-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TXe3JzaWDTT6h0Cf0L4QpB12trj3rkie32Pim7+WGVaLi9bbxZ4uMa3KeXnbPKrm VAGXoYO7tIFEGW8lSKBidw== /in/edgar/work/20000614/0001016843-00-000469/0001016843-00-000469.txt : 20000919 0001016843-00-000469.hdr.sgml : 20000919 ACCESSION NUMBER: 0001016843-00-000469 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000430 FILED AS OF DATE: 20000614 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HUGHES SUPPLY INC CENTRAL INDEX KEY: 0000049029 STANDARD INDUSTRIAL CLASSIFICATION: [5063 ] IRS NUMBER: 590559446 STATE OF INCORPORATION: FL FISCAL YEAR END: 0125 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08772 FILM NUMBER: 654974 BUSINESS ADDRESS: STREET 1: 20 N ORANGE AVE, STE 200 STREET 2: P O BOX 2273 CITY: ORLANDO STATE: FL ZIP: 32802-2273 BUSINESS PHONE: 4078414755 10-Q 1 0001.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File No. 001-08772 HUGHES SUPPLY, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Florida 59-0559446 ------------------------------- ---------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 20 North Orange Avenue, Suite 200, Orlando, Florida 32801 - --------------------------------------------------- --------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 407/841-4755 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. COMMON STOCK OUTSTANDING AS OF JUNE 2, 2000 ------------ ------------------------------ $1 Par Value 23,594,455 HUGHES SUPPLY, INC. FORM 10-Q INDEX PAGE NO. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of April 30, 2000 and January 28, 2000 .......................... 3 - 4 Consolidated Statements of Income for the Three Months Ended April 30, 2000 and 1999 ................... 5 Consolidated Statements of Cash Flows for the Three Months Ended April 30, 2000 and 1999 ................... 6 Notes to Consolidated Financial Statements ................... 7 - 12 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ................ 13 - 17 Item 3. Quantitative and Qualitative Disclosures about Market Risks .. 18 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K ............................. 19 - 22 Signatures ................................................... 23 Index of Exhibits Filed with This Report ..................... 24 Page 2 HUGHES SUPPLY, INC. PART I. FINANCIAL INFORMATION Item 1. Financial Statements CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA) APRIL 30, 2000 JANUARY 28, (UNAUDITED) 2000 ---------- ----------- ASSETS Current Assets: Cash and cash equivalents $ 10,550 $ 10,000 Accounts receivable, less allowance for losses of $5,092 and $2,777 467,069 398,244 Inventories 520,128 495,491 Deferred income taxes 9,366 15,993 Other current assets 28,179 38,050 ---------- ---------- Total current assets 1,035,292 957,778 Property and Equipment, Net 153,566 144,945 Excess of Cost over Net Assets Acquired 252,656 243,367 Other Assets 24,128 22,924 ---------- ---------- $1,465,642 $1,369,014 ========== ========== The accompanying notes are an integral part of these consolidated financial statements. Page 3 HUGHES SUPPLY, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) - CONTINUED (IN THOUSANDS, EXCEPT SHARE DATA) APRIL 30, 2000 JANUARY 28, (UNAUDITED) 2000 ----------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $ 587 $ 803 Accounts payable 291,896 239,810 Accrued compensation and benefits 27,088 29,590 Other current liabilities 37,695 30,075 ----------- ----------- Total current liabilities 357,266 300,278 Long-Term Debt 561,781 535,000 Deferred Income Taxes 5,882 6,027 Other Noncurrent Liabilities 5,306 5,265 ----------- ----------- Total liabilities 930,235 846,570 ----------- ----------- Commitments and Contingencies Shareholders' Equity: Preferred stock -- -- Common stock-24,242,658 and 24,249,281 shares issued 24,243 24,249 Capital in excess of par value 221,244 221,284 Retained earnings 312,312 300,144 Treasury stock, 648,203 and 668,950 at cost (14,957) (15,434) Unearned compensation related to outstanding restricted stock (7,435) (7,799) ----------- ----------- Total shareholders' equity 535,407 522,444 ----------- ----------- $ 1,465,642 $ 1,369,014 =========== =========== The accompanying notes are an integral part of these consolidated financial statements. Page 4 HUGHES SUPPLY, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA) THREE MONTHS ENDED APRIL 30, 2000 1999 --------- --------- Net Sales $ 831,171 $ 711,296 Cost of Sales 646,286 554,938 --------- --------- Gross Profit 184,885 156,358 --------- --------- Operating Expenses: Selling, general and administrative 142,515 121,335 Depreciation and amortization 7,688 6,656 Provision for doubtful accounts 1,533 1,387 --------- --------- Total operating expenses 151,736 129,378 --------- --------- Operating Income 33,149 26,980 --------- --------- Non-Operating Income and (Expenses): Interest and other income 1,216 2,240 Interest expense (9,910) (6,774) --------- --------- (8,694) (4,534) --------- --------- Income Before Income Taxes 24,455 22,446 Income Taxes 10,027 9,091 --------- --------- Net Income $ 14,428 $ 13,355 ========= ========= Earnings Per Share: Basic $ .62 $ .56 ========= ========= Diluted $ .62 $ .55 ========= ========= Average Shares Outstanding: Basic 23,223 23,863 ========= ========= Diluted 23,299 24,240 ========= ========= Dividends Per Share $ .085 $ .085 ========= ========= The accompanying notes are an integral part of these consolidated financial statements. Page 5 HUGHES SUPPLY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
