Organic. While overall demand in 2009 is expected to decrease due to the recessionary market conditions, the Company remains focused on expanding market share through a greater emphasis on new product introductions and better leverage of sales and marketing efforts across the organization.

Acquisitions. In 2008, we invested a total of $267.4 million on acquisitions and their related costs. Three of these acquisitions were added to our Electrical segment, while the remaining four were added to our Power segment. These businesses are expected to contribute approximately $200 million in annual net sales.

• Price Realization

In 2008, numerous price increases were implemented to offset significant commodity cost headwinds, steel in particular. In 2009, we anticipate a less volatile commodity environment and will continue to exercise pricing discipline. However, the combination of weaker overall demand and lower commodity costs will make price realization challenging in 2009.

• Cost Containment

Global sourcing. We remain focused on expanding our global product and component sourcing and supplier cost reduction program. We continue to consolidate suppliers, utilize reverse auctions, and partner with vendors to shorten lead times, improve quality and delivery and reduce costs.

Freight and Logistics. Transporting our products from suppliers, to warehouses, and ultimately to our customers, is a major cost to our Company. We see opportunities, in 2009, to further reduce these costs and increase the effectiveness of our freight and logistics processes including capacity utilization and network optimization.

• Productivity

We continue to leverage the benefits of the enterprise-wide business system implementation, including standardizing best practices in inventory management, production planning and scheduling to improve manufacturing throughput and reduce costs. In addition, value-engineering efforts and product transfers are also expected to contribute to our productivity improvements. We also continue to emphasize further reductions in lead times and improved service levels to our customers.

Working Capital Efficiency. Working capital efficiency is principally measured as the percentage of trade working capital (inventory plus accounts receivable, less accounts payable) divided by annual net sales. We continue to focus on improving our working capital efficiency with an emphasis on inventory.

Transformation of business processes. We continue our long-term initiative of applying lean process improvement techniques throughout the enterprise, with particular emphasis on reducing supply chain complexity to eliminate waste and improve efficiency and reliability. We will continue to build on the shared services model that has been implemented in sourcing and logistics and apply those principles in other areas.

Results of Operations
Summary of Consolidated Results (in millions, except per share data):

                                                    Three Months Ended March 31
                                                       % of                        % of
                                         2009        Net sales       2008        Net sales
   Net sales                            $ 585.6                     $ 627.9
   Cost of goods sold                     418.6                       440.5

   Gross profit                           167.0            28.5 %     187.4            29.8 %
   Selling & administrative expenses      109.7            18.7 %     112.1            17.8 %

   Operating income                        57.3             9.8 %      75.3            12.0 %
   Net income attributable to Hubbell      33.8             5.8 %      48.4             7.7 %
   Earnings per share - diluted         $  0.60                     $  0.85

Net Sales
Net sales of $585.6 million for the first quarter of 2009 decreased 7% compared to the first quarter of 2008 due to lower market demand and unfavorable currency translation partially offset by acquisitions and price realization. Acquisitions added approximately five percentage points to net sales in the first quarter of 2009 compared to the first quarter of 2008. Additionally, price realization and storm related shipments added two percentage points each to net sales in the first quarter of 2009. Foreign currency translation decreased net sales by four percentage points in the first quarter of 2009 compared to the first quarter of 2008.
Gross Profit
The consolidated gross profit margin in the first quarter of 2009 was 28.5% compared to 29.8% in the first quarter of 2008. The 130 basis point decline compared to 2008 was primarily due to lower manufacturing output resulting from decreased demand and inventory reductions partially offset by selling price increases and productivity improvements. Selling & Administrative Expenses ("S&A") S&A expenses decreased in the first quarter of 2009 compared with the first quarter of 2008 primarily due to cost containment actions partially offset by the incremental S&A expenses of the businesses acquired, higher pension expense and workforce reduction costs. As a percentage of sales, S&A expenses of 18.7% in the first quarter of 2009 were 90 basis points higher than the 17.8% reported in the first quarter of 2008 primarily due to higher pension expense and workforce reduction costs.
Total Other Expense, net
In the first quarter of 2009, interest expense increased compared to the first quarter of 2008 due to higher long-term debt. The higher long-term debt level was due to the Company completing a $300 million bond offering in May 2008 to support strategic growth initiatives. Other expense, net was favorably impacted by net foreign currency transaction gains in the first quarter of 2009 compared to net foreign currency transaction losses in the comparable period of 2008.
Income Taxes
The effective tax rate in the first quarter of 2009 was 31.5% compared to 30.5% in the first quarter of 2008 primarily due to lower foreign tax benefits. Net Income attributable to Hubbell and Earnings Per Share Net income attributable to Hubbell and earnings per share decreased 30% and 29%, respectively, in the first quarter of 2009 compared to the first quarter of 2008. The decrease in both net income attributable to Hubbell and earnings per share reflects lower sales and operating income, higher net interest expense and a higher effective tax rate.

