SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended January 31, 1997
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. 001-08772
HUGHES SUPPLY, INC.
(Exact name of registrant as specified in its charter)
Florida 59-0559446
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 North Orange Avenue, Suite 200, Orlando, Florida 32801
(Address of principal executive office) (Zip Code)
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 [ ]
Page 1
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: $349,978,000 as of March 21,
1997.
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the latest practicable
date: 11,590,873 shares of common stock ($1.00 par value) as of
March 21, 1997.
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 the fiscal
year ended January 31, 1997 (designated
portions).
Part II - Annual Report to Shareholders for the fiscal
year ended January 31, 1997 (designated
portions).
Part III- Definitive Proxy Statement for the 1997 Annual
Meeting of Shareholders (designated portions).
Part IV - Annual Report to Shareholders for the fiscal
year ended January 31, 1997 (designated
portions).
Page 2
TABLE OF CONTENTS
Page
PART I
Item 1. Business ............................................. 4
Item 2. Properties ........................................... 13
Item 3. Legal Proceedings .................................... 13
Item 4. Submission of Matters to a Vote of Security Holders .. 13
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters .................................. 14
Item 6. Selected Financial Data .............................. 14
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations .................. 14
Item 8. Financial Statements and Supplementary Data .......... 14
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure .................. 15
PART III
Item 10. Directors and Executive Officers of the Registrant ... 16
Item 11. Executive Compensation ............................... 16
Item 12. Security Ownership of Certain Beneficial Owners and
Management ........................................... 16
Item 13. Certain Relationships and Related Transactions ....... 16
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K .......................................... 17
Signatures ........................................... 22
Index to Consolidated Financial Statements and
Schedules ............................................ 23
Index of Exhibits Filed with This Report ............. 24
Page 3
PART I
ITEM 1. BUSINESS
GENERAL
Hughes Supply, Inc. was founded as a general partnership in
Orlando, Florida in 1928 and was incorporated as a Florida corporation
in 1947. As used throughout this Report, the terms "Company" and
"Registrant" shall be deemed to mean Hughes Supply, Inc. and its
subsidiaries, except where the context otherwise indicates.
The Company is one of the largest diversified wholesale
distributors of materials, equipment and supplies for the construction
and industrial markets operating primarily in the southeastern and
midwestern United States. The Company distributes more than 130,000
products through 292 branches located in 25 states and Puerto Rico. The
Company's customers are subcontractors, general contractors, utilities,
municipalities and manufacturers. Management believes that the Company
holds significant market share in a majority of its local markets and is
one of the largest distributors of its range of products in the
southeastern and midwestern United States. The Company's largest
geographic market is Florida (representing approximately 36% of fiscal
1997 net sales), which is one of the largest commercial and residential
construction markets in the United States. The following table presents
the distribution of the Company's branches:
State, Territory Number of Branches
Florida 83
Georgia 35
North Carolina 32
Alabama 20
South Carolina 19
Ohio 16
Tennessee 16
Texas 13
Mississippi 11
Virginia 7
Illinois 5
Kentucky 5
Indiana 4
Louisiana 4
Oklahoma 3
Pennsylvania 3
West Virginia 3
Maryland 2
Michigan 2
Missouri 2
New Jersey 2
California 1
New York 1
Puerto Rico 1
Utah 1
Washington 1
Page 4
A current listing of the locations of the wholesale branches and
distribution centers of the Company is set forth as Exhibit 99.1 to this
report.
The products which the Company distributes are used in new
construction for commercial, residential, utility and industrial
applications and for replacement and renovation projects. Such products
include materials and supplies associated with the Company's nine major
product groups, as follows: electrical; plumbing; water and sewer; air
conditioning and heating; industrial pipe, valves and fittings; building
materials; electric utilities; water systems; and pool equipment and
supplies. Each product group is sold by the Company's own specialized
and experienced sales force consisting of outside sales representatives
and inside account executives. Management believes that the Company's
mix of commercial, residential, utility and industrial business,
geographic diversification and multiple product groups reduces the
impact of economic cycles on the Company's net sales and profitability.
Management believes that no other company competes against it across all
of its product groups.
The Company's principal business objective is to achieve profitable
growth, both internally and through selective acquisitions, primarily in
existing and contiguous geographic markets. The Company has grown
internally through increases in comparable branch net sales, new branch
openings and the addition of new product groups. Since January 29,
1993, the Company has opened 32 new branches (exclusive of new branches
acquired through acquisitions). In addition, the Company continues to
pursue an active acquisition program to capitalize on the opportunities
presented by the substantial size and highly fragmented ownership
structure of its industry. Since January 29, 1993, the Company has
completed 37 acquisitions representing 125 branches. In addition to
increased geographic penetration, acquisitions often provide
opportunities for the Company to gain market share and to enhance and
diversify product offerings. Management believes that the most cost
effective way for the Company to enter new geographic markets is through
acquisitions. All of the Company's significant acquisitions have been
accretive to the Company's earnings per share.
INDUSTRY OVERVIEW
Based on estimates available to the Company, industry sales in the
United States of products sold by the Company exceeded $100 billion in
1996, and no wholesale distributor of these products accounted for more
than 2% of the total market. As a result of their smaller size, many of
the local or regional distributors generally lack the purchasing power
of a larger entity, may lack the resources to offer broad product lines
and multiple brands, and may not possess sophisticated inventory
management and control systems necessary to operate multiple branches
efficiently.
Page 5
As a result, during the past decade many of the large wholesale
distributors, including the Company, have grown considerably through
acquisitions. However, many independent distributors are still
privately owned, relationship-based companies that emphasize service,
delivery and reliability to their customers. Further, a majority of
independent distributors focus on a particular size or type of customer
and a particular product group. In contrast, the Company services
various sizes and types of customers and multiple product groups and
diversifies its sales across various types of construction and users of
its products. Due to its strong competitive position, its size and its
management infrastructure, management also believes that the Company is
well-positioned to continue to benefit from consolidation trends within
the wholesale distribution business.
The Company differentiates itself from consumer-oriented, large
format, do-it-yourself ("DIY") home center retailers with respect to the
type of customer served, breadth of products offered and level of
service provided. Management believes that the Company's customers,
unlike DIY customers, are typically professionals who choose their
building materials suppliers primarily on the basis of product
availability, price, relationships with sales personnel, and the quality
and scope of services offered by such suppliers. Furthermore,
professional customers generally buy in large volumes, are involved in
ongoing jobs or projects lasting months or years resulting in repeat
buying situations, and require specialized services not typically
provided by large format DIY home center retailers. Customer services
provided by the Company include credit, design assistance, material
specifications, scheduled job site delivery, job site visits to ensure
satisfaction, technical product services, including blueprint take-off
and computerized order quotes, and assistance with product returns.
Accordingly, the Company has been able to serve customer groups that
large format DIY home center retailers generally do not emphasize.
ACQUISITION STRATEGY
The Company's acquisition strategy is to acquire profitable
distribution businesses with strong management and well-developed market
positions and customer franchises. Acquisitions can generally be
categorized as fill-in acquisitions or new market acquisitions. Fill-in
acquisitions are generally smaller in size and represent new branches
within existing product groups and existing geographic markets. Since
January 29, 1993, the Company has completed fill-in acquisitions of 35
branches, and management believes that significant additional fill-in
acquisition opportunities are available.
New market acquisitions represent the addition of new product
groups, within related commercial construction and industrial products
categories, or the entry into new geographic markets, or both. During
the last four fiscal years, the Company has increasingly focused on new
market acquisitions with the goal of adding products and product groups
with higher gross margins, increasing sales to the replacement and
industrial markets (which tend to be less cyclical than new construction
markets), achieving greater geographic diversification and developing
additional opportunities for future fill-in acquisitions and new branch
Page 6
openings. Recent new market acquisitions completed by the Company
include: (i) The Treaty Distribution Group, resulting in a significant
increase in the Company's water and sewer products business in new
geographic markets; (ii) Moore Electric Supply, Inc., resulting in a
significant increase in the Company's electrical products business in
new geographic markets; (iii) Florida Pipe & Supply Company, the
Company's initial entry into the industrial pipe, valve and fitting
market; (iv) Electric Laboratories and Sales Corporation and ELASCO
Agency Sales, Inc., resulting in a significant increase in the Company's
electric utilities business in new geographic markets; (v) PVF Holdings,
Inc., resulting in a significant increase in the Company's industrial
pipe, valve and fitting business in new geographic markets; (vi) Sunbelt
Supply Company, resulting in a significant increase in the Company's
valve and fitting business in new geographic markets; and (vii) Metals
Incorporated, Stainless Tubular Products, Inc., and Metals, Inc. - Gulf
Coast Division, resulting in a significant increase in the Company's
specialty pipe, valve and fitting business as well as the metal
fabrication business in new geographic markets.
The following table summarizes the fill-in and new market
acquisitions completed by the Company since January 29, 1993:
<TABLE>
<CAPTION>
State(s)/
Type of Date of Number of Territory of
Acquisition Acquisition Acquisition Branches Operation Major Product Groups
<S> <C> <C> <C> <C> <C>
Virginia branch Fill-in June, 1993 1 VA Plumbing
Florida and Georgia Fill-in June, 1993 3 FL,GA Electrical, electric
branches utilities
Electrical New market June, 1993 1 GA Electrical
Distributors, Inc.*
Alabama Water Works New market July, 1993 3 AL Water and sewer
Supply, Inc.
Florida branches Fill-in December, 1993 2 FL Building materials
Swaim Supply New market January, 1994 8 NC,VA Plumbing, air conditioning
Company* and heating
Florida and Georgia Fill-in February- 4 FL,GA Water and sewer, plumbing,
branches (1) September, 1994 electrical
Treaty Distribution New market January, 1995 16 IN,OH Water and sewer, plumbing,
Group branches air conditioning and heating
Olander & Brophy, Inc. New market March, 1995 4 OH,PA Pool equipment and supplies,
water systems
Port City Electrical Fill-in March, 1995 2 GA,SC Electrical
Supply, Inc.
Elec-Tel Supply Fill-in April, 1995 1 GA Electric utilities
Company
Various branches (1) Fill-in July, 1995- 8 AL,FL,KY,NC, Electrical, pool equipment
February, 1996 NJ,SC,TN,VA and supplies, plumbing
Moore Electric New market August, 1995 5 NC,SC Electrical
Supply, Inc.*
Page 7
<CAPTION>
State(s)/
Type of Date of Number of Territory of
Acquisition Acquisition Acquisition Branches Operation Major Product Groups
<S> <C> <C> <C> <C> <C>
Atlantic Pump & Fill-in September, 1995 4 FL,PR Pool equipment and supplies
Equipment Companies
Florida Pipe & New market December, 1995 1 FL Industrial pipe, valves
Supply Company* and fittings
Waldorf Supply, Inc. Fill-in February, 1996 1 MD Plumbing
West Virginia Water and New market March, 1996 2 WV Water and sewer
Waste Supply Co., Inc.
Electric Laboratories New market April, 1996 3 IL,OH Electric utilities
and Sales Corporation*
PVF Holdings, Inc. New market May, 1996 16 GA,IL,LA,MO,NC, Industrial pipe, valves
NJ,TN,TX,UT,WA and fittings
Gayle Supply Fill-in May, 1996 3 AL Plumbing
Company, Inc.*
R & G Plumbing Fill-in May, 1996 2 AL Plumbing
Supply, Inc.
JuNo Industries, Inc. New market September, 1996 7 FL,GA Industrial pipe, valves
and J.I. Services and fittings
Corporation*
Palm Pool New market September, 1996 2 MI,OH Pool equipment and supplies,
Products, Inc.* water systems
Coastal Wholesale, Fill-in November, 1996 1 FL Pool equipment and supplies,
Inc. water systems
J & J, Inc. Fill-in November, 1996 2 GA,TX Industrial pipe, valves
and fittings
Wholesale Electric New market November, 1996 2 NC,NY Electrical
Supply Corporation
Panhandle Pipe & Fill-in December, 1996 1 WV Water and sewer
Supply Co., Inc.*
Sunbelt Supply Company* New market December, 1996 9 FL,LA,TX,VA Industrial pipe, valves
and fittings
Metals, Incorporated, New market January, 1997 3 AL,MO,OK Industrial pipe, valves
Stainless Tubular and fittings
Products, Inc., and
Metals, Inc. - Gulf
Coast Division*
Dixie Forming & New market February, 1997 5 NC,SC,VA Building materials
Building Specialties
Incorporated
Gulf Pool Equipment New market February, 1997 3 GA,OK,TX Pool equipment and supplies,
Company water systems
---
TOTAL 125
===
* Accounted for as pooling of interests.
(1) Facilities acquired in purchases of assets from four entities.
</TABLE>
Page 8
OPERATING STRATEGY
The Company's operating strategy is based on decentralizing
customer related functions at the branch level, such as sales and local
inventory management, and centralizing certain administrative functions
at the corporate level, such as credit, human resources, finance and
accounting, and management information systems. Key elements of the
Company's operating strategy include:
Comprehensive and Diversified Product Groups. As part of its
emphasis on superior customer service, the Company offers more than
130,000 products in nine product groups at competitive prices.
Distribution of a wide variety of products within product groups assists
the Company's customers in managing their inventory, arranging for
consolidated delivery requirements and providing a greater portion of
total job specifications. The depth and breadth of the Company's
product groups allows it to make add on sales of higher margin, non-
commodity items.
