, execute, acknowledge, and deliver to Lessor or
the holder of any such mortgage, deed to secure debt, deed of
trust, or other instrument, without expense, any and all
instruments that may be requested by Lessor or such holder to
evidence the subordination of this Lease and all rights hereunder
to the lien of any such mortgage, deed to secure debt, deed of
trust, or other instrument, and each such renewal, modification,
consolidation, replacement, and extension thereof, and if Lessee
shall fail at any time, within ten (10) days following the giving
of a written request therefor, to execute, acknowledge, and deliver
any such instrument, Lessor or such holder or such lessor, in
addition to any other remedies available to it in consequence
thereof, may execute, acknowledge, and deliver the same as the
attorney-in-fact of Lessee and in Lessee's name, place, and stead,
and Lessee hereby irrevocably makes, constitutes, and appoints
Lessor or such holder or such lessor, in their respective
successors and assigns, such attorney-in-fact for that purpose.
(c) Lessee shall, upon demand, at any time or times, execute,
acknowledge, and deliver to Lessor or to the holder of any
mortgage, deed to secure debt, deed of trust, or other instrument
affecting or encumbering the Property, without expense, any and all
instruments that may be necessary to make this Lease superior to
the lien of any such mortgage, deed to secure debt, deed of trust
or other instrument or the grant of any such ground lease, and each
renewal, modification, consolidation, replacement, and extension
thereof, and, if Lessee shall fail at any time, within ten (10)
days following the giving of a written request therefor, to
execute, acknowledge, and deliver any such instrument, Lessor or
such holder or such lessor, in addition to any other remedies
available to it in consequence thereof, may execute, acknowledge,
and deliver the same as the attorney-in-fact of Lessee and in
Lessee's name, place, and stead, and Lessee hereby irrevocably
makes, constitutes, and appoints Lessor or such holder or such
lessor, and their respective successors and assigns, such attorney-
in-fact for that purpose.
(d) If the holder of any mortgage, deed to secure debt, deed
of trust or other instrument affecting or encumbering the Property
shall hereafter succeed to the rights of Lessor under this Lease,
whether through possession or foreclosure action or exercise of
private power of sale or delivery of a new lease, Lessee shall, at
the option of such holder or lessor, attorn to and recognize such
successor as Lessee's Lessor under this Lease as of the date of
such succession to Lessor's interest and shall promptly execute and
deliver any instrument that may be necessary to evidence such
attornment, and Lessee hereby irrevocably appoints Lessor or such
holder or such lessor the attorney-in-fact of Lessee to execute and
deliver such instrument on behalf of Lessee should Lessee refuse
and fail to do so within ten (10) days after Lessor or such holder
or such lessor shall have given notice to Lessee requesting the
execution and delivery of such instrument. Upon such attornment,
this Lease shall continue in full force and effect as a direct
lease between such successor Lessor and Lessee, subject to all of
the terms, covenants, and conditions of this Lease.
(e) Lessor shall obtain from any future holder of any deed to
secure debt encumbering the Property, or from the current holder in
the event of any refinancing or future advance, a non-disturbance
agreement which shall provide that as long as Lessee remains not in
default under this Lease, such holder shall not disturb Lessee's
tenancy.
14.10ESTOPPEL CERTIFICATE. At any time and from time to
time, Lessee, on or before the date specified in a request therefor
made by Lessor, which date shall not be earlier than ten (10) days
from the making of such request, shall execute, acknowledge, and
deliver to Lessor a certificate evidencing whether or not (i) this
Lease is in full force and effect, (ii) this Lease has been amended
in any way, (iii) there are any existing events of default on the
part of Lessor hereunder to the knowledge of Lessee and specifying
the nature such events of default, if any, and (iv) the date to
which rent, and other amounts due hereunder, if any have been paid.
Each certificate delivered pursuant to this Section may be relied
on by any prospective purchaser or transferee of Lessor's interest
hereunder or of any part of Lessor's property or by any mortgagee
of Lessor's interest hereunder or of any part of Lessor's property
or by an assignee of any such mortgagee.
14.11SEVERABILITY. If any clause or provision of this Lease
is or becomes illegal, invalid, or unenforceable because of present
or future laws or any rule or regulation of any governmental body
or entity, effective during its term, the intention of the parties
hereto is that the remaining parts of this Lease shall not be
affected thereby, unless such invalidity is essential to the rights
of either party hereto in which event this Lease shall terminate.
14.12CAPTIONS. The captions used in this Lease are for
convenience only and do not in any way limit or amplify the terms
and provisions hereof.
14.13SUCCESSORS AND ASSIGNS. The words "Lessor" and
"Lessee" as used herein shall include the respective contracting
party, whether singular or plural, and whether an individual,
masculine or feminine, or a partnership, joint venture, business
trust, or corporation. The provisions of this Lease shall inure to
the benefit of and be binding upon Lessor and Lessee, and their
respective successors, heirs, legal representatives, and assigns,
subject, however, in the case of Lessee, to the provisions of
Article VIII hereof.
14.14FORCE MAJEURE. A party to this Lease shall be excused
from the performance of its duties and obligations under this
Lease, except obligations for the payment of money such as Rent,
for the period of delay, but in no event longer than 90 days,
caused by labor disputes, governmental regulations, riots, war,
insurrection, acts of God or other causes beyond the control of the
party whose performance is being excused (but such causes shall not
include insufficiency of funds).
14.15LESSOR'S REPRESENTATIONS. Lessor hereby represents and
warrants that: Lessor is the owner of the Property; there are no
liens, encumbrances or easements affecting the Property except as
described in Exhibit "B" attached hereto; Lessor is in undisputed
and peaceful possession of the Property and has a perfect right to
convey good, fee simple, merchantable title to the Property; there
currently exists adequate access, parking and utility service to
the Property for the purposes anticipated by the parties hereto;
there is no outstanding indebtedness, unpaid bill or lien against
the Property for equipment, appliances, other fixtures attached to
the Property, sewerage, water main, sidewalk or other street
improvements; there are no retention title contracts, bills of sale
or other encumbrances, of record or otherwise, affecting the title
to any personal property installed on the Property; the lines and
corners of the Property are clearly marked, and that there are no
disputes concerning the location of the lines and corners; there
are no pending suits, proceedings, judgments, bankruptcies, liens
or executions against the Lessor, either in the county where the
Property is located or in any other county in the State of Georgia;
no improvements or repairs have been made on the Property during
the ninety-five (95) days immediately preceding this date; and
there are no outstanding bills incurred for labor or materials used
in making improvements or repairs on the Property, for services of
architects, surveyors, engineers, or registered foresters incurred
in connection therewith.
14.16 HAZARDOUS SUBSTANCES.
(a) Lessee hereby covenants that Lessee shall not cause or
permit any "Hazardous Substances" (as hereinafter defined) to be
placed, held, located or disposed of in, on or at the Property or
any part thereof except in full compliance with all applicable
laws, rules, ordinances and similar provisions, and neither the
Property nor any part thereof shall ever be used as a dump site or
storage site (whether permanent or temporary) for any Hazardous
Substances during the Lease Term.
(b) Lessee hereby agrees to indemnify Lessor and hold Lessor
harmless from and against any and all losses, liabilities,
including strict liability, damages, injuries, expenses, including
reasonable attorneys' fees, costs of any settlement or judgment and
claims of any and every kind whatsoever paid, incurred or suffered
by, or asserted against, Lessor by any person or entity or
governmental agency for, with respect to, or as a direct or
indirect result of, the presence on or under, or the escape,
seepage, leakage, spillage, discharge, emission, discharging or
release from, the Property of any Hazardous Substance (including,
without limitation, any losses, liabilities, including strict
liability, damages, injuries, expenses, including reasonable
attorneys' fees, costs of any settlement or judgment or claims
asserted or arising under the Comprehensive Environmental Response,
Compensation and Liability Act, any so-called federal, state or
local "Superfund" or "Superlien" laws, statute, law, ordinance,
code, rule, regulation, order or decree regulating, relating to or
imposing liability, including strict liability, substances or
standards of conduct concerning any Hazardous Substance), provided,
however, that the foregoing indemnity is limited to matters arising
solely from Lessee's violation of the covenant contained in
subsection (a) above.
(c) For purposes of this Lease, "Hazardous Substances" shall
mean and include those elements or compounds which are contained in
the list of hazardous substances adopted by the United States
Environmental Protection Agency (the "EPA") or the list of toxic
pollutants designated by Congress or the EPA or which are defined
as hazardous, toxic, pollutant, infectious or radioactive by any
other Federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing
liability or standards of conduct concerning, any hazardous, toxic
or dangerous waste, substance or material, as now or at any time
hereafter in effect.
(d) Lessor shall have the right but not the obligation, and
without limitation of Lessor's rights under this Lease, to enter
onto the Property or to take such other actions as it deems
necessary or advisable to cleanup, remove, resolve or minimize the
impact of, or otherwise deal with, any Hazardous Substance
following receipt of any notice from any person or entity
(including without limitation the EPA) asserting the existence of
any Hazardous Substance in, on or at the Property or any part
thereof which, if true, could result in an order, suit or other
action against Lessee and/or Lessor. All reasonable costs and
expenses incurred by Lessor in the exercise of any such rights,
which costs and expenses result from Lessee's violation of the
covenant contained in subsection (a) above, shall be deemed
additional rental under this Lease and shall be payable by Lessee
upon demand.
(e) Notwithstanding the foregoing, Lessor hereby warrants
that there is no Hazardous Substance affecting the Property and
indemnifies Lessee and holds Lessee harmless from and against any
and all losses, liabilities, including strict liability, damages,
injuries, expenses, including reasonable attorneys' fees, costs of
any settlement or judgment and claims of any and every kind
whatsoever paid, incurred or suffered by, or asserted against,
Lessee by any person or entity or governmental agency for, with
respect to, or as a direct or indirect result of, the presence on
or under, or the escape, seepage, leakage, spillage, discharge,
emission, discharging or release from, the Property of any
Hazardous Substance (including, without limitation, any losses,
liabilities, including strict liability, damages, injuries,
expenses, including reasonable attorneys' fees, costs of any
settlement or judgment or claims asserted or arising under the
Comprehensive Environmental Response, Compensation and Liability
Act, any so-called federal, state or local "Superfund" or
"Superlien" laws, statute, law, ordinance, code, rule, regulation,
order or decree regulating, relating to or imposing liability,
including strict liability, substances or standards of conduct
concerning any Hazardous Substance) prior to the date hereof.
