Filed Pursuant to Rule 424(b)(3)
Registration No. 333-90754
PROSPECTUS
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HUBBELL INCORPORATED
OFFER TO EXCHANGE
$200,000,000 PRINCIPAL AMOUNT OF ITS
6.375% NOTES DUE 2012,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT,
FOR ANY AND ALL OF ITS OUTSTANDING
6.375% NOTES DUE 2012
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We are offering to exchange all of our outstanding 6.375% Notes due 2012
that were issued on May 15, 2002, which we refer to as the "old notes," for our
registered 6.375% Notes due 2012, which we refer to as the "exchange notes." We
refer to the old notes and the exchange notes collectively as the "notes." The
terms of the exchange notes are identical to the terms of the old notes except
that the exchange notes have been registered under the Securities Act of 1933
and, therefore, are freely transferable. The exchange notes will represent the
same debt as the old notes, and we will issue the exchange notes under the same
indenture.
PLEASE CONSIDER THE FOLLOWING:
- Our offer to exchange old notes for exchange notes will be open until
5:00 p.m., New York City time, on July 31, 2002, unless we extend the
offer.
- You should also carefully review the procedures for tendering the old
notes beginning on page 5 of this prospectus.
- If you fail to tender your old notes, you will continue to hold
unregistered securities and your ability to transfer them could be
adversely affected.
- No public market currently exists for the notes. We do not intend to
list the exchange notes on any securities exchange and, therefore, no
active public market is anticipated.
INFORMATION ABOUT THE NOTES:
- The notes will mature on May 15, 2012.
- We will pay interest on the notes semi-annually in arrears on May 15 and
November 15 of each year at the rate of 6.375% per annum.
- We may redeem the notes at any time at the redemption prices described
on page 28 of this prospectus.
- The notes rank equally with all of our other unsecured and
unsubordinated indebtedness.
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Neither the U.S. Securities and Exchange Commission nor any state
securities commission has approved or disapproved of the exchange notes or
determined if this prospectus is accurate or complete. Any representation to the
contrary is a criminal offense.
July 3, 2002
TABLE OF CONTENTS
PAGE
----
WHERE YOU CAN FIND MORE INFORMATION......................... i
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............. ii
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS... iii
PROSPECTUS SUMMARY.......................................... 1
THE EXCHANGE OFFER.......................................... 5
USE OF PROCEEDS............................................. 10
RATIOS OF EARNINGS TO FIXED CHARGES......................... 10
CAPITALIZATION.............................................. 11
SELECTED HISTORICAL CONSOLIDATED DATA....................... 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................. 14
BUSINESS.................................................... 24
DESCRIPTION OF THE EXCHANGE NOTES........................... 27
BOOK-ENTRY; DELIVERY AND FORM............................... 36
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES.............. 38
PLAN OF DISTRIBUTION........................................ 42
LEGAL MATTERS............................................... 42
INDEPENDENT ACCOUNTANTS..................................... 42
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended. In accordance with the Exchange
Act, we file annual, quarterly and special reports, proxy statements and other
information with the U.S. Securities and Exchange Commission, which we refer to
in this prospectus as the "Commission." These documents and other information
can be inspected and copied at the public reference facilities that the
Commission maintains at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission also maintains a web site at http://www.sec.gov, which
contains reports and other information regarding registrants that file
electronically with the Commission. Copies of these materials can be obtained at
prescribed rates from the Public Reference Section of the Commission at the
principal offices of the Commission, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such reports, proxy statements and other information can
also be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005, on which our common stock is listed.
i
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We have elected to incorporate by reference information into this
prospectus. By incorporating by reference, we can disclose important information
to you by referring to another document we have filed separately with the
Commission. The information incorporated by reference is deemed to be part of
this prospectus, except as described in the following sentence. Any statement in
this prospectus or in any document which is incorporated or deemed to be
incorporated by reference in this prospectus will be deemed to have been
modified or superseded to the extent that a statement contained in this
prospectus or any document that we subsequently file with the Commission that is
incorporated or deemed to be incorporated by reference in this prospectus
modifies or supersedes that statement. Any statement so modified or superseded
will not be deemed to be a part of this prospectus except as so modified or
superseded.
This prospectus incorporates by reference the following documents that we
have previously filed with the Commission:
- Annual Report on Form 10-K for the fiscal year ended December 31, 2001;
- Quarterly Report on Form 10-Q for the three months ended March 31, 2002;
and
- Current Reports on Form 8-K filed on March 20, 2002, April 29, 2002 and
May 10, 2002.
We are also incorporating by reference all other reports that we file with
the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act after the date of this prospectus and before the termination of
this offering.
As used in this prospectus, the term "prospectus" means this prospectus,
including the documents incorporated by reference or deemed to be incorporated
by reference, as the same may be amended, supplemented or otherwise modified
from time to time.
We have filed a Registration Statement on Form S-4 to register with the
Commission the exchange notes to be issued in exchange for the old notes. This
prospectus is part of that Registration Statement. As allowed by the
Commission's rules, this prospectus does not contain all of the information you
can find in the Registration Statement or the exhibits to the Registration
Statement. This information is available free of charge to any holders of
securities of Hubbell upon written or oral request to Hubbell Incorporated, 584
Derby Milford Road, P.O. Box 549, Orange, Connecticut 06477-4024, Attention:
Secretary (telephone: (203) 799-4100). IN ORDER TO OBTAIN TIMELY DELIVERY OF
SUCH DOCUMENTS, HOLDERS MUST REQUEST THIS INFORMATION NO LATER THAN FIVE
BUSINESS DAYS PRIOR TO THE EXPIRATION DATE OF THE EXCHANGE OFFER FOR THE NOTES.
We have not authorized anyone to give you any information or to make any
representations about the transactions we discuss in this prospectus other than
those contained herein. If you are given any information or representations
about these matters that is not discussed, you must not rely on that
information. This prospectus is not an offer to sell or a solicitation of an
offer to buy securities anywhere or to anyone where or to whom we are not
permitted to offer or sell securities under applicable law. The information
contained in this prospectus is current only as of the date on the cover page of
this prospectus and may change after that date. The delivery of this prospectus
offered hereby does not, under any circumstances, mean that there has not been a
change in our affairs since the date hereof. It also does not mean that the
information in this prospectus is correct after that date.
ii
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated or deemed to be incorporated
by reference in this prospectus contain statements concerning our future results
and performance and other matters that are "forward-looking" statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Some of these forward-looking statements can be
identified by the use of forward-looking terminology such as "believes,"
"expects," "may," "will," "should," "seeks," "approximately," "potential,"
"intends," "plans," "pro forma," "estimates" or "anticipates" or the negative or
other variations of those terms or comparable terminology, or by discussions of
strategy, plans, targets, goals or intentions. Forward-looking statements
involve numerous assumptions, known and unknown risks, uncertainties and other
factors which may cause our actual and future performance or achievements to be
materially different from any future results, performance, or achievements
expressed or implied by such forward-looking statements. These factors include:
our ability to achieve sales levels to fulfill revenue expectations; unexpected
costs or charges, certain of which may be outside our control; general economic
and business conditions in the United States and in other countries in which we
manufacture and sell products; competition; the extent to which we are able to
achieve savings from our restructuring plans and the impact of acquisitions.
We can give no assurances that any of the events anticipated by the
forward-looking statements will occur or, if any of them do, what impact they
will have on our results of operations and financial condition. You are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this prospectus.
We do not undertake any responsibility to release publicly any revisions to
these forward-looking statements to take into account events or circumstances
that occur after the date of this prospectus. Additionally, we do not undertake
any responsibility to update you on the occurrence of any unanticipated events
which may cause actual results to differ from those expressed or implied by the
forward-looking statements contained or incorporated by reference in this
prospectus.
iii
PROSPECTUS SUMMARY
In this prospectus, the words "Hubbell," the "Company," "we," or "us" refer
to Hubbell Incorporated and its subsidiaries. The following summary contains
basic information about Hubbell and this exchange offer. It does not contain all
the information that is important to you. For a more complete understanding of
this exchange offer, we encourage you to read this entire document, including
the documents incorporated by reference and the documents to which we have
referred you.
OUR COMPANY
Hubbell Incorporated was founded as a proprietorship in 1888, and was
incorporated in the State of Connecticut in 1905. We are primarily engaged in
the engineering, manufacture and sale of electrical and electronic products. For
over a century, we have manufactured and sold electrical and electronic products
for a broad range of commercial, industrial, residential, telecommunications and
utility applications. Since 1961, we have expanded our operations into other
areas of the electrical industry and related fields. Our products are now
manufactured and assembled by thirty-one divisions and subsidiaries in North
America, Switzerland, Puerto Rico, Mexico, Italy and the United Kingdom. We also
participate in a joint venture in Taiwan, and maintain sales offices in
Singapore, the People's Republic of China, Mexico, Hong Kong, South Korea and
the Middle East. The mailing address of our principal executive offices is 584
Derby Milford Road, Orange, Connecticut 06477 and the telephone number of our
principal executive offices is (203) 799-4100.
RECENT DEVELOPMENTS
ACQUISITION OF MYTECH CORPORATION
In October 2001, we acquired the stock of MyTech Corporation ("MyTech").
Based in Austin, Texas, MyTech designs, manufactures and markets
microprocessor-based, digital, self-adjusting occupancy sensors, high intensity
discharge ("HID") dimming controls, photocells and other lighting related
electronic control products used primarily to reduce energy consumption in
commercial and industrial applications by turning off lights and other
electronic devices in areas that are unoccupied. MyTech is included in our
Electrical Segment.
ACQUISITION OF HAWKE CABLE GLANDS LIMITED
In March 2002, we acquired the stock of Hawke Cable Glands Limited
("Hawke"). Based in Ashton-Under-Lyne, England, Hawke designs, manufactures and
markets cable glands and cable connectors to provide a means to terminate cables
at junction boxes, light fixtures, control centers, panel boards, motor control
enclosures and electrical equipment, as well as a line of enclosures, cable
transit, breathers, and field bus products, all for the hazardous area and
industrial markets. Hawke is included in our Electrical Segment.
ACQUISITION OF LCA GROUP, INC.
On April 26, 2002, we completed our acquisition of LCA Group, Inc. ("LCA"),
the domestic lighting business of U.S. Industries, Inc. The purchase price for
the acquisition was $250 million in cash subject to adjustment based on certain
circumstances. Through six major manufacturing facilities and multiple
distribution centers throughout the United States, the group manufactures and
distributes a wide range of outdoor and indoor lighting products to the
commercial, industrial and residential markets under various brand names,
including Alera, Kim, Spaulding, Whiteway, Moldcast, Architectural Area
Lighting, Columbia, Keystone, Prescolite, Dual Lite and Progress.
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
The Exchange Offer......... $1,000 principal amount of exchange notes in
exchange for each $1,000 principal amount of old
notes. The exchange notes are identical to the old
notes in all respects, except that the old notes
were not registered under the Securities Act.
Together, the old notes and the exchange notes
constitute an issuance of 6.375% Notes due 2012
under the indenture, dated as of September 15,
1995. As of the date hereof, $200.0 million in
aggregate principal amount of old notes are
outstanding.
Based on interpretations by the staff of the
Commission, as set forth in no-action letters
issued to certain third parties unrelated to us,
we believe that exchange notes issued pursuant to
the exchange offer in exchange for old notes may
be offered for resale, resold or otherwise
transferred by you without
1
compliance with the registration and prospectus
delivery requirements of the Securities Act,
unless you:
- are an "affiliate" of ours within the meaning
of Rule 405 under the Securities Act;
- are a broker-dealer who purchased old notes
directly from us for resale under Rule 144A or
Regulation S or any other available exemption
under the Securities Act;
- acquired the exchange notes other than in the
ordinary course of your business; or
- have an arrangement or understanding with any
person to engage in the distribution of
exchange notes.
However, the Commission has not considered the
exchange offer in the context of a no-action
letter and we cannot be sure that the staff of the
Commission would make a similar determination with
respect to the exchange offer as in such other
circumstances. In order to participate in the
exchange offer, you must make the representations
set forth in the letter of transmittal that we are
sending you with this prospectus.
Registration Rights
Agreement.................. We sold the old notes on May 15, 2002, in a
private placement in reliance on Section 4(2) of
the Securities Act. The old notes were immediately
resold by the initial purchasers in reliance on
Rule 144A and Regulation S under the Securities
Act. At the same time, we entered into a
registration rights agreement with the initial
purchasers requiring us to make the exchange
offer. The registration rights agreement also
requires us to use our reasonable best efforts to:
- cause the registration statement with respect
to the exchange offer to be filed with the
Commission; and
- consummate the exchange offer within 30 days
after the exchange offer registration statement
becomes effective.
See "The Exchange Offer -- Purpose and Effect." If
we do not complete the exchange offer, or if the
shelf registration statement (if required) is not
declared effective, in each case within 180 days
of the date the old notes were issued, the
interest rate on the old notes will increase by
0.50% per annum.
Expiration Date............ The exchange offer will expire at 5:00 p.m., July
31, 2002, New York City time, or a later date and
time if we extend it (the "expiration date").
Withdrawal................. The tender of the old notes pursuant to the
exchange offer may be withdrawn at any time prior
to the expiration date. Any old notes not accepted
for exchange for any reason will be returned
without expense as soon as practicable after the
expiration or termination of the exchange offer.
Interest on the Exchange
Notes and the Old Notes.... Interest on the exchange notes will accrue from
the last interest payment date on which interest
was paid on the old notes or, if the old notes are
surrendered for exchange on a date subsequent to
the record date for an interest payment date to
occur on or after the date of such exchange and as
to which interest will be paid, such later
interest payment date. No additional interest will
be paid on the old notes tendered and accepted for
exchange.
Conditions to the Exchange
Offer...................... The exchange offer is subject to customary
conditions, some of which may be waived by us. See
"The Exchange Offer -- Conditions to Exchange
Offer."
Procedures for Tendering
Old Notes.................. If you wish to accept the exchange offer, you must
complete, sign and date the letter of transmittal,
or a copy of the letter of transmittal, in
accordance with the instructions contained in this
prospectus and in the letter of transmittal, and
mail or otherwise deliver the letter of
transmittal, or the signed copy, together with the
old notes and any other required documentation, to
the exchange agent at the address set forth in
this prospectus. If you are a person holding the
old notes through the Depository Trust Company
2
and wish to accept the exchange offer, you must do
so through the Depository Trust Company's
Automated Tender Offer Program, by which you will
agree to be bound by the letter of transmittal. By
executing or agreeing to be bound by the letter of
transmittal, you will be making a number of
important representations to us, as described
under "The Exchange Offer -- Purpose and Effect."
Under certain circumstances specified in the
registration rights agreement, including, but not
limited to the exchange offer not being available
or not having been completed by September 12,
2002, we will be required to file a "shelf"
registration statement for the old notes for a
continuous offering under Rule 415 under the
Securities Act.
We will accept for exchange any and all old notes
that are properly tendered in the exchange offer
prior to the expiration date. The exchange notes
issued in the exchange offer will be delivered
promptly following the expiration date. See "The
Exchange Offer -- Terms of the Exchange Offer."
Exchange Agent............. JPMorgan Chase Bank is serving as exchange agent
in connection with the exchange offer.
Federal Income Tax
Considerations............. We believe the exchange of old notes for exchange
notes in the exchange offer will not constitute a
sale or an exchange for federal income tax
purposes. See "Certain United States Federal Tax
Consequences."
Effect of Not Tendering.... Old notes that are not tendered or that are
tendered but not accepted will, following the
completion of the exchange offer, continue to be
subject to their existing transfer restrictions.
We will have no further obligation to provide for
registration under the Securities Act of such old
notes.
SUMMARY OF THE TERMS OF THE EXCHANGE NOTES
Securities Offered......... $200,000,000 principal amount of 6.375% Notes due
2012.
Maturity................... May 15, 2012.
Interest................... 6.375% per annum, payable semi-annually in arrears
on May 15 and November 15. The exchange notes will
bear interest from the most recent interest
payment date to which interest has been paid.
Optional Redemption........ We may redeem some or all of the notes, at any
time or from time to time, at the redemption
prices described in the section entitled
"Description of the Notes -- Optional Redemption."
The notes will not be subject to any sinking fund
provision.
Ranking.................... The notes will be direct, unsecured obligations of
Hubbell. The indebtedness represented by the notes
will rank senior to all indebtedness of Hubbell
that by its terms is subordinated in right of
payment. The notes will be effectively
subordinated to all existing and future
liabilities of our subsidiaries, including
indebtedness, trade payables, guarantees, lease
obligations and letter of credit obligations. See
"Description of the Notes -- Ranking."
Separate Series of Debt
Securities under the
Indenture.................. We may issue debt securities under the indenture
from time to time in one or more series, which are
each sometimes referred to herein as a "series" of
debt securities. The exchange notes, together with
any old notes that remain outstanding following
consummation of the exchange offer will constitute
a separate series of debt securities under the
indenture.
Certain Covenants.......... We will issue the notes under an indenture with
JPMorgan Chase Bank, as trustee. The indenture
will, among other things, restrict our ability and
the ability of our "restricted subsidiaries," as
that term is defined in the indenture, to:
- create or assume, otherwise than in favor of
Hubbell or a subsidiary, any mortgage, pledge
or other lien or encumbrance upon any Principal
Property (as such term is defined in the
indenture) or upon any stock of
3
any subsidiary or any indebtedness of any such
subsidiary to Hubbell or such restricted
subsidiary, whether now owned or hereafter
acquired, without likewise securing the
outstanding debt securities of any series under
the indenture equally and ratably with any and
all other obligations and indebtedness thereby
secured so long as any such other obligations
and indebtedness are so secured (provided, that
for the purpose of providing such equal and
ratable security, the principal amount of
outstanding debt securities of discount
securities will be such portion of the principal
amount as may be specified in the terms of that
series); and
- enter into specified sale and leaseback
transactions with respect to any Principal
Property which was owned by Hubbell or such
restricted subsidiary on the date of the
indenture.
These covenants are subject to certain exceptions
and limitations and you should carefully review
the information under "Description of the
Notes -- Certain Restrictions" for more
information.
4
THE EXCHANGE OFFER
PURPOSE AND EFFECT
Together with the sale by us of the old notes on May 15, 2002, we entered
into a registration rights agreement, dated May 15, 2002, with the initial
purchasers, which requires that we file a registration statement under the
Securities Act with respect to the exchange notes and, upon the effectiveness of
that registration statement, offer to the holders of the old notes the
opportunity to exchange their old notes for a like principal amount of exchange
notes. The exchange notes will be issued without a restrictive legend and
generally may be reoffered and resold without registration under the Securities
Act. The registration rights agreement provides that we must use reasonable best
efforts to cause the registration statement with respect to the exchange offer
to be filed with the Commission and to complete the exchange offer within 30
days of the effective date of such registration statement.
