(HUBBELL LOGO)
Date: July 23, 2003 NEWS RELEASE
For Release: IMMEDIATELY
HUBBELL INCORPORATED
584 Derby-Milford Road
P. O. Box 549
Orange, CT 06477
203-799-4100
Contact: Thomas R. Conlin
HUBBELL REPORTS SECOND
QUARTER RESULTS
ORANGE, CT. (July 23, 2003) -- Hubbell Incorporated (NYSE: HUBA, HUBB)
today reported its results for the second quarter ended June 30, 2003.
Sales for the quarter were $449.3 million or a 9% increase over sales of $414.1
million reported for the corresponding period of 2002. Incremental sales
primarily resulted from acquisitions completed last year: LCA Group, Inc., on
April 26, 2002, and the pole line hardware business of Cooper Power Systems,
Inc., on November 22, 2002.
Net income in the second quarter was $24.2 million or $.40 per diluted share as
compared to $30.8 million or $.51, respectively, reported for the equivalent
period of the prior year. Items affecting comparability included in these
results are:
- In the second quarter 2003, earnings per share included costs of
$6.6 million, pre-tax, or $.07 per diluted share incurred in the
ongoing restructuring of lighting operations. The $6.6 million
included $4.6 million to discontinue a lighting product line (of
which $1.8 million was recorded in Cost of goods sold), and $2.0
million for ongoing lighting restructuring.
- In the second quarter 2002, diluted earnings per share included a
benefit of $.07 per diluted share primarily from a favorable tax
settlement.
-continued-
Excluding the impact of these items in both years, second quarter diluted
earnings per share would have been 7% higher than the prior year.
OPERATIONS REVIEW
"Flexibility kept us on target," said Timothy H. Powers, President and Chief
Executive Officer, " as uncertainty associated with the Iraq conflict continued
to impact business levels. Appropriate cost containment actions and a 5%
reduction in our labor force were implemented. These actions along with normal
seasonal strengthening in demand helped our operating margins excluding charges
for ongoing restructuring of lighting operations improve by 120 basis points
compared to the first quarter 2003."
"Our focus on asset management continues to pay off," Powers added. "Operating
cash flow was exceptionally strong at more than $54 million in the quarter and a
year-to-date total of approximately $90 million. Continuing inventory reduction
played a major role, down by $30 million year-to-date, as we approach our full
year 2003 goal of $30 -- $40 million. Net debt reduction also continued during
the quarter - down by $49 million year-to-date to net debt of $118 million at
mid-year - after paying out $39 million in cash dividends to shareholders so far
in 2003."
SEGMENT REVIEW
Demand remained generally flat across many of the Company's markets with
seasonal improvement for summer construction scattered geographically and
generally modest in degree. Acquisitions, strength in some specialty markets,
and internal profitability programs benefited results. Percentage comparisons
noted below are for the second quarter 2003 versus the equivalent period last
year.
Sales for the Electrical Segment rose by 10% and operating income, excluding
special charges, rose by 4%. The expansion of Hubbell Lighting by acquisition in
2002 was the primary component of the higher volume although the wiring systems
and electrical products businesses also recorded modestly higher sales.
Residential markets continued to show strength with Progress Lighting, the
nation's largest supplier of decorative fixtures, turning in another solid
quarter. Commercial and industrial markets remain generally weak as construction
awards continued to decline year-over-year. Pockets of strength were seen in
certain segments of the market such as school construction projects and consumer
spending in home centers.
Hubbell Power Systems Segment's sales were up 1% while operating income declined
by 13%. Profitability was affected by product mix during the quarter with
proportionately fewer sales of higher margin connectors,
-continued-
as well as continuing integration expenses associated with the pole line
hardware acquisition. Order input was weak as lower capital investment by
utility customers, reduced spending on maintenance and repair, high distributor
inventories, and the struggling economy all acted to dampen demand. Exacerbating
the utility industry's difficulties are continuing liquidity constraints and an
uncertain regulatory environment.
The Industrial Technology Segment reported a 12% increase in sales and $2.6
million operating income versus a $2.0 million loss in 2002 resulting from
inventory write downs. The primary driver to the segment's performance was the
GAI-Tronics unit and its broad lines of specialty communications technology.
This unit continued to benefit from its leading share of the global market and
the focus on security and safety in a wide range of applications. The other
businesses in this segment, which serve industrial and high voltage markets,
continue to contend with depressed demand.