The Company is diversified across nine product groups and various
sectors of the construction industry (such as commercial, residential,
utility and industrial), which lessens its dependence upon market
conditions applicable to any one of its products groups or any single
sector of the construction industry. Further, the Company's product
diversification allows it to participate in multiple phases of
construction projects.
Superior Customer Service. Substantially all of the Company's
sales are to professional customers with whom the Company has developed
long-term relationships. These relationships are largely based on the
Company's history of providing superior service. Customer services
provided by the Company include credit, design assistance, material
specifications, scheduled job site delivery, job site visits to ensure
satisfaction, technical product services, including blueprint take-off
and computerized order quotes, and assistance with product returns.
Local Market Focus. The Company has organized its branches as
autonomous, decentralized branches capable of meeting local market needs
and offering competitive prices. Each branch handles one or more of the
Company's product groups and operates as a separate profit center with
its own sales force. Each branch manager has the authority and
responsibility to set pricing and tailor the product offering and mix,
as well as the nature of services offered, to meet the local market
demand. In addition, each branch manager is responsible for purchasing,
maintenance of adequate inventory levels, cost controls and customer
relations.
The Company has been able to tailor its branch size and product
offerings to perceived market demand. As a result, the Company has
successfully operated branches in secondary cities where management
believes it has achieved significant market share and in larger
metropolitan areas where it has established a sound market presence.
Page 9
Well-Trained and Experienced Workforce. The Company has
implemented extensive employee training and recruiting programs to
ensure that its employees have the skill levels necessary to compete
effectively in today's marketplace. The Company utilizes in-depth
training seminars covering basic and advanced product knowledge, and
selling, purchasing, negotiating and management skills. The Company has
also developed a recruiting and training program to increase the number
of qualified applicants introduced into its management and sales ranks.
The Company has experienced a low rate of turnover among its employees
and, as a result, the Company's corporate management group, branch
managers, outside sales representatives and inside sales account
executives have considerable experience with the Company.
Centralized Administrative Functions. The Company has centralized
certain administrative functions such as credit, human resources,
finance and accounting and management information systems. The
Company's credit function is essential to its success. All credit
decisions are researched, analyzed and approved by a group of regional
credit managers to ensure conformity and quality of credit decisions
across the Company's operations. Management believes that its credit
function has enabled it to be recognized as an industry leader due to
its consistently low level of bad debt expense. Centralization of human
resources, finance and accounting functions ensure conformity in policy
and lower overall cost of administration. The Company's comprehensive
management information system is based on point of sale information and
provides managers with real time inventory, receivables, purchasing,
pricing, credit and margin information. This management information
system allows the Company's branches to more effectively manage their
inventory and receivables and respond more quickly and accurately to
specific customer needs and local market demand.
Volume Purchasing Power. The Company established its Preferred
Vendor Program in 1991 to more effectively leverage its purchasing
power. This program has reduced the number of vendors and has resulted
in stronger, more strategic relationships with a more concentrated group
of vendors. The concentration of vendors has also improved the
Company's ability to assure more timely delivery, reduce errors, and to
obtain better terms and greater financial incentives. Other programs
currently being employed with vendors include vendor managed inventory
systems, bar coding, and electronic exchange of purchase orders and
invoices, each of which has resulted in a reduction in transaction costs
and an improvement in operating efficiency.
PRODUCTS
The Company distributes products in the following nine major
product groups:
Electrical: 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
and other special use fixtures.
Page 10
Plumbing: Plumbing fixtures and related fittings, residential,
commercial and industrial water heaters, and plumbing accessories and
supplies.
Water and Sewer: Water works and industrial supplies, including
large diameter plastic (PVC) and cast iron pipe, fire hydrants, water
meters, valves, backflow prevention devices, and related hardware and
accessories.
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, supplies and service parts.
Industrial Pipe, Valves and Fittings: Mechanical and weld pipe,
valves and related fittings, fire protection systems and supplies, high
performance valves, specialty pipe, stainless steel and other high alloy
pipe, plate, valves and fittings.
Building Materials: Reinforcing wire, reinforcing steel, plyform,
lumber, concrete chemicals, concrete forming accessories, road and
bridge products, masonry accessories and other building materials, hand
tools, power tools and equipment for all mechanical and building trades.
Electric Utilities: Transformers, conductor cable, insulators,
prestressed concrete transmission and distribution poles, and other
electric utility supplies and related hardware, accessories and tools.
Water Systems: Jet and submersible pumps and tanks, residential
and commercial water treatment, well liners, wire, poly pipe,
accessories and environmental products.
Pool Equipment and Supplies: Above-ground and in-ground pool
packages, pumps, filters, heaters, lights, slides, diving boards,
skimmers, drains, chemicals, solar equipment, pool liners and in-ground
pool walls, deck products and cleaning equipment.
SALES AND PURCHASING
The Company employs approximately 525 outside sales representatives
who call on customers and who also work with architects, engineers,
manufacturers' representatives, purchasing agents, and plant
superintendents and foremen for major construction projects.
Approximately 500 inside account executives expedite orders, deliveries,
quotations, and requests for pricing. Most orders are received by
telephone, and materials are delivered by the Company's trucks to the
customer's office or job site.
The Company's purchasing agents in its branches use a computerized
inventory system to monitor stock levels, while central distribution
centers in Orlando, Florida, Forest Park, Georgia, Henderson, North
Carolina, Monroe, North Carolina, Greenville, Ohio and Nashville,
Tennessee provide purchasing assistance as well as a broad stock of
inventory which supplements the inventory of the branches.
Page 11
CUSTOMERS AND SUPPLIERS
The Company currently serves over 65,000 customers, and no single
customer accounts for more than 1% 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 from inventory at the Company's branches. The Company also
accommodates special orders from its customers and facilitates the
shipment of certain large volume orders directly from the manufacturer
to the customer.
The Company regularly purchases from over 6,000 manufacturers and
suppliers, of which approximately 600 are currently part of the
Company's Preferred Vendor Program. No single supplier accounted for
more than 5% of the Company's total purchases during fiscal 1997.
INVENTORIES
The Company is a wholesale distributor of construction and
industrial materials and maintains significant inventories to meet rapid
delivery requirements and to assure itself of a continuous allotment of
goods from suppliers. As of January 31, 1997, inventories constituted
approximately 39% of the Company's total assets.
COMPETITION
Management believes that the Company is one of the largest
wholesale distributors of its range of products in the southeastern and
midwestern United States. However, there is strong competition in each
product group distributed by the Company. 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, pool supplies and contractor's tools. The principal
competitive factors in the Company's business are product availability,
pricing, technical product knowledge as to application and usage, and
advisory and other service capabilities.
EMPLOYEES
As of January 31, 1997, the Company had approximately 4,400
employees consisting of approximately 15 executives, 500 managers, 1,025
sales personnel and 2,860 other employees, including truck drivers,
warehouse personnel, office and clerical workers. Over the last year,
the Company's work force has increased by approximately 31% compared to
the prior year as a result of increased sales volume and all completed
business acquisitions. The Company considers its relationship with its
employees to be excellent.
Page 12
ITEM 2. PROPERTIES
The Company leases approximately 34,000 square feet of an office
building in Orlando, Florida for its headquarters. In addition, the
Company owns or leases 286 facilities in 25 states and Puerto Rico. The
typical sales branch consists of a combined office and warehouse
facility ranging in size from 3,000 to 50,000 square feet, with paved
parking and storage areas. The Company also operates a computer center,
six central distribution warehouses, and a garage and trucking terminal.
Additional information regarding owned and leased properties of the
Company is set forth as Exhibit 99.1 to this Report and in Note 7 of the
Notes to Consolidated Financial Statements of the Annual Report to
Shareholders for the fiscal year ended January 31, 1997, 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
The Company is involved in various legal proceedings incidental to
the ordinary conduct of its business. Management believes that none of
these proceedings will have a material adverse impact on its financial
condition, results of operations or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the Company's security holders
during the fourth quarter of the fiscal year ended January 31, 1997.
Page 13
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Information with respect to the principal market for the Company's
common stock, stock prices and dividend information is set forth under
the captions "Corporate and Shareholder Information" and in Note 11 of
the Notes to Consolidated Financial Statements of the Company's Annual
Report to Shareholders for the fiscal year ended January 31, 1997, 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
Information with respect to selected financial data of the Company
is set forth under the caption "Selected Financial Data" of the
Company's Annual Report to Shareholders for the fiscal year ended
January 31, 1997, 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
Information with respect to the Company's financial condition,
changes in financial condition and results of operations is set forth
under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" of the Company's Annual Report to
Shareholders for the fiscal year ended January 31, 1997, 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 Financial Data
Information with respect to selected quarterly financial data of
the Company is set forth in Note 11 of the Notes to Consolidated
Financial Statements of the Company's Annual Report to Shareholders for
the fiscal year ended January 31, 1997, a copy of which is filed as an
exhibit to this Report and the cited portion of which is incorporated
herein by reference.
Page 14
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
The Company 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.
Page 15
PART III
All information required by Part III (Items 10, 11, 12 and 13) is
incorporated by reference to the Company's Definitive Proxy Statement
for the 1997 Annual Meeting of Shareholders.
Page 16
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 Report 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 31, 1997.
(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 Articles of Incorporation, as amended, filed as Exhibit
3.1 to Form 10-Q for the quarter ended July 31, 1994
(Commission File No. 001-08772).
3.2 Composite By-Laws, as amended, filed as Exhibit 3.2 to
Form 10-Q for the quarter ended July 31, 1994 (Commission
File No. 001-08772).
(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 (Commission File No. 0-5235).
4.2 Resolution Approving and Implementing Shareholder Rights
Plan filed as Exhibit 4.4 to Form 8-K dated May 17, 1988
(Commission File No. 0-5235).
Page 17
(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 (Commission File No. 0-
5235). 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 (Commission File No. 0-5235).
(b) Leases effective March 31, 1988, filed as Exhibit
10.1(c) to Form 10-K for the fiscal year ended
January 27, 1989 (Commission File No. 0-5235).
Sub-Item Property
(1) Clearwater
(2) Daytona Beach
(3) Fort Pierce
(4) Lakeland
(6) Leesburg
(7) Orlando Electrical Operation
(8) Orlando Plumbing Operation
(9) Orlando Utility Warehouse
(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
(Commission File No. 0-5235).
(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 (Commission
File No. 0-5235).
(e) Leases dated March 11, 1992, filed as Exhibit
10.1(e) to Form 10-K for the fiscal year ended
January 31, 1992 (Commission File No. 0-5235).
Sub-Item Property
(2) Gainesville Electrical Operation
Page 18
10.2 Hughes Supply, Inc. 1988 Stock Option Plan as amended
March 12, 1996 filed as Exhibit 10.2 to Form 10-K for the
fiscal year ended January 26, 1996 (Commission File No.
001-08772).
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 (Commission File
No. 0-5235).
10.4 Directors' Stock Option Plan, as amended, filed as
Exhibit 10.4 to Form 10-Q for the quarter ended July 31,
1994 (Commission File No. 001-08772).
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 (Commission
File No. 0-5235).
10.6 Lease Agreement dated June 30, 1993 between Donald C.
Martin and Electrical Distributors, Inc., filed as
Exhibit 10.6 to Form 10-K for fiscal year ended January
28, 1994 (Commission File No. 001-08772).
10.7 Consulting Agreement dated June 30, 1993 between Hughes
Supply, Inc. and Donald C. Martin, filed as Exhibit 10.7
to Form 10-K for fiscal year ended January 28, 1994
(Commission File No. 001-08772).
10.8 Written description of senior executives' long-term
incentive bonus plan for fiscal year 1996 incorporated by
reference to the description of the bonus plan set forth
under the caption "Approval of the Stock Award Provisions
of the Senior Executives' Long-Term Incentive Bonus Plan
for Fiscal Year 1996" on pages 26 and 27 of the
Registrant's Proxy Statement Annual Meeting of
Shareholders To Be Held May 24, 1994 (Commission File No.
001-08772).
10.9 Hughes Supply, Inc. Amended Senior Executives' Long-Term
Incentive Bonus Plan, adopted January 25, 1996, filed as
Exhibit 10.9 to Form 10-K for the fiscal year ended
January 26, 1996 (Commission File No. 001-08772).
10.10 Lease Agreement dated June 24, 1996 between Donald C.
Martin and Hughes Supply, Inc., filed as Exhibit 10.10 to
Form 10-Q for the quarter ended October 31, 1996
(Commission File No. 001-08772).
Page 19
10.11 Lease Agreements between Union Warehouse & Trucking
Company (d/b/a Union Warehouse & Realty Company) or
Monoco Realty and USCO Incorporated.
(a) Leases dated March 1, 1985 and amended December 23,
1986, filed as Exhibit 10.11(a) to Form 10-K for
the fiscal year ended January 26, 1996 (Commission
File No. 001-08772).
Sub-Item Property
(1) 610 East Windsor St., Monroe, NC
(2) 113-115 Henderson St., Monroe, NC
(3) Statesville, NC
(4) Charlotte, NC
(5) Durham, NC
(6) Pinehurst, NC
(7) West Columbia, SC
(b) Lease dated July 1, 1986 and amended December 23,
1986 for Aiken, South Carolina property, filed as
Exhibit 10.11(b) to Form 10-K for the fiscal year
ended January 26, 1996 (Commission File No. 001-
08772).
