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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission File No. 1-2958
HUBBELL INCORPORATED
(Exact name of Registrant as specified in its charter)
CONNECTICUT 06-0397030
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
584 Derby Milford Road, Orange, Connecticut 06477-4024
(Address of principal executive offices) (Zip Code)
(203) 799-4100
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class Name of Exchange on which Registered
Class A Common - $.01 par value (20 votes per share) New York Stock Exchange
Class B Common - $.01 par value (1 vote per share) New York Stock Exchange
Class A Common Stock Purchase Rights New York Stock Exchange
Class B Common Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 3 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 report), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ X ]
The approximate aggregate market value of the voting stock held by
non-affiliates of the Registrant as of March 18, 1994 was $1,754,923,000.*
The number of shares outstanding of the Class A Common Stock and Class B Common
Stock as of March 18, 1994 was 5,883,861 and 25,410,958, respectively.
Documents Incorporated by Reference
The definitive proxy statement for the proposed annual meeting of
stockholders to be held on May 2, 1994, filed with the Commission on March
25, 1994 - Part III.
- ---------------
* Calculated by excluding all shares held by executive Officers and
Directors of Registrant and the Roche Trust, the Hubbell Trust and the
Harvey Hubbell Foundation, without conceding that all such persons are
"affiliates" of registrant for purpose of the Federal Securities Laws.
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PART I
Item 1. Business
Hubbell Incorporated (herein referred to as "Hubbell", the "Company" or the
"registrant", which references shall include its divisions and subsidiaries as
the context may require) was founded as a proprietorship in 1888, and was
incorporated in Connecticut in 1905. For over a century, Hubbell has
manufactured and sold high quality electrical and electronic products for a
broad range of commercial, industrial, telecommunications, and utility
applications. Since 1961, Hubbell has expanded its operations into other areas
of the electrical industry and related fields. Hubbell products are now
manufactured or assembled by seventeen divisions and subsidiaries at twenty-six
locations in the United States, Canada, Puerto Rico, Mexico, United Kingdom and
Singapore. Hubbell also participates in joint ventures with partners in
Germany and Taiwan, and maintains sales offices in Malaysia, Indonesia,
Germany, Hong Kong, South Korea, and the Middle East.
Hubbell is primarily engaged in the engineering, manufacture and sale of
electrical and electronic products. These products can be divided into three
general segments: products primarily used in low-voltage applications,
products primarily used in high-voltage applications and products that either
are not directly related to the electrical business, or, if related, cannot be
clearly classified on a voltage application basis. Hubbell defines
"low-voltage" as being 600 volts and less and "high-voltage" as greater than
600 volts. Reference is made to page 35 for information relative to Industry
Segment and Geographic Area Information for 1993, 1992 and 1991.
In March, 1993, Hubbell acquired the stock of E. M. Wiegmann & Co., Inc.
("Wiegmann"). Wiegmann, located in Freeburg, Illinois, manufactures and sells
a wide range of cabinets, panels, consoles and other enclosures used to mount
and protect transformers, industrial controls, wireway ducts and fittings.
Additional information relating to the Wiegmann acquisition can be found on
page 6 of this document under "Outlet Boxes, Enclosures and Fittings."
On January 19, 1994, in reporting its fourth quarter - 1993, and full year -
1993, results, Hubbell announced implementation of a restructuring program
which will include the consolidation of all or a portion of ten manufacturing
facilities, a reduction in labor force of approximately 6%, the reorganization
of certain operation's management structure, and a realignment of warehousing
and product distribution capabilities.
As noted on page 37, the Company announced on March 16, 1994, that it had
entered into an agreement to purchase A. B. Chance Industries, Inc. ("Chance").
Chance, with facilities in Centralia and Mexico, Missouri; Ontario, Canada; and
Bristol, England, manufactures products used in the electrical transmission,
distribution and telecommunications industries, including electrical apparatus
(overhead and underground distribution switches, fuses, contacts, enclosures
and sectionalizers); anchors; hardware; insulators (porcelain and polymer); and
hot-line tools and other safety equipment. The transaction is subject to
completion of certain conditions under the agreement and obtaining of
regulatory approvals.
PRODUCTS USED IN LOW-VOLTAGE APPLICATIONS
Electrical Wiring Devices
The Wiring Device Division of Hubbell specializes in the manufacture and sale
of highly durable and reliable wiring devices which are supplied principally to
industrial and commercial customers. These products, comprising several
thousand catalog items, include plugs, receptacles, (including surge
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suppressor units), wall outlets, connectors, adapters, floor boxes and switches
(including automatic motion sensing switches).
The Wiring Device Division's pin-and-sleeve devices have incorporated improved
water and dust-tight construction and impact resistance. In addition,
Hubbell's flexible wiring systems offer standardized connectors and cable
lengths for integration with electrical, lighting and power fixtures in both
the domestic and international markets. Switch and receptacle wall plates
produced by Hubbell Plastics, Inc., are distributed through the Wiring Device
Division, feature proprietary thermoplastic materials offering high impact
resistance and durability, and are available in a variety of colors.
Architectural wiring systems, including the system PDC (under carpet cable
systems for power, data and communications transmission) provide efficiency and
flexibility in both initial installation and remodeling application.
Hubbell also manufactures wiring devices for use in certain environments
requiring specialized products. The Wiring Device Division also sells ground
fault circuit interrupter units for residential and industrial applications.
Some of these units contain a number of outlets to which electrically-powered
equipment may be simultaneously connected for ground fault protection. Ground
fault units interrupt the circuit to which they are connected when a fault to
ground is detected to protect the user from potentially lethal shock.
Bryant Electric, Inc. manufactures and sells electrical wiring devices,
including plugs, connectors, receptacles, switches, lampholders, motor control
pendants, weatherproof enclosures, and wall plates, to a separate market
segment of industrial and commercial customers, utilizing its own sales and
marketing organization.
Hubbell maintains operations in the United Kingdom, Singapore, Canada and
Mexico which sell a variety of wiring device products similar to those produced
in the United States. Most of the wiring device products sold by these
operations are manufactured from parts shipped from the United States.
Lighting Fixtures
Hubbell Lighting, Inc. sells lighting fixtures and accessories for both indoor
and outdoor applications in the United States, Canada, Mexico, United Kingdom,
Singapore and elsewhere internationally. Hubbell Lighting has three basic
classifications of products; specifically, Outdoor, Industrial and Commercial.
The Outdoor products include floodlights, landscape lights, roadway lights and
poles, which are used to illuminate athletic and recreational fields, service
stations, outdoor display signs, parking lots, roadways and streets, security
areas, shopping centers and similar areas. In addition, a line of decorative
outdoor fixtures is sold for use in residences, parking lots, gardens and
walkways. The Industrial products include fixtures used to illuminate
factories, work spaces, and similar areas, including specialty requirements
such as paint rooms, clean rooms and warehouses. The Commercial products
include fluorescent, emergency and exit, and recessed and track fixtures which
are used for offices, schools, hospitals, retail stores, and similar
applications. The fixtures use high-intensity discharge lamps, such as
mercury-vapor, high-pressure sodium-vapor, and metal-halide lamps, as well as
quartz, fluorescent and incandescent lamps, all of which are purchased from
other sources. Hubbell Lighting also manufactures a broad range of track and
down lighting fixtures and accessories sold under the Marco name. These
products supplemented existing track and down lighting product lines developed
internally by Hubbell Lighting. Hubbell Lighting also has a line of Life
Safety products, fixtures and related components which are used in specialized
safety applications.
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Industrial Controls
Hubbell Industrial Controls, Inc. manufactures and sells a variety of
heavy-duty electrical control products which have broad application in the
control of industrial equipment and processes. These products range from
standard and specialized industrial control components to combinations of
components that control entire industrial manufacturing processes. Standard
products include motor speed controls, pendant-type push-button stations, power
and grounding resistors and overhead crane controls. Hubbell Industrial
Controls, Inc. also manufactures and sells a line of transfer switches used to
direct electrical supply from alternate sources and a line of fire pump control
products used in fire control systems.
Industrial controls are also manufactured and sold in the United Kingdom by
Hubbell, Ltd. Products sold by this subsidiary are used in motor control
applications and include fuse switches, contactors and solid state timers.
Special Application Products
In addition to its other products, Killark Electric Manufacturing Company
manufactures and sells weather proof and hazardous location products suitable
for explosion proof applications. These products consist of plugs and
receptacles, enclosed and gasketed HID and incandescent lighting fixtures, and
standard and custom configuration control stations.
Hazardous locations are those areas where a potential for explosion and fire
exists due to the presence of flammable gasses, vapors, dust or easily
ignitable fibers and include such places as refineries, petro-chemical plants,
grain processing areas and elevators.
Sales and Distribution of Low-Voltage Products
A majority of Hubbell's low-voltage products are stock items and are sold
through distributors, home centers and lighting showrooms. A portion of these
products, primarily industrial controls, are sold directly to the customer.
Special application products are sold primarily through electrical distributors
to contractors, industrial customers and original equipment manufacturers.
Hubbell maintains a sales organization to assist potential users with the
application of certain products to their specific requirements. Hubbell also
maintains regional offices in the United States which work with architects,
engineers, industrial designers, original equipment manufacturers and
electrical contractors for the design of electrical systems to meet the
specific requirements of industrial and commercial users.
Hubbell is also represented by sales representatives for its lighting fixtures,
and industrial controls product lines, as well as products of the Wiring Device
Division.
The sales of low-voltage products accounted for approximately 52% of Hubbell's
total revenue in 1993, 54% in 1992 and 55% in 1991.
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PRODUCTS USED IN HIGH-VOLTAGE APPLICATIONS
Insulated Wire and Cable
The Kerite Company manufactures and sells premium quality, high performance,
insulated electric power cable for application in critical circuits of electric
utilities and major industrials. This product line utilizes proprietary
insulation systems and unique designs to meet the increasingly demanding
specifications of its customers. Applications include nuclear and fossil fuel
generating plants, underground and submarine transmission and distribution
systems, petrochemical plants and mines. Kerite produces specially-designed
cable for supplying power to submersible pumps in oil wells. This cable is
designed to offer increased service life in the extreme compressive,
temperature and corrosive conditions encountered in these adverse environments.
The Kerite Company also manufactures accessories for splicing and terminating
cable ends.
Electrical Transmission and Distribution Products
The Ohio Brass Company manufactures a complete line of polymer insulators, and
high-voltage surge arresters used in the construction of electrical
transmission and distribution lines and substations. The Ohio Brass Company's
primary focus in this product area is its Hi*LiteXL and Veri*Lite polymer
insulator line and its DynaVar and Protecta*Lite surge arrester lines.
Electrical transmission products, primarily suspension insulators, are used in
the expansion and upgrading of electrical transmission capability.
High Voltage Test and Measurement Equipment
Acquired in November, 1992, Hipotronics, Inc. manufactures and sells a broad
line of high voltage test and measurement systems to test materials and
equipment used in the generation, transmission and distribution of electricity.
In addition, Hipotronics manufactures test equipment and high voltage power
supplies for use in electrical and electronic industries. Principal products
include AC/DC hipot testers and megohmmeters, cable fault location systems, oil
testers and DC hipots, impulse generators and digital measurement systems, AC
series resonant and corona detection systems, DC test sets and power supplies,
the Peschel variable transformer, voltage regulators, and motor and transformer
test sets.