Except as described below, upon the completion of the exchange offer, our
obligations with respect to the registration of the old notes and the exchange
notes will terminate. A copy of the registration rights agreement has been filed
as an exhibit to the registration statement of which this prospectus is a part,
and this summary of the material provisions of the registration rights agreement
does not purport to be complete and is qualified in its entirety by reference to
the complete registration rights agreement. As a result of the timely filing and
the effectiveness of the registration statement, we will not have to pay certain
additional interest on the old notes provided in the registration rights
agreement. Following the completion of the exchange offer, holders of old notes
not tendered will not have any further registration rights other than as set
forth in the paragraphs below, and those old notes will continue to be subject
to certain restrictions on transfer. Accordingly, the liquidity of the market
for the old notes could be adversely affected by the consummation of the
exchange offer.
In order to participate in the exchange offer, a holder must represent to
us, among other things, that:
- the exchange notes acquired pursuant to the exchange offer are being
obtained in the ordinary course of business of the holder;
- the holder is not engaging in and does not intend to engage in a
distribution of the exchange notes;
- the holder does not have an arrangement or understanding with any person
to participate in the distribution of the exchange notes; and
- the holder is not an "affiliate," as defined under Rule 405 under the
Securities Act, of ours.
Under certain circumstances specified in the registration rights agreement,
we may be required to file a "shelf" registration statement for a continuous
offering in connection with the old notes pursuant to Rule 415 under the
Securities Act. See "-- Procedures for Tendering."
Based on an interpretation by the Commission's staff set forth in no-action
letters issued to third parties unrelated to us, we believe that, with the
exceptions set forth below, exchange notes issued in the exchange offer may be
offered for resale, resold and otherwise transferred by the holder of exchange
notes without compliance with the registration and prospectus delivery
requirements of the Securities Act, unless the holder:
- is an "affiliate" of ours within the meaning of Rule 405 under the
Securities Act;
- is a broker-dealer who purchased old notes directly from us for resale
under Rule 144A or Regulation S or any other available exemption under
the Securities Act;
- acquired the exchange notes other than in the ordinary course of the
holder's business; or
- the holder has an arrangement or understanding with any person to engage
in the distribution of exchange notes within the meaning of the
Securities Act.
Any holder who tenders in the exchange offer for the purpose of
participating in a distribution of the exchange notes cannot rely on this
interpretation by the Commission's staff and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction. Each broker-dealer that receives exchange notes
for its own account in exchange for old notes, where such old notes were
acquired by such broker-dealer as a result of market making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such exchange notes. See "Plan of Distribution."
Broker-dealers who acquired old notes directly from us and not as a result of
market making activities or other trading activities may not rely on the staff's
interpretations discussed above or participate in the exchange offer and must
comply with the prospectus delivery requirements of the Securities Act in order
to sell the old notes.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept any and all old notes validly
tendered and not withdrawn prior to 5:00 p.m., New York City time, on
5
July 31, 2002 or such date and time to which we extend the offer. We will issue
$1,000 in principal amount of exchange notes in exchange for each $1,000
principal amount of outstanding old notes accepted in the exchange offer.
Holders may tender some or all of their old notes pursuant to the exchange
offer. However, old notes may be tendered only in integral multiples of $1,000
in principal amount.
The exchange notes will evidence the same debt as the old notes and will be
issued under the terms of, and entitled to the benefits of, the indenture
relating to the old notes.
As of the date of this prospectus, old notes representing $200.0 million in
aggregate principal amount were outstanding and there was one registered holder,
a nominee of the Depository Trust Company. This prospectus, together with the
letter of transmittal, is being sent to the registered holder and to others
believed to have beneficial interests in the old notes. We intend to conduct the
exchange offer in accordance with the applicable requirements of the Exchange
Act and the rules and regulations of the Commission promulgated under the
Exchange Act.
We will be deemed to have accepted validly tendered old notes when, as, and
if we have given oral or written notice thereof to JPMorgan Chase Bank, the
exchange agent. The exchange agent will act as agent for the tendering holders
for the purpose of receiving the exchange notes from us. If any tendered old
notes are not accepted for exchange because of an invalid tender, the occurrence
of certain other events set forth under the heading "Conditions to the Exchange
Offer" or otherwise, certificates for any such unaccepted old notes will be
returned, without expense, to the tendering holder of those old notes as
promptly as practicable after the expiration date.
Holders who tender old notes in the exchange offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the letter
of transmittal, transfer taxes with respect to the exchange of old notes in the
exchange offer. We will pay all charges and expenses, other than certain
applicable taxes, applicable to the exchange offer. See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The expiration date shall be 5:00 p.m., New York City time, on July 31,
2002, unless we, in our sole discretion, extend the exchange offer, in which
case the expiration date shall be the latest date and time to which the exchange
offer is extended. In order to extend the exchange offer, we will notify the
exchange agent and each registered holder of any extension by oral or written
notice prior to 9:00 a.m., New York City time, on the next business day after
the previously scheduled expiration date. We reserve the right, in our sole
discretion:
(i) to delay accepting any old notes, to extend the exchange offer or,
if any of the conditions set forth under "Conditions to Exchange
Offer" shall not have been satisfied, to terminate the exchange
offer, by giving oral or written notice of that delay, extension or
termination to the exchange agent, or
(ii) to amend the terms of the exchange offer in any manner.
In the event that we make a fundamental change to the terms of the exchange
offer, we will file a post-effective amendment to the registration statement.
PROCEDURES FOR TENDERING
Only a holder of old notes may tender the old notes in the exchange offer.
Except as set forth under "Book Entry Transfer," to tender in the exchange offer
a holder must complete, sign, and date the letter of transmittal, or a copy of
the letter of transmittal, have the signatures on the letter of transmittal
guaranteed if required by the letter of transmittal, and mail or otherwise
deliver the letter of transmittal or signed copy to the exchange agent prior to
the expiration date. In addition:
- certificates for the old notes must be received by the exchange agent
along with the letter of transmittal prior to the expiration date;
- a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of the old notes, if that procedure is available, into
the exchange agent's account at the Depository Trust Company (the "Book-
Entry Transfer Facility") following the procedure for book-entry
transfer described below, must be received by the exchange agent prior
to the expiration date; or
- you must comply with the guaranteed delivery procedures described below.
To be tendered effectively, the letter of transmittal and other required
documents must be received by the exchange agent at the address set forth under
"Exchange Agent" prior to the expiration date.
Your tender, if not withdrawn before the expiration date will constitute an
agreement between you and us in accordance with the terms and subject to the
conditions set forth herein and in the letter of transmittal.
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THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR ELECTION AND RISK.
INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT YOU USE AN OVERNIGHT OR HAND
DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF
TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO US. YOU MAY REQUEST YOUR BROKERS,
DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THESE
TRANSACTIONS FOR YOU.
Any beneficial owner whose old notes are registered in the name of a
broker, dealer, commercial bank, trust company, or other nominee and who wishes
to tender should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf. If the beneficial
owner wishes to tender on its own behalf, the beneficial owner must, prior to
completing and executing the letter of transmittal and delivering its old notes,
either make appropriate arrangements to register ownership of the old notes in
the beneficial owner's name or obtain a properly completed bond power from the
registered holder. The transfer of registered ownership may take considerable
time.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an eligible guarantor institution that is a
member of or participant in the Securities Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Program or by an "eligible
guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act
(an "Eligible Institution") unless old notes tendered pursuant thereto are
tendered:
(i) by a registered holder who has not completed the box entitled
"Special Registration Instruction" or "Special Delivery
Instructions" on the letter of transmittal, or
(ii) for the account of an Eligible Institution.
If the letter of transmittal is signed by a person other than the
registered holder of any old notes listed in the letter of transmittal, the old
notes must be endorsed or accompanied by a properly completed bond power, signed
by the registered holder as that registered holder's name appears on the old
notes.
If the letter of transmittal or any old notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to us of
their authority to so act must be submitted with the letter of transmittal
unless waived by us.
All questions as to the validity, form, eligibility, including time of
receipt, acceptance, and withdrawal of tendered old notes will be determined by
us in our sole discretion, which determination will be final and binding. We
reserve the absolute right to reject any and all old notes not properly tendered
or any old notes our acceptance of which would, in the opinion of our counsel,
be unlawful. We also reserve the right to waive any defects, irregularities or
conditions of tender as to particular old notes. Our interpretation of the terms
and conditions of the exchange offer, including the instructions in the letter
of transmittal, will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of old notes must be cured
within such time as we shall determine. Although we intend to notify holders of
defects or irregularities with respect to tenders of old notes, neither we, the
exchange agent, nor any other person shall incur any liability for failure to
give that notification. Tenders of old notes will not be deemed to have been
made until such defects or irregularities have been cured or waived. Any old
notes received by the exchange agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived will be
returned by the exchange agent to the tendering holders, unless otherwise
provided in the letter of transmittal, as soon as practicable following the
expiration date.
In addition, we reserve the right in our sole discretion to purchase or
make offers for any old notes that remain outstanding after the expiration date
or, as set forth under "Conditions to the Exchange Offer," to terminate the
exchange offer and, to the extent permitted by applicable law, purchase old
notes in the open market, in privately negotiated transactions, or otherwise.
The terms of any such purchases or offers could differ from the terms of the
exchange offer.
By tendering, you will be representing to us that, among other things:
- the exchange notes acquired in the exchange offer are being obtained in
the ordinary course of business of the person receiving such exchange
notes, whether or not such person is the registered holder;
- you are not engaging in and do not intend to engage in a distribution of
the exchange notes;
- you do not have an arrangement or understanding with any person to
participate in the distribution of such exchange notes; and
- you are not an "affiliate," as defined under Rule 405 of the Securities
Act, of ours.
7
In all cases, issuance of exchange notes for old notes that are accepted
for exchange in the exchange offer will be made only after timely receipt by the
exchange agent of certificates for such old notes or a timely Book-Entry
Confirmation of such old notes into the exchange agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed letter of
transmittal or, with respect to the Depository Trust Company and its
participants, electronic instructions in which the tendering holder acknowledges
its receipt of and agreement to be bound by the letter of transmittal, and all
other required documents. If any tendered old notes are not accepted for any
reason set forth in the terms and conditions of the exchange offer or if old
notes are submitted for a greater principal amount than the holder desires to
exchange, such unaccepted or non-exchanged old notes will be returned without
expense to the tendering holder or, in the case of old notes tendered by
book-entry transfer into the exchange agent's account at the Book-Entry Transfer
Facility according to the book-entry transfer procedures described below, those
non-exchanged old notes will be credited to an account maintained with that
Book-Entry Transfer Facility, in each case, as promptly as practicable after the
expiration or termination of the exchange offer.
Each broker-dealer that receives exchange notes for its own account in
exchange for old notes, where those old notes were acquired by such
broker-dealer as a result of market making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of those exchange notes. See "Plan of Distribution."
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with respect
to the old notes at the Book-Entry Transfer Facility for purposes of the
exchange offer within two business days after the date of this prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of old notes being tendered by
causing the Book-Entry Transfer Facility to transfer such old notes into the
exchange agent's account at the Book-Entry Transfer Facility in accordance with
that Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of old notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, (i) the letter of transmittal or copy of the
letter of transmittal, with any required signature guarantees and any other
required documents, must, in any case other than as set forth in the following
paragraph, be transmitted to and received by the exchange agent at the address
set forth under "Exchange Agent" on or prior to the expiration date or (ii) the
guaranteed delivery procedures described below must be complied with.
The Depository Trust Company's Automated Tender Offer Program ("ATOP") is
the only method of processing exchange offers through the Depository Trust
Company. To accept the exchange offer through ATOP, participants in the
Depository Trust Company must send electronic instructions to the Depository
Trust Company through the Depository Trust Company's communication system
instead of sending a signed, hard copy letter of transmittal. The Depository
Trust Company is obligated to communicate those electronic instructions to the
exchange agent. To tender old notes through ATOP, the electronic instructions
sent to the Depository Trust Company and transmitted by the Depository Trust
Company to the exchange agent must contain the character by which the
participant acknowledges its receipt of and agrees to be bound by the letter of
transmittal.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the old notes desires to tender old notes and the
old notes are not immediately available, or time will not permit that holder's
old notes or other required documents to reach the exchange agent before the
expiration date, or the procedure for book-entry transfer cannot be completed on
a timely basis, a tender may be effected if:
- the tender is made through an Eligible Institution;
- prior to the expiration date, the exchange agent receives from that
Eligible Institution a properly completed and duly executed letter of
transmittal or a facsimile of a duly executed letter of transmittal and
notice of guaranteed delivery, substantially in the form provided by us,
by telegram, telex, fax transmission, mail or hand delivery, setting
forth the name and address of the holder of old notes and the amount of
old notes tendered and stating that the tender is being made by
guaranteed delivery and guaranteeing that within three New York Stock
Exchange, Inc. ("NYSE") trading days after the date of execution of the
notice of guaranteed delivery, the certificates for all physically
tendered old notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, will be deposited by the Eligible
Institution with the exchange agent; and
- the certificates for all physically tendered old notes, in proper form
for transfer, or a Book-Entry Confirmation, as the case may be, are
received by the exchange agent within three NYSE trading days after the
date of execution of the notice of guaranteed delivery.
8
WITHDRAWAL RIGHTS
Tenders of old notes may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the expiration date.
For a withdrawal of a tender of old notes to be effective, a written or,
for the Depository Trust Company participants, electronic ATOP transmission
notice of withdrawal, must be received by the exchange agent at its address set
forth under "Exchange Agent" prior to 5:00 p.m., New York City time, on the
expiration date. Any such notice of withdrawal must:
- specify the name of the person having deposited the old notes to be
withdrawn (the "Depositor");
- identify the old notes to be withdrawn, including the certificate number
or numbers and principal amount of such old notes;
- be signed by the holder in the same manner as the original signature on
the letter of transmittal by which such old notes were tendered,
including any required signature guarantees, or be accompanied by
documents of transfer sufficient to have the trustee register the
transfer of such old notes into the name of the person withdrawing the
tender; and
- specify the name in which any such old notes are to be registered, if
different from that of the Depositor.
All questions as to the validity, form, eligibility and time of receipt of
such notices will be determined by us, which determination shall be final and
binding on all parties. Any old notes so withdrawn will be deemed not to have
been validly tendered for exchange for purposes of the exchange offer. Any old
notes which have been tendered for exchange but which are not exchanged for any
reason will be returned to the holder of those old notes without cost to that
holder as soon as practicable after withdrawal, rejection of tender, or
termination of the exchange offer. Properly withdrawn old notes may be
re-tendered by following one of the procedures under "Procedures for Tendering"
at any time on or prior to the expiration date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the exchange offer, we will not be
required to accept for exchange, or to issue exchange notes in exchange for, any
old notes and may terminate or amend the exchange offer if at any time before
the acceptance of those old notes for exchange or the exchange of the exchange
notes for those old notes, we determine that the exchange offer violates
applicable law, any applicable interpretation of the staff of the Commission or
any order of any governmental agency or court of competent jurisdiction.
The foregoing conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any such condition or may be
waived by us in whole or in part at any time and from time to time in our sole
discretion. The failure by us at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any of those rights and each of those
rights shall be deemed an ongoing right which may be asserted at any time and
from time to time.
In addition, we will not accept for exchange any old notes tendered, and no
exchange notes will be issued in exchange for those old notes, if at such time
any stop order shall be threatened or in effect with respect to the registration
statement of which this prospectus constitutes a part or the qualification of
the indenture under the Trust Indenture Act of 1939. In any of those events we
are required under the registration rights agreement to use every reasonable
effort to obtain the withdrawal of any stop order at the earliest possible time.
EXCHANGE AGENT
All executed letters of transmittal should be directed to the exchange
agent. JPMorgan Chase Bank has been appointed as exchange agent for the exchange
offer. Questions, requests for assistance and requests for additional copies of
this prospectus or of the letter of transmittal should be directed to the
exchange agent addressed as follows:
By Registered or Certified Mail, Hand Delivery or Overnight Courier:
JPMorgan Chase Bank, 4 New York Plaza, 13(th) Floor, New York, New York 10041;
Attn: Victor Matis, ITS -- Money Market Operations.
By Facsimile: (Eligible Institutions Only): (212) 623-8424, (212) 623-8430
or (212) 623-8470; or For Information or Confirmation by Telephone: (212)
623-8286.
If documents are sent by facsimile, do not send original documents or
additional copies by mail, by hand, or by overnight courier.
FEES AND EXPENSES
We will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. The principal solicitation is being made by
mail; however, additional solicitations may be made in person or by telephone
9
by our officers and employees. The estimated cash expenses to be incurred in
connection with the exchange offer will be paid by us and will include
accounting, legal, printing, and related fees and expenses.
TRANSFER TAXES
Holders who tender their old notes for exchange will not be obligated to
pay any transfer taxes in connection with that tender or exchange, except that
holders who instruct us to register exchange notes in the name of, or request
that old notes not tendered or not accepted in the exchange offer be returned
to, a person other than the registered tendering holder will be responsible for
the payment of any applicable transfer tax on those old notes.
USE OF PROCEEDS
This exchange offer is intended to satisfy our obligations under the
registration rights agreement dated as of May 15, 2002 by and among Hubbell
Incorporated and the initial purchasers named therein. We will not receive any
cash proceeds from the issuance of the exchange notes. We will only receive old
notes with a total principal amount equal to the total principal amount of the
exchange notes issued in the exchange offer.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table presents the ratios of earnings to fixed charges for
Hubbell Incorporated and its consolidated subsidiaries for the periods
indicated.
THREE MONTHS FISCAL YEAR ENDED DECEMBER 31,
ENDED MARCH 31, --------------------------------
2002 2001 2000 1999 1998 1997
--------------- ---- ---- ---- ---- ----
Ratio of earnings to fixed charges(1)............. 9.2 3.9 9.1 11.4 19.4 19.6
-------------------
(1) For the purpose of calculating the ratios of earnings to fixed charges,
earnings consist of earnings before income taxes and fixed charges. Fixed
charges consist of interest on indebtedness, amortization of debt expense
and premiums, and one-third of rental expenses, which we deem
representative of an interest factor. If special charges and gains on sales
of business were excluded from earnings for the purpose of this
calculation, the ratio of earnings to fixed charges would be 9.0 for the
three months ended March 31, 2002; 6.5 for the fiscal year ended 2001; 8.4
for the fiscal year ended 2000; 10.9 for the fiscal year ended 1999; 19.4
for the fiscal year ended 1998; and 25.0 for the fiscal year ended 1997.