(c) Lease dated March 1, 1990 for Greenville, South
Carolina property, filed as Exhibit 10.11(c) to
Form 10-K for the fiscal year ended January 26,
1996 (Commission File No. 001-08772).
(d) Lease dated November 1, 1993 for Cheraw, South
Carolina property, filed as Exhibit 10.11(d) to
Form 10-K for the fiscal year ended January 26,
1996 (Commission File No. 001-08772).
(e) Lease dated March 1, 1985 and amended October 1,
1992 for 1515 Morgan Mill Road, Monroe, North
Carolina property, filed as Exhibit 10.11(e) to
Form 10-K for the fiscal year ended January 26,
1996 (Commission File No. 001-08772).
(f) Lease amendment letter between Union Warehouse &
Realty Company, Monoco Realty Company and Hughes
Supply, Inc., dated October 18, 1994, amending the
leases for the eleven properties listed in Exhibit
10.11(a) through (e), filed as Exhibit 10.11(f) to
Form 10-K for the fiscal year ended January 26,
1996 (Commission File No. 001-08772).
(g) Lease effective February 1, 1996 for Pineville,
North Carolina property, filed as Exhibit 10.11(g)
to Form 10-K for the fiscal year ended January 26,
1996 (Commission File No. 001-08772).
Page 20
10.12 Lease Agreement effective February 1, 1993 between Union
Warehouse & Realty Company and Moore Electric Supply,
Inc., filed as Exhibit 10.12 to Form 10-K for the fiscal
year ended January 26, 1996 (Commission File No. 001-
08772).
(11) Statement re computation of per share earnings.
11.1 Summary schedule of earnings per share calculations.
(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 31, 1997.
(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 Price Waterhouse LLP.
(24) Power of attorney. Not applicable.
(27) Financial data schedule.
27.1 Financial Data Schedule (filed electronically only).
27.2 Restated Financial Data Schedule (filed electronically
only).
27.3 Restated Financial Data Schedule (filed electronically
only).
(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.
Page 21
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 and
Chief Accounting Officer
Date: April 4, 1997
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/ Clifford M. Hames
David H. Hughes Clifford M. Hames
April 4, 1997 April 4, 1997
(Director) (Director)
/s/ John D. Baker, II /s/ Russell V. Hughes
John D. Baker, II Russell V. Hughes
April 4, 1997 April 4, 1997
(Director) (Director)
/s/ Robert N. Blackford /s/ Vincent S. Hughes
Robert N. Blackford Vincent S. Hughes
April 4, 1997 April 4, 1997
(Director) (Director)
/s/ H. Corbin Day /s/ Herman B. McManaway
H. Corbin Day Herman B. McManaway
April 4, 1997 April 4, 1997
(Director) (Director)
/s/ John B. Ellis /s/ Donald C. Martin
John B. Ellis Donald C. Martin
April 4, 1997 April 4, 1997
(Director) (Director)
/s/ A. Stewart Hall, Jr.
A. Stewart Hall, Jr.
April 4, 1997
(Director)
Page 22
HUGHES SUPPLY, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
The following consolidated financial statements of the Registrant and
its subsidiaries included in the Registrant's Annual Report to
Shareholders for the fiscal year ended January 31, 1997, are
incorporated by reference:
Annual
Report
Page
Consolidated Statements of Income
for the years ended January 31, 1997,
January 26, 1996 and January 27, 1995 14
Consolidated Balance Sheets as of
January 31, 1997 and January 26, 1996 15
Consolidated Statements of Shareholders'
Equity for the years ended January 31,
1997, January 26, 1996 and January 27, 1995 16
Consolidated Statements of Cash Flows for
the years ended January 31, 1997,
January 26, 1996 and January 27, 1995 17
Notes to Consolidated Financial Statements 18
Report of Independent Certified
Public Accountants 27
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.
Page 23
INDEX OF EXHIBITS FILED WITH THIS REPORT
11.1 Summary schedule of earnings per share calculations.
13.1 Information incorporated by reference into Form 10-K from the
Annual Report to Shareholders for the fiscal year ended
January 31, 1997.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Price Waterhouse LLP.
27.1 Financial data schedule (filed electronically only).
27.2 Restated financial data schedule (filed electronically only).
27.3 Restated financial data schedule (filed electronically only).
99.1 Location of facilities.
Page 24
Exhibit 11.1
HUGHES SUPPLY, INC.
SUMMARY SCHEDULE OF EARNINGS PER SHARE CALCULATIONS
(in thousands, except per share amounts)
Potentially dilutive securities:
a) Options for common stock, issued under stock option plan.
b) 7% Convertible subordinated debentures, due May 1, 2011.
<TABLE>
<CAPTION>
Fiscal Year Ended
<S> <C> <C> <C>
1/31/97 1/26/96 1/27/95
Line
- ----
SHARES
------
1 Average shares outstanding 10,367 8,392 7,784
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 208 130 142
------- ------- -------
3 Shares used in calculating Earnings Per
Common and Common Equivalent Share 10,575 8,522 7,926
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 16 80 4
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 0 180
------- ------- -------
6 Shares used in calculating Earnings Per
Common Share - Assuming Full Dilution 10,591 8,602 8,110
======= ======= =======
</TABLE>
HUGHES SUPPLY, INC.
<TABLE>
<CAPTION>
Fiscal Year Ended
<S> <C> <C> <C>
1/31/97 1/26/96 1/27/95
Line
- ----
EARNINGS
--------
7 Net income per financial statements, used in
calculating Earnings Per Common Share and
Earnings Per Common and Common Equivalent
Share $32,528 $23,206 $15,881
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 0 166
------- ------- -------
9 Earnings used in calculating Earnings Per
Common Share - Assuming Full Dilution $32,528 $23,206 $16,047
======= ======= =======
RESULTING PER SHARE DATA
------------------------
10 Earnings per common share (Line 7/Line 1) $ 3.14 $ 2.77 $ 2.04
======= ======= =======
11 Earnings per common share and common
equivalent share (Line 7/Line 3) $ 3.08 $ 2.72 $ 2.00
======= ======= =======
12 Dilution 1.9% 1.8% 2.0%
======= ======= =======
13 Earnings per common share - assuming full
dilution (Line 9/Line 6) $ 3.07 $ 2.70 $ 1.98
======= ======= =======
14 Dilution 2.2% 2.5% 2.9%
======= ======= =======
15 Used in statements of income:
[ ] Line 10, if dilution less than 3%, or antidilution, exists for all
periods.
[ X ] Lines 11 and 13, if dilution >= 3% for any period.
</TABLE>
HUGHES SUPPLY, INC. ANNUAL REPORT
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Fiscal Years Ended
-----------------------------------------
January 31, January 26, January 27,
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Net Sales .......................................................... $ 1,516,088 $ 1,242,446 $ 994,811
Cost of Sales ...................................................... 1,200,179 989,214 797,123
----------- ----------- -----------
Gross Profit ....................................................... 315,909 253,232 197,688
----------- ----------- -----------
Operating Expenses:
Selling, general and administrative .............................. 240,830 200,767 159,548
Depreciation and amortization .................................... 14,964 11,272 9,654
Provision for doubtful accounts .................................. 842 1,907 1,415
----------- ----------- -----------
Total operating expenses ........................................ 256,636 213,946 170,617
----------- ----------- -----------
Operating Income ................................................... 59,273 39,286 27,071
----------- ----------- -----------
Non-Operating Income and (Expenses):
Interest and other income ........................................ 5,953 4,961 3,203
Interest expense ................................................. (13,520) (9,380) (6,414)
----------- ----------- -----------
(7,567) (4,419) (3,211)
----------- ----------- -----------
Income Before Income Taxes ......................................... 51,706 34,867 23,860
Income Taxes ....................................................... 19,178 11,661 7,979
----------- ----------- -----------
Net Income ......................................................... $ 32,528 $ 23,206 $ 15,881
=========== =========== ===========
Earnings Per Share:
Primary .......................................................... $ 3.08 $ 2.72 $ 2.00
=========== =========== ===========
Fully diluted .................................................... $ 3.07 $ 2.70 $ 1.98
=========== =========== ===========
Average Shares Outstanding:
Primary .......................................................... 10,576 8,523 7,926
=========== =========== ===========
Fully diluted .................................................... 10,591 8,602 8,110
=========== =========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
14
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
January 31, January 26,
1997 1996
---------- ----------
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents ............................. $ 6,329 $ 3,644
Accounts receivable, less allowance for
losses of $3,809 and $4,868 ........................ 195,200 155,702
Inventories ........................................... 250,113 167,138
Deferred income taxes ................................. 12,761 10,501
Other current assets .................................. 12,366 16,737
-------- --------
Total current assets ............................... 476,769 353,722
Property and Equipment, Net ............................. 73,038 62,751
Excess of Cost over Net Assets Acquired ................. 89,755 16,637
Deferred Income Taxes ................................... 2,204 2,436
Other Assets ............................................ 7,736 5,249
-------- --------
$649,502 $440,795
======== ========
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities:
Current portion of long-term debt ..................... $ 3,108 $ 3,238
Accounts payable ...................................... 111,997 102,262
Accrued compensation and benefits ..................... 16,508 13,551
Other current liabilities ............................. 14,768 17,525
-------- --------
Total current liabilities .......................... 146,381 136,576
Long-Term Debt .......................................... 221,988 131,682
Other Noncurrent Liabilities ............................ 2,199 1,771
-------- --------
Total liabilities .................................. 370,568 270,029
-------- --------
Commitments and Contingencies (Note 7)
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; 20,000,000 shares
authorized; 11,518,298 and 8,465,662 shares issued .. 11,518 8,466
Capital in excess of par value ......................... 114,927 40,048
Retained earnings ...................................... 152,489 122,252
-------- --------
Total shareholders' equity .......................... 278,934 170,766
-------- --------
$649,502 $440,795
======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
15
<PAGE>
HUGHES SUPPLY, INC. ANNUAL REPORT
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Common Stock Capital in Treasury Stock
------------------------- Excess of Retained ----------------------------
Shares Amount Par Value Earnings Shares Amount
----------- ----------- ------------ ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 28, 1994,
as previously reported ................. 5,514,727 $ 5,515 $ 15,134 $ 83,901 418,566 $ (6,484)
Adjustment for poolings of interests . 1,667,200 1,667 (822) 9,153 - -
----------- ----------- ----------- ----------- ----------- -----------
Balance, January 28, 1994, as restated .. 7,181,927 7,182 14,312 93,054 418,566 (6,484)
Net income ........................... - - - 15,881 - -
Cash dividends -
$.22 per share ...................... - - - (1,290) - -
Pooled companies .................... - - - (1,957) - -
Treasury shares contributed
to employee benefit plan ............ - - 243 - (16,597) 257
Conversion of subordinated convertible
debentures into common stock ........ 1,081,146 1,081 21,670 - - -
Stock dividend by pooled company ..... 26,101 26 207 (233) - -
Shares issued under stock option plans - - 121 (141) (44,341) 687
Purchase and retirement
of common shares .................... (8,217) (8) (35) (170) - -
Other acquisitions ................... - - 434 - (248,640) 3,852
----------- ----------- ----------- ----------- ----------- -----------
Balance, January 27, 1995 ............... 8,280,957 8,281 36,952 105,144 108,988 (1,688)
Net income ........................... - - - 23,206 - -
Cash dividends -
$.30 per share ...................... - - - (1,971) - -
Pooled companies .................... - - - (3,330) - -
Stock dividend by pooled company ..... 28,710 29 260 (289) - -
Shares issued under stock option plans 6,657 7 270 (154) (86,984) 1,347
Purchase and retirement
of common shares .................... (19,642) (20) (146) (354) - -
Other acquisitions ................... 168,980 169 2,712 - (22,004) 341
----------- ----------- ----------- ----------- ----------- -----------
Balance, January 26, 1996 ............... 8,465,662 8,466 40,048 122,252 - -
Net income ........................... - - - 32,528 - -
Cash dividends -
$.38 per share ...................... - - - (3,712) - -
Pooled companies .................... - - - (2,918) - -
Shares issued under stock option
and bonus plans ..................... 66,314 66 987 - - -
Issuance of shares in public offering 1,486,989 1,487 46,706 - - -
Purchase and retirement
of common shares .................... (14,632) (15) (209) (329) - -
Other acquisitions ................... 1,513,965 1,514 27,395 4,668 - -
----------- ----------- ----------- ----------- ----------- -----------
Balance, January 31, 1997 ............... 11,518,298 $ 11,518 $ 114,927 $ 152,489 - $ -
=========== =========== =========== =========== =========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
16
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Fiscal Years Ended
-------------------------------------------
January 31, January 26, January 27,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents:
Cash flows from operating activities:
Cash received from customers .............................................. $ 1,505,903 $ 1,231,106 $ 979,122
Cash paid to suppliers and employees ...................................... (1,471,388) (1,192,412) (962,508)
Interest received ......................................................... 3,755 3,540 2,397
Interest paid ............................................................. (12,627) (9,156) (5,961)
Income taxes paid ......................................................... (22,676) (15,729) (9,383)
----------- ----------- -----------
Net cash provided by operating activities ............................... 2,967 17,349 3,667
----------- ----------- -----------
Cash flows from investing activities:
Capital expenditures ...................................................... (16,104) (13,140) (13,117)
Proceeds from sale of property and equipment .............................. 1,748 1,285 812
Business acquisitions, net of cash ........................................ (100,078) (10,009) (11,099)
----------- ----------- -----------
Net cash used in investing activities ................................... (114,434) (21,864) (23,404)
----------- ----------- -----------
Cash flows from financing activities:
Net borrowings (payments) under short-term
debt arrangements ....................................................... (5,688) 15,418 26,789
Principal payments on:
Long-term notes ......................................................... (19,985) (6,033) (1,266)
Capital lease obligations ............................................... (777) (844) (725)
Proceeds from issuance of long-term debt .................................. 98,000 - -
Net proceeds from sale of common stock .................................... 48,193 - -
Proceeds from issuance of common shares
under stock option plans ................................................ 1,053 1,470 667
Purchase of common shares ................................................. (553) (520) (213)
Dividends paid ............................................................ (6,091) (5,106) (3,111)
----------- ----------- -----------
Net cash provided by financing activities ............................... 114,152 4,385 22,141
----------- ----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents ......................... 2,685 (130) 2,404
Cash and Cash Equivalents, beginning of year ................................. 3,644 3,774 1,370
----------- ----------- -----------
Cash and Cash Equivalents, end of year ....................................... $ 6,329 $ 3,644 $ 3,774
=========== =========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
17
<PAGE>
HUGHES SUPPLY, INC. ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 1 - DESCRIPTION OF BUSINESS AND 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
primarily to the construction industry. Major product lines distributed by the
Company include electrical; plumbing; water and sewer; air conditioning and
heating; industrial pipe, valves and fittings; building materials; electric
utilities; water systems; and pool equipment and supplies. The Company's
principal customers are electrical, plumbing and mechanical contractors,
electric utility companies, 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 companies acquired and accounted for as poolings of interests.
