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Hubbell Annual Report, Year Ended Dec 31, 2002

Filing Date
Filed March 24, 2003
Period End
December 31, 2002
Security
HUBB
In the record · 2016–202610-K1110-Q338-K110

HUBB filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 110 current reports (8-K) between 2016 and 2026.

  1. Restructuring8-K · Jan ’17Jan ’17
  2. Leadership change8-K · Mar ’19Mar ’19
  3. Material agreement8-K · Mar ’21Mar ’21
  4. Material agreement8-K · Nov ’25Nov ’25

01—Abstract

Summary

Summary of the 10-K filed March 24, 2003. Cited figures are marked; the original filing is the authoritative source.

Hubbell Incorporated's 2002 annual report shows net sales of $1,587.8 milliona, up 21% from $1,312.2 million in 2001, with the increase attributed to the 2001 fourth quarter and 2002 acquisitions.

Excluding acquired businesses, consolidated net sales decreased approximately 10% as non-residential construction and industrial demand declined, while residential and consumer/home center demand grew. Operating income rose to $138.5 millionb from $56.5 million, helped by lower special charges, acquired-business profit, and streamlining savings. Net income was $83.2 million, or $1.38 diluted EPS, after a $25.4 million non-cash goodwill impairment recorded as a cumulative effect of accounting change; income before that change was $108.6 million, or $1.81 diluted EPS.

The balance sheet became more leveraged after the 2002 acquisitions of LCA (the domestic lighting business of U.S. Industries, Inc.), Hawke Cable Glands, and a pole line hardware business from Cooper Power Systems. Total debt rose to $298.7 millionc from $167.5 million, and debt to total capitalization increased to 29% from 19%. Acquisitions consumed $270.2 million in cash, and operating cash flow was $179.4 million.

Management expects 2003 pretax lighting integration costs of $15 to $20 milliond, a tax rate of approximately 27%, and pension contributions of $25 to $35 million. Management stated that economic conditions in commercial construction, industrial, and telecommunications markets were negatively affecting results and are expected to remain below 1998-2000 levels in 2003. The company reported 11,476 full-time employees at year-end 2002, and its shares trade on the New York Stock Exchange under the symbols HUBA and HUBB.

02—Key points

Key Highlights

  1. Net sales rose 21% to $1,587.8 million, driven by acquisitions; excluding acquired businesses, net sales decreased approximately 10%.
  2. Operating income increased to $138.5 million from $56.5 million, with operating income as a percentage of sales at 8.7% versus 4.3%.
  3. Net income was $83.2 million ($1.38 diluted EPS), including a $25.4 million goodwill impairment charge recorded as a cumulative effect of accounting change.
  4. Acquisitions of LCA, Hawke, and a pole line hardware business required cash outlays of $270.2 million, funded largely by $200 million of 6.375% senior notes due 2012.
  5. Total debt increased to $298.7 million, and debt to total capitalization rose to 29% from 19%; the company had no commercial paper outstanding at December 31, 2002.
  6. Electrical Segment sales were $1,142.5 million (72% of revenue), Power Segment sales were $325.8 million, and Industrial Technology sales were $119.5 million.
  7. The company expects 2003 operating margin to improve by approximately 100 basis points and an effective tax rate of approximately 27%.

03—Questions

Frequently Asked Questions

  1. What drove the increase in Hubbell's 2002 net sales?

    The filing attributes the 21% increase in consolidated net sales to the 2001 fourth quarter and 2002 acquisitions, principally LCA, Hawke, and the Cooper pole line hardware business. Excluding acquired businesses, net sales decreased approximately 10% as non-residential construction and industrial demand declined, while residential and consumer/home center demand grew.

  2. How did the goodwill impairment affect 2002 results?

    Upon adopting SFAS No. 142 on January 1, 2002, the company recorded a non-cash goodwill impairment charge of $25.4 million, net of tax, or $0.43 per diluted share, for one reporting unit in the Industrial Technology segment. It was reported as a cumulative effect of accounting change, reducing net income to $83.2 million from $108.6 million before the change.

  3. How did Hubbell finance its 2002 acquisitions and how did leverage change?

    The company used available cash, commercial paper of $250 million issued in April 2002, and $200 million of 6.375% senior notes due 2012 issued in May 2002, the proceeds of which partly repaid commercial paper. Total debt rose to $298.7 million from $167.5 million, and debt to total capitalization increased to 29% from 19%. All commercial paper was repaid by year-end 2002.

  4. What special charges and integration costs should investors expect in 2003?

    The company recorded pretax special charges of $13.7 million in 2002, including $10.3 million tied to lighting integration. It anticipates additional pretax lighting integration costs of $15 to $20 million in 2003 and expects $15 to $20 million in annual pretax savings when fully implemented, though a portion may be used to offset future costs and competitive pressures.

  5. What risks and outlook did management describe?

    Management said economic conditions in commercial construction, industrial, and telecommunications markets negatively affected 2002 results and are expected to remain below the 1998-2000 period levels in 2003. The Power Segment cited lower utility demand and delayed capital investment. The company also expects pension contributions of $25 to $35 million in 2003 and a higher effective tax rate of approximately 27%.

04—Continue

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