FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File No. 001-08772
HUGHES SUPPLY, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-0559446
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 North Orange Avenue, Suite 200, Orlando, Florida 32801
--------------------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 407/841-4755
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
COMMON STOCK OUTSTANDING AS OF JUNE 2, 2000
------------ ------------------------------
$1 Par Value 23,594,455
<PAGE>
HUGHES SUPPLY, INC.
FORM 10-Q
INDEX
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of
April 30, 2000 and January 28, 2000 .......................... 3 - 4
Consolidated Statements of Income for the
Three Months Ended April 30, 2000 and 1999 ................... 5
Consolidated Statements of Cash Flows for the
Three Months Ended April 30, 2000 and 1999 ................... 6
Notes to Consolidated Financial Statements ................... 7 - 12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ................ 13 - 17
Item 3. Quantitative and Qualitative Disclosures about Market Risks .. 18
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ............................. 19 - 22
Signatures ................................................... 23
Index of Exhibits Filed with This Report ..................... 24
Page 2
<PAGE>
HUGHES SUPPLY, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
APRIL 30,
2000 JANUARY 28,
(UNAUDITED) 2000
---------- -----------
ASSETS
Current Assets:
Cash and cash equivalents $ 10,550 $ 10,000
Accounts receivable, less allowance for
losses of $5,092 and $2,777 467,069 398,244
Inventories 520,128 495,491
Deferred income taxes 9,366 15,993
Other current assets 28,179 38,050
---------- ----------
Total current assets 1,035,292 957,778
Property and Equipment, Net 153,566 144,945
Excess of Cost over Net Assets Acquired 252,656 243,367
Other Assets 24,128 22,924
---------- ----------
$1,465,642 $1,369,014
========== ==========
The accompanying notes are an integral part of these
consolidated financial statements.
Page 3
<PAGE>
HUGHES SUPPLY, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED) - CONTINUED
(IN THOUSANDS, EXCEPT SHARE DATA)
APRIL 30,
2000 JANUARY 28,
(UNAUDITED) 2000
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 587 $ 803
Accounts payable 291,896 239,810
Accrued compensation and benefits 27,088 29,590
Other current liabilities 37,695 30,075
----------- -----------
Total current liabilities 357,266 300,278
Long-Term Debt 561,781 535,000
Deferred Income Taxes 5,882 6,027
Other Noncurrent Liabilities 5,306 5,265
----------- -----------
Total liabilities 930,235 846,570
----------- -----------
Commitments and Contingencies
Shareholders' Equity:
Preferred stock -- --
Common stock-24,242,658 and
24,249,281 shares issued 24,243 24,249
Capital in excess of par value 221,244 221,284
Retained earnings 312,312 300,144
Treasury stock, 648,203 and
668,950 at cost (14,957) (15,434)
Unearned compensation related to
outstanding restricted stock (7,435) (7,799)
----------- -----------
Total shareholders' equity 535,407 522,444
----------- -----------
$ 1,465,642 $ 1,369,014
=========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
Page 4
<PAGE>
HUGHES SUPPLY, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED APRIL 30,
2000 1999
--------- ---------
Net Sales $ 831,171 $ 711,296
Cost of Sales 646,286 554,938
--------- ---------
Gross Profit 184,885 156,358
--------- ---------
Operating Expenses:
Selling, general and administrative 142,515 121,335
Depreciation and amortization 7,688 6,656
Provision for doubtful accounts 1,533 1,387
--------- ---------
Total operating expenses 151,736 129,378
--------- ---------
Operating Income 33,149 26,980
--------- ---------
Non-Operating Income and (Expenses):
Interest and other income 1,216 2,240
Interest expense (9,910) (6,774)
--------- ---------
(8,694) (4,534)
--------- ---------
Income Before Income Taxes 24,455 22,446
Income Taxes 10,027 9,091
--------- ---------
Net Income $ 14,428 $ 13,355
========= =========
Earnings Per Share:
Basic $ .62 $ .56
========= =========
Diluted $ .62 $ .55
========= =========
Average Shares Outstanding:
Basic 23,223 23,863
========= =========
Diluted 23,299 24,240
========= =========
Dividends Per Share $ .085 $ .085
========= =========
The accompanying notes are an integral part of these
consolidated financial statements.