Results of operations of companies purchased and immaterial poolings are
included from the dates of acquisition. The Company's minority investment in
affiliates is accounted for by the equity method.
FISCAL YEAR
The Company's fiscal year ends on the last Friday in January. Fiscal year 1997
was a 53-week period while fiscal years 1996 and 1995 each contained 52 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 is determined by the average cost method.
PROPERTY AND EQUIPMENT
Buildings and equipment are recorded at cost and 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 3-10 years
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.
EXCESS OF COST OVER NET ASSETS ACQUIRED
The excess of cost over the fair value of net assets of purchased companies
(goodwill) is being amortized by the straight-line method over 15 to 25 years.
At January 31, 1997 and January 26, 1996, goodwill was $89,755 and $16,637,
respectively, net of accumulated amortization of $6,029 and $1,507,
respectively.
OTHER ASSETS
The Company capitalizes certain internal software development costs which are
amortized by the straight-line method over the estimated useful lives of the
software not to exceed five years. At January 31, 1997, unamortized software
development costs were $1,500. Amortization of capitalized software was $78 in
fiscal 1997. In fiscal 1996 and 1995, internal software development costs were
not material.
IMPAIRMENT OF LONG-LIVED ASSETS
In the event that facts and circumstances indicate that the carrying value of a
long-lived asset, including associated intangibles, may be impaired, an
evaluation of recoverability is performed by comparing the estimated future
undiscounted cash flows associated with the asset to the asset's carrying amount
to determine if a write-down to market value or discounted cash flow is
required. Statement of Financial Accounting Standards No. 121, ACCOUNTING FOR
THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF
("SFAS 121"), was issued in March 1995 and has been implemented by the Company
in fiscal 1997. However, as the Company's previous accounting policy was
consistent with the provisions of SFAS 121, there was no impact as a result of
adopting the new standard.
REVENUE RECOGNITION
The Company recognizes revenue from product sales when goods are received by
customers.
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.
STOCK-BASED COMPENSATION
The Company accounts for compensation cost related to employee stock options and
other forms of employee stock-based compensation plans in accordance with the
requirements of Accounting Principles Board Opinion No. 25, ACCOUNTING FOR STOCK
ISSUED TO EMPLOYEES ("APB 25"). APB 25 requires compensation cost for
stock-based compensation plans to be recognized based on the difference, if any,
18
<PAGE>
between the fair market value of the stock on the date of grant and the option
exercise price. In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION ("SFAS 123"). SFAS 123 established a fair value-based method of
accounting for compensation cost related to stock options and other forms of
stock-based compensation plans. SFAS 123 allows an entity to continue to measure
compensation cost using the principles of APB 25 if certain pro forma
disclosures are made. SFAS 123 was effective for fiscal years beginning after
December 15, 1995. The Company adopted the provisions for the pro forma
disclosure requirements of SFAS 123 in fiscal 1997.
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. Fully diluted earnings per share assumes the
conversion of 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.
RECLASSIFICATIONS
The January 26, 1996 balance sheet contains certain reclassifications which were
made to conform to the January 31, 1997 financial statement format. None of
these reclassifications affected net income or shareholders' equity.
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles necessarily requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 2 - BUSINESS COMBINATIONS
On April 26, 1996, the Company exchanged 490,161 shares of the Company's common
stock for all of the common stock of Electric Laboratories and Sales Corporation
and ELASCO Agency Sales, Inc. (collectively, "ELASCO"). ELASCO is a wholesale
distributor of electric utility supplies and equipment with three outlets in
Illinois and Ohio. ELASCO was a Subchapter S corporation for federal income tax
purposes and, accordingly, did not pay U.S. federal income taxes. ELASCO will be
included in the Company's U.S. federal income tax return effective April 26,
1996.
On December 11, 1996, the Company exchanged 155,556 shares of the Company's
common stock for all of the common stock of Panhandle Pipe and Supply Co., Inc.
("PPSC"). PPSC is a wholesale distributor of water and sewer supplies and
equipment with one outlet in West Virginia.
On December 30, 1996, the Company exchanged 483,882 shares of the Company's
common stock for all of the common stock of Sunbelt Supply Co. ("Sunbelt").
Sunbelt is a wholesale distributor of industrial valves, flanges and fittings
with nine outlets in Texas, Louisiana, Virginia and Florida.
On January 24, 1997, the Company exchanged 537,601 shares of the Company's
common stock for all of the common stock of Metals, Incorporated, Stainless
Tubular Products, Inc. and Metals, Inc. - Gulf Coast Division (collectively, the
"Metals Group"). The Metals Group is a wholesale distributor of stainless steel,
high temperature and corrosion resistant pipe, bar and flat products with three
outlets in Oklahoma, Alabama and Missouri. Metals, Incorporated and Stainless
Tubular Products, Inc. were Subchapter S corporations for federal income tax
purposes and accordingly, did not pay U.S. federal income taxes. They will be
included in the Company's U.S. federal income tax return effective January 24,
1997.
The above transactions have been accounted for as poolings of interests and,
accordingly, the consolidated financial statements for the periods presented
have been restated to include the accounts of ELASCO, PPSC, Sunbelt and the
Metals Group. ELASCO's, PPSC's, Sunbelt's and the Metals Group's fiscal year
ends have been changed 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
ELASCO, PPSC, Sunbelt and the Metals Group mergers were as follows:
Unaudited
Pro Forma
Net Net Net
Sales Income Income
---------- ------- ---------
Nine months ended
October 31, 1996
(unaudited):
Hughes, as
previously reported ........ $1,050,187 $22,011 $21,874
PPSC ......................... 7,528 212 212
Sunbelt ...................... 52,705 1,179 1,179
Metals Group ................. 40,250 1,734 1,067
---------- ------- -------
Combined ..................... $1,150,670 $25,136 $24,332
========== ======= =======
Fiscal year ended
January 26, 1996:
Hughes, as
previously reported ........ $1,082,179 $16,050 $16,050
ELASCO ....................... 44,616 2,181 1,287
PPSC ......................... 7,740 112 112
Sunbelt ...................... 56,959 921 921
Metals Group ................. 50,952 3,942 2,379
---------- ------- -------
Combined ..................... $1,242,446 $23,206 $20,749
========== ======= =======
19
<PAGE>
HUGHES SUPPLY, INC. ANNUAL REPORT
Unaudited
Pro Forma
Net Net Net
Sales Income Income
-------- ------- ---------
Fiscal year ended
January 27, 1995:
Hughes, as
previously reported ......... $875,459 $11,485 $11,485
ELASCO ........................ 35,903 2,139 1,293
PPSC .......................... 8,489 312 312
Sunbelt ....................... 39,079 430 430
Metals Group .................. 35,881 1,515 906
-------- ------- -------
Combined ...................... $994,811 $15,881 $14,426
======== ======= =======
Unaudited pro forma net income reflects adjustments to net income to record an
estimated provision for income taxes for each period presented assuming ELASCO,
Metals, Incorporated and Stainless Tubular Products, Inc. were tax paying
entities.
On May 13, 1996, the Company acquired substantially all of the assets,
properties and business of PVF Holdings, Inc. and its subsidiaries ("PVF"), a
wholesale distributor of stainless steel pipe, valves and fittings with 16
locations nationwide. The aggregate consideration paid was $108,984, consisting
of cash in the amount of $82,069, the issuance of 737,645 shares of common stock
having an agreed-upon value of $27.763 per share and the assumption of $6,436 of
bank debt. The transaction was accounted for as a purchase and the results of
operations of PVF from the date of acquisition are included in the consolidated
financial statements. The excess of cost over net assets acquired is being
amortized over 15 years by the straight-line method.
The following table reflects the unaudited pro forma combined results of
operations, assuming the PVF acquisition had occurred at the beginning of each
year presented:
Fiscal Years Ended
-----------------------
1997 1996
---------- ----------
Net sales ..................................... $1,549,163 $1,351,605
Net income .................................... 34,843 35,346
Earnings per share:
Primary ..................................... 3.22 3.82
Fully diluted ............................... 3.22 3.78
The past and future financial performance of PVF will be directly influenced by
the cost of stainless steel and nickel alloy which as a commodity item can and
does fluctuate. Significant fluctuations in the prices of stainless steel and
nickel alloy which have occurred in the fiscal years presented have resulted in
gross margins for PVF of 28.6% for the fiscal year ended 1997 compared to 37.3%
for the fiscal year ended 1996 included in the pro forma information above. As a
result of the commodity price fluctuations and the fact that these significant
price fluctuations could continue to create cyclicality in PVF's future
operating performance, management believes that the pro forma information is not
necessarily indicative of future performance.
During fiscal 1997, 1996 and 1995, the Company acquired several other wholesale
distributors of materials to the construction industry that were accounted for
as purchases or immaterial poolings. 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.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
1997 1996
-------- --------
Land ................................................ $ 15,878 $ 14,851
Buildings and improvements .......................... 57,532 48,960
Transportation equipment ............................ 24,440 21,809
Furniture, fixtures and equipment ................... 33,382 27,342
Assets under capital leases ......................... 9,696 10,551
-------- --------
140,928 123,513
Less accumulated depreciation
and amortization ................................. (67,890) (60,762)
-------- --------
$ 73,038 $ 62,751
======== ========
NOTE 4 - LONG-TERM DEBT
Long-term debt consists of the following:
1997 1996
-------- --------
7.96% Senior notes, due 2011 ....................... $ 98,000 $ -
Unsecured revolving bank notes under
$150,000 credit agreement, payable
June 30, 1999, fluctuating interest
(5.8% to 6.0% at January 31, 1997) ............... 80,000 68,300
Short-term instruments classified as
long-term debt ................................... 40,921 40,128
Other notes payable ................................ 3,929 23,478
Capital lease obligations .......................... 2,246 3,014
-------- --------
225,096 134,920
Less current portion ............................... (3,108) (3,238)
-------- --------
$221,988 $131,682
======== ========
On May 29, 1996 the Company issued $98,000 of senior notes in a private
placement in connection with the acquisition of PVF. The notes mature in 2011,
bear interest at 7.96% and will be payable in 20 equal semi-annual payments
beginning in 2001. Proceeds received by the Company in the private placement of
the senior notes were used to partially fund the PVF acquisition and to reduce
indebtedness outstanding under the Company's revolving credit facility and line
of credit agreement.
On October 10, 1996, the Company's revolving credit and line of credit agreement
with a group of banks was amended. The agreement, as amended, now permits the
Company to borrow up to $150,000 (subject to borrowing limitations under the
agreement) - $100,000 long-term, expiring June 30, 1999, and $50,000 line of
credit convertible to a term note due two years from conversion date. The
$50,000 line of credit backs commercial paper. 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.
20
<PAGE>
Loan covenants require the Company to maintain consolidated working capital of
not less than $75,000 and a maximum ratio of funded debt to total capital, as
defined, of .60 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 $24,230 is
available at January 31, 1997 for payment of dividends.
The Company has a commercial paper program backed by its revolving credit
facility. The weighted average interest rate on outstanding commercial paper
borrowings of $36,521 and $35,000 as of January 31, 1997 and January 26, 1996
was 5.5% and 5.9%, respectively. In addition, the Company had bank short-term
borrowings of $4,400 and $5,128 at weighted average interest rates of 6.0% and
10.6% as of January 31, 1997 and January 26, 1996, respectively.
The Company's credit facility enables the Company to refinance short-term
borrowings on a long-term basis to the extent that the credit facility is
unused. Accordingly, $40,921 and $40,128 of short-term borrowings at January 31,
1997 and January 26, 1996, respectively, have been classified as long-term debt.