(f) This Section 14.16 shall survive cancellation,
termination or expiration of this Lease.
14.17 APPLICABLE LAW. This Lease shall be construed in
accordance with the laws of the State of Georgia.
ARTICLE XV
RIGHT OF FIRST REFUSAL.
(a) If Lessor makes a bona fide written offer to sell or
lease the Property or any part thereof to any prospective purchaser
or tenant during the term of this Lease or for an additional period
of ninety (90) days thereafter, or should Lessor receive an
acceptable offer to do so, Lessor shall notify Lessee in writing
(such notice being hereinafter called the "Offer Notice") of
Lessor's intention to sell or lease the Property. The Offer Notice
shall specifically describe the terms and the prospective purchaser
or tenant with whom such purchase and sale or lease would be
entered into (unless confidentiality of such prospective purchaser
or tenant is required by such prospective purchaser or tenant).
The Offer Notice shall also constitute an offer by Lessor to sell
or lease the Property to Lessee in accordance with the terms of
this Article XV. Lessee shall have twenty (20) days after its
receipt of such Offer Notice to accept such offer pursuant to this
First Refusal Right and to purchase or lease the Property from
Lessor in accordance with the terms of this Article XV.
(b) Acceptance by Lessee of the offer set forth in the Offer
Notice shall be deemed effective only if such acceptance is given
to Lessor in a written notice of acceptance (the "Acceptance
Notice") specifically referring to the Offer Notice to which it
relates, received by Lessor within the twenty (20) day period
prescribed above for such acceptance. If Lessee duly and timely
delivers to Lessor its Acceptance Notice in accordance with this
Article XV, then Lessor and Lessee shall, within thirty (30) days
of Lessor's receipt of such Acceptance Notice, execute a contract
to purchase and sell or an amendment to this Lease which conforms
to the terms set forth in the Offer Notice.
(c) If Lessee elects not to exercise this First Refusal
Right, Lessor shall be entitled to sell or lease the Property to
the prospective purchaser or tenant that prompted the Offer Notice,
or an affiliate thereof.
(d) Notwithstanding anything in this Article XV the contrary,
Lessee shall have no right to exercise any right or option under
this Article XV, nor shall Lessor have any obligation to submit an
Offer Notice to Lessee with respect to the Property before entering
into a third party contract or lease with respect thereto, or to
enter into any sale or lease of the Property with Lessee, at any
time during which either (i) Lessee is in default, or an event of
default exists with respect to Lessee, under this Lease, or (ii)
this Lease is not in full force and effect.
(e) Nothing in this Article XV shall be deemed to cause an
early termination of this Lease.
ARTICLE XVI
USUFRUCT. This Lease gives Lessee a usufruct only and does
not create an estate in the Lessee subject to lien or to levy and
sale.
IN WITNESS WHEREOF, the undersigned parties have caused this
Lease to be signed and sealed on the day and year first above
written.
LESSOR:
/s/ Donald C. Martin (SEAL)
DONALD C. MARTIN
LESSEE:
ELECTRICAL DISTRIBUTORS, INC.
By: /s/ Donald C. Martin
Title: President
[CORPORATE SEAL]
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement") is made and
entered into this 30th day of June, 1993 by and among HUGHES
SUPPLY, INC., a Florida corporation, ("Hughes Supply") and DONALD
C. MARTIN ("Consultant").
WHEREAS, Hughes Supply and Consultant are parties to an
Agreement (the "Acquisition Agreement") providing for Hughes
Supply's acquisition of all the outstanding shares of Electrical
Distributors, Inc., a Georgia corporation, ("EDI") and certain
other matters; and
WHEREAS, both Hughes Supply and EDI are engaged in the
business of wholesale electrical supplies; and
WHEREAS, Consultant has been the President, a Director and
principal shareholder of EDI; and
WHEREAS, Hughes Supply values Consultant's expertise and
advice, and desires Consultant to provide his expertise and advice
to officers and managerial employees of Hughes Supply; and
WHEREAS, Hughes Supply and Consultant desire to enter into
this Agreement in order to comply with the obligations imposed by
Section 5.9 of the Acquisition Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual
covenants contained herein, and for other good and valuable
consideration, the receipt, adequacy and sufficiency of which being
hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Consulting Services. Hughes Supply hereby retains Consultant
as an advisor and consultant to Hughes Supply. Consultant
shall, throughout the term of this Agreement, advise and
consult with officers and managerial employees of Hughes
Supply with respect to all matters relating to or affecting
Hughes Supply's business operations including, without
limitation, the operations of EDI. The services shall not
require the performance of ordinary executive or
administrative duties or involve substantial periods of
working time, but instead shall consist of Consultant being
available to counsel with officers and managerial employees of
Hughes Supply at such reasonable times and places as may be
mutually agreed upon.
2. Term. The term of this Agreement shall be five (5) years,
commencing July 1, 1993 and ending on June 30, 1998.
3. Payment for Services. Hughes Supply shall pay Consultant the
sum of Two Hundred Fifty Thousand Dollars ($250,000.00) for
his performance hereunder, payable in equal consecutive annual
installments of Fifty Thousand Dollars ($50,000.00) each,
commencing August 1, 1993. In addition, Hughes Supply shall
reimburse Consultant for (i) all traveling and living expenses
which Consultant incurs while away from the area of Atlanta,
Georgia in connection with his performance under this
Agreement; and (ii) all other reasonable expenses which
Consultant incurs in performing his obligations under this
Agreement. In the event of Consultant's death or disability,
all sums to be paid by Hughes Supply hereunder shall be paid
to Consultant's estate as and when due hereunder,
notwithstanding Consultant's inability to perform any further
services hereunder.
4. Termination. Hughes Supply may sooner terminate this
Agreement upon 30 days written notice if (and only if)
Consultant is convicted of the crime of fraud, embezzlement or
other felony related to the performance of Consultant's duties
under this Agreement.
5. Independent Contractor. The parties hereto acknowledge and
agree that Consultant's performance under this Agreement shall
be as an independent contractor, and not as an employee of
Hughes Supply.
6. Miscellaneous.
a. Benefit. This Agreement shall inure to the benefit of
and be binding upon (i) Hughes Supply, its successors and
assigns, including, but not limited to, any corporation
which may acquire all or substantially all of Hughes
Supply' assets and business, any corporation with and
into which Hughes Supply may be consolidated or merged,
or any corporation that is the successor corporation in
an exchange of stock; and (ii) Consultant, his heirs,
guardians and personal and legal representatives.
b. Entire Agreement/Modification. This Agreement
constitutes the entire agreement between the parties with
respect to the subject matter hereof and there are no
other commitments or agreements binding the parties with
respect to the subject matter hereof other than set forth
herein. This Agreement may be amended or modified only
by an instrument in writing executed by the parties
hereto.
c. Governing Law. This Agreement shall be governed by,
construed and enforced in all respect in accordance with
the laws of the State of Georgia.
d. Captions. Titles or captions of sections contained in
this Agreement are inserted only as a matter of
convenience and for reference, and in no way define,
limit, extend or prescribe the scope of this Agreement or
the intent of any provision.
e. Counterparts. This Agreement may be executed in
counterparts, each which shall constitute one and the
same Agreement.
f. Notices. Any notice or other communication given
hereunder shall be in writing and either be delivered
personally or mailed, certified or registered mail,
postage prepaid, and shall be deemed given when so
delivered personally, or if mailed, two (2) days after
the date of mailing, as follows:
If to Hughes Supply, Inc.:
Attn: J. Stephen Zepf, CFO
20 North Orange Avenue
Suite 200
Orlando, Florida 32802-2273
With a copy to:
Robert N. Blackford
Maguire, Voorhis & Wells, P.A.
Two South Orange Plaza
2 South Orange Avenue
Orlando, Florida 32801
And if to Consultant, to:
Donald C. Martin
5180 Peachtree Road
Atlanta, Georgia 30341
With a copy to:
John M. Bovis, P.C.
Bovis, Kyle & Burch
53 Perimeter Center East
Third Floor
Atlanta, Georgia 30346-2298
The parties may change the persons and addresses to which
notices or other communications are to be sent by giving
written notice of any such change in the manner provided
herein for giving notice.
g. Construction. The parties acknowledge that they have had
the opportunity to participate equally in the drafting of
this Agreement and that in the event of a dispute, no
party shall be treated, for any purpose, as the author of
this Agreement or have any ambiguity resolved against him
on account thereof.
IN WITNESS WHEREOF, the parties have executed,
acknowledged, sealed and delivered this Agreement.
HUGHES SUPPLY, INC., a Florida
Corporation
By:
/s/ David H. Hughes
David H. Hughes
Title: President and CEO
Attest:
By: /s/ Robert N. Blackford
Title: Secretary
[CORPORATE SEAL]
/s/ Donald C. Martin
(SEAL)
DONALD C. MARTIN
Exhibit 11.1
HUGHES SUPPLY, INC.
SUMMARY SCHEDULE OF EARNINGS PER SHARE CALCULATIONS
- ---------------------------------------------------
Potentially dilutive securities:
a) Options for common stock, issued under stock option plans.
b) 7% Convertible subordinated debentures, due May 1, 2011.
<TABLE>
<CAPTION>
Year Year Year
Ended Ended Ended
1/31/92 1/29/93 1/28/94
------- ------- -------
Line
- ----
SHARES
------
<S> <C> <C> <C> <C>
1 Average shares outstanding 4,551,997 4,552,171 4,552,798
2 Incremental shares (options) -
Assuming options outstanding at end of period
were exercised at beginning of period (or time
of issuance, if later) and proceeds were used
to purchase shares at average market price
during the period 0 12,014 96,135
----------- ----------- -----------
3 Shares used in calculating Earnings Per
Common and Common Equivalent Share 4,551,997 4,564,185 4,648,933
4 Incremental shares (options) -
Assuming options outstanding at end of period
were exercised at beginning of period (or time
of issuance, if later) and proceeds were used
to purchase shares at the higher of the
average market price during the period or the
market price at the end of the period; and
that options exercised during the period were
exercised at the beginning of the period(or
time of issuance, if later) and the proceeds
were used to, purchase shares at the market
price at the date of exercise 30 27,855 84,949
5 Incremental shares (debentures) -
Assuming debentures were converted at
beginning of period (or time of issuance, if
later) at most advantageous (for security
holder) conversion rate that becomes effective
within 10 years * 0 0 1,084,707
----------- ----------- -----------
6 Shares used in calculating Earnings Per Common
Share - Assuming Full Dilution 4,552,027 4,592,040 5,818,589
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
HUGHES SUPPLY, INC.