Sales and Distribution of High-Voltage Products
Sales of high-voltage products are made through distributors and directly to
users such as electric utilities, mining operations, industrial firms, and
engineering and construction firms engaged in electric transmission projects.
Hipotronics' products are sold primarily by direct sales to its customers in
the United States and in foreign countries through its sales engineers,
independent sales representatives and its sales and service office in Germany.
While Hubbell believes its sales in this area are not materially dependent upon
any customer or group of customers, a decrease in purchases by public utilities
does affect this category.
The sale of high-voltage products accounted for approximately 16% of Hubbell's
total revenue in 1993 and 14% and 15% in 1992 and 1991, respectively.
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PRODUCTS NOT CLASSIFIED ON A VOLTAGE BASIS
Outlet Boxes, Enclosures and Fittings
Raco Inc. is a leading manufacturer of steel and plastic boxes used at outlets,
switch locations and junction points as well as a broad line of fittings for
the electrical industry, including rigid conduit fittings, EMT (thinwall)
fittings and other metal conduit fittings. Raco also has a complete electrical
nonmetallic family of products (ENT) including PVC conduit tubing, fittings and
enclosures.
The major markets for Raco Inc.'s products include industrial, commercial and
residential construction, the do-it-yourself market, the export market, and the
original equipment manufacturer market. Raco Inc.'s products are sold
primarily through distributors and in some retail and hardware outlets.
Hubbell-Bell, Inc. manufactures a variety of electrical box products, with an
emphasis on weather-resistant types suitable for outdoor application. The
weatherproof lines include a full assortment of boxes, covers, combination
devices, lampholders, and lever switches. Bell's products are sold primarily
through electrical and hardware distributors.
Wiegmann manufactures a full-line of fabricated steel enclosures such as
rainproof and dust-tight consoles and cabinets, telephone and transformer
cabinets and electronic rack enclosures. Wiegmann's products are primarily
sold through distributors to industrial customers and original equipment
manufacturers.
In addition to its other products, Hubbell Canada Inc. manufactures a line of
quality nonmetallic plastic switch and outlet boxes configured for the Canadian
residential construction market.
Killark Electric is a leading manufacturer of quality standard and special
application enclosures and fittings including hazardous location products for
use in installations such as chemical plants, pipelines, grain towers, coal
handling facilities and refineries. These products include switch boxes, cord
connectors, service entrance fittings, conduit bodies, fittings and cast
aluminum enclosures. Killark also is a major participant in the maintenance
and repair, commercial and industrial construction segments of the domestic
conduit and raceway fittings market. Killark products are sold primarily
through electrical distributors to contractors, industrial customers and
original equipment manufacturers.
Voice and Data Signal Processing Equipment
Pulse Communications, Inc. designs and manufactures a line of voice and data
signal processing equipment primarily for use by the telephone and
telecommunications industry. Customers of this product line include various
telecommunications companies, the Regional Bell Operating Companies,
independent telephone companies and specialized common carriers and companies
with private networks. Pulse Communications, Inc. also manufactures electronic
systems which monitor various conditions, such as telephone traffic levels or
the occurrence of certain events at one or more remote locations. The
information obtained is processed and appropriate corrective or alarm signals
are generated and transmitted back to a central station.
These products are sold primarily by direct sales to its customers in the
United States and in foreign countries through Pulse Communications, Inc.'s
sales personnel and sales representatives.
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Hubbell Premise Wiring, Inc. manufactures components used in telecommunications
applications for voice and data signals. Products include adapters and
outlets, quick connect jacks, connectorized cables, patch panels, baluns,
undercarpet cable and other components used in the processing, distribution,
and termination functions for local area networks (LANS) in commercial and
industrial buildings. These products are sold through direct sales and by
selected, independent telecommunications representatives.
Holding Devices
The Kellems Division manufactures a line of Kellems grips used to pull, support
and relieve stress in elongated items such as cables, electrical cords, hoses
and conduits. The grips are made of wire mesh in a range of sizes and
strengths to accommodate differing needs. The mesh part of the grip is
designed to tighten around the surface of the items under tension.
Kellems also makes a line of cord connectors designed to prevent electrical
conductors from pulling away from electrical terminals to which the conductors
are attached, and wire management products including flexible, non-metallic
conduit and fittings and non-metallic surface raceway products used in wiring
and cable harness installations. Products are manufactured at Hubbell's
facilities in Stonington, Connecticut; Pickering, Ontario, Canada; Kempston,
Bedfordshire, England; and Vega Baja, Puerto Rico. These products are sold
primarily through distributors.
The sale of products not classified on a voltage basis accounted for
approximately 32% of Hubbell's total revenue in 1993 and 32% in 1992 and 30% in
1991.
INFORMATION APPLICABLE TO ALL GENERAL CATEGORIES
International Operations
Hubbell Ltd. in the United Kingdom manufactures and sells fuse switches,
contactors, solid state timers, lighting fixtures, and selected wiring device
products.
Hubbell Canada Inc. and Hubbell de Mexico, S.A. de C.V. currently manufacture
and/or market wiring devices, lighting fixtures, grips, fittings, plastic
outlet boxes, hazardous location products and electrical transmission and
distribution products. Industrial Controls products are sold in Canada through
an independent sales agent.
Harvey Hubbell S.E. Asia Pte. Ltd. assembles and/or markets wiring devices,
lighting fixtures, hazardous location products, electrical transmission and
distribution products and cable.
Hubbell also manufactures electrical wiring devices and selected holding
devices in Aibonito, Puerto Rico, and Vega Baja, Puerto Rico. Hubbell also has
interests in various other international operations such as joint ventures in
Germany and Taiwan, and others which are not material to its business. Hubbell
also has sales offices in Malaysia, Indonesia, Germany, Hong Kong, Mexico,
South Korea and the Middle East.
Raw Materials
Principal raw materials used in the manufacture of Hubbell products include
steel, brass, copper, aluminum, bronze, plastics, phenolics, elastomers and
petrochemicals.
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Hubbell also purchases certain electrical and electronic components, including
solenoids, lighting ballasts, printed circuit boards, integrated circuit chips
and cord sets, from a number of suppliers.
Hubbell is not materially dependent upon any one supplier for raw materials
used in the manufacture of its products and equipment and, at the present time,
raw materials and components essential to its operation are in adequate supply.
Patents
Hubbell has approximately 450 active United States and foreign patents covering
many of its products, which expire at various times. While Hubbell deems these
patents to be of value, it does not consider its business to be dependent upon
patent protection. Hubbell is licensed under patents owned by others and
grants licenses under certain of its patents.
Working Capital
Hubbell maintains sufficient inventory to enable it to provide a high level of
service to its customers. The inventory levels, payment terms and return
policies are in accord with the general practices of the electrical products
industry and standard business procedures.
Backlog
Backlog of orders believed to be firm at December 31, 1993 and 1992 were
approximately $60,400,000 and $54,700,000, respectively. Most of the backlog
is expected to be shipped in the current year.
Although this backlog is important, the majority of Hubbell's revenues result
from sales of inventoried products or products that have short periods of
manufacture.
Competition
Hubbell experiences substantial competition in all categories of its business,
but does not compete with the same companies in all its product categories.
The number and size of competitors vary considerably depending on the product
line. Hubbell cannot specify with exactitude the number of competitors in each
product category or their relative market position. However, some of its
competitors are larger companies with substantial financial and other
resources.
Hubbell considers product performance, reliability, quality and technological
innovation as important factors relevant to all areas of its business and
considers its reputation as a manufacturer of quality products to be an
important factor in its business. In addition, product price and other factors
can affect Hubbell's ability to compete.
Environment
Compliance with Federal, State and local provisions regulating the discharge of
materials into the environment, or otherwise relating to the protection of the
environment, is not believed to have any material effect upon the financial
position or the competitive position of Hubbell.
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Employees
As of December 31, 1993, Hubbell had approximately 5,885 full-time employees,
including salaried and hourly personnel. Approximately 1,750 of Hubbell's
United States employees are represented by seven labor unions. Hubbell
considers its labor relations to be satisfactory.
Item 2. Properties
The following is a list of Hubbell's material manufacturing facilities,
classified by segment:
Approximate Floor
Location No. of Facilities Area In Sq. Ft.
-------- ----------------- ---------------
Low Voltage Segment Connecticut 2 492,600
Ohio 1 76,900
Puerto Rico 2 208,100 (1)
Tennessee 1 250,000 (2)
Virginia 1 321,300
High Voltage Segment Connecticut 1 438,000
New York 2 184,000
Ohio 1 85,000
South Carolina 1 190,000 (2)
Other Segment Connecticut 1 67,400
Illinois 1 223,100
Indiana 1 320,000
Missouri 1* 179,700
Pennsylvania 1 105,000
Virginia 1 138,000
Hubbell owns and occupies its corporate headquarters and executive office,
containing a total of approximately 85,000 square feet, on property located in
Orange, Connecticut. Bryant Electric leases its administrative headquarters
and engineering facility, containing a total of approximately 39,771 square
feet, in Milford Connecticut.
Hubbell and its subsidiaries own or lease warehouses and distribution centers
containing an aggregate of approximately 733,400 square feet. Hubbell believes
its manufacturing and warehousing facilities are adequate to carry on its
business activities.
Item 3. Legal Proceedings
There are no material pending legal proceedings to which Hubbell or any of its
subsidiaries is a party or of which any of their property is the subject, other
than ordinary and routine litigation incident to their business.
- ---------------------
(1) 69,100 square feet leased
(2) Leased
* Some products also are classified in the low voltage segment.
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Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of 1993.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
The Company's Class A and Class B common stocks are principally traded on the
New York Stock Exchange under the symbols "HUBA" and "HUBB". The following
tables provide information on market prices, dividends declared and number of
common shareholders:
Market Prices (Dollars Per Share) Common A Common B
- --------------------------------- -------- --------
Years Ended December 31, High Low High Low
- ------------------------ ---- --- ---- ---
1993-First quarter 55 1/2 50 7/8 58 5/8 52
1993-Second quarter 55 51 1/2 58 54 1/2
1993-Third quarter 54 49 1/4 57 1/4 50 7/8
1993-Fourth quarter 54 50 1/4 55 7/8 51 1/4
1992-First quarter 57 1/4 49 1/8 59 5/8 51 1/4
1992-Second quarter 52 3/4 46 3/4 55 7/8 49 1/2
1992-Third quarter 50 1/4 46 53 1/8 46 1/4
1992-Fourth quarter 54 48 7/8 55 7/8 50 1/8
Dividends Declared (Cents Per Share) Common A Common B
- ------------------------------------ -------- --------
Years Ended December 31, 1993 1992 1993 1992
- ------------------------ ---- ---- ---- ----
First quarter 40 39 40 39
Second quarter 41 40 41 40
Third quarter 41 40 41 40
Fourth quarter 41 40 41 40
Number of Common Shareholders
- -----------------------------
At December 31, 1993 1992 1991 1990 1989
- --------------- ---- ---- ---- ---- ----
Class A 1,405 1,464 1,523 1,539 1,621
Class B 5,628 5,555 5,438 5,513 5,569
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Item 6. Selected Financial Data
The following summary should be read in conjunction with the
consolidated financial statements and notes and Exhibit 11 contained herein
(Dollars in thousands, except per share amounts).