Page 5
<PAGE>
HUGHES SUPPLY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED APRIL 30,
2000 1999
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 14,428 $ 13,355
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 7,688 6,656
Provision for doubtful accounts 1,533 1,387
Equity in earnings of unconsolidated affiliates 1,357 (408)
Other, net 895 134
Changes in assets and liabilities, net
of effects of business acquisitions:
(Increase) in accounts receivable (66,442) (47,645)
(Increase) in inventories (21,086) (9,463)
Decrease in other current assets 9,938 7,460
(Increase) in other assets (929) (3,285)
Increase in accounts payable and
accrued liabilities 50,568 37,002
Increase in accrued interest and
income taxes 5,167 12,238
Increase (decrease) in other
noncurrent liabilities 41 (110)
Decrease (increase) in net deferred
income taxes 6,482 (733)
-------- --------
Net cash provided by
operating activities 9,640 16,588
-------- --------
Cash Flows from Investing Activities:
Capital expenditures (8,431) (6,984)
Proceeds from sale of property and equipment 158 79
Investments in unconsolidated affiliates (2,500) --
Business acquisitions, net of cash (23,037) (31,469)
-------- --------
Net cash used in investing
activities (33,810) (38,374)
-------- --------
Cash Flows from Financing Activities:
Net borrowings under short-term
debt arrangements 26,781 46,832
Principal payments on debt of acquired entities (216) (6,696)
Dividends paid (2,004) (2,056)
Purchase of treasury stock -- 15,788
Other 159 234
-------- --------
Net cash provided by financing
activities 24,720 22,526
-------- --------
Net Increase in Cash and Cash Equivalents 550 740
Cash and Cash Equivalents:
Beginning of period 10,000 6,010
-------- --------
End of period $ 10,550 $ 6,750
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
Page 6
<PAGE>
HUGHES SUPPLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
1. In the opinion of Hughes Supply, Inc. (the "Company"), the accompanying
unaudited consolidated financial statements contain all adjustments
(consisting only of normal recurring adjustments) necessary to present
fairly the financial position as of April 30, 2000, the results of
operations for the three months ended April 30, 2000 and 1999, and cash
flows for the three months then ended. The results of operations for
the three months ended April 30, 2000 are not necessarily indicative of
the results that may be expected for the full year.
The fiscal year of the Company is a 52-week period ending on the last
Friday in January. The three months ended April 30, 2000 and 1999 each
contained 13 weeks.
Basic earnings per share is calculated by dividing net income by the
weighted-average number of shares outstanding. Diluted earnings per
share is calculated by dividing net income by the weighted-average
number of shares outstanding, adjusted for dilutive potential common
shares. The weighted-average number of shares used in calculating basic
earnings per share were 23,223,000 and 23,863,000 for the three months
ended April 30, 2000 and 1999, respectively. In calculating diluted
earnings per share, these amounts were adjusted to include dilutive
potential common shares of 76,000 and 377,000 for the three months
ended April 30, 2000 and 1999, respectively.
2. Effective February 1, 2000, the Company was reorganized into five
strategic business units ("SBUs") on a product group basis. The five
SBUs are: Electrical and Electric Utility; Plumbing/HVAC; Industrial
Pipe, Valves & Fittings ("PVF"); Building Materials/Pool and Spa/
Maintenance Supplies; and Water & Sewer.
The operating segments reported below are the segments of the Company
for which separate financial information is available and for which
operating income amounts are evaluated regularly by executive
management in deciding how to allocate resources and in assessing
performance.
Page 7
<PAGE>
Income before income tax amounts evaluated include allocations of
certain costs, including employee benefits, interest expense, corporate
capital charges and property and casualty insurance. These costs are
allocated based on consumption or at a standard rate determined by
management.