Year Year Year
Ended Ended Ended
1/31/92 1/29/93 1/28/94
------- ------- -------
Line
- ----
EARNINGS
-------- <C> <C> <C>
<S> <C>
7 Net income per financial statements, used in
calculating Earnings Per Common Share and
Earnings Per Common and Common Equivalent
Share $(3,858,829) $ 2,478,267 $ 6,285,738
8 Incremental earnings (debentures) -
Assuming interest charges applicable to
convertible debentures (and nondiscretionary
adjustments that would have been made based
on net income) are taken into account in
determining balance of income applicable to
common stock * 0 0 996,464
----------- ----------- -----------
9 Earnings used in calculating Earnings Per
Common Share - Assuming Full Dilution $(3,858,829) $ 2,478,267 $ 7,282,202
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Year Year Year
Ended Ended Ended
1/31/92 1/29/93 1/28/94
------- ------- -------
Line
- ----
RESULTING PER SHARE DATA
------------------------
<S> <C> <C> <C> <C>
10 Earnings per common share (Line 7/Line 1) $ (0.85) $ 0.54 $ 1.38
=========== =========== ===========
11 Earnings per common share and common
equivalent share (Line 7/Line 3) $ (0.85) $ 0.54 $ 1.35
=========== =========== ===========
12 Dilution 0.0% 0.0% 2.2%
=========== =========== ===========
13 Earnings per common share - assuming full
dilution (Line 9/Line 6) $ (0.85) $ 0.54 $ 1.25
=========== =========== ===========
14 Dilution (antidilution) 0.0% 0.0% 9.4%
=========== =========== ===========
</TABLE>
15 Used in statements of operations:
[ ] Line 10, if dilution less than 3%, or antidilution,
exists for all periods.
[ X ] Lines 11 and 13, if dilution >= 3% for any period.
* Convertible debentures are antidilutive for fiscal years ending
January 29, 1993 and January 31, 1992, and, consequently, are not
used in the calculation of fully diluted earnings per share
for those years.
1994 ANNUAL REPORT - PAGE 3
<TABLE>
MARKET PRICE AND DIVIDEND DATA
<CAPTION>
Dividends Per
Market Price (1) Share (2)
Fiscal Years (3) Fiscal Years (3)
1994 1993 1994 1993
HIGH LOW HIGH LOW
<S> <C> <C> <C> <C> <C> <C>
First quarter $15 3/8 $13 1/4 $13 1/4 $11 3/4 $ .03 $ .03
Second quarter $17 1/4 $13 1/2 $13 $11 1/4 $ .04 $ .03
Third quarter $19 1/2 $15 3/4 $16 3/8 $10 7/8 $ .04 $ .03
Fourth quarter $24 $17 3/8 $15 5/8 $11 7/8 $ .05 $ .03
Year's high and low $24 $13 1/4 $16 3/8 $10 7/8
Total dividends $ .16 $ .12
</TABLE>
(1) Per share prices as reported in the Wall Street Journal for
New York Stock Exchange.
(2) See Note 3 of Notes to Consolidated Financial Statements for
dividend restrictions.
(3) The Company's fiscal year ends on the last Friday in January.
<TABLE>
SELECTED QUARTERLY FINANCIAL DATA
(in thousands, except per share data)
<CAPTION>
Net Gross Net Earnings Per Share (1) Average Shares (1)
Sales Profit Income Primary Fully Diluted Primary Fully Diluted
Fiscal Quarter
1994
<S> <C> <C> <C> <C> <C> <C> <C>
First $ 148,514 $ 28,893 $ 699 $ .15 $ .15 4,605 4,605
Second 163,950 32,746 1,718 .37 .34 4,619 5,718
Third 178,993 34,580 1,843 .40 .36 4,665 5,751
Fourth 169,481 35,001 2,026 .43 .39 4,694 5,820
Year $ 660,938 $131,220 $6,286 $ 1.35 $ 1.25 4,649 5,819
Fiscal Quarter
1993 (2)
First $ 131,119 $ 25,968 $ 183 $ .04 $ .04 4,554 4,554
Second 142,155 27,230 562 .12 .12 4,552 4,552
Third 145,237 27,879 757 .17 .17 4,578 4,578
Fourth(3) 137,285 27,346 976 .21 .21 4,591 4,593
Year $ 555,796 $108,423 $2,478 $ .54 $ .54 4,564 4,592
</TABLE>
(1) Calculated independently for each period and, consequently,
the sum of the quarters may differ from the annual amount.
(2) Restated for 1994 pooling of interests.
(3) The fourth quarter of fiscal 1993 results included a pre-tax
gain of $810 on the sale of transportation equipment.
- --------------------------------------------------------------------------------
1994 ANNUAL REPORT - PAGE 14
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Fiscal Years Ended
<CAPTION>
January 28, January 29, January 31,
1994 1993 1992
<S> <C> <C> <C>
Net Sales $660,938 $555,796 $509,192
Cost of Sales 529,718 447,373 410,132
Gross Profit 131,220 108,423 99,060
Operating Expenses:
Selling, general and administrative 109,760 94,810 91,114
Depreciation and amortization 7,465 6,636 7,149
Provision for doubtful accounts 1,671 1,775 2,542
Total operating expenses 118,896 103,221 100,805
Operating Income (Loss) 12,324 5,202 (1,745)
Non-Operating Income and (Expenses):
Interest and other investment income 1,856 1,865 1,857
Interest expense (4,610) (4,760) (5,991)
Other, net 988 1,709 56
(1,766) (1,186) (4,078)
Income (Loss) Before Income Taxes 10,558 4,016 (5,823)
Income Taxes (Benefits) 4,272 1,538 (1,964)
Net Income (Loss) $ 6,286 $ 2,478 $ (3,859)
Earnings (Loss) Per Share:
Primary $ 1.35 $ .54 $ (.85)
Fully diluted $ 1.25 $ .54 $ (.85)
Average Shares Outstanding:
Primary 4,649 4,564 4,552
Fully diluted 5,819 4,592 4,552
</TABLE>
See accompanying notes to consolidated financial statements.
- -------------------------------------------------------------------------------
1994 ANNUAL REPORT - PAGE 15
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
January 28, January 29,
ASSETS 1994 1993
Current Assets:
Cash and cash equivalents $ 1,078 $ 2,253
Accounts receivable, less allowance for
losses of $3,914 and $3,037 97,765 78,346
Inventories 94,223 84,817
Deferred income taxes 4,972 4,609
Other current assets 5,532 5,398
Total current assets 203,570 175,423
Property, Plant and Equipment, at cost:
Land 12,353 12,160
Buildings and improvements 37,097 35,249
Transportation equipment 19,674 16,145
Furniture, fixtures and equipment 14,843 13,466
Leased property under capital leases 10,794 10,794
Total 94,761 87,814
Less accumulated depreciation and
amortization (45,439) (39,892)
Net property, plant and equipment 49,322 47,922
Deferred Income Taxes 2,210 1,786
Other Assets 8,303 5,607
$ 263,405 $ 230,738
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 898 $ 2,414
Accounts payable 52,053 46,381
Accrued compensation and benefits 7,257 4,719
Other current liabilities 8,401 8,273
Total current liabilities 68,609 61,787
Long-Term Debt, less current portion:
Notes and subordinated debentures 95,367 76,736
Capital lease obligations 3,859 4,584
Total long-term debt 99,226 81,320
Other Noncurrent Liabilities 1,143 965
Total liabilities 168,978 144,072
Commitments and Contingencies
Shareholders' Equity:
Preferred stock, no par value; 10,000,000
shares authorized; none issued;
preferences, limitations and relative
rights to be established by the
Board of Directors - -
Common stock, par value $1 per share;
10,000,000 shares authorized;
5,075,670 and 5,453,249 shares issued 5,076 5,453
Capital in excess of par value 15,410 22,410
Retained earnings 80,425 72,761
100,911 100,624
Less treasury stock, 418,566 shares and
901,055 shares, at cost (6,484) (13,958)
Total shareholders' equity 94,427 86,666
$ 263,405 $ 230,738
See accompanying notes to consolidated financial statements.
- -------------------------------------------------------------------------------
1994 ANNUAL REPORT - PAGE 16
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(dollars in thousands)
<CAPTION>
Capital in
Common Stock Excess of Retained Treasury Stock
Shares Amount Par Value Earnings Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Balance, January 25, 1991,
as previously reported 5,079,344 $5,079 $22,740 $72,712 902,620 $(13,982)
Adjustments for Electrical
Distributors, Inc. pooling
of interests 374,998 375 (326) 2,950 - -
Balance, January 25, 1991, as restated 5,454,342 5,454 22,414 75,662 902,620 (13,982)
Net loss - - - (3,859) - -
Cash dividends - $.24 per share - - - (1,003) - -
Treasury shares issued under
stock option plans - - - (5) (1,465) 22
Purchase and retirement of
common shares (1,093) (1) (4) (10) - -
Balance, January 31, 1992 5,453,249 5,453 22,410 70,785 901,155 (13,960)
Net income - - - 2,478 - -
Cash dividends - $.12 per share - - - (502) - -
Treasury shares issued - - - - (100) 2
Balance, January 29, 1993 5,453,249 5,453 22,410 72,761 901,055 (13,958)
Net income - - - 6,286 - -
Cash dividends - $.16 per share - - - (724) - -
Issuance of treasury shares for
EDI merger (374,998) (375) (5,434) - (374,998) 5,809
Other acquisition - - (1,557) 2,158 (101,368) 1,570
Treasury shares issued under
stock option plans - - - (18) (6,123) 95
Purchase and retirement of
common shares (2,581) (2) (9) (38) - -
Balance, January 28, 1994 5,075,670 $5,076 $15,410 $80,425 418,566 $ (6,484)
</TABLE>
See accompanying notes to consolidated financial statements.