10
CAPITALIZATION
The following table sets forth our consolidated capitalization as of March
31, 2002 on an actual basis and an as adjusted basis to give effect to the
offering of the notes and the use of proceeds therefrom. This table should be
read in conjunction with, and is qualified in its entirety by reference to, the
information appearing elsewhere in this prospectus under the caption "Selected
Financial Data of Hubbell Incorporated" and our consolidated financial
statements and related notes incorporated by reference in this prospectus.
PRO FORMA
ACTUAL AS ADJUSTED
------ -----------
DEBT
Commercial Paper............................................ $74.8 $ 74.8
Senior Unsecured Notes...................................... 99.8 99.8
Credit Facilities........................................... -- --
New Commercial Paper........................................ -- 52.0
Senior Unsecured Notes...................................... -- 200.0
------ --------
Total debt..................................... $174.6 $ 426.6
====== ========
SHAREHOLDERS' EQUITY
Common Stock, par value $.01
Class A -- authorized 50,000,000 shares,
outstanding 9,671,623......................... $ 0.1 $ 0.1
Class B -- authorized 150,000,000 shares,
outstanding 49,302,372........................ 0.5 0.5
Additional paid-in capital.................................. 213.8 213.8
Retained earnings........................................... 548.5 548.5
Cumulative translation adjustments.......................... (19.6) (19.6)
Unrealized gain on investments.............................. 0.1 0.1
------ --------
Total shareholders' equity..................... 743.4 743.4
------ --------
Total capitalization........................... $918.0 $1,170.0
====== ========
11
SELECTED HISTORICAL CONSOLIDATED DATA
The selected financial data of Hubbell Incorporated and its consolidated
subsidiaries presented below for the fiscal years ended December 31, 2001, 2000,
1999, 1998 and 1997 have been derived from our consolidated financial
statements, which have been audited by PricewaterhouseCoopers LLP, independent
accountants. We have prepared this consolidated selected financial data using
our consolidated financial statements for the five years ended December 31,
2001. The selected consolidated financial data as of and for the three months
ended March 31, 2002 and March 31, 2001 have been derived from our unaudited
consolidated financial statements for these periods, which, in the opinion of
our management, reflect all adjustments, consisting of normal recurring items,
necessary for a fair presentation of this data. The results for any interim
period are not necessarily indicative of the results that may be expected for
the full year. The selected financial data appearing below is qualified in its
entirety by reference to, and should be read in conjunction with, our
consolidated financial statements and related notes that have been incorporated
by reference in this prospectus and that we have filed with the Commission, as
well as information appearing under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
THREE MONTHS
FISCAL YEAR ENDED ENDED MARCH 31,
-------------------------------------------------------- ---------------------
2001 2000 1999 1998 1997 2002 2001
-------- -------- -------- -------- -------- -------- --------
(DOLLARS AND SHARES IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
RESULTS OF OPERATIONS
Net sales............................... $1,312.2 1,424.1 1,451.8 1,424.6 1,378.8 301.7 344.1
Gross Profit(4)......................... $ 314.0(1) 369.1(2) 409.0 438.2 430.4 76.4 86.5
Special charges (credit), net........... $ 40.0(1) (.1)(2) -- -- 52.0(3) 0.7(1) --
(Gain) on sale of business.............. $ (4.7) (36.2)(2) (8.8) -- -- (1.4) --
Operating income(4)..................... $ 56.5(1) 184.5(2) 194.4 226.1 171.6 26.3 29.9
Net income(4)........................... $ 48.3(1) 138.2(2) 145.8 169.4 130.3(3) 19.5 21.1
Return on sales..................... 3.7% 9.7% 10.0% 11.9% 9.5% 6.5% 6.1%
Return on common shareholders'
average equity.................... 6.4% 17.0% 17.2% 20.3% 16.6% n/a* n/a*
Earnings per share
Basic(4)............................ $ 0.83(1) 2.26 2.24 2.56 1.94(3) 0.33 0.36
Diluted(4).......................... $ 0.82(1) 2.25 2.21 2.50 1.89(3) 0.33 0.36
Cash dividends declared per common
share................................. $ 1.32 1.31 1.27 1.22 1.13 0.33 0.33
Average number of common shares
outstanding (diluted)................. $ 58.9 61.3 65.9 67.7 68.8 59.5 58.8
Operating cash flow..................... $ 199.3 123.8 176.0 190.4 148.6 34.9 31.6
Additions to property, plant and
equipment............................. $ 28.6 48.6 53.7 86.1 60.6 3.9 9.2
Depreciation and amortization(4)........ $ 53.0 54.9 52.8 48.1 43.2 11.3 14.5
FINANCIAL POSITION
Working capital......................... $ 224.4 123.2 209.4 219.8 339.9 214.1 132.4
Current ratio........................... 1.8 to 1 1.3 to 1 1.6 to 1 1.6 to 1 2.3 to 1 1.7 to 1 1.3 to 1
Property, plant and equipment (net)..... $ 264.2 305.3 308.9 310.1 251.9 256.6 301.8
Total assets............................ $1,205.4 1,448.5 1,407.2 1,390.4 1,284.8 1,220.0 1,401.3
Long-term debt.......................... $ 99.8 99.7 99.6 99.6 99.5 99.8 99.7
Common shareholders' equity:
Total............................... $ 736.5 769.5 855.8 840.6 830.3 743.4 759.1
Per share........................... $ 12.50 12.55 13.00 12.42 12.06 12.49 12.91
Number of employees..................... 8,771 10,469 10,190 10,562 8,801 8,358 10,102
-------------------
(1) In 2001, we recorded a special charge of $56.3 million, offset by a $3.3
million reversal relating to the 1997 streamlining program. A portion of
the total 2001 charge, $13.0 million, relates to product rationalization
which is classified in cost of goods sold. This special charge, net,
reduced 2001 net income by $35.5 million or $0.60 per share. Excluding the
special charge, net, 2001 net income would have been $83.8 million or $1.42
per share diluted. In addition to the 2001 charge, expenses totaling
approximately $6.0 million are expected to be charged against profit in
2002, as costs are incurred and specific actions are announced and
implemented. Of the total expected 2002 charge amount, $0.7 million was
recorded in the first quarter.
(2) Special charge (credit) for 2000 reflects a special charge, offset by a
reduction in the streamlining program accrual established in 1997. In
addition, $20.3 million for product rationalization is included in cost of
goods sold.
12
(3) In 1997, we recorded a special charge of $52.0 million which reduced net
income by $32.2 million or $0.47 per share. Excluding the special charge,
net income would have been $162.5 million or $2.36 per share -- diluted.
(4) On January 1, 2002, the Company adopted SFAS No. 142 "Goodwill and Other
Intangible Assets". As a result of adopting SFAS No. 142, the Company
stopped recording goodwill amortization expense. The following table
summarizes the impact on net income and earnings per share had goodwill not
been amortized in all prior periods presented:
THREE MONTHS
FISCAL YEAR ENDED ENDED MARCH 31,
------------------------------------- ---------------
2001 2000 1999 1998 1997 2001
----- ----- ----- ----- ----- ---------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Pretax goodwill amortization...... $ 8.2 8.2 7.8 6.6 6.2 2.1
===== ===== ===== ===== ===== ====
Reported net income............... $48.3 138.2 145.8 169.4 130.3 21.1
Addback: Goodwill amortization.... $ 6.8 7.4 7.0 6.0 5.7 1.6
----- ----- ----- ----- ----- ----
Pro forma net income.............. $55.1 145.6 152.8 175.4 136.0 22.7
===== ===== ===== ===== ===== ====
Pro forma earnings per
share-diluted................... $0.93 2.37 2.32 2.59 1.97 0.39
===== ===== ===== ===== ===== ====
The Company is in process of performing the initial impairment tests of the
recorded value of goodwill, as is required by this standard. Any impairment
which results will be recorded as the cumulative effect of a change in
accounting principle, retroactive to the first quarter of 2002. This
process must be completed and the impairment determined by year-end 2002.
* Return on common shareholders' average equity is not calculated on a
quarterly basis.
13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The discussion and analysis that follow reflect management's assessment of
the financial condition and results of operations of Hubbell Incorporated and
should be read in conjunction with our consolidated financial statements
included in our annual report on Form 10-K and our quarterly report on Form 10-Q
incorporated by reference in this prospectus.
RESULTS OF OPERATIONS -- FIRST QUARTER 2002 COMPARED TO FIRST QUARTER 2001
First quarter results of operations reflect general economic weakness
throughout our markets as compared with the first quarter of 2001. Lower levels
of economic activity versus the prior year first quarter, particularly in our
industrial, telecommunications and, to a lesser extent, commercial markets, has
reduced the rate of incoming orders and, consequently, reported sales and
profits.
Consolidated net sales for the first quarter of 2002 declined 12% versus
the comparable period of the prior year. Adjusting for the late fourth quarter
2001 acquisition of MyTech Incorporated ("MyTech") and first quarter 2002
acquisition of Hawke Cable Glands ("Hawke"), sales declined 13% in the quarter
versus 2001. Operating income for the quarter fell 12% versus the 2001 first
quarter. However, excluding the following effects, pro forma operating income
year-to-date versus 2001 was down 20%:
- Ongoing costs associated with the streamlining and cost reduction
program which began in the fourth quarter of 2001;
- Favorable adjustment to the previously recorded gain on sale of
Wavepacer DSL assets;
- Elimination of goodwill amortization in conjunction with our adoption of
SFAS No. 142, "Goodwill and Other Intangible Assets"
On a net basis, these items added $2.8 million to consolidated pretax
profit in the quarter, or $.04 per diluted share, of which the largest item was
the change in accounting for goodwill.
The pro forma operating profit decline exceeded the sales decline primarily
due to unabsorbed manufacturing costs and a larger proportion of lower margin
products in the overall sales mix. Cost reduction actions, particularly those
associated with the cost reduction program, have been targeted at those
operations affected by the slowdown. Capacity reduction and other cost reduction
actions underway are expected to continue to minimize the margin decline by
reducing the variable costs associated with lower sales and partially reducing
fixed costs.
SEGMENT RESULTS
The following profit comparisons exclude the effects of the charge related
to the capacity reduction plan, favorable DSL gain adjustment and impact of
adoption of the provisions of SFAS No. 142.
Electrical Segment sales declined 12% in the first quarter 2002 versus the
comparable period of 2001. The sales decline is attributable to lower orders of
lighting and wiring products and a decline in orders from
data/telecommunications customers affecting sales of premise wiring and the
multiplexing products of Pulse Communications. Partially offsetting these
declines were improved sales of commodity electrical "rough-in" products
associated with increased market share and improved sales of harsh/hazardous
electrical products, primarily resulting from the Hawke acquisition and higher
energy related construction activity. Segment pro forma operating income fell
18% in the quarter. Volume declines of higher margin industrial application
products and, to a lesser extent, unabsorbed manufacturing expenses, combined to
reduce quarterly operating income in the Segment versus the first quarter of
2001.
Power Segment sales declined 9% in the 2002 first quarter versus 2001 as a
result of overall lower order input levels, primarily from utility industry
customers. Sales were favorably impacted in the quarter from storm-related
activity in the Midwest, which generated increased stock shipments of
connectors, pole line hardware and over voltage products. However, this activity
was more than offset by lower orders due to weak economic conditions and the
utility industry's continued emphasis on investment in generating capacity as
opposed to the Segment's transmission and distribution products. Pro forma
operating income in the quarter declined 16% primarily due to the lower sales
and unabsorbed manufacturing expenses. Daily order activity in the Segment
improved toward the end of the quarter. However, substantially higher levels of
bookings are not expected for the balance of the year.
Industrial Technology Segment reported substantially lower sales and
margins in the quarter with sales down 23% and pro forma operating income down
52%. These declines reflect the recessionary conditions that exist throughout
the Segment's markets including domestic steel and heavy industry and, on a
worldwide basis, high voltage test and measurement markets. While market
conditions are not forecast to recover until 2003, margin rates are expected to
improve in the second half of the year as cost reduction actions are completed.
14
SPECIAL AND NON-RECURRING CHARGES
As described below under "Special and Non-Recurring Charges -- 2001," we
initiated the 2001 streamlining and cost reduction program (the "Plan")
primarily to reduce our productive capacity and realign employment levels to
better match with lower actual and forecast rates of incoming business. As
described below, we expect the Plan to require a cumulative charge to profit and
loss of approximately $62 million. In addition to the 2001 charge of $56.3
million, expenses totaling approximately $6.0 million are expected to be charged
against profit in 2002, as costs are incurred and specific actions are announced
and implemented. Of the total expected 2002 charge amount, $0.7 million was
recorded in the first quarter.
The following table sets forth the original components and status of the
streamlining and cost reduction program at March 31, 2002 (in millions):
EMPLOYEE ASSET EXIT
BENEFITS DISPOSALS COSTS OTHER TOTAL
-------- --------- ----- ----- -----
Accrual balance at December 31, 2001..................... $ 7.9 $-- $1.8 $6.8 $16.5
Additional program costs................................. 0.5 -- 0.2 -- 0.7
Cash expenditures........................................ (2.9) -- (0.2) (0.4) (3.5)
----- --- ----- ----- -----
Remaining Accrual........................................ $ 5.5 $-- $1.8 $6.4 $13.7
===== === ===== ===== =====
Substantially all actions contemplated are scheduled for completion by
December 31, 2002. Cash expenditures under the plan to date total approximately
$8 million for severance and other costs of facility closings. Additional cash
expenditures of $18 million are expected to be incurred, net of approximately $9
million in asset sale recoveries.
SELLING AND ADMINISTRATIVE (S&A) EXPENSES
S&A expenses of $50.8 million were 16.8% of sales in the 2002 first quarter
compared with $56.6 million, 16.4% of sales, in the 2001 first quarter. While
S&A as a percentage of sales was up modestly year-over-year, the 2002 first
quarter rate compares favorably with the 18.2% rate experienced in the 2001
fourth quarter. The decline from the 2001 fourth quarter is primarily due to the
effects of S&A workforce reductions implemented in connection with the
streamlining and cost reduction program.
GAIN ON SALE OF BUSINESS
In April 2000, we completed the sale of our Wavepacer Digital Subscriber
Line assets for a purchase price of $61.0 million. We recognized a gain on this
sale of $36.2 million in 2000. At the time of sale, we retained a contractual
obligation to supply product to the buyer at prices below manufacturing cost,
resulting in an adverse commitment. Management revised the remaining adverse
commitment accrual at March 31, 2002 to reflect lower order quantities and
projected costs than previously estimated, which resulted in an additional gain
of $1.4 million. Deliveries under this contract ended in April 2002, and
although final order quantities are known, ongoing service and warranty costs
continue to be estimated and reserved. Expenditures under the commitment are
expected to conclude by the end of the 2002 third quarter.
OTHER INCOME/EXPENSE
Investment income declined 62% in the 2002 first quarter versus the first
quarter of 2001 due to lower average cash and investment balances and lower
average interest rates. Similarly, year-over-year interest expense declined 58%
due to lower average debt levels and lower average interest rates on our
outstanding commercial paper.
INCOME TAXES
Our effective tax rate in the first quarter 2002 was 23%, down from 25% in
the 2001 first quarter, but consistent with the rate in the 2001 second and
third quarters. The rate reduction versus the prior year is primarily a result
of lower earnings being derived from domestic operations, which have
comparatively higher tax rates.
NET INCOME AND EARNINGS PER SHARE
Net income and diluted earnings per share declined in response to the
decline in segment operating profit and the increase in special and
non-recurring charges, offset by the elimination of amortization of goodwill in
accordance with SFAS No. 142 and the favorable adjustment related to the
previously recorded gain on sale of DSL assets.
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RESULTS OF OPERATIONS -- YEAR ENDED 2001 COMPARED TO YEAR ENDED 2000
Consolidated net sales declined 8% versus the prior year as a result of
widespread economic weakness throughout our markets in 2001 and, in particular,
the period following the terrorist events of September 11. Although depressed
economic conditions negatively affected orders and sales in a majority of our
product lines, improvements in customer service and modest growth in oil & gas
markets did provide positive year-over-year comparisons in our commodity
electrical and harsh and hazardous product offerings, respectively.
Pro forma operating income, defined as reported operating income excluding
the effects in both years of special and non-recurring charges and gains on sale
of business, declined 39%. This decline exceeded the decline in sales primarily
due to the effects of unabsorbed fixed manufacturing costs and a larger
proportion of lower margin sales constituting the overall sales mix. However,
cost reduction actions, which began in the fourth quarter of 2000, were
effective at containing the margin decline by reducing variable costs associated
with lower sales and partly reducing fixed costs. To further these efforts, we
completed development in December 2001 of a comprehensive plan to reduce
manufacturing capacity and targeted fixed costs and recorded a net $53.0 million
pre-tax special charge to cover the cost of facility closures, workforce
reductions, outsourcing and other actions. Management expects the actions
covered by the charge to improve operating margins by 1-1 1/2 percentage points
when fully implemented. Sales and profits in 2001 also reflect a full year's
results of GAI-Tronics Corporation ("GAI-Tronics"), which we acquired in July
2000.
SEGMENT RESULTS
Electrical Segment sales declined 10% due to significantly lower orders in
the segment's core specification-grade wiring devices and lighting product lines
and a decline in demand from data/telecommunications customers, affecting sales
of premise wiring and the multiplexing products of Pulse Communications
("Pulse"). Partially offsetting these declines were improved sales of commodity
electrical boxes and fittings resulting from improvements in customer service,
and generally healthier harsh/hazardous electrical products markets associated
with an increase in energy exploration and processing projects. The segment's
operating profits on a comparative basis fell by 39% due to high unabsorbed
manufacturing expenses and the volume decline in higher margin industrial
application products.
Power Segment sales also declined 10% on lower shipments across most
product families including over-voltage, connectors, apparatus and tool & rod.
Full year sales in this Segment reflect a slowing, which began in the second
half of 2000, in order input from utility industry customers. Lower utility
industry demand is attributable to generally weak economic conditions and the
industry's emphasis on investment in generating capacity as opposed to the
segment's distribution and transmission products. Operating income declined 39%
due to the lower sales and unabsorbed fixed expenses. In addition, the segment
incurred an expense of $3 million in connection with a third quarter customer
bankruptcy and $3.8 million in the second quarter related to the impairment of
manufacturing facility assets.
Industrial Technology Segment sales increased 14% for the year versus 2000
as a result of the July 2000 acquisition of GAI-Tronics. GAI-Tronics is a
leading supplier of specialized communications systems designed for indoor,
outdoor and hazardous environments. However, excluding the strong contribution
from GAI-Tronics, sales fell 16% as a result of the segment's reliance on
domestic industrial markets including steel processing and industrial controls,
which were in recession for most of 2001. In addition, worldwide demand fell
sharply during the year for the test sets produced by the segment's high voltage
test businesses. Operating income, including the full year results from
GAI-Tronics, fell 48% due to the sharp decline in sales which outpaced
management's ability to respond with commensurate cost reduction actions. We are
continuing our program to transition this segment, through internal development,
into faster growing and more profitable instrumentation and industrial
communications markets.