SUMMARY AND OUTLOOK
"The second quarter in our markets continued at a slow pace," said Powers, "and
we haven't seen any catalyst to spark substantial improvement through the
remainder of 2003. Recent tax reductions and continuing low interest rates will
be beneficial, but haven't had time to translate into economic growth. Even
though our served markets are slow, our productivity and working capital
programs are moving forward. These programs benefit our current results -
demonstrated so far in 2003 - and will leverage Hubbell into a faster, more lean
Company which will be able to take advantage of future growth."
Certain statements contained herein may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements may be identified by the use of forward-looking words or
phrases such as "plan", "could", expect", "expected", "estimates", "should",
"likely", "goal", "probably", and others. Such forward-looking statements
involve numerous assumptions, known and unknown risks, uncertainties and other
factors which may cause actual and future performance or achievements of the
Company to be materially different from any future results, performance, or
achievements expressed or implied by such forward-looking statements. Such
factors include: achieving sales levels to fulfill revenue expectations;
unexpected costs or charges, certain of
-continued-
which may be outside the control of the Company; general economic and
business conditions; and competition.
Hubbell Incorporated is an international manufacturer of quality electrical and
electronic products for commercial, industrial, residential, utility, and
telecommunications markets. With 2002 revenues of $1.6 billion, Hubbell
Incorporated operates manufacturing facilities in North America, Puerto Rico,
Mexico, Italy, Switzerland, and the United Kingdom, participates in a joint
venture in Taiwan, and maintains sales offices in Singapore, Hong Kong, South
Korea, People's Republic of China, and the Middle East. The corporate
headquarters is located in Orange, CT.
# # # # #
(Financial Schedules are Attached.)
HUBBELL INCORPORATED
CONSOLIDATED STATEMENT OF EARNINGS
(IN MILLIONS, EXCEPT PER SHARE DATA) UNAUDITED
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
---------------------- ----------------------
2003 2002 2003 2002
-------- -------- -------- --------
NET SALES
ELECTRICAL $ 331.0 $ 300.0 $ 643.1 $ 493.1
POWER 84.8 84.2 163.8 164.6
INDUSTRIAL TECHNOLOGY 33.5 29.9 61.8 58.1
-------- -------- -------- --------
TOTAL NET SALES $ 449.3 $ 414.1 $ 868.7 $ 715.8
======== ======== ======== ========
ELECTRICAL $ 30.7 $ 29.5 $ 57.5 $ 46.7
SPECIAL CHARGE (4.8) (0.2) (5.9) (0.8)
GAIN ON SALE OF BUSINESS -- -- -- 1.4
-------- -------- -------- --------
TOTAL ELECTRICAL 25.9 29.3 51.6 47.3
POWER 7.4 9.0 13.8 16.2
SPECIAL CHARGE -- (0.5) -- (0.6)
-------- -------- -------- --------
TOTAL POWER 7.4 8.5 13.8 15.6
INDUSTRIAL TECHNOLOGY 2.6 (1.7) 4.3 (0.5)
SPECIAL CHARGE -- (0.3) -- (0.3)
-------- -------- -------- --------
TOTAL INDUSTRIAL TECHNOLOGY 2.6 (2.0) 4.3 (0.8)
-------- -------- -------- --------
TOTAL OPERATING INCOME 35.9 35.8 69.7 62.1
-------- -------- -------- --------
OTHER INCOME (EXPENSE), NET (3.2) (2.3) (7.7) (3.3)
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES
AND ACCOUNTING CHANGE 32.7 33.5 62.0 58.8
PROVISION FOR INCOME TAXES 8.5 2.7 16.1 8.5