THREE MONTHS ENDED APRIL 30, 2000 1999 -------- -------- Cash Flows from Operating Activities: Net income $ 14,428 $ 13,355 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,688 6,656 Provision for doubtful accounts 1,533 1,387 Equity in earnings of unconsolidated affiliates 1,357 (408) Other, net 895 134 Changes in assets and liabilities, net of effects of business acquisitions: (Increase) in accounts receivable (66,442) (47,645) (Increase) in inventories (21,086) (9,463) Decrease in other current assets 9,938 7,460 (Increase) in other assets (929) (3,285) Increase in accounts payable and accrued liabilities 50,568 37,002 Increase in accrued interest and income taxes 5,167 12,238 Increase (decrease) in other noncurrent liabilities 41 (110) Decrease (increase) in net deferred income taxes 6,482 (733) -------- -------- Net cash provided by operating activities 9,640 16,588 -------- -------- Cash Flows from Investing Activities: Capital expenditures (8,431) (6,984) Proceeds from sale of property and equipment 158 79 Investments in unconsolidated affiliates (2,500) -- Business acquisitions, net of cash (23,037) (31,469) -------- -------- Net cash used in investing activities (33,810) (38,374) -------- -------- Cash Flows from Financing Activities: Net borrowings under short-term debt arrangements 26,781 46,832 Principal payments on debt of acquired entities (216) (6,696) Dividends paid (2,004) (2,056) Purchase of treasury stock -- 15,788 Other 159 234 -------- -------- Net cash provided by financing activities 24,720 22,526 -------- -------- Net Increase in Cash and Cash Equivalents 550 740 Cash and Cash Equivalents: Beginning of period 10,000 6,010 -------- -------- End of period $ 10,550 $ 6,750 ======== ========
The accompanying notes are an integral part of these consolidated financial statements. Page 6 HUGHES SUPPLY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 1. In the opinion of Hughes Supply, Inc. (the "Company"), the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position as of April 30, 2000, the results of operations for the three months ended April 30, 2000 and 1999, and cash flows for the three months then ended. The results of operations for the three months ended April 30, 2000 are not necessarily indicative of the results that may be expected for the full year. The fiscal year of the Company is a 52-week period ending on the last Friday in January. The three months ended April 30, 2000 and 1999 each contained 13 weeks. Basic earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding. Diluted earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding, adjusted for dilutive potential common shares. The weighted-average number of shares used in calculating basic earnings per share were 23,223,000 and 23,863,000 for the three months ended April 30, 2000 and 1999, respectively. In calculating diluted earnings per share, these amounts were adjusted to include dilutive potential common shares of 76,000 and 377,000 for the three months ended April 30, 2000 and 1999, respectively. 2. Effective February 1, 2000, the Company was reorganized into five strategic business units ("SBUs") on a product group basis. The five SBUs are: Electrical and Electric Utility; Plumbing/HVAC; Industrial Pipe, Valves & Fittings ("PVF"); Building Materials/Pool and Spa/ Maintenance Supplies; and Water & Sewer. The operating segments reported below are the segments of the Company for which separate financial information is available and for which operating income amounts are evaluated regularly by executive management in deciding how to allocate resources and in assessing performance. Page 7 Income before income tax amounts evaluated include allocations of certain costs, including employee benefits, interest expense, corporate capital charges and property and casualty insurance. These costs are allocated based on consumption or at a standard rate determined by management. As part of the Company's reorganization at the beginning of fiscal 2001, certain administrative groups and assets were re-aligned on an SBU basis. As a result of the reorganization, the Company restructured various administrative groups whereby activities previously performed on a centralized basis are now performed at the SBU level. Additionally, commencing in fiscal 2001, the Company changed its method of allocating certain costs (interest expense, rent expense, corporate capital charge and depreciation and amortization expense) to the SBUs which has also impacted the comparability of prior year information. Accordingly, comparative information has only been presented for net sales and gross profit, which were not impacted by any of the allocation method changes. The tables set forth below represent segment results for the three months ended April 30, 2000 for each of the Company's SBUs. When comparable, information for the three months ended April 30, 1999 has also been presented.
