<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 18, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
HUGHES SUPPLY, INC.
(Exact Name of Registrant as Specified in Its Charter)
---------------------
<TABLE>
<C> <C>
FLORIDA 59-0559446
(State or Other Jurisdiction of Incorporation or (I.R.S. Employer Identification Number)
Organization)
</TABLE>
20 NORTH ORANGE AVENUE
SUITE 200
ORLANDO, FLORIDA 32801
(407) 841-4755
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
---------------------
J. STEPHEN ZEPF
TREASURER AND CHIEF FINANCIAL OFFICER
HUGHES SUPPLY, INC.
20 NORTH ORANGE AVENUE
SUITE 200
ORLANDO, FLORIDA 32801
(407) 841-4755
(Name, Address, Including Zip Code, and Telephone Number of Agent for Service)
---------------------
COPIES OF COMMUNICATIONS TO:
G. WILLIAM SPEER, ESQ.
POWELL, GOLDSTEIN, FRAZER & MURPHY LLP
SIXTEENTH FLOOR
191 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30303
(404) 572-6600
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time following the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
--------------------
If this form is a post-effective amendment filed pursuant to Rule 462(b)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
--------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================================================
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES TO BE AGGREGATE PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) FEE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock par value $1.00 per share....... 1,407,925 shares $32.875 $46,285,534 $14,026
- -----------------------------------------------------------------------------------------------------------------------------
Rights to purchase Series A Junior
Participating Preferred Stock, no par value
per share.................................. 1,407,925 rights N/A N/A $100(2)
=============================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee and
calculated in accordance with Rule 457(c) under the Securities Act on the
basis of the last reported sale price of the Company's Common Stock on
February 12, 1997, as reported by the New York Stock Exchange.
(2) The rights to purchase the Series A Junior Participating Preferred Stock
will be attached to and traded with shares of the Company's Common Stock.
Value attributable to such rights, if any, will be reflected in the market
price of the shares of the Company's Common Stock. The fee paid represents
the minimum statutory fee pursuant to Section 6(b) of the Securities Act.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
PROSPECTUS
1,407,925 SHARES
HUGHES SUPPLY, INC.
COMMON STOCK
---------------------
This prospectus (this "Prospectus") relates to the offering by the selling
shareholders named herein (the "Selling Shareholders") of up to an aggregate of
1,407,925 shares of Common Stock, par value $1.00 per share (the "Common
Stock"), of Hughes Supply, Inc., a Florida corporation ("Hughes Supply" or the
"Company"), consisting of: (i) 27,218 shares of Common Stock (the "Gayle
Shares") issued pursuant to the Acquisition Agreement (the "Gayle Agreement")
dated May 1, 1996 by and among the Company, Gayle Supply Company, Inc., an
Alabama corporation ("Gayle Supply"), and the shareholders of Gayle Supply; (ii)
209,933 shares of Common Stock (the "Juno Shares") issued pursuant to the
Acquisition Agreement (the "Juno Agreement") dated September 16, 1996 by and
among the Company, Juno Industries, Inc., a Florida corporation ("Juno"), and
the shareholders of Juno; (iii) 94,364 shares of Common Stock (the "PPP Shares")
issued pursuant to the Acquisition Agreement (the "PPP Agreement") dated
September 30, 1996 by and among the Company, Palm Pool Products, Inc., a
Michigan corporation ("PPP"), and the shareholders of PPP; (iv) 68,211 shares of
Common Stock (the "CWI Shares") issued pursuant to the Acquisition Agreement
(the "CWI Agreement") dated November 5, 1996 by and among the Company, Coastal
Wholesale, Inc., a Florida corporation ("CWI"), and the shareholders of CWI; (v)
120,000 shares of Common Stock (the "WES Shares") issued pursuant to the
Acquisition Agreement (the "WES Agreement") dated December 2, 1996 by and among
the Company, Wholesale Electric Supply Corporation, a New York corporation
("WES"), and the shareholder of WES; (vi) 147,747 shares of Common Stock (the
"PPSC Shares") issued pursuant to the Acquisition Agreement (the "PPSC
Agreement") dated December 11, 1996 by and among the Company, Panhandle Pipe &
Supply Co., Inc., a West Virginia corporation ("PPSC"), and the shareholders of
PPSC; (vii) 256,610 shares of Common Stock (the "Sunbelt Shares") issued
pursuant to the Acquisition Agreement (the "Sunbelt Agreement") dated December
30, 1996 by and among the Company, Sunbelt Supply Co., a Texas corporation
("Sunbelt"), and the shareholders of Sunbelt; and (viii) 483,842 shares of
Common Stock (the "Metals Shares") issued pursuant to the Acquisition Agreement
(the "Metals Agreement") dated January 24, 1997 by and among the Company,
Metals, Incorporated, Stainless Tubular Products, Inc., Metals, Inc. - Gulf
Coast Division, each an Oklahoma corporation (collectively, the "Metals Group"),
and the shareholders of the Metals Group (The Gayle Shares, the Juno Shares, the
PPP Shares, the CWI Shares, the WES Shares, the PPSC Shares, the Sunbelt Shares
and the Metals Shares are collectively referred to herein as the "Shares").
The Shares, when sold, will be sold by and for the account of the Selling
Shareholders. The Company will not receive any proceeds from the sale of the
Shares by the Selling Shareholders. See "Use of Proceeds." The Company's Common
Stock is listed on the New York Stock Exchange, Inc. (the "NYSE") under the
symbol "HUG." On February 14, 1997, the last sale price for the Common Stock as
reported on the NYSE was $32.875 per share.
All expenses relating to the distribution of the Shares shall be borne by
the Company, other than selling commissions and fees and expenses of counsel and
other representatives of the Selling Shareholders. See "Plan of Distribution."
SEE "RISK FACTORS" BEGINNING ON PAGE 8 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING AN INVESTMENT IN THE
COMMON STOCK OFFERED HEREBY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
The Company has been advised by the Selling Shareholders that the Selling
Shareholders, acting as principals for their own accounts, directly, through
agents designated from time to time, or to or through broker-dealers or
underwriters also to be designated, may sell all or a portion of the Shares
offered hereby from time to time on terms to be determined at the time of sale.
The aggregate proceeds to the Selling Shareholders from the sale of the Shares
sold by the Selling Shareholders pursuant to this Prospectus will be the
purchase price of such shares less any commissions. See "Plan of Distribution."
Any broker-dealers, agents or underwriters that participate with the
Selling Shareholders in the distribution of the Shares may be deemed
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), in which event any commissions received by such
broker-dealers, agents or underwriters and any profit on the resale of the
Shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
---------------------
The date of this Prospectus is February , 1997.
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549-1104, and at the following
regional offices of the Commission: New York Regional Office, 7 World Trade
Center, 13th Floor, New York, New York 10048; and Chicago Regional Office,
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can also be obtained from the Public
Reference Section of the Commission at prescribed rates at the principal office
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants such as the Company. This
Web site may be accessed at http://www.sec.gov. In addition, the Common Stock of
the Company is traded on the NYSE, and such reports, proxy statements and other
information concerning the Company can also be inspected at the offices of the
NYSE, Room 401, 20 Broad Street, New York, New York 10005.
The right to purchase one one-hundredth of a share of the Company's Series
A Junior Participating Preferred Stock, no par value per share (collectively,
"Rights"), is attached to each share of Common Stock, including each share of
Common Stock offered hereby. Any reference in this Prospectus to the Common
Stock shall include such Rights. This Prospectus, which constitutes part of the
Registration Statement on Form S-3 (Registration No. 333- ) (the
"Registration Statement") filed by the Company with the Commission under the
Securities Act, omits certain of the information contained in the Registration
Statement. Reference is hereby made to the Registration Statement and to the
exhibits relating thereto for further information with respect to the Company
and the securities offered hereby. This Prospectus does not contain all
information set forth in the Registration Statement. Certain parts of the
Registration Statement have been omitted in accordance with the rules and
regulations of the Commission. For further information, reference is made to the
Registration Statement which can be inspected at the public reference rooms at
the offices of the Commission.
2
<PAGE> 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or portions thereof, filed by the Company with the
Commission under the Exchange Act and the Securities Act, are incorporated
herein by reference:
(a) Hughes Supply's Annual Report on Form 10-K (File No. 001-08772)
for the year ended January 26, 1996;
(b) Hughes Supply's Quarterly Reports on Form 10-Q for the quarters
ended April 30, 1996, July 31, 1996 and October 31, 1996;
(c) Hughes Supply's Current Reports on Form 8-K, as filed with the
Commission on March 27, 1996, May 13, 1996, October 23, 1996 and February
14, 1997;
(d) Hughes Supply's Proxy Statement for the Annual Meeting of
Shareholders held on May 21, 1996; and
(e) Hughes Supply's Registration Statement on Form S-3 (File No.
333-15675), as filed with the Commission on November 6, 1996.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of this offering
shall be deemed to be incorporated by reference in this Prospectus and to be a
part of this Prospectus from the date of filing thereof. Any statement contained
in a document incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or to any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statements so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, upon the written or oral
request of any such person, a copy of any or all of the documents referred to
above which shall have been or may be incorporated in this Prospectus by
reference (not including exhibits to such information, unless such exhibits are
specifically incorporated by reference into such information). Requests for such
copies shall be directed to Hughes Supply, Inc., Attention: J. Stephen Zepf,
Treasurer and Chief Financial Officer, at 20 North Orange Avenue, Suite 200,
Orlando, Florida 32801, telephone (407) 841-4755.
3
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the supplemental financial statements and consolidated financial
statements and related notes thereto included elsewhere or incorporated by
reference in this Prospectus. As used in this Prospectus, unless the context
indicates otherwise, the terms "Company" and "Hughes Supply" mean Hughes Supply,
Inc., its subsidiaries and its predecessors. The Company's fiscal year ends on
the last Friday in January of each year. The supplemental financial statements
and information contained in this Prospectus give retroactive effect to the
Company's mergers with PPSC, Sunbelt and the Metals Group which were consummated
after October 31, 1996 and were accounted for as poolings of interests.
THE COMPANY
Hughes Supply 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. As of
December 31, 1996, the Company distributed more than 130,000 products through
272 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 a 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 40%
of fiscal 1996 net sales), which is one of the largest commercial and
residential construction markets in the United States.
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 and new branch openings and the
addition of new product groups. Since January 29, 1993, the Company has opened
30 new branches (exclusive of new branches acquired through acquisitions). In
addition, the Company continues to pursue an active acquisition program as a
result of opportunities presented by the substantial size and highly fragmented
ownership structure of its industry. Based upon estimates available to the
Company, industry sales in the United States of products sold by the Company
exceeded $100 billion in 1995, and no wholesale distributor of these products
accounted for more than 2% of the total market. Since January 29, 1993, the
Company has completed 34 acquisitions representing 117 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.
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 36 branches, and management believes that significant
additional fill-in acquisition opportunities are available.
4
<PAGE> 6
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 three 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 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. ("Moore Electric"), resulting in a significant
increase in the Company's electrical products business in new geographic
markets; (iii) Florida Pipe & Supply Company ("FPS"), the Company's initial
entry into the industrial pipe, valve and fitting market; (iv) Electric
Laboratories and Sales Corporation and ELASCO Agency Sales, Inc. (collectively,
"ELASCO"), resulting in a significant increase in the Company's electric
utilities business in new geographic markets; (v) PVF Holdings, Inc. ("PVF"),
resulting in a significant increase in the Company's industrial pipe, valve and
fitting business in new geographic markets; (vi) Sunbelt, resulting in a
significant increase in the Company's valve and fitting business in new
geographic markets; and (vii) the Metals Group, 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 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. Other key elements of the Company's operating strategy
include:
- Comprehensive and diversified product groups;
- Superior customer service;
- Local market focus;
- Well-trained and experienced workforce; and
- Volume purchasing power.
Hughes Supply 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.
As a result of the Company's operating and acquisition strategies, net
sales increased to $1.2 billion in fiscal 1996 from $827.3 million in fiscal
1994, a compound annual growth rate of 22.6%; operating income increased to
$39.3 million in fiscal 1996 from $16.8 million in fiscal 1994, a compound
annual growth rate of 52.9%; and the number of branches increased to 226
branches at the end of fiscal 1996 from 151 branches at the end of fiscal 1994,
a compound annual growth rate of 22.3%.
Hughes Supply was founded as a general partnership in Orlando, Florida in
1928 and was incorporated as a Florida corporation in 1947. The Company's
executive offices are located at 20 North Orange Avenue, Suite 200, Orlando,
Florida 32801, and its telephone number is (407) 841-4755.
5
<PAGE> 7
RISK FACTORS
For a discussion of certain factors that should be considered by
prospective purchasers of the Common Stock offered hereby, see "Risk Factors."
FORWARD-LOOKING STATEMENTS
This Prospectus, including the information incorporated by reference
herein, includes "forward-looking statements" within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act, and is subject to the
safe-harbor created by such sections. When used in this Prospectus, the words
"believe," "anticipate," "estimate," "expect," and similar expressions are
intended to identify forward-looking statements. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to be
correct. The Company's actual results may differ significantly from the results
discussed in such forward-looking statements. Certain factors that might cause
such differences include, but are not limited to, the "Risk Factors" described
herein.
THE OFFERING
<TABLE>
<S> <C>
Common Stock being offered hereby........................... 1,407,925 shares
Common Stock outstanding (as of February 3, 1997)(1)........ 11,520,298 shares
Common Stock to be outstanding after this offering(2)....... 11,520,298 shares
NYSE symbol................................................. HUG
</TABLE>
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(1) Includes all shares offered hereby.
(2) Assumes all shares offered hereby have been sold. Because the Selling
Shareholders may sell all, some or none of the respective shares pursuant
to this Prospectus, no actual estimate can be made of the aggregate number
of shares that each Selling Shareholder will own upon completion of the
offering to which this Prospectus relates.
6
<PAGE> 8
SUMMARY SUPPLEMENTAL CONSOLIDATED FINANCIAL AND OPERATING DATA(1)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED NINE MONTHS ENDED
------------------------------------------------------------------- -------------------------
JANUARY 26, JANUARY 27, JANUARY 28, JANUARY 29, JANUARY 31, OCTOBER 31, OCTOBER 31,
1996 1995 1994 1993 1992(2) 1996(3) 1995(3)
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF INCOME DATA:
Net sales...................... $1,242,446 $994,811 $827,251 $676,465 $648,010 $1,150,670 $938,481
Cost of sales.................. 989,214 797,123 664,696 547,636 524,525 914,270 750,121
---------- -------- -------- -------- -------- ---------- --------
Gross profit................... 253,232 197,688 162,555 128,829 123,485 236,400 188,360
Operating expenses............. 213,946 170,617 145,749 119,340 119,445 191,033 157,950
---------- -------- -------- -------- -------- ---------- --------
Operating income............... 39,286 27,071 16,806 9,489 4,040 45,367 30,410
Interest expense............... 9,380 6,414 6,048 5,774 7,463 9,603 7,133
Interest and other income...... 4,961 3,203 3,679 4,072 2,408 4,665 3,834
---------- -------- -------- -------- -------- ---------- --------
Income (loss) before income
taxes........................ 34,867 23,860 14,437 7,787 (1,015) 40,429 27,111
Income taxes (benefits)........ 11,661 7,979 4,710 1,734 (1,359) 15,293 8,980
---------- -------- -------- -------- -------- ---------- --------
Net income..................... $ 23,206 $ 15,881 $ 9,727 $ 6,053 $ 344 $ 25,136 $ 18,131
========== ======== ======== ======== ======== ========== ========
Earnings per share:
Primary...................... $ 2.72 $ 2.00 $ 1.43 $ 0.90 $ 0.05 $ 2.46 $ 2.13
========== ======== ======== ======== ======== ========== ========
Fully diluted................ $ 2.70 $ 1.98 $ 1.34 $ 0.90 $ 0.05 $ 2.45 $ 2.12
========== ======== ======== ======== ======== ========== ========
Cash dividends per share....... $ 0.30 $ 0.22 $ 0.16 $ 0.12 $ 0.24 $ 0.28 $ 0.21
========== ======== ======== ======== ======== ========== ========
Pro forma earnings (loss) per
share:(4)
Primary...................... $ 2.43 $ 1.82 $ 1.27 $ 0.75 $ (0.09) $ 2.38 $ 1.89
========== ======== ======== ======== ======== ========== ========
Fully diluted................ $ 2.41 $ 1.80 $ 1.21 $ 0.75 $ (0.09) $ 2.38 $ 1.88
========== ======== ======== ======== ======== ========== ========
OPERATING DATA:
Branches at end of period...... 226 182 151 136 129 266 204
Comparable branch sales
increases (decreases)(5)..... 11% 14% 18% (1%) (10%) 10% 13%
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF
JANUARY 26, 1996 OCTOBER 31, 1996
---------------- ----------------
<S> <C> <C>
BALANCE SHEET DATA (END OF PERIOD):
Working capital............................................. $217,146 $303,184
Total assets................................................ 440,795 625,128
Long-term debt, less current portion........................ 131,682 194,755
Shareholders' equity........................................ 170,766 265,427
</TABLE>
- ---------------
(1) The Company merged with PPSC, Sunbelt and the Metals Group in transactions
consummated after October 31, 1996 and accounted for as poolings of
interests. The Summary Supplemental Consolidated Financial and Operating
Data gives retroactive effect to the mergers.