As part of the Company's reorganization at the beginning of fiscal
2001, certain administrative groups and assets were re-aligned on an
SBU basis. As a result of the reorganization, the Company restructured
various administrative groups whereby activities previously performed
on a centralized basis are now performed at the SBU level.
Additionally, commencing in fiscal 2001, the Company changed its method
of allocating certain costs (interest expense, rent expense, corporate
capital charge and depreciation and amortization expense) to the SBUs
which has also impacted the comparability of prior year information.
Accordingly, comparative information has only been presented for net
sales and gross profit, which were not impacted by any of the
allocation method changes.
The tables set forth below represent segment results for the three
months ended April 30, 2000 for each of the Company's SBUs. When
comparable, information for the three months ended April 30, 1999 has
also been presented.
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
APRIL 30, 2000 APRIL 30, 1999
-------------- --------------
<S> <C> <C>
NET SALES
Electrical and Electric Utility $ 146,517 $ 141,474
Plumbing/HVAC 259,176 238,318
Industrial PVF 80,563 78,589
Building Materials/Pool and Spa/Maintenance Supplies 115,743 102,164
Water & Sewer 234,039 154,521
--------- ---------
836,038 715,066
Corporate and eliminations (4,867) (3,770)
--------- ---------
Total $ 831,171 $ 711,296
========= =========
</TABLE>
Page 8
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
APRIL 30, 2000 APRIL 30, 1999
-------------- --------------
<S> <C> <C>
GROSS PROFIT
Electrical and Electric Utility $ 28,367 $ 24,671
Plumbing/HVAC 57,357 55,587
Industrial PVF 22,604 17,521
Building Materials/Pool and Spa/Maintenance
Supplies 30,942 26,406
Water & Sewer 45,615 32,173
--------- ---------
Total $ 184,885 $ 156,358
========= =========
THREE MONTHS
ENDED
APRIL 30, 2000
--------------
DEPRECIATION AND AMORTIZATION EXPENSE
Electrical and Electric Utility $ 556
Plumbing/HVAC 1,833
Industrial PVF 736
Building Materials/Pool and Spa/Maintenance
Supplies 942
Water & Sewer 1,872
----------
5,939
Corporate 1,749
----------
Total $ 7,688
==========
</TABLE>
Page 9
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
APRIL 30, 2000
--------------
<S> <C>
INTEREST AND OTHER INCOME
Electrical and Electric Utility $ 280
Plumbing/HVAC 906
Industrial PVF 67
Building Materials/Pool and Spa/Maintenance
Supplies 280
Water & Sewer 688
--------------
2,221
Corporate (1,005)
--------------
Total $ 1,216
==============
THREE MONTHS
ENDED
APRIL 30, 2000
--------------
INTEREST EXPENSE
Electrical and Electric Utility $ 787
Plumbing/HVAC 2,306
Industrial PVF 2,495
Building Materials/Pool and Spa/Maintenance
Supplies 1,265
Water & Sewer 3,057
--------------
Total $ 9,910
==============
</TABLE>
Page 10
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
APRIL 30, 2000
--------------
<S> <C>
INCOME BEFORE INCOME TAXES
Electrical and Electric Utility $ 5,427
Plumbing/HVAC 2,856
Industrial PVF 6,691
Building Materials/Pool and Spa/Maintenance
Supplies 3,554
Water & Sewer 9,769
--------
28,297
Corporate (3,842)
--------
Total $ 24,455
========
</TABLE>
Page 11
<PAGE>
The table set forth below represents the investment in inventories and
accounts receivable, less allowance for losses, for each strategic
business unit at April 30, 2000 and January 28, 2000.