- -------------------------------------------------------------------------------
1994 ANNUAL REPORT - PAGE 17
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<CAPTION>
Fiscal Years Ended
January 28, January 29, January 31,
1994 1993 1992
<S> <C> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents:
Cash flows from operating activities:
Cash received from customers $644,667 $546,848 $503,780
Cash paid to suppliers and employees (638,724) (535,645) (490,688)
Interest and other investment income
received 1,856 1,865 1,857
Interest paid (4,693) (4,875) (6,098)
Income taxes (paid) refunded (5,361) (1,677) 1,438
Net cash provided by (used in)
operating activities (2,255) 6,516 10,289
Cash flows from investing activities:
Proceeds from sale of property, plant
and equipment 704 1,810 1,126
Capital expenditures (8,257) (8,702) (4,992)
Business acquisitions, net of cash (3,934) - -
Net cash used in investing
activities (11,487) (6,892) (3,866)
Cash flows from financing activities:
Net borrowings (payments) under short-term
debt arrangements 16,733 (2,267) 10,398
Proceeds from long-term debt - 1,444 -
Principal payments on:
Long-term notes (2,918) (1,678) (12,038)
Capital lease obligations (660) (602) (550)
Proceeds from issuance of common shares
under stock option plans 77 - 17
Purchase of common shares (49) - (15)
Dividends paid (616) (502) (1,254)
Net cash provided by (used in)
financing activities 12,567 (3,605) (3,442)
Net Increase (Decrease) in Cash and Cash
Equivalents (1,175) (3,981) 2,981
Cash and Cash Equivalents, beginning of year 2,253 6,234 3,253
Cash and Cash Equivalents, end of year $ 1,078 $ 2,253 $ 6,234
</TABLE>
See accompanying notes to consolidated financial statements.
- -------------------------------------------------------------------------------
1994 ANNUAL REPORT - PAGE 18
HUGHES SUPPLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES:
Industry:
Hughes Supply, Inc. and its subsidiaries (the "Company")
are engaged in the wholesale distribution of a broad range of materials,
equipment and supplies to the construction industry. Major product lines
distributed by the Company include electrical, plumbing and electric
utility equipment, building materials, water and sewer equipment, heating
and air conditioning equipment, and pipe, valves and fittings. The Company's
principal customers are electrical, plumbing and mechanical contractors,
electric utility companies, and municipal and industrial accounts.
Principles of Consolidation:
The consolidated financial statements include the Company
and its wholly owned subsidiaries. All significant intercompany
transactions and accounts have been eliminated. Prior period
financial statements have been restated to include the accounts
of a company acquired and accounted for as a pooling of
interests. Results of operations of companies purchased and
immaterial poolings are included from dates of acquisition. The Company's
minority investment in affiliate is accounted for by the equity method.
Fiscal Year:
The Company's fiscal year ends on the last Friday in
January. Fiscal years 1994 and 1993 contained 52 weeks; fiscal
year 1992 contained 53 weeks.
Cash Equivalents:
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash equivalents.
Inventories:
Inventories are carried at the lower of cost or market.
The cost of substantially all inventories of Hughes Supply, Inc.
is determined by a moving average cost method which approximates
the first-in, first-out (FIFO) method. Its subsidiaries value
their inventories principally on FIFO or on cost methods which
approximate FIFO.
Property, Plant and Equipment:
Plant and equipment is depreciated using both
straight-line and declining balance methods based on
the following estimated useful lives:
Buildings and improvements 5-40 years
Transportation equipment 2- 7 years
Furniture, fixtures and equipment 3-15 years
Leased property under capital leases 20-40 years
Maintenance and repairs are charged to expense
as incurred and major renewals and betterments are
capitalized. Gains or losses are credited or charged to
earnings upon disposition.
Other Assets:
The excess of cost over the fair value of net assets
of purchased companies is being amortized by the straight-line
method over 25 years. Debt issuance costs are deferred and
amortized by the straight-line method over the term of the
related debt, principally 25 years.
Income Taxes:
Income taxes are provided for the tax effects of
transactions reported in the financial statements and
consist of taxes currently due plus deferred taxes resulting
from temporary differences. Such temporary differences result
from differences in the carrying value of assets and liabilities
for tax and financial reporting purposes. The deferred tax
assets and liabilities represent the future tax consequences of
those differences, which will either be taxable or deductible
when the assets and liabilities are recovered or settled.
Deferred taxes are also recognized for operating losses that are
available to offset future taxable income. Valuation allowances
are established to reduce deferred tax assets to the amount expected
to be realized.
Earnings Per Common Share:
Primary earnings per share are based on the weighted
average number of shares outstanding during each year plus the
common stock equivalents issuable upon the exercise of stock
options. Unless the results are antidilutive, fully diluted
earnings per share assumes the conversion of the 7% convertible
subordinated debentures (after elimination of related interest
expense, net of income tax effect) and exercise of stock options.
Deferred Employee Benefits:
The present value of amounts estimated to be payable under
unfunded supplemental retirement agreements with certain
officers is being accrued over the remaining years of active
employment of the officers, and is included in other noncurrent
liabilities.
NOTE 2 - SHORT-TERM DEBT:
Banks:
The Company and its subsidiaries have bank lines of credit
for short-term borrowings aggregating $2,000,000 at January 28,
1994 and $26,000,000 at January 29, 1993 (subject to borrowing
limitations under the long-term debt covenants) under which
$1,500,000 and $18,754,000 was outstanding at January 28, 1994
and January 29, 1993, respectively. The lines, which generally
provide for interest at prime or money market rates, expire within
one year. During fiscal 1994, 1993 and 1992, borrowings under
these short-term debt arrangements and under revolving credit
arrangements (see Note 3) reached month-end maximums of
$46,875,000, $30,200,000 and $26,893,000, respectively. The
average daily borrowings amounted to $35,918,000 in 1994,
$22,307,000 in 1993 and $17,900,000 in 1992. Weighted average
interest rates of 3.7% in 1994, 4.3% in 1993 and 6.2% in 1992
were calculated by dividing the interest expense during the year
for such borrowings by the average daily borrowings. The
weighted average interest rate on short-term borrowings as of
January 28, 1994 and January 29, 1993 was 3.5% and 3.8%,
respectively.
Commercial Paper:
The Company has a commercial paper program backed by a
revolving credit facility ($25,000,000 as of January 28, 1994)
with a group of banks (see Note 3). Commitment fees of .125%
per annum are paid on the unused portion of the credit line.
During fiscal 1994, 1993 and 1992, commercial paper borrowings reached
- -------------------------------------------------------------------------------
1994 ANNUAL REPORT - PAGE 19
month-end maximums of $29,776,000, $29,873,000 and $28,609,000,
respectively. Average daily borrowings amounted to $25,358,000
in 1994, $26,917,000 in 1993 and $25,168,000 in 1992. Weighted
average interest rates of 3.3% in 1994, 3.9% in 1993 and 5.9% in
1992 were calculated by dividing the interest expense during the
year for such borrowings by the average daily borrowings. The
weighted average interest rate on outstanding borrowings of
$25,000,000, and $29,153,000 as of January 28, 1994 and January
29, 1993 was 3.2% and 3.5%, respectively.
The Company's credit facilities (see Note 3) enabled the
Company to refinance short-term borrowings on a long-term basis
to the extent that these credit facilities were unused.
Accordingly, $26,500,000 and $47,907,000 of short-term
borrowings at January 28, 1994 and January 29, 1993,
respectively, have been classified as long-term debt. The
carrying value of these borrowings is a
reasonable estimate of fair value since interest rates
are based on prevailing market rates.
NOTE 3 - NOTES AND DEBENTURES PAYABLE:
Consolidated notes and debentures payable consist of the
following (in thousands):
January 28, January 29,
1994 1993
7% Convertible Subordinated
Debentures, due 2011 $ 22,960 $ 22,960
Bank Notes:
Unsecured revolving notes
under $100,000,000 credit
agreement, payable April
30, 1996, fluctuating interest
(3.4% to 3.5% at
January 28, 1994) 45,375 -
Unsecured revolving note under
$5,000,000 credit agreement,
payable May 3, 1993,
fluctuating interest (4.4% at
January 29, 1993) - 4,000
9.00% unsecured promissory
note payable $500,000
annually through September
30, 1995, plus interest - 1,500
12.375% unsecured promissory
note payable $1,000,000
annually through November 1,
1993, plus interest - 1,000
Short-term instruments classified
as long-term debt (see Note 2) 26,500 47,907
Mortgage and equipment notes
payable monthly of approx-
imately $18,000, including
interest at 5% to 10%, maturities
through 1999, collateralized by
real property and equipment
carried at approximately
$964,000 at January 28, 1994 705 1,123
95,540 78,490
Less current portion (173) (1,754)
$ 95,367 $ 76,736
The 7% convertible subordinated debentures may be converted
at any time prior to maturity or redemption into shares of
common stock of the Company at a conversion price of $21.17 per
share, subject to adjustment under certain conditions. Except in
limited circumstances, the debentures are redeemable at the option
of the Company at any time after April 30, 1989, initially at 108%
of principal and decreasing annually thereafter to 100% on and
after May 1, 1994 (see Note 11). Annual sinking fund payments
commencing May 1, 2001 are calculated to retire 75% of the debentures
prior to maturity.
At January 29, 1993, the Company had revolving credit and
term note agreements with three banks which permitted the
Company to borrow up to $45,000,000 (subject to borrowing
limitations) of which $4,000,000 was outstanding under the term
note agreements. A $30,000,000 revolving credit agreement
backed commercial paper. On various dates from May, 1993 through
September, 1993 the notes generally became convertible to term
notes payable over three years, with interest rates based on various
money market rates. These agreements were replaced during fiscal
1994 by the revolving credit and line of credit agreement discussed below.
During fiscal 1994, the Company entered into a
revolving credit and line of credit agreement with a group of
banks, which permits the Company to borrow up to $100,000,000
(subject to borrowing limitations discussed below) - $75,000,000
long-term, expiring April 30, 1996, and $25,000,000 line of
credit convertible to term note due two years from conversion
date. The $25,000,000 line of credit backs commercial paper.
The agreement supports the classification of certain notes
maturing within one year as long-term debt at January 28, 1994
and January 29, 1993. Under the credit facility, interest
is payable at market rates plus applicable margins. Commitment
fees of .25% and .125% are paid on the unused portions of the
revolving and line of credit facilities, respectively.