THREE MONTHS THREE MONTHS ENDED ENDED APRIL 30, 2000 APRIL 30, 1999 -------------- -------------- NET SALES Electrical and Electric Utility $ 146,517 $ 141,474 Plumbing/HVAC 259,176 238,318 Industrial PVF 80,563 78,589 Building Materials/Pool and Spa/Maintenance Supplies 115,743 102,164 Water & Sewer 234,039 154,521 --------- --------- 836,038 715,066 Corporate and eliminations (4,867) (3,770) --------- --------- Total $ 831,171 $ 711,296 ========= =========
Page 8
THREE MONTHS THREE MONTHS ENDED ENDED APRIL 30, 2000 APRIL 30, 1999 -------------- -------------- GROSS PROFIT Electrical and Electric Utility $ 28,367 $ 24,671 Plumbing/HVAC 57,357 55,587 Industrial PVF 22,604 17,521 Building Materials/Pool and Spa/Maintenance Supplies 30,942 26,406 Water & Sewer 45,615 32,173 --------- --------- Total $ 184,885 $ 156,358 ========= ========= THREE MONTHS ENDED APRIL 30, 2000 -------------- DEPRECIATION AND AMORTIZATION EXPENSE Electrical and Electric Utility $ 556 Plumbing/HVAC 1,833 Industrial PVF 736 Building Materials/Pool and Spa/Maintenance Supplies 942 Water & Sewer 1,872 ---------- 5,939 Corporate 1,749 ---------- Total $ 7,688 ==========
Page 9
THREE MONTHS ENDED APRIL 30, 2000 -------------- INTEREST AND OTHER INCOME Electrical and Electric Utility $ 280 Plumbing/HVAC 906 Industrial PVF 67 Building Materials/Pool and Spa/Maintenance Supplies 280 Water & Sewer 688 -------------- 2,221 Corporate (1,005) -------------- Total $ 1,216 ============== THREE MONTHS ENDED APRIL 30, 2000 -------------- INTEREST EXPENSE Electrical and Electric Utility $ 787 Plumbing/HVAC 2,306 Industrial PVF 2,495 Building Materials/Pool and Spa/Maintenance Supplies 1,265 Water & Sewer 3,057 -------------- Total $ 9,910 ==============
Page 10
THREE MONTHS ENDED APRIL 30, 2000 -------------- INCOME BEFORE INCOME TAXES Electrical and Electric Utility $ 5,427 Plumbing/HVAC 2,856 Industrial PVF 6,691 Building Materials/Pool and Spa/Maintenance Supplies 3,554 Water & Sewer 9,769 -------- 28,297 Corporate (3,842) -------- Total $ 24,455 ========
Page 11 The table set forth below represents the investment in inventories and accounts receivable, less allowance for losses, for each strategic business unit at April 30, 2000 and January 28, 2000.