<TABLE>
<CAPTION>
APRIL 30, 2000 JANUARY 28, 2000
-------------- ----------------
<S> <C> <C>
Inventories and Accounts Receivable
Electrical and Electric Utility $ 128,145 $ 121,236
Plumbing/HVAC 305,811 287,303
Industrial PVF 161,143 160,758
Building Materials/Pool and Spa/Maintenance
Supplies 128,435 105,851
Water & Sewer 267,226 222,258
---------- ----------
990,760 897,406
Corporate and eliminations (3,563) (3,671)
---------- ----------
Total $ 987,197 $ 893,735
========== ==========
Cash and Cash Equivalents 10,550 10,000
Deferred Income Taxes 9,366 15,993
Other Current Assets 28,179 38,050
Property and Equipment, Net 153,566 144,945
Excess of Costs Over
Net Assets Acquired 252,656 243,367
Other Assets 24,128 22,924
---------- ----------
Total Assets $1,465,642 $1,369,014
========== ==========
</TABLE>
Page 12
<PAGE>
HUGHES SUPPLY, INC.
PART I. FINANCIAL INFORMATION - CONTINUED
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following is management's discussion and analysis of certain significant
factors which have affected the financial condition of the Company as of April
30, 2000, and the results of operations for the three months then ended.
Certain statements set forth in Management's Discussion and Analysis of
Financial Condition and Results of Operations, constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and
are subject to the safe harbor created by such sections. When used in this
report, the words "believe," "anticipate," "estimate," "expect," "may," "will,"
"should," "plan," "intend," "potential," "predict," "forecast," 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. When appropriate,
certain factors that could cause results to differ materially from those
projected in the forward-looking statements are enumerated. This Management's
Discussion and Analysis of Financial Condition and Results of Operations should
be read in conjunction with the Company's consolidated financial statements and
the notes thereto contained herein and in the Company's Form 10-K for the fiscal
year ended January 28, 2000.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
NET SALES
Net sales were $831 million for the quarter ended April 30, 2000, a 17% increase
over the prior year's first quarter. Approximately 52% of the increase in net
sales was attributable to same-store sales growth over the prior year's first
quarter. The remainder of the increase was attributable to branches acquired and
opened after January 31, 1999.
Electrical and Electric Utility
Net sales were $146.5 million for the quarter ended April 30, 2000, a 4%
increase over the first quarter of fiscal 2000. The increase was primarily due
to a 2% growth in same-store sales which was consistent with industry growth
during the quarter.
Plumbing/HVAC
Net sales increased from $238.3 million for the three months ended April 30,
1999 to $259.2 million for the three months ended April 30, 2000, a 9% increase.
The growth in sales was due to a 7% increase in same-store sales resulting from
improved market penetration and the continued strength of the construction
market.
Industrial PVF
For the quarter ended April 30, 2000, net sales were $80.6 million compared to
$78.6 million in the first quarter of fiscal 2000. The sales increase was due
to a 2% increase in same-store sales primarily driven by an increase in
stainless steel prices for the first quarter of fiscal 2001.
Page 13
<PAGE>
Building Materials/Pool and Spa/Maintenance Supplies
Net sales increased from $102.2 million to $115.8 million for the three months
ended April 30, 1999 and April 30, 2000, respectively, a 13% increase. Of the
$13.6 million increase, $8.5 million was attributable to same-store sales
growth, with the remainder coming from newly opened/acquired branches. The 9%
increase in same-store sales was primarily due to (i) improved market
penetration in pool and spa products, (ii) strong demand for construction rental
materials, and (iii) expansion of appliance product lines in the maintenance
supply branches.
Water & Sewer
Water & Sewer segement sales increased $79.5 million from $154.5 million in the
first quarter of fiscal 2000 to $234.0 million in the first quarter of fiscal
2001, a 51% increase. Of the increase, $47.3 million was from branches opened or
acquired after January 31, 1999. The remainder was due to a 21% same-store sales
increase from the first quarter of fiscal 2000. The increase in same-store sales
was due to (i) several large contracts and a general increase in overall
activity through all Water & Sewer markets in fiscal 2001, and (ii) increased
spending on infrastructure by municipalities.
