[HUBBELL LOGO]
Date: January 20, 2004 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 FOURTH QUARTER, FULL YEAR 2003
RESULTS; SETS COMPANY RECORD FOR CASH FLOW
ORANGE, CT. (January 20, 2004) -- Hubbell Incorporated (NYSE: HUBA, HUBB) today
reported its results for the fourth quarter and full year ended December 31,
2003. Full year 2003 cash flow from operations exceeded $240 million, the
highest level in the Company's 115 year history.
Sales in the fourth quarter 2003 totaled $444.6 million, a 4% increase over
$426.2 million reported in the same period last year. Sales for the full year
2003 rose to $1.77 billion or an increase of 12% compared to $1.59 billion
reported for 2002. The following acquisitions completed in 2002 benefited the
year-over-year comparison of full year sales:
o LCA Group, Inc., the domestic lighting business of U.S. Industries,
Inc., completed in April, Hawke International, a U.K. - based global
leader in brass glands and connectors, closed in February, and the
assets of the utility pole line hardware business of Cooper Power
Systems, Inc., completed in September.
Net income for the fourth quarter 2003 was $34.7 million or $.57 per share as
compared to $27.2 million or $.45 per share reported for the equivalent period
of 2002. Both periods included items that affect the year-over-year comparison:
o The fourth quarter of 2003 included pre-tax expenses of $0.5 million or
$.01 per share for actions implemented under the Company's program to
restructure its lighting business.
o The fourth quarter of 2002 included:
o A charge of $10.3 million pre-tax or $.11 per share for the
lighting business restructuring program.
o Expenses of $2.1 million pre-tax or $.02 per share under the 2001
capacity reduction program.
o A reduction in tax expense of $5.8 million or $.10 per share
associated with R & D tax credits.
Net income for the full year 2003 was $115.1 million or $1.91 per share versus
$83.2 million or $1.38, respectively, reported for 2002. Included in the full
year 2003 results were lighting business restructuring expenses of $ 8.1 million
pre-tax or $.08 per share. Included in the full year 2002 results were
restructuring charges of $13.7 million pre-tax or $.14 per share, tax-related
benefits of $10.8 million or $.18 per share, a $25.4 million or $.43 per share
non-cash write-down of goodwill resulting from the Company's adoption of FAS
142, and a $3.0 million pre-tax or $.03 per share increase to a previously
reported gain on the sale of a business.
OPERATIONS REVIEW
"Hubbell's financial results for 2003 reflect another year of solid progress on
multiple fronts," said Timothy H. Powers, President and Chief Executive Officer.
"We achieved virtually every one of our near-term operating goals and took
substantial steps forward in advancing our long-term strategic plan."
"The positive sales and profit comparisons gained in a sluggish economy speak
for themselves," Powers said. "Of equal importance were the achievements behind
those numbers. We achieved our goal for 2003 by improving Hubbell's operating
margin by one full point. Further achievements in working capital management
across all of our businesses were a prominent feature of the year. Inventories
were reduced by $50 million to bring the cumulative reduction over the last
three years, excluding the impact
of acquisitions, to more than $165 million. Operating cash flow for 2003 set a
new Company record of more than $240 million which funded $79 million in
dividends to shareholders and substantial net debt reduction. I'm pleased to
report that Hubbell was net debt free at the end of 2003, just twenty months
after completing the largest acquisition in the Company's history."
SEGMENT REVIEW
The comments and year-over-year percentage comparisons which follow in this
segment review are based on fourth quarter results in 2003 and 2002.
Hubbell's Electrical Segment reported a 5% increase in sales and a 74% increase
in operating profit as margin improved to 11.8% and special charges declined
from the prior year. Of special note were continued strength in residential and
commercial fluorescent lighting fixture markets served by the Progress and
Columbia brands, broad product lines marketed by Hubbell Canada, and harsh and
hazardous application products sold by Chalmit based in Scotland.
The Power Systems Segment reported a 5% gain in sales and a 1% decline in
operating profit due to competitive pricing and increased raw material costs.
Utility product markets continue to be sluggish as customers delay capital
investment. The lack of action on a national energy policy remains the primary
barrier to industry capital investment.