SPECIAL AND NON-RECURRING CHARGES -- 2001
Full year operating results in 2001 reflect special and non-recurring
charges offset by a $3.3 million reduction in the streamlining program accrual
established in 1997. These net costs, which were recorded in the fourth quarter,
total $53.0 million ($35.5 million net of tax, or $0.60 per diluted share).
The 2001 streamlining and cost reduction initiative (the "Plan") is
comprised of a variety of individual programs and was primarily undertaken to
reduce our productive capacity and realign employment levels to better match
with lower actual and forecast rates of incoming business. In total, we expect
the Plan to require a cumulative charge to profit and loss of $62.0 million. In
addition to the 2001 charge of $56.3 million, we expect expenses totaling
approximately $6.0 million to be charged against profits in 2002, as costs are
incurred and specific actions are announced and implemented.
A breakdown of the major programs specified in the Plan and its attendant
cost of $62.0 million is as follows:
- Capacity reduction ($22.5 million) -- includes facility rationalization
and other capacity reduction actions. Facility rationalization reflects
management's decision to permanently reduce the manufacturing space we
occupy and consolidate and eliminate office space in each Segment. In
total, the Plan covers the cost of closing six manufacturing facilities
representing approximately 600,000 square feet, 11% of our approximately
5.6 million total active manufacturing square footage. In addition, we
are eliminating three offices
16
totaling approximately 100,000 square feet through consolidation. Other
capacity reductions include the write-off of surplus productive assets
which will no longer be used. These reductions are related to facilities
to be closed and relate to product lines deemed to have excess fixed
investment (i.e., tools, dies, machinery) versus the capacity needed to
produce at forecast volumes. These actions occurred primarily in the
Power Segment, within the Lighting products group of the Electrical
Segment and in the Industrial Technology Segment.
- Workforce reductions ($12.1 million) -- in addition to the 10% reduction
in overall employment levels recorded through the first nine months of
the year, the Plan contemplates a further 9% reduction in overall
employment levels through voluntary and involuntary termination, mainly
focused on indirect manufacturing and salaried employees in each of our
segments.
- Outsourcing ($3.8 million) -- primarily includes asset write-off costs
in support of decisions to exit manufacturing of certain end products
and components not considered core competencies of the business and to
procure these products and components from lower cost sources of supply
both domestically and internationally.
- Exit product lines ($13.0 million) -- this program reflects management's
decision to streamline our product offering and eliminate non-strategic
inventory across all business units. The cost of this program is
included in Cost of goods sold in our Consolidated Statement of Income
included in our annual report on Form 10-K incorporated by reference
herein. This rationalization of product is intended to facilitate
improvements in manufacturing efficiencies and lower working capital
needs.
- Other ($10.6 million) -- primarily includes costs associated with
environmental remediation actions of previously exited facilities in
anticipation of their disposal and costs associated with uncompleted
acquisitions.
Substantially all actions contemplated in the Plan are scheduled for
completion by December 31, 2002. Once complete, management expects the Plan to
provide $20 million in ongoing annual savings primarily realized through lower
manufacturing, selling and administrative costs. Cash expenditures under the
Plan will be approximately $26 million for severance and other costs of facility
closings, net of an estimated $9 million in asset sale recoveries.
SPECIAL AND NON-RECURRING CHARGES -- 2000
Full year operating results in 2000 also reflect a special and
non-recurring charge offset by a reduction in the streamlining program accrual
established in 1997. These net costs, which were recorded in the first and
second quarters of 2000, total $23.7 million ($17.8 million net of tax, or $0.29
per diluted share).
Net sales included a non-recurring charge of $3.5 million related to an
increase in the reserve for customer returns and allowances primarily in
response to higher customer credit activity associated with inaccurate/
incomplete shipments from an electrical products central distribution warehouse
that began operation in late 1999. Cost of sales reflected a special charge of
$20.3 million in connection with management's decision to streamline our product
offering and eliminate non-strategic inventory across all business units.
Special charge, net, reflects the cost of first and second quarter 2000
cost reduction and streamlining actions of $10.4 million offset by a $10.5
million reversal, in connection with management's ongoing review, of costs
accrued in connection with the 1997 streamlining program. The special charge
costs primarily related to asset impairments and facility consolidation actions
undertaken to reduce ongoing operating costs and exit certain joint venture
arrangements. All actions under the 2000 special charge were completed in the
first quarter of 2001.
1997 STREAMLINING PLAN
In 1997, we recorded a special charge of $52.0 million ($32.2 million
after-tax or $.47 per share), comprised of $32.4 million of accrued
consolidation and streamlining costs, $9.5 million of facility asset
impairments, a $7.4 million goodwill asset impairment, and other current
employee and product line exit costs of $2.7 million. We undertook the
consolidation and streamlining initiatives to optimize the organization and cost
structure primarily within the Electrical and Power Segments.
As part of management's ongoing review of estimated program costs in
connection with the 1997 plan, adjustments in the amount of $3.3 million and
$10.5 million were made in 2001 and 2000, respectively. These adjustments
reflected costs originally estimated as part of the 1997 plan which were deemed
no longer required to complete certain actions in the Electrical and Power
Segments. The change in estimate in 2001 of $3.3 million primarily occurred
within the Electrical Segment in connection with management's decision to
terminate plans related to closure of the Louisiana, Missouri manufacturing
facility. Following this adjustment, all actions contemplated under the 1997
Streamlining Plan were completed.
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SELLING AND ADMINISTRATIVE (S&A) EXPENSES
S&A expenses increased as a percentage of sales in 2001 versus 2000 due to
the full year inclusion of GAI-Tronics, which generates higher S&A costs than
our average, the cost of senior management and employee severance actions and an
increase in customer bad debt expense. Although the rate of volume decline
outpaced management's ability to respond with cost reduction actions in 2001, a
reduction in S&A as a percentage of sales is expected in 2002 as a result of a
10% reduction in S&A workforce implemented in connection with the 2001 capacity
reduction Plan, and other actions.
GAIN ON SALE OF BUSINESS
In April 2000, we completed the sale of our WavePacer Digital Subscriber
Line ("DSL") assets to ECI Telecom Ltd. ("ECI") for a purchase price of $61.0
million. We recognized a gain on this sale of $36.2 million in the 2000 second
quarter. At the time of sale, we retained a contractual obligation to supply
product to ECI at prices below manufacturing cost, resulting in an adverse
commitment. In December 2001, management revised the remaining adverse
commitment accrual to reflect lower known and projected orders from ECI through
the contract expiration date and recorded an additional gain of $4.7 million.
Deliveries under this contract ended in April 2002, and although final order
quantities are known, ongoing service and warranty costs continue to be
estimated and reserved. Resolution of the remaining post-closing costs is
expected to occur by the end of the third quarter 2002.
OTHER INCOME/EXPENSE
Investment income declined 34% in 2001 versus 2000 due to lower average
cash and investment balances and lower average interest rates. Similarly,
year-over-year interest expense declined 21% due to lower average debt levels
and lower average interest rates on our outstanding commercial paper. During the
third quarter 2001, we repositioned a significant portion of our long-term
investment portfolio to better match the maturity dates of the securities owned
with investment requirements. Overall, this repositioning shortened the average
maturity period of the portfolio.
Other income, net, in 2001 and 2000 includes $3.6 million and $3.2 million,
respectively, of gains on sale of leveraged lease investments. In 2001, we
liquidated a leveraged lease investment which no longer represented a
tax/investment strategy consistent with the our objectives. The 2000 first
quarter also included a gain on sale of similar leveraged lease investments in
contemplation of their pending expiration. The 2001 transaction fully liquidated
our portfolio of leveraged lease investments. Other income, net in the current
year also includes a gain on sale of investments in connection with the
investment portfolio repositioning noted above.
INCOME TAXES
During the fourth quarter of 2001, we adjusted our effective tax rate to a
full year rate of 13.4%, down from 23%, which had been used in the second and
third quarters of 2001, and significantly lower than the prior year rate of 25%.
The rate reduction versus the prior year is a result of recording the special
charge in the fourth quarter of 2001, which substantially reduced the overall
percentage of earnings being derived from domestic operations, which have
comparatively higher tax rates. In 2002, we expect to return to a 23% effective
tax rate.
NET INCOME
Net income declined in response to the decline in segment operating profit,
the increase in special and non-recurring charges, and the decline in the gain
on sale of DSL assets. The percentage decline in diluted earnings per share was
lower than the percentage decline in net income as a result of a 2.5 million
reduction in average diluted shares outstanding which occurred in connection
with the 1997 share repurchase program.
RESULTS OF OPERATIONS -- YEAR ENDED 2000 COMPARED TO YEAR ENDED 1999
Consolidated net sales increased 1% (excluding the impact of the September
1999 disposition of The Kerite Company ("Kerite")) due to acquisitions and
higher shipments of utility and lighting products. Offsetting these increases
were a decline in orders and, consequently, sales to telephone companies at
Pulse and weakness in commodity electrical products. Operating income on a
comparative basis declined 6% (excluding the results of Kerite in 1999, gains on
sale of businesses in 1999 and 2000, and special and nonrecurring charges in
2000). This decline is mainly attributable to the lower sales and higher
logistical costs at the commodity electrical products business and lower
lighting margins.
SEGMENT RESULTS
Electrical Segment sales declined 4% due to significantly lower sales at
Pulse as a result of the decline in demand from telephone operating companies
for the unit's core multiplexing access line products. In addition, declining
orders and logistical issues associated with the start-up of a new central
distribution warehouse to service primarily electrical commodity products led to
lower sales in this business. Partially offsetting these declines were
18
improved sales of premise wiring products due to a combination of strong
international demand and new products. Despite favorable comparisons from having
disposed of the DSL assets of Pulse, operating profit was driven down by lower
earnings in commodity products where high logistical costs related to freight
and warehousing combined to reduce profitability versus 1999. However,
management improved operations as the year progressed resulting in this business
reporting breakeven operating income in the 2000 fourth quarter. The Segment's
2000 profit also includes an $8.1 million gain on the sale of a west-coast
facility.
Power Segment sales increased 2%, excluding Kerite, on higher shipments
across most product lines including over voltage, connectors, apparatus and tool
and rod. Full year sales in this segment reflect a slowing in the second half of
the year in order input versus strong first half demand, consistent with the
postponement by utility industry customers of necessary upgrades to the
transmission and distribution infrastructure. Comparable operating income rose
due to cost savings associated with the streamlining program. However, delays in
completing certain streamlining actions to late 1999 and early 2000, primarily
impacting high margin connector products, added cost in 2000 and reduced
operating efficiencies. These actions were substantially completed by year-end.
Industrial Technology Segment (renamed from "Other" in the Fourth Quarter
2000) sales were up 41% for the year versus 1999 as a result of the July 1999
acquisition of Haefely Test AG, a high voltage test and instrumentation
business, and the July 2000 acquisition of GAI-Tronics. Operating income rose
19% due to the effect of acquisitions. Within the Segment's legacy businesses,
slower industrial demand resulted in flat sales and modestly lower profits
compared with 1999.
GAIN ON SALE OF BUSINESS
In April 2000, we completed the sale of our DSL business assets to ECI
Telecom Ltd. for a cash purchase price of $61.0 million. The transaction
produced a gain on sale of $36.2 million in the second quarter. As a result of
the sale, we no longer absorbed new product development costs and associated
operating costs for this business (a development stage company with limited
revenues) which totaled approximately $4.5 million in 2000.
In 1999, we sold Kerite, a manufacturer of power cable previously included
in the Power Segment. This transaction produced a gain on sale of $8.8 million.
OTHER INCOME/EXPENSE
Investment income increased due to higher average interest rates in 2000
versus 1999, partially offset by lower average investment balances due to a
decline in investable funds resulting from a continuation of the share
repurchase program, acquisitions, additions to property, plant and equipment,
and overall lower earnings. The increase in interest expense primarily reflects
the higher level of commercial paper outstanding during the year. The effective
tax rate was 25.0% in 2000 versus 26.0% in 1999. The decrease in the
consolidated effective tax rate results from a greater proportion of income
being derived from tax-advantaged operations in Puerto Rico.
Other income, net in 2000 includes the first quarter gain of $3.2 million
on sale of leveraged lease investments in contemplation of their pending
expiration. The 1999 balance includes insurance recoveries in connection with
damage sustained from Hurricane Georges.
NET INCOME
Net income declined in response to the decline in segment operating profit
and the special and nonrecurring charges, offset by the gain on sale of DSL
assets. However, diluted earnings per share increased as a result of a 4.6
million reduction in average diluted shares outstanding in connection with the
1997 share repurchase program.
LIQUIDITY AND CAPITAL RESOURCES
2002 FIRST QUARTER
Management measures liquidity on the basis of our ability to meet
operational funding needs, fund additional investments, including acquisitions,
and make dividend payments to shareholders. Our working capital position at
March 31, 2002 was $214.1 million, down from $224.4 million at December 31,
2001. Total borrowings at March 31, 2002 were $174.6 million, 23% of total
shareholders' equity, versus $167.5 million, also 23% of total shareholders'
equity, at December 31, 2001.
During the 2002 first quarter, we utilized operating cash flow and
commercial paper borrowings to purchase the shares of Hawke and pay the
quarterly dividend to shareholders. Capital spending in the 2002 first quarter
was below the spending levels reported in the 2001 first quarter due to
management's emphasis on asset optimization and redeployment, as opposed to new
capital investment, in connection with our streamlining and cost reduction
program and lean manufacturing initiative.
19
In December 2000, our Board of Directors authorized the repurchase of $300
million of Class A and Class B shares. Through March 31, 2002 there have been no
purchases under this authorization and none are anticipated in 2002.
Cash provided by operations in the 2002 first quarter was approximately $35
million versus $32 million in the 2001 first quarter. However, after adjusting
the prior year for a non-recurring tax refund of approximately $8 million, the
2002 first quarter exceeded the prior year by $11 million or 48%, despite lower
earnings. Strong cash generation will normally accompany a decline in business
activity, as we experienced throughout 2001 and continuing into 2002. During the
quarter management continued to focus on reducing inventory, which accounted for
close to $15 million of the quarter's operating cash flow. Cash outflows
occurred related to the ongoing actions associated with the streamlining and
cost reduction program.
Investing cash flow reflects the acquisition of Hawke. Financing cash flows
reflect the impact of the increase in commercial paper borrowings and the
payment of the quarterly dividend to shareholders. During the 2001 first
quarter, financing cash flows included $9.9 million of funds spent to complete
the 1997 share repurchase program.
In 2002, inventory reduction will continue to be a primary area of focus
for management, contributing an estimated $30 million in operating cash flow.
Strong internal cash generation together with currently available cash,
available borrowing facilities, and an ability to access credit lines if needed,
are expected to be more than sufficient to fund operations, the current rate of
dividends, capital expenditures, and any increase in working capital that would
be required to accommodate a higher level of business activity. We actively seek
to expand by acquisition as well as through the growth of our present
businesses. While a significant acquisition may require additional borrowings,
we believe we would be able to obtain financing based on our favorable
historical earnings performance and strong financial position.
At March 31, 2002, consistent with December 31, 2001, our debt consisted of
commercial paper and long-term notes. The non-callable long-term notes are fixed
until 2005 at $100 million and are only subject to accelerated payment prior to
2005 if we fail to meet certain non-financial covenants. Borrowings were also
available from committed bank credit facilities up to $150 million, although
these facilities were not used during the quarter. In April 2002 we issued an
additional $250 million of commercial paper.
With respect to the LCA acquisition, management financed the $250 million
purchase price, plus fees, with available cash. We permanently funded the
acquisition through the issuance of $200 million in long-term notes, which notes
are being solicited in the exchange offer contemplated by this prospectus.
Although not our principle source of liquidity, management believes these
bank credit facilities are capable of providing significant financing
flexibility at reasonable rates of interest. However, a significant
deterioration in results of operations or cash flows, leading to a deterioration
in our financial condition, could either increase our borrowing costs or
altogether restrict our ability to sell commercial paper in the open market.
Further, the bank credit facilities are dependent on our maintaining certain
financial and non-financial covenants, which were met at March 31, 2002. We have
not entered into any other guarantees, commitments or obligations that could
give rise to unexpected cash requirements.
YEAR ENDED 2001
Our working capital position at December 31, 2001 was $224.4 million, up
from $123.2 million at December 31, 2000. Total borrowings at December 31, 2001
were lowered to $167.5 million, 23% of total shareholders equity, versus $359.2
million or 47% of total shareholders' equity, at December 31, 2000. The
combination of substantially higher operating cash flow, a suspension of stock
repurchase activity and a reduction of investments facilitated a decline in
commercial paper outstanding and, consequently, the debt to equity ratio as
compared to the prior year.
We also applied financial resources to pay the quarterly dividend to
shareholders, make capital expenditures and, in the first quarter of 2001,
complete the 1997 share repurchase program. However, capital spending was
reduced by $20.0 million in 2001 versus 2000 due to the overall decline in the
level of business activity and the resulting opportunity for management to
reorganize and redeploy underutilized capital assets as opposed to making new
capital additions.
Our cash provided by operations in 2001 reached an all time high,
increasing $75.5 million or 61% versus 2000. Although strong cash generation
will normally accompany a decline in business activity, as we experienced in
2001, management focused significant attention on reducing inventory and
accounts receivable, which together accounted for in excess of $100 million in
cash provided from operations. In addition, cash from operations improved due to
the timing of tax payments and reduced expenditures in connection with
streamlining and special charges. The decline in operating liabilities reflected
a decline in accounts payable and general business accruals, consistent with the
lower levels of business activity year-over-year. Investing cash flow in 2001
reflected the acquisition of MyTech Corporation, offset by the liquidation of a
leveraged lease investment. Investing cash flow in 2000 included proceeds of
$84.3 million from the sale of DSL assets, liquidation of leveraged leases and
the sale of a west-coast warehouse,
20
offset by the acquisition of GAI-Tronics. Financing cash flows reflected the
impact of the reduction in commercial paper borrowings during 2001, completion
of the 1997 share repurchase program, which limited cash expenditures for
treasury shares to $9.9 million in 2001 versus $142.8 million in 2000, and a
flat dividend rate of $1.32 per share.
During 2001, our debt consisted of commercial paper and long-term notes.
Commercial paper borrowings ranged from a low in December 2001 of $67.7 million
to a high earlier in the year of $240.5 million. The long-term debt is fixed
until 2005 at $100 million. Borrowing were also available from committed bank
credit facilities up to $150 million, although these facilities were not used
during the year, except for two days following the September 11 attack due to a
lack of liquidity in the commercial paper markets. These bank credit facilities
are dependent on our maintaining certain financial and non-financial covenants,
which were met at December 31, 2001.