GROSS PROFIT AND GROSS MARGIN
Gross profit and gross margin for the three months ended April 30, 2000 and
April 30, 1999 were as follows (dollars in thousands):
<TABLE>
<CAPTION>
Gross Profit Gross Margin
--------------------------------- -------------------------------
Three Three Three Three
Months Months Months Months
Ended April Ended April Ended April Ended April
30, 2000 30, 1999 30, 2000 30, 1999
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Electrical and Electric Utility $ 28,367 $ 24,671 19.4% 17.4%
Plumbing/HVAC 57,357 55,587 22.1% 23.3%
Industrial PVF 22,604 17,521 28.1% 22.3%
Building Materials/Pool and Spa/Maintenance Supplies 30,942 26,406 26.7% 25.8%
Water & Sewer 45,615 32,173 19.5% 20.8%
---------- ---------- ---------- ----------
$ 184,885 $ 156,358 22.2% 22.0%
========== ========== ========== ==========
</TABLE>
Electrical and Electric Utility
Gross margin increased approximately 200 basis points from the first quarter of
fiscal 2000 to the first quarter of fiscal 2001. The increase in gross margin
was primarily due to changes in product sales mix in fiscal 2001, with the
remainder due to enhanced purchasing power.
Page 14
<PAGE>
Plumbing/HVAC
Gross margin decreased approximately 120 basis points from the first quarter of
fiscal 2000 to the first quarter of fiscal 2001. The decrease was primarily
attributable to an erosion of margins as the Company sought to improve market
share in certain areas.
Industrial PVF
Gross margin and gross profit within the Industrial PVF segment are closely tied
to the pricing of certain commodity based products (primarily stainless steel
and nickel alloys). In the first quarter of fiscal 2001, the price of these
commodity items increased which improved the Company's gross margin for these
products. The Company anticipates decreasing margins within this segment in the
second half of fiscal 2001 when the inventories purchased prior to recent price
increases are depleted.
Building Materials/Pool and Spa/Maintenance Supplies
Gross margin increased approximately 90 basis points from the first quarter of
fiscal 2000 to the first quarter of fiscal 2001. The increase was primarily due
to a shift in sales mix resulting from increased equipment rentals.
Water & Sewer
Gross margin within the Water & Sewer segment declined approximately 130 basis
points from the first quarter of fiscal 2000 to the first quarter of fiscal
2001. The decrease was primarily due to an increase in large direct shipped
orders which generate lower gross margin levels.
OPERATING EXPENSES
Operating expenses for the three months ended April 30, 2000 and 1999 were as
follows (dollars in thousands):
2000 1999 VARIANCE
---------- ---------- --------
Operating expenses $ 151,736 $ 129,378 $22,358
Percentage of net sales 18.3% 18.2% 17%
Approximately $9.0 million (40%) of the $22.4 million increase in operating
expenses for the three months ended April 30, 2000 was attributable to branches
acquired and opened after January 31, 1999. The remainder of the increase was
primarily due to (i) higher personnel costs associated with same-store sales
growth, (ii) increased transportation costs brought about by same-store growth
and increased fuel costs, and (iii) increased information technology costs as
the Company continues to upgrade its information technology systems.
INTEREST AND OTHER INCOME
Interest and other income decreased from $2.2 million for the three months April
30, 1999 to $1.2 million for the three months ended April 30, 2000. The decrease
was primarily due to losses from the Company's equity investment in
bestroute.com in the first quarter of fiscal 2001.
Page 15
<PAGE>
INTEREST EXPENSE
Interest expense was $9.9 million and $6.8 million for the three months ended
April 30, 2000 and 1999, respectively, a 46% increase. The increase was
primarily the result of higher borrowing levels, coupled with increased interest
rates. The higher borrowing levels were primarily due to the Company's (i)
higher working capital investments resulting from accelerated sales growth, (ii)
expansion through business acquisitions, which has been partially funded by debt
financing, and (iii) share repurchases.
INCOME TAXES
The effective income tax rates for the three months ended April 30, 2000 and
1999 were 41.0% and 40.5%, respectively. The increase in the effective rate was
primarily due to increases in non-deductible goodwill and other non-deductible
costs.