OPERATIONS, YEARS ENDED DECEMBER 31, 1993 1992 1991
- ------------------------------------ ---- ---- ----
Net sales $832,423 786,078 756,126
Gross profit $262,931 257,800 247,640
Restructuring charge $(50,000)* --- ---
Operating income $ 70,241 117,926 118,501
Provision for income taxes $ 15,188 36,588 38,821
Income before cumulative effect of change
in accounting principles $ 66,306* 94,090 90,597
Return on sales 8.0% 12.0% 12.0%
Return on common shareholders' average equity 12.1% 17.7% 18.3%
Return on average total capital 12.0% 17.6% 18.1%
Cumulative effect of change in accounting principles $ --- (16,506) ---
Net Income $ 66,306* 77,584 90,597
Earnings Per Share:
Income before cumulative effect of change
in accounting principles $ 2.10* 2.97 2.87
Cumulative effect of change in
accounting principles --- (0.52) ---
Net Income $ 2.10* 2.45 2.87
Cash dividends declared per common share $ 1.63 1.59 1.47
Additions to property, plant, and equipment $ 25,123 22,894 23,063
Depreciation and amortization $ 30,098 26,813 22,222
FINANCIAL POSITION, AT YEAR-END
- -------------------------------
Working capital $131,875 129,401 232,939
Current ratio 1.6 to 1 1.6 to 1 3.1 to 1
Property, plant and equipment (net) $154,621 153,339 147,615
Total assets $874,298 806,688 685,341
Long-term debt $ 2,700 2,700 8,100
Preferred stock --- --- ---
Common shareholders' equity:
Total $557,660 541,327 518,906
Per share $ 17.84 17.36 16.66
NUMBER OF EMPLOYEES, AT YEAR END 5,885 5,759 5,532
- --------------------------------
* In the fourth quarter of 1993, the Company recorded a restructuring charge
for consolidation of manufacturing and distribution operations and other
productivity programs which reduced net income by $31,000,000, $0.98 per
share. Excluding the restructuring charge, net earnings from operations
would have been $97,306,000, $3.08 per share.
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1990 1989 1988 1987 1986 1985 1984
---- ---- ---- ---- ---- ---- ----
719,509 668,765 614,237 581,087 558,810 521,136 467,133
232,060 218,384 206,629 195,915 182,229 171,406 148,357
--- --- --- --- --- --- ---
111,136 104,973 97,418 89,735 81,952 77,005 69,262
38,633 37,350 35,114 36,724 35,562 34,571 33,667
86,022 79,364 71,288 62,529 54,468 47,742 42,001
12.0% 11.9% 11.6% 10.8% 9.7% 9.2% 9.0%
19.2% 19.3% 19.1% 18.3% 17.7% 17.5% 17.1%
18.9% 19.1% 18.7% 17.9% 17.1% 16.8% 16.2%
--- --- --- --- --- --- ---
86,022 79,364 71,288 62,529 54,468 47,742 42,001
2.74 2.52 2.25 1.94 1.69 1.49 1.30
--- --- --- --- --- --- ---
2.74 2.52 2.25 1.94 1.69 1.49 1.30
1.31 1.12 .90 .80 .67 .61 .55
27,165 21,484 17,189 18,705 20,565 18,858 20,710
17,728 16,570 14,950 14,164 13,762 12,071 10,410
249,049 239,560 190,437 171,253 163,307 141,846 122,701
3.4 to 1 3.4 to 1 3.2 to 1 3.1 to 1 3.1 to 1 2.9 to 1 2.9 to 1
131,799 107,962 102,443 100,271 99,330 90,915 81,070
624,706 576,286 523,462 477,432 438,182 392,917 349,605
8,100 8,100 8,100 8,270 8,576 3,590 2,700
--- --- --- 2,793 6,152 14,606 22,889
468,733 427,818 392,530 354,443 324,376 280,907 246,262
15.11 13.80 12.56 11.37 10.44 9.43 8.56
5,546 5,320 5,159 5,211 5,603 5,766 5,170
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Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
Management views liquidity on the basis of the Company's ability to meet
operational needs, fund additional investments, including acquisitions, and
make dividend payments to shareholders.
At December 31, 1993, the Company's financial condition remained strong with
working capital of $131.9 million and a current ratio of 1.6 to 1. Cash and
temporary cash investments increased by $16.0 million primarily as a result of
increased cash generated by operations.
Net cash provided by operations increased due to higher sales and profitability
after adjusting for the impact of the non-cash restructuring charge recorded in
1993 and a reduction in the level of inventories and receivables. This decline
reflects the Company's aggressive management of inventory and receivables while
maintaining emphasis on continued improvement in order fill rates and cycle
times and overall customer service.
The level of net cash used in investing and financing activities in 1993 is
more in line with the Company's historic patterns. In 1992 as part of managing
its financial investment structure, the Company re-allocated funds from
temporary cash investments into longer-term securities with higher investment
yields and entered into unsecured short-term borrowings primarily to fund the
purchase of Hipotronics, Inc. At December 31, 1993 total borrowings,
consisting of notes payable of $91.1 million and long-term debt of $2.7
million, were 16.8% of shareholder equity.
Capital expenditures in 1993 increased slightly over 1992 as the Company
continued to invest in new machinery and equipment as part of the on-going
product development programs, as well as the continued emphasis on improvements
in operating efficiencies. Although no significant commitments had been made
at December 31, 1993, the Company anticipates that capital expenditures will be
between $40.0 million and $50.0 million annually during the next three years
reflecting the historic capital investment pattern and the capital investment
portion of the planned restructuring program. The Company believes that
currently available borrowing facilities, and its ability to increase its
credit lines if needed, combined with internally generated funds should be more
than sufficient to fund capital expenditures as well as the increased working
capital that would be required to accommodate a higher level of business
activity.
The Company actively seeks to expand by acquisition as well as through the
growth of its present businesses. While a significant acquisition may require
additional borrowings, the Company believes it would be able to obtain
financing based on its favorable historical earnings performance and strong
financial position.
As noted on page 37, the Company has entered into an agreement to purchase A.
B. Chance Industries, Inc. The transaction is subject to completion of certain
conditions under the agreement and regulatory approvals. The Company will pay
for the acquisition out of internally available funds and additional short term
borrowing of up to $40,000,000.
15
Page 15
RESULTS OF OPERATIONS
1993 Compared With 1992
Consolidated net sales increased 6% on improved sales through distributors and
home centers; continued growth at the Ohio Brass subsidiary; inclusion of
Hipotronics Inc. acquired in November 1992 and the E. M. Wiegmann & Co., Inc.
acquired in March 1993. These improvements were offset by lower activity at
the Pulse Communications subsidiary and foreign operations. In the fourth
quarter of 1993, the Company recorded a $50,000,000 pretax charge ($31,000,000
net of tax, or $.98 per share) for the estimated costs of a restructuring
program. The program includes the consolidation of all or a portion of several
manufacturing plants, a reduction in labor force of approximately 6%, the
reorganization of certain operations management and structure, and a
realignment of warehousing and product distribution capabilities. The
restructuring charge is approximately equally divided between personnel costs
(severance and postemployment benefits), plant and equipment relocation and
costs associated with disposal of plant and equipment. At the end of 1993,
$7,250,000 has been expended with an additional $14,000,000 anticipated in 1994
with the balance to be expended approximately equally in 1995 and 1996. After
an approximate three year implementation the annual savings and cost avoidance
could be as much as $25,000,000. Excluding the impact of the restructuring
charge, segment total operating income increased 2% as a large portion of the
sales growth was in lower margin products combined with strong price
competition during this period of slow economic growth. Additionally, the
Company has continued to increase expenditures for product and market
development, as well as, customer service enhancements.
The Low Voltage Segment sales for the year increased 2% on higher shipments of
fluorescent lighting products and improved demand for products in the
commercial and industrial markets off-setting weakness in overseas markets.
Segment operating income before restructuring charges increased 2% in line with
the growth in sales.
Sales of the High Voltage Segment increased by more than 23% from the inclusion
of Hipotronics, Inc. and higher shipments of insulators and surge arrestors.
Sales of power cable were essentially even with last year due to the depressed
worldwide market conditions for cable. Segment operating income before the
restructuring charge increased 35% on higher sales volume and improved
operating rates.
Other Industry Segment net sales increased by more than 4% due to the
acquisition of E. M. Wiegmann & Co., Inc. in March, 1993, and increased sales
of components for wire management, voice and data signals, which off-set the
reduced shipments of telecommunication products and equipment. Segment
operating income prior to the restructuring charge decreased 10% reflecting the
reduced shipment of higher marginal products and increased expenditures for
development of the next generation of telecommunication products.
General corporate expenses were slightly lower than last year due to continued
productivity improvements. Investment income increased 10% on a higher level
of funds invested in long-term securities. The higher level of interest
expense is due to the utilization of short-term borrowings by the Company. The
increase in other expenses reflects the charges for the establishment of a
corporate owned life insurance program. The effective tax rate was 19% in
1993, 28% in 1992, and 30% in 1991. The decline in the effective tax rate
reflects an increased portion of earnings from Puerto Rico operations and
continued emphasis on generating tax-exempt income combined with the tax
effect of the restructuring charge recorded in 1993. The recent tax law
changes may in future years reduce the tax benefit arising from the Company's
Puerto Rico operations.
16
Page 16
1992 Compared With 1991
Consolidated net sales increased by 4% due to the strong sales growth at the
Pulsecom and Ohio Brass subsidiaries; moderate increases in other operating
units due to the gradual but mixed economic recovery; and inclusion of Bryant
Electric, Inc., which was acquired in March 1991 and Hipotronics, Inc., which
was acquired in November 1992. These improvements were offset by the
continuing soft demand for power cable and the disposal of the Hermetic
Refrigeration operation in November 1991. Segment total operating income was
essentially even with last year as the modest sales growth was offset by
increased expenditures to enhance sales and marketing programs, continued
product development programs and strong price competition during this period of
slow economic growth. Income before the cumulative effect of the change in
accounting principles and the related earnings per share increased 4% due to
the higher level of investment income and a lower effective tax rate. The
Company recorded a one-time, non-cash charge of $16,506,000 net of tax or $0.52
per share for the cumulative effect on prior years of the change in accounting
principles due to the adoption of the Statements of Financial Standards (SFAS)
No. 106 - Employers' Accounting for Postretirement Benefits Other than
Pensions, No. 109 - Accounting for Income Taxes and No. 112 - Employers'
Accounting for Postemployment Benefits. Net income, as adjusted for these
changes was $77,584,000 or $2.45 per share. Based on the restructuring of
benefit programs which began in 1989, the impact on the Company's financial
position was not significant (3% of shareholder's equity) and the required
on-going annual expense will not have a material effect on operating results.
Low Voltage Segment sales for the year increased by 2% on a higher level of
shipments of industrial wiring devices and fluorescent lighting products
combined with the inclusion of Bryant Electric for the full year. This
improvement was offset by highly competitive market conditions and the disposal
of the Hermetic Refrigeration operations in November 1991. Operating income
increased by 1% reflecting the increased sales, especially of lower margin
lighting products, and market introduction costs for new products which were
approximately offset by the effect of the acquisition of Bryant Electric and
disposal of Hermetic Refrigeration.
Sales of High Voltage products were 3% lower than last year due to the
depressed worldwide market for power cable products which negated the higher
sales of insulators and surge arresters and inclusion of Hipotronics, Inc.
Operating income was more than 20% below 1991 due to the impact from the cable
operation of maintaining marketing programs and reduced manufacturing volumes.
Inflation
In times of inflationary cost increases, the Company has historically been able
to maintain its profitability by improvements in operating methods and cost
recovery through price increases. In large measure the reported operating
results have absorbed the effects of inflation since the Company's predominant
use of the LIFO method of inventory accounting generally has the effect of
charging operating results with costs (except for depreciation) that contain
current price levels.