APRIL 30, 2000 JANUARY 28, 2000 -------------- ---------------- Inventories and Accounts Receivable Electrical and Electric Utility $ 128,145 $ 121,236 Plumbing/HVAC 305,811 287,303 Industrial PVF 161,143 160,758 Building Materials/Pool and Spa/Maintenance Supplies 128,435 105,851 Water & Sewer 267,226 222,258 ---------- ---------- 990,760 897,406 Corporate and eliminations (3,563) (3,671) ---------- ---------- Total $ 987,197 $ 893,735 ========== ========== Cash and Cash Equivalents 10,550 10,000 Deferred Income Taxes 9,366 15,993 Other Current Assets 28,179 38,050 Property and Equipment, Net 153,566 144,945 Excess of Costs Over Net Assets Acquired 252,656 243,367 Other Assets 24,128 22,924 ---------- ---------- Total Assets $1,465,642 $1,369,014 ========== ==========
Page 12 HUGHES SUPPLY, INC. PART I. FINANCIAL INFORMATION - CONTINUED Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following is management's discussion and analysis of certain significant factors which have affected the financial condition of the Company as of April 30, 2000, and the results of operations for the three months then ended. Certain statements set forth in Management's Discussion and Analysis of Financial Condition and Results of Operations, constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created by such sections. When used in this report, the words "believe," "anticipate," "estimate," "expect," "may," "will," "should," "plan," "intend," "potential," "predict," "forecast," and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. The Company's actual results may differ significantly from the results discussed in such forward-looking statements. When appropriate, certain factors that could cause results to differ materially from those projected in the forward-looking statements are enumerated. This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company's consolidated financial statements and the notes thereto contained herein and in the Company's Form 10-K for the fiscal year ended January 28, 2000. MATERIAL CHANGES IN RESULTS OF OPERATIONS NET SALES Net sales were $831 million for the quarter ended April 30, 2000, a 17% increase over the prior year's first quarter. Approximately 52% of the increase in net sales was attributable to same-store sales growth over the prior year's first quarter. The remainder of the increase was attributable to branches acquired and opened after January 31, 1999. Electrical and Electric Utility Net sales were $146.5 million for the quarter ended April 30, 2000, a 4% increase over the first quarter of fiscal 2000. The increase was primarily due to a 2% growth in same-store sales which was consistent with industry growth during the quarter. Plumbing/HVAC Net sales increased from $238.3 million for the three months ended April 30, 1999 to $259.2 million for the three months ended April 30, 2000, a 9% increase. The growth in sales was due to a 7% increase in same-store sales resulting from improved market penetration and the continued strength of the construction market. Industrial PVF For the quarter ended April 30, 2000, net sales were $80.6 million compared to $78.6 million in the first quarter of fiscal 2000. The sales increase was due to a 2% increase in same-store sales primarily driven by an increase in stainless steel prices for the first quarter of fiscal 2001. Page 13 Building Materials/Pool and Spa/Maintenance Supplies Net sales increased from $102.2 million to $115.8 million for the three months ended April 30, 1999 and April 30, 2000, respectively, a 13% increase. Of the $13.6 million increase, $8.5 million was attributable to same-store sales growth, with the remainder coming from newly opened/acquired branches. The 9% increase in same-store sales was primarily due to (i) improved market penetration in pool and spa products, (ii) strong demand for construction rental materials, and (iii) expansion of appliance product lines in the maintenance supply branches. Water & Sewer Water & Sewer segement sales increased $79.5 million from $154.5 million in the first quarter of fiscal 2000 to $234.0 million in the first quarter of fiscal 2001, a 51% increase. Of the increase, $47.3 million was from branches opened or acquired after January 31, 1999. The remainder was due to a 21% same-store sales increase from the first quarter of fiscal 2000. The increase in same-store sales was due to (i) several large contracts and a general increase in overall activity through all Water & Sewer markets in fiscal 2001, and (ii) increased spending on infrastructure by municipalities. GROSS PROFIT AND GROSS MARGIN Gross profit and gross margin for the three months ended April 30, 2000 and April 30, 1999 were as follows (dollars in thousands):