(2) Fiscal 1992 represents a 53-week fiscal year.
(3) Nine months ended October 31, 1996 and 1995 contain 40 and 39 weeks,
respectively, and include the results of PVF commencing May 13, 1996.
(4) Pro forma earnings (loss) per share assumes that the earnings of ELASCO, a
Subchapter S corporation acquired by the Company on April 26, 1996, and
Metals, Incorporated and Stainless Tubular Products, Inc., also Subchapter S
corporations acquired by the Company on January 24, 1997, would have been
taxed at the Company's effective rate for each period presented. See Note 2
of Notes to Supplemental Consolidated Financial Statements.
(5) Comparable branch sales increases (decreases) are calculated for each period
presented by comparing the net sales results in the period with the net
sales results for the comparable prior year period (for branches that were
open for the entire duration of both periods).
7
<PAGE> 9
RISK FACTORS
In addition to the other information included or incorporated by reference
in this Prospectus, prospective investors should consider carefully the
following information relating to the Company and the Common Stock before making
an investment in the Common Stock offered hereby.
RISKS OF ACQUISITION STRATEGY
A significant portion of the Company's growth strategy is based upon the
acquisition of other building products businesses. During the normal course of
its business, the Company pursues suitable acquisition opportunities in selected
markets. There can be no assurance, however, that the Company will be able to
continue to identify and acquire appropriate businesses or obtain financing for
such acquisitions on satisfactory terms. In addition, no assurance can be given
that the Company will be successful in integrating acquired businesses into its
existing operations, or that such integration will not result in unforeseen
operational difficulties or require a disproportionate amount of management's
attention. Future acquisitions may be financed through the incurrence of
additional indebtedness or through the issuance of Common Stock or the issuance
of equity-linked securities, which may be dilutive to the Company's
shareholders. Furthermore, there can be no assurance that competition for
acquisition opportunities in the building products industry will not escalate,
thereby increasing the cost to the Company of making further acquisitions or
causing the Company to refrain from making further acquisitions.
DEPENDENCE ON CONSTRUCTION MARKETS, ESPECIALLY IN FLORIDA
Demand for the Company's products depends to a significant degree on the
commercial, residential and industrial construction markets. The level of
activity in the commercial construction market depends largely on vacancy and
absorption rates, interest rates, regional economic outlooks, the availability
of financing and general economic conditions. The level of activity in the
residential construction market depends on new housing starts and residential
renovation projects, which are a function of many factors, including interest
rates, availability of financing, housing affordability, unemployment,
demographic trends, gross domestic product growth and consumer confidence. The
level of activity in the industrial construction market is linked to the
industrial economic outlook, corporate profitability, interest rates and
capacity utilization. Consequently, the level of activity in the commercial,
residential and industrial construction markets is determined by factors that
are not within the Company's control. Moreover, since such markets are sensitive
to cyclical changes in the economy, future downturns in the economy or lack of
further improvement in the economy could negatively affect the Company's results
of operations, especially in Florida where approximately 40% of the Company's
net sales were derived in fiscal 1996.
UNCERTAINTY OF SUPPLY AND PRICE OF PRODUCTS
The Company distributes construction materials and supplies manufactured by
over 5,500 manufacturers and suppliers, no one of which accounted for more than
5% of the Company's total purchases during fiscal 1996. Although the Company has
a widely diversified base of suppliers, future supply shortages may occur from
time to time as a result of unanticipated demand or production difficulties. In
such cases, suppliers often allocate products among distributors, which could
have a short-term adverse effect on the Company's results of operations.
Although the Company has entered into strategic partnerships with certain
suppliers, if the Company fails to maintain such strategic partnerships or if
such suppliers cease to offer competitive pricing terms, the Company's results
of operations may be adversely affected.
COMPETITION
The building products industry is highly competitive and fragmented. The
principal competitive factors in the Company's business are availability of
materials and supplies, pricing of products, availability of credit, technical
product knowledge as to application and usage, and advisory and other service
capabilities. The Company competes with other wholesalers, manufacturers who
sell certain lines directly to contractors and other customers of the Company
and, to a limited extent, retailers in the markets for plumbing, electrical
8
<PAGE> 10
fixtures and supplies, building materials, pool supplies and contractor's tools.
The Company's competition varies by product line, customer classification and
geographic market. No assurance can be given that the Company will be able to
respond effectively to the competitive pressures created by those entities,
especially since certain of those entities have substantially greater financial
and other resources than those of the Company.
RELIANCE ON EXECUTIVE OFFICERS
The Company is highly dependent upon the skills, experience and efforts of
its executive officers. Loss of the services of one or more of the Company's
executive officers could have a material adverse effect on the Company's
business and development. The Company's continued growth also depends in part on
its ability to attract and retain qualified managers, salespersons and other key
employees, and on its executive officers' ability to manage growth successfully.
No assurance can be given that the Company will be able to attract and retain
such employees or that such executive officers will be able to manage growth
successfully.
LIMITATIONS ON PAYMENT OF DIVIDENDS
The amount of future dividends, as well as the decision to pay any
dividends, in respect of the Common Stock will depend on the Company's results
of operations, capital requirements and financial condition and other factors
that the Board of Directors deems relevant. In addition, certain debt
instruments and agreements to which the Company and its subsidiaries are or may
in the future become parties contain or may contain restrictive covenants and
provisions that limit the amount of dividends payable by the Company.
VOLATILITY OF MARKET PRICE FOR COMMON STOCK
From time to time after this offering, there may be significant volatility
in the market price for the Common Stock. Operating results of the Company or of
other companies participating in the building products industry, changes in
general economic conditions and the financial markets, or other developments
affecting the Company or its competitors could cause the market price for the
Common Stock to fluctuate substantially. See "Dependence on Construction
Markets, Especially in Florida" above.
USE OF PROCEEDS
The Common Stock offered hereby is being offered for the accounts of the
respective Selling Shareholders. The Company will receive no proceeds from the
sale of such shares.
9
<PAGE> 11
SELECTED UNAUDITED PRO FORMA SUPPLEMENTAL CONSOLIDATED FINANCIAL DATA
The unaudited Pro Forma Supplemental Consolidated Statements of Income of
the Company for the nine months ended October 31, 1996 and the year ended
January 26, 1996 gives effect to the following as if each had occurred at the
beginning of the respective period: (i) the Company's acquisition of
substantially all of the assets, properties and business of PVF and its
subsidiaries and the assumption of certain of their liabilities (the "PVF
Acquisition"); (ii) the Company's Common Stock offering and Senior Notes
offering both completed in May 1996, and the application of the net proceeds
therefrom by the Company; and (iii) the business combinations between the
Company and ELASCO, PPSC, Sunbelt and the Metals Group, which were accounted for
as poolings of interests.
The PVF Acquisition was accounted for under the purchase method of
accounting. The total purchase price was allocated to tangible and identifiable
intangible assets and liabilities based on management's estimate of their fair
values with the excess of cost over the fair value of the net assets acquired
allocated to goodwill.
The unaudited Pro Forma Supplemental Consolidated Statements of Income have
been prepared by the Company based on the Supplemental Consolidated Financial
Statements of the Company included in this Prospectus and of PVF incorporated by
reference in this Prospectus. The unaudited Pro Forma Supplemental Consolidated
Statements of Income are presented for illustration purposes only and do not
purport to be indicative of the combined financial condition or results of
operations that actually would have occurred if the transactions described above
had been effected at the dates indicated or to project future financial
condition or results of operations for any future period. In particular, PVF's
gross margin may be adversely affected by fluctuations in prices for stainless
steel and nickel alloy. In addition, the volatility of prices for stainless
steel and nickel alloy may create cyclicality in PVF's operating performance.
Therefore, management believes that the pro forma consolidated financial data
are not necessarily indicative of future performance. The unaudited Pro Forma
Supplemental Consolidated Statements of Income should be read in conjunction
with the Supplemental Consolidated Financial Statements of the Company included
in this Prospectus and of PVF incorporated by reference in this Prospectus.
10
<PAGE> 12
HUGHES SUPPLY, INC.
UNAUDITED PRO FORMA SUPPLEMENTAL CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED OCTOBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMMON
PRO FORMA STOCK AND
ADJUSTMENTS NOTES PRO FORMA
HUGHES PVF FOR PVF PRO FORMA PRO FORMA OFFERING AS
SUPPLY(A) ACQUISITION(B) ACQUISITION ADJUSTMENTS COMBINED ADJUSTMENTS ADJUSTED
---------- -------------- ----------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales............. $1,150,670 $29,427 $ -- $ -- $1,180,097 $ -- $1,180,097
Cost of Sales......... 914,270 19,726 -- -- 933,996 -- 933,996
---------- ------- ------- ----- ---------- ---- ----------
Gross Profit........ 236,400 9,701 -- -- 246,101 -- 246,101
Operating Expenses.... 180,395 3,490 (552)(c) -- 183,333 -- 183,333
Depreciation &
Amortization........ 10,638 120 1,013(d) -- 11,771 -- 11,771
---------- ------- ------- ----- ---------- ---- ----------
Total Operating
Expenses............ 191,033 3,610 461 -- 195,104 -- 195,104
---------- ------- ------- ----- ---------- ---- ----------
Operating Income.... 45,367 6,091 (461) -- 50,997 -- 50,997
Interest and Other
Income.............. 4,665 45 -- -- 4,710 -- 4,710
Interest Expense...... (9,603) (176) (1,439)(e) -- (11,218) 727(g) (10,491)
---------- ------- ------- ----- ---------- ---- ----------
Income Before
Taxes............. 40,429 5,960 (1,900) -- 44,489 727 45,216
Income Taxes.......... 15,293 2,316 (728)(f) 804(h) 17,685 289(f) 17,974
---------- ------- ------- ----- ---------- ---- ----------
Net Income.......... $ 25,136 $ 3,644 $(1,172) $(804) $ 26,804 $438 $ 27,242
========== ======= ======= ===== ========== ==== ==========
Earnings Per Share:
Primary............. $ 2.46 $ 2.53 $ 2.37
========== ========== ==========
Fully-diluted....... $ 2.45 $ 2.53 $ 2.36
========== ========== ==========
Average Shares
Outstanding:
Primary............. 10,208 10,577 11,498
========== ========== ==========
Fully-diluted....... 10,242 10,611 11,532
========== ========== ==========
</TABLE>
See notes to unaudited pro forma supplemental consolidated statement of income.
11
<PAGE> 13
NOTES TO UNAUDITED PRO FORMA SUPPLEMENTAL CONSOLIDATED
STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)
(a) Represents the combined results of the Company, ELASCO, PPSC, Sunbelt
and the Metals Group. These combined results will become the restated
historical results of the Company upon publication of financial results
for periods inclusive of the date of consummation of the respective
transactions in accordance with pooling of interests accounting.
(b) Amounts represent results of PVF for the 3 months ended March 31, 1996.
(c) Adjustments to operating expenses to eliminate overhead allocation from
PVF's parent of $311 and personnel costs of $241 which will be
reduced/eliminated as a result of the acquisition.
(d) Adjustment to reflect amortization on goodwill of $60,773 on a
straight-line basis over 15 years.
(e) Adjustment to interest expense as a result of the PVF Acquisition:
<TABLE>
<S> <C>
Interest on $74,772 of Senior Notes (including $372 of debt
issuance costs) issued in connection with the PVF
Acquisition, at an interest rate of 7.96%................. $1,488
Reduction of interest on PVF average borrowing of $8,153 at
an average rate of 8.63% replaced by the Company's line of
credit with an average rate of 5.77%...................... (58)
Amortization of debt issuance costs......................... 9
------
$1,439
======
</TABLE>
(f) Federal income tax adjustments relating to the PVF Acquisition using
the Company's annual effective tax rate of 39.8%.
(g) Adjustment to interest expense as a result of the Common Stock offering
and the Senior Notes offering:
<TABLE>
<S> <C>
Use of proceeds from the Common Stock offering to reduce
amounts outstanding under the Company's line of credit
facility.................................................. $ 900
Increase in interest expense resulting from replacing
amounts outstanding under the line of credit facility with
the Senior Notes.......................................... (173)
-----
$ 727
=====
</TABLE>
(h) Amount reflects the pro forma effect on income taxes for earnings of
ELASCO, Metals, Incorporated and Stainless Tubular Products, Inc.,
Subchapter S corporations, assuming the earnings had been taxed at the
Company's effective tax rate of 39.8%.
12
<PAGE> 14
HUGHES SUPPLY, INC.
UNAUDITED PRO FORMA SUPPLEMENTAL CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED JANUARY 26, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMMON
PRO FORMA STOCK AND
ADJUSTMENTS NOTES PRO FORMA
HUGHES PVF PVF PRO FORMA PRO FORMA OFFERING AS
SUPPLY(A) ACQUISITION(B) ACQUISITION ADJUSTMENTS COMBINED ADJUSTMENTS ADJUSTED
---------- -------------- ----------- ----------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales............. $1,242,446 $109,159 $ -- $ -- $1,351,605 $ -- $1,351,605
Cost of Sales......... 989,214 66,428 -- -- 1,055,642 -- 1,055,642
---------- -------- ------- ------- ---------- ------ ----------
Gross Profit.......... 253,232 42,731 -- -- 295,963 -- 295,963
Operating Expenses.... 202,674 14,349 (3,264)(c) -- 213,759 -- 213,759
Depreciation &
Amortization........ 11,272 673 4,052(d) -- 15,997 -- 15,997
---------- -------- ------- ------- ---------- ------ ----------
Total Operating
Expenses............ 213,946 15,022 788 -- 229,756 -- 229,756
---------- -------- ------- ------- ---------- ------ ----------
Operating Income.... 39,286 27,709 (788) -- 66,207 -- 66,207
Interest and Other
Income.............. 4,961 175 -- -- 5,136 -- 5,136
Interest Expense...... (9,380) (965) (5,694)(e) -- (16,039) 2,547(g) (13,492)
---------- -------- ------- ------- ---------- ------ ----------
Income Before
Taxes............. 34,867 26,919 (6,482) -- 55,304 2,547 57,851
Income Taxes.......... 11,661 10,910 (2,613)(f) 2,457(h) 22,415 1,034(f) 23,449
---------- -------- ------- ------- ---------- ------ ----------
Net Income.......... 23,206 $ 16,009 $(3,869) $(2,457) 32,889 $1,513 34,402
========== ======== ======= ======= ========== ====== ==========
Earnings Per Share:
Primary............. $ 2.72 $ 3.55 $ 3.20
========== ========== ==========
Fully-diluted....... $ 2.70 $ 3.52 $ 3.18
========== ========== ==========
Average Shares
Outstanding:
Primary............. 8,523 9.261 10,748
========== ========== ==========
Fully-diluted....... 8,602 9,340 10,827
========== ========== ==========
</TABLE>
See notes to unaudited pro forma supplemental consolidated statement of income.
13
<PAGE> 15
NOTES TO UNAUDITED PRO FORMA SUPPLEMENTAL CONSOLIDATED
STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)
(a) Represents the combined results of the Company, ELASCO, PPSC, Sunbelt
and the Metals Group. These combined results will become the restated
historical results of the Company upon publication of financial results
for periods inclusive of the date of consummation of the respective
transactions in accordance with pooling of interests accounting.
(b) Amounts represent results of PVF for the 12 months ended December 31,
1995.
(c) Adjustments to operating expenses to eliminate overhead allocation from
PVF's parent of $2,341 and personnel costs of $923 which will be
reduced/eliminated as a result of the acquisition.
(d) Adjustment to reflect amortization on goodwill of $60,773 on a
straight-line basis over 15 years.
(e) Adjustment to interest expense as a result of the PVF Acquisition:
<TABLE>
<S> <C>
Interest on $74,772 of Senior Notes (including $372 of debt
issuance costs) issued in connection with the PVF
Acquisition, at an interest rate of 7.96%................. $5,952
Reduction of interest on PVF average borrowing of $10,651 at
an average rate of 9.06% replaced by the Company's line of
credit with an average rate of 6.29%...................... (295)
Amortization of debt issuance costs......................... 37
------
$5,694
======
</TABLE>
(f) Federal income tax adjustments relating to the PVF Acquisition using
the Company's annual effective tax rate of 40.6%.