The Industrial Technology Segment reported essentially flat sales as it
continues to contend with slack demand from its customers in high voltage
industrial and utility markets. The GAI-Tronics specialty communications
operation reported another strong quarter of sales and operating profit gains.
Combined with cost reductions and productivity gains, the Segment significantly
improved its operating profit.
SUMMARY AND OUTLOOK
"Our strategic plan is straightforward: operational excellence and growth. Our
lean transformation -- now in its third year -- is at work in 28 factories and
warehouses. We're adding lean concepts to new product development. The goal is
to reduce time to market by two-thirds and triple our new product introductions.
Lean concepts are being applied to back office processes to increase
productivity by 5%
per year. We are also progressing on our Hubbell 2006 initiative: a multiyear
implementation of a comprehensive business system across the enterprise which
will allow us to reduce costs and increase customer service."
"We expect the year ahead to be much like the year just past," Powers added.
"Our markets are likely to continue to be challenging, especially commercial
construction and utility product markets, with only modest improvements in
industrial product demand and a possible slowdown in residential activity after
an unusually strong 2003. Within Hubbell, however, we plan on further
improvements in operational performance in 2004: an additional 1% increase in
operating margin, more working capital reductions, higher factory throughput,
increased productivity, and industry-leading service to our customers. And, our
record-setting cash flow in 2003 gives Hubbell the financial capability to
continue its historical record of growth."
Certain statements contained herein may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
These include statements about capital resources, performance and results of
operations and are based on the Company's reasonable current expectations. These
statements may be identified by the use of forward-looking words or phrases such
as "plan", "could", "expect", "expected", "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, but are not limited to:
achieving sales levels to fulfill revenue expectations; unexpected costs or
charges, certain of which may be outside the control of the Company; expected
benefits of process improvement and other lean initiatives, the ability to
achieve projected levels of efficiencies and cost reduction measures; 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 2003 revenues of $1.8 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)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31 DECEMBER 31
-------------------------- --------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- ----------- -------
2003 2002 2003 2002
----------- ----------- ----------- -------
Net Sales .......................... $444.6 $426.2 $1,770.7 $1,587.8
Cost of goods sold ................. 316.8(1) 315.0(2) 1,289.2(1) 1,178.7(2)
------ ------ -------- --------
Gross Profit ....................... 127.8 111.2 481.5 409.1
Selling & administrative
expenses ......................... 76.5 72.1 303.9 265.3
Special charges, net ............... -- 7.0 5.7 8.3
Gain on sale of business ........... -- -- -- (3.0)
------ ------ -------- --------
Total Operating Income ............. 51.3 32.1 171.9 138.5
Investment income .................. 0.9 2.0 3.7 5.9
Interest expense ................... (5.1) (5.5) (20.6) (17.8)
Other income, net .................. (0.2) (0.8) 0.5 0.4
------ ------ -------- --------
Total Other Income (Expense) ....... (4.4) (4.3) (16.4) (11.5)
Income Before Income Taxes
and Accounting Change ............ 46.9 27.8 155.5 127.0
Provision for income taxes ......... 12.2 0.6 40.4 18.4
------ ------ -------- --------
Income Before Effect
of Accounting Change ............. 34.7 27.2 115.1 108.6
------ ------ -------- --------
Effect of Accounting Change
Net of Tax (SFAS 142) .............. -- -- -- (25.4)
------ ------ -------- --------
NET INCOME ......................... $ 34.7 $ 27.2 $ 115.1 $ 83.2
====== ====== ======== ========
Earnings per share before
accounting change - diluted ...... $ 0.57 $ 0.45 $ 1.91 $ 1.81
Earnings per share after
accounting change - diluted ...... $ 0.57 $ 0.45 $ 1.91 $ 1.38
Average Shares Outstanding - Diluted 60.9 59.9 60.1 59.7
====== ====== ======== ========
(1) 2003 Cost of goods sold includes a special charge of $0.5 and $2.4 for
Lighting business restructuring in the fourth quarter and full year,
respectively.
(2) 2002 Cost of goods sold includes a special charge of $5.4 for Lighting
business restructuring.