17
Page 17
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Hubbell Incorporated
In our opinion, the consolidated financial statements listed in the index on
page 44 present fairly, in all material respects, the financial position of
Hubbell Incorporated and its subsidiaries at December 31, 1993 and 1992, and
the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1993, 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.
As discussed in the Statement of Accounting Policies accompanying the
consolidated financial statements, the Company changed its method of accounting
for postretirement benefits other than pensions, for postemployment benefits,
and for income taxes in 1992.
Price Waterhouse
Stamford, Connecticut
January 19, 1994, except as to the subsequent
event note on page 37 which is as of
March 16, 1994.
18
Page 18
Hubbell Incorporated and Subsidiaries
CONSOLIDATED BALANCE SHEET
At December 31, (Dollars in thousands)
ASSETS 1993 1992
- ------ ---- ----
CURRENT ASSETS
Cash and temporary cash investments $ 44,231 $ 28,255
Accounts receivable less allowances of $3,768
in 1993 and $3,340 in 1992 109,987 115,639
Inventories 181,699 177,910
Prepaid taxes 15,875 4,954
Other 10,289 3,109
-------- --------
Total current assets 362,081 329,867
PROPERTY, PLANT, AND EQUIPMENT, AT COST
Land 13,073 12,892
Buildings 86,391 86,670
Machinery and equipment 237,203 216,002
-------- --------
336,667 315,564
-------- --------
Less-Accumulated Depreciation 182,046 162,225
-------- --------
154,621 153,339
-------- --------
OTHER ASSETS
Investments 245,081 219,334
Purchase price in excess of net assets of
companies acquired, less accumulated amortization
of $8,538 in 1993 and $6,779 in 1992 66,522 59,783
Property held as investment 7,794 7,257
Other 38,199 37,108
-------- --------
357,596 323,482
-------- --------
$874,298 $806,688
======== ========
See notes to consolidated financial statements.
19
Page 19
Hubbell Incorporated and Subsidiaries
CONSOLIDATED BALANCE SHEET
At December 31, (Dollars in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES 1993 1992
---- ----
Notes payable $ 91,100 $ 73,800
Accounts payable 20,964 23,417
Accrued salaries, wages and employee benefits 20,215 20,556
Accrued income taxes 35,617 33,204
Dividends payable 12,816 12,474
Accrued restructuring charge 14,000 ---
Other accrued liabilities 35,494 37,015
--------- ---------
Total current liabilities 230,206 200,466
--------- ---------
LONG-TERM DEBT 2,700 2,700
--------- ---------
OTHER NON-CURRENT LIABILITIES 79,160 47,363
--------- ---------
DEFERRED INCOME TAXES 4,572 14,832
--------- ---------
COMMON SHAREHOLDERS' EQUITY
Common Stock, par value $.01
Class A - authorized 50,000,000 shares, outstanding 59 59
5,875,748 and 5,855,095 shares
Class B - authorized 150,000,000 shares, outstanding 254 253
25,382,793 and 25,329,453 shares
Additional paid-in capital 358,219 356,351
Retained earnings 203,787 188,385
Cumulative translation adjustments (4,659) (3,721)
--------- ---------
Total common shareholders' equity 557,660 541,327
--------- ---------
$874,298 $806,688
========= =========
See notes to consolidated financial statements.
20
Page 20
Hubbell Incorporated and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands, except per share amounts)
Years Ended December 31, 1993 1992 1991
- ------------------------ ------ ------ ------
NET SALES $832,423 $786,078 $756,126
Cost of goods sold 569,492 528,278 508,486
--------- -------- ---------
GROSS PROFIT 262,931 257,800 247,640
Restructuring Charge 50,000 --- ---
Selling & administrative expenses 142,690 139,874 129,139
--------- -------- ---------
OPERATING INCOME 70,241 117,926 118,501
--------- -------- ---------
OTHER INCOME (EXPENSE):
Investment income 15,559 14,099 12,341
Interest expense (3,386) (702) (632)
Other income (expense), net (920) (645) (792)
--------- -------- ---------
TOTAL OTHER INCOME, NET 11,253 12,752 10,917
--------- -------- ---------
INCOME BEFORE INCOME TAXES 81,494 130,678 129,418
Provision for income taxes 15,188 36,588 38,821
--------- -------- ---------
Income before cumulative effect of change
in accounting principles 66,306 94,090 90,597
Cumulative effect of change in
accounting principles --- (16,506) ---
--------- -------- ---------
NET INCOME $ 66,306 $ 77,584 $ 90,597
========= ========= =========
EARNINGS PER SHARE:
Income before cumulative effect of change
in accounting principles $ 2.10 $ 2.97 $ 2.87
Cumulative effect of change in
accounting principles --- (0.52) ---
Net income $ 2.10 $ 2.45 $ 2.87
See notes to consolidated financial statements.
21
Page 21
Hubbell Incorporated and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
Years Ended December 31, 1993 1992 1991
- ------------------------ ---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 66,306 $ 77,584 $ 90,597
Cumulative effect of change in accounting principles --- 16,506 ---
Restructuring charge 42,750 --- ---
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 30,098 26,813 22,222
Deferred income taxes (21,181) (3,191) 394
Changes in assets and liabilities, net of
the effects of business acquisitions:
(Increase) Decrease in accounts receivable 8,937 (15,434) 2,007
(Increase) Decrease in inventories 3,528 (20,968) 9,254
(Increase) Decrease in other current assets (7,180) 679 1,131
Increase (Decrease) in current liabilities
(excluding dividends payable and short-term borrowing) (8,074) 7,621 3,061
(Increase) Decrease in other, net 3,268 (4,413) 627
--------- --------- ---------
Net cash provided by operating activities 118,452 85,197 129,293
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of non-current investments (41,303) (103,876) (48,531)
Sale of non-current investments 16,977 3,483 24,794
Acquisition of businesses (18,319) (40,000) (52,937)
Additions to property, plant and equipment (25,123) (22,894) (23,063)
Other, net (3,315) (2,399) 432
--------- --------- ---------
Net cash used in investing activities (71,083) (165,686) (99,305)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Short-term borrowing 17,300 73,800 ---
Payment of dividends (50,562) (48,680) (44,468)
Redemption of industrial development bond --- (5,400) ---
Acquisition of treasury shares --- (4,743) ---
Exercise of stock options 1,869 2,185 2,825
Other net --- (32) ---
--------- --------- ---------
Net cash provided from (used in) financing activities (31,393) 17,130 (41,643)
--------- --------- ---------
INCREASE (DECREASE) IN CASH AND TEMPORARY 15,976 (63,359) (11,655)
CASH INVESTMENTS
CASH AND TEMPORARY CASH INVESTMENTS
Beginning of period 28,255 91,614 103,269
--------- --------- ---------
End of period $ 44,231 $ 28,255 $ 91,614
========= ========= =========
See notes to consolidated financial statements.
22
Page 22
Hubbell Incorporated and Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Dollars in thousands, except per share amounts)
Class A Class B Additional Cumulative
For the three years ended Common Common Paid-In Retained Translation
December 31, 1993 Stock Stock Capital Earnings Adjustments
- ----------------- ------ ------ -------- -------- -----------
BALANCE AT DECEMBER 31, 1990 $ 58 $ 237 $270,057 $201,460 $ (602)
Net Income 90,597
Exercise of stock options 1 1 5,567
Acquisition of treasury shares (2,742)
Cash dividends declared
($1.47 per share adjusted
for stock dividend) (45,631)
Stock dividend declared 15 86,027 (86,042)
Translation adjustments (97)
--------- -------- --------- --------- --------
BALANCE AT DECEMBER 31, 1991 $ 59 $ 253 $358,909 $160,384 $ (699)
Net Income 77,584
Exercise of stock options 1 1 7,080
Acquisition of treasury shares (1) (1) (9,638)
Cash dividends declared (49,583)
($1.59 per share)
Translation adjustments (3,022)
--------- -------- --------- --------- --------
BALANCE AT DECEMBER 31, 1992 $ 59 $ 253 $356,351 $188,385 $(3,721)
Net Income 66,306
Exercise of stock options 1 2,643
Acquisition of treasury shares (775)
Cash dividends declared (50,904)
($1.63 per share)
Translation adjustments (938)
--------- -------- --------- --------- --------
BALANCE AT DECEMBER 31, 1993 $ 59 $ 254 $358,219 $203,787 $(4,659)
========= ======== ========= ========= ========
See notes to consolidated financial statements
23
Page 23
Hubbell Incorporated and Subsidiaries
STATEMENT OF ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include all subsidiaries; all significant
inter-company balances and transactions have been eliminated. Certain
reclassifications, which were not significant, have been made in prior period
financial statements to conform to the 1993 presentation.
Foreign Currency Translation
The assets and liabilities of international subsidiaries are translated to U.S.
dollars at exchange rates in effect at the end of the year, and income and
expense items are translated at average rates of exchange in effect during the
year. The effects of exchange rate fluctuations on the translated amounts of
foreign currency assets and liabilities are included as translation adjustments
in shareholders' equity. Gains and losses from foreign currency transactions
are included in income of the period.
Cash and Temporary Cash Investments
Temporary cash investments consist of liquid investments with maturities of
three months or less when purchased. The carrying value of cash and temporary
cash investments approximates fair value because of their short maturities.
Inventories
Inventories are stated at the lower of cost or market. The cost of
substantially all domestic inventories, 82% of total inventory value, is
determined on the basis of the last-in, first-out (LIFO) method of inventory
accounting. The cost of foreign inventories and certain domestic inventories
is determined on the basis of the first-in, first-out (FIFO) method of
inventory accounting.
Property, Plant, and Equipment
Property, plant, and equipment are depreciated over their estimated useful
lives, principally using accelerated methods.
Purchase Price in Excess of Net Assets of Companies Acquired
The cost of companies acquired in excess of the amount assigned to net assets
is being amortized on a straight-line basis over a 40 year period.
Deferred Income Taxes
Deferred income taxes are recognized for the tax consequence of differences
between the financial statement carrying amounts and tax bases of assets and
liabilities by applying the currently enacted statutory tax rates. The effect
of a change in statutory tax rates is recognized in income in the period that
includes the enactment date. Federal income taxes have not been provided on
the undistributed earnings of the Company's international subsidiaries as the
Company has reinvested all of these earnings indefinitely.
24
Page 24
Retirement Benefits
The Company's policy is to fund pension costs within the ranges prescribed by
applicable regulations. In addition to providing pension benefits, in some
circumstances the Company provides health care and life insurance benefits for
retired employees. The Company's policy is to fund these benefits through
insurance premiums or as actual expenditures are made.
Earnings Per Share
Earnings per share is based on reported income and the weighted average number
of shares of common stock and equivalents outstanding.
Change in Accounting Principles
In 1992, the Company adopted Statement of Financial Accounting Standards (SFAS)
No. 106 - Employers' Accounting for Postretirement Benefits Other Than
Pensions, No. 109 - Accounting for Income Taxes and No. 112 - Employers'
Accounting for Postemployment Benefits. As part of adopting the new accounting
standards as of January 1, 1992, a one-time non-cash charge of $16,506,000 net
of tax or $0.52 per share was recorded. Also deferred taxes were recorded for
business acquisitions completed before January 1, 1992 which increased the
previously allocated purchased adjustments to inventories, property, plant and
equipment. The impact of these accounting changes on 1992 financial results
were not significant.
