2008 Annual Report - Hubbell Wiring Device-Kellems

HUBBELL INCORPORATED AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)In September 2008, the FASB issued FSP No. FAS 133-1 and FIN 45-4, “Disclosures about Credit Derivativesand Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; andClarification of the Effective Date of FASB Statement No. 161”. FSP No. FAS 133-1 and FIN 45-4 is intended toimprove disclosures about credit derivatives by requiring more information about the potential adverse effects ofchanges in credit risk on the financial position, financial performance, and cash flows of the sellers of creditderivatives. This statement will not have an impact on the Company’s financial statements.In December 2008, the FASB issued FSP 140-4 and FIN 46(R)-8, “Disclosures by Public Entities (Enterprises)about Transfers of Financial Assets and Interests in Variable Interest Entities”. FSP 140-4 and FIN 46(R)-8 isintended to improve disclosures about a company’s involvement with variable interest entities by requiring moreinformation about the assumptions made in determining whether or not to consolidate a variable interest entity, thenature of restrictions on a variable interest entity’s assets, as well as the risks associated with an enterprise’sinvolvement with the variable interest entity. FSP 140-4 and FIN 46(R)-8 are effective December 15, 2008. Thisstatement did not have an impact on the Company’s financial statements.In December of 2008, the FASB issued FSP 132(R)-1, “Employers’ Disclosures about Postretirement BenefitPlan Assets”. FSP 132(R)-1 is intended to improve disclosures about a company’s postretirement benefit plan assetsby requiring more information about how investment allocation decisions are made, major categories of plan assets,fair value assumptions and concentrations of risk. FSP 132(R)-1 will be applicable to the Company on January 1,2009. The Company is currently evaluating the requirements of FSP 132(R)-1 and the impact that this statementwill have on its financial statements.Note 2 — Variable Interest EntitiesFIN 46(R) provides a framework for identifying variable interest entities (“VIE”) and determining when acompany should include the assets, liabilities, non-controlling interests and results of activities of a VIE in itsconsolidated financial statements. FIN 46(R) requires a VIE to be consolidated if a party with an ownership,contractual or other financial interest in the VIE (a “variable interest holder”) is obligated to absorb a majority of therisk of loss from the VIE’s activities, is entitled to receive a majority of the VIE’s residual returns (if no partyabsorbs a majority of the VIE’s losses), or both. A variable interest holder that consolidates the VIE is called theprimary beneficiary.The Company has a 50% interest in a joint venture in Hong Kong, established as Hubbell Asia Limited(“HAL”). The principal objective of HAL is to manage the operations of its wholly-owned manufacturing companyin the People’s Republic of China. HAL commenced operations during the third quarter of 2008.Under the provisions of FIN 46(R), HAL has been determined to be a VIE, with the Company being theprimary beneficiary, and as a result the Company has consolidated HAL in accordance with FIN 46(R). Theconsolidation of HAL did not have a material impact on the Consolidated Financial Statements.Note 3 — Business AcquisitionsIn December 2008, the Company purchased all of the outstanding common stock of Varon for approximately$55.6 million in cash. Varon is a leading provider of energy-efficient lighting fixtures and controls designed for theindoor commercial and industrial lighting retrofit and relight market, as well as outdoor new and retrofit pedestrianscalelighting applications. The company has manufacturing operations in California, Florida, and Wisconsin. Thisacquisition has been added to the lighting business within the Electrical segment.In September 2008, the Company purchased all of the outstanding common stock of CDR for approximately$68.8 million in cash. CDR, based in Ormond Beach, Florida, with multiple facilities throughout North America,manufactures polymer concrete and fiberglass enclosures serving a variety of end markets, including electric, gasand water utilities, cable television and telecommunications industries. This acquisition has been added to thePower segment.48