Executive Overview of the Business

The Company is primarily engaged in the design, manufacture and sale of quality electrical and electronic products for a broad range of non-residential and residential construction, industrial and utility applications. Products are either sourced complete, manufactured or assembled by subsidiaries in the United States, Canada, Switzerland, Puerto Rico, China, Mexico, Italy, the United Kingdom, Brazil and Australia. The Company also participates in joint ventures in Taiwan and Hong Kong, and maintains offices in India, Singapore, China, Mexico, South Korea and countries in the Middle East. The Company employs approximately 14,000 individuals worldwide.

The Company's reporting segments consist of the Electrical segment (comprised of electrical systems products and lighting products) and the Power segment. Results for the three and six months ended June 30, 2012 are included under "Segment Results" within this Management's Discussion and Analysis.

The Company is focused on growing profits and delivering attractive returns to our shareholders by executing a business plan focused on the following key initiatives: revenue growth, price realization and productivity improvements.

As part of our revenue growth initiative, we remain focused on expanding market share through new product introductions and more effective utilization of sales and marketing efforts across the organization. In addition, we continue to assess opportunities to expand sales through acquisitions of businesses that fill product line gaps or allow for expansion into new markets.

Price realization is a key area of focus for our company. Material costs are approximately two-thirds of our cost of goods sold therefore volatility in this area can impact profitability significantly. As a result, our goal is to achieve parity between pricing and commodity cost increases.

Productivity improvements are also an important initiative for the Company. These programs impact virtually all functional areas within the company by reducing or eliminating waste and improving processes. We continue to expand our efforts surrounding global product and component sourcing and supplier cost reduction programs. Value engineering efforts, product transfers and the use of lean process improvement techniques are expected to increase manufacturing efficiency. In addition, we continue to build upon the benefits of our enterprise resource planning system across all functions and have also implemented a sustainability program across the organization. Our goal is to have enough productivity programs to pay for investments in key growth areas as well as offset other inflationary cost increases.

Results of Operations - Second Quarter of 2012 compared to the Second Quarter of 2011

SUMMARY OF CONSOLIDATED RESULTS (IN MILLIONS, EXCEPT PER SHARE DATA):

                                                Three Months Ended June 30
                                        2012 % of Net sales      2011 % of Net sales
  Net Sales                          $ 778.4                  $ 709.2
  Cost of goods sold                   518.6                    479.3
  Gross Profit                         259.8           33.4 %   229.9           32.4 %
  Selling & administrative expense     135.3           17.4 %   124.8           17.6 %
  Operating income                     124.5           16.0 %   105.1           14.8 %
  Net income attributable to Hubbell    77.5           10.0 %    65.2            9.2 %
  Earnings per share - diluted       $  1.29                  $  1.07

Net Sales

Net sales of $778.4 million for the second quarter of 2012 increased 10% compared to the second quarter of 2011 due to higher organic volume, acquisitions and price realization partially offset by unfavorable foreign currency translation. Compared to the second quarter of 2011, organic volume increased net sales by approximately eight percentage points due to improved market conditions and new product growth. Additionally, acquisitions and price realization added two and one percentage points, respectively, to net sales. Foreign currency translation reduced net sales by one percentage point.

Cost of goods sold

As a percentage of net sales, cost of goods sold decreased to 66.6% in the second quarter of 2012 compared to 67.6% in the second quarter of 2011 due to the impact of price realization and lower commodity costs.

Gross Profit

The consolidated gross profit margin in the second quarter of 2012 was 33.4% compared to 32.4% in the second quarter of 2011. The increase in gross profit margin was due to price realization, slightly lower commodity costs and leveraging the higher sales volume. In addition, productivity essentially offset inflationary cost increases.

Selling & Administrative Expenses ("S&A")

S&A expenses in the second quarter of 2012 were $135.3 million compared to $124.8 million in the second quarter of 2011. As a percentage of net sales, S&A expenses declined to 17.4% in the second quarter of 2012 compared to 17.6% in the second quarter of 2011 due to leveraging the higher sales volume partially offset by higher wage and benefit costs.