25
Page 25
Hubbell Incorporated and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Restructuring Charge
In the fourth quarter of 1993, the Company recorded a $50,000,000 pretax charge
($31,000,000 net of tax benefits, or $.98 per share) for the estimated costs of
a restructuring program. The program entails the consolidation of
manufacturing facilities, reduction in labor force and a realignment of
warehousing and distribution activities. The restructuring charge is
approximately equally divided between personnel costs (severance and
postemployment benefits), plant and equipment relocation, and costs associated
with disposal of plant and equipment. At December 31, 1993, the restructuring
accrual was $42,750,000 of which $14,000,000 is classified as a current
liability.
Acquisitions
In March 1993, the E. M. Wiegmann & Co., Inc. was acquired. Wiegmann
fabricates a wide range of cabinets, panels, consoles and other enclosures used
to mount and protect transformers, industrial controls, and wireway duct and
fittings. The total cost of the acquired business has been allocated on a
preliminary basis to current assets, property, plant and equipment, goodwill,
and other liabilities pending final appraisal.
In November 1992, Hipotronics, Inc., was acquired. Hipotronics, Inc.
manufactures high voltage test equipment which is sold to electric utility and
industrial companies in the United States and abroad.
In March 1991, the net assets and business of the Bryant Electric Division
(Bryant Electric) of the Westinghouse Electric Corporation were acquired.
Bryant Electric manufactures a line of high quality wiring devices
including plugs, connectors, receptacles, switches, lamp holders and wall
plates. In October 1991, the net assets and business of the Lexington Switch
and Controls Division, a manufacturer of transfer switches and fire pump
controls, were acquired from the Paulworth Corporation.
The acquisitions in 1993, 1992 and 1991 were for cash and were recorded under
the purchase method of accounting. Accordingly, the results of operations for
the acquired businesses have been included in the consolidated statement of
income only from their respective acquisition dates. If the businesses had
been acquired on the first day of 1991, unaudited consolidated net sales would
have been $836,902,000 in 1993, $822,832,000 in 1992, $808,159,000 in 1991, and
there would have been no material effect on reported earnings for the
respective years.
26
Page 26
Investments
Investments consist primarily of mortgage-backed securities and marketable
securities. Marketable equity securities are carried at the lower of aggregate
cost or market. Other investments are carried at cost with the purchase
premium or discount amortized over the estimated life of the security. Certain
portfolio securities that may be affected by changes in interest rates are
hedged with futures contracts for U.S. Treasury notes and bonds (at December
31, 1993, future contracts totaled $7,500,000). Market value gains and losses
on the futures contracts are recognized in income when the effects of the
related price changes in the value of the hedged securities are recognized.
The following table sets forth selected data with respect to the Company's long
term investments at December 31, 1993 (in thousands):
Number of Amount at which
Shares or Carried in
Principal Market Consolidated
Description Amount Cost Value Balance Sheet
- ----------- ------ -------- -------- --------------
Common and Preferred Stocks - $ 37,081 $ 37,081 $ 37,081
Government National Mortgage
Association Securities 46,725 47,321 49,481 47,321
Federal National Mortgage
Association Securities 96,402 98,029 99,195 98,029
Mortgage Backed Securities 45,306 51,204 51,363 51,204
U.S. Treasury Notes and
Municipal Bonds 7,490 10,060 10,056 10,060
Other - 1,386 1,386 1,386
-------- -------- --------
Total $245,081 $248,562 $245,081
======== ======== =========
Securities of any one individual issuer do not exceed 2% of total assets of the
Company.
Non-current marketable equity securities are carried at cost which approximates
market in 1993 and at cost $35,283,000 (market - $35,727,000) in 1992.
27
Page 27
Inventories
Inventories are classified as follows at December 31, (in thousands):
1993 1992
---- ----
Raw material $ 58,359 $ 61,179
Work-in-process 49,653 51,508
Finished goods 113,312 101,342
-------- --------
221,324 214,029
Excess of current production costs over LIFO cost basis 39,625 36,119
-------- --------
Total $181,699 $177,910
======== ========
The financial accounting basis for the LIFO inventories of acquired companies
exceeds the tax basis by approximately $28,500,000 at December 31, 1993.
Income Taxes
The following table sets forth selected data with respect to the Company's
income tax provisions for the years ended December 31, (in thousands):
1993 1992 1991
---- ---- ----
Income before income taxes and accumulative
effect of change in accounting principles:
United States $ 83,157 $127,596 $124,556
International (1,663) 3,082 4,862
--------- --------- ---------
Total $ 81,494 $130,678 $129,418
========= ========= =========
Provisions for income taxes:
Federal $ 32,080 $ 32,390 $ 30,727
State 4,837 6,056 5,824
International (548) 1,333 1,876
Deferred (21,181) (3,191) 394
--------- --------- ---------
Total $ 15,188 $ 36,588 $ 38,821
========= ========= =========
28
Page 28
Income Taxes (continued)
The principal items making up the deferred tax provisions are set forth in the
following table for the years ended December 31, (in thousands):
1993 1992 1991
---- ---- ----
Transactions of leasing subsidiary $ (686) $ (632) $ (386)
Restructuring reserve (16,245) --- ---
Depreciation (354) 1,233 1,944
Other, net (3,896) (3,792) (1,164)
---------- --------- ---------
Total $ (21,181) $ (3,191) $ 394
========== ========= =========
As discussed in the Change in Accounting Principles note, the Company adopted
SFAS No. 109 as of the beginning of the year 1992. The deferred tax provision
for 1991 was determined under prior accounting principles in effect at that
time and has not been restated for adoption of SFAS No. 109.
The components of the net deferred tax (asset) liability at December 31, (in
thousands) were as follows:
1993 1992
---- ----
Deferred tax assets:
Inventory $ 3,778 $ 3,566
Pensions 7,970 7,094
Postretirement and postemployment benefits 10,549 10,707
Accrued restructuring charge 16,245 ---
Accrued liabilities 21,996 20,939
Miscellaneous other 6,888 3,407
---------- ---------
Total deferred tax asset 67,426 45,713
---------- ---------
Deferred tax liabilities:
Property, plant, and equipment 18,360 18,755
Leasing subsidiary 20,096 20,782
LIFO inventories of acquired businesses 10,830 10,564
Miscellaneous other 6,837 5,490
---------- ---------
Total deferred tax liability 56,123 55,591
---------- ---------
Net deferred tax (asset) liability $(11,303) $ 9,878
========== =========
Deferred taxes are classified in the financial statements as a net short-term
deferred tax asset of $15,875,000 and a net long-term deferred tax liability of
$4,572,000.
At December 31, 1993, United States income taxes had not been provided on
approximately $15,600,000 of undistributed international earnings. Payments of
income taxes were $33,106,000 in 1993, $32,819,000 in 1992 and $34,200,000 in
1991.
29
Page 29
Income Taxes (continued)
The consolidated effective income tax rates varied from the United States
federal statutory income tax rate for the years ended December 31, as follows:
1993 1992 1991
---- ---- ----
Federal statutory income tax rate 35.0% 34.0% 34.0%
State income taxes, net of federal benefit 2.6 3.0 3.0
Partially tax-exempt income (5.7) (2.8) (2.3)
Non-taxable income from
Puerto Rico operations (11.1) (6.3) (6.2)
Other, net (2.2) 0.1 1.5
------ ------ ------
Consolidated effective income tax rate 18.6% 28.0% 30.0%
====== ====== ======
The decline in the consolidated effective income tax rate to 18.6% in 1993 is a
result of the decline in pre-tax income following the charge for restructuring.
The dollar amount of all items in the table above which reconcile the statutory
rate to the effective rate remained at relatively consistent levels for all
three years.
30
Page 30
Other Non-Current Liabilities
Other Non-Current Liabilities consists of the following at December 31, (in
thousands):
1993 1992
---- ----
Pensions $ 20,139 $ 16,935
Other postretirement benefits 21,006 21,177
Restructuring charge 28,750 ---
Other, net 9,265 9,251
-------- --------
Total $ 79,160 $ 47,363
======== ========
Pension Benefits
The Company and its subsidiaries have a number of non-contributory defined
benefit pension plans and defined contribution plans covering substantially all
employees. The pension plans provide pension benefits that are based on a
combination of years of service and either compensation levels or specified
dollar amounts.
The following table sets forth the components of pension cost for the years
ended December 31, (in thousands):
1993 1992 1991
---- ---- ----
Benefits earned $ 6,704 $ 6,126 $ 5,290
Increase in present value of
benefits earned in prior years 10,706 9,798 8,973
Actual return on plan assets (15,312) (10,576) (21,720)
Deferred gain or (loss) 4,560 792 12,488
Amortization of actuarial gains and
losses and prior service cost (294) 64 (991)
--------- --------- ---------
Net Pension Cost $ 6,364 $ 6,204 $ 4,000
========= ========= =========
ASSUMPTIONS USED IN DETERMINING PENSION COST:
Discount rate 8.0% 8.0% 8.5%
Long term rate of compensation increase 6.5% 6.5% 6.5%
Expected long-term rate of return
on plan assets 9.0% 9.0% 9.5%
Pension expense as a percent of payroll was 3.3% in 1993, 3.4% in 1992 and 2.4%
in 1991.
31
Page 31
Pension Benefits (continued)
The following table sets forth the retirement plans' status and the pension
liability recognized in the Company's balance sheet at December 31, (in
thousands):
Plans Where Assets Exceed Plans Where Accumulated
Accumulated Benefits Benefits Exceed Assets
-------------------- ----------------------
1993 1992 1993 1992
------ ------- ------ ------
ESTIMATED FUNDS REQUIRED TO PROVIDE FOR FUTURE
PAYMENT OF:
Benefits based on service to date and present
pay levels:
Vested $ 98,320 $ 79,746 $ 10,472 $ 14,177
Non-vested 7,439 7,600 1,045 1,096
-------- --------- ---------- ----------
Accumulated benefit obligation 105,759 87,346 11,517 15,273
Additional amounts related to projected pay increases 19,722 25,928 4,824 4,812
-------- --------- ---------- ----------
Projected benefit obligation 125,481 113,274 16,341 20,085
-------- --------- ---------- ----------
ASSETS AVAILABLE FOR BENEFITS:
Plan assets (market value) 143,793 124,597 0 5,694
Company assets (recorded liability) 7,578 6,054 13,995 12,711
-------- --------- ---------- ----------
Total Assets 151,371 130,651 13,995 18,405
-------- --------- ---------- ----------
ASSETS IN EXCESS OF (LESS THAN)
PROJECTED BENEFIT OBLIGATION $ 25,890 $ 17,377 $ (2,346) $ (1,680)
======== ========= ========== ==========
Consisting of:
Unrecognized net asset (obligation) at transition $ 5,811 $ 6,641 $ (75) $ (225)
Unrecognized actuarial gain (loss) since transition $ 20,381 $ 10,973 $ (2,271) $ (1,220)
Unrecognized prior service costs incurred
since transition $ (302) $ (237) $ 0 $ (235)
The projected benefit obligations were determined using discount rates of 7.5%
in 1993 and 8.0% in 1992 and assumed average long-term rate of compensation
increase of 5% in 1993 and 6.5% in 1992.
At December 31, 1993, approximately $70,800,000 of plan assets were invested in
common stocks, including Hubbell Incorporated common stock with a market value
of $8,600,000. The balance of plan assets are invested in short term money
market accounts, government and corporate bonds.