HUBBELL INCORPORATED
CONSOLIDATED STATEMENT OF EARNINGS
(in millions, except per share data)
<Table>
<Caption>
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31 DECEMBER 31
-------------------------- -------------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
2003 2002 2003 2002
------ ------ -------- --------
Net Sales
Electrical ............................ $331.0 $316.4 $1,313.7 $1,142.5
Power ................................. 82.6 78.6 332.5 325.8
Industrial Technology ................. 31.0 31.2 124.5 119.5
------ ------ -------- --------
Total Net Sales .................... $444.6 $426.2 $1,770.7 $1,587.8
====== ====== ======== ========
Operating Income
Electrical ............................ $39.5 $34.2 $136.3 $112.5
Special charges, net .................. (0.5) (11.8) (8.1) (12.4)
Gain on sale of business .............. - - - 3.0
------ ------ -------- --------
Total Electrical ................... 39.0 22.4 128.2 103.1
Power ................................. 8.8 9.1 32.9 33.4
Special charges, net .................. - (0.2) - (0.5)
------ ------ -------- --------
Total Power ........................ 8.8 8.9 32.9 32.9
Industrial Technology ................. 3.5 1.2 10.8 3.3
Special charges, net .................. - (0.4) - (0.8)
------ ------ -------- --------
Total Industrial Technology ......... 3.5 0.8 10.8 2.5
------ ------ -------- --------
Total Operating Income ............ 51.3 32.1 171.9 138.5
------ ------ -------- --------
Other expense, net ....................... (4.4) (4.3) (16.4) (11.5)
------ ------ -------- --------
Income Before Income Taxes
and Accounting Change .................... 46.9 27.8 155.5 127.0
Provision for income taxes ............... 12.2 0.6 40.4 18.4
------ ------ -------- --------
Income Before Effect
of Accounting Change ..................... 34.7 27.2 115.1 108.6
------ ------ -------- --------
Effect of Accounting Change
Net of Tax (SFAS 142) .................... - - - (25.4)
------ ------ -------- --------
NET INCOME ............................... $34.7 $27.2 $115.1 $83.2
====== ====== ======== ========
Earnings per share before accounting
change - diluted ...................... $0.57 $0.45 $1.91 $1.81
Earnings per share after accounting
change - diluted ...................... $0.57 $0.45 $1.91 $1.38
Average Shares Outstanding - Diluted ..... 60.9 59.9 60.1 59.7
====== ====== ======== ========
</Table>
HUBBELL INCORPORATED
CONSOLIDATED BALANCE SHEET
(in millions)
(UNAUDITED) (UNAUDITED)
DECEMBER SEPTEMBER DECEMBER
2003 2003 2002
----------- ----------- --------
ASSETS
Cash and temporary cash
investments ........................ $ 220.8 $ 175.4 $ 40.0
Short-term investments ............... -- 15.0 15.0
Accounts receivable (net) ............ 227.1 255.5 221.2
Inventories (net) .................... 207.9 211.3 258.0
Deferred taxes and other ............. 53.5 50.9 62.1
-------- -------- --------
CURRENT ASSETS ....................... 709.3 708.1 596.3
Property, plant and
equipment (net) .................... 295.8 297.7 320.6
Investments .......................... 80.1 74.7 76.5
Goodwill ............................. 322.7 318.6 314.6
Intangible assets
and other .......................... 91.5 90.8 102.3
-------- -------- --------
TOTAL ASSETS ......................... $1,499.4 $1,489.9 $1,410.3
======== ======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Commercial paper and notes $ -- $ -- $ --
Accounts payable ..................... 103.6 96.6 86.2
Accrued salaries, wages and
employee benefits .................. 51.1 51.3 39.8
Accrued income taxes ................ 34.9 33.6 25.5
Dividends payable ................... 19.9 19.7 19.5
Other accrued liabilities ........... 78.9 87.6 83.7
-------- -------- --------
CURRENT LIABILITIES ................. 288.4 288.8 254.7
Long-term debt ...................... 298.8 298.8 298.7
Other non-current liabilities ....... 82.5 119.6 112.7
-------- -------- --------
TOTAL LIABILITIES ................... 669.7 707.2 666.1
SHAREHOLDERS' EQUITY ................ 829.7 782.7 744.2
-------- -------- --------
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY .............. $1,499.4 $1,489.9 $1,410.3
======== ======== ========