Total Other Expense

Total other expense was $8.4 million in the second quarter of 2012 compared to $9.2 million in the second quarter of 2011. This $0.8 million decrease is primarily due to both net foreign currency transaction losses and net interest expense being lower in the second quarter of 2012 compared to the second quarter of 2011.

Income Taxes

The effective tax rate in the second quarter of 2012 increased to 32.8% from 31.5% in the second quarter of 2011. This increase is primarily due to the federal research and development tax credit not being extended for 2012 and a higher percentage of domestic income in the current year.

Net income attributable to Hubbell and Earnings Per Diluted Share

Net income attributable to Hubbell and earnings per diluted share increased 19% and 21% respectively in the second quarter of 2012 compared to the second quarter of 2011. These increases are due to higher operating income partially offset by a higher effective tax rate. In addition, earnings per diluted share reflect a decrease in the average number of shares outstanding in the second quarter of 2012 compared to the second quarter of 2011.

Segment Results

ELECTRICAL

                                          Three Months Ended
                                                June 30
                       (In millions)          2012       2011
                       Net sales         $   536.3    $ 497.9
                       Operating income  $    81.2    $  69.2
                       Operating margin       15.1 %     13.9 %

Net sales in the Electrical segment increased 8% in the second quarter of 2012 compared with the second quarter of 2011. Compared to the second quarter of 2011, organic volume increased net sales by approximately five percentage points while acquisitions and price realization added three and one percentage points, respectively, to net sales. Foreign currency translation reduced net sales by one percentage point.

Within the segment, electrical systems products net sales increased 12% in the second quarter of 2012 compared to the second quarter of 2011 due to higher organic volume, acquisitions and price realization. Sales of lighting products were flat in the second quarter of 2012 compared to 2011 due to favorable price realization offset by lower organic volume. Compared to the second quarter of 2011, sales of commercial and industrial lighting products decreased 4% primarily driven by continued weakness in public construction partially offset by stronger demand in the retrofit and relight markets. Sales of residential lighting products increased 21% year-over-year due to stronger demand in the multi-family housing and renovation markets.

Operating income in the second quarter of 2012 increased 17% to $81.2 million compared to the second quarter of 2011 and operating margin increased by 120 basis points to 15.1%. Operating income increased primarily due to price realization, lower commodity costs, higher volume and acquisitions. Productivity improvements essentially offset cost increases including wages, benefits and other personnel costs.

POWER

                                          Three Months Ended
                                                June 30
                       (In millions)          2012       2011
                       Net sales         $   242.1    $ 211.3
                       Operating income  $    43.3    $  35.9
                       Operating margin       17.9 %     17.0 %

Net sales in the Power segment increased 15% in the second quarter of 2012 compared to the second quarter of 2011. Organic volume increased net sales by approximately fourteen percentage points due to strong growth in domestic transmission and distribution products. Price realization was favorable by two percentage points. Foreign currency translation reduced net sales by one percentage point.

Operating income in the second quarter of 2012 increased 21% to $43.3 million compared to the second quarter of 2011 and operating margin increased by 90 basis points to 17.9%. The operating income and margin increases were primarily due to the higher volume, productivity and price realization partially offset by cost increases, including commodities, wages, pension and benefits.

Results of Operations - Six Months Ended June 30, 2012 compared to the Six Months Ended June 30, 2011

SUMMARY OF CONSOLIDATED RESULTS (IN MILLIONS, EXCEPT PER SHARE DATA):

                                                        Six Months Ended June 30
                                               2012 % of Net sales          2011 % of Net sales
Net Sales                               $   1,502.2                  $   1,367.3
Cost of goods sold                          1,008.3                        932.2
Gross Profit                                  493.9           32.9 %       435.1           31.8 %
Selling & administrative expense              267.7           17.8 %       246.4           18.0 %
Operating income                              226.2           15.1 %       188.7           13.8 %
Net income attributable to Hubbell            140.7            9.4 %       115.5            8.4 %
Earnings per share - diluted            $      2.34                  $      1.89

Net Sales

Net sales of $1.5 billion for the first six months of 2012 increased 10% compared to the first six months of 2011 due to higher organic volume, acquisitions and price realization. Compared to the first six months of 2011, organic volume increased net sales by eight percentage points due to improved market conditions and new product growth. Additionally acquisitions and price realization added two and one percentage points, respectively, to net sales. Foreign currency translation reduced net sales by one percentage point.