Postretirement Benefits Other Than Pensions
The Company and its subsidiaries have a number of health care and life
insurance benefit plans covering eligible employees who reached retirement age
while working for the Company, providing they retired prior to 1992. These
benefits were discontinued in 1991 for substantially all future retirees.
For retirees prior to 1992, some of the plans provide for retiree
contributions, which are periodically increased. The plans anticipate future
cost-sharing changes that are consistent with the Company's past practices.
The plans are funded either on a monthly premium basis or as benefits become
due.
At December 31, 1993, the recorded liability for providing these postretirement
benefits was based on a 7% discount rate and assumed health care cost trend
rate of 20.0% declining to 5.5% over fifteen years. The costs recognized for
providing these benefits in 1993, 1992, and 1991 were $1,300,000, $1,400,000,
and $1,800,000 respectively. The costs for 1993 and 1992 were primarily
interest while 1991 was determined under prior accounting pronouncements in
effect at that time and have not been restated for the adoption of SFAS No.
106.
32
Page 32
Debt
The following table sets forth the components of the Company's debt structure
at December 31, (in thousands):
1993 1992
------- -------
Notes Payable
Term Loan $ 75,000 $ 60,000
Revolving Credit 16,100 13,800
-------- --------
Total $ 91,100 $ 73,800
======== ========
Long Term Debt
Industrial Development Bonds, due 2001,
interest rate 11 1/4% $ 2,700 $ 2,700
======== ========
The term loan is due on November 25, 1994 and has a variable rate based on
LIBOR plus 0.25% which equalled 3.50% at December 31, 1993. The revolving
credit loan agreement matures on November 19, 1994 and may be extended based on
approval of the bank. The maximum amount available under the agreement is
$25,000,000 and carries a daily interest rate based on the bank's overnight
rate which was 3.46% at December 31, 1993. A fee of 0.1% is due on the average
daily unused portion of the credit agreement. Payments of interest and fees
were $3,280,000 in 1993.
As part of the borrowing agreements, the Company is required to maintain a
minimum shareholder equity of $400,000,000 and can not have total debt of more
than $250,000,000. The Company is in compliance with the terms and conditions
under the borrowing agreements.
Leases
Total rental expense under operating leases was $5,600,000 in 1993, $6,600,000
in 1992 and $6,800,000 in 1991.
The minimum annual rentals on non-cancelable, long-term, operating leases in
effect at December 31, 1993 will approximate $1,500,000 in 1994, $1,200,000 in
1995, and will decline thereafter.
Research, Development and Engineering
Expenses for new product development and ongoing improvement of existing
products were $15,400,000 in 1993, $13,800,000 in 1992, and $8,500,000 in 1991.
Expenses in 1993 included an increase in expenditures for the development of
the next generation of telecommunication products.
Concentration of Credit Risks
Financial instruments which potentially subject the Company to concentration of
credit risks consist of trade receivables and temporary cash investments. The
Company grants credit terms in the normal course of business to its customers.
Due to the diversity of its product segments, the Company has a diverse
customer base including electrical distributors and wholesalers, electric
utilities, equipment manufacturers, electrical contractors, retail and hardware
outlets. As part of its ongoing procedures, the Company monitors the credit
worthiness of its customers. Bad debt write-offs have historically been
minimal. The Company places its temporary cash investments with financial
institutions and limits the amount of exposure to any one institution.
33
Page 33
Capital Stock
Share activity in the Company's preferred and common stocks is set forth below
for the three years ended December 31, 1993:
Preferred Stock Common Stock
--------------- ------------
Class A Class B
---------- -----------
OUTSTANDING AT DECEMBER 31, 1990 --- 5,840,139 23,690,755
Exercise of stock options 67,278 122,554
Acquisition/Issuance of treasury shares (15,577) (32,600)
Stock dividend declared --- 1,480,613
---------- --------- -----------
OUTSTANDING AT DECEMBER 31, 1991 --- 5,891,840 25,261,322
Exercise of stock options 116,211 104,984
Acquisition/Issuance of treasury shares (152,956) (36,853)
---------- ---------- -----------
OUTSTANDING AT DECEMBER 31, 1992 --- 5,855,095 25,329,453
Exercise of stock options 22,669 65,216
Acquisition/Issuance of treasury shares (2,016) (11,876)
---------- -----------
OUTSTANDING AT DECEMBER 31, 1993 --- 5,875,748 25,382,793
=========== ========= ===========
Shares held in Treasury at December 31, 1993: Class A Common - 1,672,968; Class
B Common - 1,920,620. Voting rights per share: Class A Common - twenty; Class
B Common - one. In addition, the Company has 5,891,097 authorized shares of
preferred stock; none are outstanding.
The Company has a Shareholder Rights Plan under which holders of Class A Common
Stock have Class A Rights and holders of Class B Common Stock have Class B
Rights. These Rights become exercisable after a specified period of time only
if a person or group of affiliated persons acquires beneficial ownership of 20
percent or more of the outstanding Class A Common Stock of the Company or
announces or commences a tender or exchange offer that would result in the
offeror acquiring beneficial ownership of 30 percent or more of the outstanding
Class A Common Stock of the Company. Once exercisable, the Rights would entitle
their registered holders to purchase, for each common share held, one share of
the Company's Class A Common Stock or Class B Common Stock, as the case may be,
at a price of $103.66 per share, subject to adjustment to prevent dilution.
Upon the occurrence of certain events or transactions specified in the Rights
Agreement, a holder of Rights applicable to one share is entitled to receive
for an exercise price of $103.66 per share owned a number of shares of the
Company's Class A Common Stock or Class B Common Stock, as the case may be, or
an acquiring corporation's common stock, having a market value equal to twice
the exercise price. The Rights may be redeemed by the Company for one cent per
Right prior to the tenth day after a person or group of affiliated persons has
acquired 20 percent or more of the outstanding Class A Common Stock of the
Company. The Rights expire on December 31, 1998, unless earlier redeemed by
the Company.
Shares of common stock were reserved at December 31, 1993 as follows:
Exercise of stock purchase rights 31,258,541
Exercise of outstanding stock options 1,746,565
Future grant of stock options 587,759
-----------
Total (Class A, 6,507,104; Class B, 27,085,761 ) 33,592,865
===========
34
Page 34
Stock Options
The Company has granted to officers and key employees options to purchase the
Company's Class A and Class B Common Stock and the Company may grant to
officers and key employees options to purchase the Company's Class B Common
Stock at not less than 85% of market prices on the date of grant. Stock option
activity for the three years ended December 31, 1993 is set forth below:
Number Option price
of shares per share
--------- ---------------
OUTSTANDING AT DECEMBER 31, 1990 1,364,433 $ 7.28 - $40.82
Granted 295,155 $49.11
Exercised (199,324) $ 7.28 - $35.98
Canceled or expired (28,795) $14.08 - $40.59
-----------
OUTSTANDING AT DECEMBER 31, 1991 1,431,469 $12.36 - $49.11
Granted 334,000 $56.69
Exercised (221,195) $12.36 - $40.59
Canceled or expired (15,318) $40.39 - $49.11
-----------
OUTSTANDING AT DECEMBER 31, 1992 1,528,956 $12.90 - $49.11
Granted 306,100 $52.81
Exercised (87,939) $12.90 - $49.11
Canceled or expired (552) $40.59
-----------
OUTSTANDING AT DECEMBER 31, 1993 1,746,565 $13.99 - $56.69
===========
Options for the purchase of 1,217,687 shares were exercisable at December 31,
1993, at prices ranging from $13.99 to $56.69 per share.
35
Page 35
Industry Segment and Geographic Information
The Company's business is the manufacture and sale of electrical and electronic
products. For better assessment, operations are reported in three segments as
follows:
Low Voltage products are in the range of less than 600 volts, are sold
principally to distributors and represent stock items. At December 31, 1993,
this segment consisted of standard and special application wiring device
products, lighting fixtures and low voltage industrial controls.
High Voltage products are in the more than 600 volt range, are generally sold
directly to the user and represent products made to customer's order. At
December 31, 1993, this segment comprised test and measurement equipment, wire
and cable, insulators and surge arresters.
The Other segment consists of products not classified on a voltage basis. At
December 31, 1993, this segment included standard and special application
cabinets and enclosures, fittings, switch and outlet boxes, wire management
components and systems, data transmission and telecommunications equipment, and
components for voice and data signals.
Net sales comprise sales to unaffiliated customers - intersegment and
inter-area sales are immaterial.
Segment operating income consists of net sales less operating expenses.
General corporate expenses, interest expense, and other income, net have not
been allocated to segments.
General corporate assets not allocated to segments are principally cash and
investments.
Financial information by industry segment and geographic area for the three
years ended December 31, 1993 is summarized below (in thousands):
INDUSTRY SEGMENT 1993 1992 1991
---- ---- ----
NET SALES:
Low Voltage $431,974 $422,585 $412,699
High Voltage 134,195 108,651 112,367
Other 266,254 254,842 231,060
--------- --------- ---------
Total $832,423 $786,078 $756,126
========= ========= =========
OPERATING INCOME:
Low Voltage $ 83,835 $ 81,803 $ 80,838
Restructuring Charge (28,300) - -
High Voltage 15,388 11,391 14,640
Restructuring Charge (3,100) - -
Other 35,049 39,058 37,415
Restructuring Charge (18,600) - -
--------- --------- ---------
Segment Total 84,272 132,252 132,893
General corporate expenses (14,031) (14,326) (14,392)
Interest expense (3,386) (702) (632)
Investment and other income, net 14,639 13,454 11,549
--------- --------- ---------
Income before income taxes $ 81,494 $130,678 $129,418
========= ========= =========
36
Page 36
Financial Information (continued)
1993 1992 1991
---- ---- ----
ASSETS:
Low Voltage $246,937 $245,960 $227,800
High Voltage 109,205 112,405 55,297
Other 156,757 148,372 125,716
General corporate 361,399 299,951 276,528
--------- --------- ---------
Total $874,298 $806,688 $685,341
========= ========= =========
CAPITAL EXPENDITURES:
Low Voltage $ 8,464 $ 10,481 $ 11,164
High Voltage 8,657 4,359 2,976
Other 6,397 6,747 7,094
General corporate 1,605 1,307 1,829
--------- --------- ---------
Total $ 25,123 $ 22,894 $ 23,063
========= ========= =========
DEPRECIATION AND AMORTIZATION:
Low Voltage $ 15,968 $ 15,245 $ 12,023
High Voltage 4,885 3,753 3,699
Other 7,851 6,466 5,322
General corporate 1,394 1,349 1,178
--------- --------- ---------
Total $ 30,098 $ 26,813 $ 22,222
========= ========= =========
GEOGRAPHIC AREA
NET SALES:
United States $788,708 $742,490 $709,419
International 43,715 43,588 46,707
--------- --------- ---------
Total $832,423 $786,078 $756,126
========= ========= =========
OPERATING INCOME:
United States 132,150 $126,965 $126,080
Restructuring (49,100) --- ---
International 2,122 5,287 6,813
Restructuring (900) --- ---
--------- --------- ---------
Total $ 84,272 $132,252 $132,893
========= ========= =========
ASSETS:
United States $839,853 $774,682 $646,733
International 34,445 32,006 38,608
--------- --------- ---------
Total $874,298 $806,688 $685,341
========= ========= =========
Export sales to unaffiliated customers were $37,500,000 in 1993, $26,500,000 in
1992, and $21,900,000 in 1991.