(g) Adjustment to interest expense as a result of the Common Stock offering
and the Senior Notes offering:
<TABLE>
<S> <C>
Use of proceeds from the Common Stock offering to reduce
amounts outstanding under the Company's line of credit
facility.................................................. $2,948
Increase in interest expense resulting from replacing
amounts outstanding under the line of credit facility with
the Senior Notes.......................................... (401)
------
$2,547
======
</TABLE>
(h) Amount reflects the pro forma effect on income taxes for earnings of
ELASCO, Metals, Incorporated and Stainless Tubular Products, Inc.,
Subchapter S corporations, assuming the earnings had been taxed at the
Company's annual effective tax rate of 40.6%.
14
<PAGE> 16
SELECTED SUPPLEMENTAL CONSOLIDATED FINANCIAL AND OPERATING DATA(1)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The financial data set forth below for fiscal 1996, 1995 and 1994 have been
derived from the audited supplemental consolidated financial statements of the
Company. The financial data set forth below for fiscal 1993 and 1992 have been
derived from the unaudited supplemental consolidated financial statements of the
Company. The financial data of the Company as of and for the nine months ended
October 31, 1996 and October 31, 1995 have been derived from the unaudited
supplemental consolidated financial statements of the Company appearing
elsewhere herein and which, in the opinion of management, include all
adjustments, consisting only of normal recurring adjustments which the Company
considers necessary for a fair presentation of the results of operations and the
financial condition for the periods. The financial data for the nine months
ended October 31, 1996 are not necessarily indicative of results for a full
fiscal year. All supplemental financial data presented has been restated to
reflect the combined operations of the Company, PPSC, Sunbelt and the Metals
Group. The selected financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," Supplemental Consolidated Financial Statements of the Company and
the Unaudited Pro Forma Supplemental Consolidated Financial Information included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED NINE MONTHS ENDED
------------------------------------------------------------------- -------------------------
JANUARY 26, JANUARY 27, JANUARY 28, JANUARY 29, JANUARY 31, OCTOBER 31, OCTOBER 31,
1996 1995 1994 1993 1992(2) 1996(3) 1995(3)
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF INCOME DATA:
Net sales...................... $1,242,446 $994,811 $827,251 $676,465 $648,010 $1,150,670 $938,481
Cost of sales.................. 989,214 797,123 664,696 547,636 524,525 914,270 750,121
---------- -------- -------- -------- -------- ---------- --------
Gross profit................... 253,232 197,688 162,555 128,829 123,485 236,400 188,360
Operating expenses............. 213,946 170,617 145,749 119,340 119,445 191,033 157,950
---------- -------- -------- -------- -------- ---------- --------
Operating income............... 39,286 27,071 16,806 9,489 4,040 45,367 30,410
Interest expense............... 9,380 6,414 6,048 5,774 7,463 9,603 7,133
Interest and other income...... 4,961 3,203 3,679 4,072 2,408 4,665 3,834
---------- -------- -------- -------- -------- ---------- --------
Income (loss) before income
taxes........................ 34,867 23,860 14,437 7,787 (1,015) 40,429 27,111
Income taxes (benefits)........ 11,661 7,979 4,710 1,734 (1,359) 15,293 8,980
---------- -------- -------- -------- -------- ---------- --------
Net income..................... $ 23,206 $ 15,881 $ 9,727 $ 6,053 $ 344 $ 25,136 $ 18,131
========== ======== ======== ======== ======== ========== ========
Earnings per share:
Primary...................... $ 2.72 $ 2.00 $ 1.43 $ 0.90 $ 0.05 $ 2.46 $ 2.13
========== ======== ======== ======== ======== ========== ========
Fully diluted................ $ 2.70 $ 1.98 $ 1.34 $ 0.90 $ 0.05 $ 2.45 $ 2.12
========== ======== ======== ======== ======== ========== ========
Cash dividends per share....... $ 0.30 $ 0.22 $ 0.16 $ 0.12 $ 0.24 $ 0.28 $ 0.21
========== ======== ======== ======== ======== ========== ========
Pro forma earnings (loss) per
share:(4)
Primary...................... $ 2.43 $ 1.82 $ 1.27 $ 0.75 $ (0.09) $ 2.38 $ 1.89
========== ======== ======== ======== ======== ========== ========
Fully diluted................ $ 2.41 $ 1.80 $ 1.21 $ 0.75 $ (0.09) $ 2.38 $ 1.88
========== ======== ======== ======== ======== ========== ========
Shares outstanding:
Primary...................... 8,523 7,926 6,810 6,725 6,713 10,208 8,499
Fully diluted................ 8,602 8,110 7,980 6,753 6,713 10,242 8,555
OPERATING DATA:
Branches at end of period...... 226 182 151 136 129 266 204
Comparable branch sales
increases (decreases)(5)..... 11% 14% 18% (1%) (10%) 10% 13%
BALANCE SHEET DATA (END OF
PERIOD):
Working capital................ $ 217,146 $196,952 $161,665 $139,977 $128,772 $ 303,184 $208,187
Total assets................... 440,795 391,153 313,691 280,007 264,425 625,128 429,100
Long-term debt, less current
portion...................... 131,682 121,728 118,224 101,028 87,922 194,755 127,661
Shareholders' equity........... 170,766 148,689 108,064 99,097 94,836 265,427 167,354
</TABLE>
- ---------------
(1) The Company merged with PPSC, Sunbelt and the Metals Group in transactions
consummated after October 31, 1996 and accounted for as poolings of
interests. The Summary Supplemental Consolidated Financial and Operating
Data gives retroactive effect to the mergers.
(2) Fiscal 1992 represents a 53-week fiscal year.
(3) Nine months ended October 31, 1996 and 1995 contain 40 and 39 weeks,
respectively.
(4) Pro forma earnings (loss) per share assumes that the earnings of ELASCO, a
Subchapter S corporation acquired by the Company on April 26, 1996, and
Metals, Incorporated and Stainless Tubular Products, Inc., also Subchapter S
corporations acquired by the Company on January 24, 1997, would have been
taxed at the Company's effective rate for each period presented. See Note 2
of Notes to Consolidated Financial Statements.
(5) Comparable branch sales increases (decreases) are calculated for each period
presented by comparing the net sales results in the period with the net
sales results for the comparable prior year period (for branches that were
open for the entire duration of both periods).
15
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As described in Note 2 of the Notes to Supplemental Consolidated Financial
Statements, in fiscal 1996 and 1997 the Company entered into business
combinations with Moore Electric, FPS, 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.
NINE MONTHS ENDED OCTOBER 31, 1996 AND 1995
Net Sales
Net sales for the nine months ended October 31, 1996 were $1,150.7 million,
a 23% increase over the nine months ended October 31, 1995. Newly acquired and
opened wholesale outlets provided 10 percentage points of the 23% increase.
Management expects commercial construction 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 margin for the nine months ended October 31, 1996 was 20.5% compared
to 20.1% for the nine months ended October 31, 1995. Expansion of product
offerings to lines with better margins, efficiencies created with central
distribution centers, increased volume and concentration of supply sources have
contributed to the improvement.
Operating Expenses
Operating expenses for the nine month period ended October 31, 1996 were
$191.0 million, a 21% increase over the prior year period. Approximately
one-half of this increase is attributable to recent acquisitions and
newly-opened wholesale outlets.
Non-Operating Income and Expenses
Interest and other income increased $.8 million for the nine months ended
October 31, 1996 over the prior year period. The increase is primarily
attributable to gain on sales of property and equipment, and increased
collection of service charges due on delinquent accounts receivable.
Interest expense was $9.6 million for the nine months ended October 31,
1996 compared to $7.1 million for the nine months ended October 31, 1995. The
increase is primarily the result of higher borrowing levels as interest rates
have been essentially unchanged. Expansion through business acquisitions has
been partially funded by debt financing.
Income Taxes
The effective tax rates for the nine months ended October 31, 1996 and 1995
were 37.8% and 33.1%, respectively. Prior to the merger 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 will be higher for the year ending January 31, 1997
than for the year ended January 26, 1996.
Net Income
For the nine months ended October 31, 1996, net income reached $25.1
million, a 39% increase over the nine months ended October 31, 1995. Fully
diluted earnings per share for the nine months ended October 31, 1996 and 1995
were $2.45 and $2.12, respectively. This increase of 16% was on 20% more shares
outstanding.
16
<PAGE> 18
FISCAL 1996, 1995 AND 1994
Net Sales
The Company exceeded the one billion dollar mark with net sales of $1.2
billion in fiscal 1996. Net sales increased by 25% over fiscal 1995 net sales of
$994.8 million. Fiscal 1994 net sales totaled $827.3 million. Newly-opened and
acquired wholesale outlets accounted for approximately 60% of the increase in
fiscal 1996 and 40% of the increase in fiscal 1995.
The Company's strategy of expanding and diversifying into more construction
markets (commercial and industrial, as well as geographic) has contributed to
these strong sales gains along with same store sales growth. Although fiscal
1996 and 1995 residential construction activity has been slower following a
strong fiscal 1994, commercial and industrial construction activity rebounded in
fiscal 1995 and continued through fiscal 1996.
Gross Margin
Gross margins have been improving steadily over the past few years. Gross
margins increased to 20.4% in fiscal 1996 compared to 19.9% in fiscal 1995 and
19.7% in fiscal 1994. 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 1996 were $213.9 million, a 25% increase over
fiscal 1995. Newly-opened wholesale outlets and recent acquisitions accounted
for approximately 50% of the increase. The remainder of the increase is due
primarily to personnel and transportation costs associated with the growth in
sales. Similarly, the $24.9 million increase in fiscal 1995 compared to fiscal
1994 is attributed primarily to newly-opened wholesale outlets and acquisitions
(approximately 45%) and costs, such as personnel, transportation and insurance,
associated with sales growth.
Non-Operating Income and Expenses
Interest and other income increased to $5.0 million in fiscal 1996 compared
to $3.2 million in fiscal 1995 and $3.7 million in fiscal 1994. This increase is
primarily the result of improved collection of service charge income on
delinquent accounts receivable. In addition, gain realized on sales of property
and equipment (primarily transportation equipment) was $.3 million higher in
fiscal 1996.
Interest expense increased by $3.0 million in fiscal 1996 over fiscal 1995.
Higher interest rates and higher average borrowing levels were equally
responsible for the increase. Fiscal 1995 interest expense was only $.4 million
higher than fiscal 1994, which was attributable to higher interest rates
partially offset by lower borrowing levels due primarily to the conversion of
approximately $23 million of subordinated debentures.
Net Income
Net income in fiscal 1996 increased 46% to $23.2 million from $15.9 million
in fiscal 1995, while fully diluted earnings per share increased 36% to $2.70 in
fiscal 1996 compared to $1.98 in fiscal 1995. These results followed fiscal 1995
increases of 63% and 48%, respectively, in net income and fully diluted earnings
per share. Net income and fully diluted earnings per share in fiscal 1994 were
$9.7 million and $1.34, 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 3.2%
in fiscal 1996, compared to 2.7% and 2.0% in fiscal 1995 and 1994, respectively.
17
<PAGE> 19
Liquidity and Capital Resources
Working capital at October 31, 1996 amounted to $303 million compared to
$217 million, $197 million and $162 million in fiscal years ended 1996, 1995 and
1994, respectively. The working capital ratio increased to 2.86 to 1 at October
31, 1996 compared to 2.59 to 1, 2.65 to 1 and 2.87 to 1 for fiscal years ended
1996, 1995 and 1994, 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 through increased use of central distribution facilities and with
investments in resources to improve the efficiency and service capability of
these facilities.
For the nine months ended October 31, 1996, net cash provided by operations
was $8.0 million. In fiscal 1996, net cash provided by operations was $17.3
million compared to $3.7 million in fiscal 1995 and cash used in operations of
$1.0 million in fiscal 1994. These changes are due primarily to fluctuations in
accounts receivable, inventories and accounts payable. Because additional
amounts of cash were generated in fiscal 1996, net borrowing under short-term
debt decreased to $15.4 million compared to $26.8 million and $17.8 million in
fiscal 1995 and 1994, respectively.
Expenditures for property and equipment were $11.8 million for the nine
months ended October 31, 1996 compared to $9.7 million for the nine months ended
October 31, 1995. The Company invested $90.0 million for property and equipment
in fiscal 1996. Cash payments for business acquisitions totaled $89.9 million
and $10.0 million for the nine months ended October 31, 1996 and the fiscal year
ended January 26, 1996, respectively. Capital expenditures for property and
equipment, not including amounts for business acquisitions, are expected to be
approximately $14 million in fiscal 1997.
As discussed in Note 11 of the Notes to Supplemental 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 all
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) a higher gross margin product
group than the Company's other product groups; (iii) greater focus on targeted
industrial and replacement markets; (iv) a strong management team; and (v) new
opportunities for additional acquisitions. Additional growth opportunities for
the Company related to these acquisitions include incremental sales of
complimentary valve products (which had represented only 2% of PVF's fiscal 1995
net sales) and new branch openings.
Principal reductions on long-term debt were $14.3 million for the nine
months ended October 31, 1996 compared to $5.4 million for the prior year nine
months. The increase resulted primarily from paying off debt of recent business
acquisitions. Dividend payments were $4.5 million and $3.9 million during the
nine months ended October 31, 1996 and 1995, respectively. Dividend payments
included $2.4 million and $2.6 million in cash dividends of pooled companies
during the nine months ended October 31, 1996 and 1995, 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 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 $63 million of unused debt capacity (subject to borrowing
limitations under long-term debt covenants) as of October 31, 1996, 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.
18
<PAGE> 20
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 the first nine months of fiscal 1997 the Company acquired several
wholesale distributors for approximately $127 million ($90 million in cash and
$37 million in stock). In fiscal 1996, consideration for acquisitions 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), while fiscal 1994 expenditures were $4 million in cash. 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 supplemental consolidated financial
statements. As a result of these acquisitions, the Company had 266 branches in
24 states as of October 31, 1996, compared to 226 branches in 20 states at last
year end.
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.
19
<PAGE> 21
SELLING SHAREHOLDERS
The following table sets forth certain information regarding the ownership
of the Common Stock by each of the Selling Shareholders. Each of the Selling
Shareholders has sole voting and investment power with respect to such shares.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AFTER THE
NUMBER OF SHARES NUMBER OF SHARES OFFERING(1)
NAME OF SELLING BENEFICIALLY OWNED AS REGISTERED FOR -------------------
SHAREHOLDER OF FEBRUARY 3, 1997 SALE HEREBY(1) NUMBER PERCENT
--------------- --------------------- ---------------- -------- --------
<S> <C> <C> <C> <C>
William G. Gayle(2)......................... 62,190 15,899 46,291 *
1125 Sun Valley Road
Harpersville, AL 35078
Donald E. Guy(2)............................ 11,676 11,319 357 *
P.O. Box 10452
Birmingham, AL 35202
William R. Moore, Trustee, as Trustee of
the(3).................................... 72,864 72,864 0 *
William R. Moore Revocable Trust
2021 East View Drive
Sun City Center, FL 33570
William B. Moore(3)......................... 48,178 48,178 0 *
2228 Eagle Bluff Drive
Valrico, FL 33594
Lee Roth(3)................................. 24,414 24,414 0 *
3625 Bridgefield Drive
Lakeland, FL 33803
Jeff Clyne(3)............................... 16,443 16,443 0 *
1002 East Highland Drive
Lakeland, FL 33813
Thomas Allen(3)............................. 8,978 8,978 0 *
2640 Kennedy Road
Lakeland, FL 33801
Juno Profit Sharing Trust(3)................ 13,685 13,685 0 *
4355 Drane Field Rd.
Lakeland, FL 33811
Max Stout(3)................................ 5,046 5,046 0 *
4947 Tradition Drive
Lakeland, FL 33813
Roger Kelly(3).............................. 4,483 4,483 0 *
903 Pinecrest Drive
Bartow, FL 33830
William Claussen(3)......................... 3,962 3,962 0 *
1598 Pond Gannett Lane
Jacksonville, FL 32259
Tom Hodge(3)................................ 3,263 3,263 0 *
6219 Quail Ridge
Lakeland, FL 33813
Dwayne Castle(3)............................ 2,188 2,188 0 *
P.O. Box 21
Bradley, FL 33835
</TABLE>
20
<PAGE> 22
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AFTER THE
NUMBER OF SHARES NUMBER OF SHARES OFFERING(1)