Cost of goods sold

As a percentage of net sales, cost of goods sold decreased to 67.1% for the first six months of 2012 compared to 68.2% for the first six months of 2011 due to the impact of price realization.

Gross Profit

The consolidated gross profit margin was 32.9% the first six months of 2012 compared to 31.8% in the first six months of 2011. The increase in gross profit margin was primarily due to price realization.

Selling & Administrative Expenses

S&A expenses in the first six months of 2012 were $267.7 million compared to $246.4 million in the first six months of 2011. As a percentage of net sales, S&A expenses declined to 17.8% in the first six months of 2012 compared to 18.0% in the first six months of 2011 due to leveraging the higher sales volume partially offset by higher wage and benefit costs.

Total Other Expense

Total other expense was $15.5 million in the first six months of 2012 compared to $18.8 million in the first six months of 2011. This $3.3 million decrease is primarily due to both net foreign currency transaction losses and net interest expense being lower in the first six months of 2012 compared to the comparable prior year period.

Income Taxes

The effective tax rate in the first six months of 2012 increased to 32.8% from 31.5% in the first six months of 2011. This increase is primarily due to the federal research and development tax credit not being extended for 2012 and a higher percentage of domestic income in the current year.

Net income attributable to Hubbell and Earnings Per Diluted Share

Net income attributable to Hubbell and earnings per diluted share increased 22% and 24%, respectively, in the first six months of 2012 compared to the first six months of 2011. These increases are due to higher operating income and lower other expense partially offset by a higher effective tax rate. In addition earnings per diluted share reflect a decrease in the average number of shares outstanding for the first six months of 2012 compared to the first six months of 2011.

Segment Results

ELECTRICAL

                                           Six Months Ended
                                                June 30
                        (In millions)         2012      2011
                        Net sales        $ 1,041.4   $ 964.0
                        Operating income $   145.0   $ 126.8
                        Operating margin      13.9 %    13.2 %

Net sales in the Electrical segment increased 8% in the first six months of 2012 compared with the first six months of 2011 due to higher organic volume, acquisitions and price realization. Compared to the first six months of 2011, organic volume added approximately five percentage points to net sales. In addition, acquisitions and price realization added three and one percentage points, respectively, to net sales. Foreign currency translation reduced net sales by one percentage point.

Within the segment, electrical systems products net sales increased 12% in the first six months of 2012 compared to the first six months of 2011 due to higher organic volume and acquisitions and price realization. Sales of lighting products increased 2% in the first six months of 2012 compared to 2011. Compared to the first six months of 2011, sales of commercial and industrial lighting products decreased 1% primarily driven by continued weakness in public construction partially offset by stronger demand in the retrofit and relight markets. Sales of residential lighting products increased 16% year-over-year due to stronger demand in the multi-family housing and renovation markets.

Operating income in the first six months of 2012 increased 14% to $145.0 million compared to the first six months of 2011 while operating margin increased 70 basis points. Operating income and operating margin increased due to price realization, productivity improvements, lower commodity costs and sales volume leverage partially offset by inflationary spending increases.

POWER

                                           Six Months Ended
                                                June 30
                        (In millions)         2012      2011
                        Net sales         $  460.8   $ 403.3
                        Operating income  $   81.2   $  61.9
                        Operating margin      17.6 %    15.3 %

Net sales in the Power segment increased 14% in the first six months of 2012 compared to the first six months of 2011. Organic volume increased net sales by approximately thirteen percentage points due to higher net sales of transmission and distribution products. Price realization added two percentage points to net sales. Foreign currency translation reduced net sales by one percentage point.