Net assets of international subsidiaries were 4% of the consolidated total in
1993, 4% in 1992, and 6% in 1991.
37
Page 37
Subsequent Event
On March 16, 1994, the Company announced that it had entered into an agreement
to purchase A. B. Chance Industries, Inc. Chance manufactures electrical
apparatus (overhead and underground distribution switches, fuses, contacts,
enclosures and sectionalizers); anchors; hardware, insulators (porcelain and
polymer); and hot-line tools and other safety equipment. Under terms of the
agreement the Company will purchase all the outstanding capital stock of Chance
for $41,135,000 and retire Chance's existing debt of $66,865,000. The
transaction is subject to completion of certain conditions under the agreement
and obtaining of regulatory approvals.
Quarterly Financial Data (Unaudited)
The table below sets forth summarized quarterly financial data for the years
ended December 31, 1993 and 1992 (in thousands, except per share amounts):
First Second Third Fourth
1993 Quarter Quarter Quarter Quarter
- ---- ------- ------- ------- -------
Net Sales $ 198,017 $211,261 $211,464 $ 211,681
Gross Profit $ 63,727 $ 66,210 $ 64,581 $ 68,413
Restructuring Charge --- --- --- $ (50,000)
Net Income $ 24,025 $ 25,010 $ 23,388 $ (6,117)
Earnings Per Share $ 0.76 $ 0.79 $ 0.74 $ (0.19)
1992
- ----
Net Sales $ 187,737 $195,426 $202,330 $ 200,585
Gross Profit $ 62,848 $ 64,954 $ 62,614 $ 67,384
Income before cumulative effect of
change in accounting principles $ 23,596 $ 24,403 $ 22,732 $ 23,359
Cumulative effect of change in
accounting principles $ (16,506) --- --- ---
Net Income $ 7,090 $ 24,403 $ 22,732 $ 23,359
Earnings Per Share:
Income before cumulative effect of
change in accounting principles $ 0.74 $ 0.77 $ 0.72 $ 0.74
Cumulative effect of change in
accounting principles $ (0.52) --- --- ---
Net Income $ 0.22 $ 0.77 $ 0.72 $ 0.74
38
Page 38
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant (1)
Information relative to Executive Officers appears on Page 41 of
this report.
Item 11. Executive Compensation (1)
Item 12. Security Ownership of Certain Beneficial Owners and Management
(1)
Item 13. Certain Relationships and Related Transactions (1)
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
1. Financial Statement and Schedules
Financial statement and schedules listed in the Index to Financial Statements
and Schedules appearing on Page 44 are filed as part of this Annual Report on
Form 10-K.
2. Exhibits
Number Description
3a Articles of Incorporation, as amended on May 10, 1991. Exhibit
3a of the registrant's report on (i) Form 10-K for the year
1980, filed on March 16, 1981 (containing the Articles of
Incorporation), (ii) Form 10-K for the year 1986 filed on March
26, 1987, (iii) Form 10-K for the year 1987 filed on March 25,
1988, (iv) Form 10-Q for the quarter ended June 30, 1990 filed
on August 6, 1990, and (v) Form 10-K for the year 1991 filed on
March 24, 1992 are herein incorporated by reference.
3b By-Laws, Hubbell Incorporated, as amended on December 12, 1989.
Exhibit 3b of the registrant's report on Form 10-K for the year
1989, filed on March 26, 1990, is incorporated by reference.
3c Rights Agreement, dated as of December 13, 1988, between Hubbell
Incorporated and Manufacturers Hanover Trust Company (now known
as Chemical Bank) as Rights Agent. Registrant's Form 8-A, dated
December 27, 1988, and filed on December 29, 1988, is
incorporated by reference.
- ----------------
(1) The definitive proxy statement for the annual meeting of shareholders to
be held on May 2, 1994, filed with the Commission on March 25, 1994,
pursuant to Regulation 14A, is incorporated herein by reference.
39
Page 39
Exhibits - Continued
Number Description
4 Loan Agreement dated as of June 1, 1981, between the Connecticut
Development Authority and Harvey Hubbell, Incorporated. Exhibit
4c of the registrant's report on Form 10-K for the year 1981,
filed on March 29, 1982, is incorporated herein by reference.
10a+ Hubbell Incorporated Supplemental Executive Retirement Plan, as
amended and restated effective May 1, 1993. Exhibit 10a of the
registrant's report on Form 10-Q for the second quarter, 1993,
filed on August 12, 1993, is incorporated by reference.
10b(1)+ Hubbell Incorporated 1973 Stock Option Plan for Key Employees,
as amended and restated effective September 12, 1991. Exhibit
10b(1) of the registrant's report on Form 10-Q for the third
quarter, 1991, filed on November 8, 1991, is incorporated by
reference.
10c+ Description of the Hubbell Incorporated, Post Retirement Death
Benefit Plan for Participants in the Supplemental Executive
Retirement Plan, as emended effective May 1, 1993. Exhibit 10c
of the registrant's report on Form 10-Q for the second quarter,
1993, filed on August 12, 1993, is incorporated herein by
reference.
10f Hubbell Incorporated Deferred Compensation Plan for Directors,
as amended and restated effective June 20, 1991. Exhibit 10f of
the registrant's report on Form 10-Q for the second quarter,
1991, filed on August 7, 1991, is incorporated by reference.
10g*+ Hubbell Incorporated Incentive Compensation Plan, as amended and
restated effective December 15, 1993.
10h Hubbell Incorporated Key Man Supplemental Medical Insurance, as
amended and restated effective December 9, 1986. Exhibit 10h
of the registrant's report on Form 10-K for the year 1987, filed
on March 25, 1988, is incorporated by reference.
10i Hubbell Incorporated Retirement Plan for Directors, as amended
and restated effective March 13, 1990. Exhibit 10i of the
registrant's report on Form 10-K for the year 1989, filed on
March 26, 1990, is incorporated by reference.
10l+ Employment Agreement, dated March 28, 1989 (effective January 1,
1989), between Hubbell Incorporated and G. Jackson Ratcliffe,
Chairman of the Board, President and Chief Executive Officer.
Exhibit 10l of the registrant's report on Form 10-K for the year
1988, filed on March 29, 1989, is incorporated by reference.
- -------------------
*Filed hereunder
+This exhibit constitutes a management contract, compensatory plan, or
arrangement
40
Page 40
Exhibits - Continued
Number Description
10m+ Employment Agreement, dated March 28, 1989 (effective January 1,
1989), between Hubbell Incorporated and Vincent R. Petrecca,
Executive Vice President. Exhibit 10m of the registrant's
report on Form 10-K for the year 1988, filed on March 29, 1989,
is incorporated by reference.
10n+ Employment Agreement, dated March 28, 1989 (effective January 1,
1989), between Hubbell Incorporated and Harry B. Rowell, Jr.,
Executive Vice President. Exhibit 10n of the registrant's
report on Form 10-K for the year 1988, filed on March 29, 1989,
is incorporated by reference.
10o+ Hubbell Incorporated Policy for Providing Severance Payments to
Key Managers, as amended and restated effective September 9,
1993. Exhibit 10o of the registrant's report on Form 10-Q for
the third quarter, 1993, filed on November 10, 1993, is
incorporated by reference.
11 Computation of earnings per share.
21 Listing of significant subsidiaries.
3. Reports on Form 8-K
There were no reports on Form 8-K filed for the three months
ended December 31, 1993.
- -----------------
+This exhibit constitutes a management contract, compensatory plan, or
arrangement
41
Page 41
Executive Officers of the Registrant
------------------------------------
Name Age(1) Present Position Business Experience
G. Jackson Ratcliffe 57 Chairman of the Board, President President and Chief Executive Officer since
and Chief Executive Officer January 1, 1988; Chairman of the Board since 1987;
Executive Vice President - Administration 1983-1987;
Senior Vice President-Finance and Law 1980-1983;
Vice President, General Counsel and Secretary
1974-1980.
Vincent R. Petrecca 53 Executive Vice President Present position since January 1, 1988; Group Vice
President 1984-1987; Vice President and General
Manager of the Wiring Device Division 1981-1984;
Vice President and General Manager of the Lighting
Division 1976-1981.
Harry B. Rowell, Jr. 52 Executive Vice President Present position since January 1, 1988; Group Vice
President 1985-1987; Vice President Corporate
Development and Planning 1979-1985.
Thomas H. Pluff 46 Group Vice President Present position in March 1989; Group Vice President
- Burndy Corp. 1986-1989; Vice President, General
Manager Electrical Group, Burndy Corp. 1982 - 1985.
Richard W. Davies 47 General Counsel and Secretary Present position in 1987; Secretary since 1982;
Assistant Secretary 1980-1982; Assistant General
Counsel 1974-1987.
James H. Biggart, Jr. 41 Treasurer Present position in 1987; Assistant Treasurer
1986-1987; Director of Taxes 1984-1986; Arthur
Andersen & Co. 1975-1984.
There is no family relationship between any of the above-named executive officers.
- ------------------
(1) As of March 18, 1994
42
Page 42
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
HUBBELL INCORPORATED
By /s/G. J. Ratcliffe 3/14/94
-------------------------------------------------- ---------
G. J. Ratcliffe Date
Chairman of the Board, President, Chief
Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By /s/G. J. Ratcliffe 3/14/94
--------------------------------------------------- ---------
G. J. Ratcliffe Date
Chairman of the Board, President, Chief
Executive Officer and Director
By /s/H. B. Rowell, Jr. 3/14/94
-------------------------------------------------- ---------
H. B. Rowell, Jr. Date
Executive Vice President
(Chief Financial and Accounting Officer)
By /s/E. R. Brooks 3/14/94
-------------------------------------------------- ---------
E. R. Brooks Date
Director
By /s/G. W. Edwards, Jr. 3/14/94
-------------------------------------------------- ---------
G. W. Edwards, Jr. Date
Director
43
Page 43
By /s/R. N. Flint 3/14/94
-------------------------------------------------- ---------
R. N. Flint Date
Director
By /s/J. S. Hoffman 3/14/94
-------------------------------------------------- ---------
J. S. Hoffman Date
Director
By /s/H. G. McDonell 3/14/94
-------------------------------------------------- ---------
H. G. McDonell Date
Director
By /s/A. McNally IV 3/14/94
-------------------------------------------------- ---------
A. McNally IV Date
Director
By /s/D. J. Meyer 3/14/94
-------------------------------------------------- ---------
D. J. Meyer Date
Director
By /s/J. A. Urquhart 3/14/94
-------------------------------------------------- ---------
J. A. Urquhart Date
Director
44
Page 44
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Form 10-K for
1993, Page:
-------------
Financial Statements
- --------------------
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Consolidated Balance Sheet at December 31, 1993 and 1992 . . . . . . . . . . . . . . . 18
Consolidated Statement of Income for the three years
ended December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Consolidated Statement of Cash Flows for the three years
ended December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Consolidated Statement of Changes in Shareholders' Equity
for the three years ended December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . 22
Statement of Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . 25
Financial Statement Schedules
- -----------------------------
Report of Independent Accountants
on Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Property, Plant and Equipment (Schedule V) . . . . . . . . . . . . . . . . . . . . . . 46
Accumulated Depreciation and Amortization of Property,
Plant and Equipment (Schedule VI) . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Valuation and Qualifying Accounts and Reserves
(Schedule VIII) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Short-Term Borrowings (Schedule IX) . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Supplementary Income Statement Information
(Schedule X) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
All other schedules are omitted because they are not applicable or the required
information is shown in the consolidated financial statements or notes thereto.