NAME OF SELLING BENEFICIALLY OWNED AS REGISTERED FOR -------------------
SHAREHOLDER OF FEBRUARY 3, 1997 SALE HEREBY(1) NUMBER PERCENT
--------------- --------------------- ---------------- -------- --------
<S> <C> <C> <C> <C>
Cyril Fullenkamp(3)......................... 2,145 2,145 0 *
10363 Arrow Lakes Drive East
Jacksonville, FL 32256
David Kinder(3)............................. 1,602 1,602 0 *
1115 East Palmetto
Lakeland, FL 33801
Don Mock(3)................................. 1,330 1,330 0 *
645 S. Lakeside Terrace
Eagle Lake, FL 33839
LaDonnia Mathis(3).......................... 729 729 0 *
6228 Sommerset
Lakeland, FL 33803
Patricia Noury(3)........................... 236 236 0 *
2980 Willow Wood Drive
Mulberry, FL 33860
Barbara Mobley(3)........................... 129 129 0 *
4020 Vinson Road
Lakeland, FL 33809
Timothy Allen(3)............................ 129 129 0 *
1602 Golfview Drive South
Plant City, FL 33567
Donald Lamb(3).............................. 129 129 0 *
3617 Southcrest Blvd.
Lakeland, FL 33813
Graham Clements(4).......................... 47,182 47,182 0 *
3349 South Shores Circle
West Bloomfield, MI 48323
Donald Telman(4)............................ 47,182 47,182 0 *
2650 Norwood
Bloomfield Hills, MI 48302
H. Clayton Arnold, as Trustee of(5)......... 24,557 24,557 0 *
the H. Clayton Arnold Revocable Trust dated
9/22/93
612 Kingfish Road
North Palm Beach, FL 33408
Kathleen G. Arnold, as Trustee of(5)........ 16,371 16,371 0 *
the Kathleen G. Arnold Revocable Trust dated
9/22/93
612 Kingfish Road
North Palm Beach, FL 33408
Gregory H. Arnold(5)........................ 27,283 27,283 0 *
114 Cape Pointe Circle
Jupiter, FL 33477
James F. Matthews(6)........................ 120,000 120,000 0 *
7 Dellwood Place
Binghamton, NY 13903
</TABLE>
21
<PAGE> 23
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AFTER THE
NUMBER OF SHARES NUMBER OF SHARES OFFERING(1)
NAME OF SELLING BENEFICIALLY OWNED AS REGISTERED FOR -------------------
SHAREHOLDER OF FEBRUARY 3, 1997 SALE HEREBY(1) NUMBER PERCENT
--------------- --------------------- ---------------- -------- --------
<S> <C> <C> <C> <C>
Patricia R. Douglas(7)...................... 75,337 75,337 0 *
2401 Nollville Road
Martinsburg, WV 25401
John F. Bedick(7)........................... 29,555 29,555 0 *
4821 McClung Street
South Charleston, WV 25309
Ronald L. Whitney(7)........................ 29,555 29,555 0 *
4821 McClung Street
South Charleston, WV 25309
Robert S. Clay(7)........................... 13,300 13,300 0 *
2604 Avenham Avenue
Roanoke, VA 24014
Larry A. Feld(8)............................ 128,305 128,305 0 *
11909 Wink Road
Houston, TX 77027
Brent W. Scheps(8).......................... 128,305 128,305 0 *
5108 Valerie
Bellaire, TX 77401
Ronald L. Siegenthaler, as Trustee of(9).... 165,732 165,732 0 *
the Ronald L. Siegenthaler
Revocable Living Trust dated 9/25/95, as
amended 8/28/96
1010 West 37th Place
Tulsa, OK 74107
William B. Emmer(9)......................... 165,732 165,732 0 *
3616 East 99th Street
Tulsa, OK 74137
John R. Sappington(9)....................... 27,409 27,409 0 *
5211 East 88th Street
Tulsa, OK 74137
John H. Cullinan, Jr., as Trustee of(9)..... 44,873 44,873 0 *
the John H. Cullinan, Jr.
Revocable Trust dated 10/12/93
2322 South Delware
Tulsa, OK 74114
Larry E. Fishpaw, as Trustee of(9).......... 44,873 44,873 0 *
the Larry E. Fishpaw
Revocable Trust dated 8/27/92
4735 South Victor
Tulsa, OK 74105
Craig Hurt(9)............................... 20,193 20,193 0 *
10061 South Sheridan Apt. #614
Tulsa, OK 74133
Steve Walker(9)............................. 9,393 9,393 0 *
6951 Falls Church Court
Spanish Fort, AL 36527
</TABLE>
22
<PAGE> 24
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AFTER THE
NUMBER OF SHARES NUMBER OF SHARES OFFERING(1)
NAME OF SELLING BENEFICIALLY OWNED AS REGISTERED FOR -------------------
SHAREHOLDER OF FEBRUARY 3, 1997 SALE HEREBY(1) NUMBER PERCENT
--------------- --------------------- ---------------- -------- --------
<S> <C> <C> <C> <C>
Shari Roberts(9)............................ 4,175 4,175 0 *
4826 Oakleaf Drive
Tulsa, OK 74132
Ernest E. Smith(9).......................... 1,462 1,462 0 *
1604 North Hickory Avenue
Broken Arrow, OK 74012
</TABLE>
- ---------------
* Less than 1%.
(1) Assumes all shares offered hereby have been sold. Because the Selling
Shareholders may sell all, some or none of their respective shares pursuant
to this Prospectus, no actual estimate can be made of the aggregate number
of shares that each Selling Shareholder will own upon completion of the
offering to which this Prospectus relates.
(2) On May 1, 1996, the Company, pursuant to the Gayle Agreement, exchanged
152,098 shares of Common Stock of the Company for all of the outstanding
shares of Gayle Supply, subject to adjustment, if necessary, to reflect any
change in the net asset value of Gayle Supply from the assumed value at the
date of the Gayle Agreement to the value determined under the Gayle
Agreement on the closing date. Of the 27,218 Gayle Shares covered by this
Prospectus, 26,141 shares have been issued as an adjustment to the number
of shares exchanged by the Company pursuant to the terms of the Gayle
Agreement while the remaining 1,077 shares were issued by the Company at
the closing of that transaction. Messrs. Gayle and Guy were each
shareholders of Gayle Supply prior to the consummation of that transaction.
See Note (10) below.
(3) On September 16, 1996, the Company, pursuant to the Juno Agreement,
exchanged 190,894 shares of Common Stock of the Company for all of the
outstanding shares of Juno, subject to adjustment, if necessary, to reflect
any change in the net asset value of Juno from the assumed value at the
date of the Juno Agreement to the value determined under the Juno Agreement
at the closing date. At closing, 21,210 shares were delivered in escrow
under the terms of the Escrow Agreement (as defined in the Juno Agreement).
Of those 21,210 shares, 2,171 shares have been returned to the Company
based on a decrease in the net asset value of Juno from the assumed value
at the date of the Juno Agreement. Of the 209,933 Juno Shares covered by
this Prospectus, 19,039 shares were released from escrow and delivered to
the Juno shareholders. Messrs. W. B. Moore, W. R. Moore (as trustee), Roth,
Clyne, Allen, Stout, Kelly, Claussen, Hodge, Castle, Fullenkamp, Kinder,
Mock, Allen and Lamb and Ms. Mathis, Noury and Mobley and the Juno Profit
Sharing Trust were each shareholders of Juno prior to the consummation of
that transaction. See Note (10) below.
(4) On September 30, 1996, the Company, pursuant to the PPP Agreement,
exchanged 94,364 shares of Common Stock of the Company for all of the
outstanding shares of PPP, subject to adjustment, if necessary, to reflect
any change in the net asset value of PPP from the assumed value at the date
of the PPP Agreement to the value determined under the PPP Agreement at the
closing date. At closing, 10,486 shares of Common Stock were delivered in
escrow under the terms of the Escrow Agreement (as defined in the PPP
Agreement) and may be returned to the Company or additional shares may be
issued to the PPP Shareholders based upon finalization of the net asset
value of PPP as of the closing date. Messrs. Clements and Telman were each
shareholders of PPP prior to the consummation of that transaction. See Note
(10) below.
(5) On November 5, 1996, the Company, pursuant to the CWI Agreement, acquired
CWI from its shareholders, for an aggregate base price of $2,880,000 (the
"Base Price"), subject to adjustment, if necessary, to increase or decrease
the price from the Base Price to the Final Adjusted Price (as defined in
the CWI Agreement) to reflect any change in the value of CWI from the
assumed value of
23
<PAGE> 25
$1,569,690. The Base Price was paid by the Company at closing by delivery
of consideration consisting of 68,211 shares of Common Stock of the Company
with an aggregate value, as determined under the CWI Agreement at $38.00
per share (the "CWI Agreement Share Price"), of $2,592,018. At closing,
7,579 shares of Common Stock with an aggregate value of $288,002 were
delivered in escrow under the terms of the Escrow Agreement (as defined in
the CWI Agreement) as security to be returned to the Company in the event
the Final Adjusted Price is determined to be less than or more than the
Base Price. In the event the Final Adjusted Price is determined to be less
than or more than the Base Price, the amount of such difference will be
returned to the Company or paid by the Company, as the case may be, in
shares of the Company at the CWI Agreement Share Price. Messrs. Clayton
Arnold (as trustee), Gregory Arnold and Ms. Kathleen Arnold (as trustee)
were each shareholders of CWI prior to its acquisition by the Company. See
Note (10) below.
(6) On December 2, 1996, the Company, pursuant to the WES Agreement, acquired
WES from its shareholder for an aggregate base price of $4,800,000 (the
"Base Price"), subject to adjustment, if necessary, to increase or decrease
the price from the Base Price to the Final Adjusted Price (as defined in
the WES Agreement) to reflect any change in the value of WES from the
assumed value of $2,765,392. The Base Price was paid by the Company at
closing by delivery of consideration consisting of 120,000 shares of Common
Stock of the Company with an aggregate value, as determined under the WES
Agreement at $36.00 per share (the "WES Agreement Share Price"), of
$4,320,000. At closing, 13,334 shares of Common Stock with an aggregate
value of $480,024 were delivered in escrow under the terms of the Escrow
Agreement (as defined in the WES Agreement) as security to be returned to
the Company in the event the Final Adjusted Price is determined to be less
than or more than the Base Price. In the event the Final Adjusted Price is
determined to be less than or more than the Base Price, the amount of such
difference will be returned to the Company or paid by the Company, as the
case may be, in shares of the Company at the WES Agreement Share Price. Mr.
James W. Matthews was the shareholder of WES prior to its acquisition of
the Company. See Note (10) below.
(7) On December 11, 1996, the Company, pursuant to the PPSC Agreement,
exchanged 147,747 shares of Common Stock of the Company for all of the
outstanding shares of PPSC, subject to adjustment, if necessary, to reflect
any change in the net asset value of PPSC from the assumed value at the
date of the PPSC Agreement to the value determined under the PPSC Agreement
at the closing date. At closing, 7,809 shares of Common Stock were
delivered in escrow under the terms of the Escrow Agreement (as defined in
the PPSC Agreement) and may be returned to the Company or additional shares
may be issued to the PPSC shareholders based upon finalization of the net
asset value of PPSC as of the closing date. Messrs. Bedick, Whitney, Clay
and Ms. Douglas were each shareholders of PPSC prior to the consummation of
that transaction. See Note (10) below.
(8) On December 30, 1996, the Company, pursuant to the Sunbelt Agreement,
exchanged 256,610 shares of Common Stock of the Company for all of the
outstanding shares of Sunbelt and certain real estate leased to Sunbelt
from its shareholders, subject to adjustment, if necessary, to reflect any
change in the net asset value of Sunbelt from the assumed value at the date
of the Sunbelt Agreement to the value determined under the Sunbelt
Agreement at the closing date. At closing, 45,454 shares of Common Stock
were delivered in escrow under the terms of the Escrow Agreement (as
defined in the Sunbelt Agreement) and may be returned to the Company or
additional shares may be issued to the Sunbelt shareholders based upon
finalization of the net asset value of Sunbelt as of the closing date. An
additional 181,818 shares of Common Stock of the Company were issued to the
Sunbelt Supply Co. Employee Stock Ownership Plan and Trust, which shares
have been registered under a Form S-8 Registration Statement previously
filed by the Company with the Commission. Messrs. Feld and Scheps were each
shareholders of Sunbelt prior to the consummation of that transaction. See
Note (10) below.
(9) On January 24, 1997, the Company, pursuant to the Metals Agreement,
exchanged 483,842 shares of Common Stock of the Company for all of the
outstanding shares of the Metals Group, subject to adjustment, if
necessary, to reflect any change in the net asset value of the Metals Group
from the assumed value at the date of the Metals Agreement to the value
determined under the Metals Agreement at the closing date. At closing,
53,759 shares of Common Stock were delivered in escrow
24
<PAGE> 26
under the terms of the Escrow Agreement (as defined in the Metals
Agreement) and may be returned to the Company or additional shares may be
issued to the Metals Group shareholders based upon the finalization of the
net asset value of the Metals Group as of the closing date. Messrs.
Siegenthaler (as trustee), Emmer, Sappington, Cullinan (as trustee),
Fishpaw (as trustee), Hurt, Smith, Walker and Ms. Roberts were each
shareholders of the Metals Group prior to the consummation of that
transaction. See note (10) below.
(10) The registration under the Securities Act of the shares offered hereby to
permit resale of the shares by the respective Selling Shareholders after
the closing of the acquisition or share exchange, as applicable, was, in
each case, a condition of the acquisition or share exchange under the
applicable agreement.
25
<PAGE> 27
PLAN OF DISTRIBUTION
The Shares offered hereby are being offered by the respective Selling
Shareholders. The Company will receive no proceeds from the sale of any of the
Shares by the Selling Shareholders. The sale of the Shares may be effected by
the Selling Shareholders from time to time in transactions in the
over-the-counter market, on the NYSE or on other exchanges on which the Shares
may be listed, in negotiated transactions, or a combination of such methods of
sale, at fixed prices which may be changed, at market prices prevailing at the
time of sale, at prices related to prevailing market prices or at negotiated
prices. The Selling Shareholders may effect such transactions by selling the
Shares to or through underwriters or broker-dealers, and such underwriters or
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Shareholders and/or the purchasers of the Shares
for whom such underwriters or broker-dealers may act as agents or to whom they
sell as principals, or both (which compensation as to a particular underwriter
or broker-dealer might be in excess of customary commissions). To the extent
required, the number of Shares to be sold, the purchase price, the name of any
such agent, dealer or underwriter and any applicable commissions with respect to
a particular offer will be set forth in an accompanying Prospectus Supplement.
The aggregate proceeds to the Selling Shareholders from the sale of the Shares
sold by the Selling Shareholders hereby will be the purchase price of such
Shares less any broker's commissions or underwriters' discounts. In addition,
any securities covered by this Prospectus which qualify for sale under Rule 144
under the Securities Act ("Rule 144") may be sold under Rule 144 rather than
pursuant to this Prospectus.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
Any broker-dealers, agents or underwriters that participate with the
Selling Shareholders in the distribution of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act, in which event any
commissions received by such broker-dealers, agents, or underwriters and any
profit on their sale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Shares may not simultaneously engage in
market making activities with respect to the Common Stock of the Company for a
period of two business days prior to the commencement of such distribution. In
addition and without limiting the foregoing, each Selling Shareholder will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Rules 10b-6 and 10b-7,
which provisions may limit the timing of purchases and sales of shares of the
Company's Common Stock by the Selling Shareholders.
The Company agreed to register the Shares under the Securities Act and to
indemnify certain Selling Shareholders against certain liabilities under the
Securities Act that could arise in connection with the sale by such Selling
Shareholders of the Shares. The Company has agreed to pay certain fees and
expenses incident to the registration of the Shares. The Company has agreed to
use its best effort to maintain the effectiveness of the Registration Statement
of which this Prospectus constitutes a part for a period of two years from the
respective dates on which the transactions with each Selling Shareholder were
consummated.
LEGAL MATTERS
Certain legal matters with respect to the legality of the issuance of the
Shares offered hereby will be passed upon for the Company by its General
Counsel, Benjamin P. Butterfield, Esq.
26
<PAGE> 28
EXPERTS
The Company's Supplemental Consolidated Balance Sheets as of January 26,
1996 and January 27, 1995, and the Supplemental Consolidated Statements of
Income, Shareholders' Equity and Cash Flows of the Company for each of the two
years in the period ended January 26, 1996 included in this Prospectus and the
Company's Consolidated Balance Sheets as of January 26, 1996 and January 27,
1995 and the Consolidated Statements of Income, Shareholders' Equity and Cash
Flows of the Company for each of the two years in the period ended January 26,
1996 incorporated in this Prospectus by reference to the Company's Registration
Statement on Form S-3 (File No. 333-15675), have been so included and
incorporated in reliance on the report of Price Waterhouse LLP, independent
certified public accountants, given on the authority of said firm as experts in
auditing and accounting.
The Company's Supplemental Consolidated Statements of Income, Shareholders'
Equity and Cash Flows for the year ended January 28, 1994 included in this
Prospectus and the Company's Consolidated Statements of Income, Shareholders
Equity and Cash Flows for the year ended January 28, 1994 incorporated in this
Prospectus by reference to the Registration Statement on Form S-3 have been so
included and incorporated in reliance on the reports of Price Waterhouse LLP,
independent certified public accountants, and Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of said firms as experts in
auditing and accounting.
