2008 Annual Report - Hubbell Wiring Device-Kellems

TO THE SHAREHOLDERS:Hubbell is well positioned for today and poised for the challenges of tomorrow.Our performance in 2008 demonstrates our sound positioning for “today.”Through the effort and dedication of our people, we have been able to leverage thestrength of our brands to deliver the best financial results in our over120 - year history: salesof $2.7 billion and earnings per diluted share of $3.94. This achievement was particularlyimpressive given the dramatic volatility in commodity costs and a housing market thatcontinues to slump at historic proportions. In addition, the credit markets froze and the globaleconomy slipped into a recession which made for a challenging environment for Hubbell andbusinesses of all sizes and types as we ended the year.How were we able to produce record results despite the challenging headwinds?One of the cornerstones of our success has been our ability to improve margins – 210 basispoints in 2007 and an additional 100 basis points in 2008 – through a relentless focus onprice, cost and productivity. As we were confronted with inflation and a rapid rise in the costYear Ended December 31, 2008 2007 Change(Dollars in millions, except per share amounts)Net Sales $2,704.4 $2,533.9 7%Net Income $ 222.7 $ 208.3 7%Earnings Per Share-Diluted $ 3.94 $ 3.50 13%of steel during the second half of the year, we worked very closely with our customers toadjust pricing, but that mechanism only partially recovered all cost increases. So we turned toan enterprise wide approach to purchasing – not just raw materials and components but alsotransportation and logistics. We captured efficiencies in supply chain management. We alsocontinued to move production to lower cost countries and redesign manufacturing processesusing a lean methodology. Opportunities exist to implement new initiatives in these areas tofurther help the Company in the future.We also grew the Company in 2008, aided by a number of acquisitions. Hubbellinvested $267 million in 7 acquisitions in 2008. These acquisitions helped both our Electricaland Power business segments. Each transaction was inspired by a compelling strategic fit thatadded product breadth, geographic reach, manufacturing know-how or channel extension.Acquisitions added roughly 4% to our sales in 2008 and were accretive to earnings. Wehave developed a competency in selecting attractive targets, being disciplined in valuation,and delivering excellent results that we feel we can deploy in 2009 and beyond.2