UNITED STATES SECURITIES AND EXCHANGE COMMISSION

FORM 10Q

HUBBELL INCORPORATED

(203) 799-4100

N/A

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            Noo

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x No o

The number of shares outstanding of the Class A Common Stock and Class B Common Stock as of August 2, 2004 were 9,418,569 and 51,444,780, respectively.

HUBBELL INCORPORATED

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HUBBELL INCORPORATED

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Consolidated Statements of Income
(unaudited)
(in millions, except per share amounts)

See notes to consolidated financial statements.

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HUBBELL INCORPORATED

Consolidated Balance Sheets
(in millions)

See notes to consolidated financial statements.

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HUBBELL INCORPORATED

Consolidated Statements of Cash Flows
(unaudited)
(in millions)

See notes to consolidated financial statements.

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HUBBELL INCORPORATED

1. Basis of Presentation

     The accompanying unaudited consolidated financial statements of Hubbell Incorporated (“Hubbell”, the “Company”, or “Registrant”) have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004. Certain prior year amounts have been reclassified to conform with the current year presentation.

     The balance sheet at December 31, 2003 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

     For further information, refer to the consolidated financial statements and footnotes thereto included in the Hubbell Incorporated Annual Report on Form 10-K for the year ended December 31, 2003.

2. Stock-Based Compensation

     The Company accounts for employee stock option and performance plans using the intrinsic value based method of accounting for such plans in accordance with Accounting Principles Board Opinion No. 25 “Accounting for Stock Issued to Employees,” where compensation expense per option granted is measured as the excess, if any, of the quoted market price of the Company’s stock at the measurement date over the exercise price.

     The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123 “Accounting for Stock-Based Compensation” for stock options for the three and six months ended June 30, 2004 and 2003 (in millions, except per share amounts):

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3. Inventories:

     Inventories are comprised of the following (in millions):

4. Earnings Per Share

     The following table sets forth the computation of earnings per share for the three and six months ended June 30, 2004 and 2003 (in millions, except per share amounts).

     A portion of the total number of options to purchase shares of common stock were not included in the computation of diluted earnings per share because the effect would be anti-dilutive. The number of anti-dilutive options outstanding were 1.6 million for the second quarter and six months ended June 30, 2004. The number of anti-dilutive options outstanding were 3.6 million for the second quarter and six months ended June 30, 2003.

5. Goodwill and Other Intangible Assets

     Changes in the carrying amount of goodwill for the six months ended June 30, 2004, by segment, were as follows (in millions):

     The Company’s policy is to perform its annual impairment testing in the second quarter of each year, unless circumstances dictate the need for more frequent assessments. In 2004, this testing resulted in implied fair values for each reporting unit which exceeded the reporting unit’s carrying value, including goodwill. Consequently, there were no impairments of goodwill or indefinite-lived intangible assets.

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     Identifiable intangible assets as of June 30, 2004 are recorded in “Intangible assets and other” in the Consolidated Balance Sheets and include approximately $21.5 million of indefinite-lived intangible assets not subject to amortization and $10.4 million of intangibles with definite lives that are being amortized and are presented net of accumulated amortization of $2.4 million. Indefinite-lived intangible assets primarily represent trade names, while definite-lived intangible assets primarily represent trademarks and patents, for which amortization expense is expected to be approximately $1.2 million per year over the next five years.

6. Shareholders’ Equity

     Shareholders’ equity is comprised of the following (in millions, except share and per share amounts):

7. Special Charges

     Special charges recorded in the second quarter of 2004 and 2003 reflect expenses of $10.4 million and $6.6 million, respectively. Included in these amounts are $0.9 million and $1.8 million, respectively, of second quarter 2004 and 2003 inventory write-downs related to discontinued products, which were recorded in Cost of goods sold in the Consolidated Statements of Income.

     The ongoing lighting business integration program accounted for $3.7 million of the 2004 second quarter charge and all of the 2003 second quarter charge. In the second quarter of 2004, the Company announced the closure of a domestic, commercial lighting manufacturing facility and the consolidation of these operations into an existing lighting manufacturing facility in Virginia. This action was taken to reduce manufacturing space and overhead within the lighting operations as part of the integration of the acquired LCA and legacy Hubbell lighting businesses. The cost of this factory closure was $3.0 million and was recorded in the second quarter. The $3.0 million cost consisted of asset impairments of $2.7 million, including inventory write-downs, and severance costs of $0.3 million. The severance cost represents a portion of an estimated $1.2 million charge which will be recognized ratably in 2004 over the remaining service period of the affected employees. Approximately 70 employees will be affected by this action, none of whom had left the Company by June 30, 2004.

     Additionally, special charges in the second quarter of 2004 include $6.7 million of charges in connection with the closure of a wiring device factory in Puerto Rico. The factory is expected to close by the end of the second quarter of 2005, at which time production activities will have either been outsourced or transferred to existing facilities. Approximately 225 employees will be impacted by this action over the next twelve months, none of whom had left the Company by June 30, 2004. The $6.7 million special charge includes $4.5 million of asset impairments and $2.2 million of severance costs. The asset impairments include write-offs of leasehold improvements and write-downs of equipment to fair market value, which approximated salvage value due to the overall age and location of the equipment.

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     Special charges for the first six months of 2004 consist of a total of $11.8 million of expenses, of which $7.7 million were non-cash charges primarily related to asset impairments and inventory write-downs, and $4.1 million were expenses for severance costs and other exit and integration costs. Included in the non-cash portion of the charge is $1.1 million of inventory write-downs, which were recorded in Cost of goods sold. In addition to the plant closures noted above, 2004 year-to-date special charges include ongoing costs incurred in connection with the lighting integration program of $2.1 million. These costs primarily relate to programs approved and announced in prior years for which the costs were not able to be accrued in accordance with applicable accounting rules. These costs primarily include severance, facility shut down and integration cost, and stranded inventory write-offs.

     Special charges for the second quarter and first six months of 2003 reflected expenses of $6.6 million and $7.7 million, respectively. Included in these amounts was $4.6 million of expense recorded in the 2003 second quarter resulting from the Company’s decision to discontinue its entertainment lighting product offering consisting of contract cancellation costs of $1.5 million, $1.8 million, included in Cost of goods sold, for the write-down of entertainment lighting inventory to salvage value and asset impairments and other costs of $1.3 million. In addition, the Company expensed $2.0 million and $3.1 million in the second quarter and first six months of 2003, respectively, as special charges related to ongoing costs for the lighting integration program. Similar to 2004, these costs primarily included facility closures and personnel realignment, and consist of costs which were expensed as they were incurred in 2003 in accordance with applicable accounting rules.

     The following table sets forth the components of special charges recorded for the six months ended June 30, 2004 (in millions):

     A detailed description of the actions associated with these programs is included in “Special Charges” within Management’s Discussion and Analysis.

     8. Comprehensive Income:

     Total comprehensive income and its components are as follows (in millions):

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9. Segment Information

     The following table sets forth financial information by business segment (in millions):