Loan covenants require the Company to maintain
consolidated working capital of not less than $75,000,000 and a
maximum ratio of senior funded debt to total capital, as
defined, of .45 to 1.0. The covenants also restrict the
Company's activities regarding investments, liens,
borrowing and leasing, and payment of dividends other than
stock. Under the dividend covenant, approximately $4,490,000 is
available at January 28, 1994 for payment of dividends.
Maturities of long-term notes and debentures for each of
the five years subsequent to January 28, 1994 and in the
aggregate are as follows (in thousands):
Fiscal Years Ending
1995 $ 173
1996 431
1997 71,908
1998 36
1999 24
Later years 22,968
$ 95,540
- -------------------------------------------------------------------------------
1994 ANNUAL REPORT - PAGE 20
NOTE 4 - INCOME TAXES:
In fiscal year 1992, the Company adopted Statement of
Financial Accounting Standards No. 109, Accounting for Income
Taxes. Under the provisions of SFAS No. 109, the Company elected
not to restate prior years and has determined that the
cumulative effect of implementation was immaterial. The effect
of this change on fiscal 1992's financial statement was to
decrease the net loss by approximately $450,000 ($.10 per share).
The components of the net deferred tax asset recognized in
the accompanying balance sheets are as follows (in thousands):
January 28, January 29,
1994 1993
Deferred tax asset $7,514 $6,903
Deferred tax liability (188) (333)
Valuation allowance (144) (175)
$7,182 $6,395
The types of temporary differences between the tax bases of
assets and liabilities and their financial reporting amounts
that give rise to the deferred tax liability and deferred tax
asset and their approximate tax effects are as follows (in
thousands):
January 28, January 29,
1994 1993
Depreciation $ 374 $ 142
Capital leases 646 703
Allowance for doubtful accounts 1,529 1,229
Inventory (net) 1,435 1,366
Accrued vacation 471 437
Environmental clean up costs 183 191
Deferred compensation 447 469
Other accrued expenses 2,179 1,715
Other (82) 143
$7,182 $6,395
The consolidated provision for income taxes consists of the
following (in thousands):
Fiscal Years Ended
January 28, January 29, January 31,
1994 1993 1992
Currently payable:
Federal $ 4,433 $ 2,998 $ (40)
State 626 436 173
5,059 3,434 133
Deferred:
Federal (978) (1,415) (1,774)
State 191 (481) (323)
(787) (1,896) (2,097)
$ 4,272 $ 1,538 $ (1,964)
The following is a reconciliation of tax computed at the
statutory Federal rate to the income tax expense in the
statements of operations (dollars in thousands):
Fiscal Years Ended
January 28, January 29, January 31,
1994 1993 1992
Amount % Amount % Amount %
Tax com-
puted at
statutory
Federal
rate $ 3,695 35.0 $ 1,365 34.0 $(1,980) (34.0)
Effect of:
State
income
tax,net of
Federal
income
tax
benefit 531 5.0 (30) (.7) (99) (1.7)
Nonde-
ductible
amorti-
zation of
purchase
adjust-
ments 24 .2 14 .3 21 .4
Nonde-
ductible
expenses 117 1.1 103 2.6 92 1.6
Other, net (95) (.8) 86 2.1 2 -
Income tax
expense
(benefit) $ 4,272 40.5 $ 1,538 38.3 $(1,964) (33.7)
As of January 28, 1994, the Company had operating loss
carryforwards for state and Federal income tax purposes of
approximately $2,000,000 and $400,000, respectively, which will
expire in the years 1999-2007.
NOTE 5 - EMPLOYEE BENEFIT PLANS:
Profit Sharing and Employee Stock Ownership Plans:
The Company has a 401(k) Profit Sharing Plan which provides
benefits for substantially all employees of the Company who meet
minimum age and length of service requirements. Under the plan,
employee contributions of not less than 2% to not more than 3%
of each eligible employee+s compensation are matched (in cash or
stock) 50% by the Company. Additional annual contributions may
be made at the discretion of the Board of Directors.
The Company has an employee stock ownership plan (ESOP)
covering substantially all employees of the Company, who meet
minimum age and length of service requirements. The plan is
designed to enable eligible employees to acquire a proprietary
interest in the Company. Company contributions (whether in cash
or stock) are determined annually by the Board of Directors in
an amount not to exceed the maximum allowable as
an income tax deduction.
Amounts charged to expense for these plans during the
fiscal years ended in 1994, 1993 and 1992 were $1,000,000,
$405,000 and $460,000, respectively.
- -------------------------------------------------------------------------------
1994 ANNUAL REPORT - PAGE 21
Bonus Plans:
The Company has bonus plans, based on profitability
formulas, which provide incentive compensation for key
employees. Amounts charged to expense for bonuses to executive
officers were $533,000, $263,000 and $50,000 for the fiscal
years ended in 1994, 1993 and 1992, respectively.
Stock Option Plans:
The Company's stock option plans authorize the
granting of both incentive and non-incentive stock options for
an aggregate of 1,560,000 shares of common stock to key
executive, management, and sales employees, and, with respect to
60,000 shares, to directors. Under the plans, options are
granted at prices not less than market value on the date of grant,
and the maximum term of an option may not exceed ten years. Prices for
incentive stock options granted to employees who own 10% or more
of the Company's stock are at least 110% of market value at date
of grant. Options may be granted from time to time to May,
1998. An option becomes exercisable at such times and in such
installments as set by the Board of Directors.
The employee plan also permits the granting of stock
appreciation rights (SARs) to holders of options. Such rights
permit the optionee to surrender an exercisable option, in whole
or in part, on any date that the fair market value of the
Company's common stock exceeds the option price for the stock
and receive payment in common stock, or, if the Board of
Directors approves, in cash or any combination of cash and
common stock. Such payment would be equal to the excess of the
fair market value of the shares under the surrendered option over the
option price for such shares. The change in value of SARs is reflected in
income based upon the market value of the stock. There were no
SARs granted or exercised during the three-year period ended
January 28, 1994.
A summary of option transactions during each of the three
fiscal years in the period ended January 28, 1994 is shown below:
Number of Option Price
Shares Range
Under option, January 25, 1991
(all exercisable) 288,550 $12.25-$19.33
Granted 297,000 $12.63
Exercised (1,365) $12.25
Cancelled (161,449) $12.25-$16.08
Under option, January 31, 1992
(194,736 shares exercisable) 422,736 $12.25-$19.33
Granted 20,000 $12.00-$12.87
Exercised - -
Cancelled (36,294) $12.25-$19.33
Under option, January 29, 1993
(253,442 shares exercisable) 406,442 $12.00-$17.63
Granted 12,000 $16.25
Exercised (6,023) $12.25-$12.87
Cancelled (12,835) $12.00-$12.63
Under option, January 28, 1994
(297,584 shares exercisable) 399,584 $12.00-$17.63
There were 755,658 and 754,823 shares available for
the granting of options at January 28, 1994 and January 29,
1993, respectively.
Supplemental Executive Retirement Plan:
The Company has entered into agreements with
certain key executive officers, providing for supplemental
payments, generally for periods up to 15 years, upon retirement,
disability or death. The obligations are not funded apart from
the Company's general assets. Amounts charged to expense under
the agreements were $166,000, $158,000 and $155,000 in fiscal
1994, 1993 and 1992, respectively.
NOTE 6 - COMMITMENTS AND CONTINGENCIES:
Lease Commitments:
A portion of the Company's operations are conducted from
locations leased under capital leases from a
corporation which is owned by three of the directors of Hughes
Supply, Inc. The leases generally provide that all expenses
related to the properties are to be paid by the lessee. The
leases also generally provide for rental increases at specified
intervals. The leases all expire
within ten years; however, it is expected that they will be
renewed. Rents under these agreements amounted to $1,165,000,
$1,165,000 and $1,153,000 for the fiscal
years ended in 1994, 1993 and 1992, respectively.
Leased properties under capital leases are included
in the balance sheets as follows (in thousands):
January 28, January 29,
1994 1993
Leased property under capital leases
(consisting of land and buildings) $10,794 $10,794
Accumulated amortization (7,864) (7,270)
$ 2,930 $ 3,524
In addition, rents under operating leases paid to this
related corporation were $396,000, $399,000 and $145,000 in
1994, 1993 and 1992, respectively.
Future minimum payments, by year and in the aggregate,
under the aforementioned leases and other noncancellable
operating leases with initial or remaining terms in excess of
one year as of January 28, 1994, are as follows
(in thousands):
Capital Operating
Fiscal Years Ending Leases Leases
1995 $ 1,165 $ 5,524
1996 1,165 2,969
1997 1,165 2,209
1998 1,165 1,833
1999 562 1,444
Later years 945 2,199
Total minimum lease payments 6,167 $16,178
Less amount representing interest (1,583)
Present value of net minimum
lease payments 4,584
Less current portion (725)
$ 3,859
- -------------------------------------------------------------------------------
1994 ANNUAL REPORT - PAGE 22
Lease-related expenses are as follows (in thousands):
Fiscal Years Ended
January 28, January 29, January 31,
1994 1993 1992
Capital lease amortization $ 594 $ 594 $ 594
Capital lease interest
expense $ 505 $ 564 $ 603
Operating lease rentals
(excluding month-to-
month rents) $5,872 $5,210 $3,875
Guarantees of Affiliate Debt:
A wholly-owned subsidiary of the Company owns a 20%
interest in Accord Industries Company ("Accord"), a joint
venture formed from the Company's fiscal 1991 sale of its
manufacturing operations. As partial consideration for the
sale, the Company received $2,750,000 in notes receivable, part
of which is convertible into an additional partnership interest
in Accord of up to 29%.
In connection with the investment in Accord, the Company
has guaranteed $1,750,000 of Accord's indebtedness to a bank;
and the Company's subsidiary as a joint venturer is contingently
liable for the remaining bank debt of approximately $360,000 as
of January 28, 1994.
NOTE 7 - PREFERRED STOCK:
The Company's Board of Directors established Series A
Junior Participating Preferred Stock (Series A Stock) consisting
of 300,000 shares. Each share of Series A Stock will be
entitled to one vote on all matters submitted to a vote of
shareholders. Series A Stock is not redeemable or convertible
into any other security. Each share of Series A Stock shall
have a minimum cumulative preferential quarterly dividend rate
equal to the greater
of $1.25 per share or 100 times the aggregate per share amount
of the dividend declared on common stock.