The Consolidated Balance Sheets of PVF as of June 30, 1994 and June 30,
1995 and the Consolidated Statements of Income, Stockholders' Equity and Cash
Flows of PVF for each of the three years in the period ended June 30, 1995
incorporated in this Prospectus by reference to the Company's Current Report on
Form 8-K dated May 13, 1996, have been so incorporated in reliance upon the
report of Deloitte & Touche LLP, independent certified public accountants, given
on the authority of that firm as experts in auditing and accounting.
27
<PAGE> 29
SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
The following supplemental consolidated financial statements give effect to
the business combinations between the Company and PPSC, Sunbelt and the Metals
Group consummated after October 31, 1996 and accounted for as poolings of
interests. These supplemental financial statements will become the restated
historical financial statements of the Company upon the publication of combined
financial results of the combining companies covering a period subsequent to the
acquisitions. The following supplemental consolidated statements of operations
and of cash flows combine the historical consolidated statements of operations
and of cash flows of the Company and PPSC, Sunbelt and the Metals Group for the
three years ended January 26, 1996, January 27, 1995 and January 28, 1994,
respectively and the nine months ended October 31, 1996 and 1995. The
supplemental consolidated statements of operations and of cash flows assume the
PPSC, Sunbelt, and the Metals Group acquisitions occurred at the beginning of
the earliest period presented. The supplemental consolidated balance sheets
combine the historical consolidated balance sheet of the Company with the
historical consolidated balance sheets of PPSC, Sunbelt and the Metals Group as
of January 26, 1996, January 27, 1995 and October 31, 1996.
The supplemental consolidated earnings per share is based on the combined
weighted average number of shares of Common Stock of the Company and Common
Stock of the Company issued to former shareholders of PPSC, Sunbelt and the
Metals Group for each period. The supplemental consolidated balance sheets
reflect the issuance of 155,556, 483,882 and 537,601 shares of Common Stock of
the Company in exchange for all outstanding shares of PPSC, Sunbelt and the
Metals Group.
INDEX TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
OF THE COMPANY
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Price Waterhouse LLP, Independent Certified Public
Accountants............................................... F-2
Report of Coopers & Lybrand L.L.P., Independent
Accountants............................................... F-3
Supplemental Consolidated Balance Sheets as of January 26,
1996 and January 27, 1995................................. F-4
Supplemental Consolidated Statements of Income for the
fiscal years ended January 26, 1996, January 27, 1995 and
January 28, 1994.......................................... F-5
Supplemental Consolidated Statements of Shareholders' Equity
for the fiscal years ended January 26, 1996, January 27,
1995 and January 28, 1994................................. F-6
Supplemental Consolidated Statements of Cash Flows for the
fiscal years ended January 26, 1996, January 27, 1995 and
January 28, 1994.......................................... F-7
Notes to Supplemental Consolidated Financial Statements..... F-8
Supplemental Consolidated Balance Sheets as of October 31,
1996 (unaudited) and January 26, 1996..................... F-21
Supplemental Consolidated Statements of Income for the nine
months ended October 31, 1996 and October 31, 1995
(unaudited)............................................... F-22
Supplemental Consolidated Statements of Cash Flows for the
nine months ended October 31, 1996 and October 31, 1995
(unaudited)............................................... F-23
Notes to Supplemental Consolidated Financial Statements
(unaudited)............................................... F-24
</TABLE>
F-1
<PAGE> 30
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of Hughes Supply, Inc.
In our opinion, the accompanying supplemental consolidated balance sheets
and the related supplemental 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 26, 1996 and
January 27, 1995, and the results of their operations and their cash flows for
the years ended 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. The
consolidated financial statements of Hughes Supply, Inc. and its subsidiaries
for the year ended January 28, 1994, prior to restatement, were audited by other
independent accountants whose report dated March 17, 1994 expressed an
unqualified opinion on those financial statements.
As described in Note 2, on December 11, 1996, December 30, 1996 and January
24, 1997, the Company merged with Panhandle Pipe and Supply Co., Inc., Sunbelt
Supply Co., and Metals, Incorporated, Stainless Tubular Products, Inc. and
Metals, Inc. -- Gulf Coast Division, respectively, in transactions accounted for
as poolings of interests. The accompanying supplemental consolidated financial
statements give retroactive effect to the mergers.
The supplemental financial statements for 1994 have been restated to
reflect the poolings of interests described in Note 2. We have audited the
restatement adjustments described in Note 2 that were applied to restate the
1994 supplemental financial statements. In our opinion, such adjustments are
appropriate and have been properly applied to the 1994 supplemental financial
statements.
/s/ PRICE WATERHOUSE LLP
Orlando, Florida
March 14, 1996, except as to the pooling
of interests with Electric Laboratories and
Sales Corporation and ELASCO Agency Sales,
Inc., which is as of April 26, 1996,
Panhandle Pipe and Supply Co., Inc.,
which is as of December 11, 1996,
Sunbelt Supply Co., which is as of
December 30, 1996 and Metals, Incorporated,
Stainless Tubular Products, Inc. and
Metals, Inc. -- Gulf Coast Division,
which is as of January 24, 1997.
F-2
<PAGE> 31
REPORT OF INDEPENDENT ACCOUNTANTS
Shareholders and Board of Directors
Hughes Supply, Inc.
We have audited the consolidated statements of income, shareholders'
equity, and cash flows of Hughes Supply, Inc. and subsidiaries for the fiscal
year ended January 28, 1994 (not presented herein). 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated results of operations and cash flows
of Hughes Supply, Inc. and subsidiaries for the fiscal year ended January 28,
1994 (prior to the retroactive restatement to account for the poolings of
interests), in conformity with generally accepted accounting principles.
/s/ COOPERS & LYBRAND
Orlando, Florida
March 17, 1994
F-3
<PAGE> 32
HUGHES SUPPLY, INC.
SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JANUARY 26, JANUARY 27,
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 3,644 $ 3,774
Accounts receivable, less allowance for losses of $4,868
and $5,224............................................. 155,702 140,898
Inventories............................................... 167,138 149,461
Deferred income taxes..................................... 10,501 8,999
Other current assets...................................... 16,737 13,010
-------- --------
Total current assets.............................. 353,722 316,142
Property and Equipment, Net................................. 62,751 59,147
Deferred Income Taxes....................................... 2,436 2,095
Other Assets................................................ 21,886 13,769
-------- --------
$440,795 $391,153
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt......................... $ 3,238 $ 3,414
Accounts payable.......................................... 102,262 91,447
Accrued compensation and benefits......................... 13,551 10,305
Other current liabilities................................. 17,525 14,024
-------- --------
Total current liabilities......................... 136,576 119,190
Long-Term Debt.............................................. 131,682 121,728
Other Noncurrent Liabilities................................ 1,771 1,546
-------- --------
Total liabilities................................. 270,029 242,464
-------- --------
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; 8,465,662 and 8,280,957 shares issued...... 8,466 8,281
Capital in excess of par value............................ 40,048 36,952
Retained earnings......................................... 122,252 105,144
-------- --------
170,766 150,377
Less treasury stock, no shares and 108,988 shares, at
cost................................................... -- (1,688)
-------- --------
Total shareholders' equity........................ 170,766 148,689
-------- --------
$440,795 $391,153
======== ========
</TABLE>
The accompanying notes are an integral part of these supplemental consolidated
financial statements.
F-4
<PAGE> 33
HUGHES SUPPLY, INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
---------------------------------------
JANUARY 26, JANUARY 27, JANUARY 28,
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Net Sales................................................... $1,242,446 $994,811 $827,251
Cost of Sales............................................... 989,214 797,123 664,696
---------- -------- --------
Gross Profit................................................ 253,232 197,688 162,555
---------- -------- --------
Operating Expenses:
Selling, general and administrative....................... 200,767 159,548 135,162
Depreciation and amortization............................. 11,272 9,654 8,358
Provision for doubtful accounts........................... 1,907 1,415 2,229
---------- -------- --------
Total operating expenses.......................... 213,946 170,617 145,749
---------- -------- --------
Operating Income............................................ 39,286 27,071 16,806
---------- -------- --------
Non-Operating Income and (Expenses):
Interest and other income................................. 4,961 3,203 3,679
Interest expense.......................................... (9,380) (6,414) (6,048)
---------- -------- --------
(4,419) (3,211) (2,369)
---------- -------- --------
Income Before Income Taxes.................................. 34,867 23,860 14,437
Income Taxes................................................ 11,661 7,979 4,710
---------- -------- --------
Net Income.................................................. $ 23,206 $ 15,881 $ 9,727
========== ======== ========
Earnings Per Share:
Primary................................................... $ 2.72 $ 2.00 $ 1.43
========== ======== ========
Fully diluted............................................. $ 2.70 $ 1.98 $ 1.34
========== ======== ========
Average Shares Outstanding:
Primary................................................... 8,523 7,926 6,810
========== ======== ========
Fully diluted............................................. 8,602 8,110 7,980
========== ======== ========
Unaudited Pro Forma Net Income(Note 2)...................... $ 20,749 $ 14,426 $ 8,647
========== ======== ========
Unaudited Pro Forma Earnings Per Share:
Primary................................................... $ 2.43 $ 1.82 $ 1.27
========== ======== ========
Fully diluted............................................. $ 2.41 $ 1.80 $ 1.21
========== ======== ========
</TABLE>
The accompanying notes are an integral part of these supplemental consolidated
financial statements.
F-5
<PAGE> 34
HUGHES SUPPLY, INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK CAPITAL IN TREASURY STOCK UNEARNED
------------------ EXCESS OF RETAINED ------------------- ESOP
SHARES AMOUNT PAR VALUE EARNINGS SHARES AMOUNT COMPENSATION
--------- ------ ---------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 29, 1993, as
previously reported............. 5,892,306 $5,892 $22,134 $ 76,012 901,055 $(13,958) $ --
Adjustment for poolings of
interests.................... 1,667,200 1,667 (920) 8,790 -- -- (520)
--------- ------ ------- -------- -------- -------- ------
Balance, January 29, 1993, as
restated........................ 7,559,506 7,559 21,214 84,802 901,055 (13,958) (520)
Net income..................... -- -- -- 9,727 -- --
Cash dividends --
$.16 per share............... -- -- -- (724) -- --
Pooled companies............. -- -- -- (2,853) -- --
Issuance of treasury shares for
EDI merger................... (374,998) (375) (5,434) -- (374,998) 5,809
Other acquisition.............. -- -- (1,557) 2,158 (101,368) 1,570
Shares issued under stock
option plans................. -- -- 98 (18) (6,123) 95
Purchase and retirement of
common shares................ (2,581) (2) (9) (38) -- --
Reduction of guaranteed ESOP
debt......................... 520
--------- ------ ------- -------- -------- -------- ------
Balance, January 28, 1994........ 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 -- $ -- $ --
========= ====== ======= ======== ======== ======== ======
</TABLE>
The accompanying notes are an integral part of these supplemental consolidated
financial statements.
F-6
<PAGE> 35
HUGHES SUPPLY, INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
---------------------------------------
JANUARY 26, JANUARY 27, JANUARY 28,
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents:
Cash flows from operating activities:
Cash received from customers.......................... $ 1,231,106 $ 979,122 $ 811,069
Cash paid to suppliers and employees.................. (1,192,412) (962,508) (802,000)
Interest received..................................... 3,540 2,397 2,078
Interest paid......................................... (9,156) (5,961) (6,117)
Income taxes paid..................................... (15,729) (9,383) (6,014)
----------- --------- ---------
Net cash provided by (used in) operating
activities....................................... 17,349 3,667 (984)
----------- --------- ---------
Cash flows from investing activities:
Capital expenditures.................................. (13,140) (13,117) (9,222)
Proceeds from sale of property and equipment.......... 1,285 812 731
Business acquisitions, net of cash.................... (10,009) (11,099) (3,934)
----------- --------- ---------
Net cash used in investing activities............... (21,864) (23,404) (12,425)
----------- --------- ---------
Cash flows from financing activities:
Net borrowings under short-term debt arrangements..... 15,418 26,789 17,849
Proceeds from issuance of long-term debt.............. -- -- 580
Principal payments on:
Long-term notes..................................... (6,033) (1,266) (2,918)
Capital lease obligations........................... (844) (725) (660)
Proceeds from issuance of common shares under stock
option plans........................................ 1,470 667 175
Purchase of common shares............................. (520) (213) (49)
Dividends paid........................................ (5,106) (3,111) (3,421)
----------- --------- ---------
Net cash provided by financing activities........... 4,385 22,141 11,556
----------- --------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents....... (130) 2,404 (1,853)
Cash and Cash Equivalents, beginning of year............... 3,774 1,370 3,223
----------- --------- ---------
Cash and Cash Equivalents, end of year..................... $ 3,644 $ 3,774 $ 1,370
=========== ========= =========
</TABLE>
The accompanying notes are an integral part of these supplemental consolidated
financial statements.
F-7
<PAGE> 36
HUGHES SUPPLY, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 1 -- DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUPPLEMENTAL FINANCIAL STATEMENTS
As described in Note 2, on December 11, 1996, December 30, 1996 and January
24, 1997, the Company merged with PPSC, Sunbelt and the Metals Group,
respectively, in transactions accounted for as poolings of interests. The
accompanying supplemental consolidated financial statements give retroactive
effect to the mergers.
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 and electric utility equipment, building
materials, pool equipment and supplies, water and sewer products, heating and
air conditioning equipment and supplies, water systems and industrial pipe,
valves and fittings. 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 dates of acquisition. The Company's
minority investment in affiliate is accounted for by the equity method.
FISCAL YEAR
The Company's fiscal year ends on the last Friday in January. Fiscal years
1996, 1995 and 1994 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 depreciated using both straight-line and
declining-balance methods based on the following estimated useful lives:
<TABLE>
<S> <C>
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
</TABLE>
F-8
<PAGE> 37
HUGHES SUPPLY, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Maintenance and repairs are charged to expense as incurred and major
renewals and betterments are capitalized. Gains or losses are credited or
charged to earnings upon disposition.
OTHER ASSETS
The excess of cost over the fair value of net assets of purchased companies
($16,637 and $8,806 at January 26, 1996 and January 27, 1995, respectively, net
of accumulated amortization) is being amortized by the straight-line method over
15 to 25 years.
IMPAIRMENT OF LONG-LIVED ASSETS
In the event that facts and circumstances indicate that the excess of cost
over the fair value of net assets of purchased companies or other assets may be
impaired, an evaluation of recoverability would be performed. If an evaluation
is required, the estimated future undiscounted cash flows associated with the
asset would be compared to the asset's carrying amount to determine if a
write-down to market value or discounted cash flow is required.
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.
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.
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.
F-9
<PAGE> 38
HUGHES SUPPLY, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 2 -- BUSINESS COMBINATIONS
On August 1, 1995, the Company acquired all the common stock of Moore
Electric Supply, Inc. ("Moore Electric") in exchange for 315,815 shares of the
Company's common stock. Moore Electric is a wholesale distributor of electrical
products with five outlets in North Carolina and South Carolina.
On December 18, 1995, the Company acquired all the common stock of Florida
Pipe & Supply Company ("FPS") in exchange for 178,053 shares of the Company's
common stock. FPS is a wholesale distributor of industrial pipe, valves and
fittings with one outlet in Florida.
On April 26, 1996, the Company acquired all the common stock of Electric
Laboratories and Sales Corporation and ELASCO Agency Sales, Inc. (collectively,
"ELASCO") in exchange for 490,161 shares of the Company's common stock. 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 acquired all the common stock of
Panhandle Pipe and Supply Co., Inc. ("PPSC") in exchange for 155,556 shares of
the Company's common stock. PPSC is a wholesale distributor of water and sewer
supplies and equipment with one outlet in West Virginia.
On December 30, 1996, the Company acquired all the common stock of Sunbelt
Supply Co. ("Sunbelt") in exchange for 483,882 shares of the Company's common
stock. 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 acquired all the common stock of Metals,
Incorporated, Stainless Tubular Products, Inc. and Metals, Inc. -- Gulf Coast
Division (collectively, the "Metals Group") in exchange for 537,601 shares of
the Company's common stock. 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 Moore Electric, FPS,
ELASCO, PPSC, Sunbelt and the Metals Group. Moore Electric's, FPS's, 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.