45
Page 45
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of Hubbell Incorporated
Our audits of the consolidated financial statements referred to in our report
dated January 19, 1994, except for the subsequent event note which is as of
March 16, 1994, appearing on page 17 of this Form 10-K also included an audit
of the Financial Statement Schedules listed in the index on page 44. In our
opinion, these Financial Statement Schedules present fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements.
Price Waterhouse
Stamford, Connecticut
January 19, 1994
46
Page 46
HUBBELL INCORPORATED Schedule V
AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1991, 1992 AND 1993
(In thousands)
Machinery
Land and Land and
Improvements Buildings Equipment Total
------------- --------- --------- --------
Balance, December 31, 1990 $ 9,991 $ 79,242 $175,064 $264,297
Additions at cost 521 2,025 20,516 23,062
Retirement and sales (2) - (19) (7,986) (8,005)
Acquisition of Businesses - 28 15,844 15,872
Reclassification/transfers (3) (630) (2,340) 63 (2,907)
Translation 1 3 (70) (66)
-------- -------- --------- ---------
Balance, December 31, 1991 9,883 78,939 203,431 292,253
Additions at cost 229 3,414 19,251 22,894
Retirement and sales - (340) (5,901) (6,241)
Acquisition of Businesses (4) 2,790 4,781 56 7,627
Reclassification/transfers - - - -
Translation (10) (124) (835) (969)
--------- --------- --------- ---------
Balance, December 31, 1992 12,892 86,670 216,002 315,564
Additions at cost 81 1,411 23,631 25,123
Retirement and sales - (5,000) (5,116) (10,116)
Acquisition of Businesses (5) 105 3,355 2,879 6,339
Reclassification/transfers - - - -
Translation (5) (45) (193) (243)
-------- --------- --------- ---------
Balance, December 31, 1993 $13,073 $ 86,391 $237,203 $336,667
======= ======== ======== ========
Notes
1. Property, plant, and equipment are depreciated using principally
accelerated methods over the following estimated useful lives:
Buildings 10 to 60 years
Machinery and equipment 3 to 12 years
Leasehold improvements Lives of leases
When properties are retired or otherwise disposed of, accumulated
depreciation together with any amount realized on disposal, are offset
against the cost of the assets retired and the resulting gain or loss is
reflected in income of the period. Expenditures for repairs and
maintenance are charged against income; major renewals and betterments
are capitalized.
2. Includes the assets of the Hubbell Hermetic Refrigeration, Inc.
subsidiary which were sold as part of the discontinuation of the
business.
3. Certain surplus and idle assets which are being offered for sale and
have been reclassified to "Property held as investment" are included in
this caption.
4. Includes the assets of Hipotronics, Inc., which was acquired during
1992, as well as the impact of the adoption of Statement of Financial
Accounting Standard 109 - Accounting for Income Taxes on previously
recorded business acquisitions.
5. Includes the assets of E. M. Wiegmann & Co., Inc. which was acquired
during 1993.
47
Page 47
HUBBELL INCORPORATED Schedule VI
AND SUBSIDIARIES
ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1991, 1992 AND 1993
(In thousands)
Machinery
Land and
Improvements Buildings Equipment Total
------------ --------- --------- --------
Balance, December 31, 1990 $ 1,703 $ 34,509 $ 96,286 $132,498
Additions charged to costs and expenses 167 3,360 16,711 20,238
Retirement and sales (2) - (16) (6,572) (6,588)
Reclassification/transfers (3) (44) (1,406) (15) (1,465)
Translation - (2) (43) (45)
-------- --------- --------- ---------
Balance, December 31, 1991 1,826 36,445 106,367 144,638
Additions charged to costs and expenses 175 3,221 20,431 23,827
Retirement and sales - (85) (5,532) (5,617)
Reclassification/transfers (2) 255 (254) (1)
Translation (1) (86) (535) (622)
--------- --------- --------- ---------
Balance, December 31, 1992 1,998 39,750 120,477 162,225
Additions charged to costs and expenses 231 3,510 22,140 25,881
Retirement and sales - (1,254) (4,645) (5,899)
Reclassification/transfers - - - -
Translation (1) (30) (130) (161)
--------- --------- -------- ---------
Balance, December 31, 1993 $ 2,228 $ 41,976 $137,842 $182,046
======== ======== ======== ========
Notes
1. The following table reconciles depreciation per this schedule to total
depreciation and amortization as reported in the 1993 Annual Report to
shareholders:
1993 1992 1991
------- ------- -------
Depreciation and amortization of property, $25,881 $23,827 $20,238
plant and equipment (as above)
Amortization of intangibles and other assets 4,217 2,986 1,984
------- ------- -------
$30,098 $26,813 $22,222
======= ======= =======
2. Includes the assets of Hubbell Hermetic Refrigeration, Inc. subsidiary
which were sold as part of the discontinuation of the business.
3. Certain surplus and idle assets which are being offered for sale and
have been reclassified to "Property held as investment" are included
in this caption.
48
Page 48
HUBBELL INCORPORATED Schedule VIII
AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1991, 1992 AND 1993
(In thousands)
Reserves deducted in the balance sheet from the assets to which they apply:
Additions Deductions -
Balance at charged to Acquisition uncollectible Balance
beginning to costs of accounts at end
of period and expenses businesses written off of period
--------- ------------ ---------- ----------- ---------
Allowances for doubtful
accounts receivable:
Year 1991 $2,534 $1,250 $254 ($1,305) $2,733
Year 1992 $2,733 $1,713 $291 ($1,397) $3,340
Year 1993 $3,340 $1,845 $ 64 ($1,481) $3,768
49
Page 49
Schedule IX
HUBBELL INCORPORATED
AND SUBSIDIARIES
SHORT TERM BORROWINGS
FOR THE YEARS ENDED DECEMBER 31, 1991, 1992 AND 1993
(In thousands)
Maximum Average Weighted
Weighted Amount Amount Average
Balance Average Outstanding Outstanding Interest Rate
Category of Aggregate at End of Interest During the During the During the
Short-Term Borrowings Period Rate Period (1) Period (2) Period (2)
- --------------------- --------- ---------- ----------- ----------- -------------
Notes Payable to Banks
Year 1991 --- --- --- --- ---
Year 1992 $73,800 3.98% $73,800 $73,800 3.98%
Year 1993 $91,100 3.49% $96,900 $82,324 3.65%
- -----------------------
(1) Maximum daily balance outstanding during the year
(2) Calculated using the average daily balance outstanding and related daily
interest rate
50
Page 50
Schedule X
HUBBELL INCORPORATED
AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1991, 1992 AND 1993
(In thousands)
Years Ended December 31,
Item 1993 1992 1991
- ---- ------ ------ -------
Repairs and Maintenance $ 7,234 $ 7,554 $ 7,307
Depreciation and amortization of property, plant and equipment $25,881 $23,827 $20,238
51
Exhibit Index
Number Description
3a Articles of Incorporation, as amended on May 10, 1991. Exhibit
3a of the registrant's report on (i) Form 10-K for the year
1980, filed on March 16, 1981 (containing the Articles of
Incorporation), (ii) Form 10-K for the year 1986 filed on March
26, 1987, (iii) Form 10-K for the year 1987 filed on March 25,
1988, (iv) Form 10-Q for the quarter ended June 30, 1990 filed
on August 6, 1990, and (v) Form 10-K for the year 1991 filed on
March 24, 1992 are herein incorporated by reference.
3b By-Laws, Hubbell Incorporated, as amended on December 12, 1989.
Exhibit 3b of the registrant's report on Form 10-K for the year
1989, filed on March 26, 1990, is incorporated by reference.
3c Rights Agreement, dated as of December 13, 1988, between Hubbell
Incorporated and Manufacturers Hanover Trust Company (now known
as Chemical Bank) as Rights Agent. Registrant's Form 8-A, dated
December 27, 1988, and filed on December 29, 1988, is
incorporated by reference.
52
Exhibit Index - Continued
Number Description
4 Loan Agreement dated as of June 1, 1981, between the Connecticut
Development Authority and Harvey Hubbell, Incorporated. Exhibit
4c of the registrant's report on Form 10-K for the year 1981,
filed on March 29, 1982, is incorporated herein by reference.
10a+ Hubbell Incorporated Supplemental Executive Retirement Plan, as
amended and restated effective May 1, 1993. Exhibit 10a of the
registrant's report on Form 10-Q for the second quarter, 1993,
filed on August 12, 1993, is incorporated by reference.
10b(1)+ Hubbell Incorporated 1973 Stock Option Plan for Key Employees,
as amended and restated effective September 12, 1991. Exhibit
10b(1) of the registrant's report on Form 10-Q for the third
quarter, 1991, filed on November 8, 1991, is incorporated by
reference.
10c+ Description of the Hubbell Incorporated, Post Retirement Death
Benefit Plan for Participants in the Supplemental Executive
Retirement Plan, as emended effective May 1, 1993. Exhibit 10c
of the registrant's report on Form 10-Q for the second quarter,
1993, filed on August 12, 1993, is incorporated herein by
reference.
10f Hubbell Incorporated Deferred Compensation Plan for Directors,
as amended and restated effective June 20, 1991. Exhibit 10f of
the registrant's report on Form 10-Q for the second quarter,
1991, filed on August 7, 1991, is incorporated by reference.
10g*+ Hubbell Incorporated Incentive Compensation Plan, as amended and
restated effective December 15, 1993.
10h Hubbell Incorporated Key Man Supplemental Medical Insurance, as
amended and restated effective December 9, 1986. Exhibit 10h
of the registrant's report on Form 10-K for the year 1987, filed
on March 25, 1988, is incorporated by reference.
10i Hubbell Incorporated Retirement Plan for Directors, as amended
and restated effective March 13, 1990. Exhibit 10i of the
registrant's report on Form 10-K for the year 1989, filed on
March 26, 1990, is incorporated by reference.
10l+ Employment Agreement, dated March 28, 1989 (effective January 1,
1989), between Hubbell Incorporated and G. Jackson Ratcliffe,
Chairman of the Board, President and Chief Executive Officer.
Exhibit 10l of the registrant's report on Form 10-K for the year
1988, filed on March 29, 1989, is incorporated by reference.
- -------------------
*Filed hereunder
+This exhibit constitutes a management contract, compensatory plan, or
arrangement
53
Exhibit Index - Continued
Number Description
10m+ Employment Agreement, dated March 28, 1989 (effective January 1,
1989), between Hubbell Incorporated and Vincent R. Petrecca,
Executive Vice President. Exhibit 10m of the registrant's
report on Form 10-K for the year 1988, filed on March 29, 1989,
is incorporated by reference.
10n+ Employment Agreement, dated March 28, 1989 (effective January 1,
1989), between Hubbell Incorporated and Harry B. Rowell, Jr.,
Executive Vice President. Exhibit 10n of the registrant's
report on Form 10-K for the year 1988, filed on March 29, 1989,
is incorporated by reference.
10o+ Hubbell Incorporated Policy for Providing Severance Payments to
Key Managers, as amended and restated effective September 9,
1993. Exhibit 10o of the registrant's report on Form 10-Q for
the third quarter, 1993, filed on November 10, 1993, is
incorporated by reference.
11 Computation of earnings per share.
21 Listing of significant subsidiaries.
- -----------------
+This exhibit constitutes a management contract, compensatory plan, or
arrangement