The carrying value of notes payable is a reasonable estimate of fair value since
interest rates are based on prevailing market rates.
Maturities of long-term debt, excluding capital lease obligations, for each of
the five years subsequent to January 31, 1997 and in the aggregate are as
follows:
Fiscal Years Ending
- -------------------------------------------------------------------------------
1998 ............................................................ $ 2,149
1999 ............................................................ 1,714
2000 ............................................................ 120,978
2001 ............................................................ 9
2002 ............................................................ 9,334
Later years ..................................................... 88,666
--------
$222,850
========
NOTE 5 - INCOME TAXES
The components of deferred tax assets and liabilities at January 31, 1997 and
January 26, 1996 are as follows:
1997 1996
------- -------
Deferred tax assets:
Allowance for doubtful accounts ............... $ 1,513 $ 1,829
Inventories ................................... 3,461 1,821
Capital leases ................................ 377 503
Property and equipment ........................ 864 1,171
Accrued vacation .............................. 1,588 914
Deferred compensation ......................... 832 681
Environmental clean-up costs .................. 91 268
Operating leases .............................. 286 276
Other accrued liabilities ..................... 5,253 5,106
Other ......................................... 706 389
------ ------
Total deferred tax assets ................... 14,971 12,958
------ ------
Deferred tax liabilities:
Intangible assets ........................... 6 21
------- -------
Net deferred tax assets .......................... $14,965 $12,937
======= =======
No valuation allowance has been provided for these deferred tax assets at
January 31, 1997 and January 26, 1996 as full realization of these assets is
expected.
The consolidated provision for income taxes consists of the following:
Fiscal Years Ended
----------------------------------------
1997 1996 1995
-------- --------- --------
Currently payable:
Federal ...................... $ 18,399 $ 11,676 $ 10,161
State ........................ 2,807 1,796 1,667
-------- -------- --------
21,206 13,472 11,828
-------- -------- --------
Deferred:
Federal ...................... (1,739) (1,555) (3,650)
State ........................ (289) (256) (199)
-------- -------- --------
(2,028) (1,811) (3,849)
-------- -------- --------
$ 19,178 $ 11,661 $ 7,979
======== ======== ========
The following is a reconciliation of tax computed at the statutory Federal rate
to the income tax expense in the consolidated statements of income:
<TABLE>
<CAPTION>
Fiscal Years Ended
-----------------------------------------------------------------
1997 1996 1995
------------------ ------------------- --------------------
Amount % Amount % Amount %
-------- ---- --------- ---- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Tax computed at statutory
Federal rate ...................... $ 18,097 35.0 $ 12,204 35.0 $ 8,351 35.0
Effect of:
State income tax,
net of Federal income tax benefit 1,637 3.2 991 2.8 955 4.0
ELASCO earnings ................... (121) (.2) (772) (2.2) (756) (3.2)
Metals Group earnings ............. (618) (1.2) (1,395) (4.0) (530) (2.2)
Nondeductible purchase
adjustments ..................... 123 .2 43 .1 38 .1
Nondeductible expenses ............ 637 1.2 396 1.1 330 1.4
Other, net ........................ (577) (1.1) 194 .6 (409) (1.7)
-------- ---- -------- ----- -------- ----
Income tax expense ................ $ 19,178 37.1 $ 11,661 33.4 $ 7,979 33.4
======== ==== ======== ===== ======== ====
</TABLE>
Prior to their merger with the Company, ELASCO, Metals, Incorporated and
Stainless Tubular Products, Inc. were Subchapter S corporations and were not
subject to corporate income tax. ELASCO's Subchapter S corporation status
terminated upon the merger with the Company on April 26, 1996 while Metals,
Incorporated and Stainless Tubular Products, Inc.'s Subchapter S corporation
status terminated upon the merger with the Company on January 24, 1997.
21
<PAGE>
HUGHES SUPPLY, INC. ANNUAL REPORT
NOTE 6 - 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. At January 31, 1997 and
January 26, 1996, the plan owned approximately 172,000 and 184,000 shares,
respectively, of the Company's common stock, all of which were allocated to
participants.
Amounts charged to expense for these and other similar plans during fiscal 1997,
1996 and 1995 were $2,088, $2,322 and $1,315, respectively.
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 $1,544, $1,354 and $935 for fiscal 1997, 1996 and
1995, 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 1,635,000 shares of common stock
to key executive, management, sales employees, and, with respect to 135,000 of
these shares, to directors. Under the plans, options are granted at prices not
less than the 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, or
May 2003 with regard to directors. 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 would be reflected in
income based upon the market value of the stock. No SARs have been granted or
issued through January 31, 1997.
A summary of option transactions during each of the three fiscal years in the
period ended January 31, 1997 is shown below:
Number of Weighted-Average
Shares Option Price
-------- ----------------
Under option, January 28, 1994
(297,584 shares exercisable) 399,584 $12.86
Granted .................... 115,000 20.73
Exercised .................. (44,241) 12.35
--------
Under option, January 27, 1995
(339,343 shares exercisable) 470,343 14.83
Granted .................... 15,000 19.25
Exercised .................. (93,541) 13.41
Cancelled .................. (1,861) 11.04
--------
Under option, January 26, 1996
(329,941 shares exercisable) 389,941 15.36
Granted .................... 115,000 29.37
Exercised .................. (56,733) 13.57
Cancelled .................. (4,000) 20.25
--------
Under option, January 31, 1997
(328,208 shares exercisable) 444,208 19.17
========
There were 516,519 and 627,519 shares available for the granting of options at
January 31, 1997 and January 26, 1996, respectively.
22
<PAGE>
The following table summarizes the stock options outstanding at January 31,
1997:
Number Weighted-Average
Range of Outstanding at Remaining Weighted-Average
Exercise Prices Jan. 31, 1997 Contractual Life Exercise Price
--------------- -------------- ---------------- ----------------
$12.00 - $17.63 216,708 4 Years $12.97
18.13 - 25.38 112,500 8 Years 20.69
28.00 - 38.50 115,000 9 Years 29.37
The Company has adopted the disclosure-only provisions of SFAS 123. Accordingly,
no compensation expense has been recognized for its stock option plans. If the
fair value estimates had been used to record compensation expense, pro forma net
income would have been $32,221 and $23,121 in fiscal 1997 and 1996,
respectively, with an immaterial effect on earnings per share. The fair value of
each option is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions: dividend
yields of 1.3%; expected volatility of 33%; risk-free interest rates of 6.47%;
and expected lives of 8 years. The weighted-average fair value of options
granted during the year was $13.15 for fiscal 1997 and $8.55 for fiscal 1996.
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
$421, $238 and $390 in fiscal 1997, 1996 and 1995, respectively.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS
The Company leases certain facilities and equipment under agreements which are
classified as capital leases. The building leases are with a corporation which
is owned by three of the directors of Hughes Supply, Inc. These 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 $1,092, $1,149
and $1,165 for fiscal 1997, 1996 and 1995, respectively. Most equipment leases
have purchase options at the end of the original lease term. Assets under
capital leases are included in the consolidated balance sheets as follows:
1997 1996
------ -------
Property (land and buildings)... $9,407 $10,551
Equipment....................... 289 -
------ -------
9,696 10,551
Accumulated amortization........ (8,492) (8,840)
------ -------
$1,204 $ 1,711
====== =======
In addition, rents under operating leases paid to the related corporation were
$220, $358 and $400 in fiscal 1997, 1996 and 1995, 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 31, 1997, are as follows:
Capital Operating
Fiscal Years Ending Leases Leases
- ------------------- ------- ---------
1998 ............................. $1,170 $14,125
1999 ............................. 584 11,752
2000 ............................. 390 9,356
2001 ............................. 344 7,404
2002 ............................. 148 4,629
Later years ...................... 110 7,823
------ -------
Total minimum lease payments ....... 2,746 $55,089
=======
Less amount representing interest .. (500)
------
Present value of net minimum
lease payments ................... 2,246
Less current portion ............... (959)
------
$1,287
======
Lease-related expenses are as follows:
Fiscal Years Ended
---------------------------
1997 1996 1995
------- ------- ------
Capital lease amortization ....... $ 552 $ 584 $ 594
Capital lease interest expense ... 290 364 440
Operating lease rentals
(excluding month-to-month
rents) ......................... 15,791 12,816 7,904
GUARANTEES OF AFFILIATE DEBT
A wholly-owned subsidiary of the Company owns a one-third interest in Accord
Industries Company ("Accord"), a joint venture formed from the Company's sale of
its manufacturing operations in 1990. As partial consideration for the sale, the
Company received $2,750 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 guaranteed $500 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 $2,500 as of
January 31, 1997.
LEGAL MATTERS
The Company is involved in various legal proceedings incident to the conduct of
its business. In the opinion of management, none of the proceedings are material
in relation to the Company's consolidated operations or financial position.
23
<PAGE>
HUGHES SUPPLY, INC. ANNUAL REPORT
NOTE 8 - CAPITAL STOCK
COMMON STOCK
On May 24, 1994, the shareholders approved an amendment to the articles of
incorporation of the Company increasing the number of authorized shares of
common stock to 20,000,000 shares, $1.00 par value per share.
On March 8, 1994, the Company issued a call for redemption of its outstanding 7%
convertible subordinated debentures to take place on April 7, 1994. Of the
$22,960 debentures outstanding at January 28, 1994, $22,889, or 99.7%, were
converted into the Company's common stock at $21.17 per share or 47.2 common
shares for each $1 face amount of debentures. This conversion resulted in the
issuance of 1,081,146 common shares.
In May 1996, the Company sold in a public offering 1,486,989 shares of its
common stock which generated net proceeds of $48,193. Proceeds received by the
Company from the sale of the common stock were used to partially fund the PVF
acquisition and to reduce indebtedness outstanding under the Company's revolving
credit facility and line of credit agreement.
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 9 - CONCENTRATION OF CREDIT RISK
The Company sells its products in the major areas of construction markets in
certain states primarily in the southeast and midwest 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 these areas; 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 1% 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.
24
<PAGE>
NOTE 10 - SUPPLEMENTAL CASH FLOWS INFORMATION
The following is a reconciliation of net income to net cash provided by (used
in) operating activities:
Fiscal Years Ended
------------------------------
1997 1996 1995
------- ------- -------
Net income ................................. $32,528 $23,206 $15,881
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation ............................. 9,568 9,342 8,815
Amortization ............................. 5,396 1,930 839
Provision for doubtful accounts .......... 842 1,907 1,415
Gain on sale of property and equipment ... (607) (589) (286)
Undistributed (earnings) losses of
affiliate ............................... (101) 115 (139)
Treasury shares contributed to employee
benefit plan ............................ - - 500
Changes in assets and liabilities, net of
effects of business acquisitions:
(Increase) decrease in -
Accounts receivable ................. (11,675) (12,287) (16,069)
Inventories ......................... (23,632) (9,183) (22,278)
Other current assets ................ 5,157 (3,619) (3,016)
Other assets ........................ (1,770) (1,090) (390)
Increase (decrease) in -
Accounts payable and accrued expenses (10,555) 11,236 18,950
Accrued interest and income taxes ... (617) (2,001) 2,845
Other noncurrent liabilities ........ 421 225 397
Increase in deferred income taxes ...... (1,988) (1,843) (3,797)
-------- -------- --------
Net cash provided by operating activities .. $ 2,967 $ 17,349 $ 3,667
======== ======== ========
NONCASH INVESTING AND FINANCING ACTIVITIES
The net assets acquired and consideration for acquisitions accounted for as
purchases are summarized below:
Fiscal Years Ended
-----------------------------
1997 1996 1995
-------- ------- -------
Fair value of:
Assets acquired .......... $161,198 $22,600 $28,396
Liabilities assumed ...... (32,958) (9,369) (7,269)
-------- ------- -------
Purchase price ............. $128,240 $13,231 $21,127
======== ======= =======
Consideration in fiscal 1997 and 1996 included 946,769 and 190,984 shares of
common stock, with fair values of $28,162 and $3,222, respectively.
Consideration in fiscal 1995 included 248,640 shares of common stock with a fair
value of $4,286, a note for $1,525 and amounts payable of $4,217.
Additional common stock was issued in fiscal 1995 upon the conversion of $22,889
convertible subordinated debentures.