Gross Profit Gross Margin --------------------------------- ------------------------------- Three Three Three Three Months Months Months Months Ended April Ended April Ended April Ended April 30, 2000 30, 1999 30, 2000 30, 1999 -------------- -------------- -------------- ------------- Electrical and Electric Utility $ 28,367 $ 24,671 19.4% 17.4% Plumbing/HVAC 57,357 55,587 22.1% 23.3% Industrial PVF 22,604 17,521 28.1% 22.3% Building Materials/Pool and Spa/Maintenance Supplies 30,942 26,406 26.7% 25.8% Water & Sewer 45,615 32,173 19.5% 20.8% ---------- ---------- ---------- ---------- $ 184,885 $ 156,358 22.2% 22.0% ========== ========== ========== ==========
Electrical and Electric Utility Gross margin increased approximately 200 basis points from the first quarter of fiscal 2000 to the first quarter of fiscal 2001. The increase in gross margin was primarily due to changes in product sales mix in fiscal 2001, with the remainder due to enhanced purchasing power. Page 14 Plumbing/HVAC Gross margin decreased approximately 120 basis points from the first quarter of fiscal 2000 to the first quarter of fiscal 2001. The decrease was primarily attributable to an erosion of margins as the Company sought to improve market share in certain areas. Industrial PVF Gross margin and gross profit within the Industrial PVF segment are closely tied to the pricing of certain commodity based products (primarily stainless steel and nickel alloys). In the first quarter of fiscal 2001, the price of these commodity items increased which improved the Company's gross margin for these products. The Company anticipates decreasing margins within this segment in the second half of fiscal 2001 when the inventories purchased prior to recent price increases are depleted. Building Materials/Pool and Spa/Maintenance Supplies Gross margin increased approximately 90 basis points from the first quarter of fiscal 2000 to the first quarter of fiscal 2001. The increase was primarily due to a shift in sales mix resulting from increased equipment rentals. Water & Sewer Gross margin within the Water & Sewer segment declined approximately 130 basis points from the first quarter of fiscal 2000 to the first quarter of fiscal 2001. The decrease was primarily due to an increase in large direct shipped orders which generate lower gross margin levels. OPERATING EXPENSES Operating expenses for the three months ended April 30, 2000 and 1999 were as follows (dollars in thousands): 2000 1999 VARIANCE ---------- ---------- -------- Operating expenses $ 151,736 $ 129,378 $22,358 Percentage of net sales 18.3% 18.2% 17% Approximately $9.0 million (40%) of the $22.4 million increase in operating expenses for the three months ended April 30, 2000 was attributable to branches acquired and opened after January 31, 1999. The remainder of the increase was primarily due to (i) higher personnel costs associated with same-store sales growth, (ii) increased transportation costs brought about by same-store growth and increased fuel costs, and (iii) increased information technology costs as the Company continues to upgrade its information technology systems. INTEREST AND OTHER INCOME Interest and other income decreased from $2.2 million for the three months April 30, 1999 to $1.2 million for the three months ended April 30, 2000. The decrease was primarily due to losses from the Company's equity investment in bestroute.com in the first quarter of fiscal 2001. Page 15 INTEREST EXPENSE Interest expense was $9.9 million and $6.8 million for the three months ended April 30, 2000 and 1999, respectively, a 46% increase. The increase was primarily the result of higher borrowing levels, coupled with increased interest rates. The higher borrowing levels were primarily due to the Company's (i) higher working capital investments resulting from accelerated sales growth, (ii) expansion through business acquisitions, which has been partially funded by debt financing, and (iii) share repurchases. INCOME TAXES The effective income tax rates for the three months ended April 30, 2000 and 1999 were 41.0% and 40.5%, respectively. The increase in the effective rate was primarily due to increases in non-deductible goodwill and other non-deductible costs. NET INCOME Net income was $14.4 million for the first quarter compared to $13.4 million for the prior year's first quarter, an 8% increase. Diluted earnings per share for the first quarter was $.62 compared to $.55 in the prior year's first