MARKET RISKS AND RISK MANAGEMENT
In the operation of our business, we have market risk exposures to foreign
currency exchange rates, raw material prices and interest rates. Each of these
risks and our strategies to manage the exposure is discussed below.
We manufacture our products in North America, Switzerland, Puerto Rico,
Mexico, Italy and the United Kingdom and sell products in those markets as well
as through sales offices in Singapore, The Peoples' Republic of China, Mexico,
Hong Kong, South Korea and the Middle East. International sales were 18% of our
sales in 2001 and 15% in 2000. The Canadian market represents 45%, United
Kingdom 19%, Mexico 17%, Switzerland 15% and all other areas 4% of our total
international sales. As such, our operating results could be affected by changes
in foreign currency exchange rates or weak economic conditions in the foreign
markets in which we distribute our products. To manage this exposure, we closely
monitor the working capital requirements of our international units and to the
extent possible, we will maintain their monetary assets in U.S. dollar
instruments. We view this exposure as not being material to our operating
results and, therefore, we do not actively hedge our foreign currency risk.
Raw materials used in the manufacture of our products include steel, brass,
copper, aluminum, bronze, plastics, phenols, bone fiber, elastomers and
petrochemicals as well as purchased electrical and electronic components. Our
financial results could be affected by the availability and changes in prices of
these materials. We closely monitor our inventory requirements and utilize
multiple suppliers. We are not materially dependent upon any single material or
supplier and we do not actively hedge or use derivative instruments in the
management of our inventories.
Our financial results are subject to risk from interest rate fluctuations
to the extent that there is a difference between the amount of our
interest-earning assets and the amount of our interest-bearing liabilities. The
principal objective of our investment management activities is to maximize net
investment income while maintaining acceptable levels of interest rate and
liquidity risk and facilitating our funding needs. As part of our investment
management, we may use derivative financial products such as interest rate
hedges and interest rate swaps. During the two years ended December 31, 2001, we
did not engage in any material derivative transactions.
As described in our Statement of Accounting Policies, we may use derivative
financial instruments only if they are matched with a specific asset, liability,
or proposed future transaction. We do not speculate or use leverage when trading
a financial derivative product.
CRITICAL ACCOUNTING POLICIES
We are required to make estimates and judgments in the preparation of our
financial statements that affect the reported amounts of assets and liabilities,
revenues and expenses and related disclosures. We continually review these
estimates and their underlying assumptions to ensure they are appropriate for
the circumstances. Management believes these estimates and judgments to be most
significant in the areas of customer credit and collections, employee benefit
costs and taxes.
CREDIT AND COLLECTIONS
We maintain allowances for doubtful accounts receivable in order to reflect
the potential inability of customers to make required payments for purchases of
products on open credit. If the financial condition of our customers were to
deteriorate, resulting in their inability to make the required payments, we may
be required to record additional allowances against income. Further, certain of
our businesses deal with significant volumes of customer deductions and debits,
as is customary in commodity electrical products markets. These deductions
primarily relate to pricing, quantity of shipment, item shipped and, in certain
situations, quality corrections. This situation requires management to estimate
at the time of sale the value of shipments that should not be recorded as
revenue equal to the amount which is not expected to be collected in cash from
customers. Management primarily relies upon historical trends of actual
collections to estimate these reserves at the time of shipment.
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EMPLOYEE BENEFITS COSTS AND FUNDING
Employee benefits costs are accrued in the financial statements to reflect
the future cost of primarily employee retirement and other post-employment
benefits. Applicable accounting standards require that amounts recognized in
financial statements be determined on an actuarial basis and that the effects of
the performance of plan assets (applicable only to the pension plan) and changes
in liability discount rates on the computation of pension expense be amortized
over future periods.
The most significant assumption in determining our pension expense is the
expected return on plan assets. In 2001, we estimated that the expected
long-term rate of return on plan assets would be 9%. Based on our long-term
experience, pension plan assets have earned in excess of 9%. The expected
long-term rate of return on assets is applied to the fair market value of plan
assets to produce the expected return on plan assets that is included in pension
expense. The difference between this expected return and the actual return on
plan assets is deferred. The net deferral of past asset gains (losses)
ultimately affects future pension expense through the amortization of gain
(losses). Pension plan assets earned a rate of return less than 9% in 2001.
Should this trend continue, we would be required to reconsider our expected rate
of return on plan assets, which, if lowered, would likely increase pension
expense. A resulting decline in plan assets could require an increase in our
cash funding requirements.
At the end of each year, we determine the discount rate to be used to
calculate the present value of plan liabilities. The discount rate is an
estimate of the current interest rate at which the liabilities could effectively
be settled at the end of the year. In estimating this rate, we look to rates of
return on high-quality, fixed-income investments with maturities that closely
match the expected funding period of our liability. At December 31, 2001, we
determined this rate to be 7.25%, a decrease of 25 basis points from the rate
used at December 31, 2000. Changes in discount rates over the past three years
have not materially affected plan expense, and the net effect of changes in the
discount rate, as well as the net effect of other changes in actuarial
assumptions and experience, have been deferred, in accordance with SFAS Nos. 87
and 106.
TAXES
We account for income taxes in accordance with SFAS No. 109, "Accounting
for Income Taxes" which requires that deferred tax assets and liabilities be
recognized using enacted tax rates for the effect of temporary differences
between the book and tax bases of recorded assets and liabilities. SFAS No. 109
also requires that deferred tax assets be reduced by a valuation allowance if it
is more likely than not that some portion or all of the deferred tax asset will
not be realized.
At December 31, 2001 and 2000, we had deferred tax assets of $28.7 million
and $12.1 million, respectively. At December 31, 2001 and 2000, management
determined that these assets will be fully realized and, therefore, no valuation
allowance was recorded against these balances.
The factors used to assess the likelihood of realization are the forecast
of future taxable income and available tax planning strategies that could be
implemented to realize the net deferred tax assets. Failure to achieve
forecasted taxable income might affect the ultimate realization of the net
deferred tax assets.
In addition, we operate within multiple taxing jurisdictions and are
subject to audit in these jurisdictions. These audits can involve complex
issues, which may require an extended period of time to resolve. In management's
opinion, adequate provisions for income taxes have been made for all years.
INFLATION
In times of inflationary cost increases, we have historically been able to
maintain our profitability by improvements in operating methods and cost
recovery through price increases. In large measure, the reported operating
results have absorbed the effects of inflation since our predominant use of the
LIFO method of inventory accounting generally has the effect of charging
operating results with costs (except for depreciation) that reflect current
price levels.
RECENTLY ISSUED ACCOUNTING STANDARDS
In July 2001, the Financial Accounting Standards Board ("FASB") published
two Statements: Statement No. 141 ("FAS 141"), "Business Combinations", and
Statement No. 142 ("FAS 142"), "Goodwill and Other Intangible Assets". FAS 141
primarily addresses the accounting for the cost of an acquired business (i.e.,
the purchase price allocation), including any subsequent adjustments to its
cost. FAS 141 supercedes APB 16, Business Combinations. The most significant
changes made by FAS 141 are:
- It requires use of the purchase method of accounting for all business
combinations, thereby eliminating use of the pooling-of-interests
method.
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- It provides new criteria for determining whether intangible assets
acquired in a business combination should be recognized separately from
goodwill.
FAS 141 was effective for all business combinations (as defined in that
Statement), accounted for by the purchase method, completed after June 30, 2001.
FAS 142 primarily addresses the accounting for goodwill and intangible
assets subsequent to their acquisition (i.e., the post-acquisition accounting).
FAS 142 supercedes APB 17, Intangible Assets. The most significant changes made
by FAS 142 are:
- Goodwill and indefinite lived intangible assets will no longer be
amortized and will be tested for impairment at the reporting unit level
at least annually (effective on January 1, 2002 for all goodwill).
- The amortization period of intangible assets with finite lives is no
longer limited to forty years.
In 2001, we recorded approximately $8.0 million of goodwill amortization
expense which will not be recorded in 2002. In addition, we are in the process
of performing the initial impairment tests of the recorded value of goodwill,
which is required to be completed by the end of the second quarter of fiscal
2002. We will report any adjustment as a cumulative effect of a change of
accounting principle no later than the end of fiscal 2002 as required by this
standard.
In November 2001, FASB issued Statement No. 143 ("FAS 143"), "Accounting
for Obligations Associated with the Retirement of Long-Lived Assets". FAS 143
establishes accounting standards for the recognition and measurement of asset
retirement obligations associated with the retirement of tangible long-lived
assets that have indeterminate lives. FAS 143 will be effective for us January
1, 2003. However, it is not expected to have a material effect on financial
position, results of operations or cash flows, as we do not currently have any
such assets.
In October 2001, FASB issued FAS No. 144 ("FAS 144"), "Accounting for the
Impairment or Disposal of Long-Lived Assets". This statement provides guidance
on the accounting for the impairment or disposal of long-lived assets and also
specifies a revised definition for what constitutes a discontinued operation, as
previously defined in APB 30, Discontinued Operations. FAS 144 is effective for
us on January 1, 2002 and, generally, its provisions are to be applied
prospectively. This pronouncement is not expected to have any material effect on
our financial position, results of operations or cash flows.
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BUSINESS
GENERAL
Hubbell Incorporated was founded as a proprietorship in 1888, and was
incorporated in Connecticut in 1905. For over a century, we have manufactured
and sold electrical and electronic products for a broad range of commercial,
industrial, telecommunications, and utility applications. Since 1961, we have
expanded our operations into other areas of the electrical industry and related
fields. Our products are now manufactured or assembled by thirty-one divisions
and subsidiaries in North America, Switzerland, Puerto Rico, Mexico, Italy, and
the United Kingdom. We also participate in a joint venture in Taiwan, and
maintain sales offices in Singapore, the People's Republic of China, Mexico,
Hong Kong, South Korea and the Middle East.
We made three acquisitions within the past year. In October 2001, we
acquired the stock of MyTech Corporation ("MyTech"), based in Austin, Texas.
MyTech designs, manufactures and markets microprocessor-based, digital,
self-adjusting occupancy sensors, high intensity discharge dimming controls,
photocells and other lighting related electronic control products used primarily
to reduce energy consumption in commercial and industrial applications by
turning off lights and other electronic devices in areas that are unoccupied. In
March 2002, we acquired the stock of Hawke Cable Glands Limited ("Hawke"), based
in Ashton-Under-Lyne, England. Hawke designs, manufactures and markets cable
glands and cable connectors to provide a means to terminate cables at junction
boxes, light fixtures, control centers, panel boards, motor control enclosures
and electrical equipment, as well as a line of enclosures, cable transit,
breathers, and field bus products, all for the hazardous area and industrial
markets. MyTech and Hawke are included in our Electrical Segment.
On April 26, 2002, we completed our acquisition of LCA Group, Inc. ("LCA"),
the domestic lighting business of U.S. Industries, Inc, for $250 million,
subject to adjustment based on certain circumstances. The group manufactures and
distributes a wide range of outdoor and indoor lighting products to the
commercial, industrial and residential markets under various brand names,
including Alera, Kim, Spaulding, Whiteway, Moldcast, Architectural Area
Lighting, Columbia, Keystone, Prescolite, Dual Lite and Progress. These newly
acquired operations add six major manufacturing facilities and multiple
distribution centers throughout the United States, making the new Hubbell
Lighting one of the largest lighting manufacturers in North America.
BUSINESS SEGMENT INFORMATION
We are primarily engaged in the engineering, manufacture and sale of
electrical and electronic products. For management reporting and control, our
businesses are divided into three operating segments: Electrical, Power and
Industrial Technology, as described below.
ELECTRICAL SEGMENT
The Electrical Segment is comprised of businesses that primarily sell
through distributors, lighting showrooms, home centers, telephone and
telecommunication companies, and represents thousands of stock items including
standard and special application wiring device products, lighting fixtures,
fittings, switches and outlet boxes, enclosures, wire management products and
voice and data signal processing components. The products are typically used in
and around industrial, commercial, and institutional facilities by electrical
contractors, maintenance personnel, electricians, and telecommunication
companies.
A majority of our Electrical Segment products are stock items and are sold
through electrical and industrial distributors, home centers, some retail and
hardware outlets, and lighting showrooms. Special application products are sold
primarily through wholesale distributors to contractors, industrial customers
and original equipment manufacturers. Voice and data signal processing equipment
products are represented worldwide through a direct sales organization and by
selected, independent telecommunications representatives, primarily sold through
datacom, electrical and catalogue distribution channels. Telecommunications
products are sold primarily by direct sales to customers in the United States
and in foreign countries through sales personnel and sales representatives. We
maintain a sales and marketing organization to assist potential users with the
application of certain products to their specific requirements. We maintain
regional offices in the United States that work with architects, engineers,
industrial designers, original equipment manufacturers and electrical
contractors for the design of electrical systems to meet the specific
requirements of industrial, institutional, and commercial users. We are also
represented by sales representatives for our lighting fixtures and electrical
wiring devices product lines.
The sale of Electrical Segment products accounted for approximately 64% of
our total revenue in 2001, 65% in 2000 and 66% in 1999.
POWER SEGMENT
Our Power Segment operations comprise a wide variety of construction,
switching and protection products, hot line tools, grounding equipment, cover
ups, fittings and fasteners, cable accessories, insulators, arresters, cutouts,
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sectionalizers, connectors and compression tools for the building and
maintenance of overhead and underground power and telephone lines, as well as
applications in the industrial, construction and pipeline industries.
Sales of high-voltage products are made through distributors and directly
to users such as electric utilities, mining operations, industrial firms, and
engineering and construction firms. While we believe that our sales in this area
are not materially dependent upon any customer or group of customers, a decrease
in purchases by public utilities would affect this segment.
The sale of Power Segment products accounted for approximately 25% of our
total revenue in 2001, 26% in 2000 and 28% in 1999.
INDUSTRIAL TECHNOLOGY SEGMENT
The Industrial Technology Segment consists of operations that design and
manufacture test and measurement equipment, high voltage power supplies and
variable transformers, industrial controls including motor speed controls,
pendant-type push-button stations, overhead crane controls, Gleason Reel(R)
electric cable and hose reels, and specialized communications systems such as
intra-facility communications systems, telephone systems, and land mobile radio
peripherals. Products in this segment are sold primarily to steel mills,
industrial complexes, oil, gas and petrochemical industries, seaports,
transportation authorities, the security industry (malls and colleges), and
cable and electronic equipment manufacturers.
Our Industrial Technology Segment products are sold primarily through
direct sales and sales representatives to contractors, industrial customers and
original equipment manufacturers, with the exception of high voltage test and
measurement equipment which is sold primarily by direct sales to customers in
the United States and in foreign countries through our sales engineers and
independent sales representatives.
The sale of Industrial Technology Segment products accounted for
approximately 11% of our total revenue in 2001, 9% in 2000 and 6% in 1999.
INTERNATIONAL OPERATIONS
Hubbell Ltd. in the United Kingdom manufactures and/or markets fuse
switches, contactors, selected wiring device products, premise wiring products,
specialized control gear, chart recording products, and industrial control
products used in motor control applications such as fuse switches and
contactors.
Hubbell Canada Inc. and Hubbell de Mexico, S.A. de C.V. manufacture and/or
market wiring devices, premise wiring products, lighting fixtures, grips,
fittings, non-metallic switches and outlet boxes, hazardous location products,
electrical transmission and distribution products and earth anchoring systems.
Industrial control products are sold in Canada through an independent sales
agent. Hubbell Canada also designs and manufactures electrical outlet boxes,
metallic wall plates, and related accessories.
Hawke Cable Glands Limited in the United Kingdom manufactures and/or
markets a range of products used in hazardous locations including brass cable
glands and cable connectors used in watertight terminations, cable transition
devices, utility transformer breathers, enclosures and field bus connectivity
components.
Harvey Hubbell S.E. Asia Pte. Ltd. markets wiring devices, lighting
fixtures, hazardous location products and electrical transmission and
distribution products.
Haefely Test AG in Switzerland designs and manufactures high voltage test
and instrumentation systems, and GAI-Tronics in the United Kingdom and Italy
designs and manufactures specialized communications systems including closed
circuit television systems (CCTV).
We also manufacture lighting products, wiring devices, weatherproof outlet
boxes, fittings, and power products in Juarez, Mexico. We also have interests in
various other international operations such as a joint venture in Taiwan, and we
maintain sales offices in Mexico, Singapore, the People's Republic of China,
Hong Kong, South Korea and the Middle East.
The wiring devices sold by our operations in the United Kingdom, Singapore,
Canada and Mexico are similar to those produced in the United States, most of
which are manufactured in the United States and Puerto Rico.
As a percentage of total sales, international shipments from foreign
subsidiaries were 11% in 2001, 10% in 2000 and 8% in 1999, with the Canadian
market representing approximately 45% of the total.
RAW MATERIALS
The principal raw materials which we use to manufacture our products
include steel, brass, copper, aluminum, bronze, plastics, phenolics, bone fiber,
elastomers and petrochemicals. We also purchase certain electrical and
electronic components, including solenoids, lighting ballasts, printed circuit
boards, integrated circuit chips and cord sets, from a number of suppliers. We
are not materially dependent upon any one supplier for raw materials used in the
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manufacture of our products and equipment and, at the present time, raw
materials and components essential to our operations are in adequate supply.
PATENTS
We have approximately 835 active United States and foreign patents covering
many of our products, which expire at various times. While we deem these patents
to be of value, we do not consider our business to be dependent upon patent
protection. We license under patents owned by others, as may be needed, and
grant licenses under certain of our patents.
WORKING CAPITAL
We maintain sufficient inventory to enable us to provide a high level of
service to our customers. We believe that our inventory levels, payment terms
and return policies are in accord with the general practices of the electrical
products industry and standard business procedures.
BACKLOG
Backlog of orders we believed to be firm at March 31, 2002 were
approximately $99.3 million. We expect most of the backlog to be shipped in the
current year. Although this backlog is important, the majority of our revenues
result from sales of inventoried products or products that have short periods of
manufacture.
COMPETITION
We experience substantial competition in all categories of our business,
but we do not compete with the same companies in all of our product categories.
The number and size of competitors vary considerably depending on the product
line. We cannot specify with exactitude the number of competitors in each
product category or their relative market position. However, some of our
competitors are larger companies with substantial financial and other resources.
We consider product performance, reliability, quality and technological
innovation to be important factors relevant to all areas of our business and
consider our reputation as a manufacturer of quality products to be an important
factor in our business. In addition, product price and other factors can affect
our ability to compete.