In the event of liquidation, shares of Series A Stock will be
entitled to the greater of $100 per share plus any accrued and
unpaid dividend or 100 times the payment to be made per share of
common stock. No shares of Series A Stock are presently
outstanding, and no shares are expected to be issued except in
connection with the shareholder rights plan referred to below.
The Company has a shareholder rights plan.
Under the plan, the Company distributed to shareholders a
dividend of one right per share of the Company's
common stock. When exercisable, each right will permit the
holder to purchase from the Company a unit consisting of one
one-hundredth of a share of Series A Stock at a purchase price
of $65 per unit. The rights generally become exercisable if a
person or group acquires 20%
or more of the Company's common stock or commences a tender
offer that could result in such person or group owning 30% or
more of the Company's common stock.
If certain subsequent events occur after the rights first become
exercisable, the rights may become exercisable for the purchase
of shares of common stock of the Company, or of an acquiring
company, having a value equal to two times the exercise price of
the right. The rights may be redeemed by the Company at $.01 per
right at any time prior to ten days after 20% or more of the Company's
stock is acquired by a person or group. The rights expire on
June 2, 1998 unless sooner terminated in accordance with the rights plan.
NOTE 8 - CONCENTRATION OF CREDIT RISK:
The Company sells its products in the major areas of
construction markets throughout the Southeastern United States.
Approximately 90% of the Company's sales are credit sales which
are primarily to customers whose ability to pay is dependent
upon the construction industry economics prevailing in the
Southeast; however, concentration of credit risk with respect to
trade accounts receivable is limited due to the large number of
customers comprising the Company's customer base and no one
customer comprises more than 2% of annual sales. The Company performs
ongoing credit evaluations of its customers and in certain
situations obtains collateral sufficient to protect its credit
position. The Company maintains reserves for potential credit
losses, and such losses have been within management's
expectations.
NOTE 9 - BUSINESS COMBINATIONS:
On June 30, 1993, the Company acquired all the
common stock of Electrical Distributors, Inc. ("EDI")
in exchange for 374,998 shares of the Company's common stock.
EDI is a wholesale distributor of electrical products with one
outlet in Georgia. The transaction has been accounted for as a
pooling of interests and, accordingly, the consolidated
financial statements for all periods
presented have been restated to include the accounts of EDI.
EDI's fiscal year end has been changed from April 30 to the last
Friday in January to conform to the Company's fiscal year end.
Net sales and net income of the separate companies for the
periods preceding the acquisition were (in thousands):
Hughes
Supply, Inc. EDI Combined
Three months ended
April 30, 1993
(unaudited):
Net sales $141,636 $ 6,878 $148,514
Net income 648 51 699
Fiscal year ended
January 29, 1993:
Net sales 528,363 27,433 555,796
Net income 2,264 214 2,478
Fiscal year ended
January 31, 1992:
Net sales 481,001 28,191 509,192
Net income (loss) (4,040) 181 (3,859)
During fiscal year 1994, the Company acquired several
wholesale distributors of materials to the construction
industry. One acquisition was treated as an immaterial pooling
while the other acquisitions were accounted for as purchases.
These acquisitions, individually or in the aggregate, did not
have a material effect on the consolidated financial statements.
Results of operations of these companies from their respective
dates of acquisition have been included in the consolidated
financial statements.
- -------------------------------------------------------------------------------
1994 ANNUAL REPORT - PAGE 23
<TABLE>
NOTE 10 - SUPPLEMENTAL
CASH FLOWS INFORMATION:
The following is a reconciliation of net income (loss)
to net cash provided by (used in) operating activities (in
thousands):
<CAPTION>
Fiscal Years Ended
January 28, January 29, January 31,
1994 1993 1992
<S> <C> <C> <C>
Net income (loss) $ 6,286 $ 2,478 $ (3,859)
Adjustments to reconcile
net income(loss) to
net cash provided by
(used in) operating
activities:
Depreciation 6,703 5,863 6,084
Amortization 762 773 1,065
Provision for doubtful
accounts 1,671 1,775 2,542
(Gain) loss on sale of
property, plant and
equipment (264) (1,012) 284
Undistributed
(earnings) losses of
affiliate (171) (135) 131
Write-off of goodwill - - 468
Changes in assets and
liabilities net of
effects of business
acquisitions:
(Increase) decrease in:
Accounts receivable (16,824) (9,499) (5,789)
Inventories (4,209) 60 4,319
Refundable income
taxes - 530 1,571
Other current
assets (97) (1,195) 296
Other assets 178 31 154
Increase (decrease) in:
Accounts payable
and accrued
expenses 4,704 7,473 5,227
Accrued interest
and income taxes (461) 1,112 (107)
Other noncurrent
liabilities 178 158 -
Increase in deferred
income taxes (711) (1,896) (2,097)
Net cash provided by
(used in) operating
activities $ (2,255) $ 6,516 $ 10,289
</TABLE>
NOTE 11 - SUBSEQUENT EVENT:
On March 8, 1994, the Company issued a call for redemption
or conversion of the outstanding 7% convertible debentures (see
Note 3). On April 7, 1994, any
debentures outstanding will be redeemed by the Company at 101%
of the principal amount, plus accrued and unpaid interest to the
redemption date. If the Company had called the redemption of
the debentures on January 30, 1993 and if all the debentures had
been converted to common stock, primary earnings per share for
fiscal year 1994 would have been $1.27. Fully diluted earnings
per share for fiscal 1994 already assumes the conversion of the
debentures.
REPORT OF INDEPENDENT ACCOUNTANTS
Shareholders and Board of Directors
Hughes Supply, Inc.
We have audited the accompanying consolidated balance sheets of
Hughes Supply, Inc. and subsidiaries as of January 28, 1994 and
January 29, 1993, and the related consolidated statements of
operations, shareholders' equity, and cash flows for each of the
three years in the period ended January 28, 1994. 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 in accordance with generally accepted
auditing standards. Those standards 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. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Hughes Supply, Inc. and subsidiaries as of
January 28, 1994 and January 29, 1993, and the
consolidated results of their operations and their cash flows
for each of the three years in the period ended January 28,
1994, in conformity with generally accepted accounting
principles.
As discussed in Note 4 to the financial statements, the Company
changed its method of accounting for income taxes in the period
ended January 31, 1992.
/s/ Coopers & Lybrand
Orlando, Florida
March 17, 1994
- -------------------------------------------------------------------------------
1994 ANNUAL REPORT - PAGE 24
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Sales
Net sales for fiscal 1994 were $660.9 million, a 19%
increase over last year's net sales of $555.8 million.
Newly-opened and acquired branches accounted for approximately
$17 million or 16% of the increase in sales. Sales for
Electrical Distributors, Inc., ("EDI"), acquired June 1993, were
approximately $30 million and $27 million in fiscal years 1994
and 1993, respectively, and are included in the consolidated
sales of the Company because the acquisition of EDI was
accounted for as a pooling of
interests (see Note 9 of the Notes to the Consolidated Financial
Statements).
The residential construction markets were more active
during fiscal 1994 as compared to the prior two years. The
markets were driven by a favorable interest rate environment,
improved consumer confidence and the affordability of housing.
Overall market activity was up 10-12% in most of the major
markets served by the Company. Approximately 80% of the
Company's sales increase resulted from increasing its market
share. The Company anticipates
the overall construction markets to continue to improve during
fiscal 1995 as commercial construction markets start to rebound.
During fiscal 1993, the Company generated sales
of $555.8 million, a 9.2% increase over fiscal year 1992.
Existing operations accounted for approximately 80%
of the growth in sales with newly-opened branches
producing the other 20%. Overall construction activity
in the market remained flat. The increased sales volume was
achieved, despite a depressed construction market, through gains
in market share. Hurricane Andrew, and
the resulting rebuilding effort in South Florida, had a
positive but minimal impact on the Company's operations.
Gross Margin
The gross margin for fiscal 1994 was 19.9%. The Company's
recent investment in a computerized
management information system, has contributed to the Company's
economies of purchasing and inventory
management and has provided greater control over pricing and
margins. This favorable impact was somewhat offset by continued
competitive conditions in the marketplace.
In fiscal 1993, the gross margin remained the same as the
fiscal 1992 level of 19.5%. This resulted from increased
competition in down markets and the Company's efforts to gain
market share.
Operating Expenses
In fiscal 1994, operating expenses were $118.9 million, a
15.2% increase over the prior year. Newly-opened and acquired
branches accounted for approximately 20%
of the increase in operating costs. The majority of the increase
was in personnel costs essential to support the growth in the
Company's operations. As a percentage of sales, the Company
lowered its operating expenses in fiscal 1994 to 18.0% from
18.6% and 19.8% in fiscal 1993 and 1992, respectively. This
resulted from the Company's
tight control of operating costs as revenues increased.
Management believes additional operating leverage is
possible as it continues to install its management
information system into remaining operations not currently on
the system and by the elimination and centralization
of certain administrative functions.
Operating expenses for fiscal 1993 were $103.2 million, a
2.4% increase over the prior year. The $500,000 decrease in
depreciation and amortization (due to greater use of leased
versus owned equipment) and the $800,000 decrease in bad debt
expenses (due to better collection experience) were partially
offset by increased selling, general and administrative expenses
attributable to the inclusion
of newly-opened branches for a portion of the year.
In fiscal 1992, the Company accrued approximately $675,000
as an operating expense for estimated future costs of removing
underground fuel tanks and environmental clean-up. Federal,
state and local laws and regulations govern the Company's
operation of underground fuel storage tanks. Rather than incur
additional costs to restore and upgrade tanks as required by
regulations, management opted to remove the existing tanks. The
Company has removed these tanks and has identified
certain tanks with leaks which will require remedial cleanups.
The Company does not expect additional
material expenses in future years associated with fuel
storage tanks.
Non-Operating Income and Expenses
Interest and other investment income for fiscal 1994,
fiscal 1993 and fiscal 1992 remained constant totaling
$1.9 million in each year. The majority of interest income is
generated by the collection of service charge income.
Interest expense decreased in fiscal 1994 to $4.6 million,
down $150,000 from the prior year, due to lower interest rates
even though borrowing levels were higher. Interest expense in
fiscal 1993 was lower by $1.2 million compared to the prior
year, due to lower borrowing rates on
approximately the same level of debt.