quarter. The factors impacting net income and diluted earnings per share have been enumerated above in the material changes in results of operations section of Management's Discussion and Analysis of Financial Condition and Results of Operations. LIQUIDITY AND CAPITAL RESOURCES Working capital at April 30, 2000 totaled $678 million compared to $658 million at January 28, 2000. The working capital ratio was 2.9 to 1 and 3.2 to 1 as of April 30, 2000 and January 28, 2000, respectively. Due to the seasonality of the Company's business, inventories, receivables and trade payables increase in the spring, as sales pick up and the Company prepares for the summer, which has historically been its busiest season. Net cash provided by operations was $9.6 million for the three months ended April 30, 2000 compared to $16.6 million for the three months ended April 30, 1999. This change was primarily the result of increased inventories and accounts receivable levels, partially offset by an increase in accounts payable. The Company's expenditures for property and equipment were $8.4 million for the three months ended April 30, 2000 compared to $7.0 million for the three months ended April 30, 1999. Capital expenditures for property and equipment, excluding amounts for business acquisitions, are expected to be approximately $30 million for fiscal 2001. Cash payments for business acquisitions accounted for as purchases totaled $23.0 million for the three months ended April 30, 2000 compared to $31.5 million for the three months ended April 30, 1999. Page 16 Principal reductions on long-term debt were $0.2 million for the three months ended April 30, 2000 and $6.7 million for the three months ended April 30, 1999. The amounts were primarily attributable to the repayment of debt assumed as a result of certain business acquisitions. Dividend payments were $2.0 million and $2.1 million during the three months ended April 30, 2000 and 1999, respectively. As of April 30, 2000, the Company had approximately $76 million of unused borrowing capacity (subject to borrowing limitations under long-term debt covenants) to fund ongoing operating requirements and anticipated capital expenditures. The Company also believes it has sufficient borrowing capacity to take advantage of growth and business acquisition opportunities and to fund share repurchases in the near term. The Company expects to continue to finance future expansion on a project-by-project basis through additional borrowing or through the issuance of common stock. Page 17 Item 3. Quantitative and Qualitative Disclosures about Market Risks The Company is exposed to market risk from changes in (i) interest rates on outstanding variable-rate debt and (ii) the prices of certain of the Company's products whose manufacture is reliant on certain commodities. INTEREST RATE RISK At April 30, 2000, the Company had approximately $333.8 million of outstanding variable-rate debt. Based upon an assumed 10% increase or decrease in interest rates from their April 30, 2000 levels, the market risk with respect to the Company's variable-rate debt would not be material. The Company manages its interest rate risk by maintaining a combination of fixed-rate and variable-rate debt. COMMODITY PRICE RISK The Company is affected by price fluctuations in stainless steel, nickel alloys, copper, aluminum, resin and other commodities. Such commodity price fluctuations have from time to time created cyclicality in the financial performance of the Company and could continue to do so in the future. The Company seeks to minimize the effects of commodity price fluctuations through (i) economies of purchasing and inventory management resulting in cost reductions, maintenance of minimum economic reorder points, and productivity improvements and (ii) price increases to maintain reasonable profit margins. Additional information with respect to the Company's commodity price risk is set forth under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part I, Item 2 of this report. Page 18 HUGHES SUPPLY, INC. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) EXHIBITS FILED (2) Plan of acquisition, reorganization, arrangement, liquidation or succession. Not applicable. (3) Articles of incorporation and by-laws. 3.1 Restated Articles of Incorporation, as amended, incorporated by reference to Exhibit 3.1 to Form 10-Q for the quarter ended April 30, 1997 (Commission File No. 001-08772). 3.2 Composite By-Laws, as amended, incorporated by reference to Exhibit 3.2 to Form 10-Q for the quarter ended October 31, 1999 (Commission File No. 001-08772). 