ENVIRONMENT
Our operations are subject to numerous environmental laws and regulations
of foreign, federal, state and local authorities, including those pertaining to
air emissions, wastewater discharges, the generation, handling, storage and
disposal of solid and hazardous wastes, and the remediation of contamination
associated with the use and disposal of hazardous substances. In addition, many
of these laws and regulations require that we obtain, maintain and comply with
permits to undertake our operations, and some laws imposed liability for
remediation of hazardous substances regardless of fault. We have incurred and
will continue to incur costs and capital expenditures in complying with those
laws and regulations; however, we do not believe such compliance to have any
material effect upon our financial or competitive position.
EMPLOYEES
As of March 31, 2002, we had approximately 8,358 full-time employees,
including salaried and hourly personnel. Approximately 42% of our United States
employees are represented by fourteen labor unions. We believe our labor
relations to be satisfactory.
LEGAL PROCEEDINGS
There are no material pending legal proceedings to which we or any of our
subsidiaries is a party or of which any of our property is the subject, other
than ordinary and routine litigation incident to our business.
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DESCRIPTION OF THE EXCHANGE NOTES
We issued the old notes under an indenture dated as of September 15, 1995
between us and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank
and Chemical Bank), as trustee. The terms of the exchange notes are identical in
all material respects to the old notes except that, upon completion of the
exchange offer, the exchange notes will be:
- registered under the Securities Act, and
- free of any covenants regarding exchange registration rights.
We refer in this section to the indenture, as amended, restated,
supplemented or otherwise modified from time to time, as the "Indenture". The
Indenture is subject to and governed by the Trust Indenture Act of 1939, as
amended (the "TIA"). The following is a summary of material provisions of the
Indenture and the notes and does not include all of the provisions of the
Indenture and the notes. We urge you to read the Indenture and the notes because
they, and not this description, define your rights as a holder of notes. We have
filed a copy of the Indenture and specimen certificates representing the old
notes and the exchange notes as exhibits to the registration statement which
includes this prospectus.
In this section, references to "Hubbell," "we," "our" and "us" mean Hubbell
Incorporated excluding, unless the context otherwise requires or otherwise
expressly stated, its subsidiaries. Capitalized terms that are used in the
following summary but not defined have the meanings given to those terms in the
Indenture.
GENERAL
The Indenture provides that we may issue debt securities ("debt
securities") under the Indenture from time to time in one or more series and
permits us to establish the terms of each series of debt securities at the time
of issuance. The Indenture does not limit the amount of debt securities that we
may issue under the Indenture and provides that debt securities may be
denominated and payable in foreign currencies or units based on or relating to
foreign currencies.
The old notes and the exchange notes constitute a separate series of debt
securities under the Indenture, initially limited to $200,000,000 in aggregate
principal amount. References to "notes" in this section mean the exchange notes
and the old notes, in each case outstanding at any given time. Under the
Indenture we may, without the consent of the holders of the notes, "reopen" that
series and issue additional notes of that series from time to time in the
future. However, we shall only make such additional issuances if the additional
notes are fungible with the original notes for United States federal income tax
purposes.
The notes and any additional notes that we may issue in the future upon a
reopening will constitute a single series of debt securities under the
Indenture. This means that, in circumstances where the Indenture provides for
the holders of debt securities to vote or take any other action as a single
class, the old notes of that series outstanding, if any, and the exchange notes
of that series, as well as any additional notes of that series that we may issue
by reopening the series, will vote or take that action as a single class.
PRINCIPAL, MATURITY AND INTEREST
The notes will mature on May 15, 2012. The notes will bear interest from
May 15, 2002 at the rate of 6.375% per annum, payable semi-annually on May 15
and November 15 of each year, commencing on November 15, 2002. Interest on the
notes will be payable to the persons in whose names the notes are registered at
the close of business on the preceding May 1 and November 1, respectively.
Interest on the notes will be computed on the basis of a 360-day year
consisting of twelve 30-day months. If an interest payment date, redemption date
or maturity date falls on a day that is not a business day, then the payment of
principal, premium, if any, or interest, as the case may be, due in respect of
the notes on that date need not be made on that date, but may be made on the
next succeeding business day with the same force and effect as if made on that
interest payment date, redemption date or maturity date, as the case may be, and
no interest will accrue for the period after that date.
The notes will be issued in book-entry form and will be evidenced by one or
more registered global certificates without coupons, which we sometimes refer to
as "global securities," registered in the name of Cede & Co., as nominee for The
Depository Trust Company. Except in certain limited circumstances described
below under "Book-Entry; Delivery and Form -- Certificated Securities," holders
of interests in global securities will not be entitled to receive notes in
definitive certificated form registered in their names. See "Global Securities;
Book Entry System" for a summary of selected provisions applicable to the
depositary agreements. The notes will be issued in denominations of $1,000 and
integral multiples of $1,000. The notes will be denominated and payable in U.S.
dollars. Payments of principal, premium, if any, and interest on the global
securities will be made to DTC or its nominee.
27
The notes will not be entitled to the benefit of any sinking fund and will
not be subject to repurchase by us at the option of the holders prior to
maturity.
RANKING
The notes will be Hubbell's direct, unsecured obligations. The indebtedness
represented by the notes will rank senior to all indebtedness of Hubbell that by
its terms is subordinated in right of payment.
The Indenture does not limit the aggregate principal amount of debt
securities that we may issue. The general provisions of the Indenture do not
contain any provisions that would limit the ability of Hubbell or its
subsidiaries to incur indebtedness or that would afford holders of debt
securities protection in the event of a highly leveraged or similar transaction
involving Hubbell or its subsidiaries.
Hubbell conducts certain of its operations through its subsidiaries. As a
result, Hubbell is dependent on the cash flow of its subsidiaries to meet its
debt obligations, including its obligations under the notes. In addition, the
rights of Hubbell and its creditors, including the holders of the debt
securities, to participate in the assets of any subsidiary upon the latter's
liquidation or reorganization will be subject to the prior claims of the
subsidiary's creditors except to the extent that Hubbell may itself be a
creditor with recognized claims against the subsidiary.
OPTIONAL REDEMPTION
The notes will be redeemable, in whole or from time to time in part, at our
option on any date at a redemption price equal to the greater of:
(1) 100% of the principal amount of the notes to be redeemed, and
(2) the sum of the present values of the remaining scheduled payments
of principal and interest on the notes to be redeemed (exclusive of
interest accrued to the applicable redemption date) discounted to that
redemption date on a semi-annual basis (assuming a 360-day year consisting
of twelve 30-day months) at the Treasury Rate plus 20 basis points,
plus, in the case of both clause (1) and clause (2) above, accrued and unpaid
interest on the principal amount of the notes being redeemed to that redemption
date. Notwithstanding the foregoing, payments of interest on the notes that are
due and payable on or prior to a date fixed for redemption of notes will be
payable to the holders of those notes registered as such at the close of
business on the relevant record dates according to their terms and the terms and
provisions of the Indenture.
"Treasury Rate" means, with respect to any redemption date for the notes,
(1) the yield, under the heading that represents the average for the
immediately preceding week, appearing in the most recently published
statistical release designated "H.15 (519)" or any successor publication
which is published weekly by the Board of Governors of the Federal Reserve
System and which establishes yields on actively traded United States
Treasury securities adjusted to constant maturity under the caption
"Treasury Constant Maturities," for the maturity corresponding to the
Comparable Treasury Issue (if no maturity is within three months before or
after the Final Maturity Date for the notes, yields for the two published
maturities most closely corresponding to the Comparable Treasury Issue
shall be determined and the Treasury Rate shall be interpolated or
extrapolated from such yields on a straight line basis, rounding to the
nearest month), or
(2) if such release (or any successor release) is not published during
the week preceding the calculation date or does not contain such yields,
the rate per annum equal to the semi-annual equivalent yield to maturity of
the Comparable Treasury Issue, calculated using a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to
the Comparable Treasury Price for such redemption date.
The Treasury Rate shall be calculated on the third business day preceding
the applicable redemption date. As used in the immediately preceding sentence
and in the definition of "Reference Treasury Dealer Quotations" below, the term
"business day" means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed.
"Comparable Treasury Issue" means, with respect to any redemption date for
the notes, the United States Treasury security selected by the Independent
Investment Banker as having a maturity comparable to the remaining term of the
notes to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the remaining term of the notes to be
redeemed.
"Comparable Treasury Price" means, with respect to any redemption date for
the notes, (1) the average of four Reference Treasury Dealer Quotations for such
redemption date, after excluding the highest and lowest such
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Reference Treasury Dealer Quotations, or (2) if the trustee obtains fewer than
four such Reference Treasury Dealer Quotations, the average of all such
quotations.
"Final Maturity Date" means May 15, 2012.
"Independent Investment Banker" means, with respect to any redemption date
for the notes, J.P. Morgan Securities Inc. and its successors, or, if such firm
or the successors, if any, to such firm, as the case may be, are unwilling or
unable to select the Comparable Treasury Issue, an independent investment
banking institution of national standing appointed by the trustee after
consultation with us.
"Reference Treasury Dealers" means, with respect to any redemption date for
the notes, J.P. Morgan Securities Inc. and three additional primary U.S.
Government securities dealers in New York City (each a "Primary Treasury
Dealer") selected by the trustee after consultation with us, and their
respective successors (provided, however, that if any such firm or any such
successor, as the case may be, shall cease to be a primary U.S. Government
securities dealer in New York City, the trustee, after consultation with us,
shall substitute therefor another Primary Treasury Dealer).
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date for the notes, the average, as
determined by the trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted to the trustee by that Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third business day preceding that redemption date.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of the notes to be redeemed at
the holder's registered address. If less than all of the notes are to be
redeemed at our option, the trustee will select, in a manner it deems fair and
appropriate, the notes, or portions of the notes, to be redeemed.
Unless we default in payment of the redemption price due in respect of the
notes on any redemption date, on and after that redemption date interest will
cease to accrue on the notes or portions of the notes called for redemption on
that redemption date.
We shall not be required (i) to register the transfer of or exchange any
notes during a period beginning at the opening of business 15 days before the
day of the transmission of a notice of redemption of notes selected for
redemption and ending at the close of business on the day of such transmission,
or (ii) to register the transfer of or exchange any notes so selected for
redemption in whole or in part, except the unredeemed portion of any notes being
redeemed in part.
CERTAIN RESTRICTIONS
The following restrictions will apply to the notes and to each other series
of debt securities issued under the Indenture, unless the terms of another
series of debt securities provide otherwise with respect to that series.
Limitation on Liens. Hubbell will not create or assume and will not permit
a restricted subsidiary to create or assume, otherwise than in favor of Hubbell
or a subsidiary, any mortgage, pledge or other lien or encumbrance upon any
principal property or upon any stock of any subsidiary or any indebtedness of
any subsidiary to Hubbell or such restricted subsidiary, whether now owned or
hereafter acquired, without likewise securing the outstanding debt securities of
any applicable series equally and ratably with any and all other obligations and
indebtedness thereby secured so long as any such other obligations and
indebtedness are so secured (provided, that for the purpose of providing such
equal and ratable security, the principal amount of outstanding debt securities
of any series of discount securities will be such portion of the principal
amount as may be specified in the terms of that series).
This limitation on liens will not apply to certain permitted mortgages,
pledges and other liens and encumbrances as described in the Indenture,
including:
(a) liens existing on the date of the Indenture or at the time a
person owning a principal property shall become a restricted subsidiary;
(b) purchase money liens created within specified time limits;
(c) liens securing the cost of construction or improvement of any
property created within specified time limits;
(d) liens existing on acquired property and existing on shares of
stock or indebtedness of a person at the time such person shall become a
subsidiary;
(e) certain tax, materialmen's, mechanic's, carrier's, workmen's,
repairmen's and judgment liens, certain liens arising by operation of law,
liens to secure performance in connection with bids or contracts, liens to
secure surety, stay, appeal of customs bonds and certain other similar
liens;
29
(f) liens in connection with certain government contracts;
(g) certain liens in favor of any state or local government or
governmental agency in connection with certain tax-exempt financings; and
(h) mortgages, pledges and other liens and encumbrances not otherwise
permitted, provided that the aggregate amount of indebtedness secured by
all such mortgages, pledges or other liens or encumbrances does not exceed
15% of Hubbell's Consolidated Net Tangible Assets as of the end of
Hubbell's most recently completed accounting period preceding the creation
or assumption of any such mortgage, pledge or other lien or encumbrance
(reduced by any Attributable Debt with respect to any sale and leaseback
transaction permitted under clause (c) of, but not otherwise permitted
under, the "Limitation on Sale and Leaseback Transactions" covenant below).
Limitation on Sale and Leaseback Transactions. Hubbell will not enter into
and will not permit a restricted subsidiary to enter into any sale and leaseback
transaction with respect to any principal property owned by Hubbell or such
restricted subsidiary on the date of the Indenture, unless:
(a) such sale and leaseback transaction involves a lease for a term of
not more than three years;
(b) such sale and leaseback transaction is between Hubbell or such
restricted subsidiary and a subsidiary;
(c) Hubbell or such restricted subsidiary would be entitled to incur
indebtedness secured by a mortgage, pledge or other lien or encumbrance on
such principal property involved in such sale and leaseback transaction at
least equal in amount to the Attributable Debt with respect to such sale
and leaseback transaction pursuant to the proviso of clause (h) under the
"Limitation on Liens" covenant above without equally and ratably securing
the debt securities of any applicable series pursuant to such covenant; or
(d) the proceeds of such sale and leaseback transaction are at least
equal to the fair market value of such principal property (as determined in
good faith by the Board of Directors of Hubbell) and Hubbell applies an
amount equal to the greater of the net proceeds of such sale or the
Attributable Debt with respect to such sale and leaseback transaction
within 180 days of such sale to either (or a combination) of (i) the
retirement (other than the mandatory retirement, mandatory prepayment or
sinking fund payment or by payment at maturity) of Funded Debt of Hubbell
or a restricted subsidiary (other than Funded Debt that is subordinated to
the debt securities) or (ii) the purchase, construction or development of
other comparable property.
EVENTS OF DEFAULT
Under the Indenture, "Event of Default" with respect to the debt securities
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law, pursuant to any judgment, decree or order of any court or any
order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any debt security or
any payment with respect to the coupons, if any, of such series when it
becomes due and payable, and continuance of such default for a period of 30
days;
(2) default in the payment of the principal of (and premium, if any,
on) any debt security of such series at its Maturity;
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of a debt security of such series;
(4) default in the performance, or breach of any covenant or warranty
in the Indenture (other than a covenant or warranty a default in whose
performance or whose breach is elsewhere in the Indenture specifically
dealt with or which expressly has been included in the Indenture solely for
the benefit of debt securities of a series other than such series), and
continuance of such default or breach for a period of 60 days after there
has been given to Hubbell by the trustee or to Hubbell and the trustee by
the holders of at least 25% in principal amount of the outstanding debt
securities of such series, a written notice specifying such default or
breach and requiring it to be remedied;
(5) certain events of bankruptcy, insolvency or reorganization with
respect to Hubbell; or
(6) any other Event of Default provided with respect to debt
securities of that series pursuant to the Indenture.
The Indenture requires Hubbell to file with the trustee, annually, an
officers' certificate as to Hubbell's compliance with all conditions and
covenants under the Indenture. The Indenture provides that the trustee may
withhold notice to the holders of a series of debt securities of any default
(except payment defaults on such debt securities) if it considers such
withholding to be in the interest of the holders of such series of debt
securities to do so.
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If an Event of Default with respect to debt securities at the time
outstanding (other than an Event of Default specified in clause (5) above)
occurs and is continuing, then in every case the trustee or the holders of not
less than 25% in principal amount of the outstanding debt securities of such
series may declare the principal amount (or, if any debt securities of such
series are discount securities, such portion of the principal amount of such
discount securities as may be specified in the terms of such discount
securities) of the debt securities of such series to be due and payable
immediately, by a notice in writing to Hubbell (and to the trustee if given by
holders), and upon any such declaration such principal amount (or specified
amount), plus accrued and unpaid interest (and premium, if any) (the "Default
Amount") shall become immediately due and payable. Upon payment of the Default
Amount in the currency in which such debt securities are denominated (except as
otherwise provided in the Indenture or specified in the prospectus supplement or
offering memorandum, as applicable, for such series), all obligations of Hubbell
in respect of the payment of principal of the debt securities of such series
shall terminate. Notwithstanding any other provision of the Indenture, if an
Event of Default specified in clause (5) above occurs, then the Default Amount
on the debt securities then outstanding shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the trustee or any holder.
Subject to the provisions of the Indenture relating to the duties of the
trustee, in case an Event of Default with respect to debt securities of a
particular series shall occur and be continuing, the trustee shall be under no
obligation to exercise any of its rights or powers under the Indenture at the
request, order or direction of any of the holders of debt securities of that
series, unless such holders shall have offered to the trustee reasonable
indemnity against the expenses and liabilities which might be incurred by it in
compliance with such request. Subject to such provisions for the indemnification
of the trustee, the holders of a majority in principal amount of the outstanding
debt securities of such series shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the trustee
under the Indenture, or exercising any trust or power conferred on the trustee
with respect to the debt securities of that series.
At any time after such a declaration of acceleration with respect to debt
securities has been made and before a judgment or decree for payment of the
money due has been obtained by the trustee as provided in the Indenture, the
holders of not less than a majority in principal amount of the outstanding debt
securities of such series, by written notice to Hubbell and the trustee, may
rescind and annul such declaration and its consequences if:
(1) Hubbell has paid or deposited with the trustee a sum in the
currency in which such debt securities are denominated (except as otherwise
provided in the Indenture or specified in the prospectus supplement or
offering memorandum, as applicable, for such series) sufficient to pay (A)
all overdue installments of interest on all debt securities or all overdue
payments with respect to any coupons of such series, (B) the principal of
(and premium, if any, on) any debt securities of such series which have
become due otherwise than by such declaration of acceleration and interest
thereon at the rate or rates prescribed therefor in such debt securities,
(C) to the extent that payment of such interest is lawful, interest upon
overdue installments of interest on each debt security of such series or
upon overdue payments on any coupons of such series at a rate established
for such series, and (D) all sums paid or advanced by the trustee and the
reasonable compensation, expenses, disbursements and advances of the
trustee, its agents and counsel and any other amounts due the trustee under
the Indenture; and
(2) all Events of Default with respect to debt securities of such
series, other than the nonpayment of the principal of debt securities of
such series which have become due solely by such declaration of
acceleration, have been cured or waived as provided in the Indenture. No
such rescission and waiver will affect any subsequent default or impair any
right consequent thereon.
DEFEASANCE AND DISCHARGE
The following defeasance provision will apply to the notes and to each
other series of debt securities issued under the Indenture, unless the terms of
another series of debt securities provide otherwise.