25
<PAGE>
<TABLE>
<CAPTION>
HUGHES SUPPLY, INC. ANNUAL REPORT
NOTE 11 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
Quarter
-----------------------------------------
First Second Third Fourth
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Fiscal 1997
Net sales ................................ $349,500 $395,817 $405,353 $365,418
Gross profit ............................. $ 69,343 $ 81,596 $ 85,461 $ 79,509
Net income ............................... $ 5,523 $ 9,198 $ 10,415 $ 7,392
Earnings per share:
Primary ................................ $ .63 $ .86 $ .92 $ .63
Fully diluted .......................... $ .63 $ .86 $ .92 $ .63
Average shares outstanding (in thousands):
Primary ................................ 8,731 10,647 11,313 11,711
Fully diluted .......................... 8,771 10,650 11,319 11,712
Market price per share:
High ................................... $ 34 1/2 $ 41 $ 40 7/8 $ 44 5/8
Low .................................... $ 26 5/8 $ 31 5/8 $ 32 1/8 $ 32
Dividends per share ...................... $ .09 $ .09 $ .10 $ .10
Fiscal 1996
Net sales ................................ $289,543 $320,522 $328,416 $303,965
Gross profit ............................. $ 58,719 $ 64,148 $ 65,493 $ 64,872
Net income ............................... $ 5,009 $ 6,897 $ 6,225 $ 5,075
Earnings per share:
Primary ................................ $ .60 $ .81 $ .72 $ .59
Fully diluted .......................... $ .60 $ .81 $ .72 $ .59
Average shares outstanding (in thousands):
Primary ................................ 8,378 8,546 8,602 8,628
Fully diluted .......................... 8,384 8,562 8,617 8,648
Market price per share:
High ................................... $ 20 7/8 $ 22 3/8 $ 27 1/4 $ 30 1/2
Low .................................... $ 17 3/4 $ 18 7/8 $ 21 3/8 $ 23 5/8
Dividends per share ...................... $ .07 $ .07 $ .07 $ .09
</TABLE>
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles necessarily requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
The Company historically performs a detailed analysis of its accounts receivable
in the fourth quarter for purposes of determining and recording the write-off of
doubtful accounts. In fiscal 1997 and 1996, the Company's collection experience
was better than anticipated, resulting in credits of $(1,859) and $(547) in the
provision for doubtful accounts for the fourth quarter of the respective years.
26
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
of Hughes Supply, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, shareholders' equity and of cash flows
present fairly, in all material respects, the financial position of Hughes
Supply, Inc. and its subsidiaries at January 31, 1997 and January 26, 1996, and
the results of their operations and their cash flows for the years ended January
31, 1997, January 26, 1996 and January 27, 1995, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
/s/ PRICE WATERHOUSE LLP
- ------------------------
Orlando, Florida
March 21, 1997
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
The consolidated financial statements and related information included in this
annual report were prepared in conformity with generally accepted accounting
principles. Management is responsible for the integrity of the financial
statements and for the related information. Management has included in
the Company's financial statements amounts that are based on estimates and
judgements which it believes are reasonable under the circumstances.
The responsibility of the Company's independent accountants is to express an
opinion on the fairness of the financial statements. Their opinion is based on
an audit conducted in accordance with generally accepted auditing standards as
further described in their report.
The Audit Committee of the Board of Directors is composed of three
non-management directors. The Committee meets periodically with financial
management, internal auditors, and the independent accountants to review
internal accounting control, auditing, and financial reporting matters.
27
<PAGE>
HUGHES SUPPLY, INC. ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As described in Note 2 of the Notes to Consolidated Financial Statements, in
fiscal 1997 the Company entered into business combinations with ELASCO, PPSC,
Sunbelt and the Metals Group which were accounted for as poolings of interests.
Accordingly, all financial data in this discussion and analysis is reported as
though the companies have always been one.
NET SALES
In fiscal 1997, the Company generated net sales of $1.5 billion, a 22% increase
over fiscal 1996 net sales of $1.2 billion. Fiscal 1996 net sales of $1.2
billion increased 25% over fiscal 1995 net sales of $995 million. Newly-opened
and acquired wholesale outlets accounted for approximately 16 and 14 percentage
points of the 22% and 25% increases for fiscal 1997 and 1996, respectively.
The Company's strategy of expanding and diversifying into more construction
markets (commercial and industrial) as well as expanding geographically has
contributed to these strong sales gains along with same-store sales growth.
Commercial construction and industrial repair markets have been strong during
the last three fiscal years. Residential construction activity rebounded in
fiscal 1997 despite higher mortgage rates, reflecting high levels of consumer
confidence.
Management expects market activity to continue at current levels. These
favorable conditions coupled with the Company's acquisition program should
result in continued sales growth.
GROSS MARGIN
Gross margins have been improving steadily over the past few years. Gross
margins were 20.8%, 20.4% and 19.9% for fiscal 1997, 1996 and 1995,
respectively. The improvement has resulted from several factors, including
expansion of product offerings to lines with better margins, efficiencies
created with central distribution centers, increased volume and concentration of
supply sources as part of the Company's preferred vendor program.
OPERATING EXPENSES
Operating expenses in fiscal 1997 were $257 million (16.9% of net sales), a 20%
increase over fiscal 1996 operating expenses of $214 million. Newly-opened
wholesale outlets and recent acquisitions accounted for approximately 16
percentage points of the 20% increase. The remainder of the increase is due
primarily to personnel and transportation costs associated with the same-store
sales growth. Similarly, the $43 million increase in fiscal 1996 compared to
fiscal 1995 which had operating expenses of $171 million (or 17.2% of net sales)
is attributed primarily to newly-opened wholesale outlets and acquisitions
(approximately one-half) and costs, such as personnel, transportation and
insurance, associated with same-store sales growth.
The decrease in operating expenses as a percentage of sales from 17.2% in fiscal
1995 and 1996 to 16.9% in fiscal 1997 is primarily the result of: (i) synergies
associated with consolidating certain administrative functions; (ii) lower
insurance costs as a percentage of sales resulting from reductions in insurance
premiums combined with better than expected claims experience; and (iii) a
decrease in bad debt expense as a percentage of sales. Bad debt expense as a
percentage of sales decreased due to the centralization of the Company's credit
function and the recent expansion of the Company into new product groups,
primarily industrial pipe, valves and fittings, which have a lower bad debt
percentage than the Company's existing product groups.
NON-OPERATING INCOME AND EXPENSES
Interest and other income increased to $6.0 million in fiscal 1997 compared to
$5.0 million in fiscal 1996 and $3.2 million in fiscal 1995. These increases are
primarily the result of improved collection of service charge income on
delinquent accounts receivable. In addition, the gain realized on sales of
property and equipment (primarily transportation equipment) was $.3 million
higher in fiscal 1996.
Interest expense for fiscal 1997, 1996 and 1995 was $13.5 million, $9.4 million
and $6.4 million, respectively. The $4.1 million increase in fiscal 1997 is
primarily the result of higher borrowing levels as expansion through business
acquisitions has been partially funded by debt financing. Interest rates were
relatively stable in fiscal 1997. Higher interest rates and higher average
borrowing levels were equally responsible for the $3.0 million increase in
interest expense from fiscal 1995 to 1996.
INCOME TAXES
The effective tax rates for fiscal 1997, 1996 and 1995 were 37.1%, 33.4% and
33.4%, respectively. Prior to the mergers on April 26, 1996 with ELASCO and
January 24, 1997 with Metals, Incorporated and Stainless Tubular Products, Inc.,
all three entities were Subchapter S corporations and, therefore, not subject to
corporate income tax. Each entity's Subchapter S corporation status terminated
upon the merger with the Company. As a result, the Company's effective tax rate
is higher for fiscal 1997 than for fiscal 1996 and 1995.
NET INCOME
Net income in fiscal 1997 increased 40% to $32.5 million from $23.2 million in
fiscal 1996. Fully diluted earnings per share increased 14% to $3.07 in fiscal
1997 compared to $2.70 in fiscal 1996 on 23% more average shares outstanding.
These results followed fiscal 1996 increases of 46% and 36% in net income and
fully diluted earnings per share, respectively. Net income and fully diluted
earnings per share in fiscal 1995 were $15.9 million and $1.98, respectively.
These improved results reflect operating leverage that has been achieved through
the Company's acquisition and internal growth program. Operating margins
(operating income as a percentage of net sales) have steadily improved to 3.9%
in fiscal 1997, compared to 3.2% and 2.7% in fiscal 1996 and 1995, respectively.
28
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Working capital in fiscal 1997 amounted to $330 million compared to $217 million
and $197 million in fiscal 1996 and 1995, respectively. The Company continues to
maintain approximately 75% of total assets as current assets. The working
capital ratio was 3.3 to 1, 2.6 to 1 and 2.7 to 1 for fiscal 1997, 1996 and
1995, respectively. During expansionary periods when sales volumes are
increasing, the Company is required to carry higher levels of inventories and
receivables to support the growth. The Company strives to maintain inventories
at levels that support current sales activity but are not excessive. It
accomplishes this through increased use of central distribution facilities and
by investing in resources to improve the efficiency and service capability of
its facilities.
Net cash provided by operations was $3.0 million in fiscal 1997 compared to
$17.3 million in fiscal 1996 and $3.7 million in fiscal 1995. These changes are
due primarily to fluctuations in accounts receivable, inventories and accounts
payable.
In fiscal 1997, the Company invested $16.1 million for property and equipment
and paid $100 million in cash consideration for business acquisitions. Capital
expenditures for property and equipment, not including amounts for business
acquisitions, are expected to be approximately $20 million in fiscal 1998.
As discussed in Notes 4 and 8 of the Notes to Consolidated Financial Statements,
in May 1996 the Company issued 1,486,989 shares of common stock in a public
offering (generating net proceeds of approximately $48 million, after payment of
expenses) and issued $98 million of senior notes in a private placement in
connection with the purchase of substantially all of the assets, properties and
business of PVF Holdings, Inc. ("PVF"). In addition to funding the PVF
acquisition, the net proceeds of these offerings were used to reduce
indebtedness outstanding under the Company's bank debt.
Management believes that the acquisitions of PVF, Sunbelt and the Metals Group
provide the Company with several strategic benefits, including: (i) a
well-established position in the stainless steel and specialty alloy sector of
the pipe, valve and fitting products market; (ii) greater focus on targeted
industrial and replacement markets; (iii) a strong management team; and (iv) new
opportunities for additional acquisitions. Additional growth opportunities for
the Company related to these acquisitions include incremental sales of
complementary valve products and new branch openings.
Principal payments on long-term debt were $20.0 million for fiscal 1997 compared
to $6.0 million and $1.3 million for fiscal 1996 and 1995, respectively. The
increases resulted primarily from paying off debt assumed as a result of certain
business acquisitions. Dividend payments of $6.1 million, $5.1 million and $3.1
million during fiscal 1997, 1996 and 1995 included cash dividends of pooled
companies totaling $2.9 million, $3.3 million and $2.0 million, respectively.
In October 1996, the Company's revolving credit and line of credit agreement
with a group of banks was amended. The agreement now permits the Company to
borrow up to $150 million ($160 million previously). With this facility, the
Company believes it has sufficient borrowing capacity to take advantage of
growth and business acquisition opportunities. The Company's financial condition
remains strong and the Company believes that it has the resources necessary,
with approximately $35 million of unused debt capacity (subject to borrowing
limitations under long-term debt covenants) as of January 31, 1997, to fund
ongoing operating requirements. Future expansion will continue to be financed on
a project-by-project basis through additional borrowing, or, as circumstances
allow, through the issuance of common stock.
BUSINESS ACQUISITIONS
In addition to the business combinations with ELASCO, PPSC, Sunbelt, and the
Metals Group accounted for as poolings of interests as mentioned previously,
during fiscal 1997 the Company acquired several wholesale distributors for
approximately $144 million ($100 million in cash and $44 million in stock). In
fiscal 1996, consideration paid by the Company for acquisitions (excluding
poolings of interests) was approximately $13 million ($10 million in cash and $3
million in stock). Outlays for acquisition of wholesale distributors in fiscal
1995 totaled $21 million ($11 million in cash, $4 million in stock and $6
million in other consideration). These acquisitions were accounted for as either
purchases or immaterial poolings and the results of operations of these
businesses from their respective dates of acquisition are included in the
Company's consolidated financial statements. As a result of these acquisitions,
the Company had 272 branches in 25 states as of the end of fiscal 1997, compared
to 212 branches in 14 states as of the end of fiscal 1996 (prior to restatement
for fiscal 1997 poolings of interests).
INFLATION AND CHANGING PRICES
The Company is aware of the potentially unfavorable 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 (which has been moderate over the past few years) and
changing prices have not significantly affected the Company's operating results
or markets in the three most recent fiscal years.