3.3 Form of Articles of Amendment to Restated Articles of Incorporation of the Company, incorporated by reference to Exhibit 99.2 to Form 8-A dated May 22, 1998 (Commission File No. 001-08772). (4) Instruments defining the rights of security holders, including indentures. 4.1 Form of Common Stock Certificate representing shares of the Registrant's common stock, $1.00 par value, incorporated by reference to Exhibit 4.1 to Form 10-Q for the quarter ended July 31, 1997 (Commission File No. 001-08772). 4.2 Rights Agreement dated as of May 20, 1998 between Hughes Supply, Inc. and American Stock Transfer & Trust Company, incorporated by reference to Exhibit 99.2 to Form 8-A dated May 22, 1998 (Commission File No. 001-08772). Page 19 (10) Material contracts. 10.1 Lease Agreements with Hughes, Inc. (a) Orlando Trucking, Garage and Maintenance Operations dated December 1, 1971, incorporated by reference to Exhibit 13(n) to Registration No. 2-43900 (Commission File No. 0-5235). Letter dated April 15, 1992 extending lease from month to month, filed as Exhibit 10.1(a) to Form 10-K for the fiscal year ended January 31, 1992 (Commission File No. 0-5235). (b) Leases effective March 31, 1988, incorporated by reference to Exhibit 10.1(c) to Form 10-K for the fiscal year ended January 27, 1989 (Commission File No. 0-5235). SUB-ITEM PROPERTY -------- -------- (1) Clearwater (2) Daytona Beach (3) Fort Pierce (4) Lakeland (6) Leesburg (7) Orlando Electrical Operation (8) Orlando Plumbing Operation (9) Orlando Utility Warehouse (11) Sarasota (12) Venice (13) Winter Haven (c) Lease amendment letter between Hughes, Inc. and the Registrant, dated December 1, 1986, amending Orlando Truck Operations Center and Maintenance Garage lease, incorporated by reference to Exhibit 10.1(i) to Form 10-K for the fiscal year ended January 30, 1987 (Commission File No. 0-5235). (d) Lease agreement dated June 1, 1987, between Hughes, Inc. and the Registrant, for additional Sarasota property, incorporated by reference to Exhibit 10.1(j) to Form 10-K for the fiscal year ended January 29, 1988 (Commission File No. 0-5235). (e) Lease dated March 11, 1992, incorporated by reference to Exhibit 10.1(e) to Form 10-K for the fiscal year ended January 31, 1992 (Commission File No. 0-5235). SUB-ITEM PROPERTY -------- -------- (2) Gainesville Electrical Operation Page 20 (f) Amendments to leases between Hughes, Inc. and the Registrant, dated April 1, 1998, amending the leases for the thirteen properties listed in Exhibit 10.1(b), (d) and (e), incorporated by reference to Exhibit 10.1 to Form 10-K for the fiscal year ended January 30, 1998 (Commission File No. 001-08772). 10.2 Hughes Supply, Inc. 1988 Stock Option Plan as amended March 12, 1996 incorporated by reference to Exhibit 10.2 to Form 10-K for the fiscal year ended January 26, 1996 (Commission File No. 001-08772). 10.3 Form of Supplemental Executive Retirement Plan Agreement entered into between the Registrant and eight of its executive officers, incorporated by reference to Exhibit 10.6 to Form 10-K for the fiscal year ended January 30, 1987 (Commission File No. 0-5235). 10.4 Directors' Stock Option Plan, as amended, incorporated by reference to Exhibit 10.4 to Form 10-Q for the quarter ended October 31, 1999 (Commission File No. 001-08772). 10.5 Hughes Supply, Inc. Amended Senior Executives' Long-Term Incentive Bonus Plan, adopted January 25, 1996, incorporated by reference to Exhibit 10.9 to Form 10-K for the fiscal year ended January 26, 1996 (Commission File No. 001-08772). 10.6 Note Purchase Agreement, dated as of August 28, 1997, by and among the Company and certain purchasers identified in Schedule A of the Note Purchase Agreement, incorporated by reference to Exhibit 10.15 to Form 10-Q for the quarter ended July 31, 1997 (Commission File No. 001-08772). 10.7(a) Hughes Supply, Inc. 1997 Executive Stock Plan, incorporated by reference to Exhibit 10.7 to Form 10-K for the fiscal year ended January 28, 2000 (Commission File No. 001-08772). 10.7(b) Amendment No. 1 to the Hughes Supply, Inc. 1997 Executive Stock Plan (filed herewith). 10.8 Note Purchase Agreement, dated as of May 29, 1996, by and among the Company and certain purchasers identified in Schedule A of the Note Purchase Agreement, incorporated by reference to Exhibit 10.13 to Form 10-K for the fiscal year ended January 30, 1998 (Commission File No. 001-08772). 