Segment Results
Electrical

                                            Three Months Ended
                                                 March 31
                                             2009         2008
                                              (In millions)
                      Net sales           $  402.5      $ 470.3
                      Operating income        27.7         50.0
                      Operating margin         6.9 %       10.6 %

Net sales in the Electrical segment decreased 14% in the first quarter of 2009 compared with the first quarter of 2008 due to lower market demand and unfavorable foreign currency translation partially offset by acquisitions and selling price increases. Acquisitions and selling price increases added approximately two percentage points each to net sales in the first quarter of 2009 compared with the same period of 2008. Foreign currency translation decreased net sales by four percentage points in the first quarter of 2009 compared to 2008.
Within the segment, sales of electrical systems products decreased 16% in the first quarter of 2009 compared to the first quarter of 2008 due to lower market demand and unfavorable foreign currency translation, partially offset by price realization. Within electrical system products, sales of electrical products decreased approximately 11% compared to the first quarter of 2008, while sales of wiring products decreased approximately 23%. Sales of lighting products decreased by 13% in the first quarter of 2009 compared to 2008 due to lower market demand partially offset by the Varon acquisition and price realization. Sales of residential lighting products were lower by approximately 27% as a result of the continued decline in the U.S. residential construction market. Commercial and industrial sales decreased 10% including the favorable impact of the Varon acquisition.
Operating income decreased by $22.3 million primarily due to lower market demand. The first quarter of 2009 results include approximately $3 million of costs associated with workforce reductions. Price realization and productivity improvements essentially offset commodity cost increases and other inflationary increases. Operating margin decreased by 370 basis points compared to the first quarter of 2008 primarily due to lower absorption of manufacturing overhead resulting from significantly lower production volume and costs associated with workforce reductions. Within the segment, both electrical systems products and lighting products operating income and operating margin declined compared to the first quarter of 2008.
Power

                                            Three Months Ended
                                                 March 31
                                             2009         2008
                                              (In millions)
                      Net sales           $  183.1      $ 157.6
                      Operating income        29.6         25.3
                      Operating margin        16.2 %       16.1 %

Net sales in the Power segment increased 16% in the first quarter of 2009 compared to the first quarter of 2008 due to acquisitions, higher storm related shipments and price realization. Acquisitions and storms added approximately 14% and 7%, respectively, to net sales in the first quarter of 2009. In addition, price realization added approximately 4% to net sales while unfavorable foreign currency translation reduced net sales by approximately two percentage points. Operating income and margin increased in the first quarter of 2009 compared to the first quarter of 2008. Operating income increased by $4.3 million primarily due to price realization, productivity improvements and the impact of acquisitions partially offset by commodity cost increases. Operating margin improved slightly as favorable price realization and productivity were almost entirely offset by cost increases, unfavorable product mix and the dilutive impact of acquisitions.

              FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Cash Flow

                                                                      Three Months Ended
                                                                           March 31
                                                                    2009              2008
                                                                        (In Millions)
Net cash provided by (used in):
Operating activities                                              $    46.6         $   32.4
Investing activities                                                  (10.2 )         (108.9 )
Financing activities                                                  (19.7 )           96.2
Effect of foreign currency exchange rate changes on cash and
cash equivalents                                                       (2.9 )            3.1

Net change in cash and cash equivalents                           $    13.8         $   22.8

Cash provided by operating activities for the three months ended March 31, 2009 increased from the comparable period in 2008 primarily as a result of lower working capital and prepaid advertising. Working capital in the first quarter of 2009 used cash of $9.3 million compared to $22.9 million used in the first quarter of 2008. The lower level of working capital in 2009 consists of decreases in accounts receivable and inventory, partially offset by lower levels of current liabilities, specifically accounts payable and deferred revenue.
Investing activities used cash of $10.2 million in the first three months of 2009 compared to cash used of $108.9 million during the comparable period in 2008. The change is due to lower levels of spending on acquisitions in the first three months of 2009 as compared to 2008. Financing activities used cash of $19.7 million in the first three months of 2009 compared to $96.2 million of cash provided during the comparable period of 2008. During the first three months of 2008, there were higher levels of commercial paper borrowings, partially offset by share repurchases as compared to the first three months of 2009.
Investments in the Business
Investments in our business include both normal expenditures required to maintain the operations of our equipment and facilities as well as expenditures in support of our strategic initiatives. In the first three months of 2009, we used cash of $8.0 million for capital expenditures, a decrease of $3.9 million from the comparable period of 2008.