29
<PAGE>
<TABLE>
<CAPTION>
HUGHES SUPPLY, INC. ANNUAL REPORT
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
Fiscal Years Ended(1)(2)
----------------------------------------------------
1997 1996 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales ....................................... $1,516,088 $1,242,446 $ 994,811 $ 827,251
Cost of sales ................................... $1,200,179 $ 989,214 $ 797,123 $ 664,696
Gross margin .................................... 20.8% 20.4% 19.9% 19.7%
Selling, general and administrative expenses .... $ 240,830 $ 200,767 $ 159,548 $ 135,162
% of sales .................................... 15.9% 16.2% 16.0% 16.3%
Depreciation and amortization ................... $ 14,964 $ 11,272 $ 9,654 $ 8,358
Provision for doubtful accounts ................. $ 842 $ 1,907 $ 1,415 $ 2,229
Operating income ................................ $ 59,273 $ 39,286 $ 27,071 $ 16,806
Operating margin ................................ 3.9% 3.2% 2.7% 2.0%
Interest and other income ....................... $ 5,953 $ 4,961 $ 3,203 $ 3,679
Interest expense ................................ $ 13,520 $ 9,380 $ 6,414 $ 6,048
Income (loss) before income taxes ............... $ 51,706 $ 34,867 $ 23,860 $ 14,437
% of sales .................................... 3.4% 2.8% 2.4% 1.7%
Income taxes (benefits) ......................... $ 19,178 $ 11,661 $ 7,979 $ 4,710
Net income ...................................... $ 32,528 $ 23,206 $ 15,881 $ 9,727
% of sales .................................... 2.1% 1.9% 1.6% 1.2%
Earnings per share:
Primary ....................................... $ 3.08 $ 2.72 $ 2.00 $ 1.43
Fully diluted ................................. $ 3.07 $ 2.70 $ 1.98 $ 1.34
Average shares outstanding:
Primary ....................................... 10,576 8,523 7,926 6,810
Fully diluted ................................. 10,591 8,602 8,110 7,980
Cash dividends per share ........................ $ .38 $ .30 $ .22 $ .16
Long-term debt, less current portion ............ $ 221,988 $ 131,682 $ 121,728 $ 118,224
Shareholders' equity ............................ $ 278,934 $ 170,766 $ 148,689 $ 108,064
Total assets .................................... $ 649,502 $ 440,795 $ 391,153 $ 313,691
Net working capital ............................. $ 330,388 $ 217,146 $ 196,952 $ 161,665
Current ratio ................................... 3.3 to 1 2.6 to 1 2.7 to 1 2.9 to 1
Shareholders' equity per share .................. $ 24.22 $ 20.17 $ 18.20 $ 15.98
Return on equity(3) ............................. 19.0% 15.6% 14.7% 9.8%
Leverage (total assets/shareholders' equity) .... 2.33 2.58 2.63 2.90
Return on assets(3) ............................. 7.4% 5.9% 5.1% 3.5%
Ratio of long-term debt to total capital employed .44 to 1 .44 to 1 .45 to 1 .52 to 1
Capital expenditures(4) ......................... $ 16,104 $ 13,140 $ 13,117 $ 9,222
</TABLE>
<TABLE>
<CAPTION>
Fiscal Years Ended(1)(2)
-------------------------------------------------
1993 1992 1991 1990
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales ....................................... $ 676,465 $ 648,010 $ 721,489 $ 678,631
Cost of sales ................................... $ 547,636 $ 524,525 $ 584,290 $ 543,217
Gross margin .................................... 19.0% 19.1% 19.0% 20.0%
Selling, general and administrative expenses .... $ 110,218 $ 108,696 111,428 $ 102,425
% of sales .................................... 16.3% 16.8% 15.4% 15.1%
Depreciation and amortization ................... $ 7,180 $ 7,867 $ 9,863 $ 9,677
Provision for doubtful accounts ................. $ 1,942 $ 2,882 $ 3,026 $ 2,796
Operating income ................................ $ 9,489 $ 4,040 $ 12,882 $ 20,516
Operating margin ................................ 1.4% .6% 1.8% 3.0%
Interest and other income ....................... $ 4,072 $ 2,408 $ 4,618 $ 3,241
Interest expense ................................ $ 5,774 $ 7,463 $ 9,680 $ 8,701
Income (loss) before income taxes ............... $ 7,787 $ (1,015) $ 7,820 $ 15,056
% of sales .................................... 1.2% (.2%) 1.1% 2.2%
Income taxes (benefits) ......................... $ 1,734 $ (1,359) $ 2,058 $ 4,914
Net income ...................................... $ 6,053 $ 344 $ 5,762 $ 10,142
% of sales .................................... .9% .1% .8% 1.5%
Earnings per share:
Primary ....................................... $ .90 $ .05 $ .84 $ 1.38
Fully diluted ................................. $ .90 $ .05 $ .84 $ 1.32
Average shares outstanding:
Primary ....................................... 6,725 6,713 6,892 7,342
Fully diluted ................................. 6,753 6,713 6,892 8,437
Cash dividends per share ........................ $ .12 $ .24 $ .36 $ .35
Long-term debt, less current portion ............ $ 101,028 $ 87,922 $ 98,054 $ 93,002
Shareholders' equity ............................ $ 99,097 $ 94,836 $ 98,121 $ 103,100
Total assets .................................... $ 280,007 $ 264,425 $ 264,379 $ 276,906
Net working capital ............................. $ 139,977 $ 128,772 $ 138,283 $ 135,029
Current ratio ................................... 2.8 to 1 2.6 to 1 3.1 to 1 2.7 to 1
Shareholders' equity per share .................. $ 14.88 $ 14.24 $ 14.74 $ 14.44
Return on equity(3) ............................. 6.4% .4% 5.6% 10.3%
Leverage (total assets/shareholders' equity) .... 2.83 2.79 2.69 2.69
Return on assets(3) ............................. 2.3% .1% 2.1% 4.0%
Ratio of long-term debt to total capital employed .50 to 1 .48 to 1 .50 to 1 .47 to 1
Capital expenditures(4) ......................... $ 9,343 $ 5,707 $ 8,622 $ 11,801
</TABLE>
<TABLE>
<CAPTION>
Fiscal Years Ended(1)(2)
------------------------------------
1989 1988 1987
--------- --------- ----------
<S> <C> <C> <C>
Net sales ....................................... $ 625,202 $ 524,131 $ 417,217
Cost of sales ................................... $ 497,027 $ 416,515 $ 336,516
Gross margin .................................... 20.5% 20.5% 19.3%
Selling, general and administrative expenses .... $ 92,541 $ 78,473 $ 58,718
% of sales .................................... 14.8% 15.0% 14.1%
Depreciation and amortization ................... $ 9,222 $ 7,098 $ 5,733
Provision for doubtful accounts ................. $ 1,542 $ 1,842 $ 807
Operating income ................................ $ 24,870 $ 20,203 $ 15,443
Operating margin ................................ 4.0% 3.9% 3.7%
Interest and other income ....................... $ 4,011 $ 2,876 $ 2,860
Interest expense ................................ $ 7,374 $ 4,667 $ 3,835
Income (loss) before income taxes ............... $ 21,507 $ 18,412 $ 14,468
% of sales .................................... 3.4% 3.5% 3.5%
Income taxes (benefits) ......................... $ 7,592 $ 7,897 $ 7,034
Net income ...................................... $ 13,915 $ 10,515 $ 7,434
% of sales .................................... 2.2% 2.0% 1.8%
Earnings per share:
Primary ....................................... $ 1.87 $ 1.40 $ 1.00
Fully diluted ................................. $ 1.75 $ 1.33 $ .98
Average shares outstanding:
Primary ....................................... 7,423 7,537 7,408
Fully diluted ................................. 8,533 8,628 8,251
Cash dividends per share ........................ $ .31 $ .27 $ .25
Long-term debt, less current portion ............ $ 84,989 $ 66,324 $ 39,352
Shareholders' equity ............................ $ 98,747 $ 90,416 $ 82,742
Total assets .................................... $ 254,785 $ 225,075 $ 179,036
Net working capital ............................. $ 124,463 $ 106,480 $ 83,013
Current ratio ................................... 2.8 to 1 2.6 to 1 2.5 to 1
Shareholders' equity per share .................. $ 13.50 $ 12.31 $ 11.18
Return on equity(3) ............................. 15.4% 12.7% 9.7%
Leverage (total assets/shareholders' equity) .... 2.58 2.49 2.16
Return on assets(3) ............................. 6.2% 5.9% 5.0%
Ratio of long-term debt to total capital employed .46 to 1 .42 to 1 .32 to 1
Capital expenditures(4) ......................... $ 10,159 $ 15,954 $ 11,841
<FN>
- ----------
(1) The Company's fiscal year ends on the last Friday in January.
(2) All data adjusted for poolings of interests and three-for-two stock split
declared May 17, 1988.
(3) Ratios based on balance sheet at beginning of year.
(4) Excludes capital leases.
</FN>
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
CORPORATE AND SHAREHOLDER INFORMATION
DIRECTORS EXECUTIVE OFFICERS AND TRANSFER AGENT AND REGISTRAR
MANAGEMENT
<S> <C> <C>
David H. Hughes American Stock Transfer &
CHAIRMAN OF THE BOARD David H. Hughes Trust Company
CHAIRMAN OF THE BOARD AND CHIEF 40 Wall Street
John D. Baker, II EXECUTIVE OFFICER New York, New York 10005
PRESIDENT, FLORIDA ROCK INDUSTRIES,
INC.
A. Stewart Hall, Jr. ANNUAL MEETING
PRESIDENT AND CHIEF OPERATING
Robert N. Blackford OFFICER Tuesday, May 20, 1997, at
ATTORNEY, MAGUIRE, VOORHIS & WELLS, 10:00 AM
P.A. Robert N. Blackford Hughes Supply, Inc.
SECRETARY Suite 200
H. Corbin Day 20 North Orange Avenue
CHAIRMAN, JEMISON INVESTMENT Benjamin P. Butterfield Orlando, Florida 32801
CO., INC. ASSISTANT SECRETARY AND GENERAL
COUNSEL INDEPENDENT ACCOUNTANTS
John B. Ellis
FORMER SENIOR VICE PRESIDENT- Jacquel K. Clark Price Waterhouse LLP
FINANCE AND TREASURER, GENUINE ASSISTANT SECRETARY AND ASSISTANT Orlando, Florida
PARTS COMPANY TREASURER
CORPORATE HEADQUARTERS
A. Stewart Hall, Jr. Jasper L. Holland, Jr.
REGIONAL VICE PRESIDENT Hughes Supply, Inc.
Clifford M. Hames 20 North Orange Avenue
FORMER VICE CHAIRMAN OF THE Clyde E. Hughes Orlando, Florida 32801
BOARD, SUN BANK, N.A. REGIONAL VICE PRESIDENT Telephone: 407-841-4755
Russell V. Hughes Russell V. Hughes
VICE PRESIDENT
Vincent S. Hughes Vincent S. Hughes
VICE PRESIDENT
Herman B. McManaway
FORMER VICE PRESIDENT, RUDDICK
CORPORATION AND PRESIDENT, James C. Plyler, Jr.
RUDDICK INVESTMENT CO. REGIONAL VICE PRESIDENT
Donald C. Martin Kenneth H. Stephens
FORMER PRESIDENT, ELECTRICAL REGIONAL VICE PRESIDENT
DISTRIBUTORS, INC.
Sidney J. Strickland, Jr.
VICE PRESIDENT, PURCHASING AND
ADMINISTRATION
Gradie E. Winstead, Jr.
REGIONAL VICE PRESIDENT
J. Stephen Zepf
TREASURER AND CHIEF FINANCIAL
OFFICER
</TABLE>
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 February 21, 1997 was 1,104. 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
31
Exhibit 21.1
Subsidiaries of the Registrant
Set forth below is a listing, by name and state of
incorporation, of each corporation which is, as of the date of this
Report, or was, at any time since the first day of the fiscal year
ended January 31, 1997, a subsidiary of the Registrant. Unless
otherwise indicated, each such corporation was a 100% owned
subsidiary during such fiscal year and continues in existence as a
100% owned subsidiary of the Registrant as of the date of this
Report.
1) Atlantic Pump & Equipment Company of Miami, Inc., a
Florida corporation, acquired by the Registrant September
1, 1995.
2) Atlantic Pump and Equipment Co. of Puerto Rico, a Florida
corporation, acquired by the Registrant September 1,
1995.
3) Atlantic Pump & Equipment Company of West Palm Beach,
Inc., a Florida corporation, acquired by the Registrant
September 1, 1995.
4) Carolina Pump & Supply Corp., a Rhode Island corporation,
acquired by the Registrant September 24, 1985.
5) Coastal Wholesale, Inc., a Florida corporation, acquired
by the Registrant November 5, 1996.
6) ELASCO Agency Sales, Inc., an Illinois corporation,
acquired by the Registrant April 30, 1996.
7) Elec-Tel Supply Company, a Georgia corporation, acquired
by the Registrant April 3, 1995.
8) Electric Laboratories and Sales Corporation, a Delaware
corporation, acquired by the Registrant April 30, 1996.
9) Florida Pipe & Supply Company, a Florida corporation,
acquired by the Registrant December 18, 1995.
10) Full Circle Transport, Inc., a Florida corporation,
acquired by the Registrant September 16, 1996.
11) Gayle Supply Company, Inc., an Alabama corporation,
acquired by the Registrant March 31, 1996.
12) H Venture Corp., a Florida corporation.
13) HHH, Inc., a Delaware corporation.
14) HSI Corp., a Delaware corporation.
15) Hughes Acquisition Corp., a West Virginia corporation,
acquired by the Registrant March 25, 1996.
16) Hughes Supply FSC, Inc., a Barbados corporation.
17) J.I. Services Corporation, a Florida corporation,
acquired by the Registrant September 16, 1996.
18) J & J, Inc., a Georgia corporation, acquired by the
Registrant November 8, 1996.
19) JuNo Industries, Inc., a Florida corporation, acquired by
the Registrant September 16, 1996.
20) Metals Incorporated, an Oklahoma corporation, acquired by
the Registrant January 24, 1997.
21) Metals, Inc. - Gulf Coast Division, an Oklahoma
corporation, acquired by the Registrant January 24, 1997.
22) Mills & Lupton Supply Company, a Tennessee corporation,
acquired by the Registrant August 19, 1988.
23) Moore Electric Supply, Inc., a North Carolina
corporation, acquired by the Registrant August 1, 1995.
24) Olander & Brophy, Inc., a Pennsylvania corporation,
acquired by the Registrant March 3, 1995.
25) One Stop Supply, Inc., a Tennessee corporation, acquired
by the Registrant March 31, 1988.
26) Paine Supply of Jackson, Inc., a Mississippi corporation,
acquired by the Registrant December 31, 1986.
27) Palm Pool Products, Inc., a Michigan corporation,
acquired by the Registrant September 30, 1996.
28) Panhandle Pipe & Supply Co., Inc., a West Virginia
corporation, acquired by the Registrant December 11,
1996.