F-10
<PAGE> 39
HUGHES SUPPLY, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Net sales and net income for the periods preceding the ELASCO, PPSC,
Sunbelt and the Metals Group mergers were as follows:
<TABLE>
<CAPTION>
UNAUDITED
NET NET PRO FORMA
SALES INCOME NET INCOME
---------- ------- ----------
<S> <C> <C> <C>
Nine months ended October 31, 1996:
Hughes, as previously reported...................... $1,050,187 $22,011 $21,874
PPSC................................................ 7,528 212 212
Sunbelt............................................. 52,705 1,179 1,179
The 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
The Metals Group.................................... 50,952 3,942 2,379
---------- ------- -------
Combined............................................ $1,242,446 $23,206 $20,749
========== ======= =======
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
The Metals Group.................................... 35,881 1,515 906
---------- ------- -------
Combined............................................ $ 994,811 $15,881 $14,426
========== ======= =======
Fiscal year ended January 28, 1994:
Hughes, as previously reported...................... $ 734,958 $ 6,524 $ 6,524
ELASCO.............................................. 26,063 1,683 1,005
PPSC................................................ 6,891 124 124
Sunbelt............................................. 32,264 412 412
The Metals Group.................................... 27,075 984 582
---------- ------- -------
Combined............................................ $ 827,251 $ 9,727 $ 8,647
========== ======= =======
</TABLE>
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.
During fiscal years 1996, 1995 and 1994, the Company acquired several
wholesale distributors of materials to the construction industry that were
accounted for as purchases. These acquisitions, individually or in the
aggregate, did not have a material effect on the consolidated financial
statements. Results of operations of these companies from their respective dates
of acquisition have been included in the consolidated financial statements.
F-11
<PAGE> 40
HUGHES SUPPLY, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 3 -- PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Land........................................................ $ 14,475 $ 13,509
Buildings and improvements.................................. 53,161 49,307
Transportation equipment.................................... 20,444 20,106
Furniture, fixtures and equipment........................... 24,982 21,812
Property under capital leases............................... 10,551 10,794
-------- --------
123,613 115,528
Less accumulated depreciation and amortization.............. (60,862) (56,381)
-------- --------
$ 62,751 $ 59,147
======== ========
</TABLE>
NOTE 4 -- LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Unsecured revolving bank notes under $160,000 credit
agreement, payable June 30, 1998, fluctuating interest
(6.3% to 6.4% at January 26, 1996)........................ $ 87,567 $ 74,918
Short-term instruments classified as long-term debt......... 35,200 34,803
Other notes payable......................................... 9,139 11,563
Capital lease obligations................................... 3,014 3,858
-------- --------
134,920 125,142
Less current portion........................................ (3,238) (3,414)
-------- --------
$131,682 $121,728
======== ========
</TABLE>
On July 31, 1995, 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 $160,000 (subject to borrowing limitations
under the agreement) -- $125,000 long-term, expiring June 30, 1998, and $35,000
line of credit convertible to a term note due two years from conversion date.
The $35,000 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.
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 .55 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 $13,480 is
available at January 26, 1996 for payment of dividends.
The Company has a bank line of credit for short-term borrowing aggregating
$6,000 (subject to borrowing limitations under the long-term debt covenants)
under which $200 was outstanding at January 26, 1996. There were no amounts
outstanding at January 27, 1995. The line provides for interest at market rates.
The interest rate on short-term borrowing as of January 26, 1996 was 5.9%. In
addition, the Company has a commercial paper program backed by its revolving
credit facility. The weighted average interest rate on outstanding commercial
paper borrowings of $35,000 and $34,803 as of January 26, 1996 and January 27,
1995 was 5.9% and 6.0%, respectively.
F-12
<PAGE> 41
HUGHES SUPPLY, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
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, $35,200 and $34,803 of short-term borrowings at January 26,
1996 and January 27, 1995, 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 26, 1996 and in the aggregate are as
follows:
<TABLE>
<CAPTION>
FISCAL YEARS ENDING
-------------------
<S> <C>
1997................................................... $ 2,381
1998................................................... 5,737
1999................................................... 123,067
2000................................................... 166
2001................................................... 555
Later years............................................ --
--------
$131,906
========
</TABLE>
NOTE 5 -- INCOME TAXES
The components of deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts........................... $ 1,829 $ 1,874
Inventories............................................... 1,821 2,900
Capital leases............................................ 503 590
Property and equipment.................................... 1,171 765
Accrued vacation.......................................... 914 670
Deferred compensation..................................... 681 597
Environmental clean-up costs.............................. 268 216
Operating leases.......................................... 276 --
Other accrued liabilities................................. 5,106 3,222
Other..................................................... 389 310
------- -------
Total deferred tax assets......................... 12,958 11,144
------- -------
Deferred tax liabilities:
Operating leases.......................................... -- 42
Intangible assets......................................... 21 8
------- -------
Total deferred tax liabilities......................... 21 50
------- -------
Net deferred tax asset...................................... $12,937 $11,094
======= =======
</TABLE>
No valuation allowance has been provided for these deferred tax assets at
January 26, 1996 and January 27, 1995 as full realization of these assets is
expected.
F-13
<PAGE> 42
HUGHES SUPPLY, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The consolidated provision for income taxes consists of the following:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
----------------------------
1996 1995 1994
------- ------- ------
<S> <C> <C> <C>
Currently payable:
Federal.............................................. $11,676 $10,161 $4,739
State................................................ 1,796 1,667 672
------- ------- ------
13,472 11,828 5,411
------- ------- ------
Deferred:
Federal.............................................. (1,555) (3,650) (906)
State................................................ (256) (199) 205
------- ------- ------
(1,811) (3,849) (701)
------- ------- ------
$11,661 $ 7,979 $4,710
======= ======= ======
</TABLE>
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
------------------------------------------------------
1996 1995 1994
---------------- --------------- ---------------
AMOUNT % AMOUNT % AMOUNT %
------- ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Tax computed at statutory
Federal rate............... $12,204 35.0% $8,350 35.0% $5,053 35.0%
Effect of:
State income tax, net of
Federal income tax
benefit................. 991 2.8 955 4.0 569 3.9
ELASCO earnings............ (772) (2.2) (756) (3.2) (595) (4.1)
Metals Group earnings...... (1,395) (4.0) (530) (2.2) (344) (2.4)
Nondeductible purchase
adjustments............. 43 0.1 38 0.2 24 0.2
Nondeductible expenses..... 396 1.1 330 1.4 117 0.8
Other, net................. 194 0.6 (408) (1.7) (114) (0.8)
------- ----- ------ ----- ------ -----
Income tax expense........... $11,661 33.4% $7,979 33.5% $4,710 32.6%
======= ===== ====== ===== ====== =====
</TABLE>
Prior to their merger with the Company, ELASCO, Metals, Incorporated and
Stainless Tubular Products, Inc. were Subchapter S corporations and, therefore,
not subject to corporate income tax. ELASCO's Subchapter S corporation status
terminated upon the merger with the Company on April 26, 1996, and Metals,
Incorporated and Stainless Tubular Products, Inc.'s Subchapter S corporation
status terminated upon the merger with the Company on January 24, 1997.
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.
F-14
<PAGE> 43
HUGHES SUPPLY, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
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 26,
1996 and January 27, 1995, the plan owned approximately 184,000 and 172,000
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 the
fiscal years ended in 1996, 1995 and 1994 were $2,322, $1,315 and $1,784,
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 $1,354, $935 and $533 for the fiscal years ended in
1996, 1995 and 1994, 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, and sales employees, and, with respect to
135,000 shares, to directors. Under the plans, options are granted at prices not
less than market value on the date of grant, and the maximum term of an option
may not exceed ten years. Prices for incentive stock options granted to
employees who own 10% or more of the Company's stock are at least 110% of market
value at date of grant. Options may be granted from time to time to May 1998, 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 26, 1996.
F-15
<PAGE> 44
HUGHES SUPPLY, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
A summary of option transactions during each of the three fiscal years in
the period ended January 26, 1996 is shown below:
<TABLE>
<CAPTION>
NUMBER OF OPTION PRICE
SHARES RANGE
--------- -------------
<S> <C> <C>
Under option, January 29, 1993
(253,442 shares exercisable).............................. 406,442 $12.00-$17.63
Granted................................................... 12,000 $16.25
Exercised................................................. (6,023) $12.25-$12.87
Cancelled................................................. (12,835) $12.00-$12.63
-------
Under option, January 28, 1994
(297,584 shares exercisable).............................. 399,584 $12.25-$17.63
Granted................................................... 115,000 $18.13-$25.37
Exercised................................................. (44,241) $12.25-$12.63
-------
Under option, January 27, 1995
(339,343 shares exercisable).............................. 470,343 $12.25-$25.37
Granted................................................... 15,000 $19.25
Exercised................................................. (93,541) $12.25-$20.25
Cancelled................................................. (1,861) $12.25-$12.63
-------
Under option, January 26, 1996
(329,941 shares exercisable).............................. 389,941 $12.25-$25.37
=======
</TABLE>
There were 627,519 and 640,658 shares available for the granting of options
at January 26, 1996 and January 27, 1995, respectively.
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 25 ("APB 25"). APB
25 requires compensation cost for stock-based compensation plans to be
recognized based on the difference, if any, 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.
However, SFAS 123 allows an entity to continue to measure compensation costs
using the principles of APB 25 if certain pro forma disclosures are made. SFAS
123 is effective for fiscal years beginning after December 15, 1995. The Company
intends to adopt the provisions for pro forma disclosure requirements of SFAS
123 in fiscal 1997.
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
$238, $390 and $166 in fiscal years ended 1996, 1995 and 1994, respectively.
F-16
<PAGE> 45
HUGHES SUPPLY, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 7 -- COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS
A portion of the Company's operations are conducted from locations leased
under capital leases from a corporation which is owned by three of the directors
of Hughes Supply, Inc. The leases generally provide that all expenses related to
the properties are to be paid by the lessee. The leases also generally provide
for rental increases at specified intervals. The leases all expire within ten
years; however, it is expected that they will be renewed. Rents under these
agreements amounted to $1,149 in fiscal year ended 1996 and $1,165 for fiscal
years ended 1995 and 1994. Property under capital leases is included in the
consolidated balance sheets as follows:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Property under capital leases (consisting of land and
buildings)................................................ $10,551 $10,794
Accumulated amortization.................................... (8,840) (8,458)
------- -------
$ 1,711 $ 2,336
======= =======
</TABLE>
In addition, rents under operating leases paid to this related corporation
were $358, $400 and $396 in 1996, 1995 and 1994, 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 26, 1996, are as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ---------
<S> <C> <C>
FISCAL YEARS ENDING
1997................................................. $1,141 $ 9,992
1998................................................. 1,141 8,971
1999................................................. 558 7,134
2000................................................. 360 5,155
2001................................................. 325 3,340
Later years.......................................... 258 5,372
------ -------
Total minimum lease payments................................ 3,783 $39,964
=======
Less amount representing interest........................... (769)
------
Present value of net minimum lease payments................. 3,014
Less current portion........................................ (857)
------
$2,157
======
</TABLE>
Lease-related expenses are as follows:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
-------------------------
1996 1995 1994
------- ------ ------
<S> <C> <C> <C>
Capital lease amortization.................................. $ 584 $ 594 $ 594
Capital lease interest expense.............................. 364 440 505
Operating lease rentals (excluding month-to-month rents).... 12,816 7,904 6,768
</TABLE>
GUARANTEES OF AFFILIATE DEBT
A wholly-owned subsidiary of the Company owns a 20% interest in Accord
Industries Company ("Accord"), a joint venture formed from the Company's sale of
its manufacturing operations in 1990. As
F-17
<PAGE> 46
HUGHES SUPPLY, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
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 $1,100 as of
January 26, 1996.
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.
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.
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.
F-18
<PAGE> 47
HUGHES SUPPLY, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 9 -- CONCENTRATION OF CREDIT RISK
The Company sells its products in the major areas of construction markets
in certain states of the eastern half of the 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.
NOTE 10 -- SUPPLEMENTAL CASH FLOWS INFORMATION
The following is a reconciliation of net income to net cash provided by
(used in) operating activities:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
-----------------------------
1996 1995 1994
------- -------- --------
<S> <C> <C> <C>
Net income.............................................. $23,206 $ 15,881 $ 9,727
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation....................................... 9,342 8,815 7,596
Amortization....................................... 1,930 839 762
Provision for doubtful accounts.................... 1,907 1,415 2,229
Gain on sale of property and equipment............. (589) (286) (428)
Undistributed (earnings) losses of affiliate....... 115 (139) (171)
Treasury shares contributed to employee benefit
plan............................................. -- 500 --
Changes in assets and liabilities, net of effects
of business acquisitions:
(Increase) decrease in --
Accounts receivable........................... (12,287) (16,069) (17,184)
Inventories................................... (9,183) (22,278) (5,404)
Other current assets.......................... (3,619) (3,016) (632)
Other assets.................................. (1,090) (390) 168
Increase (decrease) in --
Accounts payable and accrued expenses......... 11,236 18,950 3,548
Accrued interest and income taxes............. (2,001) 2,845 (718)
Other noncurrent liabilities.................. 225 397 178
Increase in deferred income taxes................ (1,843) (3,797) (655)
------- -------- --------
Net cash provided by (used in) operating activities..... $17,349 $ 3,667 $ (984)
======= ======== ========
</TABLE>
F-19
<PAGE> 48
HUGHES SUPPLY, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NONCASH INVESTING AND FINANCING ACTIVITIES
The net assets acquired and consideration for acquisitions accounted for as
purchases are summarized below:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
---------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Fair value of:
Assets acquired......................................... $22,600 $28,396 $ 8,421
Liabilities assumed..................................... (9,369) (7,269) (4,487)
------- ------- -------
Purchase price............................................ $13,231 $21,127 $ 3,934
======= ======= =======
</TABLE>
Consideration in fiscal 1996 included 191,000 shares of common stock (fair
value $3,222). Consideration in fiscal 1995 included 249,000 shares of common
stock (fair value $4,286), a note for $1,525 and amounts payable of $4,217.
Additional common stock was issued in fiscal year 1995 upon the conversion
of $22,889 convertible subordinated debentures.
NOTE 11 -- SUBSEQUENT EVENTS (UNAUDITED)
On May 13, 1996, the Company acquired substantially all of the assets,
properties and business of PVF Holdings, Inc. and its subsidiaries ("PVF"). The
aggregate consideration paid was approximately $108,832. The following table
reflects the unaudited pro forma combined results of operations, assuming the
PVF acquisition had occurred at the beginning of fiscal 1996:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
JANUARY 26, 1996
-----------------
<S> <C>
Net sales................................................... $1,351,605
Net income.................................................. 35,346
Earnings per share:
Primary................................................... 3.82
Fully diluted............................................. 3.78
</TABLE>
The pro forma information does not purport to be indicative of the results
which actually would have occurred had the PVF acquisition occurred at the
beginning of fiscal 1996, or of results which may occur in the future.
In May 1996, the Company sold in a public offering 1,486,989 shares of its
common stock which generated net proceeds of approximately $48,197. On May 29,
1996, the Company issued $98,000 of senior notes in a private placement in
connection with the acquisition of PVF. Proceeds received by the Company in the
private placement of the senior notes and the sale of the Company's 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.
F-20
<PAGE> 49
HUGHES SUPPLY, INC.
SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS -- (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
OCTOBER 31, JANUARY 26,
1996 1996
----------- -----------
(NOTE 2)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 3,423 $ 3,644
Accounts receivable, less allowance for losses of $8,611
and $4,868............................................. 215,126 155,702
Inventories............................................... 224,209 167,138
Deferred income taxes..................................... 12,346 10,501
Other current assets...................................... 10,907 16,737
-------- --------
Total current assets.............................. 466,011 353,722
Property and Equipment, Net................................. 69,671 62,751
Excess of Cost over Net Assets Acquired..................... 80,239 16,637
Deferred Income Taxes....................................... 3,028 2,436
Other Assets................................................ 6,179 5,249
-------- --------
$625,128 $440,795
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt......................... $ 1,616 $ 3,238
Accounts payable.......................................... 120,319 102,262
Accrued compensation and benefits......................... 16,921 13,551
Other current liabilities................................. 23,971 17,525
-------- --------
Total current liabilities......................... 162,827 136,576
Long-Term Debt.............................................. 194,755 131,682
Other Noncurrent Liabilities................................ 2,119 1,771
-------- --------
Total liabilities................................. 359,701 270,029
-------- --------
Commitments and Contingencies
Shareholders' Equity:
Preferred Stock........................................... -- --
Common Stock -- 11,300,698 and 8,465,662 shares issued and
outstanding............................................ 11,301 8,466
Capital in excess of par value............................ 104,537 40,048
Retained earnings......................................... 149,589 122,252
-------- --------
Total shareholders' equity........................ 265,427 170,766
-------- --------
$625,128 $440,795
======== ========
</TABLE>
The accompanying notes are an integral part of these supplemental consolidated
financial statements.