NET INCOME
Net income was $14.4 million for the first quarter compared to $13.4 million for
the prior year's first quarter, an 8% increase. Diluted earnings per share for
the first quarter was $.62 compared to $.55 in the prior year's first quarter.
The factors impacting net income and diluted earnings per share have been
enumerated above in the material changes in results of operations section of
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at April 30, 2000 totaled $678 million compared to $658 million
at January 28, 2000. The working capital ratio was 2.9 to 1 and 3.2 to 1 as of
April 30, 2000 and January 28, 2000, respectively. Due to the seasonality of the
Company's business, inventories, receivables and trade payables increase in the
spring, as sales pick up and the Company prepares for the summer, which has
historically been its busiest season.
Net cash provided by operations was $9.6 million for the three months ended
April 30, 2000 compared to $16.6 million for the three months ended April 30,
1999. This change was primarily the result of increased inventories and accounts
receivable levels, partially offset by an increase in accounts payable.
The Company's expenditures for property and equipment were $8.4 million for the
three months ended April 30, 2000 compared to $7.0 million for the three months
ended April 30, 1999. Capital expenditures for property and equipment, excluding
amounts for business acquisitions, are expected to be approximately $30 million
for fiscal 2001.
Cash payments for business acquisitions accounted for as purchases totaled $23.0
million for the three months ended April 30, 2000 compared to $31.5 million for
the three months ended April 30, 1999.
Page 16
<PAGE>
Principal reductions on long-term debt were $0.2 million for the three months
ended April 30, 2000 and $6.7 million for the three months ended April 30, 1999.
The amounts were primarily attributable to the repayment of debt assumed as a
result of certain business acquisitions. Dividend payments were $2.0 million and
$2.1 million during the three months ended April 30, 2000 and 1999,
respectively.
As of April 30, 2000, the Company had approximately $76 million of unused
borrowing capacity (subject to borrowing limitations under long-term debt
covenants) to fund ongoing operating requirements and anticipated capital
expenditures. The Company also believes it has sufficient borrowing capacity to
take advantage of growth and business acquisition opportunities and to fund
share repurchases in the near term. The Company expects to continue to finance
future expansion on a project-by-project basis through additional borrowing or
through the issuance of common stock.
Page 17
<PAGE>
Item 3. Quantitative and Qualitative Disclosures about Market Risks
The Company is exposed to market risk from changes in (i) interest rates on
outstanding variable-rate debt and (ii) the prices of certain of the Company's
products whose manufacture is reliant on certain commodities.
INTEREST RATE RISK
At April 30, 2000, the Company had approximately $333.8 million of outstanding
variable-rate debt. Based upon an assumed 10% increase or decrease in interest
rates from their April 30, 2000 levels, the market risk with respect to the
Company's variable-rate debt would not be material. The Company manages its
interest rate risk by maintaining a combination of fixed-rate and variable-rate
debt.
COMMODITY PRICE RISK
The Company is affected by price fluctuations in stainless steel, nickel alloys,
copper, aluminum, resin and other commodities. Such commodity price
fluctuations have from time to time created cyclicality in the financial
performance of the Company and could continue to do so in the future. The
Company seeks to minimize the effects of commodity price fluctuations through
(i) economies of purchasing and inventory management resulting in cost
reductions, maintenance of minimum economic reorder points, and productivity
improvements and (ii) price increases to maintain reasonable profit margins.
Additional information with respect to the Company's commodity price risk is set
forth under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in Part I, Item 2 of this report.
Page 18
<PAGE>
HUGHES SUPPLY, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS FILED
(2) Plan of acquisition, reorganization, arrangement, liquidation
or succession. Not applicable.
(3) Articles of incorporation and by-laws.
3.1 Restated Articles of Incorporation, as amended,
incorporated by reference to Exhibit 3.1 to Form 10-Q
for the quarter ended April 30, 1997 (Commission File
No. 001-08772).
3.2 Composite By-Laws, as amended, incorporated by
reference to Exhibit 3.2 to Form 10-Q for the quarter
ended October 31, 1999 (Commission File No.