The Indenture provides that, unless the terms of debt securities provide
otherwise, Hubbell will be discharged from its obligations in respect of the
Indenture and the outstanding debt securities of that series, including its
obligations to comply with the provisions referred to above under "Certain
Restrictions", if applicable, but excluding other specified provisions of the
Indenture, such as the right of holders of debt securities of that series to
receive payments of principal and interest, if any, on the original stated due
dates (but not upon acceleration), and obligations to register the transfer of
or exchange outstanding debt securities of that series and to replace stolen,
lost or mutilated certificates.
The Indenture with respect to the debt securities may be discharged,
subject to certain terms and conditions, when:
(1) either (A) all debt securities and the coupons, if any, of such
series have been delivered to the trustee for cancellation, or (B) all debt
securities and the coupons, if any, of such series not theretofore
delivered to the trustee for cancellation (i) have become due and payable,
(ii) will become due and payable at their stated maturity within one year,
or (iii) are to be called for redemption within one year under
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arrangements satisfactory to the trustee for the giving of notice by the
trustee, and Hubbell, in the case of (i), (ii) or (iii) of subclause (B),
has irrevocably deposited or caused to be deposited with the trustee as
trust funds in trust for such purpose an amount in the currency in which
such debt securities are denominated sufficient to pay and discharge the
entire indebtedness on such debt securities for principal (and premium, if
any) and interest to the date of such deposit (in the case of debt
securities which have become due and payable) or to the stated maturity or
redemption date, as the case may be, provided, however, in the event a
petition for relief under the applicable Federal or state bankruptcy,
insolvency or other similar law is filed with respect to Hubbell within 91
days after the deposit and the trustee is required to return the deposited
money to Hubbell, the obligations of Hubbell under the Indenture with
respect to such debt securities will not be deemed terminated or
discharged;
(2) Hubbell has paid or caused to be paid all other sums payable under
the Indenture by Hubbell;
(3) Hubbell has delivered to the trustee an officers' certificate and
an opinion of counsel each stating that all conditions precedent therein
provided relating to the satisfaction and discharge of the Indenture with
respect to such series have been complied with; and
(4) Hubbell has delivered to the trustee an opinion of counsel or a
ruling of the Internal Revenue Service to the effect that such deposit and
discharge will not cause the holders of the debt securities of such series
to recognize income, gain or loss for Federal income tax purposes.
At Hubbell's option, either (a) Hubbell shall be deemed to have been
discharged (as defined below) from its obligations with respect to debt
securities ("legal defeasance option") or (b) Hubbell shall cease to be under
any obligation to comply with certain provisions of the Indenture relating to
mergers and consolidations of Hubbell, the provisions relating to limitations on
liens and limitations on sale and leaseback transactions (and, if so specified,
any other obligation of Hubbell or restrictive covenant added for the benefit of
such series ("covenant defeasance option")) at any time after the applicable
conditions set forth below have been satisfied:
(1) Hubbell shall have deposited or caused to be deposited irrevocably
with the trustee as trust funds in trust, specifically pledged as security
for, and dedicated solely to, the benefit of the holders of the debt
securities of such series, (i) money in an amount, or (ii) U.S. Government
Obligations which through the payment of interest and principal in respect
thereof in accordance with their terms will provide, not later than one day
before the due date of any payment, money in an amount, or (iii) a
combination of (i) and (ii), sufficient, in the opinion (with respect to
(ii) and (iii)) of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
trustee, to pay and discharge each installment of principal (including any
mandatory sinking fund payments) of and premium, if any, and interest on,
the outstanding debt securities of such series on the dates such
installments of interest or principal and premium are due;
(2) such deposit shall not cause the trustee with respect to the debt
securities of that series to have a conflicting interest with respect to
the debt securities;
(3) such deposit will not result in a breach or violation of, or
constitute a default under, the Indenture or any other agreement or
instrument to which Hubbell is a party or by which it is bound;
(4) if the debt securities of such series are then listed on any
national securities exchange, Hubbell shall have delivered to the trustee
an opinion of counsel or a letter or other document from such exchange to
the effect that Hubbell's exercise of its legal defeasance option or the
covenant defeasance option, as the case may be, would not cause such debt
securities to be delisted;
(5) no Event of Default or event (including such deposit) which, with
notice or lapse of time or both, would become an Event of Default with
respect to the debt securities of such series shall have occurred and be
continuing on the date of such deposit and, with respect to the legal
defeasance option only, no Event of Default under the provisions of the
Indenture relating to certain events of bankruptcy or insolvency or event
which with the giving of notice or lapse of time, or both, would become an
Event of Default under such bankruptcy or insolvency provisions shall have
occurred and be continuing on the 91st day after such date; and
(6) certain other opinions, officers' certificates and other documents
specified in the Indenture, including an opinion of counsel or a ruling of
the Internal Revenue Service to the effect that such deposit, defeasance or
discharge will not cause the holders of the debt securities of such series
to recognize income, gain or loss for Federal income tax purposes.
Notwithstanding the foregoing, if Hubbell exercises its covenant defeasance
option and an Event of Default under the provisions of the Indenture relating to
certain events of bankruptcy or insolvency or event which with the giving of
notice or lapse of time, or both, would become an Event of Default under such
bankruptcy or insolvency provisions shall have occurred and be continuing on the
91st day after the date of such deposit, the obligations of Hubbell referred to
under the definition of covenant defeasance option with respect to such debt
securities shall be reinstated in full.
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MODIFICATION OF THE INDENTURE
The Indenture provides that Hubbell and the trustee, at any time and from
time to time, may enter into supplemental indentures without prior notice to or
consent of any holders, for any of the following purposes:
(1) to evidence the succession of another corporation to the rights of
Hubbell and the assumption by such successor of the covenants and
obligations of Hubbell in the Indenture and in the debt securities and
coupons, if any, issued thereunder;
(2) to add to the covenants of Hubbell for the benefit of the holders
of all or any series of debt securities and the coupons, if any,
appertaining thereto (and if such covenants are to be for the benefit of
less than all series, stating that such covenants are expressly being
included solely for the benefit of such series), or to surrender any right
or power conferred in the Indenture upon Hubbell;
(3) to add any additional Events of Default (and if such Events of
Default are to be applicable to less than all series, stating that such
Events of Default are expressly being included solely to be applicable to
such series);
(4) to add or change any of the provisions of the Indenture to such
extent as shall be necessary to permit or facilitate the issuance
thereunder of debt securities in bearer form, registrable or not
registrable, and with or without coupons, to permit Bearer Securities to be
issued in exchange for Registered Securities, to permit Bearer Securities
to be issued in exchange for Bearer Securities of other authorized
denominations or to permit the issuance of debt securities in
uncertificated form, provided that any such action shall not adversely
affect the interests of the holders of debt securities or any related
coupons in any material respect;
(5) to change or eliminate any of the provisions of the Indenture,
provided that any such change or elimination will become effective only
when there is no outstanding debt security issued thereunder or coupon
created prior to such modification which is entitled to the benefit of such
provision and as to which such modification would apply;
(6) to secure the debt securities issued thereunder or to provide that
any of Hubbell's obligations under the debt securities or the Indenture
shall be guaranteed;
(7) to supplement any of the provisions of the Indenture to such
extent as is necessary to permit or facilitate the defeasance and discharge
of debt securities, provided that any such action will not adversely affect
the interests of the holders of debt securities of such series or any other
series of debt securities issued under the Indenture or any related coupons
in any material respect;
(8) to establish the form or terms of debt securities and coupons, if
any, as permitted by the Indenture;
(9) to evidence and provide for the acceptance of appointment
thereunder by a successor trustee with respect to one or more series of
debt securities and to add to or change any of the provisions of the
Indenture as is necessary to provide for or facilitate the administration
of the trusts thereunder by more than one trustee;
(10) to cure any ambiguity, to correct or supplement any provision in
the Indenture which may be defective or inconsistent with any other
provision therein, to eliminate any conflict between the terms of the
Indenture and the debt securities issued thereunder and the TIA or to make
any other provisions with respect to matters or questions arising under the
Indenture which will not be inconsistent with any provision of the
Indenture; provided such other provisions shall not adversely affect the
interests of the holders of outstanding debt securities or coupons, if any,
created thereunder prior to such modification in any material respect; or
(11) to change or modify any of the provisions of the Indenture;
provided that any such changes or modifications shall not adversely affect
the interests of the holders of outstanding debt securities or coupons, if
any, created thereunder prior to such modification in any material respect.
With the written consent of the holders of not less than a majority in
principal amount of the outstanding debt securities of each series affected by
such modification voting separately, Hubbell and the trustee may modify the
Indenture for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of the Indenture or of modifying in any
manner the rights of the holders of debt securities and coupons, if any, under
the Indenture; provided, however, that no such modification may, without the
consent of the holder of each outstanding debt security of each such series
affected thereby:
(1) change the stated maturity of the principal of, or any installment
of interest on, any debt security, or reduce the principal amount thereof
or the interest thereon or any premium payable upon redemption thereof, or
change the stated maturity of or reduce the amount of any payment to be
made with respect to any coupon, or change the currency or currencies in
which the principal of (and premium, if any) or interest on such debt
security is denominated or payable, or reduce the amount of the principal
of a discount security that would be due and payable upon a declaration of
acceleration of the Maturity thereof, or adversely affect the right of
repayment or repurchase, if any, at the option of the holder, or reduce the
amount of, or postpone the date
33
fixed for, any payment under any sinking fund or analogous provisions for
any debt security, or impair the right to institute suit for the
enforcement of any payment on or after the stated maturity thereof (or, in
the case of redemption, on or after the Redemption Date), or limit the
obligation of Hubbell to maintain a paying agency outside the United States
for payments on Bearer Securities;
(2) reduce the percentage in principal amount of the outstanding debt
securities, the consent of whose holders is required for any supplemental
indenture, or the consent of whose holders is required for any waiver of
compliance with certain provisions of the Indenture or certain defaults or
Events of Default thereunder and their consequences provided for in the
Indenture;
(3) modify any of the provisions of the Indenture which provide for
waivers by the holders of debt securities of past defaults or waivers by
the holders of debt securities of compliance by Hubbell with any covenants,
except to increase any such percentage required to permit such waivers; or
(4) modify any of the provisions of the Indenture which provide that
certain other provisions of the Indenture cannot be modified without the
consent of the holder of each outstanding debt security of each series
affected thereby, except to require that certain other provisions of the
Indenture cannot be modified without the consent of the holder of each
outstanding debt security of each series affected thereby.
A modification which changes or eliminates any covenant or other provision
of the Indenture with respect to one or more particular series of debt
securities and coupons, if any, or which modifies the rights of the holders of
debt securities and coupons of such series with respect to such covenant or
other provision, shall be deemed not to affect the rights under the Indenture of
the holders of debt securities and coupons, if any, of any other series.
The holders of not less than a majority in principal amount of the
outstanding debt securities may on behalf of the holders of all the debt
securities of any such series waive, by notice to the trustee and Hubbell, any
past default or Event of Default under the Indenture with respect to such series
and its consequences, except a default:
(1) in the payment of the principal of (or premium, if any) or
interest on any debt security of such series, or in the payment of any
sinking fund installment or analogous obligation with respect to the debt
securities of such series, or
(2) in respect of a covenant or provision hereof which pursuant to the
second paragraph under "Modification and Waiver" cannot be modified or
amended without the consent of the holder of each outstanding debt security
of such series affected. Upon any such waiver, such default will cease to
exist, and any Event of Default arising therefrom will be deemed to have
been cured, for every purpose of the debt securities of such series under
the Indenture, but no such waiver will extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
Hubbell may omit in any particular instance to comply with certain
covenants in the Indenture (including, any covenant not set forth in the
Indenture but specified in this prospectus to be applicable to the notes issued
hereunder, except as otherwise specified in this prospectus, and including the
covenants relating to the maintenance by Hubbell of its existence, rights and
franchises, and the limitation on liens and the limitation on sale and leaseback
transactions) if before the time for such compliance the holders of at least a
majority in principal amount of the notes either waive such compliance in such
instance or generally waive compliance with such provisions, but no such waiver
may extend to or affect any term, provision or condition except to the extent
expressly so waived, and, until such waiver becomes effective, the obligations
of Hubbell and the duties of the trustee in respect of any such provision will
remain in full force and effect.
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
The Indenture provides that Hubbell may not consolidate with or merge into
any other corporation or sell or convey its properties and assets substantially
as an entirety to any person, unless:
(1) the corporation formed by such consolidation or into which Hubbell
is merged or the person which acquires by sale or conveyance, the
properties and assets of Hubbell substantially as an entirety is a
corporation organized and existing under the laws of the United States or
any State or the District of Columbia and expressly assumes by a
supplemental indenture the due and punctual payment of the principal of
(and premium, if any) and interest on all the outstanding debt securities
and coupons, if any, issued under the Indenture and the performance of
every covenant in the Indenture on the part of Hubbell to be performed or
observed;
(2) immediately after giving effect to such transaction, no Event of
Default under the Indenture, and no event which, after notice or lapse of
time, or both, would become such an Event of Default, shall have occurred
and be continuing; and
(3) Hubbell has delivered to the trustee an officers' certificate and
an opinion of counsel each stating that such consolidation, merger, sale or
conveyance and such supplemental indenture comply with the
34
Indenture provisions and that all conditions precedent therein provided for
relating to such transaction have been complied with.
For purposes of this covenant, "sell or convey its properties and assets
substantially as an entirety" shall mean properties and assets contributing in
the aggregate to at least 80% of Hubbell's total consolidated revenues as
reported in Hubbell's last available periodic financial report (quarterly or
annual, as the case may be) filed with the Securities and Exchange Commission.
APPLICABLE LAW
The Indenture and the notes for all purposes will be governed by and
construed in accordance with the laws of the State of New York.
CONCERNING THE TRUSTEE
JPMorgan Chase Bank is the trustee under the Indenture. In the ordinary
course of business, JPMorgan Chase Bank and its affiliates have provided and may
in the future continue to provide investment banking, commercial banking and
other financial services to us and our subsidiaries for which they have received
and will receive compensation.
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BOOK-ENTRY; DELIVERY AND FORM
The old notes are, and the exchange notes will be, represented by permanent
global notes in definitive, fully registered book-entry form which will be
registered in the name of a nominee of The Depository Trust Company ("DTC") and
deposited on behalf of purchasers (including, initially, persons who exchange
old notes for the exchange notes) of the notes represented by the global
securities with a custodian for DTC for credit to the respective accounts of the
purchasers (or to such other accounts as they may direct) at DTC or will remain
in the custody of the trustee pursuant to the FAST Balance Certificate Agreement
between DTC and the trustee.
The descriptions of the operations and procedures of DTC, Euroclear and
Clearstream Luxembourg set forth below are provided solely as a matter of
convenience. These operations and procedures are solely within the control of
the respective settlement systems and are subject to change by them from time to
time. We do not take any responsibility for these operations or procedures, and
we urge you to contact the relevant system or its participants directly to
discuss these matters.
DTC has advised us that it is:
- a limited-purpose trust company organized under the laws of the State of
New York;
- a "banking organization" within the meaning of the New York Banking Law;
- a member of the Federal Reserve System;
- a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, as amended; and
- a "clearing agency" registered pursuant to Section 17A of the Securities
Exchange Act of 1934.
DTC was created to hold securities for its participants (collectively, the
"participants") and to facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes to the
accounts of its participants, thereby eliminating the need for physical transfer
and delivery of certificates. DTC's participants include securities brokers and
dealers, banks and trust companies, clearing corporations and certain other
organizations. Indirect access to DTC's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"indirect participants") that clear through or maintain a custodial relationship
with a participant, either directly or indirectly. Investors who are not
participants may beneficially own securities held by or on behalf of DTC only
through participants or indirect participants.
We expect that, pursuant to procedures established by DTC:
- upon deposit of each global security, DTC will credit, on its book-entry
registration and transfer system, the accounts of participants with an
interest in that global security, and
- ownership of beneficial interests in the global securities will be shown
on, and the transfer of ownership interests in the global securities
will be effected only through, records maintained by DTC (with respect
to the interests of participants) and by participants and indirect
participants (with respect to the interests of persons other than
participants).
The laws of some jurisdictions may require that some purchasers of
securities take physical delivery of those securities in definitive form.
Accordingly, the ability to transfer beneficial interests in notes represented
by a global security to those persons may be limited. In addition, because DTC
can act only on behalf of its participants, who in turn act on behalf of persons
who hold interests through participants, the ability of a person holding a
beneficial interest in a global security to pledge or transfer that interest to
persons or entities that do not participate in DTC's system, or to otherwise
take actions in respect of that interest, may be affected by the lack of a
physical security in respect of that interest.
So long as DTC or its nominee is the registered owner of a global security,
DTC or that nominee, as the case may be, will be considered the sole legal owner
or holder of the notes represented by that global security for all purposes of
the notes and the Indenture. Except as provided below, owners of beneficial
interests in a global security will not be entitled to have the notes
represented by that global security registered in their names, will not receive
or be entitled to receive physical delivery of certificated securities, and will
not be considered the owners or holders of the notes represented by that
beneficial interest under the Indenture for any purpose, including with respect
to the giving of any direction, instruction or approval to the trustee.
Accordingly, each holder owning a beneficial interest in a global security must
rely on the procedures of DTC and, if that holder is not a participant or an
indirect participant, on the procedures of the participant through which that
holder owns its interest, to exercise any rights of a holder of notes under the
Indenture or that global security. We understand that under existing industry
practice, in the event that we request any action of holders of notes, or a
holder that is an owner of a beneficial interest in a global security desires to
take any action that DTC, as the holder of that global security, is entitled to
take, DTC would authorize the participants to take that action and the
participants would authorize holders owning through those participants to take
that action or would otherwise act upon the instruction of those holders.
36
Neither we nor the trustee will have any responsibility or liability for
any aspect of the records relating to or payments made on account of notes by
DTC, or for maintaining, supervising or reviewing any records of DTC relating to
the notes.
Payments with respect to the principal of and premium, if any, additional
interest, if any, and interest on a global security will be payable by the
trustee to or at the direction of DTC or its nominee in its capacity as the
registered holder of the global security under the Indenture. Under the terms of
the Indenture, we and the trustee may treat the persons in whose names the
notes, including the global securities, are registered as the owners thereof for
the purpose of receiving payment thereon and for any and all other purposes
whatsoever. Accordingly, neither we nor the trustee has or will have any
responsibility or liability for the payment of those amounts to owners of
beneficial interests in a global security. Payments by the participants and the
indirect participants to the owners of beneficial interests in a global security
will be governed by standing instructions and customary industry practice and
will be the responsibility of the participants and indirect participants and not
of DTC.
Transfers between participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear or Clearstream Luxembourg will be effected in the
ordinary way in accordance with their respective rules and operating procedures.