10.9 Note Purchase Agreement, dated as of May 5, 1998, by and among the Company and certain purchasers identified in Schedule A of the Note Purchase Agreement, incorporated by reference to Exhibit 10.11 to Form 10-Q for the quarter ended April 30, 1998 (Commission File No. 001-08772). Page 21 10.10 Revolving Credit Agreement, dated as of January 26, 1999 and amended on September 29, 1999, by and among the Company and a group of banks, incorporated by reference to Exhibit 10.11 to Form 10-Q for the quarter ended October 31, 1999 (Commission File No. 001-08772). The Revolving Credit Agreement contains a table of contents identifying the contents of Schedules and Exhibits, all of which have been omitted. The Company agrees to furnish a supplemental copy of any omitted Schedule or Exhibit to the Commission upon request. 10.11 Line of Credit Agreement, dated as of January 26, 1999 and amended on September 29, 1999, by and among the Company and a group of banks, incorporated by reference to Exhibit 10.12 to Form 10-Q for the quarter ended October 31, 1999 (Commission File No. 001-08772). The Line of Credit Agreement contains a table of contents identifying the contents of Schedules and Exhibits, all of which have been omitted. The Company agrees to furnish a supplemental copy of any omitted Schedule or Exhibit to the Commission upon request. 10.12 Bridge Revolving Credit Agreement, dated as of November 30, 1999, by and between the Company and SunTrust Bank, Central Florida, N.A., incorporated by reference to Exhibit 10.12 to Form 10-K for the fiscal year ended January 28, 2000 (Commission File No. 001-08772). (11) Statement re computation of per share earnings. Not applicable. (15) Letter re unaudited interim financial information. Not applicable. (18) Letter re change in accounting principles. Not applicable. (19) Report furnished to security holders. Not applicable. (22) Published report regarding matters submitted to vote of security holders. Not applicable. (23) Consents of experts and counsel. Not applicable. (24) Power of attorney. Not applicable. (27) Financial data schedule. 27.1 Financial Data Schedule (filed electronically only). (99) Additional exhibits. Not applicable. (b) REPORTS ON FORM 8-K There were no reports on Form 8-K filed during the quarter ended April 30, 2000. Page 22 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HUGHES SUPPLY, INC. Date: June 14, 2000 By: /s/ DAVID H. HUGHES ----------------------------------- David H. Hughes, Chairman of the Board and Chief Executive Officer Date: June 14, 2000 By: /s/ J. STEPHEN ZEPF ----------------------------------- J. Stephen Zepf, Treasurer, Chief Financial Officer and Chief Accounting Officer Page 23 INDEX OF EXHIBITS FILED WITH THIS REPORT ---------------------------------------- 10.7(b) Amendment No. 1 to the Hughes Supply, Inc. 1997 Executive Stock Plan. 27.1 Financial Data Schedule (filed electronically only). EX-10.7 2 0002.txt AMDT #1 TO 1997 EXECUTIVE STOCK PLAN Exhibit 10.7 AMENDMENT NO. 1 TO THE HUGHES SUPPLY, INC. 1997 EXECUTIVE STOCK PLAN --------------------------------------------- The Hughes Supply, Inc. 1997 Executive Stock Plan ("Plan") is hereby amended, pursuant to Section 13 thereof, as follows: 1. The first sentence of Section 3 of the Plan is deleted in its entirety and the following new first sentence of Section 3 is substituted therefor: There shall be 1,750,000 shares of Stock reserved for use under this Plan. 2. The second sentence of Section 8.1 of the Plan is deleted in its entirety and the following new second sentence of Section 8.1 is substituted therefor: However, no more than 875,000 shares of Stock shall be granted as Restricted Stock from the shares otherwise available for grants under this Plan. 3. If there shall be any inconsistency between the provisions of this Amendment and the provisions of the Plan, this Amendment shall control. This Amendment shall become effective upon the date this Amendment is approved by the stockholders of the Company. Except as hereby amended, the Plan shall continue in full force and effect. Dated: ______________, 2000 HUGHES SUPPLY, INC. By:________________________ Title:_____________________ ATTEST: By:______________________ Title:___________________ [CORPORATE SEAL] EX-27.1 3 0003.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET OF HUGHES SUPPLY, INC. AS OF APRIL 30, 2000, AND THE RELATED STATEMENT OF INCOME FOR THE THREE MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000049029 HUGHES SUPPLY, INC. 1,000 3-MOS JAN-26-2001 APR-30-2000 10,550 0 472,069 5,092 520,128 1,035,292 249,422 95,856 1,465,642 357,266 561,781 0 0 24,243 511,164 1,465,642 831,171 831,171 646,286 646,286 150,203 1,533 9,910 24,455 10,027 14,428 0 0 0 14,428 .62 .62
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