001-08772).
3.3 Form of Articles of Amendment to Restated Articles of
Incorporation of the Company, incorporated by
reference to Exhibit 99.2 to Form 8-A dated May 22,
1998 (Commission File No. 001-08772).
(4) Instruments defining the rights of security holders, including
indentures.
4.1 Form of Common Stock Certificate representing shares
of the Registrant's common stock, $1.00 par value,
incorporated by reference to Exhibit 4.1 to Form 10-Q
for the quarter ended July 31, 1997 (Commission File
No. 001-08772).
4.2 Rights Agreement dated as of May 20, 1998 between
Hughes Supply, Inc. and American Stock Transfer &
Trust Company, incorporated by reference to Exhibit
99.2 to Form 8-A dated May 22, 1998 (Commission File
No. 001-08772).
Page 19
<PAGE>
(10) Material contracts.
10.1 Lease Agreements with Hughes, Inc.
(a) Orlando Trucking, Garage and Maintenance
Operations dated December 1, 1971,
incorporated by reference to Exhibit 13(n)
to Registration No. 2-43900 (Commission File
No. 0-5235). Letter dated April 15, 1992
extending lease from month to month, filed
as Exhibit 10.1(a) to Form 10-K for the
fiscal year ended January 31, 1992
(Commission File No. 0-5235).
(b) Leases effective March 31, 1988,
incorporated by reference to Exhibit 10.1(c)
to Form 10-K for the fiscal year ended
January 27, 1989 (Commission File No.
0-5235).
SUB-ITEM PROPERTY
-------- --------
(1) Clearwater
(2) Daytona Beach
(3) Fort Pierce
(4) Lakeland
(6) Leesburg
(7) Orlando Electrical Operation
(8) Orlando Plumbing Operation
(9) Orlando Utility Warehouse
(11) Sarasota
(12) Venice
(13) Winter Haven
(c) Lease amendment letter between Hughes, Inc.
and the Registrant, dated December 1, 1986,
amending Orlando Truck Operations Center and
Maintenance Garage lease, incorporated by
reference to Exhibit 10.1(i) to Form 10-K
for the fiscal year ended January 30, 1987
(Commission File No. 0-5235).
(d) Lease agreement dated June 1, 1987, between
Hughes, Inc. and the Registrant, for
additional Sarasota property, incorporated
by reference to Exhibit 10.1(j) to Form 10-K
for the fiscal year ended January 29, 1988
(Commission File No. 0-5235).
(e) Lease dated March 11, 1992, incorporated by
reference to Exhibit 10.1(e) to Form 10-K
for the fiscal year ended January 31, 1992
(Commission File No. 0-5235).
SUB-ITEM PROPERTY
-------- --------
(2) Gainesville Electrical Operation
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(f) Amendments to leases between Hughes, Inc.
and the Registrant, dated April 1, 1998,
amending the leases for the thirteen
properties listed in Exhibit 10.1(b), (d)
and (e), incorporated by reference to
Exhibit 10.1 to Form 10-K for the fiscal
year ended January 30, 1998 (Commission File
No. 001-08772).
10.2 Hughes Supply, Inc. 1988 Stock Option Plan as amended
March 12, 1996 incorporated by reference to Exhibit
10.2 to Form 10-K for the fiscal year ended January
26, 1996 (Commission File No. 001-08772).
10.3 Form of Supplemental Executive Retirement Plan
Agreement entered into between the Registrant and
eight of its executive officers, incorporated by
reference to Exhibit 10.6 to Form 10-K for the fiscal
year ended January 30, 1987 (Commission File No.
0-5235).
10.4 Directors' Stock Option Plan, as amended,
incorporated by reference to Exhibit 10.4 to Form
10-Q for the quarter ended October 31, 1999
(Commission File No. 001-08772).