In fiscal 1994, other net non-operating income was
$988,000, compared to $1.7 million in fiscal 1993 and $56,000 in
fiscal 1992. The decrease in other income in
fiscal 1994 versus the prior year is the result of decreased
gains realized on the sale of fixed assets, approximately
$300,000 versus approximately $1.0 million in fiscal 1993. The
fiscal year 1993 amount includes approximately $1.0 million gain
on the sale of transportation equipment
compared to approximately $350,000 in fiscal 1992.
Income Taxes
The effective tax rate in fiscal 1994 was 40.5% compared to
38.3% and (33.7%) in fiscal 1993 and 1992. The variation is due
to fluctuations in nondeductible expenses and an increase of 1%
in the federal tax rate in fiscal 1994. Federal tax law changes
enacted in fiscal 1994 are
expected to have minimal negative impact on the Company's future
results of operations.
- -------------------------------------------------------------------------------
1994 ANNUAL REPORT - PAGE 25
Liquidity and Capital Resources
Working capital in fiscal 1994 amounted to $135.0 million
compared to $113.6 million and $110.8 million in fiscal 1993 and
1992. The Company continues to maintain greater than 75% of
total assets as current assets. The working capital ratio was
2.97 to 1, 2.84 to 1 and 2.82 to 1 for fiscal years 1994, 1993
and 1992, respectively.
In fiscal 1994, net cash used in operating activities was
$2.3 million versus net cash provided by operating activities of
$6.5 million in fiscal 1993 and $10.3 million in fiscal 1992.
The primary drivers in fiscal 1994 were the $97.8 million
increase in cash received from customers offset by the $103.1
increase in cash paid to suppliers and employees and by the $3.7
million increase in income taxes paid.
The Company typically becomes less liquid during
expansionary periods when sales volumes are increasing requiring
higher levels of inventories and receivables to support the
growth. However, days cost of sales in average inventory in
fiscal 1994 improved to 60.86 compared to 68.26 and 76.42 in
fiscal 1993 and 1992, respectively. In fiscal 1994, days sales
in average receivables improved to 49.85 from 50.05 and 50.54 in
the prior two fiscal years, respectively.
The net cash used in investing activities for fiscal 1994
increased $4.6 million, to $11.5 million, primarily due to the
$4.0 million in business acquisitions. Capital expenditures,
excluding business acquisitions decreased $445,000 to $8.3
million. Net cash used in investing activities for
fiscal 1993 and 1992 were $6.9 million and $3.9 million,
respectively. Capital expenditures for fiscal 1995 are expected
to be approximately $13 million.
In fiscal 1994, the net cash provided by financing
activities was $12.6 million compared to net cash used in
financing activities of $3.6 million and $3.4 million in fiscal
years 1993 and 1992, respectively. To finance the increase in
working capital and recent acquisitions, net borrowings under
short term debt arrangements amounted to $16.7 million versus
$2.3 million payments under short-term debt arrangements in
fiscal 1993. These borrowings in fiscal 1994 were partially
offset by an increase of $1.2 million in principal payments on
long-term debt over fiscal year 1993.
In fiscal 1994, the Company's bank financing consisted
primarily of a $100 million unsecured credit facility which
includes a $75 million long-term revolving credit facility and a
$25 million line of credit convertible to a term note (see Note
2 and Note 3 of the Notes to Consolidated Financial Statements).
The Company's financial condition remains strong and the Company
has the resources necessary, with approximately $30 million of
unused debt capacity (subject to borrowing limitations under
long-term debt covenants), to meet future anticipated funding
requirements.
Inflation and Changing Prices
The Company is aware of the potentially adverse effects
inflationary pressures may create through higher asset
replacement costs and related depreciation, higher interest
rates and higher material costs. The Company seeks to minimize
these effects through economies of
purchasing and inventory management resulting in cost reductions
and productivity improvements as well as price increases to
maintain reasonable profit margins. Management believes,
however, that inflation and changing prices have not
significantly affected the Company's operating results or
markets in the three most recent fiscal years.
Long-Term Outlook
The Company believes its construction markets will expand
moderately over the next few years. The Company has
strategically used acquisitions over many years to diversify
from residential new construction into commercial,
infrastructure and industrial construction markets as well as
into repair and replacement markets. Streamlining of operations
during the recent severe cyclical downturn in the construction
industry has begun to produce upside leverage for the Company,
translating into a sharp upturn in the Company's profitability
when sales increase. The wholesale distribution industry, which
is highly fragmented, will continue to consolidate. The Company
will remain successful if it continues to have the capital to
assimilate new acquisitions, can finance its way through
business cycles, develop value-added services and leverage its
new technologies to improve productivity.
Accounts Receivable Turnover
Fiscal Year Ended
1992 7.13
1993 7.19
1994 7.22
Inventory Turnover
Fiscal Year Ended
1992 4.71
1993 5.27
1994 5.92
NET RECEIVABLES (in thousands)
Fiscal Year End
1992 $70,622
1993 $78,346
1994 $97,765
INVENTORY (in thousands)
Fiscal Year End
1992 $84,877
1993 $84,817
1994 $94,223
DEBT (in thousands)
Fiscal Year End
1992 $86,587
1993 $83,734
1994 $100,124
- -------------------------------------------------------------------------------
1994 ANNUAL REPORT - PAGE 26
<TABLE>
SELECTED FINANCIAL DATA
(in thousands, except per share data and ratios)
<CAPTION>
Fiscal Years Ended (1)(2)
1994 1993 1992 1991
<S> <C> <C> <C> <C>
Net sales $ 660,938 $ 555,796 $ 509,192 $ 576,388
Cost of sales $ 529,718 $ 447,373 $ 410,132 $ 463,027
Gross margin 19.9% 19.5% 19.5% 19.7%
Selling, general and administrative expenses $ 109,760 $ 94,810 $ 91,114 $ 93,538
% of sales 16.6% 17.1% 17.9% 16.2%
Depreciation and amortization $ 7,465 $ 6,636 $ 7,149 $ 9,199
Provision for doubtful accounts $ 1,671 $ 1,775 $ 2,542 $ 2,606
Operating income (loss) $ 12,324 $ 5,202 $ (1,745) $ 8,018
Operating margin 1.9% .9% (.3%) 1.4%
Interest and other income $ 2,844 $ 3,574 $ 1,913 $ 4,078
Interest expense $ 4,610 $ 4,760 $ 5,991 $ 8,026
Income (loss) before income taxes $ 10,558 $ 4,016 $ (5,823) $ 4,070
% of sales 1.6% .7% (1.1%) .7%
Income taxes (benefits) $ 4,272 $ 1,538 $ (1,964) $ 1,654
Net income (loss) $ 6,286 $ 2,478 $ (3,859) $ 2,416
% of sales 1.0% .4% (.8%) .4%
Net income (loss) per share
Primary $ 1.35 $ .54 $ (.85) $ .51
Fully diluted $ 1.25 $ .54 $ (.85) $ .51
Average number of shares outstanding
Primary 4,649 4,564 4,552 4,731
Fully diluted 5,819 4,592 4,552 4,731
Cash dividends per share $ .16 $ .12 $ .24 $ .36
Long-term debt, less current portion $ 99,226 $ 81,320 $ 76,342 $ 85,626
Shareholders' equity $ 94,427 $ 86,666 $ 84,688 $ 89,548
Total assets $ 263,405 $ 230,738 $ 223,721 $ 226,019
Return on equity (3) 7.3% 2.9% (4.3%) 2.5%
Leverage (total assets/shareholders' equity) 2.79 2.66 2.64 2.52
Return on assets (3) 2.7% 1.1% (1.7%) 1.0%
Capital expenditures (4) $ 8,257 $ 8,702 $ 4,992 $ 7,172
</TABLE>
(1) The Company's fiscal year ends on the last Friday in January.
(2) All data adjusted for fiscal 1986 and fiscal 1994 poolings
of interest and three-for-two stock split declared May 17, 1988.
(3) Ratios based on balance sheet at beginning of year.
(4) Excludes capital leases.
- -------------------------------------------------------------------------------
1994 ANNUAL REPORT - PAGE 27
<TABLE>
<CAPTION>
Fiscal Years Ended (1)(2)
1990 1989 1988 1987 1986 1985 1984
<S> <C> <C> <C> <C> <C> <C>
$ 557,769 $ 529,306 $ 458,079 $ 372,687 $ 351,832 $ 336,466 $ 276,469
$ 443,914 $ 419,890 $ 362,355 $ 300,141 $ 284,259 $ 271,449 $ 222,390
20.4% 20.7% 20.9% 19.5% 19.2% 19.3% 19.6%
$ 86,403 $ 79,538 $ 69,097 $ 52,070 $ 48,385 $ 44,915 $ 37,270
15.5% 15.0% 15.1% 14.0% 13.8% 13.3% 13.5%
$ 9,127 $ 8,759 $ 6,742 $ 5,407 $ 4,793 $ 4,278 $ 3,749
$ 2,529 $ 1,370 $ 1,602 $ 541 $ 1,239 $ 1,139 $ 313
$ 15,796 $ 19,749 $ 18,283 $ 14,528 $ 13,156 $ 14,685 $ 12,747
2.8% 3.7% 4.0% 3.9% 3.7% 4.4% 4.6%
$ 2,800 $ 3,615 $ 2,575 $ 2,548 $ 1,761 $ 1,589 $ 1,657
$ 7,360 $ 6,628 $ 4,203 $ 3,447 $ 2,623 $ 3,362 $ 3,064
$ 11,236 $ 16,736 $ 16,655 $ 13,629 $ 12,294 $ 12,912 $ 11,340
2.0% 3.2% 3.6% 3.7% 3.5% 3.8% 4.1%
$ 4,443 $ 6,456 $ 7,211 $ 6,701 $ 5,589 $ 5,847 $ 5,305
$ 6,793 $ 10,280 $ 9,444 $ 6,928 $ 6,705 $ 7,065 $ 6,035
1.2% 1.9% 2.1% 1.9% 1.9% 2.1% 2.2%
$ 1.31 $ 1.95 $ 1.76 $ 1.32 $ 1.25 $ 1.34 $ 1.21
$ 1.24 $ 1.77 $ 1.61 $ 1.24 $ 1.25 $ 1.34 $ 1.21
5,181 5,262 5,376 5,247 5,358 5,268 4,992
6,276 6,372 6,467 6,090 5,358 5,268 4,992
$ .35 $ .31 $ .27 $ .25 $ .21 $ .21 $ .19
$ 82,855 $ 76,122 $ 63,069 $ 36,954 $ 20,908 $ 21,853 $ 23,508
$ 95,411 $ 93,656 $ 85,565 $ 78,826 $ 73,879 $ 68,117 $ 60,894
$ 242,626 $ 230,064 $ 207,618 $ 167,494 $ 139,918 $ 127,671 $ 121,282
7.3% 12.0% 12.0% 9.4% 9.8% 11.6% 15.3%
2.54 2.46 2.43 2.12 1.89 1.87 1.99
3.0% 5.0% 5.6% 5.0% 5.3% 5.8% 6.6%
$ 10,749 $ 9,856 $ 15,234 $ 11,318 $ 5,635 $ 7,866 $ 8,577
</TABLE>
- -------------------------------------------------------------------------------
1994 ANNUAL REPORT - PAGE 28
HUGHES SUPPLY, INC.