Operating income increased 31% to $81.2 million and operating margin increased 230 basis points to 17.6% in the first six months of 2012 compared to the first six months of 2011. The increase in operating income and margin was due to higher volume, productivity and price realization partially offset by cost increases including commodities, wages and benefits.

Outlook

For 2012, we expect our overall net sales to increase by six to eight percent compared to 2011. We expect six to eight percent growth in our Electrical segment and seven to nine percent growth in our Power segment. The non-residential market is expected to grow slightly as strong demand from retrofit and relighting projects is expected to be partially offset by weakness in the new construction market. The utility market is expected to continue to grow with increases anticipated for both our transmission and distribution products. The industrial market is also expected to continue to expand but at a slower rate than in recent quarters. For the residential market, we anticipate continued improvement in 2012 driven by multi-family and renovation markets. Acquisitions are expected to contribute two percentage points of the overall net sales increase. We expect foreign currency translation to have an unfavorable impact on net sales of approximately one percentage point.

We plan to continue to work on productivity initiatives, including improved sourcing, product redesign and lean projects focused on factory efficiency. We anticipate cost increases from pension, healthcare and other inflationary costs. We plan to continue to invest in people and resources to support our growth initiatives. Overall we expect to expand our annual operating margin by at least 50 basis points in 2012 compared to 2011. Additionally, we expect our 2012 tax rate to increase to approximately 32.5% compared to 30.7% for 2011 primarily due to the expiration of the federal research and development tax credit and a higher mix of domestic income. We expect to increase our earnings in 2012 through higher sales, careful management of pricing relative to commodity costs and by continuing our productivity programs.

In 2012, we anticipate generating free cash flow approximately equal to net income. Finally, with our strong financial position, we expect to continue to evaluate and pursue additional acquisitions to add to our portfolio.

                                           HUBBELL INCORPORATED - Form 10-Q - 15

--------------------------------------------------------------------------------
  Back to Contents

Financial Condition, Liquidity and Capital Resources

Cash Flow

                                                                 Six Months Ended
                                                                     June 30
(In millions)                                                      2012          2011
Net cash provided by (used in):
Operating activities                                        $     104.6   $     116.4
Investing activities                                              (65.6 )       (28.0 )
Financing activities                                              (63.1 )      (106.5 )
Effect of foreign currency exchange rate changes on cash
and cash equivalents                                               (0.9 )         7.8
NET CHANGE IN CASH AND CASH EQUIVALENTS                     $     (25.0 ) $     (10.3 )

Cash provided by operating activities for the six months ended June 30, 2012 decreased from the comparable period in 2011 primarily due to a greater use of cash for working capital, higher tax payments and higher levels of pension funding, partially offset by higher net income. Cash used for working capital was $76.1 million and $50.4 million for the six month periods ended June 30, 2012 and 2011, respectively. This increase is primarily due to increased levels of inventory and higher disbursements of accounts payable partially offset by higher collections of accounts receivable. The higher tax payments are primarily due to reduced bonus depreciation in 2012, while the higher level of pension funding is due to a $5 million voluntary contribution to the Company's qualified domestic benefit plans.

Investing activities used cash of $65.6 million in the first six months of 2012 compared to cash used of $28.0 million during the comparable period in 2011. This increase is due to higher acquisition investment partially offset by lower capital expenditures. Financing activities used cash of $63.1 million in the first six months of 2012 compared to $106.5 million of cash used during the comparable period of 2011 primarily as a result of lower spending on the repurchase of common shares.

Investments in the Business

Investments in our business include both expenditures required to maintain the operation of our equipment and facilities as well as cash outlays in support of our strategic initiatives. During the first six months of 2012, we used cash of $21 million for capital expenditures, a decrease of $10.1 million from the comparable period of 2011. During the first six months of 2011, the Company purchased a facility in Switzerland for approximately $13 million that had previously been leased.

During the first six months of 2012, the Company completed the acquisition of Taymac for $42.1 million and Cableform for $10.9 million. The Company continues to assess opportunities to expand sales through acquisitions of businesses that fill product gaps or allow for expansion into new markets. See also Note 2-Business Acquisitions in the Notes to Condensed Consolidated Financial Statements.