Cross-market transfers between the participants in DTC, on the one hand,
and Euroclear or Clearstream Luxembourg participants, on the other hand, will be
effected through DTC in accordance with DTC's rules on behalf of Euroclear or
Clearstream Luxembourg, as the case may be, by its respective depositary;
however, those crossmarket transactions will require delivery of instructions to
Euroclear or Clearstream Luxembourg, as the case may be, by the counterparty in
that system in accordance with the rules and procedures and within the
established deadlines (Brussels time) of that system. Euroclear or Clearstream
Luxembourg, as the case may be, will, if the transaction meets its settlement
requirements, deliver instructions to its respective depositary to take action
to effect final settlement on its behalf by delivering or receiving interests in
the relevant global securities in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Euroclear participants and Clearstream Luxembourg participants may not
deliver instructions directly to the depositaries for Euroclear or Clearstream
Luxembourg.
Because of time zone differences, the securities account of a Euroclear or
Clearstream Luxembourg participant purchasing an interest in a global security
from a participant in DTC will be credited, and any such crediting will be
reported to the relevant Euroclear or Clearstream Luxembourg participant, during
the securities settlement processing day (which must be a business day for
Euroclear and Clearstream Luxembourg) immediately following the settlement date
of DTC. Cash received in Euroclear or Clearstream Luxembourg as a result of
sales of interest in a global security by or through a Euroclear or Clearstream
Luxembourg participant to a participant in DTC will be received with value on
the settlement date of DTC but will be available in the relevant Euroclear or
Clearstream Luxembourg cash account only as of the business day for Euroclear or
Clearstream Luxembourg following DTC's settlement date.
Although we understand that DTC, Euroclear and Clearstream Luxembourg have
agreed to the foregoing procedures to facilitate transfers of interests in the
global securities among participants in DTC, Euroclear and Clearstream
Luxembourg, they are under no obligation to perform or to continue to perform
those procedures, and those procedures may be discontinued at any time. Neither
we nor the trustee will have any responsibility for the performance by DTC,
Euroclear or Clearstream Luxembourg or their respective participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
We obtained the information in this section and elsewhere in this
prospectus concerning DTC, Euroclear and Clearstream Luxembourg and their
respective book-entry systems from sources that we believe are reliable, but we
take no responsibility for the accuracy of any of this information.
SAME-DAY PAYMENT
So long as DTC continues to make its settlement system available to us, all
payments of principal of and premium, if any, and interest on the global
securities will be made by us in immediately available funds.
CERTIFICATED SECURITIES
Interests in the global securities will be exchanged for physical delivery
of certificates ("certificated securities") only if:
(1) DTC is at any time unwilling or unable to continue as depositary
for the global securities, or DTC ceases to be a "Clearing Agency"
registered under the U.S. Securities Exchange Act of 1934, as amended, and
a successor depositary is not appointed by us within 90 days, or
(2) an event of default under the Indenture has occurred and is
continuing with respect to the exchange notes.
Upon the occurrence of either of the events described in the preceding
sentence, we will cause the appropriate certificated securities to be delivered.
37
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
The following discussion is a summary of the material United States federal
income tax consequences relevant to the exchange of the old notes pursuant to
this exchange offer and the ownership and disposition of the exchange notes, but
does not purport to be a complete analysis of all potential tax effects. The
discussion is based upon the Internal Revenue Code of 1986, as amended (the
"Code"), United States Treasury Regulations issued thereunder, Internal Revenue
Service rulings and pronouncements and judicial decisions now in effect, all of
which are subject to change at any time. Any such change may be applied
retroactively in a manner that could adversely affect a holder of the notes.
This discussion does not address all of the United States federal income tax
consequences that may be relevant to a holder in light of such holder's
particular circumstances or to holders subject to special rules, such as certain
financial institutions, U.S. expatriates, insurance companies, dealers in
securities or currencies, traders in securities, United States Holders (as
defined below) whose functional currency is not the U.S. dollar, tax-exempt
organizations and persons holding the notes as part of a "straddle," "hedge,"
"conversion transaction" or other integrated transaction. Moreover, the effect
of any applicable state, local or foreign tax laws is not discussed. The
discussion deals only with notes held as "capital assets" within the meaning of
Section 1221 of the Code.
This summary is based on the opinion of Latham & Watkins, our counsel. We
have not sought and will not seek any rulings from the Internal Revenue Service
(the "IRS") with respect to the matters discussed below. There can be no
assurance that the IRS will not take a different position concerning the tax
consequences of the exchange of the old notes pursuant to this exchange offer or
the ownership or disposition of the exchange notes or that any such position
would not be sustained. If a partnership or other entity taxable as a
partnership holds the notes, the tax treatment of a partner will generally
depend on the status of the partner and the activities of the partnership. Such
partner should consult its tax advisor as to the tax consequences.
YOU SHOULD CONSULT YOUR OWN TAX ADVISORS WITH REGARD TO THE APPLICATION OF
THE TAX CONSEQUENCES DISCUSSED BELOW TO YOUR PARTICULAR SITUATIONS AS WELL AS
THE APPLICATION OF ANY STATE, LOCAL, FOREIGN OR OTHER TAX LAWS, INCLUDING GIFT
AND ESTATE TAX LAWS.
FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER
The exchange of the old notes for the exchange notes in the exchange offer
should not be treated as an "exchange" for federal income tax purposes, because
the exchange notes should not be considered to differ materially in kind or
extent from the old notes. Accordingly, the exchange of old notes for exchange
notes should not be a taxable event to you for federal income tax purposes.
Moreover, the exchange notes should have the same tax attributes as the old
notes and the same tax consequences to you as the old notes have to you,
including without limitation, the same issue price, adjusted issue price,
adjusted tax basis and holding period. Therefore, references to "notes" apply
equally to the exchange notes and the old notes.
UNITED STATES HOLDERS
This section applies to you if you are a United States Holder. For purposes
of the following discussion, you are a "United States Holder" if you are a
beneficial owner of the notes who or that is:
- an individual that is a citizen or resident of the United States,
including an alien individual who is a lawful permanent resident of the
United States or meets the "substantial presence" test under Section
7701(b) of the Code;
- a corporation or other entity taxable as a corporation created or
organized in or under the laws of the United States or a political
subdivision thereof;
- an estate, the income of which is subject to United States federal
income tax regardless of its source; or
- a trust, if a United States court can exercise primary supervision over
the administration of the trust and one or more United States persons
can control all substantial trust decisions, or, if the trust was in
existence on August 20, 1996, it has elected to continue to be treated
as a United States person.
Interest
Payments of stated interest on the notes generally will be taxable to you
as ordinary income at the time that such payments are received or accrued, in
accordance with your method of accounting for United States federal income tax
purposes.
If we call the notes for redemption (see "Description of the Exchange
Notes -- Optional Redemption"), we may be obligated to make "make-whole"
payments in excess of stated principal and interest. We intend to take the
position that the notes should not be treated as contingent payment debt
instruments because of these additional payments. Assuming such position is
respected, you would be required to include in income the amount of any such
additional payment at the time such payments are received or accrued in
accordance with your method of accounting
38
for United States federal income tax purposes. If the IRS successfully
challenged this position, and the notes were treated as contingent payment debt
instruments, you could be required to accrue interest income at a rate higher
than the stated interest rate on the note and to treat as ordinary income,
rather than capital gain, any gain recognized on a sale, exchange or redemption
of a note. You are urged to consult your own tax advisors regarding the
potential application to the notes of the contingent payment debt instrument
rules and the consequences thereof.
Market Discount
If you acquire a note at a cost that is less than the stated redemption
price at maturity, the amount of such difference is treated as "market discount"
for federal income tax purposes, unless such difference is less than .0025
multiplied by the stated redemption price at maturity multiplied by the number
of complete years until maturity (from the date of acquisition).
Under the market discount rules of the Code, you are required to treat any
gain on the sale, exchange, retirement or other disposition of a note as
ordinary income to the extent of the accrued market discount that has not been
previously included in income. If you dispose of a note with market discount in
certain otherwise nontaxable transactions, you may be required to include
accrued market discount as ordinary income as if you had sold the note at its
then fair market value.
In general, the amount of market discount that has accrued is determined on
a ratable basis. United States Holders may, however, elect to determine the
amount of accrued market discount on a constant yield to maturity basis. This
election is made on a note-by-note basis and is irrevocable.
With respect to notes with market discount, you may not be allowed to
deduct immediately a portion of the interest expense on any indebtedness
incurred or continued to purchase or to carry the notes. United States Holders
may elect to include market discount in income currently as it accrues, in which
case the interest deferral rule set forth in the preceding sentence will not
apply. This election will apply to all debt instruments that you acquire on or
after the first day of the first taxable year to which the election applies and
is irrevocable without the consent of the IRS.
Amortizable Bond Premium
In general, if you purchase a note for an amount in excess of the stated
principal amount of the note, such excess will constitute bond premium. United
States Holders generally may elect to amortize the premium over the remaining
term of the note on a constant yield method as an offset to interest when
includible in income under your regular accounting method. The notes are subject
to call provisions at our option, as described in this prospectus under
"Description of the Exchange Notes -- Redemption." You will calculate the amount
of amortizable bond premium based on the amount payable at the applicable call
date, but only if the use of the call date (in lieu of the stated maturity date)
results in a smaller amortizable bond premium for the period ending on the call
date. If you do not elect to amortize bond premium, that premium will decrease
the gain or increase the loss you would otherwise recognize on disposition of
the note. If you elect to amortize premium on a constant yield method, such
election will also apply to all debt obligations you hold or subsequently
acquire on or after the first day of the first taxable year to which the
election applies. The election may not be revoked the without the consent of the
IRS. You should consult your own tax advisors before making this election.
Sale or Other Taxable Disposition of the Notes
You will recognize gain or loss on the sale, exchange, redemption,
retirement or other taxable disposition of a note equal to the difference
between the amount realized upon the disposition (less a portion allocable to
any accrued and unpaid interest, which will be taxable as ordinary income if not
previously included in your income) and your adjusted tax basis in the note.
Your adjusted basis in a note generally will be your cost therefor, reduced by
any principal payments you receive in respect of the note and by the amount of
amortized bond premium, if any, taken into account in respect of the note, and
increased by the amount of market discount, if any, previously included in
income in respect of the note. This gain or loss generally will be a capital
gain or loss, except as described under "Market Discount" above, and will be a
long-term capital gain or loss if you have held the note for more than one year.
Otherwise, such gain or loss will be a short-term capital gain or loss.
Backup Withholding
You may be subject to a backup withholding tax (up to 31%) when you receive
interest and principal payments on the notes held or upon the proceeds received
upon the sale or other disposition of such notes. Certain holders (including,
among others, corporations and certain tax-exempt organizations) are generally
not subject to backup withholding. You will be subject to this backup
withholding tax if you are not otherwise exempt and if you:
- fail to furnish your taxpayer identification number ("TIN"), which, for
an individual, is ordinarily his or her social security number;
39
- furnish an incorrect TIN;
- are notified by the IRS that you have failed to properly report payments
of interest or dividends; or
- fail to certify, under penalties of perjury, that you have furnished a
correct TIN and that the IRS has not notified you that you are subject
to backup withholding.
You should consult your personal tax advisors regarding your qualification
for an exemption from backup withholding and the procedures for obtaining such
an exemption, if applicable. The backup withholding tax is not an additional tax
and taxpayers may use amounts withheld as a credit against their United States
federal income tax liability or may claim a refund as long as they timely
provide certain information to the IRS.
NON-UNITED STATES HOLDERS
This section applies to you if you are a non-United States Holder. You are
a non-United States Holder if you are a beneficial owner of the notes who is not
a United States Holder.
Interest
Interest paid to you will not be subject to United States federal
withholding tax of 30% (or, if applicable, a lower treaty rate) provided that:
- you do not directly or indirectly, actually or constructively, own 10%
or more of the total combined voting power of all of our classes of
stock;
- you are not a controlled foreign corporation that is related to us
through stock ownership and are not a bank that received such notes on
an extension of credit made pursuant to a loan agreement entered into in
the ordinary course of your trade or business; and
- (1) you certify in a statement provided to us or our paying agent, under
penalties of perjury, that you are not a "United States person" within
the meaning of the Code and provide your name and address, (2) a
securities clearing organization, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or
business and holds the notes on your behalf certifies to us or our
paying agent under penalties of perjury that it, or the financial
institution between it and you, has received from the you a statement,
under penalties of perjury, that you are not a "United States person"
and provides us or our paying agent with a copy of such statement or (3)
you hold your notes directly through a "qualified intermediary" and
certain conditions are satisfied.
Even if the above conditions are not met, you may be entitled to a
reduction in or an exemption from withholding tax on interest under a tax treaty
between the United States and your country of residence. To claim such a
reduction or exemption, you must generally complete IRS Form W-8BEN and claim
this exemption on the form. In some cases, you may instead be permitted to
provide documentary evidence of your claim to the intermediary, or a qualified
intermediary may already have some or all of the necessary evidence in its
files.
The certification requirements described above may require you, if you
provide an IRS form, or if you claim the benefit of an income tax treaty, to
also provide your United States taxpayer identification number. The applicable
regulations generally also require, in the case of a note held by a foreign
partnership, that:
- the certification described above be provided by the partners and
- the partnership provide certain information.
Further, a look-through rule will apply in the case of tiered partnerships.
Special rules are applicable to intermediaries. You should consult your tax
advisors regarding the certification requirements for non-United States persons.
As more fully described above under "Description of the Exchange Notes -
Optional Redemption," upon a redemption of the notes we may be required to make
additional payments. Such payments may be treated as interest, subject to the
rules described above, or as other income subject to the United States federal
withholding tax. If you are subject to the withholding tax you should consult
your own tax advisors as to whether you can obtain a refund for all or a portion
of the withholding tax.
Sale or Other Taxable Disposition of the Notes
You will generally not be subject to United States federal income tax or
withholding tax on gain recognized on the sale, exchange, redemption, retirement
or other disposition of a note. However, you may be subject to tax on such gain
if you are an individual who was present in the United States for 183 days or
more in the taxable year of the disposition and certain other conditions are
met, in which case you may have to pay a United States federal income tax of 30%
(or, if applicable, a lower treaty rate) on such gain.
40
United States Trade or Business
If interest or gain from a disposition of the notes is effectively
connected with your conduct of a United States trade or business, or if an
income tax treaty applies and you maintain a United States "permanent
establishment" to which the interest or gain is generally attributable, you may
be subject to United States federal income tax on the interest or gain on a net
basis in the same manner as if you were a United States Holder. If interest
income received with respect to the notes is taxable on a net basis, the 30%
withholding tax described above will not apply (assuming an appropriate
certification is provided). A foreign corporation that is a holder of a note
also may be subject to a branch profits tax equal to 30% of its effectively
connected earnings and profits for the taxable year, subject to certain
adjustments, unless it qualifies for a lower rate under an applicable income tax
treaty. For this purpose, interest on a note or gain recognized on the
disposition of a note will be included in earnings and profits if the interest
or gain is effectively connected with the conduct by the foreign corporation of
a trade or business in the United States.
Backup Withholding and Information Reporting
Backup withholding will likely not apply to payments of principal or
interest made by us or our paying agents, in their capacities as such, to you if
you are exempt from withholding tax on interest as described above. However,
information reporting on IRS Form 1042-S may still apply with respect to
interest payments. Payments of the proceeds from a disposition by a non-United
States Holder of a note made to or through a foreign office of a broker will not
be subject to information reporting or backup withholding, except that
information reporting (but generally not backup withholding) may apply to those
payments if the broker is
- a United States person;
- a controlled foreign corporation for United States federal income tax
purposes;
- a foreign person 50% or more of whose gross income is effectively
connected with a United States trade or business for a specified
three-year period; or
- a foreign partnership, if at any time during its tax year, one or more
of its partners are United States persons, as defined in Treasury
regulations, who in the aggregate hold more than 50% of the income or
capital interest in the partnership or if, at any time during its tax
year, the foreign partnership is engaged in a United States trade or
business.
Payment of the proceeds from a disposition by a non-United States Holder of
a note made to or through the United States office of a broker is generally
subject to information reporting and backup withholding unless the holder or
beneficial owner certifies as to its taxpayer identification number or otherwise
establishes an exemption from information reporting and backup withholding.
You should consult your own tax advisors regarding application of
withholding and backup withholding in your particular circumstance and the
availability of and procedure for obtaining an exemption from withholding and
backup withholding under current Treasury regulations. In this regard, the
current Treasury regulations provide that a certification may not be relied on
if we or our agent (or other payor) knows or has reasons to know that the
certification may be false. Any amounts withheld under the backup withholding
rules from a payment to you will be allowed as a credit against your federal
income tax liability or may entitle you to claim a refund, provided the required
information is furnished timely to the IRS.
41
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account in the
exchange offer must acknowledge that it will deliver a prospectus together with
any resale of those exchange notes. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in the resales of
exchange notes received in exchange for old notes where those old notes were
acquired as a result of market-making activities or other trading activities. We
have agreed that for a period of up to 180 days after the expiration date, we
will make this prospectus, as amended or supplemented, available to any
broker-dealer that requests it in the letter of transmittal for use in any such
resale.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers or any other persons. Exchange notes received by broker-dealers
for their own account pursuant to the exchange offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the exchange notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such
exchange notes. Any broker-dealer that resells exchange notes that were received
by it for its own account pursuant to the exchange offer and any broker or
dealer that participates in a distribution of those exchange notes may be deemed
to be an "underwriter" within the meaning of the Securities Act and any profit
on any such resale of exchange notes and any commissions or concessions received
by any such persons may be deemed to be underwriting compensation under the
Securities Act. The letter of transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
We have agreed to pay all expenses incident to our performance of, or
compliance with, the registration rights agreement and will indemnify the
holders of old notes including any broker-dealers, and certain parties related
to such holders, against certain types of liabilities, including liabilities
under the Securities Act.
LEGAL MATTERS
The validity of the securities offered hereby is being passed upon for us
by Latham & Watkins, New York, New York.
INDEPENDENT ACCOUNTANTS
The consolidated financial statements of Hubbell Incorporated appearing in
Hubbell's Annual Report on Form 10-K for the fiscal year ended December 31,
2001, and incorporated by reference in this prospectus, have been audited by
PricewaterhouseCoopers LLP, independent accountants, as stated in their reports
incorporated by reference herein.
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[HUBBELL LOGO]
HUBBELL INCORPORATED
OFFER TO EXCHANGE
$200,000,000 PRINCIPAL AMOUNT OF ITS
6.375% NOTES DUE 2012,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT,
FOR ANY AND ALL OF ITS OUTSTANDING
6.375% NOTES DUE 2012
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PROSPECTUS
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July 3, 2002