10.5 Hughes Supply, Inc. Amended Senior Executives'
Long-Term Incentive Bonus Plan, adopted January 25,
1996, incorporated by reference to Exhibit 10.9 to
Form 10-K for the fiscal year ended January 26, 1996
(Commission File No. 001-08772).
10.6 Note Purchase Agreement, dated as of August 28, 1997,
by and among the Company and certain purchasers
identified in Schedule A of the Note Purchase
Agreement, incorporated by reference to Exhibit 10.15
to Form 10-Q for the quarter ended July 31, 1997
(Commission File No. 001-08772).
10.7(a) Hughes Supply, Inc. 1997 Executive Stock Plan,
incorporated by reference to Exhibit 10.7 to
Form 10-K for the fiscal year ended January 28,
2000 (Commission File No. 001-08772).
10.7(b) Amendment No. 1 to the Hughes Supply, Inc. 1997
Executive Stock Plan (filed herewith).
10.8 Note Purchase Agreement, dated as of May 29, 1996, by
and among the Company and certain purchasers
identified in Schedule A of the Note Purchase
Agreement, incorporated by reference to Exhibit 10.13
to Form 10-K for the fiscal year ended January 30,
1998 (Commission File No. 001-08772).
10.9 Note Purchase Agreement, dated as of May 5, 1998, by
and among the Company and certain purchasers
identified in Schedule A of the Note Purchase
Agreement, incorporated by reference to Exhibit 10.11
to Form 10-Q for the quarter ended April 30, 1998
(Commission File No. 001-08772).
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<PAGE>
10.10 Revolving Credit Agreement, dated as of January 26,
1999 and amended on September 29, 1999, by and among
the Company and a group of banks, incorporated by
reference to Exhibit 10.11 to Form 10-Q for the
quarter ended October 31, 1999 (Commission File No.
001-08772). The Revolving Credit Agreement contains a
table of contents identifying the contents of
Schedules and Exhibits, all of which have been
omitted. The Company agrees to furnish a supplemental
copy of any omitted Schedule or Exhibit to the
Commission upon request.
10.11 Line of Credit Agreement, dated as of January 26,
1999 and amended on September 29, 1999, by and among
the Company and a group of banks, incorporated by
reference to Exhibit 10.12 to Form 10-Q for the
quarter ended October 31, 1999 (Commission File No.
001-08772). The Line of Credit Agreement contains a
table of contents identifying the contents of
Schedules and Exhibits, all of which have been
omitted. The Company agrees to furnish a supplemental
copy of any omitted Schedule or Exhibit to the
Commission upon request.
10.12 Bridge Revolving Credit Agreement, dated as of
November 30, 1999, by and between the Company and
SunTrust Bank, Central Florida, N.A., incorporated
by reference to Exhibit 10.12 to Form 10-K for the
fiscal year ended January 28, 2000 (Commission
File No. 001-08772).
(11) Statement re computation of per share earnings. Not
applicable.
(15) Letter re unaudited interim financial information. Not
applicable.
(18) Letter re change in accounting principles. Not applicable.
(19) Report furnished to security holders. Not applicable.
(22) Published report regarding matters submitted to vote of
security holders. Not applicable.
(23) Consents of experts and counsel. Not applicable.
(24) Power of attorney. Not applicable.
(27) Financial data schedule.
27.1 Financial Data Schedule (filed electronically only).
(99) Additional exhibits. Not applicable.
(b) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed during the quarter
ended April 30, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HUGHES SUPPLY, INC.
Date: June 14, 2000 By: /s/ DAVID H. HUGHES
-----------------------------------
David H. Hughes, Chairman of
the Board and Chief Executive
Officer
Date: June 14, 2000 By: /s/ J. STEPHEN ZEPF
-----------------------------------
J. Stephen Zepf, Treasurer,
Chief Financial Officer and Chief
Accounting Officer
Page 23
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INDEX OF EXHIBITS FILED WITH THIS REPORT
----------------------------------------
10.7(b) Amendment No. 1 to the Hughes Supply, Inc. 1997 Executive
Stock Plan.
27.1 Financial Data Schedule (filed electronically only).