In the first three months of 2009, acquisitions decreased $102.9 million from the comparable period of 2008. The first quarter of 2008 included the acquisition of Kurt Versen, Inc. and the acquisition of a small electrical products product line, both of which were added to the Electrical segment.
In December 2007, 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 which was expected to be completed over a two year period. As of March 31, 2009, approximately $160 million remains authorized for future repurchases under the December 2007 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. We did not repurchase any shares during the first three months of 2009.
Debt to Capital
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 more appropriate than total debt for measuring our financial leverage as it better measures our ability to meet our funding needs.

                                               March 31,       December 31,
                                                  2009             2008
                                                       (In Millions)
          Total Debt                           $    497.5     $        497.4
          Total Hubbell Shareholders' Equity      1,024.6            1,008.1

          Total Capital                        $  1,522.1     $      1,505.5

          Debt to Total Capital                        33 %               33 %
          Cash and Investments                 $    230.9     $        213.3
          Net Debt                             $    266.6     $        284.1

At March 31, 2009 the Company's debt consisted entirely of long-term notes totaling $497.5 million, net of unamortized discount. These fixed rate notes, with amounts of $200 million and $300 million due in 2012 and 2018, respectively, are not callable 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 March 31, 2009.
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.
In March of 2008, we exercised our option to expand our revolving credit facility from $250 million to $350 million. As of March 31, 2009 the $350 million committed bank credit facility had not been drawn against and remains a backup to our commercial paper program. 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 other 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, 2008. Since December 31, 2008, there were no material changes to our contractual obligations.
Internal cash generation together with currently available cash and investments, available borrowing facilities and an ability to access credit lines, if needed, are expected to be sufficient to fund operations, the current rate of cash 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 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 recent disruption in the current credit markets has had a significant adverse impact on a number of financial institutions. At this point in time, the Company's liquidity has not been impacted by the current credit environment and management does not expect that it will be materially impacted in the near future. Management will continue to closely monitor the Company's liquidity and the credit markets. However, management can not predict with any certainty the impact to the Company of any further disruption in the credit environment.

• Changes in markets or competition adversely affecting realization of price increases.

• Failure to achieve projected levels of efficiencies, cost savings and cost reduction measures, including those expected as a result of our lean initiative and strategic sourcing plans.

• The expected benefits and the timing of other actions in connection with our enterprise-wide business system.

• Availability and costs of raw materials, purchased components, energy and freight.

• Changes in expected or future levels of operating cash flow, indebtedness and capital spending.

• General economic and business conditions in particular industries or markets.

• The anticipated benefits from the recently enacted Federal stimulus package.

• Regulatory issues, changes in tax laws or changes in geographic profit mix affecting tax rates and availability of tax incentives.

• A major disruption in one of our manufacturing or distribution facilities or headquarters, including the impact of plant consolidations and relocations.

• Changes in our relationships with, or the financial condition or performance of, key distributors and other customers, agents or business partners could adversely affect our results of operations.

• Impact of productivity improvements on lead times, quality and delivery of product.

• Anticipated future contributions and assumptions including changes in interest rates and plan assets with respect to pensions.

• Adjustments to product warranty accruals in response to claims incurred, historical experiences and known costs.

• Unexpected costs or charges, certain of which might be outside of our control.

• Changes in strategy, economic conditions or other conditions outside of our control affecting anticipated future global product sourcing levels.

• Ability to carry out future acquisitions and strategic investments in our core businesses and costs relating to acquisitions and acquisition integration costs.

• Future repurchases of common stock under our common stock repurchase programs.

• Changes in accounting principles, interpretations, or estimates.

• The outcome of environmental, legal and tax contingencies or costs compared to amounts provided for such contingencies.

• Adverse changes in foreign currency exchange rates and the potential use of hedging instruments to hedge the exposure to fluctuating rates of foreign currency exchange on inventory purchases.

• Other factors described in our Securities and Exchange Commission filings, including the "Business", "Risk Factors" and "Quantitative and Qualitative Disclosures about Market Risk" sections in the Company's Annual Report on Form 10-K for the year ended December 31, 2008.

Any such forward-looking statements are not guarantees of future performances and actual results, developments and business decisions may differ from those contemplated by such forward-looking statements. The Company disclaims any duty to update any forward-looking statement, all of which are expressly qualified by the foregoing, other than as required by law.