29) Port City Electrical Supply, Inc., a Georgia corporation,
acquired by the Registrant March 30, 1995.
30) R & G Plumbing Supply, Inc., an Alabama corporation,
acquired by the Registrant March 31, 1996.
31) Southwest Stainless, L.P., a Delaware corporation,
acquired by the Registrant May 13, 1996.
32) Stainless Tubular Products, Inc., an Oklahoma
corporation, acquired by the Registrant January 24, 1997.
33) Sunbelt Supply Company, a Texas corporation, acquired by
the Registrant December 30, 1996.
34) USCO Incorporated, a North Carolina corporation, acquired
by the Registrant December 23, 1986.
35) Wholesale Electric Supply Corporation, a New York
corporation, acquired by the Registrant December 2, 1996.
36) Z&L Acquisition Corp., a Delaware corporation, acquired
by the Registrant May 13, 1996.
37) Z&L Acquisition Corp. Of Delaware, Inc., a Delaware
corporation, acquired by the Registrant May 13, 1996.
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 (Nos. 2-78323, 33-9082, 33-
26468, 33-33701 and 333-19007) and Form S-3 (Nos. 333-15675 and
333-21953) of Hughes Supply, Inc. of our report dated March 21,
1997, appearing on page 27 of the Annual Report to Shareholders
which is incorporated in this Annual Report on Form 10-K.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
April 25, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF HUGHES SUPPLY, INC. AS OF JANUARY 31, 1997, AND
THE RELATED STATEMENT OF INCOME FOR THE YEAR THEN ENDED AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000049029
<NAME> HUGHES SUPPLY, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> JAN-31-1997
<CASH> 6,329
<SECURITIES> 0
<RECEIVABLES> 199,009
<ALLOWANCES> 3,809
<INVENTORY> 250,113
<CURRENT-ASSETS> 476,769
<PP&E> 140,928
<DEPRECIATION> 67,890
<TOTAL-ASSETS> 649,502
<CURRENT-LIABILITIES> 146,381
<BONDS> 221,988
0
0
<COMMON> 11,518
<OTHER-SE> 267,416
<TOTAL-LIABILITY-AND-EQUITY> 649,502
<SALES> 1,516,088
<TOTAL-REVENUES> 1,516,088
<CGS> 1,200,179
<TOTAL-COSTS> 1,200,179
<OTHER-EXPENSES> 255,794
<LOSS-PROVISION> 842
<INTEREST-EXPENSE> 13,520
<INCOME-PRETAX> 51,706
<INCOME-TAX> 19,178
<INCOME-CONTINUING> 32,528
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,528
<EPS-PRIMARY> 3.08
<EPS-DILUTED> 3.07
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS OF HUGHES SUPPLY, INC. AND RELATED STATEMENTS OF
INCOME AS OF AND FOR THE PERIODS ENDED OCTOBER 31, 1996, JULY 31, 1996,
APRIL 30, 1996, JANUARY 26, 1996, AND OCTOBER 31, 1995. THIS SCHEDULE IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<CIK> 0000049029
<NAME> HUGHES SUPPLY, INC.
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C> <C>
<PERIOD-TYPE> 9-MOS 6-MOS 3-MOS YEAR 9-MOS
<FISCAL-YEAR-END> JAN-31-1997 JAN-31-1997 JAN-31-1997 JAN-26-1996 JAN-26-1996
<PERIOD-END> OCT-31-1996 JUL-31-1996 APR-30-1996 JAN-26-1996 OCT-31-1995
<CASH> 3,423 652 3,286 3,644 1,792
<SECURITIES> 0 0 0 0 0
<RECEIVABLES> 223,737 212,380 186,125 160,570 176,254
<ALLOWANCES> 8,611 7,403 6,061 4,868 7,903
<INVENTORY> 224,209 202,296 171,842 167,138 153,431
<CURRENT-ASSETS> 466,011 430,077 376,249 353,722 340,419
<PP&E> 141,062 135,393 129,758 123,513 121,522
<DEPRECIATION> 71,391 67,985 64,561 60,762 59,360
<TOTAL-ASSETS> 625,128 588,416 470,558 440,795 429,100
<CURRENT-LIABILITIES> 162,827 150,611 152,924 136,576 132,232
<BONDS> 194,755 184,853 141,241 131,682 127,661
0 0 0 0 0
0 0 0 0 0
<COMMON> 11,301 10,907 8,561 8,466 8,441
<OTHER-SE> 254,126 240,026 165,933 162,300 159,096
<TOTAL-LIABILITY-AND-EQUITY> 625,128 588,416 470,558 440,795 429,100
<SALES> 1,150,670 745,317 349,500 1,242,446 938,481
<TOTAL-REVENUES> 1,150,670 745,317 349,500 1,242,446 938,481
<CGS> 914,270 594,378 280,157 989,214 750,121
<TOTAL-COSTS> 914,270 594,378 280,157 989,214 750,121
<OTHER-EXPENSES> 188,332 123,193 58,982 212,039 155,496
<LOSS-PROVISION> 2,701 1,683 851 1,907 2,454
<INTEREST-EXPENSE> 9,603 5,926 2,461 9,380 7,133
<INCOME-PRETAX> 40,429 23,745 8,644 34,867 27,111
<INCOME-TAX> 15,293 9,024 3,121 11,661 8,980
<INCOME-CONTINUING> 25,136 14,721 5,523 23,206 18,131
<DISCONTINUED> 0 0 0 0 0
<EXTRAORDINARY> 0 0 0 0 0
<CHANGES> 0 0 0 0 0
<NET-INCOME> 25,136 14,721 5,523 23,206 18,131
<EPS-PRIMARY> 2.46 1.52 .63 2.72 2.13
<EPS-DILUTED> 2.45 1.52 .63 2.70 2.12
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS OF HUGHES SUPPLY, INC. AND RELATED STATEMENTS OF
INCOME AS OF AND FOR THE PERIODS ENDED JULY 31, 1995, APRIL 30, 1995, AND
JANUARY 27, 1995. THIS SCHEDULE IS QUIALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<CIK> 0000049029
<NAME> HUGHES SUPPLY, INC.
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS YEAR
<FISCAL-YEAR-END> JAN-26-1996 JAN-26-1996 JAN-27-1995
<PERIOD-END> JUL-31-1995 APR-30-1995 JAN-27-1995
<CASH> 3,231 2,090 3,774
<SECURITIES> 0 0 0
<RECEIVABLES> 167,261 169,182 146,122
<ALLOWANCES> 6,500 5,715 5,224
<INVENTORY> 158,607 157,156 149,461
<CURRENT-ASSETS> 339,560 339,596 316,142
<PP&E> 120,387 118,334 115,528
<DEPRECIATION> 58,471 57,593 56,381
<TOTAL-ASSETS> 425,211 424,581 391,153
<CURRENT-LIABILITIES> 124,117 138,042 119,190
<BONDS> 137,176 128,441 121,728
0 0 0
0 0 0
<COMMON> 8,479 8,481 8,281
<OTHER-SE> 154,665 149,029 142,096
<TOTAL-LIABILITY-AND-EQUITY> 425,211 424,581 391,153
<SALES> 610,065 289,543 994,811
<TOTAL-REVENUES> 610,065 289,543 994,811
<CGS> 487,198 230,824 797,123
<TOTAL-COSTS> 487,198 230,824 797,123
<OTHER-EXPENSES> 101,611 49,657 169,202
<LOSS-PROVISION> 1,247 625 1,415
<INTEREST-EXPENSE> 4,772 2,252 6,414
<INCOME-PRETAX> 17,549 7,192 23,860
<INCOME-TAX> 5,643 2,183 7,979
<INCOME-CONTINUING> 11,906 5,009 15,881
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 11,906 5,009 15,881
<EPS-PRIMARY> 1.41 .60 2.00
<EPS-DILUTED> 1.40 .60 1.98
</TABLE>
HUGHES SUPPLY, INC. EXHIBIT 99.1
LOCATION OF FACILITIES
AS OF MARCH 31, 1997
NUMBER OF
STATE/TERRITORY CITY BRANCHES
WHOLESALE BRANCHES
ALABAMA Anniston 1
Birmingham 4
Cullman 1
Dothan 2
Huntsville 4
Mobile 4
Montgomery 3
Pelham 1
TOTAL ALABAMA 20
CALIFORNIA Artesia 1
TOTAL CALIFORNIA 1
FLORIDA Auburndale 1
Bradenton 1
Cape Coral 1
Clearwater 1
Clermont 1
Coral Springs 1
Daytona 2
Eaton Park 1
Ft. Lauderdale 1
Ft. Myers 3
Ft. Pierce 1
Gainesville 3
Inverness 1
Jacksonville 7
Kissimmee 1
Lady Lake 1
Lakeland 3
Leesburg 1
Longwood 1
Marianna 1
Melbourne 1
Miami 4
Mulberry 1
Naples 1
Ocala 1
Orange City 1
Orlando 8
Palm Beach 1
Panama City 2
Panama City Beach 1
Pensacola 1
Perry 1
Pompano Beach 3
Port Richey 1
St. Petersburg 2
Sarasota 3
Sebring 1
Tallahassee 4
Tampa 4
Tavares 1
Venice 1
West Palm Beach 5
Winter Haven 1
TOTAL FLORIDA 82
GEORGIA Albany 1
Alpharetta 1
Athens 1
Atlanta 6
Augusta 1
Austell 1
Brunswick 1
Columbus 1
Conyers 1
Dalton 1
Hartsfield 1
LaGrange 1
Macon 5
Marietta 2
McDonough 1
Savannah 4
Thomasville 1
Tifton 2
Valdosta 2
TOTAL GEORGIA 34
ILLINOIS Decatur 1
Mattoon 3
Romeoville 1
TOTAL ILLINOIS 5
INDIANA Fort Wayne 1
Indianapolis 2
Muncie 1
TOTAL INDIANA 4
KENTUCKY Bowling Green 1
Glasgow 1
Louisville 3
TOTAL KENTUCKY 5
LOUISIANA Baton Rouge 1
Luling 1
Port Allen 1
Sulphur 1
TOTAL LOUISIANA 4
MARYLAND Capitol Heights 1
Waldorf 1
TOTAL MARYLAND 2
MICHIGAN Detroit 1
Holt 1
TOTAL MICHIGAN 2
MISSOURI St. Louis 1
Springfield 1
TOTAL MISSOURI 2
MISSISSIPPI Biloxi 1
Greenville 1
Greenwood 1
Gulfport 2
Hattiesburg 1
Jackson 1
Laurel 1
Meridian 1
Pascagoula 1
Tupelo 1
TOTAL MISSISSIPPI 11
NEW JERSEY Hopelawn 1
Piscataway 1
TOTAL NEW JERSEY 2
NEW YORK Vestal 1
TOTAL NEW YORK 1
NORTH CAROLINA Charlotte 7
Durham 1
Elizabeth City 1
Fayetteville 1
Goldsboro 1
Greensboro 1
Henderson 1
Hickory 1
High Point 1
Kinston 1
Monroe 1
Pinehurst 1
Pineville 1
Raleigh 4
Rocky Mount 1
Salisbury 1
Statesville 1
Troy 1
Wilmington 2
Zebulon 1
TOTAL NORTH CAROLINA 30
OHIO Batavia 1
Brimfield 1
Cleveland 1
Columbus 2
Dayton 1
Elyria 1
Fairfield 1
Hartville 1
Lima 1
Marion 1
Monroe 1
Toledo 1
Van Wert 1
West Chester 1
TOTAL OHIO 15
OKLAHOMA Oklahoma City 1
Tulsa 2
TOTAL OKLAHOMA 3
PENNSYLVANIA Bedford 1
Monroeville 1
Shippenville 1
TOTAL PENNSYLVANIA 3
PUERTO RICO Carolina 1
TOTAL PUERTO RICO 1
SOUTH CAROLINA Aiken 1
Anderson 1
Bluffton 1
Charleston 2
Cheraw 1
Columbia 1
Florence 1
Greenville 3
Greer 2
Hilton Head 1
Lancaster 1
Myrtle Beach 1
North Charleston 1
West Columbia 2
TOTAL SOUTH CAROLINA 19
TENNESSEE Chattanooga 2
Clarksville 1
Cleveland 1
Cookeville 1
Jackson 1
Knoxville 2
Memphis 3
Nashville 4
TOTAL TENNESSEE 15
TEXAS Beaumont 1
Beaumont 1
Corpus Christi 1
Freeport 1
Garland 1
Houston 5
La Porte 1
San Antonio 1
Texas City 1
TOTAL TEXAS 13
UTAH Salt Lake City 1
TOTAL UTAH 1
VIRGINIA Arlington 1
Chantilly 1
Gainesville 1
La Crosse 1
Lynchburg 1
Richmond 1
Virginia Beach 1
TOTAL VIRGINIA 7
WASHINGTON Kent 1
TOTAL WASHINGTON 1
WEST VIRGINIA Fairmont 1
South Charleston 1
Martinsburg 1
TOTAL WEST VIRGINIA 3
TOTAL WHOLESALE BRANCHES 286
DISTRIBUTION CENTERS
FLORIDA Orlando 1
GEORGIA Forest Park 1
NORTH CAROLINA Henderson 1
Monroe 1
OHIO Greenville 1
TENNESSEE Nashville 1
TOTAL DISTRIBUTION CENTERS 6