In September 2011, the Board of Directors approved a stock repurchase program and authorized the repurchase of up to $200 million of Class A and Class B Common Stock. During 2012, the Company has spent $42.1 million on the repurchase of common shares. As of June 30, 2012, $157.9 million remains authorized for future repurchases under this program. Depending upon numerous factors, including market conditions and alternative uses of cash, we may conduct discretionary repurchases through open market and privately negotiated transactions during our normal trading windows.

Debt to Capital

At June 30, 2012, the Company had $596.5 million of senior long-term notes, net of unamortized discount. These long-term fixed-rate notes, with amounts of $300 million due in both 2018 and 2022, respectively, are callable with a make whole provision and are only subject to accelerated payment prior to maturity if we fail to meet certain non-financial covenants, all of which were met at June 30, 2012.

The Company has a credit agreement for a 6.0 million Brazilian Real line of credit to fund its Brazilian operations. At June 30, 2012, 0.4 million Brazilian Reais were drawn (equivalent to $0.2 million) and reflected as short-term debt. This line of credit expires in October 2012 and is not subject to annual commitment fees.

Net debt, defined as total debt less cash and investments, is a non-GAAP measure that may not be comparable to definitions used by other companies. We consider net debt to be a useful measure of our financial leverage for evaluating the Company's ability to meet its funding needs.

     (In millions)                        June 30, 2012      December 31, 2011
     Total Debt                          $        596.7      $           599.2
     Total Hubbell Shareholders' Equity         1,545.2                1,467.8
     TOTAL CAPITAL                       $      2,141.9      $         2,067.0
     Debt to Total Capital                           28 %                   29 %
     Cash and Investments                         598.3                  624.4
     NET DEBT                            $         (1.6 )    $           (25.2 )
     Net Debt to Total Capital                       (0 %)                  (1 %)

Liquidity

We measure liquidity on the basis of our ability to meet short-term and long-term operational funding needs, fund additional investments, including acquisitions, and make dividend payments to shareholders. Significant factors affecting the management of liquidity are cash flows from operating activities, capital expenditures, cash dividend payments, stock repurchases, access to bank lines of credit and our ability to attract long-term capital with satisfactory terms.

As of June 30, 2012, the Company's $500 million revolving credit facility had not been drawn against. The credit facility, which serves as a backup to our commercial paper program, is scheduled to expire in October 2016. The interest rate applicable to borrowing under the credit agreement is generally either the prime rate or a surcharge over LIBOR. The single financial covenant in the $500 million credit facility, which the Company is in compliance with, requires that total debt not exceed 55% of total capitalization. Annual commitment fees to support availability under the credit facility are not material.

Although not the principal source of liquidity, we believe our credit facility is capable of providing significant financing flexibility at reasonable rates of interest. However, in the event of a significant deterioration in the results of our operations or cash flows, leading to deterioration in financial condition, our borrowing costs could increase and/or our ability to borrow could be restricted. We have not entered into any guarantees that could give rise to material unexpected cash requirements.

We have contractual obligations for long-term debt, operating leases, purchase obligations, and certain other long-term liabilities that were summarized in a table of Contractual Obligations in our Annual Report on Form 10-K for the year ended December 31, 2011. Since December 31, 2011, there were no material changes to our contractual obligations.

Internal cash generation together with currently available cash and investments, available borrowing facilities and credit lines, if needed, are expected to be sufficient to fund operations, the current rate of cash dividends, capital expenditures, and an 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 current businesses. While a significant acquisition may require additional debt and/or equity financing, we believe that we would be able to obtain additional financing based on our favorable historical earnings performance and strong financial position.

The Company maintains a conservative financial structure to provide the strength and flexibility necessary to achieve its strategic objectives. The 2008 disruption in the credit markets had a significant adverse impact on a number of financial institutions. While the Company's liquidity was not negatively impacted by this disruption, management will continue to closely monitor the Company's liquidity and credit markets. Management cannot predict with any certainty the impact to the Company should any future disruptions occur in the credit environment.

Critical Accounting Estimates

. . .