-------- -------- -------- --------
INCOME BEFORE EFFECT
OF ACCOUNTING CHANGE 24.2 30.8 45.9 50.3
-------- -------- -------- --------
EFFECT OF ACCOUNTING CHANGE
NET OF TAX (SFAS 142) -- -- -- (25.4)
-------- -------- -------- --------
NET INCOME $ 24.2 $ 30.8 $ 45.9 $ 24.9
======== ======== ======== ========
EARNINGS PER SHARE BEFORE ACCOUNTING $ 0.40 $ 0.51 $ 0.76 $ 0.84
CHANGE - DILUTED
EARNINGS PER SHARE AFTER ACCOUNTING $ 0.40 $ 0.51 $ 0.76 $ 0.41
CHANGE - DILUTED
AVERAGE SHARES OUTSTANDING - DILUTED 59.9 59.9 59.9 59.7
======== ======== ======== ========
HUBBELL INCORPORATED
CONSOLIDATED STATEMENT OF EARNINGS
(IN MILLIONS, EXCEPT PER SHARE DATA) UNAUDITED
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
---------------------- ----------------------
2003 2002 2003 2002
-------- -------- -------- --------
NET SALES $ 449.3 $ 414.1 $ 868.7 $ 715.8
COST OF GOODS SOLD 333.6 308.0 643.2 533.3
-------- -------- -------- --------
GROSS PROFIT 115.7 106.1 225.5 182.5
SELLING & ADMINISTRATIVE EXPENSES 75.0 69.3 149.9 120.1
SPECIAL CHARGE 4.8 1.0 5.9 1.7
GAIN ON SALE OF BUSINESS -- -- -- (1.4)
-------- -------- -------- --------
TOTAL OPERATING INCOME 35.9 35.8 69.7 62.1
INVESTMENT INCOME 1.0 1.3 2.0 2.6
INTEREST EXPENSE (5.1) (4.3) (10.3) (6.5)
OTHER INCOME, NET 0.9 0.7 0.6 0.6
-------- -------- -------- --------
TOTAL OTHER INCOME (EXPENSE) (3.2) (2.3) (7.7) (3.3)
INCOME BEFORE INCOME TAXES
AND ACCOUNTING CHANGE 32.7 33.5 62.0 58.8
PROVISION FOR INCOME TAXES 8.5 2.7 16.1 8.5
-------- -------- -------- --------
INCOME BEFORE EFFECT
OF ACCOUNTING CHANGE 24.2 30.8 45.9 50.3
-------- -------- -------- --------
EFFECT OF ACCOUNTING CHANGE
NET OF TAX (SFAS 142) -- -- -- (25.4)
-------- -------- -------- --------
NET INCOME $ 24.2 $ 30.8 $ 45.9 $ 24.9
======== ======== ======== ========
EARNINGS PER SHARE BEFORE ACCOUNTING $ 0.40 $ 0.51 $ 0.76 $ 0.84
CHANGE - DILUTED
EARNINGS PER SHARE AFTER ACCOUNTING $ 0.40 $ 0.51 $ 0.76 $ 0.41
CHANGE - DILUTED
AVERAGE SHARES OUTSTANDING - DILUTED 59.9 59.9 59.9 59.7
======== ======== ======== ========
HUBBELL INCORPORATED
CONSOLIDATED BALANCE SHEET
(IN MILLIONS)
(UNAUDITED) (UNAUDITED)
JUNE 2003 MARCH 2003 DEC 2002
--------- ---------- --------
ASSETS
CASH AND TEMPORARY CASH INVESTMENTS $ 90.0 $ 54.9 $ 40.0
SHORT-TERM INVESTMENTS 15.0 15.0 15.0
ACCOUNTS RECEIVABLE (NET) 252.1 233.3 221.2
INVENTORIES 228.1 254.5 258.0
DEFERRED TAXES AND OTHER 56.3 57.1 62.1
-------- -------- --------
CURRENT ASSETS 641.5 614.8 596.3
PROPERTY, PLANT AND EQUIPMENT (NET) 305.0 312.0 320.6
INVESTMENTS 76.0 75.3 76.5
GOODWILL 319.2 317.5 314.6
INTANGIBLE ASSETS AND OTHER 95.0 99.7 102.3
-------- -------- --------
TOTAL ASSETS $1,436.7 $1,419.3 $1,410.3
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
COMMERCIAL PAPER AND NOTES $ -- $ -- $ --
ACCOUNTS PAYABLE 88.3 88.0 86.2
ACCRUED SALARIES, WAGES AND EMPLOYEE BENEFITS 44.5 40.3 39.8
ACCRUED INCOME TAXES 33.5 32.9 25.5
DIVIDENDS PAYABLE 19.6 19.5 19.5
OTHER ACCRUED LIABILITIES 77.1 79.3 83.7
-------- -------- --------
CURRENT LIABILITIES 263.0 260.0 254.7
LONG-TERM DEBT 298.7 298.7 298.7
OTHER NON-CURRENT LIABILITIES 112.9 111.8 112.7
-------- -------- --------
TOTAL LIABILITIES 674.6 670.5 666.1
SHAREHOLDERS' EQUITY 762.1 748.8 744.2
-------- -------- --------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $1,436.7 $1,419.3 $1,410.3
======== ======== ========