F-21
<PAGE> 50
HUGHES SUPPLY, INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF INCOME -- (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
OCTOBER 31,
----------------------
1996 1995
---------- --------
<S> <C> <C>
Net Sales................................................... $1,150,670 $938,481
Cost of Sales............................................... 914,270 750,121
---------- --------
Gross Profit................................................ 236,400 188,360
---------- --------
Operating Expenses:
Selling, general and administrative....................... 177,694 147,724
Depreciation and amortization............................. 10,638 7,772
Provision for doubtful accounts........................... 2,701 2,454
---------- --------
Total operating expenses.......................... 191,033 157,950
---------- --------
Operating Income............................................ 45,367 30,410
---------- --------
Non-Operating Income and (Expenses):
Interest and other income................................. 4,665 3,834
Interest expense.......................................... (9,603) (7,133)
---------- --------
(4,938) (3,299)
---------- --------
Income Before Income Taxes.................................. 40,429 27,111
Income Taxes................................................ 15,293 8,980
---------- --------
Net Income.................................................. $ 25,136 $ 18,131
========== ========
Earnings Per Share:
Primary................................................... $ 2.46 $ 2.13
========== ========
Fully diluted............................................. $ 2.45 $ 2.12
========== ========
Average Shares Outstanding:
Primary................................................... 10,208 8,499
========== ========
Fully diluted............................................. 10,242 8,555
========== ========
Unaudited Pro Forma Net Income.............................. $ 24,332 $ 16,083
========== ========
Unaudited Pro Forma Earnings Per Share:
Primary................................................... $ 2.38 $ 1.89
========== ========
Fully diluted............................................. $ 2.38 $ 1.88
========== ========
</TABLE>
The accompanying notes are an integral part of these supplemental consolidated
financial statements.
F-22
<PAGE> 51
HUGHES SUPPLY, INC.
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS -- (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------------
OCTOBER 31, OCTOBER 31,
1996 1995
----------- -----------
<S> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents:
Cash flows from operating activities:
Cash received from customers........................... $ 1,112,764 $ 913,089
Cash paid to suppliers and employees................... (1,085,918) (885,596)
Interest received...................................... 2,967 2,538
Interest paid.......................................... (6,564) (6,866)
Income taxes paid...................................... (15,269) (11,158)
----------- ---------
Net cash provided by operating activities............ 7,980 12,007
----------- ---------
Cash flows from investing activities:
Capital expenditures................................... (11,824) (9,652)
Proceeds from sale of property and equipment........... 1,721 1,195
Business acquisitions, net of cash..................... (89,952) (6,945)
----------- ---------
Net cash used in investing activities................ (100,055) (15,402)
----------- ---------
Cash flows from financing activities:
Net borrowing (repayment) under short-term debt
arrangements......................................... (35,182) 10,697
Principal payments on:
Long-term notes...................................... (14,266) (5,417)
Capital lease obligations............................ (843) (598)
Proceeds from issuance of long-term debt............... 98,000 --
Net proceeds from sale of common stock................. 48,197 --
Proceeds from stock options exercised.................. 869 1,036
Purchase of common shares.............................. (395) (409)
Dividends paid......................................... (4,526) (3,896)
----------- ---------
Net cash provided by financing activities............ 91,854 1,413
----------- ---------
Net Decrease in Cash and Cash Equivalents................... (221) (1,982)
Cash and Cash Equivalents, beginning of period.............. 3,644 3,774
----------- ---------
Cash and Cash Equivalents, end of period.................... $ 3,423 $ 1,792
=========== =========
</TABLE>
The accompanying notes are an integral part of these supplemental consolidated
financial statements.
F-23
<PAGE> 52
HUGHES SUPPLY, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
1. In the opinion of the Company, the accompanying unaudited supplemental
consolidated financial statements contain all adjustments (consisting only of
normal recurring adjustments) necessary to present fairly the financial position
as of October 31, 1996, the results of operations for the nine months ended
October 31, 1996 and 1995, and cash flows for the nine months then ended. The
supplemental financial statements have been restated to give effect to the
business combinations between the Company and PPSC, Sunbelt and the Metals Group
consummated after October 31, 1996 and accounted for as poolings of interests
(see Note 2).
The fiscal year of the Company is a 52 or 53-week period ending on the last
Friday in January. Fiscal year 1997 will be a 53-week period while fiscal year
1996 was a 52-week period. The nine months ended October 31, 1996 and 1995
contained 40 and 39 weeks, respectively.
The January 26, 1996 balance sheet contains certain reclassifications which
were made to conform to the October 31, 1996 financial statement format. None of
these reclassifications affected net income or shareholders' equity.
2. On April 26, 1996 the Company acquired all the common stock of ELASCO in
exchange for 490,161 shares of the Company's common stock. ELASCO is a wholesale
distributor of electric utility supplies and equipment with three branches in
Illinois and Ohio.
On December 11, 1996 the Company acquired all the common stock of PPSC in
exchange for 155,556 shares of the Company's common stock. PPSC is a wholesale
distributor of water and sewer supplies and equipment with one outlet in West
Virginia.
On December 30, 1996 the Company acquired all the common stock of Sunbelt
in exchange for 483,882 shares of the Company's common stock. 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 acquired all the common stock of the Metals
Group in exchange for 537,601 shares of the Company's common stock. 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.
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.
3. On May 13, 1996, the Company acquired substantially all of the assets,
properties and business of PVF. The aggregate consideration paid was $108,832
consisting of cash in the amount of $81,917, 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. PVF distributes stainless steel pipe, valves and
fittings from 16 locations nationwide, and had sales of approximately $110,000
for calendar year 1995. The transaction has been 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.
F-24
<PAGE> 53
HUGHES SUPPLY, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (UNAUDITED)
(CONTINUED)
The following table reflects the pro forma combined results of operations,
assuming the PVF acquisition had occurred at the beginning of each period
presented:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
OCTOBER 31,
-----------------------
1996 1995
---------- ----------
<S> <C> <C>
Net sales................................................... $1,183,745 $1,022,957
Net income.................................................. 27,451 27,086
Earnings per share:
Primary................................................... 2.61 2.93
Fully diluted............................................. 2.60 2.91
</TABLE>
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 first nine months of each
period presented have resulted in gross margins for PVF of 29.6% for the first
nine months of fiscal 1997 compared to 38.2% for the first nine months of fiscal
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.
4. 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. In May, 1996 the Company sold in a public offering 1,486,989
shares of its common stock which generated net proceeds of approximately
$48,197. Proceeds received by the Company in the private placement of the senior
notes and the sale of the Company's common stock were used to partially fund the
PVF acquisition (including satisfaction of the interim note payable to the
sellers) and to reduce indebtedness outstanding under the Company's revolving
credit facility and line of credit agreement.
5. In addition to the acquisitions discussed in Notes 2 and 3 above, during
the nine months ended October 31, 1996, the Company acquired several wholesale
distributors of materials to the construction industry for cash and stock. These
acquisitions have been accounted for as purchases or immaterial poolings and did
not have a material effect on the consolidated financial statements of the
Company. Results of operations of these companies from their respective dates of
acquisition have been included in the consolidated financial statements.
F-25
<PAGE> 54
HUGHES SUPPLY, INC.
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (UNAUDITED)
(CONTINUED)
The following is a reconciliation of net income to net cash provided by
(used in) operating activities:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
OCTOBER 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Net income.................................................. $ 25,136 $ 18,131
Adjustments to reconcile net income to net cash provided
by
(used in) operating activities:
Depreciation........................................... 6,968 6,319
Amortization........................................... 3,670 1,453
Provision for doubtful accounts........................ 2,701 2,454
Gain on sale of property and equipment................. (618) (625)
Undistributed (earnings) losses of affiliate........... (42) 73
Changes in assets and liabilities, net of effects of
business acquisitions:
(Increase) decrease in --
Accounts receivable............................... (38,944) (26,136)
Inventories....................................... (6,340) 2,428
Other current assets.............................. 5,969 6,843
Other assets...................................... (274) (2,622)
Increase (decrease) in --
Accounts payable and accrued expenses............. 6,343 5,293
Accrued interest and income taxes................. 5,500 (275)
Other noncurrent liabilities...................... 348 307
Increase in deferred income taxes.................... (2,437) (1,636)
-------- --------
Net cash provided by operating activities................... $ 7,980 $ 12,007
======== ========
</TABLE>
F-26
<PAGE> 55
======================================================
No person has been authorized to give any information or make any
representations in connection with this offering other than those contained in
this Prospectus and, if given or made, such other information and
representations must not be relied upon as having been authorized by the Company
or the Selling Shareholders. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication that
there has been no change in the affairs of the Company subsequent to its date.
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, any securities other than the registered securities to which it
relates. This Prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, such securities in any circumstances in which such offer or
solicitation is unlawful.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents By
Reference........................... 3
Prospectus Summary.................... 4
Risk Factors.......................... 8
Use of Proceeds....................... 9
Selected Unaudited Pro Forma
Supplemental Consolidated Financial
Data................................ 10
Selected Supplemental Consolidated
Financial and Operating Data........ 15
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 16
Selling Shareholders.................. 20
Plan of Distribution.................. 26
Legal Matters......................... 26
Experts............................... 27
Index to Supplemental Consolidated
Financial Statements................ F-1
</TABLE>
======================================================
======================================================
1,407,925 SHARES
HUGHES SUPPLY, INC.
COMMON STOCK
-------------------------
PROSPECTUS
-------------------------
DATED FEBRUARY , 1997
======================================================
<PAGE> 56
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
It is estimated that Hughes Supply, Inc. (the "Company") will incur the
following expenses in connection with the offering of the securities being
registered. All of the amounts shown are estimated except for the Securities and
Exchange Commission registration fee, and all of said amounts will be paid by
the Company.
<TABLE>
<S> <C>
Registration Fee -- Securities and Exchange Commission...... $14,026
Blue Sky fees and expenses.................................. 1,500
Accounting fees and expenses................................ 20,000
Legal fees and expenses..................................... 25,000
Printing.................................................... 3,500
Transfer Agent's fees and expenses.......................... 1,500
Miscellaneous Expenses...................................... 474
-------
Total............................................. $66,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 607.0850 of the Florida Business Corporation Act permits, and in
some cases requires, the Company as a Florida corporation to indemnify a
director, officer, employee, or agent of the Company, or any person serving at
the request of the Company in any such capacity with respect to another entity,
against certain expenses and liabilities incurred as a party to any proceeding,
including, among others, a proceeding under the Securities Act of 1933, as
amended (the "Securities Act"), brought against such person by reason of the
fact that such person is or was a director, officer, employee, or agent of the
Company or is or was serving in such capacity with respect to another entity at
the request of the Company. With respect to actions, other than in the right of
the Company, such indemnification is permitted if such person acted in good
faith and in a manner such person reasonably believed to be in, or not opposed
to, the best interests of the Company, and with respect to any criminal action
or proceeding, if such person had no reasonable cause to believe his or her
conduct was unlawful. Termination of any such action by judgment, order,
settlement or conviction or a plea of nolo contendere, or its equivalent shall
not, of itself, create a presumption that such person did not act in good faith
and in a manner he or she reasonably believed to be in, or not opposed to, the
best interests of the Company, or with respect to any criminal action or
proceeding, had reasonable cause to believe that his or her conduct was
unlawful.
With respect to any action threatened, pending or completed in the right of
the Company to procure a judgment in its favor against any such person, the
Company may indemnify any such person against expenses actually and reasonably
incurred by him or her in connection with the defense or settlement of such
action or suit, including the appeal thereof, if he or she acted in good faith
and in a manner he or she reasonably believed to be in, or not opposed to, the
best interests of the Company, except that no indemnification shall be made in
respect of any claim, issue or matter as to which any such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his or her duties to the Company unless the Court in which the action was
brought determines that despite the adjudication of liability, but in view of
all the circumstances in the case, such person is fairly and reasonably entitled
to indemnity for such expenses.
Section 607.0850 also provides that if any such person has been successful
on the merits or otherwise in defense of any action, suit or proceeding, whether
brought in the right of the Company or otherwise, such person shall be
indemnified against expenses actually and reasonably incurred by him or her in
connection therewith.
If any director or officer does not succeed upon the merits or otherwise in
defense of an action, suit or proceeding, then unless pursuant to a
determination made by a court, indemnification by the Company shall
II-1
<PAGE> 57
be made only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper because he or she has met
the applicable standard of conduct. Any such determination may be made:
(a) By the Board of Directors by a majority vote of a quorum
consisting of directors who are not parties to such action, suit, or
proceeding;
(b) If such a quorum is not obtainable or, even if obtainable, by a
majority vote of a committee duly designated by the Board of Directors (in
which Directors who are parties may participate) consisting solely of two
or more Directors not at the time parties to the proceeding;
(c) By independent legal counsel selected by the Board of Directors
prescribed in paragraph (a) or the committee prescribed in paragraph (b);
or if a quorum of the Directors cannot be obtained for paragraph (a) or the
committee cannot be designated under paragraph (b) selected by a majority
vote of the full Board of Directors (in which Directors who are parties may
participate); or
(d) By the shareholders by a majority vote of a quorum consisting of
shareholders who were not parties to the proceeding or, if no such quorum
is obtainable, by a majority vote of shareholders who were not parties to
such proceedings.
Section 607.0850 also contains a provision authorizing corporations to
purchase and maintain liability insurance on behalf of its directors and
officers. For some years the Company has maintained an insurance policy which
insures directors and officers of the Company against amounts the director or
officer is obligated to pay in respect of his legal liability, whether actual or
asserted, for any negligent act, any error, any omission or any breach of duty
which, subject to the applicable limits and terms of the policy, include
damages, judgments, settlements, costs of investigation, and costs, charges and
expenses incurred in the defense of actions, suits, or proceedings or appeals
thereto, subject to the exceptions, limitations and conditions set forth in the
policy.
ITEM 16. EXHIBITS.
The following items are filed as exhibits to this registration statement:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C> <C>
4.1 -- Restated Articles of Incorporation of the Company, as
amended(1)
4.2 -- Composite By-laws of the Company(2)
4.3 -- Form of Common Stock Certificate of the Company(3)
5.0 -- Opinion of Benjamin P. Butterfield, Esq.
11.1 -- Computation of Supplemental Pro Forma Combined Primary
Earnings Per Share for the nine months ended October 31,
1996
11.2 -- Computation of Supplemental Pro Forma as Adjusted Primary
Earnings Per Share for the nine months ended October 31,
1996
11.3 -- Computation of Supplemental Pro Forma Combined Primary
Earnings Per Share for the year ended January 26, 1996
11.4 -- Computation of Supplemental Pro Forma As Adjusted Primary
Earnings Per Share for the year ended January 26, 1996
11.5 -- Computation of Supplemental Pro Forma Combined Fully Diluted
Earnings Per Share for the nine months ended October 31,
1996
11.6 -- Computation of Supplemental Pro Forma as Adjusted Fully
Diluted Earnings Per Share for the nine months ended October
31, 1996
11.7 -- Computation of Supplemental Pro Forma Combined Fully Diluted
Earnings Per Share for the year ended January 26, 1996
11.8 -- Computation of Supplemental Pro Forma As Adjusted Fully
Diluted Earnings Per Share for the year ended January 26,
1996
23.1 -- Consent of Price Waterhouse LLP
</TABLE>
II-2
<PAGE> 58
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C> <C>
23.2 -- Consent of Coopers & Lybrand L.L.P.
23.3 -- Consent of Deloitte & Touche LLP
23.4 -- Consent of Benjamin P. Butterfield, Esq. appears in his
opinion filed as Exhibit 5
24.0 -- Power of Attorney (included in the signature page in Part II
of the Registration Statement)
</TABLE>
- ---------------
(1) Incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report
on Form 10-Q filed for the quarter ended July 31, 1994.
(2) Incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report
on Form 10-Q filed for the quarter ended July 31, 1994.
(3) Incorporated by reference to Exhibit 4.2 to the Company's Quarterly Report
on Form 10-Q filed for the quarter ended October 31, 1984.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Act of 1934 (and where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement relating to the
securities offered therein, and the offering of such securities at the time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the provisions described under Item 15 above or otherwise,
the Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted against
the Company by such director, officer or controlling person in connection with
the securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed
to be part of this registration statement as of the time it was declared
effective.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(3) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change
to such information in the registration statement.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
II-3
<PAGE> 59
therein, and an offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(5) To remove from registration by means of post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-4
<PAGE> 60
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, hereunto duly
authorized, in the City of Orlando, State of Florida, on this 18th day of
February 1997.