SHAREHOLDER INFORMATION
The shares of Hughes Supply, Inc. common stock are traded on the
New York Stock Exchange under the symbol "HUG". The approximate
number of shareholders of record as of March 14, 1994 was 1,169.
A COPY OF THE HUGHES SUPPLY, INC. ANNUAL REPORT ON FORM 10-K
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE
MADE AVAILABLE WITHOUT CHARGE, UPON WRITTEN REQUEST. REQUESTS SHOULD
BE DIRECTED TO:
J. Stephen Zepf
Treasurer and Chief Financial Officer
Hughes Supply, Inc.
Post Office Box 2273
Orlando, Florida 32802
TRANSFER AGENT AND REGISTRAR
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
ANNUAL MEETING
Tuesday, May 24, 1994, at 10:00 AM
3rd floor of Park Building
Sun Bank Center
200 South Orange Avenue
Orlando, Florida 32801
GENERAL COUNSEL
Maguire, Voorhis & Wells, P.A.
Orlando, Florida
AUDITORS
Coopers & Lybrand
Orlando, Florida
DIRECTORS
David H. Hughes
Chairman of the Board
Vincent S. Hughes
Russell V. Hughes
A. Stewart Hall, Jr.
Herman B. McManaway
Retired
John B. Ellis
Retired
Robert N. Blackford
Attorney, Maguire, Voorhis & Wells, P.A.
Clifford M. Hames
Retired
Donald C. Martin
Retired
John D. Baker, II
President, Florida Rock Industries, Inc.
CORPORATE OFFICE LOCATIONS AND
SUBSIDIARY EXECUTIVE OFFICERS
HUGHES SUPPLY, INC.
CORPORATE OFFICE
20 North Orange Avenue
Post Office Box 2273
Orlando, Florida 32802
Telephone: 407-841-4755
MILLS & LUPTON SUPPLY COMPANY
CORPORATE OFFICE
749 East 12th Street
Post Office Box 1639
Chattanooga, Tennessee 37401
Telephone: 615-266-6171
EXECUTIVE OFFICERS:
R. Richard Anderson
President
Harry H. Powell
Executive Vice President
ONE STOP SUPPLY, INC.
CORPORATE OFFICE
1133 Polk Avenue
Nashville, Tennessee 32710
Telephone: 615-256-9200
EXECUTIVE OFFICER
Peter J. Zabaski
President
PAINE SUPPLY COMPANY
CORPORATE OFFICE
220 One Stop Place
Pearl, Mississippi 39208
Telephone: 601-932-5556
EXECUTIVE OFFICER:
Kevin S. Walker
President
PUMP & LIGHTING COMPANY
CORPORATE OFFICE
300 East 9th Street
Post Office Box 34305
Charlotte, North Carolina 28234
Telephone: 704-377-1583
EXECUTIVE OFFICERS:
Harold D. Jordan
President
Frank W. Rush
Executive Vice President
USCO, INCORPORATED
CORPORATE OFFICE
115 Henderson Street
Post Office Box 1160
Monroe, North Carolina 28110
Telephone: 704-289-5406
EXECUTIVE OFFICERS:
James C. Plyler, Jr.
President
Kent Lee
Executive Vice President
Exhibit 21.1
Subsidiaries of the Registrant
1) XSMC, Inc.
(formerly known as Southern Manufacturing Company)
100% - Owned Subsidiary
Incorporated in the State of Florida
2) Carolina Pump & Supply Corp.
d/b/a - Pump & Lighting Company
100% - Owned Subsidiary
Incorporated in the State of North Carolina
3) USCO Incorporated
100% - Owned Subsidiary
Incorporated in the State of North Carolina
4) Paine Supply of Jackson, Inc.
100% - Owned Subsidiary
Incorporated in the State of Mississippi
5) Hughes Aviation, Inc.
100% - Owned Subsidiary
Incorporated in the State of Florida
6) One Stop Supply, Inc.
100% - Owned Subsidiary
Incorporated in the State of Tennessee
7) Mills & Lupton Supply Company
100% - Owned Subsidiary
Incorporated in the State of Tennessee
8) Twin-T of the Carolinas, Inc.
100% - Owned Subsidiary
Incorporated in the State of North Carolina
9) H Venture Corp.
100% - Owned Subsidiary
Incorporated in the State of Florida
10) HHH, Inc.
100% - Owned Subsidiary
Incorporated in the State of Delaware
11) HSI Corp.
100% - Owned Subsidiary
Incorporated in the State of Delaware
12) Electrical Distributors, Inc.
100% - Owned Subsidiary
Incorporated in the State of Georgia
13) Alabama Water Works Supply, Inc.
100% - Owned Subsidiary
Incorporated in the State of Alabama
14) Swaim Supply Company, Inc.
100% - Owned Subsidiary
Incorporated in the State of North Carolina
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
Hughes Supply, Inc.
We consent to the incorporation by reference in the Registration
Statement Nos. 2-78323, 33-9082, 33-26468 and 33-33701 on Forms S-8
and in Registration Statement No. 33-70112 on Form S-3 of Hughes
Supply, Inc., of our report dated March 17, 1994, on our audits of
the consolidated financial statements of Hughes Supply, Inc. and
subsidiaries as of January 28, 1994 and January 29, 1993 and for
each of the three years in the period ended January 28, 1994, which
report is included in this Annual Report on Form 10-K.
/s/ Coopers & Lybrand
Orlando, Florida
April 26, 1994
Exhibit 99.1
LOCATION OF FACILITIES
HUGHES SUPPLY, INC.
- -------------------
FLORIDA - WHOLESALE FLORIDA - (cont.)
Auburndale Sarasota
Bradenton Building Materials
Cape Coral Plumbing
Clearwater Sebring
Clermont Tallahassee
Daytona Contractor Tools
Eaton Park Electrical
Ft. Lauderdale Utility
Building Materials Tampa
Plumbing Building Materials
Ft. Myers Plumbing
Electrical Water & Sewer
Plumbing Tavares
Water & Sewer Venice
Ft. Pierce West Palm Beach
Gainesville Winter Haven
Electrical
Plumbing ALABAMA - WHOLESALE
Inverness Birmingham
Jacksonville Dothan
Electrical HVAC
Plumbing Utility
Plumbing & PVF Huntsville
Water & Sewer Plumbing & HVAC
Kissimmee Water & Sewer
Lady Lake Mobile
Lakeland Montgomery
Leesburg HVAC
Marianna Water & Sewer
Melbourne
Miami GEORGIA - WHOLESALE
Naples Albany
Ocala Alpharetta
Orange City Athens
Orlando Atlanta
Building Materials Building Materials
Electrical Electrical
Plumbing Plumbing & HVAC
Water & Sewer Brunswick
Palm Beach Columbus
Panama City Hartsfield
Electrical LaGrange
Plumbing Macon
Pompano Beach Electrical
Port Richey Plumbing & HVAC
St. Petersburg Marietta
Moultrie
- --------------------------------------------------------------------------------
LOCATION OF FACILITIES (Continued)
GEORGIA - (cont.) CAROLINA PUMP & SUPPLY CORP.
Savannah (d/b/a Pump & Lighting Co.)
Thomasville ----------------------------
Tifton NORTH CAROLINA - WHOLESALE
Electrical Charlotte
Plumbing & HVAC Charlotte Water & Sewer
Valdosta Fayetteville
Electrical Greensboro
Plumbing Hickory
Kinston
SOUTH CAROLINA - WHOLESALE Raleigh
Anderson Wilmington
Winston Salem
FLORIDA - RETAIL SHOWROOMS
Lakeland SOUTH CAROLINA - WHOLESALE
Macon Charleston
Naples Florence
Orlando Greer
Bathstyle Surfside Beach
Lightstyle West Columbia
Venice
TENNESSEE - WHOLESALE
FLORIDA - DISTRIBUTION CENTER Knoxville
Orlando
GEORGIA - DISTRIBUTION CENTER USCO INCORPORATED
College Park --------------------------
NORTH CAROLINA - WHOLESALE
Charlotte
PAINE SUPPLY OF JACKSON, INC. Durham
- ----------------------------- Goldsboro
MISSISSIPPI - WHOLESALE Henderson
Biloxi High Point
Greenville Monroe
Greenwood Pinehurst
Gulfport Rocky Mount
Plumbing Salisbury
Refrigeration Statesville
Hattiesburg Zebulon
Jackson
Laurel MARYLAND - WHOLESALE
Meridian Capitol Heights
Pascagoula
Tupelo SOUTH CAROLINA - WHOLESALE
Aiken
Cheraw
Columbia
Greenville
- --------------------------------------------------------------------------------
LOCATION OF FACILITIES (Continued)
USCO INCORPORATED (Cont.)
- ------------------------------
VIRGINIA - WHOLESALE
Arlington
La Crosse
Lynchburg
NORTH CAROLINA - RETAIL
SHOWROOMS
Crown Point
NORTH CAROLINA - DISTRIBUTION
CENTER
Monroe
ONE STOP SUPPLY, INC.
- -----------------------------
TENNESSEE - WHOLESALE
Clarksville
Cookeville
Jackson
Memphis
Nashville
KENTUCKY - WHOLESALE
Bowling Green
Glasgow
MILLS & LUPTON SUPPLY COMPANY
- -----------------------------
TENNESSEE - WHOLESALE
Chattanooga
Cleveland
Memphis
GEORGIA - WHOLESALE
Dalton
Macon
FLORIDA - WHOLESALE
Tallahassee