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 and Chief Financial
Officer,
(Principal Financial and Accounting
Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David H. Hughes and J. Stephen Zepf, or any of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign any or all amendments to this Registration
Statement, and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto each of said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully as to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <C>
/s/ DAVID H. HUGHES Director February 18, 1997
- -----------------------------------------------------
David H. Hughes
/s/ A. STEWART HALL, JR. Director February 18, 1997
- -----------------------------------------------------
A. Stewart Hall, Jr.
/s/ VINCENT S. HUGHES Director February 18, 1997
- -----------------------------------------------------
Vincent S. Hughes
/s/ RUSSELL V. HUGHES Director February 18, 1997
- -----------------------------------------------------
Russell V. Hughes
/s/ JOHN D. BAKER II Director February 18, 1997
- -----------------------------------------------------
John D. Baker II
</TABLE>
II-5
<PAGE> 61
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <C>
/s/ ROBERT N. BLACKFORD Director February 18, 1997
- -----------------------------------------------------
Robert N. Blackford
/s/ JOHN B. ELLIS Director February 18, 1997
- -----------------------------------------------------
John B. Ellis
/s/ CLIFFORD M. HAMES Director February 18, 1997
- -----------------------------------------------------
Clifford M. Hames
/s/ HERMAN B. McMANAWAY Director February 18, 1997
- -----------------------------------------------------
Herman B. McManaway
/s/ DONALD C. MARTIN Director February 18, 1997
- -----------------------------------------------------
Donald C. Martin
/s/ H. CORBIN DAY Director February 18, 1997
- -----------------------------------------------------
H. Corbin Day
</TABLE>
II-6
<PAGE> 62
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S> <C>
4.1 -- Restated Articles of Incorporation of the Company, as
amended(1)..................................................
4.2 -- Composite By-laws of the Company(2).........................
4.3 -- Form of Common Stock Certificate of the Company(3)..........
5.0 -- Opinion of Benjamin P. Butterfield, Esq.....................
11.1 -- Computation of Supplemental Pro Forma Combined Primary
Earnings Per Share for the nine months ended October 31,
1996........................................................
11.2 -- Computation of Supplemental Pro Forma as Adjusted Primary
Earnings Per Share for the nine months ended October 31,
1996........................................................
11.3 -- Computation of Supplemental Pro Forma Combined Primary
Earnings Per Share for the year ended January 26, 1996......
11.4 -- Computation of Supplemental Pro Forma As Adjusted Primary
Earnings Per Share for the year ended January 26, 1996......
11.5 -- Computation of Supplemental Pro Forma Combined Fully Diluted
Earnings Per Share for the nine months ended October 31,
1996........................................................
11.6 -- Computation of Supplemental Pro Forma as Adjusted Fully
Diluted Earnings Per Share for the nine months ended October
31, 1996....................................................
11.7 -- Computation of Supplemental Pro Forma Combined Fully Diluted
Earnings Per Share for the year ended January 26, 1996......
11.8 -- Computation of Supplemental Pro Forma As Adjusted Fully
Diluted Earnings Per Share for the year ended January 26,
1996........................................................
23.1 -- Consent of Price Waterhouse LLP.............................
23.2 -- Consent of Coopers & Lybrand L.L.P..........................
23.3 -- Consent of Deloitte & Touche LLP............................
23.4 -- Consent of Benjamin P. Butterfield, Esq. appears in his
opinion filed as Exhibit 5..................................
24.0 -- Power of Attorney (included in the signature page in Part II
of the Registration Statement)..............................
</TABLE>
- ---------------
(1) Incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report
on Form 10-Q filed for the quarter ended July 31, 1994.
(2) Incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report
on Form 10-Q filed for the quarter ended July 31, 1994.
(3) Incorporated by reference to Exhibit 4.2 to the Company's Quarterly Report
on Form 10-Q filed for the quarter ended October 31, 1984.
<PAGE> 1
EXHIBIT 5.0
February 18, 1997
Hughes Supply, Inc.
20 North Orange Avenue
Suite 200
Orlando, Florida 32801
Re: Registration Statement on Form S-3
Gentlemen:
I am the general counsel of Hughes Supply, Inc., a Florida corporation
(the "Company"). I am furnishing this opinion in connection with the preparation
and filing by the Company of a Registration Statement on Form S-3 (the
"Registration Statement") relating to the proposed sale of up to an aggregate
1,407,925 shares of common stock, par value $1.00 per share (the "Common
Stock"), of the Company by and for the accounts of William G. Gayle, Donald E.
Guy, William R. Moore (as Trustee of the William R. Moore Revocable Trust),
William B. Moore, Lee Roth, Jeff Clyne, Thomas Allen, Max Stout, Roger Kelly,
William Claussen, Tom Hodge, Dwayne Castle, Cyril Fullenkamp, David Kinder, Don
Mock, LaDonnia Mathis, Patricia Noury, Barbara Mobley, Timothy Allen, Donald
Lamb, the Juno Profit Sharing Trust, Graham Clements, Donald Telman, H. Clayton
Arnold (as Trustee of the H. Clayton Arnold Revocable Trust), Kathleen G. Arnold
(as Trustee of the Kathleen G. Arnold Revocable Trust), Gregory H. Arnold, James
F. Matthews, Patricia R. Douglas, John F. Bedick, Ronald L. Whitney, Robert S.
Clay, Larry A. Feld, Brent W. Scheps, Ronald L. Siegenthaler (as Trustee of the
Ronald L. Siegenthaler Revocable Living Trust), William B. Emmer, John R.
Sappington, John H. Cullinan, Jr. (as Trustee of the John H. Cullinan Revocable
Trust), Larry E. Fishpaw (as Trustee of the Larry E. Fishpaw Revocable Trust),
Craig Hurt, Steve Walker, Shari Roberts and Ernest E. Smith (collectively, the
"Selling Shareholders").
I have examined copies of the Restated Articles of Incorporation and
By-Laws of the Company, the Registration Statement, and such other corporate
records and documents as I deemed necessary to form the basis for the opinion
hereinafter expressed. In my examination of such material, I have assumed the
genuineness of all signatures, the authenticity of all documents submitted to me
as originals, and the conformity to original documents of all copies submitted
to me. As to questions of fact material to such opinion, I have relied upon
statements of officers and representatives of the Company and others.
Based on the foregoing, it is my opinion that the shares of Common Stock
being registered will, when sold as contemplated in the Prospectus forming a
part of the Registration Statement, be legally issued, fully paid and
nonassessable shares of Common Stock of the Company.
I hereby consent to the reference to me in the Registration Statement and
in the Prospectus, which constitutes a part thereof, as the attorney who will
pass on the legal matters in connection with the proposed sale of the Common
Stock by the Selling Shareholders and to the filing of this opinion as an
exhibit to the Registration Statement.
Very truly yours,
/s/ Benjamin P. Butterfield, Esq.
---------------------------------
Benjamin P. Butterfield, Esq.
<PAGE> 1
EXHIBIT 11.1
HUGHES SUPPLY, INC.
COMPUTATION OF SUPPLEMENTAL PRO FORMA COMBINED PRIMARY
EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
OCTOBER 31, 1996
----------------
<S> <C>
Supplemental pro forma combined net income.................. $26,804
=======
Weighted average shares outstanding:
Common stock and equivalents(1)........................... 10,208
Shares issued pursuant to PVF acquisition(2).............. 369
-------
Total shares................................................ 10,577
-------
Supplemental pro forma combined primary earnings per
share..................................................... $ 2.53
=======
</TABLE>
- ---------------
(1) Common stock and equivalents gives effect to the business combinations
between the Company and PPSC, Sunbelt and the Metals Group, which were
consummated after October 1996 and accounted for as poolings of interests.
(2) Shares issued pursuant to the acquisition of PVF have been included in the
computation of common and common equivalent shares as if they were
outstanding since January 27, 1996.
<PAGE> 1
EXHIBIT 11.2
HUGHES SUPPLY, INC.
COMPUTATION OF SUPPLEMENTAL PRO FORMA AS ADJUSTED
PRIMARY EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
OCTOBER 31, 1996
----------------
<S> <C>
Supplemental pro forma as adjusted net income............... $27,242
=======
Weighted average shares outstanding:
Common stock and equivalents(1)........................... 10,208
Shares issued pursuant to PVF acquisition(2).............. 369
Shares issued in connection with the Notes Offering(3).... 921
-------
Total shares................................................ 11,498
-------
Supplemental pro forma as adjusted primary earnings per
share..................................................... $ 2.37
=======
</TABLE>
- ---------------
(1) Common stock and equivalents gives effect to the business combinations
between the Company and PPSC, Sunbelt and the Metals Group, which were
consummated after October 1996 and accounted for as poolings of interests.
(2) Shares issued pursuant to the acquisition of PVF have been included in the
computation of common and common equivalent shares as if they were
outstanding since January 27, 1996.
(3) Represents number of shares issued in the common stock offering in
connection with the Notes offering. Shares are considered outstanding from
January 27, 1996.
<PAGE> 1
EXHIBIT 11.3
HUGHES SUPPLY, INC.
COMPUTATION OF SUPPLEMENTAL PRO FORMA COMBINED
PRIMARY EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED
JANUARY 26,
1996
------------
<S> <C>
Supplemental pro forma combined net income.................. $32,889
=======
Weighted average shares outstanding:
Common stock and equivalents(1)........................... 8,523
Shares issued pursuant to PVF acquisition(2).............. 738
-------
Total shares................................................ 9,261
-------
Supplemental pro forma combined primary earnings per
share..................................................... $ 3.55
=======
</TABLE>
- ---------------
(1) Common stock and equivalents gives effect to the business combinations
between the Company and PPSC, Sunbelt and the Metals Group, which were
consummated after October 1996 and accounted for as poolings of interests.
(2) Shares issued pursuant to the acquisition of PVF have been included in the
computation of common and common equivalent shares as if they were
outstanding since January 27, 1996.
<PAGE> 1
EXHIBIT 11.4
HUGHES SUPPLY, INC.
COMPUTATION OF SUPPLEMENTAL PRO FORMA AS ADJUSTED
PRIMARY EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED
JANUARY 26, 1996
----------------
<S> <C>
Supplemental pro forma as adjusted net income............... $34,402
=======
Weighted average shares outstanding:
Common stock and equivalents(1)........................... 8,523
Shares issued pursuant to PVF acquisition(2).............. 738
Shares issued in connection with the Notes Offering(3).... 1,487
-------
Total shares................................................ 10,748
-------
Supplemental pro forma as adjusted primary earnings per
share..................................................... $ 3.20
=======
</TABLE>
- ---------------
(1) Common stock and equivalents gives effect to the business combinations
between the Company and PPSC, Sunbelt and the Metals Group, which were
consummated after October 1996 and accounted for as poolings of interests.
(2) Shares issued pursuant to the acquisition of PVF have been included in the
computation of common and common equivalent shares as if they were
outstanding since January 27, 1996.
(3) Represents number of shares issued in the common stock offering in
connection with the Notes offering. Shares are considered outstanding from
January 27, 1996.
<PAGE> 1
EXHIBIT 11.5
HUGHES SUPPLY, INC.
COMPUTATION OF SUPPLEMENTAL PRO FORMA COMBINED
FULLY DILUTED EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
OCTOBER 31, 1996
----------------
<S> <C>
Supplemental pro forma combined net income.................. $26,804
=======
Weighted average shares outstanding:
Common stock and equivalents(1)........................... 10,242
Shares issued pursuant to PVF acquisition(2).............. 369
-------
Total shares................................................ 10,611
-------
Supplemental pro forma combined fully diluted earnings per
share..................................................... $ 2.53
=======
</TABLE>
- ---------------
(1) Common stock and equivalents gives effect to the business combinations
between the Company and PPSC, Sunbelt and the Metals Group, which were
consummated after October 1996 and accounted for as poolings of interests.
(2) Shares issued pursuant to the acquisition of PVF have been included in the
computation of common and common equivalent shares as if they were
outstanding since January 27, 1996.
<PAGE> 1
EXHIBIT 11.6
HUGHES SUPPLY, INC.
COMPUTATION OF SUPPLEMENTAL PRO FORMA AS ADJUSTED FULLY DILUTED EARNINGS PER
SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
OCTOBER 31, 1996
----------------
<S> <C>
Supplemental pro forma as adjusted net income............... $27,242
=======
Weighted average shares outstanding:
Common stock and equivalents(1)........................... 10,242
Shares issued pursuant to PVF acquisition(2).............. 369
Shares issued in connection with the Notes Offering(3).... 921
-------
Total shares................................................ 11,532
-------
Supplemental pro forma as adjusted fully diluted earnings
per share................................................. $ 2.36
=======
</TABLE>
- ---------------
(1) Common stock and equivalents gives effect to the business combinations
between the Company and PPSC, Sunbelt and the Metals Group, which were
consummated after October 1996 and accounted for as poolings of interests.
(2) Shares issued pursuant to the acquisition of PVF have been included in the
computation of common and common equivalent shares as if they were
outstanding since January 27, 1996.
(3) Represents number of shares issued in the common stock offering in
connection with the Notes offering. Shares are considered outstanding from
January 27, 1996.
<PAGE> 1
EXHIBIT 11.7
HUGHES SUPPLY, INC.
COMPUTATION OF SUPPLEMENTAL PRO FORMA COMBINED FULLY
DILUTED EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED
JANUARY 26, 1996
----------------
<S> <C>
Supplemental pro forma combined net income.................. $32,889
=======
Weighted average shares outstanding:
Common stock and equivalents(1)........................... 8,602
Shares issued pursuant to PVF acquisition(2).............. 738
-------
Total shares................................................ 9,340
-------
Supplemental pro forma combined fully diluted earnings per
share..................................................... $ 3.52
=======
</TABLE>
- ---------------
(1) Common stock and equivalents gives effect to the business combinations
between the Company and PPSC, Sunbelt and the Metals Group, which were
consummated after October 1996 and accounted for as poolings of interests.
(2) Shares issued pursuant to the acquisition of PVF have been included in the
computation of common and common equivalent shares as if they were
outstanding since January 27, 1996.
<PAGE> 1
EXHIBIT 11.8
HUGHES SUPPLY, INC.
COMPUTATION OF SUPPLEMENTAL PRO FORMA AS ADJUSTED FULLY DILUTED EARNINGS PER
SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED
JANUARY 26,
1996
------------
<S> <C>
Supplemental pro forma as adjusted net income............... $34,402
=======
Weighted average shares outstanding:
Common stock and equivalents(1)........................... 8,602
Shares issued pursuant to PVF acquisition(2).............. 738
Shares issued in connection with the Notes Offering(3).... 1,487
-------
Total shares................................................ 10,827
-------
Supplemental pro forma as adjusted fully diluted earnings
per share................................................. $ 3.18
=======
</TABLE>
- ---------------
(1) Common stock and equivalents gives effect to the business combinations
between the Company and PPSC, Sunbelt and the Metals Group, which were
consummated after October 1996 and accounted for as poolings of interests.
(2) Shares issued pursuant to the acquisition of PVF have been included in the
computation of common and common equivalent shares as if they were
outstanding since January 27, 1996.
(3) Represents number of shares issued in the common stock offering in
connection with the Notes offering. Shares are considered outstanding from
January 27, 1996.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of the
Registration Statement on Form S-3 of our report dated March 14, 1996, except as
to the pooling of interests with Electric Laboratories and Sales Corporation and
ELASCO Agency Sales, Inc., which is as of April 26, 1996, Panhandle Pipe and
Supply Co., Inc., which is as of December 11, 1996, Sunbelt Supply Co., which is
as of December 30, 1996 and Metals Incorporated, Stainless Tubular Products,
Inc. and Metals Inc. -- Gulf Coast Division, which is as of January 24, 1997,
relating to the supplemental consolidated financial statements of Hughes Supply,
Inc., which appears in such Prospectus. We also consent to the incorporation by
reference in the Prospectus constituting part of the Registration Statement on
Form S-3 of our report dated March 14, 1996, except as to the pooling of
interests with Electric Laboratories and Sales Corporation and ELASCO Agency
Sales, Inc., which is as of April 26, 1996, relating to the consolidated
financial statements of Hughes Supply, Inc. which appears in the Company's
Registration Statement on Form S-3 (File No. 333-15675). We also consent to the
reference to us under the heading "Experts" in such Prospectus.
Price Waterhouse LLP
Orlando, Florida
February 12, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion and incorporation by reference in this registration
statement on Form S-3 of Coopers & Lybrand's report dated March 17, 1994, on
Coopers & Lybrand's audit of the consolidated statements of income,
shareholders' equity, and cash flows of Hughes Supply, Inc. and subsidiaries for
the fiscal year ended January 28, 1994, which report is included in this
Prospectus and incorporated by reference in the Company's Annual Report on Form
10-K for the fiscal year ended January 26, 1996. We also consent to the
reference to Coopers & Lybrand under the caption "Experts".
Coopers & Lybrand L.L.P.
Orlando, Florida
February 14, 1997
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Hughes Supply, Inc. on Form S-3 of our report dated September 25, 1995 (October
25, 1995 and May 13, 1996 as to Note 9) on the consolidated financial statements
of PVF Holdings, Inc. and subsidiaries, incorporated by reference in Current
Report on Form 8-K of Hughes Supply, Inc. dated May 13, 1996 and appearing in
Registration Statement No. 333-02215 of Hughes Supply, Inc. on Form S-3. We also
consent to the reference to us under the heading "Experts" in the Prospectus,
which is part of this Registration Statement.
Deloitte & Touche LLP
Birmingham, Alabama
February 12, 1997
